10-K/A 1 d10ka.txt AMENDMENT TO FORM 10-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM 10-K/A AMENDMENT NO. 1 TO FORM 10-K _________________ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2000 Commission File No. 000-24853 FRONTIER NATIONAL CORPORATION (Exact name of registrant as specified in its charter) Alabama 72-1355228 ------------------------ ------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 43 North Broadway Sylacauga, Alabama 35150 ------------------------- (Address of principal executive offices) (256) 249-2041 --------------- (Registrant's telephone number) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each exchange Title of each class on which registered ------------------- --------------------- None None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $.001 Par Value ----------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. As of March 22, 2001 the aggregate market value of voting stock held by non-affiliates was $24,561,980. Indicate the number of shares outstanding of the registrant's class of common stock, as of the latest practicable date. Class Outstanding at May 14, 2001 ----------------------------- --------------------------- Common Stock, $.001 Par Value 3,497,497 EXPLANATORY NOTE: This Amendment No. 1 to Form 10-K is being filed in order to include information required by Items 10-13 originally intended to be incorporated by reference to the information to be included in Frontier National Corporation's proxy statement for its 2001 Annual Meeting of Stockholders. ================================================================================ PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth information regarding our directors and persons nominated to become directors at our 2001 stockholders meeting: Principal Occupation for Past 5 Years Director ------------------------------------- Name of Director Age Since and Present Position with Frontier ----------------------- --- -------- ---------------------------------- Wesley L. Bowden 65 1998 Bowden Oil Company,Inc.-- Chairman, President & CEO, January 1967 to present; Director Harry I. Brown, Jr. 54 1998 Frontier--Chairman, August 1998 to present; President & CEO, August 1998 to May 1999. First National Sylacauga Corporation--President & CEO, February 1998 to August 1998; President & COO, February 1992 to August 1998 Harry I. Brown, Sr. 80 1998 First National--Chairman, 1966 to present; CEO, 1966 to February 1998. First National Sylacauga Corporation-- Chairman, November 1984 to August 1998; CEO, November 1984 to February, 1998; Director Jerry L. Fielding 54 N/A Presiding Judge for Twenty-Ninth Judiciary District, Circuit Court of Talladega County, Alabama from 1983 to present; Director Nominee Charles M. Reeves, Jr. 77 1997 Valley National--Chairman, August 1998 to Present. Valley National Corporation--Chairman, February 1997 to August 1998. Peach State Furniture, Inc. /fka/ Skinner--Vice-Chairman until August 1998; Director Steven E. Sprayberry 49 1998 Frontier Financial Services, Inc., formerly known as Frontier Agency, Inc. /dba/ Wright & Sprayberry Insurance-- President & CEO, November 1998 to present; Wright-Sprayberry, Inc.--co- owner until November 1998; Director 2 Raymond C. Styres 63 1998 Reiter Corporation--Regional Sales Manager, January 1993 to present Steven R. Townson 43 1997 Frontier--Vice Chairman, President & CEO, May 1998 to present; Vice Chairman/President & COO, August 1998 to May 1999; Valley National Corporation--President & CEO, February 1997 to August 1998. First National-- President/CEO, May 1999 to present; Valley National--President & CEO, August 1996 to present; BancAlabama, Inc. and BankAlabama--President & COO, and President & CEO, respectively, June 1995 to August 1996 Barry D. Vaughn 50 N/A Principal of the Law Firm of Proctor and Vaughn since 1975; Director Nominee Christopher N. Zodrow 54 1998 West Point Stevens, Inc.--Vice president, Secretary and Assistant General Counsel, 1995 to present; Director Our board of directors has the power to appoint our officers. Each officer holds office for such term as may be prescribed by the board of directors and until such person's successor is chosen and qualified or until such person's death, resignation, or removal. The following table sets forth our executive officers (other than Messrs. Brown, Jr. and Townson who are identified above): Executive Officer Age Principal Occupation for Past 5 Years ----------------- --- ------------------------------------- Benjamin B. McMillan 35 Frontier National Corporation - Vice President and Senior Credit, May 2000 to present; Frontier National Bank-- Executive Vice President, March 1999 to present; Union Planters Bank, N.A., Decatur, AL: Area Lending Office, August 1996 to February, 1999; First Bank of the Villages, Lady Lake, Florida--Senior Lending Officer, May 1995 to August 1996. The board of directors currently consists of Messrs. Bowden, Brown, Jr., Brown, Sr., Reeves, Sprayberry, Styres, Townson and Zodrow. Messrs. Fielding and Vaughn have been nominated to fill the two vacancies on the board at the 2001 shareholders meeting. Mr. Reeves and Mr. Townson were charter members of the board of Valley National Corporation which was organized in 1997. Upon Valley National Corporation's merger with First National Sylacauga Corporation in 1998, the other directors became part of the board of Valley National Corporation, which was renamed Frontier National Corporation. Harry I. Brown, Sr. is the father of Harry I. Brown, Jr. There are no other family relationships among the members of our board of directors. None of our directors is a director of any other company that has a class of securities registered under the Securities Exchange Act of 1934. 3 COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT The members of our Board of Directors, our executive officers and persons who hold more than 10% of our outstanding common stock are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 which require them to file reports with respect to their ownership of our common stock and their transactions in such common stock. Based solely on a review of the copies of such reports furnished to us, or written representations that no Form 5s were required, we believe that, during the period from January 1, 2000 through December 31, 2000, all reporting requirements under Section 16(a) were met in a timely manner by our directors, executive officers and greater than ten percent beneficial owners. ITEM 11. EXECUTIVE COMPENSATION SUMMARY OF EXECUTIVE COMPENSATION The following table sets forth the total amount of compensation paid by Frontier to or for the account of Harry I. Brown, Jr., our Chairman, and Steven R. Townson, our President and CEO, for the fiscal years ended December 31, 2000, 1999 and 1998 (no other executive officers of Frontier received annual compensation in excess of $100,000):

(1) Automobile allowance and club dues (2) Director fees and KSOP contribution (3) Automobile allowance (4) Director fees EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS Harry I. Brown, Jr. and Steven R. Townson entered into employment agreements with Frontier after the merger of First National Sylacauga Corporation and Valley National Corporation. Mr. Brown's current agreement is for him to serve as Chairman of our board of directors. Mr. Townson's agreement is for him to serve as Vice-Chairman of the Board, President, and Chief Executive Officer of Frontier and President and Chief Executive Officer of both banks. Mr. Brown's current annual salary is $131,000 while Mr. Townson's salary is $170,000. Both agreements are for five (5) years, and are automatically extended each year by one (1) additional year unless one hundred twenty (120) days prior to each year-end our board of directors gives notice that the agreement will not be extended. Upon a "change of control" as defined in the agreements, in addition to 4 any remaining payments due under the agreements, Mr. Brown and Mr. Townson may be eligible for an additional payment equal to the present value of 2.99 times their average annual compensation payable under the agreement for the most recent five (5) taxable years ending before the "change of control." Finally, as additional compensation at the time of the merger in 1998, both Mr. Brown and Mr. Townson received options to purchase 75,000 shares of Class A Common Stock at $6.67 per share for a period of ten (10) years. Mr. Brown exercised 15,000 of his options in 1998. In addition, Mr. Brown and Mr. Townson have salary continuation agreements which provide for certain payments upon death or retirement. The board of directors have decided to reduce the amounts payable under these plans. Both agreements include vesting schedules that provide payment of the benefit amount upon the officer's retirement if the officer remains employed until he is fully vested. With regard to Mr. Brown, the new agreement will provide for 15 annual payments of up to $175,000 upon retirement. With regard to Mr. Townson, the new agreement will provide for 15 annual payments of up to $275,000 upon retirement. OPTIONS GRANTED IN LAST FISCAL YEAR The following table provides information regarding options granted to our named executive officers in 2000:

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES Although no options were exercised during 2000, the following table provides the number of securities underlying unexercised options at fiscal year end and their values for our named executive officers:

5 (1) Based on the closing price of our common stock on December 31, 2000 of $12.50 per share and an exercise price of $6.67 per share. (2) Based on the closing price of our common stock on December 31, 2000 of $12.50 per share and an exercise price of $10.13 per share. (3) Based on the closing price of our common stock on December 31, 2000 of $12.50 per share and an exercise price of $9.38 per share. REPORT OF THE COMPENSATION COMMITTEE The compensation committee met three times during 2000 to determine executive officers' salaries. Based on Mr. Townson's responsibilities at both banks and the holding company his salary was raised $12,000 to $170,000 and Mr. Townson was granted options to purchase shares under Frontier's statutory/non- statutory stock option plan. Mr. Brown, Jr.'s salary was $131,000 and Mr. Brown, Jr. was granted options to purchase shares under Frontier's statutory/non- statutory stock option plan. The compensation committee does not use any formal policy or standard in making its decisions on compensation. Compensation Committee Harry I. Brown, Sr. Charles M. Reeves, Jr. Raymond C. Styres Christopher N. Zodrow COMPENSATION INTERLOCK AND INSIDER PARTICIPATION The compensation committee consists of Messrs. Brown, Sr., Reeves, Jr., Styres and Zodrow. No member of the compensation committee is a current officer or employee of Frontier. Mr. Brown, Sr. is Chairman of First National and is the father of Mr. Brown Jr., who is Chairman of Frontier. None of our executive officers have served as a director or member of the compensation committee of any other entity whose executive officers served on our board of directors or compensation committee. 6 COMMON STOCK PERFORMANCE GRAPH The following graph shows the cumulative return since our common stock began trading on the NASD's Over-the-Counter Bulletin Board in October 1998 as compared to The Nasdaq National Market (US Companies) and Nasdaq Bank Stocks: [GRAPH APPEARS HERE]

DIRECTOR COMPENSATION Each director received a fee of $1,000 for each board meeting he attended during 2000 and $250 for each committee meeting he attended. 7 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table reflects the number of shares of our common stock beneficially owned by (1) each of our directors and nominees for director, (2) certain executive officers who are not directors, (3) all persons who beneficially own 5% or more of our common stock, and (4) our directors, nominees, and executive officers as a group as of May 7, 2001. There has been no change in control of Frontier since the beginning of 2000 and we are not aware of any arrangement, the operation of which would at a subsequent date result in a change in control.

* Represents less than one percent. (1) The address of each of the following shareholders is c/o Frontier National Corporation, 43 North Broadway, Sylacauga, Alabama 35150. (2) The number of shares of common stock reflected are shares that, under applicable regulations of the Securities and Exchange Commission, are deemed to be beneficially owned. Under the rules of the Securities and Exchange Commission, a person is deemed to beneficially own a security if the person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security. A person is also deemed to beneficially own any shares to which that person has the right to acquire beneficial ownership within 60 days. Shares of Common Stock subject to options exercisable within 60 days are deemed outstanding for computing the percentage of class of the person holding such options that are not deemed outstanding for computing the percentage of class for any other person. The total number of shares beneficially owned is divided, where applicable, into two categories: shares as to which voting/investment power is held solely, and shares as to which voting/investment power is shared. (3) Based upon 3,497,497 shares of common stock issued and outstanding as of May 8, 2000. 8 (4) Includes 1,500 shares held by Mr. Bowden as custodian for his grandchildren over which Mr. Bowden has sole voting and dispositive power and non- qualified stock options to purchase 5,000 shares under Frontier's statutory/non-statutory stock option plan. (5) Includes 1,665 shares held by Mr. Brown as custodian for his son, 11,000 shares held by The Harry Brown Foundation, Inc., over which Mr. Brown has sole voting and dispositive power, incentive stock options to purchase 60,700 shares under Frontier's statutory/non-statutory stock option plan, and 2,851 vested shares held in the Frontier KSOP plan. (6) Includes non-qualified stock options to purchase 5,000 shares under Frontier's statutory/non-statutory stock option plan; Mr. Brown's shares are held by Harry I. Brown, Sr. Family, LLC, in which Mr. Brown has sole voting and dispositive power. (7) Consists of non-qualified stock options to purchase 2,000 shares under Frontier's statutory/non-statutory stock option plan. (8) Includes 10,000 shares held by the Benjamin B. McMillan Living Trust, in which Mr. McMillan has sole and dispositive power, 5,422 shares owned jointly by Mr. McMillan and his wife under a dividend reinvestment plan held by Sterne, Agee & Leach, Inc., 653 vested shares held in the Frontier KSOP Plan and a qualified stock option to purchase 700 shares under Frontier's statutory/non-statutory stock option plan. (9) Includes 845,854 shares controlled through the CM/FS Reeves Investments, LP, 7l,933 shares owned by Mr. Reeves' stepchildren and non-statutory options to purchase 5,000 shares under Frontier's statutory/non-statutory stock option plan. Mr. Reeves' shares are, subject to regulatory approval, subject to a voting agreement between Mr. Townson and CM/FS Reeves Investments, LP, dated August 1998, which requires Mr. Townson and the LP to vote their shares together. (10) These shares do not include 18,501 shares owned by Mr. Sprayberry's wife over which Mr. Sprayberry has no voting or investment power and as to which he disclaims beneficial ownership. Includes 2,754 vested shares held in Frontier KSOP Plan and incentive stock options to purchase 700 shares under Frontier's statutory/non-statutory stock option plan. (11) Includes non-statutory stock options to purchase 5,000 shares under Frontier's statutory/non-statutory stock option plan. (12) All of Mr. Townson's shares are, subject to regulatory approval, subject to a voting agreement between Mr. Townson and CM/FS Reeves Investments, LP dated August 1998, which require Mr. Townson and the LP to vote their shares together. This total also includes options to purchase 77,000 shares which are also subject to the voting agreement and 2,463 vested shares held in the Frontier National Corporation KSOP plan. (13) Includes non-statutory stock options to purchase 2,000 shares under Frontier's statutory/non-statutory stock option plan. (14) Includes 3,480 shares owned by Mr. Zodrow's wife, 1,922 shares owned by Mr. Zodrow's children and a non-statutory stock option to purchase 5,000 shares under Frontier's statutory/non-statutory stock option plan. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Certain directors and executive officers of Frontier, and certain associates and members of the immediate family of these individuals, were customers of, and had loan transactions with, Frontier and its subsidiaries in the ordinary course of business during 2000. In the our opinion, all such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions of other persons and corporations and did not involve more than the normal risk of 9 collectability or present other unfavorable features. Transactions of a similar nature will, in all probability, occur in the future in the ordinary course of business. SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRONTIER NATIONAL CORPORATION Date: May 14, 2001 By: /s/ Steven R. Townson ----------------------------- Steven R. Townson Vice Chairman of the Board, President, Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

FRONTIER NATIONAL CORP 10-K/A