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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CNB Holdings, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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AN IMPORTANT REMINDER
November 5, 1998
Dear Fellow Shareholder:
The Special Meeting of Shareholders (the "Special Meeting") of CNB
Holdings, Inc. (the "Company") was held on October 21, 1998. The portion of
the meeting regarding shareholder action on Proposals 1 and 2 was adjourned
by action of the shareholders, and the meeting will reconvene at the
Company's corporate office, 7855 North Point Parkway, Suite 200, Alpharetta,
Georgia, on Wednesday, November 25, 1998, at 10 a.m., Atlanta time, to
provide shareholders with additional time to vote their shares with respect
to Proposals 1 and 2. Proposal 1 would approve and adopt the Amended and
Restated 1998 Non Qualified Stock Option Plan and Proposal 2 would approve
and adopt the Amended and Restated 1998 Incentive Stock Option Plan. All
other business was concluded at the Special Meeting.
A large number of the proxies received from shareholders to date have
been voted in favor of Proposals 1 and 2. A significant number of
shareholders, however, have not yet returned their proxies. Your broker
cannot vote your shares on Proposals 1 and 2 without your instruction. Because
many shareholders may have assumed that their broker would vote their shares
for them, the total affirmative vote received on Proposals 1 and 2 to date is
less than that required to pass the proposals. During the course of
discussions with shareholders at the Special Meeting regarding Proposals 1
and 2 as set forth in the proxy materials, several questions were asked. The
answers to such questions, which may be helpful to you as you consider voting
on these Proposals, are set forth in the attached question and answer format.
FOR THE REASONS SET FORTH ON PAGES 3 THROUGH 7 OF THE PROXY STATEMENT
PREVIOUSLY SENT TO YOU, YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" PROPOSALS 1 AND 2.
Regardless of the number of shares that you own, it is important that we
receive your vote. Since the time remaining is short, we urge you to sign,
date and return your vote as soon as possible. For your convenience, you may
also give your voting instructions by telephone. Located in the upper
left-hand corner of the enclosed voting form is a toll free number that can
be used to vote your shares. Please save your Company the expense of
additional solicitation costs by voting as soon as possible. If you have any
questions or otherwise need assistance, or would like an additional copy of
the Proxy Statement, please contact our proxy solicitor, Corporate Investor
Communications, Inc. TOLL FREE AT 1-888-296-3593. You may also call me
directly at (770) 643-4502. We appreciate your time and effort.
YOUR VOTE IS IMPORTANT, PLEASE VOTE TODAY.
Sincerely,
/s/ W. David Sweatt
W. David Sweatt
Chairman of the Board
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In the proxy statement the Board has asked that you approve amendments
to CNB's option plans. These option plans are important for CNB to attract
and retain qualified directors. The following may assist you in reaching your
decision.
1. ARE YOU ISSUING ALL OF THE OPTIONS AT THE BEGINNING OF THE TERM,
AND IF SO SHOULDN'T YOU SAVE SOME FOR THE FUTURE?
Even though the number of shares authorized may seem large, the option
shares represented will not actually be issued to the optionees, until the
options have vested over a period of years. By way of background, it should
be noted that CNB's directors have not been compensated for any of their
efforts on behalf of CNB to date. They have expended significant amounts of
their time and energy in obtaining the charter, regulatory approval, investor
financing and managerial skills and leadership in assisting CNB to become a
successful banking business. These stock option plans provide stock options
in lieu of cash compensation in recognition of the directors' efforts in the
past and for the foreseeable future. From a shareholder perspective, this
results in the retention of qualified directors from CNB's organizing period
through August, 2001 without paying them in cash but rather in options, which
may or may not have value in the future. Based on information provided by
CNB's independent auditors, BDO Seidman, it was determined that median annual
cash compensation for directors of similar holding companies is between
$6,000 and $8,000. The value of the stock options to be granted falls within
that range.
CNB's directors are actively assisting CNB's staff in business
development and serve on a variety of important committees, some of which
require weekly duties. The support of a talented and dedicated director group
is important to the success of CNB.
Although not related to prospective compensation, a significant factor
related to director retention is recognition of the performance of past
services. CNB's original business plan called for warrants to be issued for
each share of CNB stock which the organizing directors purchased prior to the
initial public offering. These warrants were viewed as compensation for the
time and risk involved in organization and early operation of CNB. During the
regulatory approval process, it became apparent that approval of the warrants
would delay the opening of our bank. The directors determined that it was in
CNB's best interest to eliminate the warrants, at that time, in order to
secure the early approval of CNB's regulatory applications, which was
achieved. The grant of these stock options may be viewed as the mere
replacement of the warrants which were sacrificed by the directors in order
to expedite the approval process.
2. IF THE OPTION STRIKE PRICE IS AT THE MARKET, DOES THAT MEAN THAT IT
WILL BE LESS THAN THE OFFERING PRICE SET FORTH IN THE INITIAL PUBLIC
OFFERING, I.E., $10.00 PER SHARE?
No. The option granted to directors provides for the strike price to be
the greater of $10.00 per share or fair market value of the stock on the date
of the grant. The Board set $10.00 as the strike price even though the actual
fair market value of CNB Common Stock on the date of grant was lower.
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3. WHY DOES THIS NEED TO BE APPROVED NOW?
Recent internal pronouncements by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants have
indicated that the favorable accounting treatment that is currently accorded
to stock options granted to outside directors may soon be adversely affected.
Consequently, BDO Seidman has advised us that the option grants should be
approved as soon as possible to mitigate the risk that future reported
earnings per share of CNB would be adversely affected by revised accounting
guidelines
4. HOW MANY SHARES MUST BE VOTED TO APPROVE THESE PROPOSALS?
More than two-thirds of those shares voted. The October 2, 1998 proxy
statement inadvertently stated that a majority and not two-thirds of the
shares voted were required to approve the proposals.
