<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CNB HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
CNB HOLDINGS, INC.
7855 NORTH POINT PARKWAY, SUITE 200
ALPHARETTA, GEORGIA 30022
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 19, 1999
--------------
TO THE SHAREHOLDERS OF CNB HOLDINGS, INC.:
The Annual Meeting of Shareholders (the "Annual Meeting") of CNB Holdings,
Inc. (the "Company") will be held on Wednesday, May 19, 1999 at 11:00 a.m.,
local time, at the Camerron City Club, 1000 Northfield Court, Roswell, Georgia
for the following purposes:
1. To elect five directors to hold office until the Company's 2001 Annual
Meeting of Shareholders; and
2. To transact such other business as may properly come before the
Company's Annual Meeting or any adjournments or postponements thereof.
Only shareholders of record at the close of business on April 14, 1999 will
be entitled to notice of and to vote at the Company's Annual Meeting or any
adjournments or postponements thereof. The stock transfer books will not be
closed.
<TABLE>
<S> <C>
By Order of the Board of Directors
/s/ H.N. Padget, Jr.
------------------------------------------
H.N. Padget, Jr.
President and Chief Executive Officer
</TABLE>
Alpharetta, Georgia
April 22, 1999
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY MAIL TO THE COMPANY
THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE PAID ENVELOPE. YOUR PROXY
MAY BE REVOKED, IF YOU CHOOSE, AT ANY TIME PRIOR TO THE VOTE BEING TAKEN AT THE
COMPANY'S ANNUAL MEETING.
<PAGE>
CNB HOLDINGS, INC.
7855 NORTH POINT PARKWAY, SUITE 200
ALPHARETTA, GEORGIA 30022
--------------
ANNUAL MEETING OF SHAREHOLDERS
May 19, 1999
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CNB Holdings, Inc. (the "Company") for use
at the Company's Annual Meeting of Shareholders (the "Annual Meeting") to be
held on May 19, 1999 at 11:00 a.m., local time, at the Camerron City Club, 1000
Northfield Court, Roswell, Georgia.
The enclosed proxy card is for use at the Annual Meeting if a shareholder is
unable to attend the Annual Meeting in person or wishes to have his shares voted
by proxy, even if he attends the Annual Meeting. Any proxy given pursuant to
this solicitation may be revoked by any one of the following three actions: (i)
giving written notice to the Secretary of the Company, (ii) delivering a later
dated proxy, or (iii) by voting in person at the Annual Meeting. All shares
represented by valid proxies received pursuant to this solicitation, and not
revoked before their exercise, will be voted in accordance with the directions
given in the proxy. When voting regarding the election of directors to serve
until the Company's 2001 Annual Meeting of Shareholders, shareholders may vote
in favor of all nominees or withhold their votes as to specific nominees.
Shareholders should specify their choices on the enclosed proxy card. If no
instructions are given, proxies which are signed and returned will be voted FOR
the election of each director nominee named and in accordance with the
discretion of the persons named on the enclosed proxy card with respect to any
other matters properly presented for action at the Annual Meeting.
A quorum for the transaction of business at the Annual Meeting consists of
the holders of a majority of the outstanding shares of Company common stock
entitled to vote at the Annual Meeting being present in person or represented by
proxy.
Each share of Company common stock is entitled to one vote on each matter to
come before the Annual Meeting. The proposal to elect five directors to hold
office until the Company's 2001 Annual Meeting of Shareholders requires the
affirmative vote of a plurality of the votes cast by the holders of Company
common stock present in person or represented by proxy at the Annual Meeting.
Therefore, abstentions and broker non-votes will not affect the outcome of the
vote.
The mailing address of the principal executive offices of the Company is
7855 North Point Parkway, Suite 200, Alpharetta, Georgia 30022. This Proxy
Statement and the enclosed proxy card are first being mailed or given to the
Company's shareholders on April 22, 1999.
Only shareholders of record at the close of business on April 14, 1999 are
entitled to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. On April 14, 1999, there were 1,235,000 shares of Company
common stock issued and outstanding.
In addition to this solicitation by mail, officers and regular employees of
the Company or its subsidiary, Chattahoochee National Bank (the "Bank"), without
additional compensation, may solicit proxies in favor of the proposals contained
herein if deemed necessary, by personal contact, letter, telephone or other
means of communication. It is anticipated that brokers, nominees and other
custodians and fiduciaries will be requested to forward proxy solicitation
material to the beneficial owners of the shares of Company common stock where
appropriate, and the Company will reimburse them for their reasonable expenses
incurred in connection with such transmittals. The costs of proxy solicitation
for the Annual Meeting will be borne by the Company. Your cooperation in
promptly signing and returning the enclosed proxy card will help to avoid
additional expenses.
<PAGE>
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The members of the Board of Directors of the Company are elected by the
Company's shareholders. The directorships of the Company are divided into three
classes, with the members of each class serving three year terms. The
shareholders of the Company elect one class annually. The Company's Board of
Directors presently consists of 13 members. Approval of directors requires the
affirmative vote of a plurality of the votes cast by the holders of the shares
of Company common stock voting in person or by proxy at the Annual Meeting.
The Company's Board of Directors has nominated five persons for election as
directors at the Company's Annual Meeting. The terms of the remaining directors
of the Company will continue as indicated below. If for any reason any nominee
should become unable or unwilling to accept nomination or election, the persons
named on the enclosed proxy card will have discretionary authority to vote
proxies for the election of another nominee designated by the Company's Board of
Directors. Management of the Company has no reason to believe that any nominee
will not serve if elected.
Patricia Rhodes Grimes, Heber N. Padget, Sr., John A. Pond, Reid W. Simmons
and W. David Sweatt have been nominated to stand for reelection to the Company's
Board of Directors, as Class I directors, to hold office for a term of three
years and until their successors are elected and qualified.
RECOMMENDATION OF THE BOARD OF DIRECTORS CONCERNING THE ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" PATRICIA
RHODES GRIMES, HEBER N. PADGET, SR., JOHN A. POND, REID W. SIMMONS AND W. DAVID
SWEATT.
NOMINEES FOR ELECTION TO TERM EXPIRING 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PATRICIA RHODES GRIMES
Director since 1997
Age 50
Ms. Grimes has been retired from SunTrust Service Corporation since 1992.
She has extensive banking experience and held various management level positions
with SunTrust Service Corporation and Trusco Data Systems, a division of Trust
Company of Georgia. Most recently, Ms. Grimes served as Senior Vice President
and Manager of the Application Systems Division with SunTrust Service
Corporation, a subsidiary of SunTrust Banks, Inc. Ms. Grimes also held positions
with Trusco Data Systems, including Group Vice President and Assistant Manager
of Systems and Programming, Vice President and Section Manager of Deposits,
Financial and Human Resources Systems, Systems Officer and Project Leader of the
Demand Deposit System, and programmer/analyst for Deposit Applications. Further,
Ms. Grimes has served on the MIS Advisory Board for the University of Georgia.
Ms. Grimes is the Chairman of the Audit Committee of the Company and the Audit,
Compliance and Community Reinvestment Act Committee of the Bank.
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2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HEBER N. PADGET, SR.
Director since 1997
Age 67
Mr. Padget has been retired since 1991 from the farming business he started
in 1962. He owns the Padget Cattle Company and Wauka Chick Company, both
farming-related businesses located in Gainesville, Georgia. Mr. Padget is a
member of the Asset/Liability Management Committee of the Bank. Mr. Padget is
the father of H.N. Padget, Jr., the Company's and the Bank's President and Chief
Executive Officer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JOHN A. POND
Director since 1997
Age 51
Mr. Pond has been the President of Pond & Company, an engineering and
architectural services company, since 1987. Mr. Pond holds a professional
engineer license as well as a professional land surveyor license. Mr. Pond is a
member of the Marketing Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REID W. SIMMONS
Director since 1997
Age 51
Mr. Simmons has been the President, founder and co-owner of OMSystems, Inc.
(Orthotrac), a leading provider of computer hardware and software for
orthodontists since 1981. From 1970 until 1981, he held various sales and
management positions with NCR Corporation, including Regional Director and
National Director of Large Computer Systems. Mr. Simmons is a member of the
Audit Committee of the Company and the Marketing Committee and the Audit,
Compliance and Community Reinvestment Act Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
W. DAVID SWEATT
Director since 1997
Age 51
Mr. Sweatt is the Chairman of the Company and the Bank. From 1996 through
1998, Mr. Sweatt managed personal investments. From 1993 until it was sold in
1996, Mr. Sweatt was a director and the President and Chief Executive Officer of
Royal Bankshares of Acadiana, Inc., Lafayette, Louisiana, a registered bank
holding company which owned the Bank of Lafayette and Trust Bank of the U.S., a
non-depository trust company. Mr. Sweatt simultaneously served as President and
Chief Executive Officer of both subsidiaries of the holding company. He is the
Chairman of the Loan Committee and the Executive Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE>
INCUMBENT DIRECTORS--TERM EXPIRING 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAVID R. HINK
Director since 1997
Age 50
Mr. Hink has been the Managing Principal of Strategic Solutions Resources, a
consultant to the utilities industry, since December 1996. In addition, Mr. Hink
is Executive Vice President of Ekercom, Inc., a software company in which he
also serves as a director. From 1995 to 1996, Mr. Hink served as President of
the MarKit Division of Severn Trent Systems, a software company. From 1993 to
1995, Mr. Hink was employed with A&C Enercom, Inc., where he served as Senior
Vice President and was responsible for its information technology group of
companies, comprised of Entec Consulting and the Market Applications Group. Mr.
Hink is a member of the Compensation Committee of the Company and the Loan
Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MARY E. JOHNSON
Director since 1997
Age 46
Ms. Johnson has served as the Controller of T. Stephen Johnson & Associates,
Inc., a financial services consulting firm, and its related entities since 1987.
She also serves as the Corporate Secretary to the Board of Directors of
Net.B@nk, Inc., the parent company of Net.B@nk, an internet bank. Ms. Johnson is
a member of the Marketing Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ROBERT W. JOHNSTON
Director since 1997
Age 47
Mr. Johnston is a consultant to the staffing services industry through his
investment in Koala Enterprises, Inc. since 1978. Mr. Johnston is a member of
the Marketing Committee and the Operations/ Technology Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
H.N. PADGET, JR.
Director since 1997
Age 43
Mr. Padget is the President and Chief Executive Officer of the Company and
the Bank. He has been a banker in metropolitan Atlanta for over 20 years and has
served in various management positions throughout his career. Mr. Padget most
recently served as Executive Vice President of Milton National Bank, Alpharetta,
Georgia from 1993 through October of 1997. Mr. Padget is the son of Heber N.
Padget, Sr., a director of the Company and the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4
<PAGE>
INCUMBENT DIRECTORS--TERM EXPIRING 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MICHAEL L. ALDREDGE
Director since 1997
Age 46
Mr. Aldredge has served as Operations Manager and Secretary of Squire Inn,
Inc., a hotel holding company, since 1990. Mr. Aldredge is also a partner in KAL
Jax Hotel, LTD, where he serves as Managing Partner of the Days Inn Jacksonville
Beach Resort. Mr. Aldredge is a member of the Loan Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C. DAN ALFORD
Director since 1997
Age 38
Mr. Alford has served as the Chief Financial Officer of Allied Utility
Network LLC, a consultant to the utility industry, since February 1998. From
1989 to 1998, Mr. Alford served as the Executive Vice President and Chief
Operating Officer of A&C Enercom, Inc., a subsidiary of Virginia Electric Power
Company from 1996 to 1997, where he also served as General Manager of National
Operations for the Commercial & Industrial Division. Mr. Alford is a member of
the Audit and Compensation Committees of the Company and the Audit, Compliance
and Community Reinvestment Act Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WILLIAM H. GROCE, JR.
Director since 1997
Age 63
Mr. Groce is a retired executive from BellSouth Telecommunications. Mr.
Groce held various positions at BellSouth Telecommunications throughout his
career which began in 1958, including Executive Assistant to the President of
BellSouth Telecommunications and Secretary to its Board of Directors from 1988
until his retirement in 1994. Mr. Groce is the Secretary of the Company, the
Chairman of the Compensation Committee of the Company and the Asset/Liability
Management Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
W. DARRELL SUMNER
Director since 1997
Age 50
Mr. Sumner is the President and co-founder of Bank Assets, Inc., a firm that
specializes in marketing, designing and implementing compensation and benefit
programs for financial institutions since 1992. Mr. Sumner is a member of the
Compensation Committee of the Company and the Loan Committee and Asset/Liability
Management Committee of the Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
There are no family relationships between any of the directors or executive
officers of the Company or the Bank, except that H.N. Padget, Jr., is the son of
Heber N. Padget, Sr.
OTHER EXECUTIVE OFFICER
Danny F. Dukes, 38, was named Senior Vice President and Chief Financial
Officer of the Company and Senior Vice President, Chief Financial Officer and
Controller of the Bank in January, 1999. From March 1997 until December 1998,
Mr. Dukes served as Vice President and Chief Financial Officer of First
Community Bancorp and First Community Bank & Trust in Cartersville, Georgia.
From March 1994 until
5
<PAGE>
March 1997, Mr. Dukes served as Chief Financial Officer of Georgia Federal
Credit Union, Atlanta, Georgia.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held nine meetings during 1998.
The Company's Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee consists of three members and held six meetings
during 1998. The Audit Committee recommends to the Company's Board of Directors
the independent public auditors to be selected to audit the Company's annual
financial statements and approves any special assignments of such auditors. The
Audit Committee also reviews the scope of the annual audit, any changes in
accounting principles and the effectiveness and efficiency of the Company's
internal accounting staff. The members of the Audit Committee are C. Dan Alford,
Patricia Rhodes Grimes and Reid W. Simmons.
The Company's Compensation Committee consists of three members and held five
meetings during 1998. The Compensation Committee establishes remuneration levels
for officers of the Company, reviews management organization and development,
reviews significant employee benefit programs, and establishes and administers
executive compensation programs. The members of the Compensation Committee are
William H. Groce, Jr., C. Dan Alford, David R. Hink and W. Darrell Sumner.
All directors have served on the Company's Board of Directors continuously
since their first election. Each director attended at least 75% of the meetings
of the Board of Directors and the meetings of the committees of which he or she
was a member in 1998.
In addition to the committees of the Company's Board of Directors, the Board
of Directors of the Bank also has established a number of standing committees.
The Bank's Loan Committee consists of four members and held 21 meetings during
1998. The Loan Committee reviews any loan request made by a potential borrower
over a certain credit threshold for compliance with the Bank's lending policies
and federal and state rules and regulations governing extensions of credit to
such parties and, based on such compliance, makes a decision whether to extend
credit to the potential borrower. The members of the Loan Committee are Michael
L. Aldredge, David R. Hink, W. Darrell Sumner and W. David Sweatt.
The Bank's Audit, Compliance and Community Reinvestment Act Committee
consists of three members and held four meetings during 1998. The Audit,
Compliance and Community Reinvestment Act Committee provides oversight to the
Bank's internal audit function and compliance with regulatory rules and
regulations. The members of the Audit, Compliance and Community Reinvestment Act
Committee are C. Dan Alford, Patricia Rhodes Grimes and Reid W. Simmons.
The Bank's Asset/Liability Management Committee consists of three members
and held 13 meetings during 1998. The Asset/Liability Management Committee
provides guidance to the Bank in balancing the yields and maturities in its
loans and investments to its deposits. The members of the Asset/Liability
Management Committee are William H. Groce, Jr., Heber N. Padget, Sr. and W.
Darrell Sumner.
The Bank's Marketing Committee consists of four members and held six
meetings during 1998. The Marketing Committee provides ideas and assistance to
the Bank in marketing its services within the Bank's primary service area. The
members of the Marketing Committee are Mary E. Johnson, Robert W. Johnston, John
A. Pond and Reid W. Simmons.
The Board of Directors of the Company and the Bank may from time to time
establish other committees to facilitate the management of the Company and the
Bank.
6
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended, and
related regulations of the Securities and Exchange Commission ("SEC"), require
the Company's executive officers and directors, and certain persons who own 10%
or more of Company common stock, to file with the SEC reports of their ownership
of Company common stock. The regulations also require these persons to furnish
the Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on a review of the copies of such reports furnished to
the Company, the Company believes that during 1998 all filing requirements
applicable to such persons have been complied with, except that (i) a Form 3,
Initial Statement of Beneficial Ownership of Securities, was inadvertently filed
late by Danny F. Dukes, Chief Financial Officer, (ii) a Form 4, Report of
Changes in Beneficial Ownership of Securities, was inadvertently filed late by
directors Michael L. Aldredge, Heber N. Padget, Sr. (two late filings by Mr.
Padget), John A. Pond and W. David Sweatt and (iii) a Form 5, Annual Statement
of Beneficial Ownership of Securities, was inadvertently filed late by directors
Patricia A. Grimes, W. Darrell Summer and W. David Sweatt (two late filings by
Mr. Sweatt).
CERTAIN TRANSACTIONS
The Bank extends loans from time to time to certain of the Company's and
Bank's directors, their associates and members of the immediate families of the
directors and executive officers of the Company. These loans are made in the
ordinary course of business on substantially the same terms, including interest
rates, collateral and repayment terms, as those prevailing at the time for
comparable transactions with persons not affiliated with the Company or the
Bank, and do not involve more than the normal risk of collectibility or present
other unfavorable features.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid to or
accrued on behalf of the Company's Chief Executive Officer during the last two
fiscal years. As the Company commenced operations in 1997, no compensation was
paid to the Company's Chief Executive Officer by the Company or the Bank for any
years prior to 1997. No other executive officer of the Company or the Bank
received annual salary and bonus in excess of $100,000 during the last fiscal
year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION(1) SECURITIES
UNDERLYING
FISCAL ------------------------ OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (#)
- ----------------------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
H.N. Padget, Jr................................ 1998 125,000 10,000 35,000(2)
President and Chief Executive Officer 1997 20,833 -- --
</TABLE>
- ------------------------
(1) All cash compensation was paid by the Bank.
(2) Consists of grants of performance-based incentive stock options for 30,000
shares of Company common stock, an incentive stock option for 5,000 shares
of Company common stock.
EMPLOYMENT AGREEMENT
In November 1997, the Company and the Bank entered into an employment
agreement with H.N. Padget, Jr. regarding Mr. Padget's employment as President
and Chief Executive Officer of the Company and the Bank (the "Employment
Agreement"). Under the terms of the Employment Agreement, Mr. Padget will
receive a salary of $125,000 per year with a 2 1/2% increase per year on the
anniversary date of the opening of the Bank. The Employment Agreement provides
that at the end of each year of operation, Mr. Padget will be entitled to
receive a cash bonus based on a performance matrix established against certain
budgets set by the Company. Additionally, the Employment Agreement provides that
the Company will grant Mr. Padget incentive stock options to purchase shares of
Company common stock, subject to achieving certain performance targets. On
August 19, 1998 Mr. Padget received grants of 30,000 performance-based incentive
stock options and 5,000 incentive stock options. Pursuant to the Employment
Agreement, the Company has also provided an automobile to be used by Mr. Padget.
The period of employment commenced as of the date the Bank received its opening
letter from the OCC and continues for a period of 36 months thereafter except in
the event of Mr. Padget's death. The employment may be terminated (i) at the
election of the Company and the Bank for cause; (ii) at Mr. Padget's election,
upon the Bank and the Company's breach of any material provision of the
Employment Agreement; or (iii) upon Mr. Padget's death or disability. In the
event that Mr. Padget's employment is terminated by the Company without cause,
(a) the Company will be required to meet its obligations under the Employment
Agreement for a period of 12 months after the date of termination with respect
to Mr. Padget's compensation and health and dental insurance coverages, and (b)
Mr. Padget will be prohibited from competing with the Bank or soliciting its
customers or employees within the geographic area set forth in the Employment
Agreement for a period of 12 months after the date of termination.
8
<PAGE>
STOCK OPTIONS PLANS
1998 INCENTIVE STOCK OPTION PLAN
On May 20, 1998, the Company's Board of Directors and initial shareholders
adopted an Incentive Stock Option Plan (the "Incentive Plan") to promote equity
ownership of the Company by key senior officers, key officers and other key
employees of the Company and the Bank. The Incentive Plan was amended by the
shareholders of the Company at a Special Meeting held on November 25, 1998 to
increase the number of shares reserved thereunder from 60,000 to 115,000. The
Incentive Plan provides for the grant of options at the discretion of the
Company's Compensation Committee. The option exercise price must be at least
100% (110% in the case of a holder of 10% or more of the Company's common stock)
of the fair market value of Company common stock on the date the option is
granted and the options are exercisable by the holder thereof in full at any
time prior to their expiration in accordance with the terms of the Incentive
Plan. Stock options granted pursuant to the Incentive Plan expire on or before
the date which is the tenth anniversary of the date the option is granted, or
until the expiration of 90 days (or such lesser period as the Compensation
Committee may determine) from the date on which the person to whom they were
granted ceases to be employed by the Company or the Bank. As of April 1, 1999,
an aggregate of 105,500 shares of Company common stock had been granted under
the Incentive Plan.
1998 NON QUALIFIED STOCK OPTION PLAN
On August 19, 1998, the Company's Board of Directors amended and restated
the Company's 1998 Non Qualified Stock Option Plan (the "Non Qualified Plan").
On November 25, 1998, the Company's shareholders approved the amended and
restated Non Qualified Plan. The purpose of the Non Qualified Plan is to
attract, retain and compensate key personnel and directors of the Company and
the Bank. There are 185,000 shares of Company common stock reserved under the
Non Qualified Plan. The Non Qualified Plan is administered by the Company's
Board of Directors. The option exercise price of options granted under the Non
Qualified Plan is the fair market value of Company common stock on the date the
option is granted and the options are exercisable by the holder thereof in full
at any time prior to their expiration in accordance with the terms of the Non
Qualified Plan. Stock options granted pursuant to the Non Qualified Plan expire
on or before the date which is the tenth anniversary of the date the option is
granted, or such lesser period as the Company's Board of Directors may
determine. As of April 1, 1999, an aggregate of 145,000 shares of Company common
stock had been granted under the Non Qualified Plan.
The following table sets forth certain information regarding the grant of
stock options in 1998 to Mr. Padget and the value of options held by him at the
end of such fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS GRANTED EXERCISE OR OPTION TERM(1)
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
- ---------------------------------- ------------------- --------------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
H.N. Padget, Jr................... 35,000(2) 33 10.00 08/19/08 $ 220,500 $ 556,000
</TABLE>
- ------------------------
(1) The dollar amounts under these columns represent the potential realizable
value of the options assuming that the market price of Company common stock
appreciates in value from the date of grant for the full 10 year terms at
the 5% and 10% annualized rates prescribed by SEC regulations. Accordingly,
these rates are not intended to forecast possible future appreciation, if
any, of the price of Company common stock.
9
<PAGE>
(2) On August 19, 1998, Mr. Padget was granted a performance incentive stock
option to purchase 30,000 shares of Company common stock (the "Performance
Option"). The Performance Option vested with respect to 6,000 shares upon
the successful opening of the Bank. On November 30, 1998, the Performance
Option vested with respect to 9,000 shares upon satisfaction of certain
performance criteria relative to the Bank's loan and lease targets. The
Performance Option will vest with respect to the remaining 15,000 shares
upon the satisfaction of certain performance criteria relative to the
Company's cumulative profitability. Also, on August 19, 1998, Mr. Padget was
granted an incentive stock option to purchase 5,000 shares of Company common
stock (the "Incentive Option"). The Incentive Option vests in equal
installments on each of the first three anniversaries of the date of grant.
The Performance Option and the Incentive Option each expire 10 years from
date of grant.
DIRECTOR COMPENSATION
The directors of the Company and the Bank do not intend to be separately
compensated in cash for their services as directors until the Company's and the
Bank's net profits exceed their net losses since inception on a cumulative
basis. During the organization of the Company and the Bank, directors of the
Company and the Bank were not compensated for their services. On August 19,
1998, the Company's Board of Directors amended and restated the Non Qualified
Plan to include non-employee directors and made individual grants to each such
director. Accordingly, during 1998, each non-employee director received a non
qualified option to purchase a number of shares of Company common stock (ranging
in size from 10,000 shares to 22,500 shares and aggregating 145,000 shares) in
consideration of his or her past service as a director and as a means of
attracting and retaining qualified individuals to serve on the Company's Board
of Directors.
10
<PAGE>
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information with respect to the
beneficial ownership, as of April 1, 1999, of shares of Company common stock by
(i) each person known by the Company to be the beneficial owner of more than 5%
of the Company's issued and outstanding common stock, (ii) each of the Company's
directors, (iii) each of the Company's executive officers, and (iv) all
directors and executive officers of the Company as a group. Except as noted
below, the Company believes that each of the persons listed has sole investment
and voting power with respect to the shares included in the table.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP (1)(2) CLASS
- ------------------------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
Patricia R. Grimes............................................................. 12,500 1.0%
Heber N. Padget, Sr............................................................ 31,400(3) 2.5%
John A. Pond................................................................... 20,000(4) 1.6%
Reid W. Simmons................................................................ 12,500(5) 1.0%
W. David Sweatt................................................................ 120,600(6) 9.7%
David R. Hink.................................................................. 15,000 1.2%
Mary E. Johnson................................................................ 12,500 1.0%
Robert W. Johnston............................................................. 10,000 *
H.N. Padget, Jr................................................................ 27,000(7) 2.2%
Michael L. Aldredge............................................................ 11,000(8) *
C. Dan Alford.................................................................. 10,000 *
William H. Groce, Jr........................................................... 15,000 1.2%
W. Darrell Sumner.............................................................. 10,000 *
Danny F. Dukes................................................................. 1,000 *
All directors and executive officers as a group (14 persons)................... 308,500 24.5%
</TABLE>
- ------------------------
* Represents holdings of less than 1%.
(1) The information contained in this table with respect to Company common stock
ownership reflects "beneficial ownership" as determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Information with respect to beneficial ownership is based
upon information furnished by each owner.
(2) With respect to certain of the individual executive officers listed in the
table and the aggregate number of shares held by the directors and executive
officers as a group, the number of shares indicated includes shares of
Company common stock that the individual has the right to acquire on or
before May 31, 1999 (60 days from April 1, 1999), through the exercise of
options granted under the Company's 1998 Incentive Stock Option Plan. The
number of shares underlying options that may be exercised as of May 31, 1999
is as follows: (i) H.N. Padget, Jr.--15,000 shares; (ii) W. David Sweatt--
7,500 shares; and (iii) all directors and executive officers as a
group--22,500 shares. Under the SEC's rules, a person is also deemed to be
the beneficial owner of any securities owned by such person's spouse,
children or relatives living in the same household. Accordingly, more than
one person may be deemed to be a beneficial owner of the same securities.
(3) Includes 900 shares held by Mr. Padget's spouse and an aggregate of 5,000
shares held by Mr. Padget and his spouse as custodian for their
grandchildren. Mr. Padget shares investment and voting power over such
shares with his spouse.
11
<PAGE>
(4) Includes an aggregate of 3,000 shares held by Mr. Pond's children.
(5) Includes 12,400 shares held by Simmons Investments, L.P., of which Mr.
Simmons is a general partner.
(6) Includes 15,000 shares held by Mr. Sweatt's spouse and an aggregate of
10,000 shares held by Mr. Sweatt's spouse as custodian for their minor
children, as to which Mr. Sweatt shares voting and investment power with his
spouse. Also includes 7,500 shares issuable upon exercise of stock options
that may be exercised within 60 days of April 1, 1999.
(7) Includes an aggregate of 5,000 shares held by Mr. Padget's children, as to
which Mr. Padget disclaims beneficial ownership and 15,000 shares issuable
upon exercise of stock options that may be exercised within 60 days of April
1, 1999.
(8) Includes 1,000 shares held by Mr. Aldredge as custodian for his minor
children.
AUDITORS
The firm of BDO Seidman, LLP audited the financial statements of the Company
for the fiscal year ended December 31, 1998. Representatives of BDO Seidman, LLP
are expected to be present at the Annual Meeting to respond to shareholders'
questions and will have an opportunity to make any statements they consider to
be appropriate. The Board of Directors of the Company has not yet selected an
independent accounting firm for the 1999 fiscal year and is currently
undertaking to make such a selection, focusing on the available options,
including a cost analysis thereof.
ANNUAL REPORT TO SHAREHOLDERS AND REPORTS ON FORM 10-KSB
Additional information concerning the Company, including financial
statements of the Company, is provided in the Company's 1998 Annual Report to
Shareholders that accompanies this Proxy Statement. The Company's Annual Report
on Form 10-KSB for the year ended December 31, 1998, as filed with the SEC, is
available to shareholders who make a written request therefor to Danny F. Dukes,
at the offices of the Company, 7855 North Point Parkway, Suite 200, Alpharetta,
Georgia 30022. Copies of exhibits filed with that report or referenced therein
will be furnished to shareholders of record upon request and payment of the
Company's expenses in furnishing such documents.
SHAREHOLDER PROPOSALS FOR INCLUSION IN NEXT YEAR'S PROXY STATEMENT
Proposals of shareholders intended to be presented at the Company's 2000
Annual Meeting of Shareholders must be received at the Company's principal
executive offices by December 23, 1999 in order to be eligible for inclusion in
the Company's proxy statement and form of proxy for that meeting. Shareholder
proposals for inclusion in next year's proxy statement should be addressed to
William H. Groce, Jr., Secretary, 7855 North Point Parkway, Suite 200,
Alpharetta, Georgia 30022.
OTHER SHAREHOLDER PROPOSALS FOR PRESENTATION
AT NEXT YEAR'S ANNUAL MEETING
For any proposal that is not submitted for inclusion in next year's proxy
statement, but is instead sought to be presented directly at the 2000 Annual
Meeting of Shareholders, management will be able to vote proxies in its
discretion if the Company: (i) receives notice of the proposal before the close
of business on March 8, 2000, and advises shareholders in the 2000 Proxy
Statement about the nature of the matter and how management intends to vote on
such matter; or (ii) does not receive notice of the proposal prior to the close
of business on March 8, 2000. Notices of intention to present proposals at the
2000 Annual Meeting of Shareholders should be addressed to William H. Groce,
Jr., Secretary, 7855 North Point Parkway, Suite 200, Alpharetta, Georgia 30022.
12
<PAGE>
OTHER MATTERS
The Company's Board of Directors knows of no other matters to be brought
before the Annual Meeting. However, if other matters should come before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
card to vote the Proxy in accordance with their judgment of what is in the best
interest of the Company.
<TABLE>
<S> <C>
By Order of the Board of Directors
/s/ H.N. Padget, Jr.
------------------------------------------
H.N. Padget, Jr.
President and Chief Executive Officer
</TABLE>
Alpharetta, Georgia
April 22, 1999
13
<PAGE>
CNB HOLDINGS, INC.
7855 NORTH POINT PARKWAY, SUITE 200
ALPHARETTA, GEORGIA 30022
COMMON STOCK PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF CNB HOLDINGS, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS, MAY 19, 1999
The undersigned shareholder of the Company hereby appoints H.N. Padget, Jr.
and Danny F. Dukes, or any of them, as proxies and attorneys-in-fact, with full
power to each of substitution and with discretionary authority, to act for and
in the name of the undersigned to vote, as designated below, all of the shares
of the undersigned at the Annual Meeting of Shareholders of the Company to be
held on May 19, 1999 and at any adjournment or postponement thereof.
1. Election of five directors to hold office until the Company's 2002 Annual
Meeting of Shareholders.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE DIRECTOR
NOMINEES NAMED BELOW
<TABLE>
<S> <C> <C> <C> <C>
/ / FOR all nominees listed below / / WITHOLD AUTHORITY
(EXCEPT AS OTHERWISE INDICATED BELOW)
</TABLE>
Patricia Rhodes Grimes, Heber N. Padget, Sr., John A. Pond, Reid W. Simmons and
W. David Sweatt
If you wish to withhold authority to vote for any individual nominee(s), write
the nominee's name(s) on the line below:
- --------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
matter or matters which may properly come before the Annual Meeting and at
any adjournment or postponement thereof.
<PAGE>
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED, AND NOT REVOKED, THE
SHARES IT REPRESENTS WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED
ABOVE, AND IF NO CHOICE IS SPECIFIED, IT WILL BE VOTED FOR EACH OF THE PROPOSALS
SET FORTH ABOVE.
PLEASE MARK, DATE AND SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: _____________________________________________ , 1999
PLEASE SIGN NAME EXACTLY AS LISTED ON
THE MAILING LABEL
_______________________________________
Signature
_______________________________________
Print name as listed on the mailing
label
_______________________________________
Signature (if held jointly)
NOTE: If stock is held in the name of
two or more persons, all must sign.
When signing as attorney, trustee,
administrator, executor or guardian,
please give your full title as such. If
a corporation, please sign in full
corporate name by President or other
authorized officer.
