1
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(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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:
(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:
2
HABERSHAM BANCORP
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 20, 1996.
To the Shareholders of HABERSHAM BANCORP:
Notice is hereby given that the annual meeting of shareholders of
Habersham Bancorp (the "Company") will be held on Saturday, April 20, 1996, at
1:00 p.m., in the Central Office of Habersham Bank at Highway 441 North,
Cornelia, Georgia, for the following purposes:
(1) To elect the directors for the ensuing year;
(2) To approve the Habersham Bancorp 1996 Incentive Stock Option
Plan; and
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 8,
1996 as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
All shareholders are requested to 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 proxy is
exercised.
By Order of the Board of Directors,
David D. Stovall
President and Chief Executive Officer
March 21, 1996
3
HABERSHAM BANCORP
Highway 441 North
P.O. Box 1980
Cornelia, Georgia 30531
PROXY STATEMENT
--------------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Habersham Bancorp (the "Company"), for
use at the annual meeting of shareholders to be held on Saturday, April 20,
1996, at 1:00 p.m., in the Central Office of Habersham Bank at Highway 441
North, Cornelia, Georgia, and at any adjournments thereof. This Proxy
Statement and the form of proxy were first mailed to shareholders on or about
March 21, 1996. If the enclosed form of proxy is properly executed, returned
and not revoked, it will be voted in accordance with the specifications made by
the shareholder. If the form of proxy is signed and returned but
specifications are not made, the proxy will be voted FOR the election of the
nominated directors and FOR the adoption of the Habersham Bancorp 1996
Incentive Stock Option Plan (the "Stock Option Plan"). Shareholders who sign
proxies have the right to revoke them at any time before they are voted by
delivering to Edward D. Ariail, Vice President and Secretary of the Company, at
the Company's Central Office, either an instrument revoking the proxy or a duly
executed proxy bearing a later date or by attending the meeting and voting in
person.
The close of business on March 8, 1996 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting.
As of the close of business on the record date, the Company had
10,000,000 shares of common stock, $1.00 par value (the "Stock"), authorized,
of which 2,325,781 shares were issued and outstanding. Each such share is
entitled to one vote on matters to be presented at the meeting.
A quorum will be present if a majority of the votes entitled to be
cast are present in person or by valid proxy. Abstentions and broker non-votes
(which are described below) will be counted in determining whether a quorum
exists. Directors are elected by a plurality of the votes cast by the shares
entitled to be voted in such election. Only votes actually cast will be
counted for the purpose of determining whether a particular nominee received
more votes than the persons, if any, nominated for the same seat on the Board
of Directors. Accordingly, votes withheld by shareholders present at the
annual meeting who do not choose to vote in the election of directors will have
no effect on the outcome of the election.
Because the Company intends to take advantage of federal securities
regulations applicable to plans approved by its shareholders, Rule 16b-3(b)(1)
promulgated under the Securities Exchange Act of 1934 requires that the Stock
Option Plan be approved by a majority of the shares represented at the annual
meeting and entitled to vote. Consequently, abstentions will have the same
legal effect as votes against the proposal to adopt the Stock Option Plan. In
contrast, broker
4
"non-votes" resulting from a broker's inability to vote a client's shares on
non-discretionary matters such as the Stock Option Plan will have no effect on
the approval of such matters.
All other matters that may be considered and acted upon by the
shareholders at the annual meeting require that the number of shares voted in
favor of the proposal exceed the number of shares voted against the proposal,
provided a quorum is present. Only votes actually cast will be counted for the
purpose of determining whether a proposal is approved by the shareholders.
Abstentions and broker "non-votes" are treated as "true abstentions" under
Georgia law and not as negative votes. Consequently, abstentions and broker
non-votes will have no effect on the outcome of the vote on other proposals
that may be brought before the meeting.
THE COMPANY
The Company was organized in 1984 as a bank holding company under the
laws of the State of Georgia. The Company's bank subsidiaries, Habersham Bank
and Security State Bank, engage in general commercial banking business.
Habersham Bank also provides data processing services to financial
institutions. The Company has one direct nonbank subsidiary, The Advantage
Group, Inc., and one indirect nonbank subsidiary, BancMortgage Financial Corp.
The Advantage Group, Inc. engages in the development and marketing of personal
computer software, provides management consulting advice to depository
institutions and administers the Company's Kids' Advantage banking program.
BancMortgage Financial Corp. is a full service mortgage lending and servicing
subsidiary located in the northern Atlanta metropolitan area.
OWNERSHIP OF STOCK
Principal Holders of Stock
On March 8, 1996, the Company had 615 shareholders of record. The
following table sets forth the persons who beneficially owned, as of March 8,
1996, 5% or more of the outstanding shares of Stock to the best information and
knowledge of the Company. According to rules adopted by the Securities and
Exchange Commission, one is a "beneficial owner" of securities if one 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.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class (1)
- --------------------- -------------------- -------------
John Robert Arrendale 230,230 9.90%
200 Hillcrest Heights
Cornelia, Georgia 30531
2
5
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class (1)
- --------------------- -------------------- -------------
Thomas A. Arrendale, Jr. 191,250 (2) 8.20%
P. O. Box 558
Baldwin, Georgia 30511
Thomas A. Arrendale, III 266,420 (2) 11.42%
P. O. Box 558
Baldwin, Georgia 30511
Cyndae Arrendale 125,000 5.37%
P. O. Box 558
Baldwin, Georgia 30511
David D. Stovall 142,447 (3) 6.01%
133 Grand Avenue
Cornelia, Georgia 30531
Footnotes
(1) 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 identified in the table.
(2) Includes 6,250 shares subject to options exercisable on or before May 7,
1996.
(3) Includes 88,785 shares owned of record by Mr. Stovall and his wife, 7,334
shares owned of record by Mr. Stovall jointly with his wife and daughter, and
46,318 shares subject to options exercisable on or before May 7, 1996.
Excludes 4,611 shares (as of the latest available evaluation of 12/31/95) 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 sets forth the number and percentage ownership of
shares of Stock beneficially owned by each director of the Company, 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 8, 1996. Unless otherwise indicated, each person is the record owner
of, and has sole voting and investment power with respect to, his shares.
3
6
Number of Shares Percentage
Name and Address Beneficially Owned of Total (1)
- ---------------- ------------------ ------------
Thomas A. Arrendale, Jr. 191,250 (2) 8.20%
P. O. Box 558
Baldwin, Georgia 30511
Thomas A. Arrendale, III 266,240 (2) 11.42%
P. O. Box 558
Baldwin, Georgia 30511
James J. Holcomb 25,100 (2) 1.08%
P. O. Box 437
Clarkesville, Georgia 30523
James A. Stapleton, Jr. 6,700 (2) (3) *
P. O. Box 40
Cornelia, Georgia 30531
David D. Stovall 142,447 (4) 6.01%
133 Grand Avenue
Cornelia, Georgia 30531
C. Kenneth White 111,513 (5) 4.77%
509 Mt. Sinai
Dalton, Georgia 30720
Calvin R. Wilbanks 8,250 (2) *
Route 1, Box 1888
Demorest, Georgia 30535
All Directors and Executive
Officers as a Group (9 persons) 816,356 (6) 33.30%
Footnotes
(*) Indicates less than 1%.
(1) 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.
(2) Includes 6,250 shares subject to options exercisable on or before May 7,
1996.
4
7
(3) Mr. Stapleton owns 450 of the indicated shares jointly with his children.
(4) Includes 88,795 shares owned of record by Mr. Stovall and his wife, 7,334
shares owned of record by Mr. Stovall jointly with his wife and daughter, and
46,318 shares subject to options exercisable on or before May 7, 1996.
Excludes 4,611 shares (as of the latest available evaluation of 12/31/95) held
in Mr. Stovall's account in the Savings Plan, as to which Mr. Stovall has no
voting or investment power.
(5) Includes 6,678 shares subject to options exercisable on or before May 7,
1996 and 103,945 shares registered to Lexus Industries of Georgia and with
respect to which Mr. White may be deemed to have sole voting and investment
power.
(6) Of the indicated shares, 125,526 shares are subject to options exercisable
on or before May 7, 1996. Excludes 9,546 shares (as of the latest available
evaluation of 12/31/95) 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.
Section 16 (a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers and
persons who own beneficially more than 10% of the Company's outstanding Stock
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in their ownership of the Company's Stock.
Directors, executive officers and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all such forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the fiscal year ended December 31,
1995, its directors, executive officers and greater than 10% shareholders
complied with all applicable Section 16(a) filing requirements.
Thomas A. Arrendale, Jr. is the father of Thomas A. Arrendale, III.
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees
The Board of Directors proposes that the nominees listed below be
elected as directors of the Company to serve until the next annual meeting of
shareholders and until their successors are duly elected and qualified.
If any of such nominees becomes unavailable to serve as a director
(which is not now anticipated), then the persons named as proxies reserve full
discretion to vote for such other person or persons as may be nominated.
5
8
The following table sets forth, for each director, his name and age at
December 31, 1995, the year he was first elected as a director of the Company,
his position with the Company other than as a director and his principal
occupation and other business experience for the past five years. During 1995,
the individuals listed below (with the exception of Mr. White) also served as
directors of Habersham Bank.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION AS DIRECTORS OF THE NOMINEES LISTED BELOW.
Year
First Position with Company;
Name Age Elected Business Experience
- ---- --- ------- ----------------------
Thomas A. Arrendale, Jr. 75 1984 Chairman of the Board of the Company and Habersham Bank;
prior to April 1990, President of the Company; President of
Habersham Bank, August 1989-April 1990; Director and
President (prior to July 1990, Vice President), Fieldale
Farms, Inc. (poultry processing and distribution)
Thomas A. Arrendale, III 38 1990 Vice Chairman of the Board of the Company and Habersham
Bank since September 1991; Director of Marketing, Fieldale
Farms, Inc. (poultry processing and distribution)
James J. Holcomb 73 1984 Owner, Mt. Airy Wood Preserving (wood products)
James A. Stapleton, Jr. 47 1990 President and General Manager, Habersham Metal Products
David D. Stovall 39 1989 President and Chief Executive Officer of the Company and
Habersham Bank since April 1990; prior thereto, Executive
Vice President and Chief Operating Officer of Habersham
Bank and Comptroller, Secretary and Treasurer of the
Company; President and Chairman of the Board of The
Advantage Group, Inc.; Chairman of the Board of Directors
of Security State Bank; Chairman of the Board of Directors
of BancMortgage Financial Corp.
6
9
Year
First Position with Company;
Name Age Elected Business Experience
- ---- --- ------- ----------------------
C. Kenneth White 55 1995 Consultant, Certified Public Accountant and Private
Investor
Calvin R. Wilbanks 50 1990 Co-Owner, C.P. Wilbanks Lumber Company
Meetings and Committees of the Board
The regular meetings of the Board of Directors of the Company are
scheduled to take place on the third Saturday of the first month of each
quarter and otherwise as necessary. The Board of Directors of Habersham Bank
is scheduled to meet on the third Saturday of each month and the Board of
Directors of Security State Bank is scheduled to meet on the third Monday of
each month. During 1995, the Board of Directors of the Company met nine times,
the Board of Directors of Habersham Bank met 12 times and the Board of
Directors of Security State Bank met 12 times. Each director of the Company
attended at least 75% of the meetings of the Board of Directors of the Company
and the committees of which he was a member (if any), 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 Board of Directors of the Company 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 1995.
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 financial information
of the Company 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., C. Kenneth White and Calvin R. Wilbanks.
Meetings are called by the Committee Chairman or the Company's internal
auditor. During 1995, the Audit Committee met three times.
Neither the Company nor any of its subsidiaries has a standing
nominating committee.
7
10
Compensation of Directors
With the exception of C. Kenneth White, the same individuals who
served as directors of the Company in 1995 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 $3,000 per Board meeting attended.
Directors of Security State Bank (including Mr. Stovall and Mr. White) receive
the same compensation as directors of Habersham Bank. Directors are not
compensated for their service as members of committees. Mr. Stovall received a
total of $14,000 in director fees for 1995.
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 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 Stock at an exercise price equal
to the fair market value of the 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. On
December 31, 1995, each of the directors of the Company (except for Mr.
Stovall) received options to purchase 1,250 shares of Stock at an exercise
price of $13.50 per share under the Directors' Plan.
EXECUTIVE OFFICERS
Officers of the Company are appointed by and hold office at the
discretion of the Board of Directors of the Company. The following table sets
forth for each executive officer of the Company (a) the person's name, (b) his
or her age at December 31, 1995, (c) the year he or she was first elected as an
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.
Year
First Position and
Name Age Elected Business Experience
- ---- --- ------- ----------------------
Thomas A. Arrendale, Jr. 75 1984 Chairman of the Board of the Company and Habersham Bank;
prior to April 1990, President of the Company; President of
Habersham Bank, August 1989 - April 1990; Director and
President (prior to July 1990, Vice President), Fieldale
Farms, Inc. (poultry processing and distribution)
8
11
Position with Company,
Year Bank and The Advantage
First Group, Inc.;
Name Age Elected Business Experience
- ---- --- ------- ----------------------
David D. Stovall 39 1984 President and Chief Executive Officer of the Company and
Habersham Bank since April 1990; prior thereto, Executive
Vice President and Chief Operating Officer of Habersham
Bank and Comptroller, Secretary and Treasurer of the
Company; President and Chairman of the Board of The
Advantage Group, Inc.; Chairman of the Board of Directors
of BancMortgage Financial Corp.; Chairman of the Board of
Directors of Security State Bank
Edward D. Ariail 37 1990 Vice President and Corporate Secretary of the Company since
April 1990; Executive Vice President of Habersham Bank
since October 1995; prior thereto, Vice President of
Habersham Bank; Executive Vice President of The Advantage
Group, Inc. since May 1989; member of the Board of
Directors of BancMortgage Financial Corp.
Pamela D. Spangler 47 1985 Assistant Vice President of the Company, Senior Vice
President of Habersham Bank and Secretary of The Advantage
Group, Inc.
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 for the fiscal years ended
December 31, 1993, 1994 and 1995. None of the Company's other executive
officers earned over $100,000 in salary and bonus during 1995.
9
12
Summary Compensation Table
Long-Term
Annual Compensation(1) Compensation(2)
--------------------- --------------
Securities
Name and Underlying All
Principal Salary Options/ Other
Position Year ($) Bonus($) SARs(#) Compensation($)
-------- ---- ------ -------- ------- ---------------
David D. Stovall 1995 120,000 0 16,318 (3) 7,157 (4)
Chief Executive 1994 120,000 0 0 6,388 (5)
Officer 1993 114,537 0 2,000 6,853 (6)
- ----------------------------
(1) Information with respect to certain perquisites and other personal
benefits has been omitted because the aggregate value of such items
does not meet the minimum amount required for disclosure under SEC
regulations.
(2) The Company has not awarded any restricted stock or long-term
incentives other than stock options. Accordingly, columns relating to
such awards have been omitted.
(3) Includes options to purchase 6,318 shares that were granted in
exchange for options to purchase common stock of Security Bancorp,
Inc., which was acquired by the Company on June 30, 1995.
(4) Includes $3,604 in Company contributions to Mr. Stovall's account
under the Savings Plan and $3,553 in premiums paid by the Company in
1995 under a split dollar life insurance policy for the benefit of Mr.
Stovall.
(5) Includes $2,835 in Company contributions to Mr. Stovall's account
under the Savings Plan and $3,553 in premiums paid by the Company in
1994 under a split dollar life insurance policy for the benefit of Mr.
Stovall.
(6) Includes $3,300 in Company contributions to Mr. Stovall's account
under the Savings Plan and $3,553 in premiums paid by the Company in
1993 under a split dollar life insurance policy for the benefit of Mr.
Stovall.
10
13
The following table sets forth information regarding the grant of
stock options to the Company's Chief Executive Officer during 1995. All
options shown are presently exercisable. The Company did not award any stock
appreciation rights during 1995.
Option Grants in Last Fiscal Year
---------------------------------
(Individual Grants)
Number of Percent of Total
Securities Options Granted
Underlying to Employees in Exercise Price Expiration
Name Options Granted Fiscal Year ($/share) Date
---- --------------- ----------- --------- ----
David D. Stovall 10,000 16.0 $ 13.50 12/31/05
5,265 (1) 8.4 10.63 4/19/03
1,053 (1) 1.7 10.63 1/15/04
- ----------------------------
(1) Represents options granted in exchange for options to purchase common
stock of Security Bancorp, Inc., which was acquired by the Company on
June 30, 1995.
11
14
The following table contains information, with respect to the
Company's Chief Executive Officer, concerning the exercise of options during
1995 and unexercised options held as of the end of 1995.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Value of Unexercised
Number of Unexercised In-the-Money
Options at FY-End (#) Options/SARs at FY /End
--------------------- -----------------------
($)(1)
Shares ------
Acquired Value
on Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ---------- --------- ----------- ------------- ----------- -------------
David D. Stovall 10,000 66,310 46,318 0 $168,673 0
- --------------------------
(1) Calculated by subtracting the exercise price from the market price of
the Common Stock at fiscal year-end and multiplying the resulting
figure by the number of shares subject to in-the-money options.
CERTAIN TRANSACTIONS
Some Company 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 1995. Some of the
directors of the Company are directors, officers, trustees or principal
securities holders of corporations or other organizations which also were
customers of, or had transactions with, the Company or its subsidiaries in the
ordinary course of business during 1995.
All outstanding loans and other transactions with the directors,
officers and principal shareholders of the Company or its subsidiaries 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,
12
15
or used products or services of, various organizations of which directors of
the Company and its subsidiaries were associated. The amounts involved in such
noncredit transactions have in no case been material in relation to the
business of the Company, its subsidiaries or such other organizations. It is
expected that the Company and its subsidiaries will continue to have similar
transactions in the ordinary course of its business with such individuals and
their associates in the future.
PROPOSAL 2: ADOPTION OF THE HABERSHAM BANCORP
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 Stock Option 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 stockholders generally and
providing the Company with a mechanism to attract and retain key personnel.
The Company has reserved 250,000 shares of Stock for issuance pursuant to
awards that may be made under the Stock Option Plan.
The following description of the Stock Option Plan is qualified in its
entirety by reference to the applicable provisions of the Stock Option Plan,
which is attached as Appendix A to this Proxy Statement.
Terms of the Stock Option Plan
Administration . Awards under the Stock Option 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 shall have at least two members. The Compensation
Committee of the Board of Directors currently serves as the Committee. The
members of the Committee are indemnified by the Company for their actions as
Committee members if those acts are not determined to be the result of
negligence or misconduct.
Awards. The Stock Option Plan permits the Committee to make awards of
incentive stock options for the purchase of shares of Stock, as well as
non-qualified options to the extent that an incentive stock option award
exceeds certain statutory limitations.
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 will be
determined by the Committee, subject to the provisions of the Stock Option
Plan.
13
16
Term. The Stock Option Plan will expire ten years following the
effective date of the plan, subject to any earlier termination of the Stock
Option Plan effected by the Board of Directors.
Granting of Options to Purchase Stock. Options may be granted
pursuant to the Stock Option Plan only to employees of the Company or any
subsidiary.
The number of shares of Stock as to which an option will be granted
will be determined by the Committee in its sole discretion, as long as the
total number of the shares available for grants under the Stock Option Plan
does not exceed 250,000. 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 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 Stock Option Plan will be evidenced by
an option agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine is appropriate and which will
specify at a minimum the number of shares of 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 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 such options were granted pursuant to the Stock Option 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 exercise price per share of Stock purchased under
any option will be set forth in the applicable option agreement and will in no
event be less than the fair market value of a share of Stock. With respect to
an option granted to the holder of over 10% of the Stock of the Company, the
exercise price will in no event be less than 110% of the fair market value of a
share of Stock on the date the option is granted.
The Stock Option 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 term of an option will be specified in the
applicable option agreement and will expire no 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.
14
17
Treatment of Awards Upon Termination of Employment. Any award under
the Stock Option 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 Stock Option Plan. The Board of
Directors at any time may amend or terminate the Stock Option Plan without
stockholder approval; provided, however, that the Board may condition any
amendment on the approval of the stockholders if such approval is necessary or
advisable with respect to tax, securities or other applicable laws.
Changes in Capitalization. The Stock Option Plan provides for an
adjustment in the number and types of shares of Stock reserved under the Plan
and subject to awards issued pursuant to the Stock Option Plan in the event of
any increase or decrease in the number of issued shares of Stock resulting from
a subdivision or combination of shares or the payment of a stock dividend in
shares of Stock or any other increase or decrease in the number of shares of
Stock outstanding effected without receipt of consideration by the Company.
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 pursuant
to the Stock Option 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 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.
Thus, 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.
15
18
If the shares of 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 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.
Non-Qualified Options. 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 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 shares of Stock are 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 Stock to the Company.
Stockholder Approval
The Board of Directors seeks stockholder approval because such
approval is required under the Internal Revenue Code as a condition of
incentive stock option treatment and also because certain eligible participants
in the Stock Option Plan are subject to Section 16 of the Exchange Act. If the
Stock Option Plan is not approved by the stockholders, awards made to these
persons may be deemed "purchases" of common stock for purposes of the
short-swing profit recovery provision of Section 16.
16
19
Approval of the Stock Option Plan requires the affirmative vote of the
holders of at least a majority of the outstanding shares of Stock of the
Company present, or represented and entitled to vote, at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ADOPTION OF THE STOCK OPTION PLAN.
ACCOUNTING MATTERS
Deloitte & Touche, independent public accountants, was appointed by
the Board of Directors of the Company to examine the Company's financial
statements for the year ended December 31, 1995. The Board of Directors
intends to continue the services of this firm for the year ending December 31,
1996, and a decision on the selection of auditors will be made at the April
1996 Board meeting.
A representative of Deloitte & Touche will be present at the meeting
to respond to any appropriate questions and to make a statement if he desires
to do so.
MISCELLANEOUS
Shareholder Proposals
Any shareholder of the Company wishing to submit a proposal for action
at the next annual meeting of shareholders of the Company and desiring
inclusion of the same in management's proxy materials must provide a written
copy of the proposal to management of the Company not later than November 18,
1996. Any such proposal must comply in all respects with the rules and
regulations of the SEC.
Other Matters
The Board of Directors of the Company knows of no other matters which
may be brought before the meeting. If, however, any matter other than the
election of directors or matters incident thereto should properly come before
the meeting, votes will be cast pursuant to the proxies in accordance with the
best judgment of the proxyholders.
17
20
Expenses and Solicitation of Proxies
The expenses of the solicitation will be paid by the Company. 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 for which they will receive no compensation in
addition to their regular salaries. The Company will request brokerage houses
and custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of the shares of Stock held of record by such persons, and,
upon request, will reimburse them for their reasonable out-of-pocket expenses
in connection therewith.
18
21
APPENDIX A
HABERSHAM BANCORP
1996 INCENTIVE STOCK OPTION PLAN
A-1
22
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 "Committee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 "Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 "Disability" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 "Fair Market Value" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 "Option" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 "Option Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.9 "Over 10% Owner" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.10 "Participant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.11 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 "Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 "Termination of Employment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Eligibility and Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3 TERMS OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Terms and Conditions of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Option Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Conditions to the Exercise of an Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 Special Provisions for Certain Substitute Options . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 Treatment of Awards Upon Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Changes in Capitalization; Merger; Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Right to Terminate Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Restrictions on Delivery and Sale of Shares; Legends. . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Nonalienation of Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Termination and Amendment of the Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Effective Date of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A-2
23
HABERSHAM BANCORP
1996 INCENTIVE STOCK OPTION PLAN
SECTION 1 DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to include
the feminine, and the singular to include the plural, unless the context
clearly indicates otherwise, and the following capitalized words and phrases
are used herein with the meaning thereafter ascribed:
1.1 "Board of Directors" means the board of directors of the
Company.
1.2 "Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
1.3 "Committee" means a committee composed of members of the Board
of Directors appointed by the Board of Directors to administer the Plan.
1.4 "Company" means Habersham Bancorp, a Georgia corporation.
1.5 "Disability" means that condition described in Code Section
22(e)(3), as amended from time to time. In the event of a dispute, the
determination of Disability shall be made by the Committee and shall be
supported by advice of a physician competent in the area to which such
Disability relates.
1.6 "Fair Market Value" refers to the fair market value of the
Stock as of a particular date, as determined in good faith by the Company;
provided that the Committee uses a reasonable valuation method in determining
fair market value in accordance with Code Section 422 and the regulations
issued thereunder and provided further that fair market value shall be
determined without regard to any restriction other than a restriction which, by
its terms, will never lapse.
1.7 "Option" means an incentive stock option, but includes any
option granted under the Plan that is treated as a nonqualified stock option
pursuant to Section 2.4.
1.8 "Option Agreement" means a written agreement between the
Company and a Participant or other documentation evidencing an award of an
Option.
1.9 "Over 10% Owner" means an individual who at any time an
incentive stock option is granted owns Stock possessing more than ten percent
(10%) of the total combined voting power of the Company or one of its
Subsidiaries, determined applying the attribution rules of Code Section 424(d).
1.10 "Participant" means an individual who receives an Option
hereunder.
A-3
24
1.11 "Plan" means the Habersham Bancorp 1996 Incentive Stock
Option Plan.
1.12 "Stock" means the Company's common stock $1.00 par value.
1.13 "Subsidiary" means, with respect to the Company, any
subsidiary corporation within the meaning of Code Section 424(f).
1.14 "Termination of Employment" means the termination of the
employee-employer relationship between a Participant and the Company and its
Subsidiaries, regardless of the fact that severance or similar payments are
made to the Participant for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death, Disability or
retirement. The Committee shall, in its absolute discretion, determine the
effect of all matters and questions relating to a Termination of Employment,
including, but not by way of limitation, the question of whether a leave of
absence constitutes a Termination of Employment.
SECTION 2 THE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide
incentive to certain officers and key employees of the Company and its
Subsidiaries to stimulate their efforts toward the continued success of the
Company and to operate and manage the business in a manner that will provide
for the long-term growth and profitability of the Company; (b) encourage stock
ownership by certain officers and key employees by providing them with a means
to acquire a proprietary interest in the Company by acquiring shares of Stock;
and (c) provide a means of obtaining and rewarding key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in
accordance with Section 4.1, 250,000 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 and shares of Stock issued
in respect of Options under the Plan in excess of the Maximum Plan Shares,
determined in accordance with Rule 16b-3(a)(1) as promulgated under the
Securities Exchange Act of 1934, as amended from time to time.
2.3 Administration of the Plan. The Plan shall be administered by
the Committee. The Committee shall have full authority in its discretion to
determine the persons to whom Options shall be granted and the terms and
provisions of Options, subject to the Plan. Subject to the provisions of the
Plan, the Committee shall have full and conclusive authority to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Option Agreements
and to make all other determinations necessary or advisable for the proper
administration of the Plan. The Committee's determinations under the Plan need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, awards under the Plan (whether or not such persons are
similarly situated). The Committee's decisions shall be final and binding on
all Participants.
A-4
25
The Committee shall consist of two or more directors, each of whom is
not, during the one year prior to service as a member of the Committee, granted
or awarded equity securities of the Company or an affiliate pursuant to the
Plan or any other plan of the issuer or an affiliate, except as may be
permitted under Rule 16b-3(c)(2)(i) promulgated under the Securities Exchange
Act of 1934.
In addition to any other rights of indemnification that they may have
as directors of the Company or as members of the Committee, the members of the
Committee shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
thereon, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided the settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any action, suit
or proceeding, except in relation to matters as to which it shall be adjudged
in the action, suit or proceeding that the Committee member is liable for
negligence or misconduct in the performance of his or her duties; provided that
within 60 days after the institution of any action, suit or proceeding a
Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
2.4 Eligibility and Limits. Options may be granted only to
employees of the Company or any Subsidiary. In addition, in the event the
aggregate Fair Market Value (determined as of the option grant date) of stock
subject to such Options (under all plans of the Company and Subsidiaries) that
first become exercisable during any calendar year by an amount that exceeds
$100,000, then such Options in excess of the limitation shall not be incentive
stock options and, to the extent such Options were granted pursuant to this
Plan, they shall be treated as nonqualified stock options.
SECTION 3 TERMS OF OPTIONS
3.1 Terms and Conditions of Options.
(a) The number of shares of Stock as to which an Option shall be
granted shall be determined by the Committee in its sole discretion, subject to
the provisions of Section 2.2 as to the total number of shares available for
grants under the Plan. Notwithstanding the preceding, to the extent required
under Code Section 162(m) and regulations thereunder for compensation to be
treated as qualified performance-based compensation, the maximum number of
shares of Stock with respect to which Options may be granted during any single
fiscal year of the Company to any employee shall not exceed 100,000.
(b) The date an Option is granted shall be the date on which the
Committee has approved the terms and conditions of the Option and has
determined the recipient of the
A-5
26
Option and the number of shares covered by the Option and has taken all such
other action necessary to complete the grant of the Option.
(c) Options shall not be transferable or assignable except by will
or by the laws of descent and distribution and shall be exercisable, during the
Participant's lifetime, only by the Participant; in the event of the Disability
of the Participant, by the legal representative of the Participant; or in the
event of the death of the Participant, by the personal representative of the
Participant's estate or if no personal representative has been appointed, by
the successor in interest determined under the Participant's will.
(d) Each Option granted under the Plan shall be evidenced by an
Option Agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine is appropriate, which shall
specify, at a minimum, the number of shares of Stock subject to the grant, the
option price and the option term. Each Option Agreement shall be subject to
the terms of the Plan and any provision contained in the Option Agreement that
is inconsistent with the Plan shall be null and void.
3.2 Option Price. Subject to adjustment in accordance with
Section 4.2 and the other provisions of this Section 3, the exercise price (the
"Exercise Price") per share of Stock purchasable under any Option shall be as
set forth in the applicable Option Agreement and shall in no event be less than
the Fair Market Value of a share of Stock. With respect to an Option grant to
an Over 10% Owner, the Exercise Price shall in no event be less than 110% of
Fair Market Value of a share of Stock on the date the Option is granted.
3.3 Option Term. The term of an Option shall be as specified in
the applicable Option Agreement and shall expire no later than five (5) years
from the date of grant. In addition, the applicable Option Agreement shall
provide that, in the event of a Termination of Employment, the then unexpired
portion of the Option shall terminate no later than the date of Termination of
Employment; provided, however, that in the case of a Participant whose
Termination of Employment is due to death, the then unexpired portion of the
Option shall terminate no later than one (1) year from the date of Termination
of Employment.
3.4 Payment. Payment for all shares of Stock purchased pursuant
to exercise of an Option shall be made in any form or manner authorized by the
Committee in the Option Agreement or by amendment thereto, including, but not
limited to, cash or, if the Option Agreement provides, (i) by delivery to the
Company of a number of shares of Stock which have been owned by the holder for
at least six (6) months prior to the date of exercise having an aggregate Fair
Market Value of not less than the product of the Exercise Price multiplied by
the number of shares the Participant intends to purchase upon exercise of the
Option on the date of delivery; or (ii) in a cashless exercise through a
broker. The holder of an Option, as such, shall have none of the rights of a
stockholder.
3.5 Conditions to the Exercise of an Option. Each Option granted
under the Plan shall be exercisable by whom, at such time or times, or upon the
occurrence of such event or
A-6
27
events, and in such amounts, as the Committee shall specify in the Option
Agreement; provided, however, except as otherwise provided by the Plan, that
subsequent to the grant of an Option, the Committee, at any time before its
expiration or cancellation, may accelerate the time or times at which such
Option may be exercised in whole or in part and may permit the Participant or
any other designated person to exercise the Option, or any portion thereof, for
all or part of the remaining Option term notwithstanding any provision of the
Option Agreement to the contrary.
3.6 Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3, any Option issued
in substitution for an Option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such
other terms and conditions as the Committee may prescribe to cause such
substitute Option to contain as nearly as possible the same terms and
conditions (including the applicable vesting and termination provisions) as
those contained in the previously issued Option being replaced thereby.
3.7 Treatment of Awards Upon Termination of Employment. Any award
under this Plan to a Participant who suffers a Termination of Employment may be
cancelled, accelerated, paid or continued, as provided in the applicable Option
Agreement or, in the absence of such provision, as the Committee may determine
thereafter. The portion of any award exercisable in the event of continuation
or the amount of any payment due under a continued award may be adjusted by the
Committee to reflect the Participant's period of service from the date of grant
through the date of the Participant's Termination of Employment or such other
factors as the Committee determines are relevant to its decision to adjust the
award.
SECTION 4 GENERAL PROVISIONS
4.1 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant of
Options; the number of shares of Stock reserved for issuance upon the exercise
of each outstanding Option; and the Exercise Price of each outstanding Option
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Stock resulting from a subdivision or combination of shares or
the payment of an ordinary stock dividend in shares of such Stock to holders of
outstanding shares of such Stock or any other increase or decrease in the
number of shares of such Stock outstanding effected without receipt of
consideration by the Company to the extent that Participant's proportionate
interest shall be maintained as before the occurrence of the event.
(b) In the event of a merger, consolidation, extraordinary
dividend, reorganization or other change in the capital structure of the
Company or tender offer for shares of Stock, the Committee may make such
adjustments with respect to Options and take such other action as it deems
necessary or appropriate to reflect or in anticipation of such merger,
consolidation,
A-7
28
reorganization or tender offer, including, without limitation, the substitution
of new options, the acceleration of Options, the early expiration of Options,
the removal of restrictions on outstanding Options or the cash-out of the
Options, in cash or in kind, based upon the Fair Market Value of the Stock
determined as of a date within thirty (30) days immediately prior to the
transaction, all as may be provided in the applicable Option Agreement or, if
not expressly addressed therein, as the Committee subsequently may determine in
the event of any such merger, consolidation, extraordinary dividend,
reorganization, other change or tender offer.
(c) The existence of the Plan and the Options granted pursuant to
the Plan shall not affect in any way the right or power of the Company to make
or authorize any adjustment, reclassification, reorganization or other change
in its capital or business structure, any merger or consolidation of the
Company, any issue of debt or equity securities having preferences or
priorities as to the Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of its
business or assets, or any other corporate act or proceeding. Any adjustment
pursuant to this Section 4.1 may provide, in the Committee's discretion, for
the elimination without payment therefor of any fractional shares that might
otherwise become subject to any Option.
4.2 Right to Terminate Services. Nothing in the Plan or in any
Option shall confer upon any Participant the right to continue as an employee,
officer, consultant or a member of the Board of Directors of the Company or any
of its affiliates or affect the right of the Company or any of its affiliates
to terminate the Participant's relationship with the Company or any of its
affiliates at any time.
4.3 Restrictions on Delivery and Sale of Shares; Legends. Each
Option is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Option upon any securities exchange or under any
state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Option or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to such Option
may be withheld unless and until such listing, registration or qualification
shall have been effected. If a registration statement is not in effect under
the Securities Act of 1933 or any applicable state securities laws with respect
to the shares of Stock purchasable or otherwise deliverable under Options then
outstanding, the Committee may require, as a condition of exercise of any
Option or as a condition to any other delivery of such Stock pursuant to an
Option, that the Participant or other recipient of an Option represent, in
writing, that the shares received pursuant to the Option are being acquired for
investment and not with a view to distribution and agree that the shares will
not be disposed of except pursuant to an effective registration statement,
unless the Company shall have received an opinion of counsel that such
disposition is exempt from such requirement under the Securities Act of 1933
and any applicable state securities laws. The Company may include on
certificates representing shares delivered pursuant to an Option such legends
referring to the foregoing representations or restrictions or any other
applicable restrictions on resale as the Company, in its discretion, shall deem
appropriate.
A-8
29
4.4 Nonalienation of Benefits. Other than as specifically
provided with regard to the death of a Participant, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Participant, be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the Participant.
4.5 Termination and Amendment of the Plan. The Board of Directors
at any time may amend or terminate the Plan without stockholder approval;
provided, however, that the Board of Directors may condition any amendment on
the approval of stockholders of the Company if such approval is necessary or
advisable with respect to tax, securities or other applicable laws. No such
termination or amendment without the consent of the holder of an Option shall
adversely affect the rights of the Participant under such Option.
4.6 Choice of Law. The laws of the State of Georgia shall govern
the Plan, to the extent not preempted by federal law.
4.7 Effective Date of Plan. The Plan shall become effective upon
the date the Plan is approved by the Board of Directors of the Company;
provided, however, that the grant of any Option prior to stockholder approval
shall be conditioned upon receipt of subsequent stockholder approval within
twelve months of the Plan's effective date.
4.8 Term. Unless terminated by the Board of Directors as of any
earlier date, the Plan shall expire on the tenth anniversary of the Plan's
effective date.
HABERSHAM BANCORP
By: /s/ David D. Stovall
-------------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
ATTEST:
/s/ Edward D. Ariail
- -------------------------
Secretary
[CORPORATE SEAL]
A-9
30
[LOGO] HABERSHAM
BANCORP
31
APPENDIX B
HABERSHAM BANCORP
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 20, 1996
The undersigned shareholder of Habersham Bancorp (the "Company") hereby appoints David B. 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, Highway 441
North, Cornelia, Georgia on Saturday, April 20, 1996 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 AND 2.
PROPOSAL 1: To elect the nominees listed below to serve as directors of the Company for the ensuing year:
Thomas A. Arrendale, Jr., Thomas A. Arrendale III, James J. Holcomb, James A. Stapleton, Jr., David D.
Stovall, C. Kenneth White and Calvin R. Wilbanks
FOR all nominees WITHHOLD AUTHORITY
--------- listed above --------- to vote for all
(except as indicated nominees listed
to the contrary below). above.
INSTRUCTION: To withhold authority for any individual nominees, mark "FOR" above, and write that nominee's name in
the space below:
--------------------------------------------------------------------
PROPOSAL 2: To approve the Habersham Bancorp 1996 Employee Incentive Stock Option Plan.
FOR AGAINST ABSTAIN
--------- -------- ---------
This proxy, when properly executed, will be voted as directed, but if no direction to the contrary is
indicated, it will be voted FOR Proposals 1 and 2.
Discretionary authority is hereby conferred as to all other matters which may come before the meeting.
Dated: , 1996
-------------------------
(Be sure to date your Proxy)
--------------------------------------------------
Name(s) of Shareholder(s)
--------------------------------------------------
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, adminstrator,
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