UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by
the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
Habersham
Bancorp
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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x
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1
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Title of each class of securities to which transaction applies:
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(2
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Aggregate number of securities to which transaction applies:
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(3
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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):
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Proposed maximum aggregate value of transaction:
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(5
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Total fee paid:
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o
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Fee paid previously with preliminary materials.
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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.
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(1
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Amount Previously Paid:
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(2
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Form, Schedule or Registration Statement No:
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(3
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Filing Party:
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(4
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Date Filed:
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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 MAY 15, 2010.
To the Shareholders of Habersham Bancorp:
The annual meeting of shareholders of Habersham Bancorp (the Company) will be held on May
15, 2010, at 1:00 p.m., in the Central Office of its subsidiary, Habersham Bank (the Bank) at 282
Historic Highway 441 North, Cornelia, Georgia, for the following purposes:
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(1)
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To elect directors.
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(2)
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To approve an Amendment to the Companys Articles of Incorporation to increase
the number of authorized shares of common stock from 10,000,000 to 50,000,000 (the
Amendment Proposal).
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(3)
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To approve an amendment to the Companys Articles of Incorporation to authorize
the Board of Directors to implement, at its sole discretion, a reverse stock split of
the Companys common stock at a ratio of up to 1:50 (one share for each 50 outstanding
shares), as determined by the Board (the Reverse Stock Split Proposal).
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(4)
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To approve granting the Companys management the authority to adjourn, postpone
or continue the Annual Meeting of Shareholders for up to 30 days in order to solicit
additional votes or attendance (the Adjournment Proposal).
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(5)
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To ratify the appointment of Porter Keadle Moore LLP as independent auditors
for the fiscal year ending December 31, 2010.
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(6)
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To transact any other business that may properly come before the meeting or any
adjournment.
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April 1, 2010 is the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
We are presenting some new proposals this year in addition to the annual election of
directors. The Amendment Proposal seeks shareholder approval of an amendment to our
Articles of Incorporation that would authorize 40,000,000 additional shares of common stock.
The number of authorized preferred shares is left unchanged. The authorization of additional
shares would provide increased flexibility and capacity to raise capital through issuances of
common stock, rights to purchase common stock or securities convertible into common stock. Our
current plans in this regard are set forth in Proposal TwoReasons for the Amendment Proposal.
It would also provide additional capacity for the issuance of new shares should the Reverse Stock
Split Proposal not be approved.
The Reverse Stock Split Proposal would authorize our Board of Directors to implement a reverse
stock split of our common stock at such ratio and at such time, within specified ranges, as would
be in the best interests of the Company and its shareholders. For example, the Board could effect
a reverse stock split in order to increase the market price of the outstanding common stock in
order to qualify the shares for listing on an exchange. Exchange listing would enable the Company
to avail itself of state securities law exemptions in offerings of its common stock, which would
save the Company significant time and expense. A higher market price could also improve the
marketability of our common stock generally and provide additional capacity for the issuance of
additional shares in an offering should the Amendment Proposal not be approved.
With respect to the Adjournment Proposal, the Board of Directors believes that if the number
of shares of common stock present or represented and voted in favor of any proposal presented at
the meeting is insufficient to approve one or more of these proposals, it is in the best interests
of the shareholders to enable the Board of Directors, for a limited period of time, to continue to
seek to obtain a sufficient number of additional votes to approve such proposal(s). The
Adjournment Proposal would grant management the authority to adjourn, postpone or continue the
meeting for up to 30 days for this purpose, even if a quorum is present.
The Audit Committee has appointed Porter Keadle Moore LLP as independent auditors for the
Company for the current fiscal year ending December 31, 2010. Although shareholder ratification of
our independent auditors is not required by our Bylaws or otherwise, we are submitting the
selection of Porter Keadle Moore LLP to our shareholders for ratification to permit out
shareholders to participate in this decision.
The Board of Directors recommends that you vote
FOR
each of these proposals, as more fully
discussed in the attached proxy statement, and asks that you 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.
* * *
We have strong ties to our community and have worked with our neighbors to enable these areas
to grow and prosper. Much of that growth and prosperity was built on the development of property
for housing and business expansion. We made many sound loans to finance such activities and never
participated in the sub-prime lending market.
During 2008 and 2009, our state and our nation faced challenging economic conditions on a
scale greater than have been experienced in decades. Like many other community banks, those
conditions impacted our Bank.
2
Recently, we have seen real estate values decline for residential housing and lots. The
demand for homes and commercial properties has also declined significantly, and unemployment has
increased. As a result, residential and commercial real estate builders and developers, as well as
consumer and small business borrowers, have experienced and continue to experience difficulty
repaying loans to us and to other banks. At the same time, many of these same borrowers watched
their retirement savings decline significantly. Because the Banks loan portfolio is a reflection
of our individual loan customers, the impact of the economy on them has had a corresponding impact
on our Bank.
On June 24, 2009, the Bank entered into an Order to Cease and Desist (the Order) with the
Department of Banking and Finance (the Department). The Department countersigned the Order on
June 30, 2009, and the Regional Director of the Federal Deposit Insurance Corporation (the FDIC)
acknowledged the Order. The Order became effective 10 days after the Department countersigned.
The Order was based on the findings of the Department during an on-site examination conducted
as of September 22, 2008. Since the completion of the examination, the Board of Directors has
aggressively taken steps to address the findings of the examination. The Bank and its Board of
Directors have taken an active role in working with the Department to improve the condition of the
Bank and have already addressed many of the items included in the Order.
To address the findings of the examination, the Order contains certain operational and
financial restrictions related primarily to the Banks asset quality, concentrations of credit,
allowance for loan and lease losses, and capital. The Bank agreed to do, among other things, the
following:
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Continue the Boards increased participation in the affairs of the Bank, including
continuing to hold meetings at least monthly;
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Assess managements qualifications and ability to comply with the Order and
applicable laws and regulations, and to restore and operate the Bank in a safe and
sound manner;
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Maintain (a) Tier 1 capital at or above 8% of total assets and (b) total risk-based
capital at or above 10% of total risk-weighted assets;
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Reduce the aggregate balance of assets classified as Substandard or Doubtful in
accordance with a schedule provided in the Order;
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Formulate a plan to reduce risk exposure for any lines of credit that are adversely
classified by the FDIC or the Department and in the aggregate are $500,000 or more as
of the date of the examination;
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Restrict extensions of credit to any borrower whose extension of credit has been,
in whole or in part, charged-off or adversely classified;
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Charge-off all assets classified as Loss and 50% of assets classified as
Doubtful in any official report of examination from the FDIC or the Department;
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Maintain an adequate ALLL, review the adequacy of the ALLL, and ensure that the
Banks policy for determining the adequacy is comprehensive;
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Perform a risk segmentation analysis on credit concentrations;
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Enhance the Banks internal loan review program;
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Revise and implement a written profit plan and comprehensive budget;
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Continue to review daily the Banks liquidity position;
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Revise and implement the Banks written liquidity contingency funding plan;
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Obtain a waiver from the FDIC prior to accepting, renewing, or rolling over any
brokered deposits; and
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File progress reports with the FDIC and the Department.
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The Company and the Bank believe that the proactive steps the management and Board have
already undertaken, together with those they plan to take in the future, will help the Bank address
the Order and the concerns that gave rise to the Order. Banking products and services and hours of
business are the same, and the Banks deposits are insured by the FDIC to the maximum limits
allowed by law.
This Order does not prevent us from continuing to fully service our customers needs and to
operate the Bank as we deem best. Instead, this Order is primarily in place due to the decline in
capital and our increased level of problem assets. While things have not returned to the
stress-free environment we all look forward to, significant progress is being made. Like any
business in this area, we suffered through the downturn, and now we will have the opportunity to
again prosper as the economy continues its recovery.
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By Order of the Board of Directors,
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David D. Stovall
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President and Chief Executive Officer
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[_________]
, 2010
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Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be Held on May 15, 2010
This proxy statement and our 2009 annual report to shareholders are available at
www.icommaterials.com.
4
HABERSHAM BANCORP
282 Historic Highway 441 North
P.O. Box 1980
Cornelia, Georgia 30531
PROXY STATEMENT
INTRODUCTION
Time and Place of the Meeting
The Companys Board of Directors is furnishing this Proxy Statement to solicit proxies for use
at the annual meeting of shareholders to be held on Saturday, May 15, 2010, at 1:00 p.m., in the
Central Office of the 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 (i) the election of the nominated directors, (ii) the
Amendment Proposal, (iii) the Reverse Stock Split Proposal, (iv) the Adjournment Proposal, (v) the
ratification of the independent accountants, 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 our Corporate Secretary, Bonnie Bowling, at the Companys
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 April 1, 2010 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
[_________]
, 2010.
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 2,818,593 shares were issued and outstanding. Each
such share is entitled to one vote on matters to be presented at the meeting.
The
Company also had 10,000 shares of Series A Preferred Stock authorized, of which no shares
were outstanding, and 4,000 shares of Series B Convertible Redeemable Preferred Stock (Series B
Preferred Stock) authorized and outstanding as of the record date. The holders of the Series B
Preferred Stock are not entitled to vote on any of the proposals at the meeting.
1
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 result from a brokers
inability to vote on non-discretionary matters, 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.
In voting for the other proposals, a shareholder may vote in favor of or against the proposal
or may abstain from voting. The vote required to approve each of these proposals is governed by
Georgia law and the Companys Articles of Incorporation and Bylaws. A FOR vote, either in person
or by proxy, by a majority of the outstanding shares of common stock as of the record date is
required to approve the Amendment Proposal and the Reverse Stock Split Proposal, and the
Adjournment Proposal and the ratification of the independent auditors require that more shares of
common stock are voted in favor of the proposal than are voted against it. Abstentions and broker
non-votes will not affect the outcome of the vote on the Adjournment Proposal or the ratification
of the independent auditors, but will have the effect of negative votes on the Amendment Proposal
and the Reverse Stock Split Proposal because the vote required for those proposals is based on
outstanding shares as opposed to shares actually voted. No proxy that is marked specifically
AGAINST the Amendment Proposal or the Reverse Stock Split Proposal will be voted in favor of the
Adjournment Proposal unless that proxy is specifically marked FOR the Adjournment Proposal.
Approval of any other matter properly presented for shareholder approval requires 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. We know of no other matters that may be brought before the
meeting. If, however, any matter (other than the proposals described in this Proxy Statement or
matters incident thereto) of which we do not have reasonable prior notice 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 2010 Annual Meeting of
Shareholders. The Company has retained Investor Com, Inc. to assist in the solicitation of proxies
for a fee of approximately $6,500. In addition, 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.
2
OWNERSHIP OF STOCK
Principal Shareholders
On the record date, the Company had approximately 486 shareholders of record. The following
table lists the persons who, to our best knowledge, beneficially owned 5% or more of the Companys
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.
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Name and Address
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Amount and Nature of
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of Beneficial Owner
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Beneficial Ownership
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Percent of Class
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John Robert Arrendale
200 Hillcrest Heights
Cornelia, Georgia 30531
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167,260
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5.9
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%
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Thomas A. Arrendale, III
P. O. Box 558
Baldwin, Georgia 30511
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1,030,160
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(1)(2)
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36.5
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%
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Cyndae Arrendale Bussey
P. O. Box 558
Baldwin, Georgia 30511
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515,776
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(1)
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18.3
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%
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David D. Stovall
P. O. Box 1980
Highway 441 North
Cornelia, Georgia 30531
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122,805
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(3)
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4.4
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%
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Footnotes
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(1)
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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.
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(2)
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Includes 5,000 shares subject to exercisable options.
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(3)
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Includes 8,334 shares owned of record by Mr. Stovall jointly with his daughter and 18,000
shares subject to exercisable options. Excludes 11,982 shares (as of the latest available
valuation) held in Mr. Stovalls account in the Companys 401(k) Savings Investment Plan Trust
(the Savings Plan), as to which Mr. Stovall has no voting or investment power.
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3
Stock Owned by Management
The following table lists the number and percentage ownership of shares of common stock
beneficially owned by each current director and director nominee, each executive officer named in
the Summary Compensation Table contained elsewhere in this Proxy Statement (each a Named Executive
Officer) and all directors and executive officers as a group, as of March 1, 2010. 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 includes any shares covered by the option(s) issued to the
individual or to members of the group, as applicable, identified in the table.
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Number of Shares
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Percentage
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Name
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Beneficially Owned
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of Total
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Directors and Director Nominees:
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Thomas A. Arrendale, III
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1,030,160
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(1)(2)
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36.5
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%
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Ben F. Cheek, III
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5,000
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(3)
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James A. Stapleton, Jr.
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12,072
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(1)(4)
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David D. Stovall
(5)
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122,805
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(6)
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4.4
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%
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Calvin R. Wilbanks
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24,442
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(1)(7)
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Bonnie C. Bowling
(5)
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16,100
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(8)
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*
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Named Executive Officer Who is
Not a Director
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Edward D. Ariail
(9)
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44,616
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(10)
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1.6
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%
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All Current Directors, Director Nominees
and Executive Officers as a Group
(7 persons):
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1,264,860
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(11)
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44.9
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%
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Footnotes
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(*)
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Indicates less than 1%.
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(1)
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Includes 5,000 shares subject to exercisable options.
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(2)
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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.
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(3)
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Includes 5,000 shares subject to exercisable options.
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4
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(4)
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Mr. Stapleton owns 450 of the indicated shares jointly with his children.
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(5)
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Mr. Stovall and Ms. Bowling are also executive officers of the Company.
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(6)
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Includes 8,334 shares owned of record by Mr. Stovall jointly with his daughter and 18,000
shares subject to exercisable options. Excludes 11,982 shares (as of the latest available
valuation) held in Mr. Stovalls account in the Savings Plan, as to which Mr. Stovall has no
voting or investment power.
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(7)
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Includes 12,042 shares held jointly with his wife and 4,325 shares held of record by his
wife.
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(8)
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Includes 10,000 shares subject to exercisable options. Excludes 3,710 shares (as of the
latest available valuation) held in Ms. Bowlings account in the Savings Plan, as to which Ms.
Bowling has no voting or investment power.
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(9)
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On October 5, 2009, Mr. Ariail submitted his resignation, effective on December 31, 2009,
from his positions as director of the Company and the Bank, Executive Vice President and
Corporate Secretary of the Company, and President of the Bank.
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(10)
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Includes 33,505 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 10,000 shares subject to
exercisable options. Excludes 9,081 shares (as of the latest available valuation) held in Mr.
Ariails account in the Savings Plan, as to which Mr. Ariail has no voting or investment
power.
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(11)
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Also includes shares and exercisable options held by Annette Banks, an executive officer who
is not a Named Executive Officer. Of the indicated shares, 59,000 shares are subject to
exercisable options. Excludes 25,162 shares (as of the latest available valuation) held in
accounts for the benefit of the Companys executive officers under the Savings Plan, as to
which participants have no voting or investment power.
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5
PROPOSAL 1: ELECTION OF DIRECTORS
Although the Companys common stock is not listed on a national securities exchange, the Board
of Directors has determined that based on Nasdaq Stock Market standards, the following directors
are independent: Thomas A. Arrendale, III, Ben F. Cheek, III, James A. Stapleton, Jr., and Calvin
R. Wilbanks. These independent directors, acting as a group, have nominated the persons listed
below to serve as directors of the Company. Each director, if elected, will serve until the 2011
annual meeting of shareholders or until his or her successor is duly elected and qualified. 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 and nominee, his or her name and age at December
31, 2009, the year he or she was first elected as a director, his or her position with the Company
other than as a director and his or her principal occupation and other business experience for the
past five years.
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Year First
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Position with Company
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Name
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Age
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Elected
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Business Experience
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Thomas A. (Gus)
Arrendale, III
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52
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1990
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Chairman of the Board
of Directors of the
Company; Chairman of
the Board and Chief
Executive Officer of
Fieldale Farms, Inc.
(poultry processing
and distribution)
|
|
|
|
|
|
|
|
|
|
|
|
Bonnie C. Bowling
|
|
|
51
|
|
|
|
2009
|
|
|
Executive Vice
President of
Habersham Bancorp and
Executive Vice
President and Chief
Operating Officer of
Habersham Bank
|
|
|
|
|
|
|
|
|
|
|
|
Ben F. Cheek, III
|
|
|
73
|
|
|
|
2005
|
|
|
Chairman and Chief
Executive Officer of
1
st
Franklin Financial
Corporation since
1988; Chairman of
Liberty Bank & Trust
from 1986 to July
2005
|
|
|
|
|
|
|
|
|
|
|
|
James A. Stapleton, Jr.
|
|
|
61
|
|
|
|
1990
|
|
|
President and General
Manager, Habersham
Metal Products
|
|
|
|
|
|
|
|
|
|
|
|
David D. Stovall
|
|
|
53
|
|
|
|
1989
|
|
|
President and Chief
Executive Officer of
the Company; Vice
Chairman and Chief
Executive Officer of
Habersham Bank;
Chairman of the Board
of Directors of
Advantage Insurers,
Inc.
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
Position with Company
|
Name
|
|
Age
|
|
Elected
|
|
Business Experience
|
Calvin R. Wilbanks
|
|
|
63
|
|
|
|
1990
|
|
|
Vice Chairman of the
Board of the Company,
Co-Owner, C.P.
Wilbanks Lumber
Company
|
The Board believes that each nominee possesses skills, experience and other qualifications
that render him or her a valuable director. Mr. Arrendales length and continuity of service as a
director, his experience and leadership of a prominent local business, and his significant
investment in the Company particularly qualify him for service as a director. Ms. Bowling is an
experienced banking professional who has been with the Bank for 13 years; Mr. Cheek possesses
significant financial expertise, serves as our audit committee financial expert and has banking
experience; and Mr. Stapleton has a long history of service as a director and has industry
expertise that complements the experience of the other directors through his leadership of
Habersham Metal Products. Mr. Stovall has served as our Chief Executive Officer for more than 20
years and overseen the Banks operations and growth through various economic cycles, and Mr.
Wilbanks owns and operates a longtime area business that has been a source of business for the
Bank.
The Board of Directors recommends that you vote FOR each of the nominees listed above.
Meetings and Committees of the Board
Board of Directors
. The Boards of Directors of the Company and the Bank hold their regular
meetings on the third Saturday of each month and otherwise as necessary. During 2009, the
Companys Board of Directors met 13 times and the Banks Board of Directors met 12 times. Each
director of the Company attended at least 75% of the meetings of the Companys Board of Directors
and of any committees of which he was a member, and each director of the 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 does not have a policy regarding director attendance at annual shareholders
meetings. All of the directors then in office attended the 2009 annual meeting of shareholders
with the exception of Messrs. Cheek and Stapleton.
On October 5, 2009, Edward D. Ariail submitted his resignation, effective on December 31,
2009, from his positions as director of the Company and the Bank, Executive Vice President and
Corporate Secretary of the Company, and President of the Bank. Additionally, on December 19, 2009,
Michael C. Martin and Michael L. Owen submitted resignations, effective as of that date, from their
positions as directors of the Company and the Bank.
Audit Committee
. The Audit Committees functions are described in its charter and include (a)
engaging, overseeing, retaining and compensating the independent accountants and determining the
scope of their services; (b) reviewing the independence of the independent accountants; (c)
pre-approving all audit and allowable non-audit services to be provided by the independent
accountants; (d) determining that the Company has adequate administrative, operating and internal
accounting controls and that it is operating in accordance with prescribed procedures; and (e)
serving as an independent party in the review of the Companys financial information prior to its
distribution to the Companys shareholders and the public. The members
7
of the Audit Committee are
Ben F. Cheek, III, James A. Stapleton, Jr. and Calvin R. Wilbanks. The Audit Committee met six times during 2009. Michael C. Martin also served as a member of
the Audit Committee until his resignation as a director of the Company, effective December 19,
2009.
The Board of Directors has determined that each Audit Committee member is independent in
accordance with Nasdaq Stock Market and Securities and Exchange Commission (SEC) regulations.
None of the members of the Audit Committee has participated in the preparation of the consolidated
financial statements of the Company or any current subsidiary of the Company at any time during the
past three years. We believe that Mr. Cheek meets the criteria specified under applicable SEC
regulations for an audit committee financial expert and that each of the other members of the
Audit Committee has the financial knowledge, business experience and independent judgment necessary
for service on the Audit Committee.
Compensation Committee
. The Compensation Committee sets and administers the policies that
govern our executive compensation programs and various cash incentive and equity programs and
reports its decisions to the full Board. The Committee has oversight responsibility of employee
compensation and benefits plans, policies and programs, including ensuring that such plans,
policies and programs are effective in aligning the interest of the employees with those of our
shareholders. Its primary responsibilities include: (1) determining the compensation payable to
our executive officers; (2) evaluating the performance of our Chief Executive Officer and the
relationship between his performance and our compensation policies for him and other executive
officers; and (3) issuing reports in accordance with SEC rules regarding compensation policies;
and (4) approving and administering our stock-based, profit-sharing and incentive compensation
plans. Included in these responsibilities is the consideration of whether the Companys
compensation policies and practices for all employees present material risks to the Company.
Because employees are paid fixed salaries without incentive compensation, the Committee does not
believe that the Companys compensation policies and practices present risks that would be likely
to materially adversely affect the Company.
The members of the Compensation Committee are Messrs. Arrendale, Cheek, Stapleton and
Wilbanks. Each of these directors is independent under applicable Nasdaq Stock Market standards.
Mr. Martin also served as a member of the Compensation Committee until his resignation as a
director of the Company, effective December 19, 2009. The Compensation Committee met twice during
2009.
Nominating Committee
. Neither the Company nor any of its subsidiaries has a standing
nominating committee. Instead, the independent directors act as a group to consider and nominate
director candidates. The Board believes that its independent directors are sufficiently removed
from management influence to fulfill the nominating function without a formal committee structure.
See Director Nominations and Shareholder Communications for information regarding the process for
director nominations.
Risk Oversight and Additional Committees
.
The Board oversees risks to the Company through its
leadership and service on the committees described above. The Audit Committee addresses risks
presented by the Companys internal controls and financial record-keeping, and the Compensation
Committee addresses risks presented by its compensation policies and practices. Additionally, the
Board regularly reviews reports by the Asset and Liability
8
Committee, which addresses interest rate
risk, and reviews credit risk through the Loan Committee, of which Mr. Wilbanks is a member. The
Capital Restoration Committee, which consists of Messrs. Stovall, Cheek and Wilbanks and Ms. Bowling, focuses on strategies for
increasing the Banks capital levels and ratios, which in turn enables the Bank to absorb losses
and thereby reduce risks presented by the current economic environment.
Compensation of Directors
Director Fees
.
The same individuals who served as directors of the Company in 2009 also
served as directors of Habersham Bank. In their regular board meetings on September 19, 2009, the
Boards of Directors of the Company and the Bank voted unanimously to suspend director fee payments
effective immediately. No date or time frame was established for re-commencement of payments. Our
director fee structure for 2009, as in effect prior to suspension, is described below.
Except for Messrs. Owen and Martin, who each received $500 per month for loan committee
service until their resignations, directors were not compensated separately for committee service.
Mr. Stovall received $2,000 per Company board meeting and $1,000 per Bank board meeting. Mr.
Ariail received $1,000 per Company board meeting and $500 per Bank board meeting, while the other
directors, except for the Chairman, received $2,000 per Company board meeting and $1,000 per Bank
board meeting. The Chairman received $4,000 per Company board meeting and $2,000 per Bank board
meeting.
The following table shows the total compensation earned by each of our directors who served in
2009 for their service that year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
Fees earned
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive
|
|
Deferred
|
|
|
|
|
|
|
or paid
|
|
Stock
|
|
Option
|
|
Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
in cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name
(1)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
(2)
|
|
($)
|
Mr. Arrendale
|
|
|
54,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
54,000
|
|
Mr. Cheek
|
|
|
27,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
27,000
|
|
Mr. Martin
|
|
|
31,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
31,500
|
|
Mr. Owen
|
|
|
31,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
31,500
|
|
Mr. Stapleton
|
|
|
27,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
27,000
|
|
Mr. Wilbanks
|
|
|
27,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
27,000
|
|
|
|
|
(1)
|
|
Mr. Ariail and Mr. Stovall are also Named Executive Officers, and as a result, their
compensation as directors is included in the Summary Compensation Table below. Messrs. Martin
and Owen resigned as directors effective December 19, 2009.
|
Stock Options
. Directors of the Company and the Bank who are not employees of the
Company or any of its subsidiaries are eligible for annual option grants under the Habersham
Bancorp Outside Directors Stock Option Plan. The Company did not grant any stock options to its
directors in 2009.
9
EXECUTIVE OFFICERS
The Companys 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 persons name, (b) his or her age at December 31, 2009, (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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
Position with Company;
|
Name
|
|
Age
|
|
Elected
|
|
Business Experience
|
Annette Banks
|
|
|
63
|
|
|
|
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 C. Bowling
|
|
|
51
|
|
|
|
1997
|
|
|
Executive Vice President and Chief Operations Officer of the Company since January 2004; Vice President, Operations, Audit, Compliance of the Company since April 1997; and from December 1994 to 1997, Process Owner of Audit/Compliance of the Company
|
|
|
|
|
|
|
|
|
|
|
|
David D. Stovall
|
|
|
53
|
|
|
|
1984
|
|
|
President and Chief Executive Officer of the Company; Vice Chairman, President and Chief Executive Officer of Habersham Bank; Chairman of the Board of Directors of Advantage Insurers, Inc.
|
EXECUTIVE COMPENSATION
For 2009, the Company designated four individuals as executive officers under the Securities Exchange Act of 1934, as amended, and
associated regulations. The following table provides certain summary information concerning the compensation paid or accrued by the Company and its subsidiaries to or on behalf of the Companys Chief Executive Officer and the two other most highly compensated executive officers of the Company who earned over $100,000 in total
compensation for 2009 (collectively, the Named Executive Officers).
10
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonequity Incentive
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
Name and
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Plan Compen-sation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
|
|
Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Earnings ($)(1)
|
|
|
($)(2)
|
|
|
Total ($)
|
|
David D. Stovall
|
|
|
2009
|
|
|
$
|
264,939
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
29,148
|
|
|
$
|
294,087
|
|
President and Chief
|
|
|
2008
|
|
|
|
278,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8,199
|
|
|
|
46,477
|
|
|
|
333,176
|
|
Executive Officer
of the Company and
Vice Chairman and
Chief Executive
Officer of
Habersham Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward D. Ariail
|
|
|
2009
|
|
|
$
|
178,754
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
14,998
|
|
|
$
|
193,752
|
|
Former Executive
|
|
|
2008
|
|
|
|
185,429
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,949
|
|
|
|
25,528
|
|
|
|
214,906
|
|
Vice President and
Corporate Secretary
of the Company and
President of
Habersham Bank (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonnie C. Bowling
|
|
|
2009
|
|
|
$
|
179,842
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
15,008
|
|
|
$
|
194,850
|
|
Executive Vice
|
|
|
2008
|
|
|
|
186,662
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,638
|
|
|
|
5,603
|
|
|
|
197,300
|
|
President and Chief
Operations Officer
of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents earnings under the Executive Supplemental Retirement Plan (Executive SERP)
agreements that were terminated in 2009.
|
|
(2)
|
|
The amounts shown include director fees and the economic value, as reported on a Form 1099-R,
of split dollar life insurance agreements for their benefit as shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Split Dollar
|
|
|
Directors Fees
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Mr. Stovall
|
|
$
|
0
|
|
|
$
|
3,577
|
|
|
$
|
27,100
|
|
|
$
|
36,000
|
|
Mr. Ariail
|
|
$
|
0
|
|
|
$
|
1,965
|
|
|
$
|
13,500
|
|
|
$
|
18,000
|
|
Ms. Bowling
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
13,500
|
|
|
$
|
0
|
|
Also includes the following Company matching contributions to the Savings Plan accounts of
the indicated persons:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
Mr. Stovall
|
|
$
|
2,148
|
|
|
$
|
6,900
|
|
Mr. Ariail
|
|
$
|
1,498
|
|
|
$
|
5,563
|
|
Ms. Bowling
|
|
$
|
1,508
|
|
|
$
|
5,603
|
|
|
|
|
(3)
|
|
Mr. Ariail resigned from his positions as director of the Company and Habersham Bank,
Executive Vice President and Corporate Secretary of the Company, and President of the Bank,
effective December 31, 2009.
|
Outstanding Equity Awards at Fiscal Year End Table
The following table shows the outstanding equity awards held by the Named Executive Officers
at December 31, 2009. No stock or equity plan awards were outstanding as of that date.
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Number of Securities
|
|
Securities
|
|
|
|
|
|
|
Underlying Unexercised
|
|
Underlying
|
|
|
|
|
|
|
Options
|
|
Unexercised Options
|
|
Option Exercise
|
|
|
|
|
(#)
|
|
(#)
|
|
Price
|
|
Option Expiration
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
David D. Stovall
|
|
|
18,000
|
|
|
|
0
|
|
|
$
|
22.95
|
|
|
|
12-31-15
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
$
|
20.60
|
|
|
|
12-31-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward D. Ariail
|
|
|
10,000
|
|
|
|
0
|
|
|
$
|
22.95
|
|
|
|
12-31-15
|
|
|
|
|
8,000
|
|
|
|
0
|
|
|
$
|
20.60
|
|
|
|
12-31-09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonnie C. Bowling
|
|
|
10,000
|
|
|
|
0
|
|
|
$
|
22.95
|
|
|
|
12-31-15
|
|
|
|
|
8,000
|
|
|
|
0
|
|
|
$
|
20.60
|
|
|
|
12-31-09
|
|
AUDIT COMMITTEE MATTERS
Audit Committee Report
The Audit Committee is responsible for providing independent, objective oversight of the
Companys accounting functions and internal controls. The Audit Committee is composed of four
directors, each of whom is independent as defined by Nasdaq Stock Market standards. The Audit
Committee operates under a written charter approved by the Board of Directors.
Management is responsible for the Companys internal controls and financial reporting process.
The independent accountants are responsible for performing an independent audit of the Companys
consolidated financial statements in accordance with auditing standards generally accepted in the
United States of America and to issue a report thereon. The Audit Committees responsibility is to
monitor and oversee these processes.
In connection with these responsibilities, the Audit Committee met with management and the
independent accountants to review and discuss the December 31, 2009 consolidated financial
statements. The Audit Committee also discussed with the independent accountants the matters
required by Statement on Auditing Standards No. 61 (Communication with Audit Committees). The
Audit Committee also received written disclosures from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and
the Audit Committee discussed with the independent accountants that firms independence.
Based upon the Audit Committees discussions of the Companys 2009 audited consolidated
financial statements with management and the independent accountants, and the Audit Committees
review of the representations of management and the independent accountants, the Audit Committee
recommended that the Board of Directors include such audited consolidated financial statements in
the Companys Annual Report on Form 10-K for the year ended December 31, 2009, to be filed with the
Securities and Exchange Commission.
12
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April 1, 2010
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THE AUDIT COMMITTEE
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Ben F. Cheek, III
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James A. Stapleton, Jr.
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Calvin R. Wilbanks
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Independent Certified Public Accountants
Porter Keadle Moore LLP, Atlanta, Georgia, acted as the Companys principal independent
certified public accountants for the year ended December 31, 2009. Representatives of Porter
Keadle Moore LLP will be present at the 2010 Annual Meeting and will have the opportunity to make a
statement if they desire to do so and respond to appropriate questions.
Audit Fees
The following table sets forth the fees billed to the Company by Porter Keadle Moore, LLP for
2009 and 2008.
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|
|
|
|
|
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|
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|
2009
|
|
|
2008
|
|
Audit fees
(1)
|
|
$
|
231,000
|
|
|
$
|
176,000
|
|
Audit-related fees
(2)
|
|
|
21,400
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|
|
|
21,000
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|
Tax fees
(3)
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|
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18,500
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18,300
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|
All other fees
(4)
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0
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|
|
0
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|
|
|
|
|
|
|
|
Total fees
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|
$
|
270,900
|
|
|
$
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215,300
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|
|
|
|
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(1)
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Audit fees include fees and associated out of pocket expenses for
professional services for the audit of the Companys annual consolidated financial
statements, review of the annual report on Form 10-K, review of regulatory filings on
Forms 8-K, and limited reviews of quarterly condensed consolidated financial statements
included in periodic reports on Form 10-Q filed with the SEC.
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(2)
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Audit related fees include fees for professional services associated with the
audit of the Companys employee benefit plan.
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(3)
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|
Tax fees include fees for tax services consisting primarily of tax compliance
services.
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(4)
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|
All other fees include fees for all other services, exclusive of the fees
disclosed above, rendered to the Company.
|
The services provided by the independent accountants were pre-approved by the Audit Committee
to the extent required under applicable law and in accordance with the provisions of
13
the
Committees charter. The Audit Committee pre-approves all audit and allowable non-audit services,
but does not have a specific pre-approval policy. The Audit Committee has determined that the rendering of non-audit professional services, as identified above, is compatible with
maintaining the independence of the Companys auditors.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires the Companys
directors and executive officers and persons who own beneficially more than 10% of the Companys
outstanding common stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in their ownership of the Companys 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, 2009, our directors,
executive officers and greater than 10% shareholders complied with all applicable Section 16(a)
filing requirements.
14
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 2009. 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 2009.
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.
On June 25, 2009, the Company entered into an exchange agreement pursuant to which Fieldale
Farms Corporation (Fieldale) (i) exchanged the 3,000 shares of Series A Preferred Stock that it
purchased on December 31, 2008 for 3,000 shares of the Companys newly issued Series B Preferred
Stock, and (ii) cancelled all of the parties remaining rights and obligations under Fieldales
December 31, 2008 subscription agreement relating to the Series A Preferred Stock. In addition,
the Company received $1.0 million in additional capital from its June 25, 2009 sale of 500 shares
of Series B Preferred Stock to each of Thomas A. Arrendale, III and A&H Real Estate Company, LLC, a
limited company in which Mr. Arrendale and an officer and director of Fieldale hold equity
interests. Thomas A. Arrendale, III is the Companys Chairman of the Board and a beneficial
owner of more than 10% of the Companys outstanding common stock. He is also Fieldales Chairman
of the Board and Chief Executive Officer and trustee and a beneficiary of a trust that owns more
than 10% of Fieldales outstanding common stock. Mr. Arrendale did not participate in the boards
consideration or approval of the transaction. Additionally, his sister, Cyndae Arrendale, who
beneficially owns more than 10% of the Companys outstanding common stock, is a director of
Fieldale and trustee and a beneficiary of a separate trust that owns more than 10% of Fieldales
outstanding common stock. She is not a director or executive officer of the Company.
The Company and the Bank also terminated the Director SERPs, Executive SERPs and Split Dollar
Life Insurance Agreements with its directors and executive officers. See Proposal 1. Election of
Directors Director Supplemental Retirement Plan Agreements, Split Dollar Life Insurance
and Supplemental Executive Retirement Plan Agreements.
15
DIRECTOR NOMINATIONS AND SHAREHOLDER COMMUNICATIONS
General
The Companys Board of Directors does not have a nominating committee. Instead, the
independent directors of the Company act as a group to consider and nominate director candidates.
They will consider shareholder recommendations of director candidates who appear to be qualified to
serve on the Companys Board of Directors. To submit a recommendation of a director candidate, a
shareholder should submit the following information in writing, addressed to the Board of
Directors, in care of the Corporate Secretary, at the main office of the Company at 282 Historic
Highway 441 North, P. O. Box 1980, Cornelia, Georgia 30531:
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1.
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The name of the person recommended as a director candidate;
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2.
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All information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, including appropriate biographical
information.
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3.
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The written consent of the person being recommended as a director candidate to
being named in the proxy statement as a nominee and to serving as a director if
elected;
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4.
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As to the shareholder making the recommendation, his or her name, address,
number of shares of Company common stock beneficially owned, the dates on which the
shareholder acquired his or her shares, documentary support for any claim of beneficial
ownership and his or her relationship or affiliation with the nominee; and
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5.
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A statement as to the qualification of the nominee. Although neither the Board
of Directors nor its independent directors has prescribed any minimum qualifications or
standards for a director nominee, relevant factors include business experience;
knowledge of the Company and the financial services industry; experience in serving as
director of the Company or of another financial institution or public company
generally; wisdom, integrity and ability to make independent analytical inquiries;
familiarity with and participation in the communities served by the Company; diversity
of gender, race and skills; and commitment to and availability for service as a
director of the Company.
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16
PROPOSAL 2:
AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK
The Board of Directors has approved a resolution recommending that Article 5A of its Amended
and Restated Articles of Incorporation, as amended, be amended to increase the number of shares of
our authorized common stock to 50,000,000 shares from 10,000,000 shares, subject to the approval of
the Companys shareholders. Like the currently authorized common stock, the additional authorized
shares would not be subject to preemptive rights. We refer to this proposal as the Amendment
Proposal. No change is being proposed to the authorized number of shares of the Companys
preferred stock, which will remain at 10,000,000 shares.
The Amendment Proposal
The Amendment Proposal would amend Article 5A of the Companys Amended and Restated Articles
of Incorporation, as amended, to increase the total number of authorized shares of common stock.
The amended text of Article 5A would be as follows:
ARTICLE 5A
The Corporation shall have the authority to issue Fifty Million
(
50,000,000
)
shares
of common stock, $1.00 par value per share.
Reasons for the Amendment Proposal
The reason for the increase in the authorized shares of common stock is to provide additional
capacity and flexibility in the Companys ability to raise additional capital. As is discussed in
the Notice of Annual Meeting accompanying this Proxy Statement, the Bank is required under the
terms of its Order to increase its capital ratios to levels that would exceed current standards for
well capitalized status. The Bank is required to attain an 8.00% Tier 1 capital ratio and a
10.00% total capital ratio. As of December 31, 2009, its Tier 1 capital ratio was 4.41% and its
total capital ratio was 5.69%. Management and the Board have implemented a capital plan to address
these and other requirements under the Order.
A principal element of the capital plan involves the Companys issuance of additional common
stock or other equity securities, with the proceeds of the offering being contributed as capital to
the Bank. Toward that end, we are currently contemplating the offer and sale, exclusively to
residents of the State of Georgia, of up to $25 million of common stock and warrants in an
intrastate offering pursuant to Section 3(a)(11) of the Securities Act of 1933, as amended (the
Securities Act). In view of current market prices and conditions, an offering of this size would
likely require that we issue a number of shares of common stock that would cause our outstanding
shares to significantly exceed the 10,000,000 shares that are currently authorized. We believe the
authorization of the number of shares set forth in the Amendment Proposal will address the
Companys common stock requirements for the foreseeable future.
17
This proxy statement is not an offer to sell or the solicitation of an offer to buy the
Companys securities. Offers and sales of securities will only be made to residents of the State
of Georgia in compliance with Section 3(a)(11) of the Securities Act pursuant to a prospectus
meeting the requirements of the Georgia Uniform Securities Act of 2008 (the Georgia Act), on the
terms and subject to the conditions set forth in such prospectus. A vote in favor of the Amendment
Proposal will not represent a response to an offer or otherwise relate in any way to participation
in an offering. However, failure to vote in favor of the Amendment Proposal may prevent the
Company from pursuing an offering and prevent the Company from raising capital on terms that are
favorable, or at all.
Description of Common Stock
Our capital stock represents non-withdrawable capital and is not insured by the FDIC. Each
share of common stock has the same relative rights and is identical in all respects with every
other share of common stock. The holders of common stock possess exclusive voting rights in the
Company (except on matters to which the holders of our Series B Preferred Stock are entitled to
vote as a matter of law) and are entitled to only one vote for each share held of record on all
matters submitted to a vote of holders of common stock. The holders of common stock are not
permitted to cumulate votes in the election of directors, and they do not possess any dividend or
liquidation rights. Holders of common stock do not have preemptive rights with respect to any
shares that may be issued. The common stock is not subject to call or redemption, and the
outstanding shares are fully paid and nonassessable. The holders of our common stock are entitled
to receive dividends when, as and if declared by the Board of Directors and paid by the Company out
of funds legally available therefor.
Effect of the Amendment Proposal
Approval of the Amendment Proposal would not affect the terms of the currently outstanding
common stock. If additional authorized shares of common stock or securities that are convertible
into, or exchangeable or exercisable for shares of common stock are issued, our existing
shareholders could, depending upon the price realized and the extent (if any) of their
participation in the issuance, experience significant dilution of book value per share, earnings
per share and percentage ownership. When and if additional shares of our common stock are issued,
these new shares would have the same voting and other rights and privileges as the currently issued
and outstanding shares of common stock, including voting rights and the right to participate in
dividends as, when and if declared by the Board of Directors.
The Amendment Proposal, if adopted, will ensure that the Company has an adequate number of
authorized and unissued shares of common stock available to provide capacity and flexibility in
raising additional capital. The following table sets forth the number of shares of common stock
authorized, outstanding, reserved for issuance and available for future issuance as of the most
recent practicable date.
18
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As of
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Upon Effectiveness
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April 1, 2010
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|
of Amendment
|
|
Shares of Common Stock Authorized
|
|
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10,000,000
|
|
|
|
50,000,000
|
|
|
|
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|
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Shares of Common Stock Outstanding
|
|
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2,818,593
|
|
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|
2,818,593
|
|
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|
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|
|
|
|
|
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Shares of Common Stock Reserved for Issuance*
|
|
|
1,091,500
|
|
|
|
1,091,500
|
|
|
|
|
|
|
|
|
|
|
Shares of
Common Stock Available for Future Issuance
|
|
|
6,089,907
|
|
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|
46,089,907
|
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*
|
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The number of shares of common stock reserved for issuance reflects 91,500]shares of common
stock subject to outstanding options and 1,000,000 shares reserved for issuance upon
conversion of the Series B Preferred Stock as of December 31, 2009.
|
The issuance of additional shares of common stock could be deemed, under certain
circumstances, to have an anti-takeover effect where, for example, the shares were issued to dilute
the equity ownership and corresponding voting power of a shareholder or group of shareholders who
may oppose the policies or strategic plan instituted by the Companys existing management. On this
basis, the proposed increase in authorized shares could enable the Board of Directors to render
more difficult or discourage an attempt by another person or entity to obtain control of the
Company.
Vote Required for Approval
This proposal requires approval by the affirmative vote of at least a majority of outstanding
shares of common stock entitled to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE AMENDMENT PROPOSAL.
19
PROPOSAL 3:
AMENDMENT TO THE COMPANYS ARTICLES OF INCORPORATION TO
AUTHORIZE THE BOARD TO EFFECT A REVERSE STOCK SPLIT
Introduction
The Board of Directors is recommending that the shareholders authorize our Board of Directors,
in its discretion, to effect a reverse stock split of our outstanding shares of common stock at a
ratio of up to 1:50 (one share for each 50 outstanding shares). If this proposal is approved, the
Board will have the authority to decide, within 12 months after the Annual Meeting, whether to
implement a reverse stock split and at which ratio (the Selected Ratio), if it is to be
implemented. If the Board decides to implement a reverse stock split, it will become effective
upon the filing of an amendment to our Articles of Incorporation with the Secretary of State of the
State of Georgia (the Effective Date). If a reverse stock split is implemented, the number of
issued and outstanding shares of common stock would be reduced in accordance with the Selected
Ratio and the market price per share of the issued and outstanding shares would likely be increased
by the same factor.
Approval of the Reverse Stock Split Proposal would not affect the number of shares authorized
in our Articles of Incorporation. The total number of authorized shares is currently 10,000,000
shares of common stock and 10,000,000 shares of preferred stock. If the Amendment Proposal is
approved, the number of authorized shares of common stock will increase to 50,000,000 shares. The
form of the amendment to our Articles of Incorporation to effect the reverse stock split is
attached as
Appendix A
to this Proxy Statement.
Purpose and Background of the Reverse Stock Split
The Boards primary objective in proposing the reverse stock split is to provide it an
opportunity to raise the per share trading price of our common stock if it determines that such
action is in the best interests of the Company and its shareholders. Our common stock currently
trades below the minimum bid prices that would enable us to list it on the American Stock Exchange
or the Nasdaq Capital Market ($3.00 and $4.00, respectively). We believe that listing on an
exchange would encourage investor interest and improve the marketability of our common stock to a
broader range of investors, and thus improve liquidity. An exchange listing would also enable us
to conduct an offering of our common stock (or securities based on our common stock) based on an
exemption from registration under state securities, or blue sky, laws, which would allow us to
save significant time, fees and expenses relating to that process.
Additionally, because of the trading volatility often associated with low-priced stocks, many
brokerage firms and institutional investors have internal policies and practices that either
prohibit them from investing in low-priced stocks or tend to discourage individual brokers from
recommending low-priced stocks to their customers. Many brokerage houses do not permit or favor
lower-priced stocks to be used as collateral for margin accounts for retail investors. The
brokerage commissions on the purchase or sale of lower priced stocks may also represent a higher
percentage of the price than the brokerage commission on higher-priced stocks. We believe that the
anticipated higher market price resulting from a reverse stock split would enable
20
institutional investors and brokerage firms with policies and practices such as those
described above to invest in our common stock.
The purpose of seeking shareholder approval of a maximum exchange ratio, rather than a fixed
exchange ratio, is to provide the Board with the flexibility to achieve the desired results of the
reverse stock split based on the circumstances. If the shareholders approve this proposal, the
Board would effect a reverse stock split only upon the Boards determination that a reverse stock
split would be in the best interests of the Company at that time. If the Board were to effect a
reverse stock split, the Board would set the timing for such a split and select a ratio within the
approved range. No further action on the part of shareholders would be required to either
implement or abandon the reverse stock split if this proposal is approved. If the shareholders
approve the proposal, and the Board determines to effect the reverse stock split, we would
communicate to the public, prior to the Effective Date, additional details regarding the reverse
stock split, including the Selected Ratio. If the Board does not implement the reverse stock split
within twelve (12) months after the Annual Meeting, the authority granted in this proposal to
implement the reverse stock split will terminate automatically. The Board reserves the right to
elect not to proceed with the reverse stock split if it determines, in its sole discretion, that it
is not in the best interests of the Company at that time.
The reverse stock split will affect all of our shareholders uniformly and will not affect any
shareholders percentage ownership interests or proportionate voting power, except to the de
minimus extent resulting from the treatment of fractional shares. In lieu of issuing fractional
shares, the shares owned by each shareholder who would have otherwise be entitled to a fractional
share will be rounded up to the nearest whole share.
The Board believes that the reverse stock split will increase the nominal price level of our
common stock. The Board cannot predict, however, the precise effect of the reverse stock split
upon the market price for our common stock, and the history of similar reverse stock splits for
companies in like circumstances is varied. The market price per share of our common stock after
the reverse stock split may not rise in proportion to the reduction in the number of shares of
common stock outstanding resulting from the reverse stock split, which would reduce our market
capitalization. The market price per post-reverse stock split share may not remain at a level
higher than it was pre-reverse stock split and the price may also vary based on our performance and
other factors.
The principal effects of the reverse stock split will be that
(i) the number of shares of common stock issued and outstanding will be reduced as follows,
depending on the exact split ratio chosen by the Board. For example, if the Board were to
select a ratio of 1:4, then the number of issued and outstanding shares of common stock would
decrease by a factor of 4 and the market price per share would likely increase by a factor of 4.
Based on the $1.25 per share closing price of the common stock and 2,818,593 shares outstanding
as of the record date, a 1:4 reverse stock split would likely increase the price per share to
$5.00 and would reduce the number of outstanding shares to 704,649 (without regard to the
treatment of fractional shares).
(ii) all outstanding options entitling the holders thereof to purchase shares of common
stock will enable such holders to purchase, upon exercise of their options, the number of shares
of common stock that such holders would have been able to purchase upon exercise of
21
their options immediately preceding the reverse stock split divided by the Selected Ratio, at an
exercise price equal to the exercise price specified before the reverse stock split multiplied
by the Selected Ratio, resulting in the same aggregate price being required to be paid upon
exercise thereof immediately preceding the reverse stock split,
(iii) the number of shares reserved for issuance pursuant to the Companys stock incentive
plans will be reduced by dividing that number by the Selected Ratio.
The reverse stock split will not affect the par value of the common stock. As a result, on
the effective date of the reverse stock split, the stated capital on the Companys balance sheet
attributable to the common stock will be divided by the Selected Ratio, and the additional paid-in
capital account will be credited with the amount by which the stated capital is reduced. The per
share net income or loss and net book value of the common stock will be retroactively increased for
each period because there will be fewer shares of common stock outstanding.
This amendment to the Articles of Incorporation will not change the terms of the common stock.
After the reverse stock split, the shares of common stock will have the same voting rights and
rights to dividends and distributions and will be identical in all other respects to the common
stock now authorized. Each shareholders percentage ownership of the new common stock will not be
altered except for the effect of eliminating fractional shares. The common stock issued pursuant
to the reverse stock split will remain fully paid and non-assessable. The reverse stock split is
not intended as, and will not have the effect of, a going private transaction covered by Rule
13e-3 under the Securities Exchange Act of 1934. Following the reverse stock split, the Company
will continue to be subject to the periodic reporting requirements of the Securities Exchange Act
of 1934.
The reverse stock split will not change the terms of the Companys authorized or outstanding
preferred stock, although the conversion ratio of the Series B Preferred Stock will be adjusted
proportionately in accordance with its terms.
The reverse stock split would result in some shareholders owning odd-lots of less than 100
shares of our common stock. Brokerage commissions and other costs of transactions in odd-lots are
generally higher than the costs of transactions in round-lots of even multiples of 100 shares.
Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates
If the reverse stock split is approved by our shareholders, and the Board determines it is in
the best interests of the Company to effect the split, the reverse stock split would become
effective at such time as the amendment to the Companys Articles of Incorporation, the form of
which is attached as
Appendix A
to this Proxy Statement, is filed with the Secretary of
State of the State of Georgia. Upon the filing of the amendment, all of the Companys existing
common stock will be converted into new common stock as set forth in the amendment.
As soon as practicable after the Effective Date, shareholders will be notified that the
reverse stock split has been effected. The Companys transfer agent will act as exchange agent for
purposes of implementing the exchange of stock certificates. Holders of pre-reverse stock split
shares will be asked to surrender to the exchange agent certificates representing pre-reverse stock
split shares in exchange for certificates representing post-reverse
22
stock split shares in accordance with the procedures to be set forth in a letter of transmittal that will be
delivered to the Companys shareholders. No new certificates will be issued to a shareholder until
the shareholder has surrendered to the exchange agent his, her or its outstanding certificate(s)
together with the properly completed and executed letter of transmittal.
SHAREHOLDERS SHOULD NOT
DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
Shareholders whose shares are held by their stockbroker do not need to submit old share
certificates for exchange. These shares will automatically reflect the new quantity of shares based
on the reverse stock split. Beginning on the Effective Date, each certificate representing
pre-reverse stock split shares will be deemed for all corporate purposes to evidence ownership of
post-reverse stock split shares.
Fractional Shares
We will not issue fractional certificates for post-reverse stock split shares in connection
with the reverse stock split. Instead, the Company will round up the number of shares held by each
shareholder who would otherwise have been entitled to a fraction of a share to the nearest whole
share.
Criteria to be Used for Decision to Apply the Reverse Stock Split
If the shareholders approve the reverse stock split, the Board will be authorized to proceed
with the reverse stock split. In determining whether to proceed with the reverse stock split and
choosing an appropriate ratio, the Board will consider the best interests of the Company, including
a number of factors such as general prevailing market and economic conditions, prevailing and
historical trading prices and trading volume of the Companys common stock, exchange listing
requirements, the Companys additional funding requirements and the amount of the Companys
authorized but unissued common stock.
No Dissenters Rights
Under the Georgia Business Corporation Code, shareholders will not be entitled to dissenters
rights with respect to the proposed amendment to the Companys Articles of Incorporation to effect
the reverse stock split, and the Company does not intend to independently provide shareholders with
any such right.
Certain U.S. Federal Income Tax Consequences of the Reverse Stock Split
The Company believes that the federal income tax consequences of the reverse stock split to
shareholders will be as follows:
|
1.
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|
No gain or loss will be recognized by a shareholder on the surrender
of the existing shares or receipt of a certificate representing new
shares.
|
|
|
2.
|
|
The aggregate tax basis of the new shares of common stock will equal
the aggregate tax basis of the existing shares exchanged therefor.
|
23
|
3.
|
|
The holding period of the new shares will include the holding period
of the existing shares if such existing shares were held as capital
assets on the date of the exchange.
|
|
|
4.
|
|
The conversion of the existing shares into new shares will produce no
gain or loss to the Company.
|
The Companys opinion is not binding upon the Internal Revenue Service or the Courts, and
there can be no assurance that the Internal Revenue Service or the courts will accept the position
as expressed above. This summary does not purport to be complete and does not address the tax
consequences to holders that are subject to special rules, such as banks, insurance companies,
regulated investment companies, personal holding companies, foreign entities, non-resident foreign
individuals, broker-dealers and tax exempt entities. The state and local tax consequences of the
reverse stock split may vary significantly as to each shareholder, depending upon the state in
which the shareholder resides. The foregoing summary is included for general information only.
Accordingly, shareholders are urged to consult their own tax advisors with respect to the federal,
state and local tax consequences of the reverse stock split.
Vote Required for Approval
The affirmative vote of the holders of a majority of the shares of the Companys common stock
outstanding as of the record date is required to approve the proposed amendment to the Companys
Articles of Incorporation to authorize the Board of Directors, in its sole discretion, to effect a
reverse stock split of the common stock at a ratio of up to 1:50.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
24
PROPOSAL 4
TO APPROVE GRANTING MANAGEMENT THE AUTHORITY TO
ADJOURN, POSTPONE OR CONTINUE THE ANNUAL MEETING
The Board of Directors believes that if the number of shares of common stock present or
represented at the meeting and voting in favor of one or more of the proposals presented is
insufficient to approve such proposal(s), it is in the best interests of the shareholders to enable
our proxy solicitor and Board of Directors to continue to seek to obtain a sufficient number of
additional votes to approve the applicable proposal. As a result, if at the meeting the number of
shares of common stock of the Company present or represented and voting in favor of a proposal is
insufficient to approve them, the Companys management may move to adjourn, postpone or continue
the meeting for up to 30 days in order to enable our proxy solicitor and Board of Directors to
continue to solicit additional proxies in favor of the proposal(s). In that event, you will be
asked to vote only upon the Adjournment Proposal and not on the proposal(s) for which the meeting
is adjourned.
If the Companys shareholders approve the Adjournment Proposal, management could adjourn,
postpone or continue the meeting and any adjourned session of the meeting and use the additional
time to solicit additional proxies in favor of other proposals, including the solicitation of
proxies from shareholders that have previously voted against such proposal(s). Among other things,
approval of the Adjournment Proposal could mean that even if proxies representing a sufficient
number of votes against a proposal have been received, management could adjourn, postpone or
continue the meeting for up to 30 days without a vote on that proposal or seek to convince the
holders of those shares to change their votes to votes in favor of the approval of such
proposal(s).
Vote Required for Approval
The Adjournment Proposal requires that more holders of the common stock vote in favor of the
proposal than vote against it. No proxy that is specifically marked AGAINST a proposal will be
voted in favor of the Adjournment Proposal unless the proxy is specifically marked FOR the
Adjournment Proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE ADJOURNMENT PROPOSAL.
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PROPOSAL 5
RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee has appointed Porter Keadle Moore LLP (Porter Keadle Moore) as the
independent auditors for the Company and the Bank for the current fiscal year ending December 31,
2010. Porter Keadle Moore has served as independent auditors for the Company and the Bank since
2004. Porter Keadle Moore has advised that neither the firm nor any of its principals has any
direct or material interest in the Company or the Bank except as auditors and independent public
accountants of those entities. Although shareholder ratification of our independent auditors is
not required by our Bylaws or otherwise, we are submitting the selection of Porter Keadle Moore to
our shareholders for ratification to permit shareholders to participate in this decision.
A representative of Porter Keadle Moore is expected to be present at the meeting and will be
given the opportunity to make a statement on behalf of the firm if he or she so desires. A
representative of Porter Keadle Moore is also expected to respond to appropriate questions from
shareholders.
Vote Required for Approval
Ratification of the appointment of Porter Keadle Moore as the independent auditors of
Habersham Bancorp for fiscal year ending December 31, 2010 requires that more holders of the
Companys common stock vote in favor of the proposal than against it.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR RATIFICATION OF PORTER KEADLE MOORE
AS INDEPENDENT AUDITORS
26
Shareholder Proposals
In order for a shareholder proposal to be included in the Companys proxy statement for its
next annual meeting of shareholders, the proposal must be received at least 120 calendar days prior
to the one-year anniversary of the date the Companys proxy statement was released to shareholders
in connection with the previous years annual meeting. As a result, shareholder proposals
submitted for consideration at the next Annual Meeting of Shareholders must be received by the
Company no later than December 20, 2010 to be included in the 2010 proxy materials. In addition,
if the Company does not have notice of a shareholder proposal for the annual meeting of
shareholders at least 45 days before the one-year anniversary of the date the Companys proxy
statement was released to shareholders for the previous years annual meeting, proxies solicited by
the Companys management will confer discretionary authority upon management to vote upon any such
matter.
Other Shareholder Communications
Shareholders wishing to communicate with the Board of Directors or with a particular director
may do so in writing addressed to the Board, or to the particular director, and delivering it to
the Corporate Secretary of the Company at the address of the Companys principal office at
282 Historic Highway 441 North, P. O. Box 1980, Cornelia, Georgia 30531. The recipient will
promptly forward such communications to the applicable director or to the Chairman of the Board for
consideration at the next scheduled meeting.
27
APPENDIX A
Articles of Amendment
of
Articles of Incorporation
of
HABERSHAM BANCORP
I.
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The name of the corporation is Habersham Bancorp (hereinafter called the Corporation);
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II.
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Article 5 of the Articles of Incorporation of the Corporation is hereby amended by adding to
the end of Article 5 the following:
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[NOTE: THE BOARD OF DIRECTORS OF THE COMPANY WILL BE AUTHORIZED TO IMPLEMENT A REVERSE STOCK
SPLIT AT A RATIO OF UP TO 1:50. THE TEXT BELOW WILL BE MODIFIED TO REFLECT THE REVERSE STOCK SPLIT
RATIO SELECTED BY THE BOARD.]
Each [NUMBER TO BE DETERMINED BASED ON RATIO NOT TO EXCEED 1:50 (THE RATIO) SELECTED BY THE
BOARD] shares of the Common Stock issued and outstanding immediately prior to the time this
amendment becomes effective (the Effective Time), shall be automatically changed and reclassified
without further action, into one fully paid and nonassessable share of Common Stock;
provided,
however,
that there shall be no fractional interest resulting from such change and
reclassification. In the case of any holder of fewer than [NUMBER TO BE DETERMINED BASED ON RATIO]
shares of Common Stock or any number of shares of Common Stock which, when divided by [NUMBER TO BE
DETERMINED BASED ON RATIO], does not result in a whole number, the fractional share interest of
Common Stock held by such holder as a result of such change and reclassification shall be rounded
upward to the nearest whole share. Each holder of record of a certificate or certificates that
immediately prior to the Effective Time represents outstanding shares of Common Stock (the Old
Certificates) shall be entitled to receive upon surrender of such Old Certificates to the
Corporations transfer agent for cancellation, a certificate or certificates (the New
Certificates) representing the number of whole shares of Common Stock into which the shares of the
Common Stock formerly represented by such Old Certificates so surrendered, are reclassified under
the terms hereof.
III.
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The foregoing amendment was duly approved and adopted by the shareholders of the Corporation
on
, 2010 in accordance with §14-2-1003 of the Georgia Business Corporation Code.
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IV.
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This amendment shall be effective at
p.m. on
, 2010.
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HABERSHAM BANCORP
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 2010
The undersigned shareholder of Habersham Bancorp (the Company) hereby appoints David D.
Stovall and Bonnie C. Bowling 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, May 15, 2010 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
EACH NOMINEE LISTED IN PROPOSAL 1.
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PROPOSAL 1:
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To elect the nominees listed below to serve as directors of the Company for the ensuing year:
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Thomas A. Arrendale III, Bonnie C. Bowling, Ben F. Cheek, III, James A. Stapleton, Jr., David D. Stovall and
Calvin R. Wilbanks
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FOR all nominees
listed above (except as
indicated to the contrary above.
below).
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WITHHOLD AUTHORITY
to vote for all nominees listed
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INSTRUCTION:
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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:
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PROPOSAL 2:
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To amend the Articles of Incorporation of the Company to increase
the number of authorized shares of common stock from 10,000,000
shares to 50,000,000 shares.
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 3:
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To amend the Companys Articles of Incorporation to authorize the
Board of Directors to implement, in its sole discretion, a
reverse stock split of the Companys issued and outstanding
common stock at a ratio of up to 1:50, as determined by the
Board.
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 4:
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To authorize management of the Company to adjourn the Annual
Meeting of Shareholders to another time and date if such action
is necessary to solicit additional proxies or attendance at the
Annual Meeting of Shareholders.
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 5:
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To ratify the appointment of Porter Keadle Moore LLP as
independent auditors for the Company for fiscal year ending
December 31, 2010.
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FOR
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AGAINST
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ABSTAIN
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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
through 5. Discretionary authority is hereby conferred as to all other matters as to which
management does not have reasonable notice prior to the meeting and that properly come before the
meeting.
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Dated:
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, 2010
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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)
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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
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be Held on May 15, 2010
The proxy statement for the Meeting and our 2009 annual report to shareholders are available
at http://www.vfnotice.com/habersham/.
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