<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. N/A )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box: [ ] Confidential, for Use of
[ ] Preliminary proxy statement the Commission Only (as
[X] Definitive proxy statement permitted by
[ ] Definitive additional materials Rule 14a-6(e)(2)
[ ] Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
GATEWAY BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
- --------------------------------------------------------------------------------
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
GATEWAY BANCSHARES, INC.
5102 Alabama Highway
Ringgold, Georgia 30736
(706) 965-5500
March 22, 1999
To the Shareholders of Gateway Bancshares, Inc.:
You are cordially invited to attend the annual meeting of shareholders
of Gateway Bancshares, Inc. (the "Company") to be held at Gateway Bank & Trust,
5102 Alabama Highway, Ringgold, Georgia 30736, on Thursday, April 15, 1999 at
2:00 p.m. The official Notice of the Meeting and the Proxy Statement of
management and the Company's Annual Report accompany this letter.
The principal business of the meeting will be (1) to elect nine persons
to serve as directors for a one-year term, (2) to approve the Company's 1999
Stock Option Plan and (3) to review the operations of the Company and its
wholly-owned subsidiary, Gateway Bank & Trust.
We cannot take any action at the meeting unless the holders of a
majority of the outstanding shares of Common Stock of the Company are
represented, either in person or by proxy. Therefore, whether or not you plan to
attend the meeting, please mark, date, and sign the enclosed proxy card, and
return it to the Company in the envelope provided as soon as possible.
Sincerely,
Robert G. Peck
President
<PAGE> 3
GATEWAY BANCSHARES, INC.
5102 Alabama Highway
Ringgold, Georgia 30736
(706) 965-5500
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1999
To the Shareholders of Gateway Bancshares, Inc.:
The Annual Meeting of Shareholders of Gateway Bancshares, Inc. will be
held on Thursday, April 15, 1999, at 2:00 p.m. at Gateway Bank & Trust, 5102
Alabama Highway, Ringgold, Georgia 30736 for the following purposes:
(1) To elect nine persons to serve as directors for a one-year
term;
(2) To approve the Gateway Bancshares, Inc. 1999 Stock Option
Plan; and
(3) To transact such other business as may properly come before
the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 19,
1999, as the record date for determining the shareholders who are entitled to
notice of, and to vote at, the meeting.
To ensure the greatest number of shareholders will be present either in
person or by proxy, we ask that you mark, date, sign, and return the enclosed
proxy card as soon as possible. If you attend the meeting in person, you may
revoke your proxy at the meeting and vote in person. You may revoke your proxy
at any time before the proxy is exercised.
By Order of the Board of Directors,
Robert G. Peck
President
March 22, 1999
<PAGE> 4
GATEWAY BANCSHARES, INC.
5102 Alabama Highway
Ringgold, Georgia 30736
(706) 965-5500
----------------------------------------------------------
PROXY STATEMENT FOR 1999 ANNUAL MEETING
----------------------------------------------------------
INTRODUCTION
The Board of Directors of Gateway Bancshares, Inc. (the "Company") is
furnishing this Proxy Statement in connection with its solicitation of proxies
for use at the Annual Meeting of Shareholders to be held on Thursday, April 15,
1999, and at any adjournments thereof. In addition to this solicitation by mail,
the officers and employees of the Company and its wholly-owned subsidiary,
Gateway Bank & Trust (the "Bank"), without additional compensation, may solicit
proxies in favor of the proposals discussed below, if deemed necessary, by
personal contact, letter, telephone or other means of communication. Brokers,
nominees and other custodians and fiduciaries will be requested to forward proxy
solicitation material to the beneficial owners of the shares of the Company's
common stock, where appropriate, and the Company will reimburse them for their
reasonable expenses incurred in connection with such transmittals. The Company
will bear the cost of solicitation of proxies for the Annual Meeting.
This Proxy Statement and the proxy card are first being mailed to
shareholders on or about March 22, 1999. If the enclosed proxy card is properly
executed, returned, and not revoked, it will be voted in accordance with the
specifications made by the shareholder. If the proxy card is signed and returned
but specifications are not made, the proxy will be voted FOR the election of the
nominees to the Board of Directors and FOR the approval of the Gateway
Bancshares, Inc. 1999 Stock Option Plan.
You can revoke your proxy at any time before they are voted by
delivering to Robert G. Peck, President of the Company, at the main office of
the Company, either a written revocation of the proxy or a duly executed proxy
bearing a later date or by attending the meeting and voting in person.
PROPOSALS TO BE CONSIDERED AT THE ANNUAL MEETING
Shareholders will be asked to consider the following two proposals at
the Annual Meeting:
Proposal 1. To elect nine persons to serve as directors for a
one-year term (see page 6 for a discussion of this
proposal).
Proposal 2. To approve the Gateway Bancshares, Inc. 1999 Stock
Option Plan (see page 9 for a discussion of this
proposal).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
EACH OF THE PROPOSALS.
<PAGE> 5
VOTING AT THE ANNUAL MEETING
The close of business on March 19, 1999 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting. As of the close of business on the record date, the authorized
common stock, $5.00 par value (the "Common Stock"), of the Company consisted of
10,000,000 shares, with 679,048 shares issued and outstanding. Each issued and
outstanding share is entitled to one vote.
Directors are elected by a plurality of the shares present in person or
by proxy and entitled to vote. Only those votes actually cast will be counted
for the purpose of determining whether a particular nominee received sufficient
votes to be elected. Accordingly, any abstentions and broker non-votes, which
occur when a broker submits a proxy card without exercising discretionary voting
authority on a non-routine matter, will not be included in vote totals and will
not be considered in determining the outcome of the vote.
Approval of the Gateway Bancshares, Inc. 1999 Stock Option Plan and any
other matter that may properly come before the Annual Meeting requires the
affirmative vote of a majority of shares of Common Stock present in person or by
proxy and entitled to vote on such matter. Abstentions will be counted in
determining the minimum number of votes required for approval and will,
therefore, have the effect of negative votes. Broker non-votes will not be
counted as votes for or against approval of any other matter properly brought
before the Annual Meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own beneficially
more than 10% of the Company's outstanding common stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in their ownership of the Company's common stock. Directors, executive
officers and greater than 10% shareholders are required to furnish the Company
with copies of the forms they file. To our knowledge, based solely on a review
of the copies of these reports furnished to the Company, during the fiscal year
ended December 31, 1998, all of our directors and executive officers, who are
listed below, filed their Form 3, Initial Statement of Beneficial Ownership, 12
days late. All other Section 16(a) filings by our directors, executive officers
and greater than 10% Shareholders for the fiscal year ended December 31, 1998
were in compliance with all applicable requirements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the number of shares of the Company's Common
Stock beneficially owned as of March 19, 1999 by (a) each director of the
Company, (b) each executive officer, and (c) all executive officers and
directors as a group. As of March 19, 1999, the Company did not have any
shareholders who beneficially owned more than 5% of the shares of the Company's
outstanding Common Stock. The information shown below is based upon information
furnished to the Company by the named persons. Unless otherwise indicated, each
person is the record owner and has sole voting and investment power with respect
to his or her shares.
Information relating to beneficial ownership of the Company is based
upon "beneficial ownership" concepts described in the rules issued under the
Securities Exchange Act of 1934, as
2
<PAGE> 6
amended. Under these rules a person is deemed to be a "beneficial owner" of a
security if that person has or shares "voting power," which includes the power
to vote or to direct the voting of the security, or "investment power," which
includes the power to dispose or to direct the disposition of the security.
Under the rules, more than one person may be deemed to be a beneficial owner of
the same securities. A person is also deemed to be a beneficial owner of any
security as to which that person has the right to acquire beneficial ownership
within sixty (60) days from the record date.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS
---------------- ---------------- ----------------
<S> <C> <C>
(A) DIRECTORS
Jack Joseph Babb
172 Crestview Circle
P. 0. Box 351 23,100(1) 3.4%
Ringgold, GA 30736
William H. H. Clark
406 Alabama Rd. 10,500(2) 1.5%
Ringgold, GA 30736
Patricia Yvonne Cochran
460 Hillcrest Circle 5,000(3) .7%
Ringgold, GA 30736
Jeannette Wilson Dupree
8423 Alabama Highway 16,305(4) 2.4%
Ringgold, GA 30736
James A. Gray, Sr.
7138 Revere Circle. 20,500(5) 3.0%
Chattanooga, TN 37421
Harle B. Green
8319 Alabama Highway 15,400(6) 2.3%
Ringgold, GA 30736
Walter Lee Jackson
423 Crestview Circle
P. 0. Box 670 22,500(7) 3.3%
Ringgold, GA 30736
Ernest Kresch
3216 Three Notch Rd. 32,500(8) 4.8%
Ringgold, GA 30736
Robert G. Peck
259 Cannonball Lane 5,000(9) .7%
Ringgold, GA 30736
(B) EXECUTIVE OFFICERS*
Jeffrey R. Hensley
109 Pamela Lane 6,800(10) 1.0%
Ringgold, GA 30736
Boyd M. Steele
190 Laurel Circle 5,000(11) .7%
Ringgold, Georgia 30736
(C) ALL DIRECTORS AND EXECUTIVE 162,605 23.9%
OFFICERS, AS A GROUP
</TABLE>
3
<PAGE> 7
- -------------------------
* Mr. Green and Mr. Peck are also executive officers of the Company.
(1) Consists of (a) 7,500 shares owned jointly by Mr. Babb and his spouse,
(b) 7,500 shares held in an IRA account for Mr. Babb, (c) 7,500 shares
owned directly by Mr. Babb's spouse as to which beneficial ownership is
shared, and (d) 600 shares held in custodian accounts by Mr. Babb's
spouse as to which beneficial ownership is shared.
(2) Consists of 10,500 shares owned directly by Ringgold Mining &
Manufacturing Co., Inc. as to which beneficial ownership is shared.
(3) Consists of 5,000 shares owned jointly by Ms. Cochran and her spouse.
(4) Consists of (a) 1,200 shares owned directly by Ms. Dupree, (b) 9,550
shares owned jointly by Ms. Dupree and her spouse, (c) 2,290 shares
held in an IRA account for Ms. Dupree, and (d) 3,265 shares held in an
IRA account for Ms. Dupree's spouse as to which beneficial ownership is
shared.
(5) Consists of 20,500 shares owned jointly by Mr. Gray and his spouse.
(6) Consists of (a) 3,300 shares owned jointly by Mr. Green and his spouse,
(b) 12,000 shares held in an IRA account for Mr. Green, and (c) 100
shares held by Ms. Green as custodian as to which beneficial ownership
is shared.
(7) Consists of (a) 16,208 shares owned jointly by Mr. Jackson and his
spouse, (b) 4,107 shares held in an IRA account for Mr. Jackson, and
(c) 2,185 shares held in an IRA account for Mr. Jackson's spouse as to
which beneficial ownership is shared.
(8) Consists of (a) 30,500 shares owned directly by Mr. Kresch and (b)
2,000 shares in a Simplified Employee Pension Plan for Mr. Kresch as to
which beneficial ownership is shared.
(9) Consists of 5,000 shares held in an IRA account for Mr. Peck.
(10) Consists of (a) 3,800 shares owned jointly by Mr. Hensley and his
spouse and (b) 3,000 shares held in an IRA account for Mr. Hensley.
(11) Consists of 5,000 shares held in an IRA account for Mr. Steele.
4
<PAGE> 8
PROPOSAL ONE: ELECTION OF DIRECTORS
The Board recommends that the shareholders elect the nominees identified
below as directors. The following table shows for each nominee: (a) his or her
name, (b) his or her age at December 31, 1998, (c) how long he or she has been a
director of the Company, (d) his or her position(s) with the Company, and (e)
his or her principal occupation and recent business experience.
DIRECTOR NOMINEES
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY
NAME (AGE) DIRECTOR SINCE AND BUSINESS EXPERIENCE
---------- -------------- -----------------------
<S> <C> <C>
Jack Joseph Babb (70) 1995 Real Estate Developer;
Vice President, Babb Lumber Co.;
President, Townsend Realty
William H. H. Clark (62) 1995 State Representative;
Retired Military Officer;
President, J.H. Clark Farms, Inc.;
President, Ringgold Preservation Corp.
Patricia Yvonne Cochran (42) 1995 Business Owner/Administrator,
Gingerbread House Child Care Center,
Kids Preparatory Pre-School
Jeannette Wilson Dupree (59) 1995 Insurance Agent, State Farm
Insurance Company
James A. Gray, Sr. (58) 1996 Automobile Dealer, President
Carco Motor, Inc.
Harle B. Green(l)(52) 1995 Chairman of the Board and
Chief Financial Officer of the Company and
the Bank
Walter Lee Jackson (66) 1995 Automobile Dealer, President
Walter Jackson Chevrolet, Inc.,
Jackson Chevrolet-Olds, Geo, Inc.
Ernest Kresch (38) 1995 Podiatrist
Robert G. Peck (2)(48) 1996 President and Chief Executive Officer of
the Company and the Bank
</TABLE>
- ------------------
(1) Mr. Green has served as Chairman of the Board of the Company since its
inception in October 1995. Mr. Green retired from full-time banking in
1991. From 1994 through 1995, Mr. Green provided banking consulting
services for a bank in Chattanooga, Tennessee.
(2) Mr. Peck has served as President and Chief Executive Officer of the
Company since January 23, 1996. Prior to becoming an officer of the
Company, Mr. Peck served as Senior Vice President of a community bank.
5
<PAGE> 9
MEETINGS AND COMMITTEES OF THE BOARD
During the year ended December 31, 1998, the Board of Directors of the
Company held seven meetings. All incumbent directors attended at least 75% of
the meetings of the Board of Directors of the Company except for Messrs. Babb,
Clark, and Kresch, each of whom attended five meetings. The directors of the
Bank are the same as those of the Company. During the year ended December 31,
1998, the Board of Directors of the Bank held 16 meetings. All of the Bank
directors attended at least 75% of the meetings of the Board of Directors of the
Bank.
On March 18, 1999, the Board of Directors established a Compensation
Committee for the sole purpose of adminstering the proposed Gateway Bancshares,
Inc. 1999 Stock Option Plan. The Compensation Committee consists of Jeannette
Wilson Dupree, James A. Gray, Sr. and Ernest Kresch. As of March 19, 1999 the
Compensation Committee has held no meetings. See "Proposal Two: Approval of the
Gateway Bancshares, Inc. 1999 Stock Option Plan - Terms of the Stock Plan -
Administration."
The Board of Directors has established an Audit Committee, which
reviews the annual report and internal audit report of the independent public
accountants. The Audit Committee consists of all the members of the Company's
Board of Directors, and held one meeting during the year ended December 31,
1998. The Board of Directors of the Company has no nominating committees.
EXECUTIVE OFFICERS
The following table shows for each executive officer of the Company:
(a) his name, (b) his age at December 31, 1998, (c) how long he has been an
officer of the Company, and (d) his positions with the Company and the Bank:
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY
NAME (AGE) OFFICER SINCE COMPANY AND THE BANK
---------- ------------- --------------------
<S> <C> <C>
Robert G. Peck (48) 1996 President and Chief Executive
Officer of the Company and the Bank
Harle B. Green (52) 1995 Chairman of the Board and Chief
Financial Officer of the Company and
the Bank
Jeffrey R. Hensley (47) 1997 Senior Vice President and Assistant
Secretary of the Company and the Bank
Boyd M. Steele (50) 1996 Executive Vice President and Secretary
of the Company and the Bank and
Chief Loan Officer of the Bank
</TABLE>
6
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
CHIEF EXECUTIVE OFFICER
The following tables set forth certain information relating to various
forms of compensation paid or granted to the Company's chief executive officer
in fiscal years 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
The following table presents the total compensation the Company paid
during fiscal years 1998, 1997 and 1996 to its chief executive officer. The
Company did not pay or award any long-term compensation to its Chief Executive
Officer during fiscal years 1998, 1997, or 1996.
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Other Annual
Compensation Salary Bonus Compensation
Name and Position Year ($) ($) ($)
----------------- --------------- ------ ------- ------------
<S> <C> <C> <C> <C>
Robert G. Peck, 1998 84,850 0 0
President and Chief Executive
Officer
1997 76,805 0 0
1996 65,676 0 0
</TABLE>
OPTION GRANTS IN FISCAL YEAR 1998
The Company has no outstanding stock options or stock appreciation
rights and granted no stock options or stock appreciation rights during fiscal
year 1998.
DIRECTOR COMPENSATION
Currently, the directors of the Company and the Bank are not separately
compensated for their services as directors. The Company and the Bank may begin
compensating the directors for their services as directors if the Company and
the Bank recover cumulative losses incurred and become profitable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and the Bank have banking and other business transactions
in the ordinary course of business with directors and officers of the Company
and the Bank and their affiliates, including members of their families,
corporations, partnerships or other organizations in which such directors and
officers have a controlling interest, on substantially the same terms (including
price, interest rate and collateral) as those prevailing at the same time for
comparable transactions with unrelated parties. In the
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<PAGE> 11
opinion of management, such transactions do not involve more than the normal
risk of collectibility or present other unfavorable features to the Company or
the Bank.
PROPOSAL TWO: APPROVAL OF THE GATEWAY BANCSHARES, INC. 1999 STOCK OPTION PLAN
INTRODUCTION
On March 18, 1999, the Board of Directors approved the Gateway
Bancshares, Inc. 1999 Stock Option Plan (the "Stock Plan"), the full text of
which is set forth in Appendix A to this Proxy Statement.
The Stock Plan provides the Company with increased flexibility to grant
options to key employees, officers, and directors of the Company and its
affiliates for the purpose of giving them a proprietary interest in the Company
and providing the Company with a mechanism to attract and retain key personnel.
The Board of Directors has reserved 200,000 shares of Common Stock, for issuance
pursuant to awards that may be made under the Stock Plan, subject to adjustment
as provided in the Stock Plan.
Applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Code") restrict the Company's ability in the absence of shareholder
approval to grant incentive stock options under Code Section 421 and to claim
deductions which may otherwise be associated with the grant of nonqualified
options under Code Section 162(m).
The following description of the Stock Plan is qualified in its
entirety by reference to the applicable provisions of the plan document.
TERMS OF THE STOCK PLAN
ADMINISTRATION
Awards under the Stock Plan will be determined by the Compensation
Committee of the Board of Directors (the "Committee"), the members of which are
selected by the Board of Directors. The Board of Directors will consider the
advisability of complying with the disinterested standards contained in both
Section 162(m) of the Code and Rule 16(b)(3) (promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) when appointing members
to the Committee. The Committee will have at least two members. At the present
time, the members of the Committee are Jeanette Wilson Dupree, James A. Gray,
Sr. and Ernest Kresch.
OPTION AWARDS
The Stock Plan permits the Committee to make awards of options to
purchase shares of Common Stock and tax reimbursement payments to eligible
persons. These discretionary awards may be made on an individual basis or
pursuant to a program approved by the Committee for the benefit of a group of
eligible persons.
The number of shares of Common Stock as to which any option is granted
and to whom any option is granted will be determined by the Committee, subject
to the provisions of the Stock Plan. Options issuable may be made exercisable or
settled at such prices and may be made forfeitable or
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<PAGE> 12
terminable under such terms as are established by the Committee, to the extent
not otherwise inconsistent with the terms of the Stock Plan. No participant who
is a "covered employee", within the meaning of Section 162(m) of the Code,
however, may be granted during any single fiscal year of the Company rights to
shares of Common Stock under options which, in the aggregate, exceed 100,000
shares of Common Stock.
Options generally are not transferable or assignable during a holder's
lifetime.
The Stock Plan provides for incentive stock options and non-qualified
stock options. The Committee will determine whether an option is an incentive
stock option or a non-qualified stock option at the time the option is granted,
and the option will be evidenced by a Stock Incentive Agreement. Options may be
made exercisable pursuant to such terms as are established by the Committee, to
the extent not otherwise inconsistent with the terms of the Stock Plan.
The exercise price of an option shall be set forth in the applicable
Stock Incentive Agreement. The exercise price of an incentive stock option may
not be less than the fair market value of the Common Stock on the date of the
grant (or less than 110% of the fair market value if the participant owns more
than 10% of the Company's outstanding Common Stock). At the time the incentive
stock option is exercised, the Company will be entitled to place a legend on the
certificates representing the shares of Common Stock purchased pursuant to the
option to identify them as shares of Common Stock purchased upon the exercise of
an incentive stock option. Non-qualified stock options may be made exercisable
at a price equal to, less than or more than the fair market value of the Common
Stock on the date that the option is awarded, based upon an average fair market
value of the Common Stock at the time the option is awarded, or based upon any
other reasonable measure of fair market value. The Committee may permit an
option exercise price (1) to be paid in cash or by the delivery of
previously-owned shares of Common Stock, or (2) to be satisfied through a
cashless exercise executed through a broker or by having a number of shares of
Common Stock otherwise issuable at the time of exercise withheld.
The term of an option shall be specified in the applicable Stock
Incentive Agreement. The term of an incentive stock option may not exceed ten
years from the date of grant; however, any incentive stock option granted to a
participant who owns more than 10% of the Common Stock will not be exercisable
after the expiration of five (5) years after the date the option is granted.
Subject to any further limitations in a Stock Incentive Agreement, in the event
of a participant's termination of employment, the term of an incentive stock
option shall expire, terminate and become unexercisable no later than three
months after the date of such termination of employment; provided, however, that
if such termination of employment is due to death or disability, one year will
be substituted for the three-month period.
TAX REIMBURSEMENT PAYMENTS
The Committee may make tax reimbursement payments designed to cover tax
obligations of employees that result from the exercise of an option.
TERMINATION OF OPTIONS
The terms of a particular option may provide that they terminate, among
other reasons, upon the holder's termination of employment or other status with
respect to the Company or any affiliate of the Company, upon a specified date,
upon the holder's death or disability, or upon the occurrence of a change in
control of the Company. Options may include exercise, conversion or settlement
rights to a holder's
9
<PAGE> 13
estate or personal representative in the event of the holder's death or
disability. At the Committee's discretion, options that are subject to
termination may be cancelled, accelerated, paid or continued, subject to the
terms of the applicable Stock Incentive Agreement and to the provisions of the
Stock Plan.
CERTAIN REORGANIZATIONS
The number of shares of Common Stock reserved for issuance in
connection with the grant or settlement of options or to which an option is
subject, as the case may be, and the exercise price of each option are subject
to adjustment in the event of any recapitalization of the Company effected
without the receipt of consideration.
In the event of certain corporate reorganizations, options may be
substituted, cancelled, accelerated, cashed-out or otherwise adjusted by the
Committee, provided such adjustment is not inconsistent with the terms of the
Stock Plan or any agreement reflecting the terms of an option.
AMENDMENTS OR TERMINATION
Although the Stock Plan may be amended by the Board of Directors
without stockholder approval, the Board of Directors also may condition any such
amendment upon stockholder approval if stockholder approval is deemed necessary
or appropriate in consideration of tax, securities or other laws. No such action
by the Board of Directors may adversely affect the rights of a holder of a Stock
Incentive without the holder's consent.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of March 18, 1999, stock options have been granted under the Stock
Plan to the persons and groups shown in the table below. The Committee has not
yet made any determination as to which eligible participants will be granted
options under the Stock Plan in the future. Consequently, it is not presently
possible to determine, with respect to the persons and groups shown in the table
below, the benefits or amounts that will be received in the future by such
persons or groups pursuant to the Stock Plan.
<TABLE>
<CAPTION>
GATEWAY BANCSHARES, INC.
1999 STOCK OPTION PLAN
------------------------
NAME AND POSITION NUMBER OF OPTIONS
----------------- -----------------
<S> <C>
EXECUTIVE OFFICERS:
Robert G. Peck, President and Chief 20,350
Executive Officer
Harle B. Green, Chairman and Chief 16,950
Financial Officer
Jeffrey R. Hensley, Senior Vice 13,550
President and Assistant Secretary of the
Company and the Bank
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
GATEWAY BANCSHARES, INC.
1999 STOCK OPTION PLAN
-------------------------
NAME AND POSITION NUMBER OF OPTIONS
----------------- -----------------
<S> <C>
Boyd M. Steele, Executive Vice President 18,650
and Secretary of the Company and the
Bank and Chief Loan Officer of the Bank
ALL EXECUTIVE OFFICERS AS A GROUP 69,500
ALL NON-EXECUTIVE DIRECTORS AS A GROUP 94,850
ALL NON-EXECUTIVE OFFICER EMPLOYEES AS A --
GROUP
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The following discussion outlines generally the federal income tax
consequences of participation in the Stock Plan. Individual circumstances may
vary and each participant should rely on his or her own tax counsel for advice
regarding federal income tax treatment under the Stock Plan.
INCENTIVE STOCK OPTIONS
A participant who exercises an incentive stock option will not be taxed
at the time he or she exercises his or her option or a portion thereof. Instead,
the participant will be taxed at the time he or she sells the shares of Common
Stock purchased pursuant to the incentive stock option. The participant will be
taxed on the difference between the price he or she paid for the Common Stock
and the amount for which he or she sells the Common Stock. If the participant
does not sell the shares of Common Stock prior to two years from the date of
grant of the incentive stock option and one year from the date the Common Stock
is transferred to him or her, the gain will be capital gain and the Company will
not get a corresponding deduction. If the participant sells the shares of Common
Stock at a gain prior to that time, the difference between the amount the
participant paid for the Common Stock and the lesser of fair market value on the
date of exercise or the amount for which the stock is sold will be taxed as
ordinary income. If the participant sells the shares of Common Stock for less
than the amount he or she paid for the stock prior to the one- or two-year
period indicated, no amount will be taxed as ordinary income and the loss will
be taxed as a capital loss. Exercise of an incentive stock option may subject a
participant to, or increase a participant's liability for, the alternative
minimum tax.
NON-QUALIFIED OPTIONS
A participant will not recognize income upon the grant of a
non-qualified option or at any time prior to the exercise of the option or a
portion thereof. At the time the participant exercises a non-qualified option or
portion thereof, he or she will recognize compensation taxable as ordinary
income in an amount equal to the excess of the fair market value of the Common
Stock on the date the option is exercised over the price paid for the Common
Stock, and the Company will then be entitled to a corresponding deduction.
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<PAGE> 15
Depending upon the period shares of Common Stock are held after
exercise, the sale or other taxable disposition of shares acquired through the
exercise of a non-qualified option generally will result in a short- or
long-term capital gain or loss equal to the difference between the amount
realized on such disposition and the fair market value of such shares when the
non-qualified option was exercised.
Special rules apply to a participant who exercises a non-qualified
option by paying the exercise price, in whole or in part, by the transfer of
shares of Common Stock to the Company.
SHAREHOLDER APPROVAL
The Board of Directors seeks shareholder approval because such approval
is required under the Code as a condition to incentive stock option treatment
and will maximize the potential for deductions associated with any non-qualified
options granted under the Stock Plan.
Approval of the Stock Plan requires the affirmative vote of the holders
of at least a majority of the outstanding shares of Common Stock of the Company
present, or represented and entitled to vote, at the Annual Meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected the accounting firm of Hensley, Land &
Associates to serve as auditors for the Company for the current year. The firm
of Hensley, Land & Associates has served as the Company's auditors since 1996. A
representative of the firm is expected to be present at the meeting and will be
given the opportunity to make a statement if he or she desires to do so and will
be available to respond to appropriate questions from shareholders.
SHAREHOLDER PROPOSALS
If you wish to submit a proposal for action at the next Annual Meeting
of Shareholders and would like to have it included in the proxy statement for
that meeting you must send a written copy of the proposal to the Chief Executive
Officer of the Company at the address listed on the first page of this Proxy
Statement on or before December 1, 1999.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters that
may be brought before the meeting. If, however, any matter other than the
election of directors or the approval of the Gateway Bancshares, Inc. 1999 Stock
Option Plan, or matters incidental thereto, should properly come before the
meeting, votes will be cast pursuant to the proxies in accordance with the best
judgment of the proxyholders.
If you cannot be present in person, you are requested to complete,
sign, date, and return the enclosed proxy promptly. An envelope has been
provided for that purpose. No postage is required if mailed in the United
States.
March 22, 1999
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APPENDIX A
GATEWAY BANCSHARES, INC.
1999 STOCK OPTION PLAN
<PAGE> 17
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
SECTION 1 DEFINITIONS.....................................................................................1
1.1 DEFINITIONS.............................................................................................1
SECTION 2 THE STOCK INCENTIVE PLAN........................................................................4
2.1 PURPOSE OF THE PLAN.....................................................................................4
2.2 STOCK SUBJECT TO THE PLAN...............................................................................4
2.3 ADMINISTRATION OF THE PLAN..............................................................................5
2.4 ELIGIBILITY AND LIMITS..................................................................................5
SECTION 3 TERMS OF OPTIONS................................................................................6
3.1 GENERAL TERMS AND CONDITIONS............................................................................6
3.2 OTHER TERMS AND CONDITIONS..............................................................................6
3.3 TREATMENT OF AWARDS UPON TERMINATION OF SERVICE.........................................................8
SECTION 4 RESTRICTIONS ON STOCK...........................................................................8
4.1 ESCROW OF SHARES........................................................................................8
4.2 RESTRICTIONS ON TRANSFER................................................................................9
SECTION 5 GENERAL PROVISIONS..............................................................................9
5.1 WITHHOLDING.............................................................................................9
5.2 CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION..........................................................9
5.3 TAX REIMBURSEMENTS.....................................................................................10
5.4 COMPLIANCE WITH CODE...................................................................................10
5.5 RIGHT TO TERMINATE SERVICE.............................................................................10
5.6 RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS...................................................11
5.7 NON-ALIENATION OF BENEFITS.............................................................................11
5.8 TERMINATION AND AMENDMENT OF THE PLAN..................................................................11
5.9 STOCKHOLDER APPROVAL...................................................................................11
5.10 CHOICE OF LAW..........................................................................................11
5.11 EFFECTIVE DATE OF PLAN.................................................................................11
</TABLE>
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GATEWAY BANCSHARES, INC.
1999 STOCK OPTION PLAN
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall
be deemed to include the feminine, and the singular to include the plural,
unless the context clearly indicates otherwise, and the following capitalized
words and phrases are used herein with the meaning thereafter:
(a) "Affiliate" means (i) any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of granting of the Option, each of the corporations (other than the
Company) owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain, or (ii) any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of granting of the Option, each of
the corporations, other than the last corporation in the unbroken chain, owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(b) "Board of Directors" means the board of directors of
the Company.
(c) "Cause" has the same meaning as provided in the
employment agreement between the Participant and the Company or, if applicable,
any Affiliate of the Company on the date of Termination of Service, or if no
such definition or employment agreement exists, "Cause" means conduct amounting
to (1) fraud or dishonesty against the Company or its Affiliates, (2)
Participant's willful misconduct, repeated refusal to follow the reasonable
directions of the Board of Directors of the Company or its Affiliates, or
knowing violation of law in the course of performance of the duties of
Participant's service with the Company or its Affiliates, (3) repeated absences
from work without a reasonable excuse, (4) repeated intoxication with alcohol or
drugs while on the Company or Affiliates' premises during regular business
hours, (5) a conviction or plea of guilty or nolo contendere to a felony or a
crime involving dishonesty, or (6) a breach or violation of the terms of any
agreement to which Participant and the Company or its Affiliates are party.
(d) "Change in Control" means, as used in a Stock Option
Agreement, any one of the following events which may occur after the date the
Option is granted:
(1) the acquisition by any individual, entity or
"group", within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended, (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934) of voting securities of the Company where such acquisition
causes any such Person to own twenty-five percent (25%) or more of the combined
voting power of the then outstanding voting securities then entitled to vote
generally in the election of directors (the "Outstanding Voting Securities");
provided, however, that for purposes of this Section l(d)(1), the following
shall not be deemed to result in a Change in Control, (i) any
<PAGE> 19
acquisition directly from the Company, unless such a Person subsequently
acquires additional shares of Outstanding Voting Securities other than from the
Company, in which case any such subsequent acquisition shall be deemed to be a
Change in Control; or, (ii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Affiliate;
(2) a merger, consolidation, share exchange,
combination reorganization or like transaction involving the Company in which
the stockholders of the Company immediately prior to such transaction do not own
at least fifty percent (50%) of the value or voting power of the issued and
outstanding capital stock of the Company or its successor immediately after such
transaction;
(3) the sale or transfer (other than as Company
security for the Company's obligations) of more than fifty percent (50%) of the
assets of the Company in any one transaction or a series of related transactions
occurring within a one (1) year period in which the Company, any corporation
controlled by the Company or the stockholders of the Company immediately prior
to the transaction do not own at least fifty percent (50%) of the value or
voting power of the issued and outstanding equity securities of the acquiror
immediately after the transaction;
(4) the sale or transfer of more than fifty
percent (50%) of the value or voting power of the issued and outstanding capital
stock of the Company by the holders thereof in any one transaction or a series
of related transactions occurring within a one (1) year period in which the
Company, any corporation controlled by the Company or the stockholders of the
Company immediately prior to the transaction do not own at least fifty percent
(50%) of the value or voting power of the issued and outstanding equity
securities of the acquiror immediately after the transaction; or
(5) the dissolution or liquidation of the
Company.
(e) "Code" means the Internal Revenue Code of
1986, as amended.
(f) "Company" means Gateway Bancshares, Inc., a
bank holding company organized under the laws of the State of Georgia.
(g) "Committee" means the committee appointed by
the Board of Directors to administer the Plan pursuant to Plan Section 2.3.
(h) "Disability" has the same meaning as
provided in the long-term disability plan or policy maintained or, if
applicable, most recently maintained, by the Company, or, if applicable, any
Affiliate of the Company for the Participant. If no long-term disability plan or
policy was ever maintained on behalf of the Participant or, if the determination
of Disability relates to an Incentive Stock Option, Disability shall mean that
condition described in Code Section 22(e)(3), as amended from time to time. In
the event of a dispute, the determination of Disability shall be made by the
Board of Directors and shall be supported by advice of a physician competent in
the area to which such Disability relates.
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<PAGE> 20
(i) "Disposition" means any conveyance, sale, transfer,
assignment, pledge or hypothecation, whether outright or as security, inter
vivos or testamentary, with or without consideration, voluntary or involuntary.
(j) "Fair Market Value" refers to the determination of
value of a share of Stock. If the Stock is actively traded on any national
securities exchange or any Nasdaq quotation or market system, Fair Market Value
shall mean the closing price at which sales of Stock shall have been sold on the
most recent trading date immediately prior to the date of determination, as
reported by any such exchange or system selected by the Committee on which the
shares of Stock are then traded. If the shares of Stock are not actively traded
on any such exchange or system, Fair Market Value shall mean the arithmetic mean
of the bid and asked prices for the shares of Stock on the most recent trading
date within a reasonable period prior to the determination date as reported by
such exchange or system. If there are no bid and asked prices within a
reasonable period and if the shares of Stock are not traded on any exchange or
system as of the determination date, Fair Market Value shall mean the fair
market value of a share of Stock as determined by the Committee taking into
account such facts and circumstances deemed to be material by the Committee to
the value of the Stock in the hands of the Participant; provided that, for
purposes of granting awards other than Incentive Stock Options, Fair Market
Value of a share of Stock may be determined by the Committee by reference to the
average market value determined over a period certain or as of specified dates,
to a tender offer price for the shares of Stock (if settlement of an award is
triggered by such an event) or to any other reasonable measure of fair market
value and provided further that, for purposes of granting Incentive Stock
Options, Fair Market Value of a share of Stock shall be determined in accordance
with the valuation principles described in the regulations promulgated under
Code Section 422.
(k) "Incentive Stock Option" means an incentive stock
option, as defined in Code Section 422, described in Plan Section 3.2.
(l) "Non-Qualified Stock Option" means a stock option,
other than an option qualifying as an Incentive Stock Option, described in Plan
Section 3.2.
(m) "Option" means a Non-Qualified Stock Option or an
Incentive Stock Option.
(n) "Over 10% Owner" means an individual who at the time
an Incentive Stock Option is granted owns Stock possessing more than 10% of the
total combined voting power of the Company or one of its Parents or
Subsidiaries, determined by applying the attribution rules of Code Section
424(d).
(o) "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, with
respect to Incentive Stock Options, at the time of granting of the Incentive
Stock Option, each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
3
<PAGE> 21
(p) "Participant" means an individual who receives an
Option hereunder.
(q) "Plan" means the Gateway Bancshares, Inc. 1999 Stock
Option Plan.
(r) "Stock" means the Company's common stock, $5.00 par
value per share.
(s) "Stock Option Agreement" means an agreement between
the Company and a Participant or other documentation evidencing an award of an
Option.
(t) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
with respect to Incentive Stock Options, at the time of the granting of the
Incentive Stock Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
(u) "Termination of Service" means the termination of the
service relationship, whether employment or otherwise, between a Participant and
the Company and its Affiliates, regardless of the fact that severance or similar
payments are made to the Participant for any reason, including, but not by way
of limitation, a termination by resignation, discharge, death, Disability or
retirement. The Committee shall, in its absolute discretion, determine the
effect of all matters and questions relating to Termination of Service,
including, but not by way of limitation, the question of whether a leave of
absence constitutes a Termination of Service, or whether a Termination of
Service is for Cause.
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide
incentive to officers, employees and directors of the Company and its Affiliates
to stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
officers, employees and directors by providing them with a means to acquire a
proprietary interest in the Company by acquiring shares of Stock or to receive
compensation which is based upon appreciation in the value of Stock; and (c)
provide a means of obtaining and rewarding key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance
with Section 5.2, 200,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Options. At no time shall the
Company have outstanding Options and shares of Stock issued in respect of
Options in excess of the Maximum Plan Shares. The shares of Stock attributable
to the nonvested, unpaid, unexercised, unconverted or otherwise unsettled
portion of any Option that is forfeited or cancelled or expires or terminates
for any reason without becoming vested, paid, exercised, converted or otherwise
settled in full shall again be available for purposes of the Plan.
4
<PAGE> 22
2.3 Administration of the Plan. The Plan shall be administered by
the Committee. The Committee shall have full authority in its discretion to
determine the officers, employees and directors of the Company or any Affiliate
to whom Options shall be granted and the terms and provisions of Options,
subject to the Plan. Subject to the provisions of the Plan, the Committee shall
have full and conclusive authority to interpret the Plan; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the respective Stock Option Agreements and to make all other
determinations necessary or advisable for the proper administration of the Plan.
The Committee's determinations under the Plan need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan (whether or not such persons are similarly situated). The
Committee's decisions shall be final and binding on all Participants.
The Committee shall consist of at least two members of the
Board of Directors and, during those periods that the Company is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, the Board of
Directors shall consider the advisability of whether each such appointee shall
qualify as a "non-employee director", as that term is defined in Rule 16b-3 as
then in effect under the Securities Exchange Act of 1934, and, during those
periods that the Company has issued equity securities required to be registered
under Section 12 of the Securities Exchange Act of 1934, the Board of Directors
shall consider the advisability of whether each such appointee shall separately
qualify as an "outside director", within the meaning of Code Section 162(m) and
the regulations promulgated thereunder. Each member of the Committee shall serve
at the pleasure of the Board of Directors and the Board of Directors may from
time to time remove members from or add members to the Committee. Vacancies on
the Committee shall be filled by the Board of Directors.
The Committee shall select one of its members as Chairman and
shall hold meetings at the times and in the places as it may deem advisable.
Acts approved by a majority of the Committee in a meeting at which a quorum is
present, or acts reduced to or approved in writing by a majority of the members
of the Committee, shall be the valid acts of the Committee.
2.4 Eligibility and Limits. Options may be granted only to
officers, employees and directors of the Company or any Affiliate; provided,
however, that an Incentive Stock Option may only be granted to an employee of
the Company or any Parent or Subsidiary. In the case of Incentive Stock Options,
the aggregate Fair Market Value (determined as of the date an Incentive Stock
Option is granted) of Stock with respect to which Options intended to meet the
requirements of Code Section 422 become exercisable for the first time by an
individual during any calendar year under all plans of the Company and its
Parents and Subsidiaries shall not exceed $100,000; provided further, that if
the limitation is exceeded, the Incentive Stock Option(s) which cause the
limitation to be exceeded shall be treated as Non-Qualified Stock Option(s);
except as the terms of the Stock Option Agreement may expressly provide
otherwise. To the extent required under Code Section 162(m) and regulations
thereunder for compensation to be treated as qualified performance-based
compensation, subject to adjustment in accordance with Section 5.2, the maximum
number of shares of Stock with respect to which Options may be granted during
any single fiscal year of the Company to any employee shall not exceed 100,000.
5
<PAGE> 23
SECTION 3 TERMS OF OPTIONS
3.1 General Terms and Conditions.
(a) The number of shares of Stock as to which an Option
shall be granted shall be determined by the Committee in its sole discretion,
subject to the provisions of Section 2 as to the total number of shares
available for grants under the Plan. If a Stock Option Agreement so provides, a
Participant may be granted a new Option to purchase a number of shares of Stock
equal to the number of previously owned shares of Stock tendered in payment of
the Exercise Price (as defined below) for each share of Stock purchased pursuant
to the terms of the Stock Option Agreement.
(b) Each Option shall be evidenced by a Stock Option
Agreement in such form and containing such terms, conditions and restrictions as
the Committee may determine is appropriate. Each Stock Option Agreement shall be
subject to the terms of the Plan and any provision in a Stock Option Agreement
that is inconsistent with the Plan shall be null and void.
(c) The date an Option is granted shall be the date on
which the Committee has approved the terms and conditions of the Stock Option
Agreement and has determined the recipient of the Option and the number of
shares covered by the Option and has taken all such other action necessary to
complete the grant of the Option.
(d) The Committee may provide in any Stock Option
Agreement (or subsequent to the award of an Option but prior to its expiration
or cancellation, as the case may be) that, in the event of a Change in Control,
the Option shall or may be cashed out on the basis of any price not greater than
the highest price paid for a share of Stock in any transaction reported by any
market or system selected by the Committee on which the shares of Stock are then
actively traded during a specified period immediately preceding or including the
date of the Change in Control or offered for a share of Stock in any tender
offer occurring during a specified period immediately preceding or including the
date the tender offer commences; provided that, in no case shall any such
specified period exceed one (1) year (the "Change in Control Price"). For
purposes of this Subsection, the cash-out of an Option shall be on the basis of
the excess, if any, of the Change in Control Price (but not more than the Fair
Market Value of the Stock on the date of the cash-out in the case of Incentive
Stock Options) over the Exercise Price with or without regard to whether the
Option may otherwise be exercisable only in part.
(e) Options shall not be transferable or assignable
except by will or by the laws of descent and distribution and shall be
exercisable, during the Participant's lifetime, only by the Participant; in the
event of the Disability of the Participant, by the legal representative of the
Participant; or in the event of the death of the participant, by the personal
representative of the Participant's estate or if no personal representative has
been appointed, by the successor in interest determined under the Participant's
will.
3.2 Other Terms and Conditions. Each Option granted under the Plan
shall be evidenced by a Stock Option Agreement. At the time any Option is
granted, the Committee shall determine whether the Option is to be an Incentive
Stock Option or a Non-Qualified Stock
6
<PAGE> 24
Option, and the Option shall be clearly identified as to its status as an
Incentive Stock Option or a Non-Qualified Stock Option. At the time any
Incentive Stock Option is exercised, the Company shall be entitled to place a
legend on the certificates representing the shares of Stock purchased pursuant
to the Option to clearly identify them as shares of Stock purchased upon
exercise of an Incentive Stock Option. An Incentive Stock Option may only be
granted within ten (10) years from the earlier of the date the Plan is adopted
by the Board of Directors or approved by the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance
with Section 5.2 and the other provisions of this Section 3.2, the exercise
price (the "Exercise Price") per share of Stock purchasable under any Option
shall be as set forth in the applicable Stock Incentive Agreement. With respect
to each grant of an Incentive Stock Option to a Participant who is not an Over
10% Owner or to each grant of any Option to a Participant who is then a "covered
employee," within the meaning of Code Section 162(m), the Exercise Price per
share shall not be less than the Fair Market Value on the date the Option is
granted. With respect to each grant of an Incentive Stock Option to a
Participant who is an Over 10% Owner, the Exercise Price shall not be less than
110% of the Fair Market Value on the date the Option is granted.
(b) Option Term. The term of an Option shall be as
specified in the applicable Stock Option Agreement; provided, however that any
Incentive Stock Option granted to a Participant who is not an Over 10% Owner
shall not be exercisable after the expiration of ten (10) years after the date
the Option is granted and any Incentive Stock Option granted to an Over 10%
Owner shall not be exercisable after the expiration of five (5) years after the
date the Option is granted.
(c) Payment. Payment for all shares of Stock purchased
pursuant to exercise of an Option shall be made in any form or manner authorized
by the Committee in the Stock Option Agreement or by amendment thereto,
including, but not limited to, cash or, if the Stock Option Agreement provides,
(1) by delivery to the Company of a number of shares of Stock which have been
owned by the holder for at least six (6) months prior to the date of exercise
having an aggregate Fair Market Value of not less than the product of the
Exercise Price multiplied by the number of shares the Participant intends to
purchase upon exercise of the Option on the date of delivery; (2) in a cashless
exercise through a broker; or (3) by having a number of shares of Stock
withheld, the Fair Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price. In its discretion, the Committee also
may authorize (at the time an Option is granted or thereafter) Company or
Affiliate financing to assist the Participant as to payment of the Exercise
Price on such terms as may be offered by the Committee in its discretion.
Payment shall be made at the time that the Option or any part thereof is
exercised, and no shares shall be issued or delivered upon exercise of an Option
until full payment has been made by the Participant. The holder of an Option, as
such, shall have none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option
granted under the Plan shall be exercisable by whom, at such time or times, or
upon the occurrence of such event or events, and in such amounts, as the
Committee shall specify in the Stock Option Agreement; provided, however, that
subsequent to the grant of an Option, the Committee, at any time before
7
<PAGE> 25
complete termination of such Option, may accelerate the time or times at which
such Option may be exercised in whole or in part, including, without limitation,
upon a Change in Control and may permit the Participant or any other designated
person to exercise the Option, or any portion thereof, for all or part of the
remaining Option term notwithstanding any provision of the Stock Option
Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect
to an Incentive Stock Option, in the event of the Termination of Service of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Service;
provided, however, that in the case of a holder whose Termination of Service is
due to death or Disability, one (1) year shall be substituted for such three (3)
month period. For purposes of this Subsection (e), Termination of Service of the
Participant shall not be deemed to have occurred if the Participant is employed
by another corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the Incentive Stock Option of the Participant in
a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3.2, any Option issued
in substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such other
terms and conditions as the Committee may prescribe to cause such substitute
Option to contain as nearly as possible the same terms and conditions (including
the applicable vesting and termination provisions) as those contained in the
previously issued option being replaced thereby.
3.3 Treatment of Awards Upon Termination of Service. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who suffers a Termination of Service may be cancelled, accelerated,
paid or continued, as provided in the Stock Option Agreement or, in the absence
of such provision, as the Committee may determine. The portion of any award
exercisable in the event of continuation or the amount of any payment due under
a continued award may be adjusted by the Committee to reflect the Participant's
period of service from the date of grant through the date of the Participant's
Termination of Service or such other factors as the Committee determines are
relevant to its decision to continue the award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of
Stock issued under the Plan shall be issued in the Participant's name, but, if
the Stock Option Agreement so provides, the shares of the Stock shall be held by
a custodian designated by the Committee (the "Custodian"). Each applicable Stock
Option Agreement providing for transfer of shares of Stock to the Custodian
shall appoint the Custodian as attorney-in-fact for the Participant for the term
specified in the applicable Stock Option Agreement, with full power and
authority in the Participant's name, place and stead to transfer, assign and
convey to the Company any shares of
8
<PAGE> 26
Stock held by the Custodian for such Participant , if the Participant forfeits
the shares under the terms of the applicable Stock Option Agreement. During the
period that the Custodian holds the shares subject to this Section, the
Participant shall be entitled to all rights, except as provided in the
applicable Stock Option Agreement, applicable to shares of Stock not so held.
Any dividends declared on shares of Stock held by the Custodian shall, as the
Committee may provide in the applicable Stock Option Agreement, be paid directly
to the Participant or, in the alternative, be retained by the Custodian until
the expiration of the term specified in the applicable Stock Option Agreement
and shall then be delivered, together with any proceeds, with the shares of
Stock to the Participant or to the Company as applicable.
4.2 Restrictions on Transfer. The Participant shall not have the
right to make or permit to exist any Disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the applicable Stock
Option Agreement. Any Disposition of the shares of Stock issued under the Plan
by the Participant not made in accordance with the Plan or the applicable Stock
Option Agreement shall be void. The Company shall not recognize, or have the
duty to recognize, any Disposition not made in accordance with the Plan and the
applicable Stock Option Agreement, and the shares so transferred shall continue
to be bound by the Plan and the applicable Stock Option Agreement.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash
distributions under the Plan any taxes required to be withheld by federal, state
or local government. Whenever the Company proposes or is required to issue or
transfer shares of Stock under the Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares. A Participant may pay the
withholding tax in cash, or, if the applicable Stock Option Agreement provides,
a Participant may elect to have the number of shares of Stock he is to receive
reduced by the smallest number of whole shares of Stock which, when multiplied
by the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state and local, if any,
withholding taxes arising from exercise of an Option (a "Withholding Election").
A Participant may make a Withholding Election only if both of the following
conditions are met:
(a) The Withholding Election must be made on or prior to
the date on which the amount of tax required to be withheld is determined (the
"Tax Date") by executing and delivering to the Company a properly completed
notice of Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable;
however, the Committee may in its sole discretion disapprove and give no effect
to the Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant
of Options; the number of shares of Stock reserved for issuance upon the
exercise of each outstanding Option
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and the Exercise Price of each outstanding Option shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Stock
resulting from a subdivision or combination of shares or the payment of an
ordinary stock dividend in shares of Stock to holders of outstanding shares of
Stock or any other increase or decrease in the number of shares of Stock
outstanding effected without receipt of consideration by the Company.
(b) In the event of any merger, consolidation,
extraordinary dividend (including a spin-off), reorganization or other change in
the corporate structure of the Company or its Stock or tender offer for shares
of Stock, the Committee, in its sole discretion, may make such adjustments with
respect to awards and take such other action as it deems necessary or
appropriate to reflect or in anticipation of such merger, consolidation,
extraordinary dividend, reorganization, other change in corporate structure or
tender offer, including, without limitation, the substitution of new awards, the
termination or adjustment of outstanding awards, the acceleration of awards or
the removal of restrictions on outstanding awards, all as may be provided in the
applicable Stock Option Agreement or, if not expressly addressed therein, as the
Committee subsequently may determine in the event of any such merger,
consolidation, extraordinary dividend (including a spin-off), reorganization or
other change in the corporate structure of the Company or its Stock or tender
offer for shares of Stock. Any adjustment pursuant to this Section 5.2 may
provide, in the Committee's discretion, for the elimination without payment
therefor of any fractional shares that might otherwise become subject to any
Option.
(c) The existence of the Plan and the Options granted
pursuant to the Plan shall not affect in any way the right or power of the
Company to make or authorize any adjustment, reclassification, reorganization or
other change in its capital or business structure, any merger or consolidation
of the Company, any issue of debt or equity securities having, preferences or
priorities as to the Stock or the rights thereof, the dissolution or liquidation
of the Company, any sale or transfer of all or any part of its business or
assets, or any other corporate act or proceedings
5.3 Tax Reimbursements. The Committee may, at any time and in its
discretion, grant to any holder of an Option the right to receive, at such times
and in such amounts as determined by the Committee in its discretion, a cash
amount which is intended to reimburse such person for all or a portion of the
federal, state and local income taxes imposed upon such person as a consequence
of the receipt of the Option or the exercise of rights thereunder.
5.4 Compliance with Code. All Incentive Stock Options to be
granted hereunder are intended to comply with Code Section 422, and all
provisions of the Plan and all Incentive Stock Options granted hereunder shall
be construed in such manner as to effectuate that intent.
5.5 Right to Terminate Service. Nothing in the Plan or in any
Stock Option Agreement shall confer upon any Participant the right to continue
as an employee, officer or director of the Company or any of its Affiliates or
affect the right of the Company or any of its Affiliates to terminate the
Participant's service at any time.
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<PAGE> 28
5.6 Restrictions on Delivery and Sale of Shares; Legends. Each
Option is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Option upon any securities exchange or under any
state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Option or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to such Option may
be withheld unless and until such listing, registration or qualification shall
have been effected. If a registration statement is not in effect under the
Securities Act of 1933 or any applicable state securities laws with respect to
the shares of Stock purchasable or otherwise deliverable under Options then
outstanding, the Committee may require, as a condition of exercise of any Option
or as a condition to any other delivery of Stock pursuant to an Option, that the
Participant or other recipient of an Option represent, in writing, that the
shares received pursuant to the Option are being acquired for investment and not
with a view to distribution and agree that the shares will not be disposed of
except pursuant to an effective registration statement, unless the Company shall
have received an opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable state securities
laws. The Company may include on certificates representing shares delivered
pursuant to an Option such legends referring to the foregoing representations or
restrictions or any other applicable restrictions on resale as the Company in
its discretion, shall deem appropriate.
5.7 Non-alienation of Benefits. Other than as specifically
provided with regard to the death of a Participant, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Participant, be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the Participant.
5.8 Termination and Amendment of the Plan. The Board of Directors
at any time may amend or terminate the Plan without stockholder approval;
provided, however, that the Board of Directors may condition any amendment on
the approval of stockholders of the Company if such approval is necessary or
advisable with respect to tax, securities or other applicable laws. No such
termination or amendment without the consent of the holder of an Option shall
adversely affect the rights of the Participant under such Option.
5.9 Stockholder Approval. The Plan shall be submitted to the
stockholders of the Company for their approval within twelve (12) months before
or after its adoption by the Board of Directors. If such approval is not
obtained, any Option granted under the Plan shall be void.
5.10 Choice of Law. The laws of the State of Georgia shall govern
the Plan, to the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective upon
the date the Plan is approved by the Board of Directors.
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IN WITNESS WHEREOF, the Company has caused this Plan to be executed as
of this 18th day of March, 1999.
GATEWAY BANCSHARES, INC.
By: /s/ Harle B. Green
------------------
Title: Chief Financial Officer
-----------------------
Attest:
/s/ Boyd M. Steele
- ---------------------
Secretary
[CORPORATE SEAL]
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GATEWAY BANCSHARES, INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, APRIL 15, 1999
The undersigned hereby appoints Robert G. Peck or Harle B. Green or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them or either of them to represent and to vote, as designated
below, all of the Common Stock of Gateway Bancshares, Inc. (the "Company"),
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at the main
office of Gateway Bank & Trust, located at 5102 Alabama Highway, Ringgold,
Georgia 30736 and at any adjournments thereof, upon the proposal described in
the accompanying Notice of the Annual Meeting and the Proxy Statement relating
to the Annual Meeting, receipt of which are hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSALS.
PROPOSAL 1: To elect the nine (9) persons listed below to serve as directors of
the Company for a term of one year:
Jack Joseph Babb Harle B. Green
William H.H. Clark Walter Lee Jackson
Patricia Yvonne Cochran Ernest Kresch
Jeannette Wilson Dupree Robert G. Peck
James A. Gray, Sr.
[ ] FOR all nominees listed above [ ] WITHHOLD authority to vote
(except as indicated below) for all nominees listed above
INSTRUCTION: To withhold authority for any individual nominee, mark "FOR"
above, and write the nominee's name in this space
------------------------------
PROPOSAL 2: To approve the Gateway Bancshares, Inc. 1999 Stock Option Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION TO
THE CONTRARY IS INDICATED, IT WILL BE VOTED FOR THE PROPOSAL.S
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER
MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING.
If stock is held in the name of more than one person, all must should
sign. Signatures should correspond exactly with the name or names appearing on
the stock certificate(s). When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
---------------------------------------------
Signature(s) of Shareholder(s)
[LABEL]
---------------------------------------------
Name(s) of Shareholders(s)
Date: , 1999
----------------------------------
(Be sure to date your Proxy)
Please mark, sign and date this Proxy, and return it in the enclosed
return-addressed envelope. No postage necessary.
I WILL WILL NOT ATTEND THE ANNUAL SHAREHOLDERS MEETING.
----------- --------
PLEASE RETURN PROXY AS SOON AS POSSIBLE
