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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. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box: |_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c)
or Rule 14a-12
FIRST CHEROKEE 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:
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(2)Aggregate number of securities to which transactions 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):
------------------------------------------------------------------
(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:
(2)Form, Schedule or Registration Statement no.:
(3)Filing Party:
(4)Date Filed:
<PAGE>
REVOCABLE PROXY
FIRST CHEROKEE BANCSHARES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned shareholder of First Cherokee Bancshares, Inc. (the "Company")
hereby constitutes and appoints J. Stanley Fitts, Carl C. Hames, Jr. and Bobby
R. Hubbard, and each of them, as true and lawful attorneys and proxies of the
undersigned, with full power of substitution and resubstitution, to vote and act
with respect to all shares of the Company's Common Stock (the "Shares"), the
undersigned could vote, and with all powers the undersigned would possess, if
personally present, at the Annual Meeting of Shareholders of the Company to be
held on April 28, 1999, and at any adjournments or postponements thereof (the
"Annual Meeting").
1.PROPOSAL: Election of Directors (except as marked to the contrary below):
NOMINEES FOR ELECTION AS DIRECTORS
----------------------------------
Alan D. Bobo Russell L. Flynn Bobby R. Hubbard
Elwin K. Bobo Carl C. Hames, Jr. R.O. Kononen, Jr.
Michael A. Edwards C. Garry Haygood Dennis M. Lord
J. Stanley Fitts Thomas D. Hopkins, Jr. Larry R. Lusk
Dr. Stuart R. Tasman
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee"s name in the space provided below.
________________________________________
The Board of Directors recommends a vote "FOR" the Election as Directors, of
the Nominess.
2.PROPOSAL: Approval of the 1999 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote "FOR" the approval of the 1999 Stock
Option Plan.
If this proxy is properly executed, the Shares represented hereby will be
voted in the manner directed herein by the shareholder. If no direction is made,
such Shares will be voted FOR the election as directors of the nominees listed
above, FOR the approval of the 1999 Stock Option Plan and in the discretion of
the proxies named above on all other matters that may properly come before the
Annual Meeting.
This proxy revokes all prior dated proxies. The signer hereby acknowledges
receipt of the Company's proxy statement dated March 30, 1999.
Please be sure to sign and date this Proxy
in the box below.
Date___________________________
__________________________ _______________________________
Stockholder sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in postage
paid envelope provided.
FIRST CHEROKEE BANCSHARES, INC.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. 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.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
<PAGE>
March 30, 1999
Dear Shareholders:
On behalf of the Board of Directors, you are cordially invited to
attend the Annual Meeting of Shareholders of First Cherokee Bancshares, Inc.
(the "Company"), the bank holding company for First National Bank of Cherokee,
Woodstock, Georgia.
The meeting will be held at the Woodstock Library, 7745 Main Street,
Woodstock, Georgia, on Wednesday, April 28, 1999, at 4:00 p.m. The Board of
Directors of the Company and our management team look forward to the opportunity
of personally greeting those shareholders in attendance.
Information about the meeting is provided in the enclosed Notice of
Annual Meeting of Shareholders and Proxy Statement. Also included is the
Company's 1998 Annual Report.
Your interest and participation, regardless of the number of shares you
own, are important to the continued success of the Company and First National
Bank of Cherokee. Therefore, whether or not you plan to attend the meeting in
person, please mark, sign and date the enclosed Proxy and return it to the
Company in the postage-paid envelope provided so that your shares can be voted.
Your continued interest in and support of the Company and First
National Bank of Cherokee are appreciated.
Sincerely,
/s/Carl C. Hames, Jr.
Carl C. Hames, Jr.
Chief Executive Officer
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
the bank holding company for
First National Bank of Cherokee
9860 Highway 92
Woodstock, Georgia 30188
(770) 591-9000
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1999
---------------------------
To: The Shareholders of First Cherokee Bancshares, Inc.:
The Annual Meeting of Shareholders (the "Annual Meeting") of First
Cherokee Bancshares, Inc. (the "Company") will be held at the Woodstock Library,
7745 Main Street, Woodstock, Georgia, on Wednesday, April 28, 1999, at 4:00
p.m., for the purpose of acting upon the following matters:
1. To elect 13 members to the Board of Directors to serve a one-year term
expiring in 2000; and
2. To approve the First Cherokee Bancshares, Inc. 1999 Stock Option Plan; and
3. To consider such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has set March 19, 1999, as the record date for
the Annual Meeting. Only shareholders of record at the close of business on the
record date are entitled to notice of and to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL AS MORE
PARTICULARLY DESCRIBED IN THE ATTACHED PROXY STATEMENT.
YOUR PROXY IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY TO THE COMPANY IN THE ACCOMPANYING,
POSTAGE-PAID ENVELOPE.
By Order of the Board of Directors
/s/ Carl C. Hames, Jr.
Carl C. Hames, Jr.
Chief Executive Officer
March 30, 1999
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
the bank holding company for
First National Bank of Cherokee
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PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held April 28, 1999
---------------------------
PROXY SOLICITATION AND VOTING
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of proxies from the shareholders of First
Cherokee Bancshares, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held April 28, 1999 (the "Annual Meeting"). This Proxy
Statement and the enclosed form of proxy (the "Proxy") are being mailed to the
Company's shareholders on or about March 30, 1999.
The Board of Directors has set March 19, 1999, as the record date for
the Annual Meeting. Only shareholders of record at the close of business on the
record date are entitled to notice of and to vote at the Annual Meeting. As of
the record date, there were 553,804 shares (the "Shares") of common stock of the
Company outstanding. A quorum for the Annual Meeting consists of the holders of
the majority of the Shares present in person or represented by Proxy. Each Share
is entitled to one vote on each matter to come before the Annual Meeting.
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 will not
be included in vote totals and will not be considered in determining the outcome
of the vote.
Approval of the 1999 Stock Option Plan and any other matter that may
properly come before the Annual Meeting requires the affirmative vote of a
majority of the Shares 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, 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.
The Proxy is solicited for use at the Annual Meeting if a shareholder
is unable to attend the Annual Meeting in person or wishes to have his or her
Shares voted by proxy, even if he or she attends the Annual Meeting. A
shareholder who signs a proxy has the right to revoke it before it is voted (1)
by notice to the Secretary of the Company, (2) by submitting a Proxy having a
later date, or (3) by such person appearing at the Annual Meeting and electing
to vote in person.
<PAGE>
All Shares represented by valid Proxies received pursuant to this
solicitation and not revoked before they are voted will be voted in the manner
specified therein. If a Proxy is signed and no specification is made, the Shares
represented by the Proxy will be voted in favor of the Proposals described below
and in accordance with the best judgment of the persons exercising the Proxy
with respect to any other matters properly presented for action at the Annual
Meeting.
In addition to this solicitation by mail, the officers and employees of
the Company and its subsidiary, without additional compensation, may solicit
Proxies in favor of the Proposals, by personal contact, letter, telephone or
other means of communication. We will ask brokers, nominees and other custodians
and fiduciaries to forward Proxy solicitation material to the beneficial owners
of the Shares, where appropriate, and we will reimburse them for their
reasonable expenses. The Company will bear the costs of soliciting Proxies for
the Annual Meeting.
The Company is a bank holding company. It was organized in 1988 under
the laws of the State of Georgia. The Company's subsidiary, First National Bank
of Cherokee (the "Bank"), opened for business on November 27, 1989 in Woodstock,
Georgia.
PROPOSAL FOR ELECTION OF DIRECTORS
Nominees
The members of the Company's Board of Directors are elected by the
shareholders. The Board of Directors presently consists of 13 members, each of
whom also serves as a director of the Bank. The members of the Board of
Directors of the Bank are elected annually by the Company, which is the sole
shareholder of the Bank.
The Board of Directors has nominated the 13 incumbent directors listed
below for re-election as directors of the Company to serve one-year terms that
will expire at the 2000 Annual Meeting of Shareholders or when their successors
are elected and qualified. We expect each Proxy solicited on behalf of the Board
of Directors to be voted for the election of the nominees designated below. At
this time, the Board of Directors knows of no reason why a nominee might be
unable to serve, but if that should occur before the Annual Meeting, the Proxies
will be voted for the election of such other person or persons as the Board of
Directors may recommend.
The following table sets forth the name, age at December 31, 1998, year
first elected and principal occupation for the last five years of each of the 13
nominees:
<PAGE>
Year
First
Name Age Elected Principal Occupation
- ---- --- ------- --------------------
Alan D. Bobo 47 1988 Mr. Alan Bobo is the owner of
Bobo Plumbing Company,
Woodstock, Georgia.
Elwin K. Bobo 51 1988 Mr. Elwin Bobo is the owner of
Bobo Construction Company,
Woodstock, Georgia.
Michael A. Edwards 40 1988 Mr. Michael Edwards is Vice
President of Edwards Tire
Sales, Inc., Woodstock, Georgia.
J. Stanley Fitts 55 1988 Mr. Stanley Fitts is the owner
and President of Reeves
Floral Products, Inc.,
Woodstock, Georgia.
Russell L. Flynn 66 1988 Mr. Russell Flynn has been a
Sales Associate at Century 21
Cherokee Realty since 1988 and
is currently a partner and
associate broker.
Carl C. Hames, Jr. 50 1988 Mr. Carl Hames became President
and Chief Executive Officer of
the Company in 1990 and Chief
Executive of the Bank in 1991.
C. Garry Haygood 48 1988 Mr. Garry Haygood is the
Executive Vice President of
Haygood Contracting, Inc., a
grading contracting company,
Woodstock, Georgia.
Thomas D. Hopkins, Jr. 64 1988 Mr. Thomas Hopkins is retired.
He is the former President of
Hopkins and Son, Inc., which
operated two NAPA Auto Parts
Stores in Georgia. He also is
a Georgia Real Estate Broker and
owner of Tom Hopkins Realty,
Woodstock, Georgia.
Bobby R. Hubbard 55 1988 Mr. Bobby Hubbard is a Flight
Equipment Instructor for
Lockheed Martin Aeronautical
Systems, Marietta, Georgia.
<PAGE>
R. O. Kononen, Jr. 48 1998 Mr. Rick Kononen served as
Executive Vice President of
Security State Bank, Canton,
Georgia from 1990 through 1996.
He joined the Bank as President
in January 1997,was elected to
the Bank's Board of Directors in
May 1997 and to the Company's
Board of Directors in April 1998.
Dennis M. Lord 57 1988 Mr. Dennis Lord was the
Secretary of Bay, Lingerfelt and
Lord, Inc., a grading contracting
company, Atlanta,Georgia, from
1972 to 1997.He presently develops
properties.
Larry R. Lusk 49 1988 Mr. Larry Lusk was the owner and
President of Lusk Construction,
Inc., a commercial construction
company, Canton, Georgia, from
1977 to 1995. He currently does
contract sales/ design work and
property development.
Dr. Stuart R. Tasman 46 1988 Dr. Stuart Tasman is an
optometrist in private practice
in Cherokee County, Georgia.
There are no arrangements or understandings between the Company and any
person pursuant to which any of the above persons have been or will be elected a
director. No director is a director of another bank or bank holding company.
Alan D. Bobo and Elwin K. Bobo are brothers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION AS
DIRECTORS OF THE 13 NOMINEES NAMED ABOVE.
Meetings of the Board of Directors
The Board of Directors of the Company held eight meetings during 1998.
Each of the meetings was attended by at least 75% of the directors of the
Company. The Board of Directors of the Company does not have standing
committees.
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the name, age at December 31, 1998, and
principal occupation for the last five years of each of the executive officers
of the Company.
Name Principal Occupation
- ---- --------------------
Carl C. Hames, Jr. Mr. Hames, age 50, has been President and Chief Executive
Officer of the Company since 1990, and Chief Executive
Officer of the Bank since 1991.
Kitty A. Kendrick Ms. Kendrick, age 40, joined the Bank in 1993 as a Senior
Vice President and Chief Financial Officer of the Company.
She was promoted to Executive Vice President in January
1997.
R. O. Kononen, Jr. Mr. Kononen, age 48, joined the Bank as President in
January, 1997, was elected to the Bank's Board of
Directors in May, 1997 and to the Company's Board of
Directors in April, 1998.Prior to joining the Bank,
Mr. Kononen was an Executive Officer at Security State
Bank, Canton, Georgia.
DIRECTOR AND EXECUTIVE COMPENSATION
Director Compensation
The Company does not compensate its directors for their services as
members of the Board of Directors. Directors of the Bank currently receive $300
per board meeting attended and between $45 and $75 per committee meeting
attended, depending on the type of committee that is meeting. Mr. Hames and Mr.
Kononen do not receive fees for board and committee meetings that are held
during the normal business hours of the Bank.
All of the Bank's directors participate in a retirement plan, with the
exception of Mr. Kononen who, as of January 1997, participates in his capacity
as an Executive Officer of the Bank. The purpose of the retirement plan is to
provide an annual retirement benefit to each director when he retires from the
Board. The plan provides retirement benefits in two ways, with an index formula
and with fee deferrals. The index formula consists of the earnings on a specific
life insurance policy, reduced by an amount equal to the Bank's opportunity
cost. At retirement, the Bank pays the accumulated excess earnings to the
director over a specified number of years. During retirement, the Bank pays the
earnings in excess of the opportunity cost to the director annually. These
payments continue for the life of the director. The fee deferral part of the
retirement plan is optional. Each director may elect to defer all or a portion
of his current director's fees for a ten-year period which began in 1995. In
addition, deferred fees will be credited with interest at a rate indexed to
current market conditions. The Bank's obligations under the retirement plan are
unfunded. However, the Bank has purchased life insurance policies on each
insurable director that are actuarially designed to offset the annual expenses
associated with the indexed formula benefit. The Bank is the sole owner of all
of the policies.
<PAGE>
The Bank also furnishes its insurable directors with a life insurance
plan. This plan is provided by a life insurance policy for each insurable
director. The life insurance plan generally provides that the Bank will pay each
director's beneficiary 80% of the life insurance policy's death benefit. The
Bank owns the policy and its entire cash surrender value as well as the
remainder of the death benefit.
Executive Compensation
The compensation described below is paid for all services rendered to
the Company and the Bank. The Company does not separately compensate its
executive officers. The following Summary Compensation Table presents the total
compensation paid during 1998, 1997 and 1996 to Mr. Hames, and the total
compensation paid during 1998 and 1997 to Mr. Kononen.
<TABLE>
<CAPTION>
Summary Compensation Table
================================================================================
Long-Term Compensation
----------------------
Awards Payouts
------ -------
Other
Annual Restricted All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary($) Bonus($) sation($)/2/ Awards($) SARs(#) Payouts($) sation($)
- --------------------- ---- ----------- -------- ------------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
President and Chief
Executive Officer 1998 $109,457/1/ $43,159 $6,000/3/ 0 0 0 $3,510/4/
of the Company
1997 $108,474/1/ 0 $6,000/3/ 0 0 0 $3,562/4/
1996 $107,355/1/ $20,580 $6,000/3/ 0 0 0 $3,600/4/
- --------------------- ---- ----------- ------- ------------- ---------- --------- ---------- ---------
R. O. Kononen, Jr. 1998 $90,000 $13,500 $8,400/3/ 0 0 0 $1,754/4/
President of the Bank 1997 $91,096/1/ 0 $8,400/3/ 0 0 0 0
- --------------------- ---- ----------- ------- ------------- ---------- --------- ---------- ---------
</TABLE>
/1/ Includes cash paid to Mr. Hames in lieu of accrued vacation in the amount of
$2,490 (1998), $4,049 (1997) and $5,542 (1996), and cash paid to Mr. Kononen in
lieu of accrued vacation in the amount of $2,077.
/2/ We have omitted information on "perks" and other personal benefits because
the aggregate value of these items does not meet the minimum amount required for
disclosure under Securities and Exchange Commission regulations.
/3/ Consists of an automobile allowance.
/4/ Consists of the Company's matching of Mr. Hames' and Mr. Kononen's
contribution to the Bank's 401K plan.
Mr. Hames and Mr. Kononen also receive retirement benefits under the Company's
retirement plan.
<PAGE>
Option Grants in Last Fiscal Year
- ---------------------------------
The following table contains information about the grant of stock
options during 1998 to the executive officers named in the Summary Compensation
Table. All options shown vest over five years at the rate of 20% per year,
beginning on March 18, 1999.
Number of Percent of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Price Expiration
Name Granted Fiscal Year ($/Share) Date
- ----------------- ---------- ----------------- --------------- -----------
Carl C. Hames, Jr. 1,200 3% $17.71 03/18/08
R.O. Kononen, Jr. 5,000 13% $17.71 03/18/08
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
- --------------------------------------------------------------------------------
Values
- ------
The following table contains information, with respect to the
executives named in the Summary Compensation Table, concerning unexercised
options held as of the end of 1998. Neither of the executive officers exercised
options during 1998.
Fiscal Year-End Option Values
---------------------------------
Value of Unexercised
Number of Unexercised In-the-Money Options at
Name Options Held at 12/31/98 12/31/98
- --------- --------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Carl C. Hames, Jr. 3,300 1,200 $31,878/1/ $1,248/1/
R.O. Kononen, Jr. 5,000 5,000 $23,750/1/ $5,200/1/
/1/ At December 31, 1998, the per share fair market value of the Company's
common stock ($18.75 per share), exceeded the per share exercise prices of
$9.09, $14.00 and $17.71 of the options. Fair market value is based on the
final trade of 1998.
<PAGE>
Employment Agreements
Mr. Hames' employment agreement provides for:
(1) A base salary of $100,000 to be adjusted annually by not more than 8% based
upon the change in the consumer price index for the metropolitan Atlanta area;
(2) An annual performance bonus determined by the Bank's Board of Directors;
(3) An automobile allowance;
(4) Term life insurance providing benefits in an amount of at least two times
annual salary, group health and hospital insurance, and long term disability
insurance benefits with benefits equal to 60% of annual salary;
(5) Reimbursement for business-related expenses and country club dues; and
(6) The establishment of a retirement plan.
During 1995, the Company and the Bank renewed Mr. Hames' employment
agreement confirming that Mr. Hames will continue to serve as President and
Chief Executive Officer of the Company, Chief Executive Officer of the Bank, and
as a director of the Company and the Bank until May 11, 2000, unless sooner
terminated for cause or by reason of Mr. Hames' death or disability. During
1998, the Bank's Board of Directors increased Mr. Hames' base salary to $107,898
based upon a 2.5% increase in the consumer price index for metropolitan Atlanta.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table lists certain information regarding the Shares
beneficially owned, as of March 19, 1999 (1) by each of the Company's directors,
(2) by its executive officers, (3) by all of the Company's directors and
executive officers as a group, and (4) by any other person who beneficially owns
more than 5% of the Shares. According to rules adopted by the Securities and
Exchange Commission, a "beneficial owner" of securities has or shares the power
to vote the securities or to direct their investment. Unless otherwise
indicated, each person is the record owner of, and has sole voting and
investment power with respect to, his or her shares. The number of issued and
outstanding shares used to calculate the percentage of total ownership for a
given individual or group includes any shares covered by the warrants or options
issued to that individual or group.
Number of Adjusted
Number Percent Shares Subject Percent
Name of of of to Warrants of
Beneficial Owner Shares/1/ Class and Options/2/ Class/3/
- ---------------- --------- ----- -------------- --------
Directors
- ---------
Alan D. Bobo 15,965/4/ 2.9 10,140 4.6
Elwin K. Bobo 18,555/5/ 3.4 15,090 5.9
Michael A. Edwards 7,610/6/ 1.4 8,490 2.9
J. Stanley Fitts 22,902/7/ 4.1 19,490 7.4
Russell L. Flynn 7,010/8/ 1.3 8,240 2.7
Carl C. Hames, Jr. 21,172/9/ 3.8 31,040 8.9
C. Garry Haygood 28,428/10/ 5.1 13,990 7.5
Thomas D. Hopkins, Jr. 15,694/11/ 2.8 11,240 4.8
Bobby R. Hubbard 11,268/12/ 2.0 10,140 3.8
R. O. Kononen, Jr. 5,625/13/ 1.0 6,000 2.1
Dennis M. Lord 20,240/14/ 3.7 16,740 6.5
Larry R. Lusk 14,108/15/ 2.5 9,040 4.1
Dr. Stuart R. Tasman 7,846/16/ 1.4 9,040 3.0
Executive Officers
- ------------------
Kitty A. Kendrick 132/17/ 0.0 3,200 0.6
All Directors and 196,555 35.5 171,880 50.8
- -----------------
Executive Officers
as a Group (14 persons)
5% Shareholder 36,000/18/ 6.5 -- 6.5
- --------------
Everest Partners, L.P.
- ----------------------------
<PAGE>
/1/ Excludes shares deemed to be beneficially owned through the right to
exercise warrants or options within 60 days of the record date.
/2/ Consists of warrants granted to the directors to purchase one share of
Common Stock for each share purchased by them in the Company's initial public
offering or the vested portion of stock options, or both.
/3/ Adjusted to reflect shares beneficially owned and shares deemed to be
beneficially owned through the right to exercise warrants or stock options
within 60 days of the record date.
/4/ Consists of (a) 11,407 shares owned directly by Mr. Bobo; (b) 660 shares
owned by Mr. Bobo's children, as to which Mr. Bobo disclaims beneficial
ownership; (c) 2,857 shares owned by Mr. Bobo's wife, as to which Mr. Bobo
disclaims beneficial ownership; and (d) 1,041 shares held in an IRA for the
benefit of Mr. Bobo's wife, as to which Mr. Bobo disclaims beneficial ownership.
Mr. Bobo's address is P.O. Box 1092, Woodstock, Georgia.
/5/ Consists of (a) 17,182 shares owned directly by Mr. Bobo; and (b) 1,373
shares held in an IRA for Mr. Bobo's benefit. Mr. Bobo's address is P.O. Box
1092, Woodstock, Georgia.
/6/ Consists of (a) 7,500 shares owned directly by Mr. Edwards; and (b) 110
shares owned by Mr. Edwards' daughter, as to which Mr. Edwards disclaims
beneficial ownership. Mr. Edwards' address is 7775 Turner Road, Woodstock,
Georgia.
/7/ Consists of (a) 22,252 shares owned directly by Mr. Fitts; and (b) 650
shares held by Reeves Greenhouse, Inc. Profit Sharing Plan. Mr. Fitts' address
is 10288 Highway 92, Woodstock, Georgia.
/8/ As to the indicated shares, Mr. Flynn shares voting power with his wife. Mr.
Flynn's address is 28 Lake Arrowhead Station # 2024, Waleska, Georgia.
/9/ Consists of (a) 10,065 shares owned directly by Mr. Hames; (b) 2,585 shares
held in an IRA for Mr. Hames' benefit; (c) 7,092 shares owned by Mr. Hames'
wife, as to which Mr. Hames disclaims beneficial ownership; (d) l,265 shares
held in an IRA for the benefit of Mr. Hames' wife, as to which Mr. Hames
disclaims beneficial ownership; and (e) 165 shares owned by Mr. Hames' son, as
to which Mr. Hames disclaims beneficial ownership. Mr. Hames' address is 2461
South Cherokee Lane, Woodstock, Georgia. Mr. Hames is also an Executive Officer
of the Company.
/10/ Consists of (a) 26,355 shares owned directly by Mr. Haygood; (b) 1,021
shares held in an IRA for the benefit of Mr. Haygood; (c) 550 shares held by Mr.
Haygood's wife as custodian for his daughters, as to which Mr. Haygood disclaims
beneficial ownership; and (d) 502 shares held in an IRA for the benefit of Mr.
Haygood's wife, as to which Mr. Haygood disclaims beneficial ownership. Mr.
Haygood's address is 1472 Johnson Brady Road, Canton, Georgia.
<PAGE>
/11/ Consists of (a) 12,411 shares owned directly by Mr. Hopkins; (b) 3,001
shares owned by Mr. Hopkins' wife, as to which Mr. Hopkins disclaims beneficial
ownership; and (c) 282 shares held in an IRA for Mr. Hopkins' benefit. Mr.
Hopkins' address is 2611 Beckwith Trail, Marietta, Georgia.
/12/ Consists of (a) 9,900 shares owned directly by Mr. Hubbard; (b) 519 shares
held in an IRA for Mr. Hubbard's benefit; (c) 519 shares held in an IRA for the
benefit of Mr. Hubbard's wife, as to which Mr. Hubbard disclaims beneficial
ownership; and (d) 330 shares owned by Mr. Hubbard's daughter, as to which Mr.
Hubbard disclaims beneficial ownership. Mr. Hubbard's address is 803 Upland
Estates Drive, Woodstock, Georgia.
/13/ Consists of 5,625 shares owned directly by Mr. Kononen. Mr. Kononen's
address is 5525 Old Highway 5, Woodstock, Georgia. Mr. Kononen is also an
Executive Officer of the Company.
/14/ Consists of (a) 16,500 shares owned directly by Mr. Lord; (b) 880 shares
held in an IRA for Mr. Lord's benefit; and (c) 2,860 shares owned jointly by Mr.
Lord and his wife. Mr. Lord's address is 3155 Trickum Road, Woodstock, Georgia.
/15/ Consists of (a) 8,800 shares owned directly by Mr. Lusk; (b) 3,353 shares
owned by his children, as to which Mr. Lusk disclaims beneficial ownership; (c)
1,189 shares held in an IRA for Mr. Lusk's benefit; and (d) 766 shares owned by
Mr. Lusk's wife, as to which Mr. Lusk disclaims beneficial ownership. Mr. Lusk's
address is Route 10, Gaddis Road, Canton, Georgia.
/16/ Consists of (a) 3,913 shares owned directly by Dr. Tasman; (b) 1,100 shares
owned by Dr. Tasman's daughters, as to which Dr. Tasman disclaims beneficial
ownership; (c) 1,379 shares held in an IRA for Dr. Tasman's benefit; and (d)
1,454 shares held in a SEP IRA for Dr. Tasman's benefit. Dr. Tasman's address is
1415 Wooten Lake Road, Kennesaw, Georgia.
/17/ As to the indicated shares, Ms. Kendrick shares voting power with her
husband. Ms. Kendrick's address is 187 Knollwood Drive, Marietta, Georgia.
/18/ Pursuant to a Schedule 13G filed by them, these shares are beneficially
owned by Everest Partners, L.P. (the "Limited Partnership"), Everest Partners,
Inc. (the "General Partner"), and Everest Managers, L.L.C.. The Limited
Partnership was formed for the purpose of investing in the equity securities of
various financial services providers, among other things. Everest Partners, Inc.
is the general partner of the Limited Partnership. Everest Managers, L.L.C. is
the manager for the Limited Partnership. The sole principal of Everest Partners,
Inc. and Everest Managers, L.L.C. is David M. W. Harvey. Everest Managers,
L.L.C. and David M. W. Harvey expressly disclaim direct and beneficial ownership
of these shares. The Limited Partnership's address is Job's Peak Branch, P.O.
Box 3178, Gardnerville, Nevada 89410.
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who
beneficially own 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, our directors, executive officers and
greater than 10% shareholders complied with all applicable Section 16(a) filing
requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of our directors, officers, principal shareholders and their
associates were customers of, or had transactions with, the Company or the Bank
in the ordinary course of business during 1998. Some of our directors are also
directors, officers, trustees or principal securities holders of corporations or
other organizations that also were customers of, or had transactions with, the
Company and the Bank in the ordinary course of business during 1998.
All outstanding loans and other transactions with our directors,
officers and principal shareholders were made in the ordinary course of business
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons and,
when made, did not involve more than the normal risk of collectability or
present other unfavorable features. In addition to banking and financial
transactions, the Company and the Bank may have had additional transactions
with, or used products or services of, various organizations with which
directors of the Company and its subsidiaries were associated. The amounts
involved in these non-credit transactions have not been material in relation to
the business of the Company, the Bank or such other organizations. We expect
that the Company and the Bank will continue to have similar transactions in the
ordinary course of business with such individuals and their associates in the
future.
The Company leases the land upon which the Bank building is located
from J. Stanley Fitts, chairman of the Board of Directors. The initial term of
the ground lease is 20 years, with four separate renewal options to extend the
term of the lease for additional five-year periods. The Company has the option
to purchase the property during the tenth year of the lease term or at each
five-year interval thereafter through the end of the lease. Under the terms of
the ground lease the Company also pays property taxes, insurance and
maintenance. During the fiscal year ended December 31, 1998, the Company paid
approximately $59,000 in rentals under the ground lease.
<PAGE>
PROPOSAL FOR APPROVAL OF
THE FIRST CHEROKEE BANCSHARES, INC. 1999 STOCK OPTION PLAN
Introduction
------------
On March 17, 1999, the Board of Directors approved the First Cherokee
Bancshares, Inc. 1999 Stock Option Plan (the "Stock Plan"). The text of the
Stock Plan can be found at Appendix A to this Proxy Statement. The Stock Plan
replaces the Key Employee Stock Option Plan.
The Stock Plan allows the Company to grant options to key employees,
officers and directors of the Company and its affiliates for the purpose of
giving them an equity interest in the Company. The Stock Plan also gives the
Company a way to attract and retain key personnel. The Board of Directors has
reserved 96,000 shares of Common Stock for issuance as awards 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 422 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
- --------------
A committee of the Board of Directors (the "Committee"), will determine
the awards granted under the Stock Plan. The Board of Directors will consider
the 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
J. Stanley Fitts, Carl C. Hames, Jr., C. Garry Haygood, Thomas D. Hopkins, Jr.,
and Dennis M. Lord.
The Committee will have the power to make all decisions regarding the
proper administration of the Stock Plan including, but not limited to,
interpretation of the provisions of the Stock Plan and whether to prescribe,
amend, or rescind the rules and regulations relating to the Stock Plan.
Additionally, the Committee will have the authority to determine, in its
discretion, which officers, employees and directors will receive awards under
the Stock Plan and the terms of the options which are granted. The Committee's
decisions relating to the administration of the Stock Plan and the grant of
options will be final and binding.
The Stock Plan provides for indemnification of Committee members by the
Company for liabilities, including attorneys' fees, settlement amounts and
judgments, incurred as a result of the defense of any legal action arising out
of any decisions, actions or failures to act by the Committee members in
connection with the Stock Plan. However, Committee members will not be eligible
for indemnification if they are negligent or engaged in any misconduct in the
performance of their duties.
<PAGE>
Option Awards
- -------------
The Stock Plan permits the Committee to grant stock options and certain
cash awards to eligible persons. These awards may be made on an individual
basis, or under a program designed by the Committee for the benefit of a group
of eligible persons.
The Committee will determine the number of shares of Common Stock
subject to an option, and to whom an option will be granted. The Committee will
also establish the exercise price of an option and forfeiture or termination
provisions of each option. No employee of the Company or any affiliate may be
granted, during any single fiscal year of the Company, rights to shares of
Common Stock under options which, in the aggregate, exceed 50,000 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 terms of the option will be set out in a Stock Option Agreement.
The exercise price of an option will be set forth in a Stock Option
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 generally 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 exercise price
of a non-qualified stock option shall be no less than fair market value if, at
the time of the grant, the optionee is a "covered employee" within the meaning
of Section 162(m) of the Code. The Committee may permit an option exercise price
to be paid in cash or by the delivery of previously-owned shares of Common
Stock, or 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. Company or affiliate financing may, in the discretion of
the Committee, be offered to assist participants with payment of the option
exercise price.
A participant may be liable for federal, state or local tax withholding
obligations as a result of the exercise of a non-qualified stock option. The tax
withholding obligation may be satisfied by payment in the form of cash or a
certified check or, if a participant elects with the permission of the
Committee, by a reduction in the number of shares to be received by the
participant upon exercise of the option.
The term of an option shall be specified in the applicable Stock Option
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 Option 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.
Certain Cash Awards
- -------------------
The Committee may make cash awards designed to cover tax obligations of
participants that result from the exercise of an option.
<PAGE>
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 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 Option 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 or terminated by the Board of
Directors without stockholder approval, the Board of Directors also may
condition any such amendment or termination 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 Option without the holder's consent.
The Stock Plan has an indefinite term, although incentive stock options must be
granted within 10 years after the adoption of the Stock Plan by the Board of
Directors.
Benefits to Named Executive Officers and Others
- -----------------------------------------------
The Committee has not yet made any determination as to which eligible
participants will be granted options under the Stock Plan.
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.
<PAGE>
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.
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE 1999 STOCK OPTION PLAN DESCRIBED ABOVE.
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has ratified management's selection of Porter
Keadle Moore, LLP as its independent certified public accountants for the
current fiscal year. Porter Keadle Moore, LLP, has audited the Company's
financial statements since 1991. A representative of that firm is expected to be
present at the Annual 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
Any shareholder proposal intended for inclusion in the Company's proxy
material for the 2000 Annual Meeting of Shareholders must be received at the
principal offices of the Company not later than November 19, 1999. The proposal
must comply with the rules and regulations of the Securities and Exchange
Commission.
OTHER MATTERS
We know of no other matters that may be brought before the meeting. If,
however, any matter other than the election of directors or approval of the
Stock Plan or related matters properly come before the meeting, the persons
appointed as Proxies will vote on the matter in accordance with their best
judgment.
ANNUAL REPORTS
Copies of the Company's 1998 Annual Report to Shareholders are being
mailed to all shareholders together with this Proxy Statement. Additional copies
may be obtained from the Secretary, First Cherokee Bancshares, Inc., 9860
Highway 92, Woodstock, Georgia 30188.
We will furnish our shareholders with a copy of the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1998 (without
exhibits) as filed with Securities and Exchange Commission. To receive the
Annual Report on Form 10-KSB, shareholders should send a letter request to the
Secretary, First Cherokee Bancshares, Inc., 9860 Highway 92, Woodstock, Georgia
30188.
<PAGE>
APPENDIX A
FIRST CHEROKEE BANCSHARES, INC.
1999 STOCK OPTION PLAN
APPENDIX A to the Proxy Statement
<PAGE>
A-i
TABLE OF CONTENTS
SECTION 1 DEFINITIONS................................................A-1
1.1 Definitions........................................................A-1
SECTION 2 THE STOCK INCENTIVE PLAN...................................A-4
2.1 Purpose of the Plan................................................A-4
2.2 Stock Subject to the Plan..........................................A-4
2.3 Administration of the Plan.........................................A-5
2.4 Eligibility and Limits.............................................A-5
SECTION 3 TERMS OF OPTIONS...........................................A-6
3.1 General Terms and Conditions.......................................A-6
3.2 Other Terms and Conditions.........................................A-7
3.3 Treatment of Awards Upon Termination of Service....................A-8
SECTION 4 RESTRICTIONS ON STOCK......................................A-8
4.1 Escrow of Shares...................................................A-8
4.2 Restrictions on Transfer...........................................A-9
SECTION 5 GENERAL PROVISIONS.........................................A-9
5.1 Withholding........................................................A-9
5.2 Changes in Capitalization; Merger; Liquidation....................A-10
5.3 Cash Awards.......................................................A-10
5.4 Compliance with Code..............................................A-10
5.5 Right to Terminate Service........................................A-10
5.6 Restrictions on Delivery and Sale of Shares; Legends..............A-11
5.7 Non-alienation of Benefits........................................A-11
5.8 Termination and Amendment of the Plan.............................A-11
5.9 Indemnification of Committee......................................A-11
5.10 Stockholder Approval..............................................A-12
5.11 Choice of Law.....................................................A-12
5.12 Effective Date of Plan............................................A-12
<PAGE>
FIRST CHEROKEE 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 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;
<PAGE>
(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.
Notwithstanding the foregoing, a Change in Control shall not include any
transaction or series of related transactions a principal purpose of which is to
convert the status of the Company (or a successor entity that results from the
transaction or series of related transactions) to an S corporation subject to
tax under Subchapter S, Chapter 1, Subtitle A of Title 26 of the Code.
(e)"Code" means the Internal Revenue Code of 1986, as amended.
(f)"Company" means First Cherokee 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.
(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.
<PAGE>
(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.
(p)"Participant" means an individual who receives an Option hereunder.
(q)"Plan" means the First Cherokee Bancshares, Inc. 1999 Stock Option Plan.
(r)"Stock" means the Company's common stock, $1.00 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.
<PAGE>
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, 96,000 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.
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 50,000.
<PAGE>
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 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.
<PAGE>
(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 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.
<PAGE>
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 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.
<PAGE>
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 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 CASH AWARDS. 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.
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 INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as members of the Committee, the members of the
Committee participating in decisions and other matters pursuant to the Plan
shall be indemnified by the Company against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such member of the Committee is
liable for negligence or misconduct in the performance of his duties; provided
that within sixty (60) days after institution of any such action, suit or
proceeding, a member of the Committee shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same. Notwithstanding
the foregoing, the provisions of this Section 5.9 shall not be applicable to the
extent such violates the Company's Charter, By-Laws, or applicable law, and if
only a portion, but not all of Section 5.9 shall so violate the Company's
Charter, By-Laws or applicable law, then the balance of Section 5.9 and the Plan
shall remain and be enforceable, and the portion or portions of Section 5.9
which so violate the Company's Charter, By-Laws or applicable law shall be, if
possible, interpreted so as to allow enforceability to the maximum extent
allowable under such Charter, By-Laws or applicable law.
<PAGE>
5.10 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.
5.11 CHOICE OF LAW. The laws of the State of Georgia shall govern the
Plan, to the extent not preempted by federal law.
5.12 EFFECTIVE DATE OF PLAN. The Plan shall become effective upon the
date the Plan is approved by the Board of Directors.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed as
of this 17th day of March, 1999.
FIRST CHEROKEE BANCSHARES, INC.
______________________________
By: /s/ Carl C. Hames, Jr.
Title: President
Attest:
__________________________
/s/ Thomas D. Hopkins, Jr.
Secretary
[CORPORATE SEAL]
