<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
HABERSHAM BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
HABERSHAM BANCORP
282 HISTORIC HIGHWAY 441 NORTH
P.O. BOX 1980
CORNELIA, GEORGIA 30531
(706) 778-1000
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SATURDAY, APRIL 15, 2000.
To the Shareholders of Habersham Bancorp:
The annual meeting of shareholders of Habersham Bancorp (the
"Company") will be held on Saturday, April 15, 2000, at 1:00 p.m., in the
Central Office of Habersham Bank at 282 Historic Highway 441 North, Cornelia,
Georgia, for the following purposes:
1. To elect directors.
2. To vote upon a proposed amendment to the Company's 1996
Incentive Stock Option Plan that would increase the number of
shares authorized for issuance under the Plan from 250,000 to
600,000.
3. To vote upon a proposed amendment to the Company's Amended and
Restated Articles of Incorporation that would eliminate a
requirement for a classified Board of Directors.
4. To transact any other business that may properly come before the
meeting or any adjournment.
March 3, 2000 is the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
Please mark, date, sign and return the enclosed form of proxy as soon
as possible. If you attend the meeting and wish to vote your shares in person,
you may do so at any time before the vote takes place.
By Order of the Board of Directors,
/s/ David D. Stovall
President and Chief Executive Officer
March 22, 2000
<PAGE> 3
HABERSHAM BANCORP
282 HISTORIC HIGHWAY 441 NORTH
P.O. BOX 1980
CORNELIA, GEORGIA 30531
PROXY STATEMENT
-----------------------------------
INTRODUCTION
TIME AND PLACE OF THE MEETING
The Company's Board of Directors is furnishing this Proxy Statement to
solicit proxies for use at the annual meeting of shareholders to be held on
Saturday, April 15, 2000, at 1:00 p.m., in the Central Office of Habersham Bank
at 282 Historic Highway 441 North, Cornelia, Georgia, and at any adjournment of
the meeting.
PROCEDURES FOR VOTING BY PROXY
If you properly sign, return and do not revoke your proxy, the persons
named as proxies will vote your shares according to the instructions you have
specified on the proxy card. If you sign and return your proxy card but do not
specify how the persons appointed as proxies are to vote your shares, your
proxy will be voted FOR the election of the nominated directors, FOR the
proposed amendments to the 1996 Incentive Stock Option Plan and to the
Company's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation") and in accordance with the best judgment of the persons
appointed as proxies as to all other matters properly brought before the
meeting. You can revoke your proxy by delivering to Edward D. Ariail at the
Company's Central Office either a written revocation of your proxy or a duly
executed proxy bearing a later date or by attending the meeting and voting in
person.
RECORD DATE AND MAILING DATE
The close of business on March 3, 2000 is the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
We first mailed this Proxy Statement and accompanying proxy card to
shareholders on or about March 22, 2000.
NUMBER OF SHARES OUTSTANDING
As of the close of business on the record date, the Company had
10,000,000 shares of common stock, $1.00 par value, authorized, of which
2,698,743 shares were issued and outstanding. Each such share is entitled to
one vote on matters to be presented at the meeting.
-1-
<PAGE> 4
REQUIREMENTS FOR SHAREHOLDER APPROVAL
A quorum will be present if a majority of the votes entitled to be
cast are present in person or by valid proxy. We will count abstentions and
broker non-votes, which are described below, in determining whether a quorum
exists. To be elected, a director must receive more votes than any other
nominee for the same seat on the Board of Directors. As a result, if you
withhold your vote as to one or more directors, it will have no effect on the
outcome of the election unless you cast that vote for a competing nominee.
To approve the proposed amendment to the Company's Articles of
Incorporation, the holders of a majority of the shares entitled to vote on the
amendment must vote in favor of the amendment. To approve the amendment to the
1996 Incentive Stock Option Plan or any other matter presented for shareholder
approval, the number of shares voted in favor of the proposal must exceed the
number of shares voted against the proposal, provided a quorum is present.
Only votes actually cast will count in determining whether the
shareholders have approved a proposal. Abstentions and broker "non-votes"
resulting from a broker's inability to vote a client's shares on
non-discretionary matters, such as the proposed amendments to our 1996
Incentive Stock Option Plan and our Articles of Incorporation, will have the
effect of a vote against the proposed amendment to the Articles of
Incorporation but will not affect the outcome of the vote on the amendment to
the 1996 Incentive Stock Option Plan or any other proposals that may be brought
before the meeting.
THE COMPANY
The Company was incorporated in 1984 as a bank holding company under
the laws of the State of Georgia. The Company's direct subsidiaries are listed
below.
<TABLE>
<CAPTION>
NAME LOCATION PRINCIPAL BUSINESS
<S> <C> <C>
Habersham Bank Cornelia, Georgia General commercial bank
The Advantage Group, Inc. Cornelia, Georgia Advertising and business
consultation
</TABLE>
In addition, Habersham Bank has the following subsidiaries:
<TABLE>
<CAPTION>
NAME LOCATION PRINCIPAL BUSINESS
<S> <C> <C>
BancMortgage Financial Northern Atlanta, Full service mortgage
Corp. Georgia metropolitan lending and servicing
area
Advantage Insurers, Inc. Cornelia, Georgia Property, casualty and life
insurance agency
</TABLE>
-2-
<PAGE> 5
Effective June 30, 1999, we combined the charters of Habersham Bank
and Security State Bank. As a result, Security State Bank now operates as a
division of Habersham Bank. In addition, we discontinued the operations of our
travel subsidiary, Appalachian Travel Services, Inc., as of September 30, 1999
and dissolved it as of December 31, 1999. Finally, during 1999 BancMortgage
Financial Corp. organized a new subsidiary, BancMortgage Reinsurance Ltd.,
which reinsures insurance companies offering private mortgage insurance.
OWNERSHIP OF STOCK
PRINCIPAL SHAREHOLDERS
On March 3, 2000, the Company had 575 shareholders of record. The
following table lists the persons who, to our best knowledge, beneficially
owned 5% or more of the Company's outstanding shares of common stock as of that
date. According to rules adopted by the Securities and Exchange Commission, a
"beneficial owner" of securities has or shares the power to vote the securities
or to direct their investment. Unless otherwise indicated, each person is the
record owner of, and has sole voting and investment power with respect to, his
or her shares. The number of issued and outstanding shares used to calculate
the percentage of total ownership for a given individual or group includes any
shares covered by the option(s) issued to that individual or group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- -------------------- ----------------
<S> <C> <C>
John Robert Arrendale 225,847 (1) 8.37%
200 Hillcrest Heights
Cornelia, Georgia 30531
Thomas A. Arrendale, III 673,620 (2)(3) 24.97%
P. O. Box 558
Baldwin, Georgia 30511
Cyndae Arrendale Bussey 510,776 (2) 18.93%
P. O. Box 558
Baldwin, Georgia 30511
David D. Stovall 170,697 (4) 6.18%
P. O. Box 1980
Highway 441 North
Cornelia, Georgia 30531
</TABLE>
Footnotes
- ---------
-3-
<PAGE> 6
(1) Includes 2,812 shares owned by Mr. Arrendale's spouse.
(2) Includes 400,000 shares owned by the Arrendale Undiversified Family
Limited Partnership and 85,000 shares owned by the Thomas A. Arrendale,
Jr. Family Limited Partnership. As general partners of each limited
partnership, Thomas A. Arrendale, III and Cyndae Arrendale Bussey share
voting and dispositive authority with respect to the shares owned by each
partnership.
(3) Includes 2,500 shares subject to options exercisable on or before May 4,
2000.
(4) Includes 97,795 shares owned of record by Mr. Stovall jointly with his
wife, 8,334 shares owned of record by Mr. Stovall jointly with his
daughter, and 63,318 shares subject to options exercisable on or before
May 4, 2000. Excludes 8,579 shares (as of the latest available valuation
of December 31, 1999) held in Mr. Stovall's account in the Company's
401(k) Savings Investment Plan Trust (the "Savings Plan"), as to which Mr.
Stovall has no voting or investment power.
STOCK OWNED BY MANAGEMENT
The following table lists the number and percentage ownership of
shares of common stock beneficially owned by each director and director
nominee, each executive officer named in the Summary Compensation Table
contained elsewhere in this Proxy Statement and all directors and executive
officers as a group as of March 3, 2000. Unless otherwise indicated, each
person is the record owner of, and has sole voting and investment power with
respect to, his shares. The number of issued and outstanding shares used to
calculate the percentage of total ownership includes any shares covered by the
option(s) issued to the individual or to members of the group, as applicable,
identified in the table.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name Beneficially Owned of Total
- ---- ------------------ ----------
<S> <C> <C>
Directors and Director Nominees:
- --------------------------------
Edward D. Ariail(1) 54,592 (2) 2.00%
Thomas A. Arrendale, Jr. 7,500 (3) *
Thomas A. Arrendale, III 674,520 (3)(4) 24.97%
James J. Holcomb 26,477 (3) *
Michael C. Martin 24,936 (5) *
James E. McCollum(1) 37,900 (6) 1.39%
James A. Stapleton, Jr. 7,950 (3)(7) *
David D. Stovall(1) 170,697 (8) 6.18%
Calvin R. Wilbanks 14,800 (3) *
Named Executive Officers who are not Directors:
- -----------------------------------------------
Robert S. Cannon 61,800 (9) 2.25%
Anthony L. Watts 52,500 (10) 1.91%
</TABLE>
-4-
<PAGE> 7
<TABLE>
<S> <C> <C>
All Directors, Director Nominees and
Executive Officers as a Group (14 persons) 1,196,904 (11) 40.44%
</TABLE>
Footnotes
- ---------
(*) Indicates less than 1%.
(1) Messrs. Ariail, McCollum and Stovall are also executive officers of the
Company.
(2) Includes 15,815 shares owned of record by Mr. Ariail jointly with his
wife, 350 shares owned of record by Mr. Ariail jointly with his wife and
daughters and 27,500 shares subject to options exercisable on or before
May 4, 2000. Excludes 5,551 shares (as of the latest available valuation
of December 31, 1999) held in Mr. Ariail's account in the Savings Plan, as
to which Mr. Ariail has no voting or investment power.
(3) Includes 2,500 shares subject to options exercisable on or before May 4,
2000.
(4) Includes 400,000 shares owned by the Arrendale Undiversified Family
Limited Partnership and 85,000 shares owned by the Thomas A. Arrendale,
Jr. Family Limited Partnership. As general partners of each limited
partnership, Thomas A. Arrendale, III and Cyndae Arrendale Bussey share
voting and dispositive authority with respect to the shares owned by each
partnership.
(5) Includes 591 shares owned of record by Mr. Martin jointly with his wife
and 8,818 shares subject to options exercisable on or before May 4, 2000.
(6) Includes 22,000 shares subject to options exercisable on or before May 4,
2000.
(7) Mr. Stapleton owns 450 of the indicated shares jointly with his children.
(8) Includes 97,795 shares owned of record by Mr. Stovall jointly with his
wife, 8,334 shares owned of record by Mr. Stovall jointly with his
daughter, and 63,318 shares subject to options exercisable on or before
May 4, 2000. Excludes 8,579 shares (as of the latest available valuation
of December 31, 1999) held in Mr. Stovall's account in the Company's
401(k) Savings Investment Plan Trust (the "Savings Plan"), as to which Mr.
Stovall has no voting or investment power.
(9) Includes 49,000 shares subject to options exercisable on or before May 4,
2000. Excludes 724 shares (as of the latest available valuation of
December 31, 1999) held in Mr. Cannon's account in the Savings Plan, as to
which Mr. Cannon has no voting or investment power.
(10) Includes 49,000 shares subject to options exercisable on or before May 4,
2000.
(11) Of the indicated shares, 261,136 shares are subject to options exercisable
on or before May 4, 2000. Excludes 18,857 shares (as of the latest
available valuation of December 31,
-5-
<PAGE> 8
1999) held in accounts for the benefit of the Company's executive officers
under the Savings Plan, as to which participants have no voting or
investment power.
PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES
We propose that the nominees listed below be elected as directors of
the Company. One of our former directors, C. Kenneth White, resigned from our
Board on November 20, 1999. If any nominee becomes unavailable to serve as a
director, which we do not now anticipate, then the persons named as proxies
will have complete discretion to vote for another duly nominated candidate.
The following table shows, for each director, his name and age at
December 31, 1999, the year he was first elected as a director, his position
with the Company other than as a director and his principal occupation and
other business experience for the past five years. Thomas A. Arrendale, Jr. and
Thomas A. Arrendale, III are father and son.
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ---------- ----------------------
<S> <C> <C> <C>
Edward D. Ariail 41 ---- Vice President and Corporate Secretary of the
Company; President of Habersham Bank since
April 1996; prior thereto, Executive Vice President
of Habersham Bank; Executive Vice President of
The Advantage Group, Inc.; member of the Board
of Directors of BancMortgage Financial Corp. and
Vice Chairman of the Board of Appalachian Travel
Service, Inc.
Thomas A. Arrendale, Jr. 79 1984 Chairman of the Board of the Company and
Habersham Bank; Director and President, Fieldale
Farms, Inc. (poultry processing and distribution)
Thomas A. Arrendale, III 42 1990 Vice Chairman of the Board of the Company;
Director of Marketing, Fieldale Farms, Inc. (poultry
processing and distribution)
James J. Holcomb 77 1984 Owner, Mt. Airy Wood Preserving (wood products)
Michael C. Martin 46 ---- President of Martin and Norton, Inc. (land
surveyors)
</TABLE>
-6-
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
James E. McCollum 49 ---- Chief Operating Officer of Habersham Bank and
Vice Chairman of The Advantage Group, Inc. since
October 1999; Executive Vice President of the Company and
Director of Habersham Bank and Advantage Insurers, Inc.
since August 1998; prior hereto, President of Credit Development,
First Data Retail Services, Omaha, Nebraska from 1996
through 1997; Manager of Credit Development, J.C. Penney,
Dallas, Texas from 1980 to 1996.
James A. Stapleton, Jr. 51 1990 President and General Manager, Habersham Metal
Products
David D. Stovall 43 1989 President and Chief Executive Officer of the
Company; Vice Chairman and Chief Executive
Officer of Habersham Bank; President and
Chairman of the Board of The Advantage Group,
Inc.; Chairman of the Board of Directors of Security
State Bank, BancMortgage Financial Corp.,
Appalachian Travel Service, Inc. and Advantage
Insurers, Inc.
Calvin R. Wilbanks 53 1990 Co-Owner, C.P. Wilbanks Lumber Company
</TABLE>
The Company's Articles of Incorporation currently provide that if the
Company has nine or more directors, the Board must be classified. This means
that our directors would be divided into three classes, with one class serving
an initial term of one year, another serving an initial term of two years and
the third serving an initial term of three years. After the initial term, each
class would serve a term of three years. This would make it more difficult for
a third party to take over the Company by accumulating a sufficient number of
shares of our outstanding common stock to propose a new slate of directors and
elect a new Board.
Our Board of Directors has recommended that the shareholders approve
an amendment to the Company's Articles of Incorporation that would eliminate
the requirement for a classified Board. If the shareholders approve this
amendment, all of our director nominees will serve until the next annual
meeting of shareholders or until their successors are duly elected and
qualified. If, however, the shareholders do not approve the proposed amendment,
the director nominees will be elected to the following classes to serve the
following terms: Class I (to serve until the 2001 annual meeting of
shareholders): Messrs. Holcomb, McCollum and Wilbanks; Class II (to serve until
the 2002 annual meeting of shareholders): Messrs. Ariail, Arrendale Jr. and
Stapleton; and Class III (to serve until the 2003 annual meeting of
shareholders): Messrs. Arrendale III, Martin and Stovall. See "Proposal
3-Amendment to Articles of Incorporation."
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES LISTED ABOVE.
-7-
<PAGE> 10
MEETINGS AND COMMITTEES OF THE BOARD
The Company's Board of Directors holds its regular meetings on the
third Saturday of the first month of each quarter and otherwise as necessary.
Habersham Bank's Board of Directors meets on the third Saturday of each month.
During 1999, the Company's Board of Directors met 12 times and Habersham Bank's
Board of Directors met 12 times. When Security State Bank was a separate
subsidiary, its Board of Directors met six times. Each director of the Company
attended at least 75% of the meetings of the Company's Board of Directors and
of any committees of which he was a member, and each director of Habersham Bank
and Security State Bank attended at least 75% of the aggregate number of
meetings of the Board of Directors and committees of which he was a member.
The Company's Board of Directors has established a Compensation
Committee and an Audit Committee. The Compensation Committee is composed of
Thomas A. Arrendale, Jr. and James J. Holcomb, and was established to determine
the compensation of Company officers. The Committee also administers the
Company's employee stock option plans. The Committee met once in 1999.
The Audit Committee's functions include (a) providing assistance to
the Board of Directors in fulfilling its responsibilities for examinations of
the Company by regulatory agencies and independent auditors; (b) determining
that the Company has adequate administrative, operating and internal accounting
controls and that it is operating in accordance with prescribed procedures; and
(c) serving as an independent party in the review of the Company's financial
information prior to its distribution to the Company's shareholders and the
public. The current members of the Audit Committee are: James J. Holcomb
(Chairman), James A. Stapleton, Jr. and Calvin R. Wilbanks. Either the Chairman
or the Company's internal auditor may call a meeting of the Audit Committee.
During 1999, the Audit Committee met four times.
Neither the Company nor any of its subsidiaries has a standing
nominating committee.
COMPENSATION OF DIRECTORS
The same individuals who served as directors of the Company in 1999
also served as directors of Habersham Bank. They were compensated for their
service to the Company and to Habersham Bank at rates of from $500 to $3,750
per Board meeting attended. When Security State Bank was a separate subsidiary,
its directors, including Mr. Stovall, received the same compensation as
directors of Habersham Bank. Directors are not compensated for their service as
members of committees. In 1999, Mr. Stovall received a total of $50,000 in
director fees and $6,000 in fees for his service as a member of Security State
Bank's advisory council after its merger with Habersham Bank; Mr. Ariail
received $14,000 in director fees; and Mr. McCollum received $10,000 in
director fees and $4,000 in fees for his service as a member of Security State
Bank's advisory council after its merger with Habersham Bank.
Directors of the Company and its bank subsidiaries who are not
employees of the Company or any of its subsidiaries are granted options
annually under the Habersham Bancorp
-8-
<PAGE> 11
Outside Directors' Stock Option Plan (the "Directors' Plan"). On December 31 of
each year, so long as the Company or the applicable bank subsidiary has a
return on beginning assets of at least one percent for the prior 12-month
period, each eligible director of the Company receives an option to purchase
1,000 shares of common stock at an exercise price equal to the fair market
value of the common stock on the date of grant and each director of a bank
subsidiary receives an option to purchase 250 shares on the same terms. Options
are exercisable in full six months after the date of grant. No directors
received options under the Directors' Plan in 1999.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who own
beneficially more than 10% of the Company's outstanding common stock to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in their ownership of the Company's common stock. Directors,
executive officers and greater than 10% shareholders are required to furnish
the Company with copies of the forms they file. To our knowledge, based solely
on a review of the copies of these reports furnished to the Company, during the
fiscal year ended December 31, 1999, our directors, executive officers and
greater than 10% shareholders complied with all applicable Section 16(a) filing
requirements.
EXECUTIVE OFFICERS
The Company's executive officers are appointed by and hold office at
the discretion of the Board of Directors. The following table lists for each
executive officer (a) the person's name, (b) his or her age at December 31,
1999, (c) the year he or she was first elected as an executive officer of the
Company, (d) his or her position with the Company and its subsidiaries, and (e)
other business experience for the past five years, if he or she has been
employed by the Company or any subsidiary for less than five years.
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ---------- ----------------------
<S> <C> <C> <C>
Thomas A. Arrendale, Jr. 79 1984 Chairman of the Board of the Company and
Habersham Bank; Director and President, Fieldale
Farms, Inc. (poultry processing and distribution)
David D. Stovall 43 1984 President and Chief Executive Officer of the
Company; Vice Chairman and Chief Executive
Officer of Habersham Bank; Chairman of the Board
of The Advantage Group, Inc.; Chairman of the
Board of Directors of BancMortgage Financial
Corp. and Advantage Insurers, Inc.
</TABLE>
-9-
<PAGE> 12
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH COMPANY;
NAME AGE ELECTED BUSINESS EXPERIENCE
- ---- --- ------- -------------------
<S> <C> <C> <C>
Edward D. Ariail 41 1990 Vice President and Corporate Secretary of the
Company; President of Habersham Bank since
April 1996; prior thereto, Executive Vice President
of Habersham Bank; Executive Vice President of
The Advantage Group, Inc.; and member of the
Board of Directors of BancMortgage Financial
Corp.
Pamela D. Spangler 52 1985 Vice President - Human Resources of the
Company, Senior Vice President of Habersham
Bank and Secretary of The Advantage Group, Inc.
Annette Banks 53 1997 Vice President and Chief Financial Officer of the
Company since April 1997; prior thereto, Chief
Financial Officer of the Company and Vice
President, Controller of Habersham Bank.
Bonnie Bowling 41 1997 Vice President, Operations, Audit, Compliance of
the Company since April 1997; from December
1994 to 1997, Process Owner of Audit/Compliance
of the Company; prior thereto, Vice President of
CB&T - West Georgia, Carrollton, Georgia
Robert S. Cannon 48 1997 Vice President, Mortgage Banking of the Company
since 1996; Vice Chairman and Co-Chief Executive
Officer of BancMortgage Financial Corp. since
December 1999 (Principal/Director since 1996);
prior thereto, President of HomeBanc Mortgage
Corporation, Atlanta, Georgia
Anthony L. Watts 52 1997 Vice President, Mortgage Banking of the Company
since 1996; Vice Chairman and Co-Chief Executive
Officer of BancMortgage Financial Corp. since
December 1999 (Principal/Director since 1996);
prior thereto, President and Chief Executive Officer
of Mr. Vernon Federal Savings Bank, Dunwoody,
Georgia.
James E. McCollum 49 1998 Chief Operating Officer of Habersham Bank and
Vice Chairman of The Advantage Group, Inc. since
October 1999; Executive Vice President of the
</TABLE>
-10-
<PAGE> 13
<TABLE>
<S> <C>
Company and Director of Habersham Bank and
Advantage Insurers, Inc. since August 1998; prior
thereto, President, First Data Retail Services,
Omaha, Nebraska from 1996 through 1997;
Manager of Credit Development, J.C. Penney,
Dallas, Texas from 1980 to 1996.
</TABLE>
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on
behalf of the Company's Chief Executive Officer and the four other mostly
highly compensated executive officers of the Company who earned over $100,000
in salary and bonus during 1999 for the last three fiscal years or for a
shorter period if their employment by the Company began within the last three
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation (1) Compensation(2)
---------------- ---
Securities Underlying All Other
Name and Principal Position Year Salary ($) Bonus($) Options/ SARs (#) Compensation($)(3)
- --------------------------- ---- ----------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
David D. Stovall 1999 170,924 0 12,000 6,819 (4)
President and Chief 1998 168,019 0 12,000 8,278 (4)
Executive Officer of the 1997 158,862 0 12,000 7,951 (4)
Company and Vice
Chairman and Chief
Executive Officer of
Habersham Bank
Edward D. Ariail 1999 105,823 0 4,500 4,490 (5)
Vice President and 1998 108,179 0 3,000 4,490 (5)
Corporate Secretary of the 1997 98,248 0 7,500 4,527 (5)
Company and President of
Habersham Bank
Robert S. Cannon 1999 200,000 0 8,000 306,656 (6)
Vice President, Mortgage 1998 320,814 0 9,000 724,767 (6)
Banking of the Company 1997 151,629 0 9,000 177,968 (6)
and Vice Chairman and Co-
Chief Executive Officer of
BancMortgage Financial
Corp.
James E. McCollum 1999 147,400 0 11,000 2,301
Executive Vice President of 1998 69,227(7) 0 11,000 0
the Company and Chief
</TABLE>
-11-
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C>
Operating Officer of
Habersham Bank
Anthony L. Watts 1999 200,000 0 8,000 306,656 (6)
Vice President, Mortgage 1998 322,043 0 9,000 724,767 (6)
Banking of the Company 1997 151,629 0 9,000 177,968 (6)
and Principal/Director and
Chief Executive Officer of
BancMortgage Financial
Corp.
</TABLE>
- -----------------
(1) We have omitted information on "perks" and other personal benefits
because the aggregate value of these items does not meet the minimum
amount required for disclosure under Securities and Exchange
Commission regulations.
(2) The Company has not awarded any restricted stock or long-term
incentives other than stock options. Accordingly, we have omitted
columns relating to these types of awards. The terms of the 1999
option grants are included in the table captioned "Option Grants in
Last Fiscal Year."
(3) Includes the following Company contributions to the indicated person's
savings plan account for the year indicated:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Mr. Stovall $ 3,266 $4,725 $4,398
Mr. Ariail 2,930 2,930 2,967
Mr. Cannon 9,750 5,200 4,621
Mr. McCollum 2,301 0 0
Mr. Watts 9,750 5,200 4,621
</TABLE>
(4) Includes $3,553 in premiums paid by the Company under a split dollar
life insurance plan for the benefit of Mr. Stovall in each of the
years indicated.
(5) Includes $1,560 in premiums paid by the Company under a split dollar
life insurance policy for the benefit of Mr. Ariail in each of the
years indicated.
(6) For each of the years indicated, the total includes the following
amounts earned in the year indicated and paid at the beginning of the
following year as a part of a distribution required under an
agreement entered into by Habersham Bank with Messrs. Cannon and
Watts relating to the establishment of BancMortgage Financial Corp.
See "-Employment Agreements."
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C>
$296,906 $719,567 $173,347
</TABLE>
-12-
<PAGE> 15
(7) Mr. McCollum's employment with us commenced in August 1998.
The following table sets forth information regarding the grant of
stock options to the executives named in the Summary Compensation Table during
1999. All options shown are presently exercisable. None of the named executive
officers exercised any options during 1999 or held any options on December 31,
1999 with an exercise price that exceeded the fair market value of the common
stock on that date.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS POTENTIAL REALIZABLE VALUE
UNDERLYING GRANTED TO EXERCISE AT ASSUMED ANNUAL RATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION OF STOCK PRICE APPRECIATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE FOR OPTION TERM ($)
---- ------------ ------------- --------- ---------- ---------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
David D. Stovall 12,000 16.33 12.75 12/31/04 195,271 246,408
Edward D. Ariail 4,500 6.12 12.75 12/31/04 73,226 92,403
Robert S. Cannon 8,000 10.88 12.75 12/31/04 130,181 164,272
James E. McCollum 11,000 14.97 12.75 12/31/04 178,998 225,874
Anthony L. Watts 8,000 10.88 12.75 12/31/04 130,181 164,272
</TABLE>
EMPLOYMENT AGREEMENTS
Under an agreement dated as of January 2, 1996 among the Company,
Habersham Bank (the "Bank"), BancMortgage Financial Corp. ("BancMortgage"),
Robert S. Cannon and Anthony L. Watts, each of Messrs. Cannon and Watts is
entitled to an annual base salary of $150,000 (subject to adjustment by the
Board of Directors) and a percentage of BancMortgage's annual net income before
taxes. See Note (6) to the Summary Compensation Table for the amounts paid
under this provision of the agreement. Other elements of compensation include
the use of a company car, club memberships, life insurance and such other
benefits as are provided under the Bank's employee benefit plans. If the
Company or the Bank is acquired or if the Bank receives and wishes to accept a
bona fide offer for the acquisition of BancMortgage, Messrs. Cannon and Watts
have a right of first refusal to acquire BancMortgage.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report discusses the compensation objectives and policies
applicable to our executive officers and our policy generally with respect to
the compensation of all executive officers as a group for 1999 and specifically
reviews the compensation established for our Chief Executive Officer during
1999.
-13-
<PAGE> 16
COMPENSATION PHILOSOPHY
Our executive compensation program has three objectives: (1) to align
the interests of the executive officers with those of our shareholders by
basing a significant portion of an executive's compensation on the Company's
performance, (2) to attract and retain highly talented and productive
executives, and (3) to provide incentives for superior performance by our
executives. To achieve these objectives, our executive compensation program
consists of base salary and incentive compensation in the form of stock
options. These compensation elements are in addition to the general benefit
programs that are offered to all of our employees.
In determining the amount and type of compensation to be awarded to
executive officers, we study the compensation packages for executives of a peer
group of the Company's most direct publicly held competitors for executive
talent, assess the competitiveness of our executive compensation program and
review the Company's financial performance for the previous year. We also gauge
our success in achieving the compensation program's objectives in the previous
year and consider the Company's overall performance objectives. Each element of
our executive compensation program is discussed below.
BASE SALARIES
Base salaries for our executive officers for 1999 are reflected in the
Summary Compensation Table. In addition to the factors described above that
support our executive compensation program generally, we evaluate subjectively
the responsibilities of the specific executive position and the individual
executive's experience and knowledge in determining his or her base salary.
Salaries are not based upon the achievement of any predetermined performance
targets.
INCENTIVE COMPENSATION
Our incentive compensation is based upon our Incentive Stock Option
Plan. We believe that placing a portion of executives' total compensation in
the form of stock options achieves three objectives. It aligns the interest of
our executives directly with those of our shareholders, gives executives a
significant long-term interest in the Company's success and helps us retain key
executives. In determining the number and terms of options to grant an
executive, we primarily consider subjectively the executive's past performance
(or, in the case of a new executive, his or her knowledge, and experience and
the degree to which we can recruit executives with similar skills) and the
degree to which an incentive for long-term performance would benefit the
Company.
BENEFITS
We believe we must offer a competitive benefits program to attract and
retain key executives. We provide the same medical and other benefits to our
executive officers that are generally available to our other employees.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
-14-
<PAGE> 17
We based our Chief Executive Officer's 1999 salary and stock options
on our review of the compensation packages for chief executive officers of our
most direct competitors and on our subjective assessment of his experience,
knowledge and abilities. We have and will continue to base salary adjustments,
stock option awards or other long-term incentive compensation on the same
elements and measures of performance as we review in determining the
compensation for our other executive officers. Aside from the incentives
inherent in the grant of stock options, we do not directly tie our Chief
Executive Officer's compensation to the Company's performance.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
It is our responsibility to address the issues raised by Section
162(m) of the Internal Revenue Code, as amended. The revisions to Section
162(m) made certain non-performance based compensation in excess of $1,000,000
to executives of public companies non-deductible to the companies beginning in
1994. We have reviewed these issues and have determined that no portion of
compensation payable to any executive officer for 1999 is non-deductible. Our
Incentive Stock Option Plan limits to $100,000 the aggregate fair market value
of the common stock subject to options that first become exercisable during any
calendar year for any individual optionee.
Submitted by: THE COMPENSATION COMMITTEE
Thomas A. Arrendale, Jr.
James J. Holcomb
-15-
<PAGE> 18
PERFORMANCE GRAPH
The following Performance Graph compares the yearly percentage change
in the cumulative total shareholder return on our common stock to the
cumulative total return on the Nasdaq Stock Market (U.S.) Index and the Nasdaq
Bank Stock Index from July 17, 1995, when the Company commenced trading on the
Nasdaq Stock Market, through the last trading day of each succeeding fiscal
year through December 31, 1999. The Performance Graph assumes reinvestment of
dividends, where applicable.
[Graph appears here]
<TABLE>
<CAPTION>
CRSP Total Returns Index for: 12/1994 12/1995 12/1996 12/1997 12/1998 12/1999
- ----------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Habersham Bancorp 122.0 155.2 180.6 134.9 120.8
Nasdaq Stock Market 74.4 105.1 129.3 158.4 223.2 405.7
(U.S. Companies)
Nasdaq Bank Stocks 79.4 118.3 156.1 261.4 259.6 249.7
SIC 6020-6029, 6710-6719 US & Foreign
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 07/17/1995.
-16-
<PAGE> 19
CERTAIN TRANSACTIONS
Some of our directors, officers, principal shareholders and their
associates were customers of, or had transactions with, the Company or its
subsidiaries in the ordinary course of business during 1999. Some of our
directors are directors, officers, trustees or principal securities holders of
corporations or other organizations that also were customers of, or had
transactions with, the Company or its subsidiaries in the ordinary course of
business during 1999.
All outstanding loans and other transactions with our directors,
officers and principal shareholders were made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and, when made, did not involve more than the normal risk of
collectability or present other unfavorable features. In addition to banking
and financial transactions, the Company and its subsidiaries may have had
additional transactions with, or used products or services of, various
organizations with which directors of the Company and its subsidiaries were
associated. The amounts involved in these non-credit transactions have not been
material in relation to the business of the Company, its subsidiaries or such
other organizations. We expect that the Company and its subsidiaries will
continue to have similar transactions in the ordinary course of business with
such individuals and their associates in the future.
-17-
<PAGE> 20
PROPOSAL 2: AMENDMENT TO THE 1996 INCENTIVE STOCK OPTION PLAN
INTRODUCTION
On February 21, 1996, the Board of Directors of the Company approved
the Habersham Bancorp 1996 Incentive Stock Option Plan (the "Stock Option
Plan"). The Plan provides the Company with increased flexibility to grant
equity-based compensation to key employees of the Company or an affiliate for
the purpose of giving them a proprietary interest in the Company to align more
closely their interests with those of shareholders generally and providing the
Company with a mechanism to attract and retain key personnel. The Board
initially reserved 250,000 shares of common stock for issuance pursuant to
awards under the Plan. On January 29, 2000, the Board voted to amend the plan
to increase the number of shares reserved for issuance under the Plan to
600,000. No options have been granted subject to shareholder approval of this
amendment. The text of the proposed amendment is attached as Appendix A to this
proxy statement.
TERMS OF THE PLAN
Administration. Awards under the Plan will be determined by a
committee of the Board of Directors (the "Committee"), the members of which are
selected by the Board of Directors. Only persons who satisfy the criteria of
"disinterested persons" set forth in Rule 16b-3(c) may be members of the
Committee. The Committee must have at least two members. The Compensation
Committee of the Board of Directors currently serves as the Committee. The
Company indemnifies the members of the Committee for their actions as Committee
members if those acts are not determined to be the result of negligence or
misconduct.
Awards. The Plan permits the Committee to make awards of incentive
stock options for the purchase of shares of common stock, as well as
non-qualified options to the extent that an incentive stock option award
exceeds certain statutory limitations. The Committee will determine the number
of shares as to which an option is granted, to whom an option is granted and
the terms and conditions of any option award.
Term. The Plan will expire on February 21, 2006 unless the Board
terminates the Plan at an earlier date.
Granting of Options to Purchase Stock. Only employees of the Company
or any subsidiary may receive options under the Plan. The Committee will
determine the number of shares of common stock as to which an option will be
granted in its sole discretion, as long as the total number of the shares
available for grants under the Plan does not exceed 600,000. Further, to the
extent required under Section 162(m) of the Internal Revenue Code and the
regulations thereunder for compensation to be treated as qualified,
performance-based compensation, the maximum number of shares of common stock
with respect to which options may be granted during any single fiscal year of
the Company to any employee cannot exceed 100,000.
Each option granted under the Plan will be evidenced by an option
agreement in such form and containing such terms, conditions and restrictions
as the Committee may determine is
-18-
<PAGE> 21
appropriate and which will specify at a minimum the number of shares of common
stock subject to the grant, the option price and the option term. In addition,
in the event the aggregate fair market value, as determined as of the option
grant date, of common stock subject to such options (under all plans of the
Company and subsidiaries) that first become exercisable during any calendar
year exceeds $100,000, then such options in excess of this limitation will not
be incentive stock options and, to the extent they were granted under the Plan,
they will be treated as non-qualified stock options.
Options are not transferable or assignable except by will or by the
laws of descent or distribution and are exercisable during the recipient's
lifetime only by the recipient.
Option Price. The applicable option agreement will state the exercise
price per share of common stock purchased under the option. The exercise price
cannot be less than the fair market value of a share of common stock on the
date of grant. With respect to an option granted to the holder of over 10% of
the Company's outstanding common stock, the exercise price cannot be less than
110% of the fair market value of a share of common stock on the date the option
is granted.
The Plan generally provides that the Committee may select among the
following alternatives for payment of an option's exercise price: cash,
surrender of previously owned shares, and cashless exercise through a broker.
Option Term. The applicable option agreement will state the term of
the option. The option cannot expire later than five years from the date of
grant. In addition, the option agreement will provide that, in the event of a
termination of employment, the then unexpired portion of the option will
terminate on the date of termination of employment, except that in the case of
a recipient whose termination of employment is due to death, the unexpired
portion of the option will terminate no later than one year following the
termination of employment.
Treatment of Awards Upon Termination of Employment. Any award under
the Plan to a recipient whose employment is terminated may be cancelled,
accelerated, paid or continued as provided in the applicable option agreement
or, in the absence of such a provision, as the Committee may determine.
Termination and Amendment of the Plan. The Board of Directors at any
time may amend or terminate the Plan without shareholder approval; provided,
however, that the Board may condition any amendment on shareholder approval if
such approval is necessary or advisable with respect to tax, securities or
other applicable laws.
Changes in Capitalization. The Plan provides for an adjustment in the
number and types of shares of common stock reserved under the Plan and subject
to awards issued pursuant to the Plan in the event of any increase or decrease
in the number of issued shares of common stock resulting from a subdivision or
combination of shares or the payment of a stock dividend or any other increase
or decrease in the number of shares of common stock outstanding effected
without receipt of consideration by the Company.
-19-
<PAGE> 22
In the event of certain corporate reorganizations, options may be
substituted, cancelled, accelerated, cashed out or otherwise adjusted by the
Committee, as provided by the express terms of an option agreement or, if not
expressly addressed therein, as the Committee may subsequently determine.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion outlines generally the federal income tax
consequences of participation in the Plan. Individual circumstances may vary
these results. The federal income tax laws and regulations are frequently
amended, and each participant should rely on his or her own tax counsel for
advice regarding federal income tax treatment under the Plan. If the recipient
is subject to Section 16(b) of the Exchange Act special rules may apply to
determine the federal income tax consequences of certain option exercises.
Incentive Stock Options. The recipient of an incentive stock option is
not subject to any federal income tax upon the grant of such an option under
the Plan, nor does the grant of an incentive stock option result in an income
tax deduction for the Company. Further, a recipient will not recognize income
for federal income tax purposes and the Company normally will not be entitled
to any federal income tax deduction as a result of the exercise of an incentive
stock option and the related transfer of shares of common stock to the
recipient. However, the excess of the fair market value of the shares
transferred upon the exercise of the incentive stock option over the exercise
price for such shares generally will constitute an item of alternative minimum
tax adjustment to the recipient for the year in which the option is exercised.
As a result, certain recipients may increase their federal income tax liability
as a result of the exercise of an incentive stock option under the alternative
minimum tax rules of the Internal Revenue Code.
If the shares of common stock transferred pursuant to the exercise of
an incentive stock option are disposed of within two years from the date the
option is granted or within one year from the date the option is exercised, the
recipient generally will recognize ordinary income equal to the lesser of (1)
the gain recognized (i.e., the excess of the amount realized on the disposition
over the exercise price) or (2) the excess of the fair market value of the
shares transferred upon exercise over the exercise price for such shares. The
balance, if any, of the recipient's gain over the amount treated as ordinary
income on disposition generally will be treated as long- or short-term capital
gain depending upon whether the holding period applicable to long-term capital
assets is satisfied. The Company normally would be entitled to a federal income
tax deduction equal to any ordinary income recognized by the recipient,
provided the Company satisfies applicable federal income tax withholding
requirements.
If the shares of common stock transferred upon the exercise of an
incentive stock option are disposed of after the holding periods have been
satisfied, such disposition will result in a long-term capital gain or loss
treatment with respect to the difference between the amount realized on the
disposition and the exercise price. The Company will not be entitled to a
federal income tax deduction as a result of a disposition of such shares after
these holding periods have been satisfied.
-20-
<PAGE> 23
Non-Qualified Options. Options granted under the Plan will only be
classified as non-qualified stock options if incentive stock option treatment
is precluded by the terms of the Plan or by applicable law. A recipient will
not recognize income upon the grant of a non-qualified option or at any time
prior to the exercise of the option or a portion thereof. At the time the
recipient exercises a non-qualified option or portion thereof, he or she will
recognize compensation taxable as ordinary income in an amount equal to the
excess of the fair market value of the common stock on the date the option is
exercised over the price paid for the stock, and the Company will then be
entitled to a corresponding deduction.
Depending upon the period during which the common stock is held after
exercise, the sale or other taxable disposition of shares acquired through the
exercise of a non-qualified option generally will result in a short- or
long-term capital gain or loss equal to the difference between the amount
realized on such disposition and the fair market value of such shares when the
non-qualified option was exercised.
Special rules apply to a participant who exercises a non-qualified
option by paying the exercise price in whole or in part by a transfer of shares
of common stock to the Company.
The foregoing is a summary discussion of certain federal income tax
consequences to optionees under the Internal Revenue Code and should not be
construed as legal, tax or investment advice. ALL PLAN PARTICIPANTS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES APPLICABLE
TO THEM, INCLUDING FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ADOPTION OF THE PLAN.
PROPOSAL 3: AMENDMENT TO ARTICLES OF INCORPORATION
Article 9 of the Company's Articles of Incorporation currently
provides that:
(a) "The Board of Directors, when it consists of nine or more
members, shall be divided into three (3) classes, Class I,
Class II, and Class III which shall be as nearly equal in
number as possible. Each director in Class I shall be elected
to an initial term of one (1) year, each director in Class II
shall be elected to an initial term of two (2) years and each
director in Class III shall be elected to an initial term of
three (3) years, and each director shall serve until the
election and qualification of his successor or until his
earlier resignation, death or removal from office. Upon the
expiration of the initial terms of office for each Class of
directors, the directors of each Class shall be elected for
terms of three (3) years, to serve until the election and
qualification of their successors or until their earlier
resignation, death or removal from office.
(b) Unless two-thirds (2/3) of the Directors then in office shall
approve the proposed change, this Article 9 may be amended or
rescinded only by the affirmative vote
-21-
<PAGE> 24
of the holders of at least two-thirds (2/3) of the issued and
outstanding shares of the Corporation entitled to vote in an
election of directors, at any regular or special meeting of
the shareholders, and notice of the proposed change must be
contained in the notice of the meeting."
On January 29, 2000, the Company's Board of Directors determined that
it would be in the Company's best interest to increase the size of its Board to
consist of nine directors and to amend the Articles of Incorporation to remove
the requirement that the Board be classified into three classes when it
consists of nine or more members. As a result, the Board amended its Bylaws to
set the number of directors at nine and the Board unanimously approved, and
recommends that the shareholders approve, an amendment to the Company's
Articles of Incorporation that would delete Article 9 as set forth above in its
entirety and replace that text with the following new Article 9:
"The number of directors of the Company shall be not less than five
nor more than 25 and within that minimum and maximum shall be such
number as shall be from time to time specified by the shareholders or
the Board of Directors of the Corporation."
The Board of Directors believes that the foregoing amendment is in the
best interest of the Company and its shareholders. In its present form, Article
9 makes it more difficult for a third party to take over the Company by
accumulating a sufficient number of shares of our outstanding common stock to
propose a new slate of directors and electing a new Board. Article 9, as
proposed to be amended, makes it easier for shareholders to effect a change in
Company's management by allowing the terms of all of our directors to expire at
the same time.
If the shareholders approve the proposed amendment, all of our
director nominees will serve until the next annual meeting of shareholders or
until their successors are duly elected and qualified. If, however, the
shareholders do not approve the proposed amendment, the director nominees will
be elected to serve in three classes as described in this proxy statement under
the caption "Proposal One - Election of Directors - Nominees."
Because the Board has approved the proposed amendment to the Articles
of Incorporation by unanimous vote, the holders of a majority of the shares of
common stock entitled to vote on the amendment must vote in favor of the
amendment in order for it to be approved.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT TO
THE ARTICLES OF INCORPORATION.
-22-
<PAGE> 25
MISCELLANEOUS
SHAREHOLDER PROPOSALS
We must receive any shareholder proposals submitted for consideration
at the next annual meeting of shareholders no later than November 17, 2000 to
be included in our 2001 proxy materials. A shareholder must notify the Company
before January 31, 2001 of a proposal for the 2001 Annual Meeting that the
shareholder intends to present other than by inclusion in the Company's proxy
materials. If we do not receive such notice before January 31, 2001, proxies
solicited by our management will confer discretionary authority upon our
management to vote upon any such matter.
OTHER MATTERS
We know of no other matters that may be brought before the meeting.
If, however, any matter other than the election of directors or a matter
incident to the election of directors properly comes before the meeting, the
persons appointed as proxies will vote on the matter in accordance with their
best judgment.
EXPENSES AND SOLICITATION OF PROXIES
The Company will pay the expenses of soliciting proxies for the 2000
annual meeting of shareholders. In addition to solicitation by mail, certain
directors, officers and regular employees of the Company and its subsidiaries
may solicit proxies by telephone, telegram or personal interview. They will
receive no compensation in addition to their regular salaries for these
activities. The Company will direct brokerage houses and custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of the
common stock that these institutions hold of record, and, upon request, will
reimburse them for their reasonable out-of-pocket expenses.
-23-
<PAGE> 26
APPENDIX A
FIRST AMENDMENT TO THE
HABERSHAM BANCORP
1996 INCENTIVE STOCK OPTION PLAN
THIS FIRST AMENDMENT is made as of January 29, 2000, by Habersham
Bancorp, a Georgia corporation (the "Company").
WHEREAS, the Company maintains the Habersham Bancorp 1996 Incentive
Stock Option Plan (the "Plan"); and
WHEREAS, the Company desires to amend the Plan to increase the number
of shares reserved for issuance under the Plan.
NOW, THEREFORE, BE IT RESOLVED, that the Company does hereby amend the
Plan, effective as of the date first set forth above, by deleting the existing
Section 2.2 and replacing it with the following new Section 2.2:
"2.2 Stock Subject to the Plan. Subject to adjustment in
accordance with Section 4.1, 600,000 shares of Stock (the "Maximum
Plan Shares") are hereby reserved exclusively for issuance pursuant to
Options. At no time shall the Company have outstanding Options subject
to Section 16 of the Securities Exchange Act of 1934 and shares of
stock issued in respect of Options in excess of the Maximum Plan
Shares."
Except as specifically amended hereby, the remaining provisions of the
Plan shall remain in full force and effect as prior to the adoption of this
First Amendment.
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
duly executed under seal on its behalf, effective as of the date first above
written.
<TABLE>
<S> <C>
ATTEST: HABERSHAM BANCORP
By: /s/ Edward D. Ariail By: /s/ David D. Stovall
---------------------------------------- ----------------------------------------
Title: Vice President and Corporate Secretary Title: President and Chief Executive Officer
</TABLE>
-24-
<PAGE> 27
HABERSHAM BANCORP
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 15, 2000
The undersigned shareholder of Habersham Bancorp (the "Company")
hereby appoints David D. Stovall and Edward D. Ariail as proxies with full
power of substitution, acting unanimously or by either of them if only one be
present and acting, to vote all shares of common stock of the Company which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders (the "Meeting") to be held at the Central Office of the
Company, 282 Historic Highway 441 North, Cornelia, Georgia on Saturday, April
15, 2000 at 1:00 p.m. and at any adjournments thereof, upon the proposals
described in the accompanying Notice of the Annual Meeting and the Proxy
Statement relating to the Meeting (the "Proxy Statement"), receipt of which is
hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
PROPOSAL 1: To elect the nominees listed below to serve as directors of the
Company for the ensuing year or, in the event the shareholders do
not approve Proposal 3, for the terms indicated in Note(1) below:
Edward D. Ariail, Thomas A. Arrendale, Jr., Thomas A. Arrendale
III, James J. Holcomb, Michael C. Martin, James E. McCollum,
James A. Stapleton, Jr., David D. Stovall and Calvin R. Wilbanks.
<TABLE>
<S> <C> <C> <C>
_______ FOR all nominees _______ WITHHOLD AUTHORITY
listed above (except as to vote for all nominees listed
indicated to the contrary above.
below).
</TABLE>
INSTRUCTION: To withhold authority for any individual nominee(s), mark
"FOR" above, and write the name of the nominee(s) for whom
you wish to withhold authority in the space below:
-------------------------------------------
PROPOSAL 2: To amend the Company's 1996 Incentive Stock Option Plan to
increase the number of shares authorized for issuance under
the Plan to 600,000.
________ FOR _______ AGAINST ______ ABSTAIN
PROPOSAL 3: To amend the Company's Amended and Restated Articles of
Incorporation by deleting Article 9 thereof in its entirety
and replacing that text with the following new Article 9:
"The number of directors of the Company shall be not less
than five nor more than 25 and within that minimum and
maximum shall be such number as shall be from time to time
specified by the shareholders or the Board of Directors of
the Corporation."
________ FOR _______ AGAINST ______ ABSTAIN
- -------------
(1) If the shareholders do not approve Proposal 3, the directors will be
elected for the following terms or until their successors are duly
elected and qualified:
<TABLE>
<S> <C>
Class I (to serve until the 2001 annual meeting of shareholders): James J. Holcomb, James E. McCollum and Calvin
R. Wilbanks
Class II (to serve until the 2002 annual meeting of shareholders): Edward D. Ariail, Thomas A. Arrendale, Jr. and
James A. Stapleton, Jr.
Class III (to serve until the 2003 annual meeting of shareholders): Thomas A. Arrendale, III, Michael C. Martin and
David D. Stovall
</TABLE>
PLEASE TURN THIS PROXY FORM OVER AND SIGN IT ON THE REVERSE SIDE.
<PAGE> 28
[REVERSE SIDE OF PROXY FORM]
This proxy, when properly executed, will be voted as directed, but if
no direction to the contrary is indicated, it will be voted FOR the
nominees listed in Proposal 1 and FOR Proposals 2 and 3. Discretionary
authority is hereby conferred as to all other matters which may come
before the meeting.
Dated: , 2000
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(Be sure to date your Proxy)
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Name(s) of Shareholder(s)
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Signature(s) of Shareholder(s)
If stock is held in the name of more than one person, all holders
should sign. Signatures must correspond exactly with the name or names
appearing on the stock certificate(s). When signing as attorney, executor,
administrator, trustee, guardian or custodian, please indicate the capacity in
which you are acting. If a corporation, please sign in full corporate name by
the President or other authorized officer. If a partnership, please sign in
name by authorized person.
Please mark, date and sign this Proxy, and return it in the enclosed
return-addressed envelope. No postage is necessary.
PLEASE RETURN PROXY AS SOON AS POSSIBLE
