GREEN BANKSHARES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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~~November 20, 2008~~

March 25, 2009

Dear Shareholder:

We invite you to attend ~~a Special~~the Annual Meeting of Shareholders (the ~~“Special~~“Annual Meeting”) of Green Bankshares, Inc. (the “Company”) to be held at the General Morgan Inn, 111 North Main Street, Greeneville, Tennessee, on Friday, ~~December 19, 2008~~April 24, 2009, at 9:11:00 a.m., local time.

The ~~Special~~Annual Meeting has been called ~~to vote on an amendment to~~for the ~~Company’s Charter to authorize a class~~election of blank check preferred stock, consisting of one million (1,000,000) authorized shares, which may be issued in one or more series, with such rights, preferences, privileges and restrictions as shall be fixed by the Company’s Board of Directors,directors and to transact such other business as may properly come before the ~~Special~~Annual Meeting or any adjournments thereof. Enclosed is a proxy statement, ~~and~~ a proxy ~~card.~~card and the Company’s Annual Report to Shareholders for the 2008 fiscal year. Directors and officers of the Company as well as representatives of Dixon Hughes PLLC, the Company’s independent registered public accounting firm for the 2008 fiscal year, will be present to respond to any appropriate questions shareholders may have.

Your vote is important, regardless of the number of shares you own. On behalf of the Board of Directors, we urge you to sign, date and return the enclosed proxy card as soon as possible, even if you currently plan to attend the ~~Special~~Annual Meeting. We also offer telephone and Internet voting, as more particularly described in the attached proxy statement. Voting by telephone, Internet or by returning a proxy card in the mail will not prevent you from voting in person, ~~at the Special Meeting,~~ but will assure that your vote is counted if you are unable to attend the ~~Special~~Annual Meeting.

Thank you for your cooperation and your continuing support.


	Sincerely,
	/s/ R. Stan Puckett
	R. Stan Puckett
	Chairman of the Board and Chief Executive Officer

GREEN BANKSHARES, INC.
100 North Main Street
P.O. Box 1120
Greeneville, Tennessee 37743
(423) 639-5111

Notice of ~~Special~~Annual Meeting of Shareholders
To Be Held on ~~December 19, 2008~~April 24, 2009

Notice is hereby giventhat ~~a Special~~the 2009 Annual Meeting of Shareholders (the ~~“Special~~“Annual Meeting”) of Green Bankshares, Inc. (the “Company”) will be held on Friday, ~~December 19, 2008~~April 24, 2009, at 9:11:00 a.m., local time, at the General Morgan Inn, 111 North Main Street, Greeneville, Tennessee 37743.

A Proxy Card and a Proxy Statement for the ~~Special~~Annual Meeting are enclosed.

The ~~Special~~Annual Meeting is for the purpose of considering and acting upon the following matters:

(1)

elect three persons to ~~consider~~serve as directors of the Company, each for a three-year term, those persons to serve until the end of their respective terms and act upon a proposal to amend the Company’s Charter to authorize a class of blank check preferred stock, consisting of one million (1,000,000) authorized shares, which may be issued in one or more series, with such rights, preferences, privilegesuntil their respective successors are duly elected and ~~restrictions as shall be fixed by the Company’s Board of Directors;~~qualified;

(2)

to consider and vote ~~on any~~upon a shareholder proposal ~~to adjourn or postpone the Special Meeting, if necessary or appropriate, to solicit additional proxies in favor~~regarding majority election of the proposal to amend the Company’s Charter to authorize a class of blank-check preferred stock if there are insufficient votes at the time of such adjournment or postponement to approve the amendment to the Company’s Charter; anddirectors;

(3)

consider and vote upon a shareholder proposal regarding annual election of directors;

(4)

consider and vote upon a proposal to ratify the use of the performance measures in the Company’s Amended and Restated 2004 Long-Term Incentive Plan;

(5)

consider and vote upon a proposal to approve the Company’s executive compensation program and procedures in accordance with recently enacted “say on pay” regulations of the American Recovery and Reinvestment Act of 2009;

(6)

consider and vote upon a proposal to ratify the appointment of Dixon Hughes PLLC as the Company’s independent registered public accounting firm for 2009; and

(7)

transact such other business as may properly come before the ~~Special~~Annual Meeting or any adjournments thereof.

NOTE: The Board of Directors is not aware of any other business to come before the ~~Special~~Annual Meeting.

Any action may be taken on any one of the foregoing proposals at the ~~Special~~Annual Meeting on the date specified above or on any date or dates to which, by original or later adjournments, the ~~Special~~Annual Meeting may be adjourned. Shareholders of record at the close of business on ~~November 5, 2008~~March 20, 2009, will be entitled to vote at the ~~Special~~Annual Meeting and any adjournments thereof.

You are requested to fill in and sign the enclosed form of proxy which is solicited by the Board of Directors and to mail it promptly in the enclosed envelope or vote by telephone or over the Internet as described in the attached proxy statement. The proxy will not be used if you attend and choose to vote in person at the ~~Special~~Annual Meeting.


	BY ORDER OF THE BOARD OF DIRECTORS
	/s/ James E. Adams
	James E. Adams
	Corporate Secretary

Greeneville, Tennessee
~~November 20, 2008~~

March 25, 2009

It is important that proxies be returned promptly. Therefore, whether or not you plan to be present in person at the ~~Special~~Annual Meeting, please sign, date, and complete the enclosed proxy card and return it in the enclosed envelope. No postage is required if mailed in the United States. Alternatively, you can vote over the telephone or on the Internet, as more particularly described in the attached proxy statement. Should you subsequently desire to revoke your proxy, you may do so as provided in the attached proxy statement before it is voted at the ~~Special~~Annual Meeting.

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the Availability of Proxy Materials for the
Annual Stockholder Meeting to be Held on April 24, 2009

Pursuant to rules promulgated by the Securities and Exchange Commission, we have provided access to these proxy statement materials (which includes this proxy statement, a proxy card and our 2008 Annual Report) both by sending you this full set of proxy statement materials, including a proxy card, and by notifying you of the availability of such materials on the Internet.

This proxy statement, the Company’s 2008 Annual Report and a proxy card are available at www.snl.com/IRWebLinkX/GenPage.aspx?IID=1019938&gkp=1073743297.

The Annual Meeting of Shareholders will be held April 24, 2009 at 11:00 a.m. local time at the General Morgan Inn, 111 North Main Street, Greeneville, Tennessee. In order to obtain directions to attend the Annual Meeting of Shareholders, please call James E. Adams, our Corporate Secretary, at (423) 639-5111.

The Proposals to be voted upon at the Annual Meeting of Shareholders, all of which are more completely set forth in this proxy statement, are as follows:

	(1)		elect three persons to serve as directors of the Company, each for a three-year term, those persons to serve until the end of their respective terms and until their respective successors are duly elected and qualified;

	(2)		consider and vote upon a shareholder proposal regarding majority election of directors;

	(3)		consider and vote upon a shareholder proposal regarding annual election of directors;

	(4)		consider and vote upon a proposal to ratify the use of the performance measures in the Company’s Amended and Restated 2004 Long-Term Incentive Plan;

	(5)		consider and vote upon a proposal to approve the Company’s executive compensation program and procedures in accordance with recently enacted “say on pay” regulations of the American Recovery and Reinvestment Act of 2009;

	(6)		consider and vote upon a proposal to ratify the appointment of Dixon Hughes PLLC as the Company’s independent registered public accounting firm for 2009; and

	(7)		transact such other business as may properly come before the Annual Meeting or any adjournments thereof.

Our Board of Directors recommends that you vote FOR the approval of Proposals 1, 4, 5, 6 and 7 and AGAINST Proposals 2 and 3.

The presence of a shareholder at the ~~Special~~Annual Meeting will not automatically revoke that shareholder’s proxy. However, a shareholder may revoke a proxy at any time prior to its exercise by:

	•		submitting a written revocation prior to the meeting to James E. Adams, Corporate Secretary, Green Bankshares, Inc., 100 North Main Street, Greeneville, Tennessee 37743-4992;

	•		submitting another proxy by mail, internet or telephone that is dated later than the original proxy; or

	•		attending the ~~Special~~Annual Meeting and voting in person.

If your shares are held by a broker or bank, you must follow the instructions on the form you receive from your broker or bank with respect to changing or revoking your proxy.

The shares represented by any proxy card that is properly executed and received by the Company in time to be voted at the ~~Special~~Annual Meeting will be voted in accordance with the instructions that are marked on the proxy card.If you execute your proxy card but do not provide the Company with any instructions, your shares will be voted “FOR” the amendment to the Company’s Charter and “FOR” the adjournment or postponement of the Special Meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the amendment to the Company’s Charter.as follows:

	•		FORthe election of three persons to serve as directors of the Company, each for a three-year term, those persons to serve until the end of their respective terms and until their respective successors are duly elected and qualified;

	•		AGAINSTthe shareholder proposal regarding majority election of directors;

	•		AGAINSTthe shareholder proposal regarding annual election of directors;

	•		FORratification of the use of the performance measures in the Company’s Amended and Restated 2004 Long-Term Incentive Plan;

	•		FORapproval of the Company’s executive compensation program and procedures in accordance with recently enacted “say on pay” regulations of the American Recovery and Reinvestment Act of 2009; and

	•		FORratification of the appointment of Dixon Hughes PLLC as the Company’s independent registered public accounting firm for 2009.

Proxies that are returned to us where brokers have received instructions to vote on one or more proposals but do not vote on other proposal(s) are referred to as “broker non-votes” with respect to the proposal(s) not voted upon. Broker non-votes are included in determining the presence of a quorum.

Vote Required

In order to have a lawful meeting, a quorum of shareholders must be present at the ~~Special~~Annual Meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of the Company’s common stock outstanding as of the record date will constitute a quorum at the ~~meeting.~~Annual Meeting. A shareholder will be deemed to be present if the shareholder either attends the ~~meeting~~Annual Meeting or submits a properly executed proxy card that is received at or prior to the ~~meeting~~Annual Meeting (and not revoked). Under the law of Tennessee, the Company’s state of incorporation, abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum, but are not counted as votes cast at the meeting. Broker non-votes occur when brokers who hold their customers’ shares in street name submit proxies for such shares on some matters, but not others. Generally, this would occur when brokers have not received any instructions from their customers. In these cases, the brokers, as the holders of record, are permitted to vote on “routine” matters, which typically include the election of directors, but not on non-routine ~~matters, such as~~matters.

The affirmative vote of a plurality of the ~~amendment~~votes cast by the shareholders entitled to vote at the Annual Meeting is required for the election of directors. A properly executed proxy marked“Withhold Authority”with respect to the ~~Company’s Charter. As such, unless you instruct your broker how to vote shares~~election of ~~yours held in a broker’s name, those shares~~one or more directors will not be voted with respect to the director or directors indicated, although it will be counted in determining whether there is a quorum. Therefore, so long as a quorum is present, withholding authority will have no effect on ~~the proposal to amend the Charter to authorize a class of blank check preferred stock.~~whether one or more directors is elected.

If a quorum exists, approval of the ~~amendment to~~ratification of the appointment of Dixon-Hughes as the Company’s ~~Charter requires the~~independent registered public accounting firm for 2009, approval of ~~a majority~~each of the ~~shares~~shareholder proposals, approval of the ratification of the performance measures in the Amended and Restated 2004 Long-Term Incentive Plan and approval of the Company’s ~~common stock outstanding as~~executive compensation program and procedures, requires that the number of votes cast, in person or by proxy, at the Company’s Annual Meeting in favor of the ~~record date and entitled to be voted at~~proposal exceed the ~~Special Meeting.~~number of votes cast, in person or by proxy, against the proposal. Abstentions and broker non-votes ~~will~~are not counted as votes cast and thus have no impact on the ~~effect~~proposal to approve ratification of ~~a vote against~~ the ~~amendment to~~appointment of Dixon-Hughes as the Company’s ~~Charter. If a quorum is present, a proposal to adjourn or postpone~~independent registered public accounting firm for 2009, approval of each of the ~~Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at~~shareholder proposals, approval of the ~~time~~ratification of ~~such adjournment or postponement~~the performance measures in the Amended and Restated 2004 Long-Term Incentive Plan and approval of the Company’s executive compensation program and procedures, because the vote required to approve ~~the amendment to~~these proposals proposal is not based upon the Company’s ~~Charter requires that the votes cast in favor of adjournment or postponement exceed the votes cast against adjournment or postponement. Abstentions~~outstanding shares, but only on those shares present and ~~broker non-votes will have no effect on the vote to adjourn or postpone the meeting.~~

voting.

Solicitation of Proxies

In addition to solicitation by mail, directors, officers and employees of the Company may solicit proxies for the ~~Special~~Annual Meeting from Company shareholders personally or by telephone and other electronic means without additional remuneration for soliciting such proxies. We also will provide persons, firms, banks and corporations holding shares in their names or in the names of nominees, which in either case are beneficially owned by others, proxy material for transmittal to such beneficial owners and will reimburse such record owners for their expenses in taking such actions.

Internet Availability of Proxy Materials

This proxy statement, proxy card and accompanying proxy materials are available at the following website: www.snl.com/IRWebLinkX/GenPage.aspx?IID=1019938&gkp=1073743297.

PROPOSAL 1 — ~~AMENDMENT TO THE COMPANY’S CHARTER TO AUTHORIZE A CLASS OF PREFERRED SHARES~~Election of Directors

~~Description~~The Company’s Board of Directors is currently composed of 10 members. The Company’s Amended and Restated Charter requires that directors be divided into three classes, as nearly equal in number as possible, and that the members of each class serve for a term of three years and until their successors are elected and qualified, with one-third of the ~~Proposal~~

~~Upon approval by the~~directors elected each year. The Company’s ~~shareholders, this proposal would amend the Company’s Charter to provide~~nominating committee has nominated for ~~the creation~~election as directors Martha Bachman, W.T. Daniels and Charles H. Whitfield, Jr., each of whom is currently a ~~class~~member of ~~preferred stock in the amount of one million (1,000,000) shares, having such rights, preferences, privileges and restrictions as may be determined by~~ the Board of ~~Directors.~~Directors, to serve for a term of three years and until his or her respective successor is duly elected and qualified. Under Tennessee law, directors are elected by a plurality of the votes cast at an election. Each director has consented to serve as a director if elected.

~~The term “blank check”~~It is ~~often used to refer to preferred stock,~~intended that the ~~creation and issuance of which is authorized by~~persons named in the ~~shareholders in advance and the terms, rights and features of which are determined~~proxies solicited by the Board of Directors ~~from~~will vote for the election of each of the nominees. If any nominee is unable to serve or for good cause will not serve, the shares represented by all properly executed proxies which have not been revoked will be voted for the election of a substitute nominee as the Board of Directors may recommend. In the alternative, the Board of Directors may, in its discretion, reduce its size to eliminate the vacancy. At this time, the Board of Directors knows of no reason why any nominee might be unable or unwilling to ~~time.~~ serve.

The ~~authorization~~Company’s Board of ~~blank check preferred stock would permit~~Directors has determined that each of the following directors is an “independent director” within the meaning of Marketplace Rule 4200(a)(15) of the Nasdaq Stock Market, LLC:

Martha M. Bachman;
Bruce Campbell;
W.T. Daniels;
Robert K. Leonard;
Samuel E. Lynch;
John Tolsma; and
Charles H. Whitfield, Jr.

The Company’s Board of Directors has established procedures for the Company’s shareholders to communicate with members of the Board of Directors. Shareholders can communicate with any of the Company’s directors, including the chairperson of any of the committees of the Board of Directors, by writing to a director c/o Green Bankshares, Inc., 100 North Main Street, P.O. Box 1120, Greeneville, Tennessee 37743.

The Company encourages the members of the Board of Directors to ~~create and issue preferred stock from time to time in one or more series without further shareholder approval. Subject to~~attend the Annual Meeting of shareholders. All of the Company’s ~~Charter,~~directors attended the 2008 Annual Meeting of Shareholders.

The Board of Directors recommends a vote “FOR” election as ~~amended from time~~directors of all the nominees listed below.

The following table sets forth certain information with respect to ~~time, and the limitations prescribed by law or by any stock exchange or national securities association trading system on which~~each of the Company’s ~~securities~~current directors whose term of office as a director will or, assuming re-election, is expected to continue after the Annual Meeting. Each of the Company’s directors also currently serves as a director of GreenBank (the “Bank”), the wholly owned subsidiary of the Company. There are no arrangements or understandings between the Company and any director pursuant to which such person has been selected as a director or nominee for director of the Company, and no director or nominee is related to any other director, nominee or executive officer by blood, marriage or adoption.


				Current Term	Previous Five-Year’s Business
Name	Age		Director Since (a)	to Expire	Experience

BOARD NOMINEES FOR TERM TO EXPIRE IN 2012

Martha M. Bachman		54	2005	2009	Real Estate and Investment Management
W.T. Daniels		64	1987	2009	Property management
Charles H. Whitfield, Jr.		51	2000	2009	President and Chief Executive Officer, Laughlin Memorial Hospital (hospital management)

DIRECTORS CONTINUING IN OFFICE

Bruce Campbell		57	2000	2011	Director, Chairman, President and Chief Executive Officer, Forward Air Corporation, (transportation)
Samuel E. Lynch		49	2008	2011	President and Chief Executive Officer BioMimetic Therapeutics, Inc. (biopharmaceutical company)
R. Stan Puckett		53	1989	2011	Chairman of the Board and Chief Executive Officer of the Company and the Bank
John Tolsma		35	2004	2011	Chief Executive Officer, Knowledge Launch (educational multimedia)
Robert K. Leonard		41	2005	2010	President, LMR Plastics (manufacturing)
Ronald E. Mayberry		55	2003	2010	Regional Executive Sumner County; previously, President and CEO of Independent Bankshares, Inc. headquartered in Gallatin, Tennessee, which was acquired by the Company in November 2003
Kenneth R. Vaught		44	2002	2010	President and Chief Operating Officer of the Company and the Bank; previously, Senior Vice-President and Regional Executive for the Bank’s Blount and Knox County, Tennessee offices.


(a)		Indicates year that director first served as a director of either the Company or the Bank.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSED DIRECTOR NOMINEES.

PROPOSAL 2 — TO CONSIDER AND VOTE UPON THE SHAREHOLDER PROPOSAL REGARDING MAJORITY ELECTION OF DIRECTORS

Frank Coleman Inman, 600 Cherry Drive, #3, Eugene, Oregon 97401, owning more than $2,000 of the Company’s Common Stock, has informed us that he intends to submit the following shareholder proposal at the Annual Meeting.The Board of Directors recommends voting “AGAINST” this proposal. Unless otherwise specified, proxies will be voted“AGAINST”the proposal.

Stockholder Proposal Regarding Majority Election of Directors

Resolved: The shareholders request that our Board establish a rule (firmly specified in our charter or bylaws if feasible) that our director nominees must each receive support from at least fifty percent of share votes cast to obtain a seat on our board of directors. Shareholders will be provided in the proxy materials with the director nominee names, SEC-required declarations, biographical sketches, and photographs.

Stockholder’s Statement Supporting Item

In typical corporate board elections, stockholders have only one director nominee option for each open board position. Any shareholder(s) can withhold votes for any or all nominees, but lacking the need for a majority of share votes cast, the election results remain preordained.

In most years (because of our typically uncontested elections), only one stockholder need vote only one share for a board nominated director to ensure that director’s election. This is clearly sub-optimal, and raises accountability and control issues for many shareholders. We can do better!

Director priorities other than maximizing shareholder wealth have often contributed to corporations underperforming. While the merger with Civitas in May 2007 gained GreenBank a footprint in a prestigious area, how many per-merger Green Bankshares stockholders would vote in favor again? Our stock price dramatically fell (more than that of most similar sized banks) from the time of pre-merger announcement to post-merger wrap-up.

Hopefully, we will be the smaller bank in any future merger, since smaller bank stockholders are more likely to grow wealthier, i.e. Civitas stockholders.

Majority voting is recommended by nearly all corporate governance experts; forms have been successfully implemented by many successful corporations, including U.S. Bancorp, Lockheed Martin, Best Buy Co., and Bank of America.

Providing positive, practical, and meaningful director elections for stockholders may ~~be listed,~~increase our Green Bankshares stock price, via more stockholder control of our GreenBank investments and more interest from sophisticated investors who demand best practices. Corporate governance may improve most via better board elections, and this practical solution makes sense for the vast majority of Green Bankshares stockholders.

Please vote “FOR” this pro-stockholder proposal.

The Company’s Board of Directors Statement OPPOSING this Proposal.

The Board of Directors believes that adherence to sound corporate governance policies and practices is important to ensuring that the Company is governed and managed with the highest standards of responsibility, ethics and integrity and in the best interests of its shareholders. After careful consideration, the Board of Directors has determined that implementing the majority vote standard advanced in this shareholder proposal would ~~be expressly authorized, at its discretion, to adopt resolutions to issue preferred shares, to fix the number of shares~~not enhance shareholder value and to change designations, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, including dividend rights, dividend rates, terms of redemption, redemption prices, voting rights, conversion rights, and liquidation preferences of the shares constituting any series of preferred stock, in each case without any further action or vote by the shareholders. The Board of Directors would ~~be required to make any determination to issue shares of preferred stock based on its judgment that doing so would~~not be in the best interests of the Company and its shareholders.

~~If the shareholders approve this proposal, Article 6 of the Company’s Charter would be amended in its entirety to read as follows:~~

~~“6.~~ The ~~maximum number of shares which the Corporation shall have the authority to issue is:~~

a) One Hundred Thirty (130) shares of Organizational Common Stock with a par value of Ten Dollars ($10.00) per share, which stock shall be callable by the Corporation at any time at the par value thereof by action of a majority of the Board of ~~Directors.~~

~~b) Twenty million (20,000,000) shares of Common Stock, with a par value of Two Dollars ($2.00) per share. Each share of Common Stock shall~~Directors believes the plurality vote standard continues to be ~~entitled to one vote. No holder of any Common Stock of~~ the ~~Corporation, now or hereafter authorized, shall have any right, as such holder, to purchase, subscribe~~best standard for or otherwise acquire any shares of stock of the Corporation, or any securities or obligations convertible into, or exchangeable for, or any right, warrant or option to purchase, any shares of any class which the Corporation may at any time hereafter issue or sell, whether now or hereafter authorized, but any and all such stock, securities, obligations, rights, warrants or options may be issued and disposed of byelecting directors. Accordingly, the Board of Directors believes a change in the standard is unnecessary and could in fact lead to ~~such persons, firms or corporations,~~unintended and ~~for such lawful consideration and on such terms as~~undesirable consequences. Further, the Board of Directors believes the current system provides shareholders a meaningful and important role in ~~its discretion may, from time to time, determine, without first offering~~ the ~~same to the shareholders~~election of ~~the Corporation.~~

c) One million (1,000,000) shares of preferred stock, no par value per share. The preferred stock may be issued by the Corporation from time to time in one or more series and in such amounts as may be determined by the Board of Directors. The designations, voting rights, amounts of preference upon distribution of assets, rates of dividends, premiums of redemption, conversion rights and other variations, if any, the qualifications, limitations or restrictions thereof, if any, of the preferred stock, and of each series thereof, shall be such as are fixed bydirectors. Therefore, the Board of Directors ~~authority so to do being hereby expressly granted, and as are stated and expressed in~~recommends a ~~resolution or resolutions adopted by the Board of Directors providing for the issue of such series of preferred stock.”~~

~~The Board of Directors approved the proposed amendment to the Company’s Charter on October 28, 2008, subject to shareholder approval.~~

~~Rationale for Creating Blank Check Preferred Stock~~

Recent economic developments have adversely affected the capital markets and the availability of capital for financial institutions. The market for trust preferred securities has been particularly impacted. Also, the emergence of credit problems in the banking industry suggests that the industry is entering a period where capital conservation and augmentation will be critically important. In light of these trends, the Board of Directors has concluded that the Company should have a full range of capital financing alternatives available in its Charter to, among other reasons, help support any future growth.vote against this proposal.

The ~~proposed amendment~~Company’s current director election policies are provided for under its Bylaws and Charter. The Company’s Bylaws provide that directors are elected under a plurality vote standard, meaning nominees who receive the most affirmative votes will be elected to the ~~Charter~~Board of Directors. The plurality voting standard for the election of directors is the predominant voting standard used by publicly traded companies. It is the default standard under Tennessee law and is known and understood by shareholders. The plurality voting standard yields a voting result that is certain and delivers election results in a simple, efficient and transparent manner. The Board of Directors believes that the plurality standard provides a reliable mechanism for electing an independent Board of Directors that is committed to delivering long-term shareholder value. Moving to a majority voting standard could jeopardize the simplicity, certainty and efficiency of the current plurality system.

The Company has a strong corporate governance process designed to identify and propose director nominees who will ~~provide~~best serve the interests of the Company ~~with increased flexibility in meeting future capital requirements by providing another type~~and its shareholders. The Board of ~~security in addition to its common stock, as it will allow~~Directors maintains a Nominating/Governance Committee that is composed entirely of independent directors, and all of the ~~Company to issue preferred stock from time to time with such features as may be determined by~~members of the Board of Directors, ~~for any proper corporate purpose. Such uses may include, without limitation, issuance for cash~~other than Messrs. Puckett, Vaught and Mayberry, are independent. The Nominating/Governance Committee applies a robust set of criteria in identifying director nominees and has established procedures to consider and evaluate persons recommended by shareholders under the same criteria as ~~a means of obtaining capital for use~~nominees submitted by the Nominating/Governance Committee.

As a result of these practices, the Company ~~or issuance as~~has consistently elected, by a plurality, highly qualified directors from diverse business backgrounds with significant business contacts in the Company’s target market, substantially all ~~or part~~of whom have been “independent” within the standards adopted by the Nasdaq Stock Market. In fact, the Company’s shareholders have a history of electing directors by a substantial majority of the ~~consideration to be paid by the Company for acquisitions of other businesses or their assets.~~ votes cast.

The Board of Directors ~~could, among other things, create~~believes that the proponent’s characterization of the plurality voting process — in particular the suggestion that a ~~series~~director may be elected by receiving only a single affirmative vote — is highly theoretical and not supported by historic results. Over the past five years at each annual meeting, every director nominee has received the affirmative vote of ~~preferred stock that is convertible into common stock~~more than 70% of the shares voting at each meeting. Adopting the proposal to depart from the Company’s plurality voting requirement would have had no effect on the ~~basis~~outcome of ~~either a fixed or floating conversion rate.~~our election process during this five-year period.

The Board of Directors believes that the proposal also has ~~authorized~~ the ~~Company’s management to explore participating in~~disadvantage of not addressing the ~~voluntary TARP Capital Purchase Program offered by~~unknown and potentially negative consequences of instituting a majority vote system at this time. It does not address what would occur if no candidate receives the United States Treasury, the details of which were released on October 14, 2008, and on October 28, 2008, the Company applied to participate in the program. Under the program, the United States Treasury will purchase an amount of preferred shares from participating financial institutions in amounts ranging fromrequisite majority vote. The proposal does not ~~less than one percent (1%) of the financial institution’s risk weighted assets and not more than the lesser of $25 billion~~address how or three percent (3%) of the institution’s risk-weighted assets on standardized terms pursuant to a public term sheet issued by the United States Treasury on October 14, 2008. These preferred shares will qualify as Tier 1 capital and will rank senior to the institution’s common stock. The senior preferred shares will pay a cumulative dividend rate of five percent (5%) per annum for the first five years and will reset to a rate of nine percent (9%) per annum after year five. The senior preferred shares will be non-voting, other than class voting rights on matters that could adversely affect the shares. The senior preferred shares will be callable at 100% of the issue price after three years. Prior to the end of three years, the shares may be redeemed for 100% of their issue price, with the proceeds from a qualifying equity offering of any Tier 1 perpetual preferred or common stock, the aggregate gross proceeds of which exceed 25% of the issue price of the preferred shares.

~~If the Company was to issue the preferred shares,~~when the Company would fill any vacancy resulting from a resignation of a director who did not receive the requisite majority vote. Such vacancies could be ~~prohibited from paying or declaring dividends on any junior preferred shares, preferred shares~~disruptive and interfere with equal ranking, or common shares unless all accrued and unpaid dividends for all past dividend periods have been declared and paid in full. The Company would also be prohibited from repurchasing or redeeming any junior or~~pari passupreferred shares, or common shares during periods dividends on~~ the ~~preferred shares are unpaid. During the initial three-year term, any increase in the Company’s common stock dividends or repurchase of common shares or junior or~~~~pari passu~~~~preferred shares, would need to be approved by the United States Treasury unless it had transferred all~~functioning of the ~~preferred shares it acquired from~~Board of Directors. Also, any vacancies could leave the Company unable to ~~third parties.~~

~~In addition~~meet Nasdaq Stock Market listing requirements relating to the ~~preferred shares, if the Company participates in the program it would be required to issue the United States Treasury 10-year warrants to purchase shares~~independence and financial literacy of ~~the Company’s common stock having an aggregate market price equal to 15%~~directors, or requirements of the preferred shares. The initial exercise price of these warrants, which will be subject to anti-dilution protection and will be immediately exercisable, will be the market price (based on a trailing 20-day trading average) of the Company’s common shares on the date that the Company’s application for participation in the program is accepted. The number of shares subject to the warrants will be reduced by 50% if, prior to December 31, 2009, the Company has received aggregate gross proceeds of not less than 100% of the issue price of the preferred shares in an offering of common stock or perpetual preferred stock, or any combination of common stock and perpetual preferred stock, that in each case qualify as Tier 1 capital. To the extent that the Company redeems the preferred shares held by the United States Treasury, the Company will have a right to repurchase any warrants or any common stock issued upon exercise of the warrants and held by the United States Treasury at fair market value. If the United States Treasury, or any person to whom the United States Treasury transfers the warrants, exercises the warrants, the Company will issue additional shares of its common stock, and the other holders of the Company’s common stock will have their ownership interest in the Company diluted. The Company will be required to file a registration statement with the Securities and Exchange Commission ~~registering for resale~~(“SEC”) relating to audit committee financial experts.

Even if the ~~preferred shares~~proposal were adopted and ~~warrants issued~~at a future election enough shareholder votes were withheld to prevent a director from receiving a majority vote, the ~~United States Treasury and registering for sale,~~Board of Directors believes that the ~~shares of common stock issuable upon exercise~~best interest of the ~~warrants.~~

~~In addition, and as described below under “Description~~Company’s shareholders would not be served. For example, if withheld votes aggregated just over 50% of the ~~Preferred Stock — Voting Rights”,~~votes cast, a director receiving just under a majority of the votes cast would not be elected. Similarly, if there were more candidates nominated than the number of open board seats, the shareholder votes could be spread in such a way that no nominee receives a majority of the votes cast. In either case, the nominee director preferred by the shareholders would not be elected and the result is less desirable than the current system of electing directors by a plurality vote.

Further, because under a majority voting standard the standard for director election is a majority of the votes cast, a single-issue activist would need to mobilize only a minority of the Company’s shareholders to achieve “AGAINST” votes from a majority of the votes cast. Consequently, a minority of the Company’s shares outstanding could act to defeat a director’s election. The Board of Directors believes it is unlikely shareholders generally want the consequences of a single-issue message to be the actual failure to elect a particular director or group of directors, especially given that the current plurality vote standard allows shareholders to nonetheless register dissatisfaction by means of a “withhold” vote for one or more directors. Further, such “vote-no” campaigns against the election of one or more of the Board of Director’s director nominees could force the Company ~~fails~~ to ~~pay dividends~~employ a proactive telephone solicitation, a second mailing or other strategies to obtain the required votes. The result would be increased spending for routine elections, which is not the best expenditure of the Company’s resources.

PROPOSAL 3 — TO CONSIDER AND VOTE UPON THE SHAREHOLDER PROPOSAL REGARDING
ANNUAL ELECTION OF EACH DIRECTOR

Andrea Estelle Inman, 600 Cherry Drive, #3, Eugene, Oregon 97401, owning more than $2,000 of the Company’s Common Stock, has informed us that Ms. Inman’s husband, on her behalf, intends to submit the following shareholder proposal at the Annual Meeting.The Board of Directors recommends voting “AGAINST” this proposal. Unless otherwise specified, proxies will be voted“AGAINST”the proposal.

Stockholder Proposal Regarding Annual Election of Directors

Resolved: The shareholders recommend that all of our director nominees be elected annually to obtain a seat on our board of directors; this includes eliminating any charter specifications or by-laws that may hinder annual elections. Shareholders will be provided in the proxy materials with the director nominee names, SEC-required declarations, biographical sketches, and photographs.

Stockholder’s Statement Supporting Item

Currently, Green Bankshares stockholders only have the opportunity to vote upon roughly 1/3 of our directors in each annual election, raising accountability and control issues for ~~a total~~many shareholders. In the vast majority of ~~six quarters, whether or not consecutive,~~corporate board elections, stockholders have the opportunity to vote annually regarding all director nominees for the open board positions. Annual elections for all directors have been the standard in corporate governance for many years.

Arguments for annual elections for all directors are many:

	1.		All directors receive feedback every year from stockholders, the owners.

	2.		Directors become more accountable to stockholders, since they are slightly easier to replace if our bank underperforms.

	3.		Since our elections are typically uncontested, election results should remain the same if our bank performs well.

	4.		The likelihood of a larger bank offering the owners of Green Bankshares a high premium for our stock increases, maximizing shareholder wealth.

	5.		Staggered elections are arguable more about director control (avoiding being profitably taken over) than about maximizing stockholder wealth.

	6.		Since an increasing number of sophisticated investors and mutual funds invest in firms with corporate governance best practices, adopting annual director elections should help boost stock price.

Annual elections for all directors may increase our Green Bankshares stock price, via more stockholder control of our GreenBank investments. Corporate governance may improve most via better board elections, and this standard practical solution makes sense for nearly all Green Bankshares stockholders.

Please vote in favor of this positive stockholder proposal.

The Company’s Board of Directors Statement OPPOSING This Proposal

The Nominating/Governance Committee of the Company’s Board of Directors, ~~will automatically be increased~~which is composed entirely of independent directors, regularly considers and evaluates a broad range of corporate governance issues affecting the Company, including whether to maintain the Company’s classified Board structure. For the reasons set forth below and based on the recommendation of the Nominating/Governance Committee, the Company’s Board of Directors has determined that it is in the best interests of the Company and its shareholders to maintain the Company’s current classified Board structure.

Accountability to Shareholders. The Board of Directors disagrees with the argument advanced by ~~two members~~the proponent that a classified Board of Directors minimizes accountability. Each director is required to uphold his or her fiduciary duties to the Company’s shareholders and the ~~holders of the preferred shares, voting together with any other holders of preferred shares ranking~~~~pari passu~~~~with the preferred shares issued~~Company. Company directors are not less accountable to the ~~United States Treasury, will~~shareholders or the Company because they are not re-elected every year. Accountability depends on the selection of responsible and experienced individuals, not on whether they serve terms of one year or three years. Except for the recessionary environment in 2008, the Company has had consistently strong short- and long-term results, demonstrating the commitment of our directors to achieving the Company’s goals.

The Company’s directors believe that they are no less attentive to shareholder concerns as a result of having been elected to three-year terms. In addition, since approximately one-third of directors stand for election each year, shareholders have the ~~right~~opportunity on an annual basis to ~~elect two directors to fill the vacancies on~~express dissatisfaction with the Board of Directors ~~created~~or management by replacing, or withholding votes from, any director standing for election that year.

Enhances the Independence of the Board. The Board of Directors believes that electing directors to three-year terms, rather than one-year terms, enhances the independence of non-employee directors by providing them with a longer assured term of office, thereby insulating them against pressures from management or from special interest groups who might have an agenda contrary to the long-term interests of all shareholders. The Company’s current classified Board structure permits its directors to act independently and on behalf of shareholders without worrying whether they will be re-nominated by the ~~increase. These directors will serve on~~other members of the Board of Directors ~~until~~each year. The freedom to focus on the long-term interests of the Company instead of on the re-nomination process leads to greater independence and better governance.

Stability and Continuity. The classified Board structure is designed to provide stability, enhance long-term planning and ensure that, at any given time, there are directors serving on the Company’s Board of Directors who are familiar with the Company, its business, its target markets and its strategic goals. The classified Board structure also provides flexibility by requiring the annual election of one-third of the directors and a majority of the directors over a two-year period. We believe that experienced directors who are knowledgeable about the Company’s business environment are a valuable resource and are better positioned to make decisions that are in the best interests of the Company and its shareholders. Staggered terms give the Company’s new directors an opportunity to gain knowledge about the Company’s business from its continuing directors. If all directors were elected annually, the Board of Directors could be composed entirely of directors who were unfamiliar with the Company, the banking environment and the Company’s business strategies. This could jeopardize the Company’s long-term strategies and growth plans.

A classified Board of Directors also assists the Company in attracting and retaining highly qualified directors who are willing to commit the time and resources necessary to understand the Company, its operations and its competitive environment. We believe that agreeing to serve a three-year term demonstrates a nominee’s commitment to the Company over the long-term. Given the current corporate governance climate, in which many qualified individuals are increasingly reluctant to serve on public boards, the Company could also be placed at a competitive disadvantage in recruiting qualified director candidates if their Board service could potentially be only for a one-year period.

Protection against Certain Takeovers.A classified Board of Directors reduces the Company’s vulnerability to unfriendly or unsolicited takeover tactics that may not be in the best interests of the Company’s shareholders. A classified Board structure encourages such third parties to negotiate at arm’s length with the Board of Directors. Because only one-third of the Company’s directors are elected at any annual meeting of shareholders, at least two annual meetings would be required to effect a change in control of the Company’s Board of Directors, giving the directors the time and leverage necessary to evaluate the adequacy and fairness of any takeover proposal, consider alternative proposals, and to ultimately negotiate the best result for all shareholders. Absent a classified Board of Directors, a potential acquirer could unilaterally gain control of the Company by acquiring or obtaining voting control over a sufficient number of shares of the Company’s Common Stock to replace the entire Board of Directors with its own nominees at a single annual meeting, and without paying a fair value to the Company’s other shareholders. Having a classified Board of Directors does not prevent unsolicited takeover attempts, but it empowers the incumbent Board of Directors to negotiate terms to maximize the value of the transaction to all Company shareholders.

CORPORATE GOVERANCE

Meetings and Committees of the Board of Directors

The Company conducts its business through meetings of the board of directors, which met 10 times during 2008. Directors of the Company also are directors of the Bank, the board of which met eight times in 2008. Each member of the board of directors of the Company and of the Bank attended at least 75% or more of the aggregate of (a) the total number of meetings of the boards of directors and (b) the total number of meetings held by all committees on which the director served.

The Nominating/Governance Committee of the Company, consisting of Bruce Campbell, Robert K. Leonard, Martha Bachman and Samuel E. Lynch, with Bruce Campbell serving as Chairman, is responsible for selecting nominees for election as directors. Nominations may also be made by shareholders, provided such nominations are made in writing and submitted to the Secretary or the President of the Company in accordance with the requirements of the Company’s Amended and Restated Charter as described below. The Nominating/Governance Committee has a written charter which sets out the duties and responsibilities of the committee, a copy of which is available on the “Investor Relations” section of the Company’s website at www.greenbankusa.com. Each of the directors who serve on the Nominating Committee is “independent” as that term is defined under Rule 4200(a)(15) of the listing standards of the Nasdaq Stock Market, LLC. During 2008, the Nominating Committee met one time.

Under the terms of the Company’s Amended and Restated Charter, shareholders of record of the Company both at the time of giving of notice and at the time of the annual meeting, may nominate persons for election to the Company’s board of directors. For such nominations to be properly brought before an annual meeting, the shareholder must have given timely notice thereof in writing to the secretary of the Company. To be timely, a shareholder’s notice shall be delivered to the secretary at the Company’s principal executive office no less than 40 days nor more than 60 days prior to the scheduled date of such meeting; except that if notice of public disclosure of the meeting is given fewer than 50 days prior to the meeting, such shareholder’s notice must be delivered to the secretary of the Company not later than the close of business on the 10th day following the day such notice was first mailed to the Company shareholders. In addition, each notice submitted by a Company shareholder shall set forth as to such nominee all information relating to that person that is required to be disclosed in solicitations of proxies for election of directors, or as otherwise required, in each case pursuant to Regulation 14A of the Securities Exchange Act of 1934 (“Exchange Act”), including that nominee’s written consent to be named in the proxy statement as a nominee and to serving as a director if elected. Also, the shareholder giving such notice and the beneficial owner, if any, on whose behalf the nomination is submitted, shall include the name and address of such shareholder as they appear on the Company’s books and of such beneficial owner, and the number of shares of each class of the Company’s stock which are owned beneficially and of record by such shareholder and such beneficial owner.

In the event that the number of directors to be elected to the board of directors at an annual meeting is increased and there is no public announcement by the Company naming all of the nominees for director or specifying the size of the increased board of directors at least 70 days prior to the first anniversary of the prior year’s annual meeting, a shareholder’s notice required by the Company’s Amended and Restated Charter shall also be considered timely with respect to nominees for any such new positions, if it shall be delivered to the Secretary of the Company at the Company’s principal executive offices not later than the close of business on the 10th day following the day on which public announcement of such increase is first made by the Company.

The Company’s Nominating/Governance Committee is responsible for (i) annually reviewing with the board of directors the appropriate skills and characteristics required of members of the board of directors, which, at a minimum, include professional integrity, sound judgment, and sufficient time to devote to board activities; (ii) annually reviewing and determining any specific qualities or skills that one or more directors must possess; (iii) identifying individuals qualified to become directors consistent with the criteria approved by the board of directors; (iv) evaluating and considering director candidates proposed by management, any director or any shareholder; and (v) recommending for selection by the board of directors director nominees for the next annual meeting of shareholders. The board of directors will then review and approve director nominees for the annual meeting of shareholders.

Each potential director nominee is evaluated on the same basis regardless of whether he or she is recommended by management, by a director or by a shareholder. The board of directors has not adopted a policy with respect to minimum qualifications for directors. Rather, the Nominating/Governance Committee annually reviews and determines the specific qualifications and skills that one or more directors must possess. Each of the nominees for director to be elected at the Annual Meeting was nominated and recommended by the Nominating/Governance Committee and approved by the board of directors. The Company has not received director nominee recommendations from any shareholders for the terms commencing in 2009 and expiring in 2012. The board of directors will consider nominees recommended by shareholders under the same criteria as nominees submitted by other parties, provided that such recommendations comply with the notice, timing and other requirements provided for in the Company’s Amended and Restated Charter.

The Audit Committee of the Bank also serves as the Audit Committee for the Company and is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee of the Bank consists of Messrs. Robert K. Leonard, Samuel E. Lynch, John Tolsma and Charles Whitfield, Jr. Each of the directors who serves on the Audit Committee is “independent” of the Company, as the term “independent” is defined under Rule 4200(a)(15) of the listing standards of the Nasdaq Stock Market, LLC and the standards promulgated under the Sarbanes-Oxley Act of 2002, including Rule 10A-3 of the rules and regulations promulgated under the Exchange Act. Mr. Robert Leonard served as the Chairman of the Audit Committee, and the Company’s board of directors has determined that he qualifies as an “audit committee financial expert” as such term is defined by the SEC’s rules and regulations, and is “independent”, as defined by the listing standards of the Nasdaq Stock Market, LLC and the SEC’s rules and regulations. This committee meets at least quarterly to (1) monitor the accounting and financial reporting practices of the Company, and (2) determine whether the Company has ~~paid~~adequate administrative, operating and internal accounting control over financial reporting. This committee met seven times during 2008 in ~~full all dividends not previously paid, at which time these directors’ terms of office shall terminate immediately.~~

~~For as long~~its capacity as the ~~United States Treasury owns any debt or equity securities~~Audit Committee for the Company. A copy of the ~~Company issued in connection with~~Audit Committee Report is set forth below. The Audit Committee has a written charter which sets out the duties and responsibilities of the Audit Committee, a copy of which is available on the “Investor Relations” section of the Company’s ~~participation~~website at www.greenbankusa.com.

The Bank’s Compensation Committee also serves as the compensation committee for the Company. The Compensation Committee consists of Martha Bachman, W.T. Daniels, Bruce Campbell, John Tolsma and Charles Whitfield, Jr., with Mr. John Tolsma serving as Chairman. Each member of the Compensation Committee is “independent” within the meaning of the listing standards of the Nasdaq Stock Market, LLC. The Compensation Committee meets periodically to evaluate the compensation and fringe benefits of the directors, officers and employees of the Bank and the Company and recommend compensation changes to the respective boards of directors. The Compensation Committee met two times during 2008. The Compensation Committee has a written charter which sets out the duties and responsibilities of the Compensation Committee, a copy of which is available on the “Investor Relations” section of the Company’s website at www.greenbankusa.com.

Additionally, because the Company is participating in the ~~TARP capital purchase program,~~Capital Purchase Program (the “CPP”) established by the ~~Company will be required to take all necessary action to ensure that its benefit plans with respect to its senior executive officers comply in all respects with Section 111(b)~~U.S. Department of the Treasury under the Emergency Economic Stabilization Act of 2008, the Human Resources and Compensation Committee has additional responsibilities under the EESA as amended by the America Recovery and Reinvestment Act of 2009 (the “ARRA”) and the rules, regulations and guidance issued ~~and in effect thereunder as of~~thereunder. Those additional responsibilities include the ~~closing date of the sale of the preferred shares to the United States Treasury. This means that, among other things, while the United States~~

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee during 2008 consisted of John Tolsma, Martha Bachman, W.T. Daniels, Bruce Campbell and Charles Whitfield, Jr.

No member of the Compensation Committee of the board of directors of the Company during 2008 was either (i) an officer or employee of the Company or any of its subsidiaries during the fiscal year ended December 31, 2008, (ii) a former officer of the Company or any of its subsidiaries, or (iii) an insider (i.e., director, officer, director or officer nominee, greater than 5% shareholder, or immediate family member of the foregoing) of the Company or any of its subsidiaries that engaged, or is currently engaging, in transactions with the Company or any subsidiary of the Company that must be disclosed in this proxy statement under the rules and regulations of the SEC.

Except as set forth above, there are no relationships among the Company’s executive officers, members of its Compensation Committee or entities whose executives serve on the board of directors or the Compensation Committee that require disclosure under applicable SEC rules or regulations.

Certain Transactions

The Company and its subsidiaries have had, and expect to have in the future, transactions in the ordinary course of business with directors and executive officers and members of their immediate families, as well as with principal shareholders. All loans and deposits included in such transactions were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, in the case of loans, as those prevailing for comparable transactions with non-affiliated persons. It is the belief of management that such loans neither involved more than the normal risk of collectability nor presented other unfavorable features.

Review, Approval or Ratification of Transactions with Related Persons

The Company has followed the practice of having the full board of directors or a committee of disinterested directors review and approve transactions in which a director has a material interest. The Company has adopted a written Related Party Transactions Review and Approval Policy, which is administered by the board of directors. The Policy covers “related party transactions”, including any financial transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships, either currently proposed or since the beginning of the last fiscal year in which the Company was or is to be a participant, involves an amount exceeding $120,000 and in which a director, nominee for director, executive officer or immediate family member of such person has or will have a direct or indirect material interest. The board of directors determines whether or not “related party transactions” are fair and reasonable to the Company. The board of directors also determines whether any “related party transaction” in which a director has an interest impairs the director’s independence. Approved “related party transactions” are subject to on-going review by the Company’s management on at least an annual basis. Loans to directors and executive officers and their related interests made and approved pursuant to the terms of Federal Reserve Board Regulation O are deemed approved under this policy. Any such loans that become subject to specific disclosure in the Company’s annual proxy statement will be reviewed by the Audit Committee at that time.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater-than-10% shareholders are required to furnish the Company with copies of all such reports. Based solely on its review of copies of such reports received by it, or written representations from certain reporting persons that no annual report of change in beneficial ownership is required, the Company believes that, during and with respect to the year ended December 31, 2008 all such filing requirements were timely satisfied.

Audit Committee Report

The following Audit Committee Report shall not be deemed filed or incorporated by reference into any other document, including the Company’s filings under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates this Report into any such filing by reference.

The board of directors of the Company has appointed an Audit Committee, consisting of four independent directors, which assists the board of directors in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company.

In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the Company’s independent registered public accounting firm the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence and satisfied itself as to the independent registered public accounting firm’s independence. The Audit Committee also discussed with management, the internal auditors and the independent registered public accounting firm the quality and adequacy of the Company’s internal control over financial reporting and the internal audit function’s organization, responsibilities, budget and staffing. The Audit Committee reviewed with both the independent registered public accounting firm and the internal auditors their audit plans, audit scope, and identification of audit risks.

The Audit Committee reviewed and discussed with the independent registered public accounting firm all matters required by generally accepted auditing standards, including those matters described in Statement on Auditing Standards No. 61, as amended, (AICPA,Professional Standards, Vol. 1 AU Section 380) as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and, with and without management present, discussed and reviewed the results of the independent registered public accounting firm’s examination of the financial statements. The Audit Committee also discussed the results of the internal audit examinations.

The Audit Committee reviewed and discussed the audited financial statements of the Company as of and for the fiscal year ended December 31, 2008, with management and the independent registered public accounting firm. Management has the responsibility for the preparation of the Company’s financial statements, and the independent registered public accounting firm has the responsibility for the examination of those statements and expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America. The Audit Committee held seven meetings during 2008.

Based on the above-mentioned review and discussions with management and the registered public accounting firm, the Audit Committee recommended to the board of directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, for filing with the Securities and Exchange Commission.

Robert K. Leonard, Chairman
Samuel E. Lynch
John Tolsma
Charles H. Whitfield, Jr.

Code of Conduct

The Company maintains a code of conduct that is applicable to all of the Company’s directors and employees, including its principal executive officer and its senior financial officers. This code, which requires continued observance of high ethical standards such as honesty, integrity and compliance with law in the conduct of the Company’s business, is available for public access under the “Investor Relations” section of the Company’s website at www.greenbankusa.com. The Company intends to make any legally required disclosure of any amendments to, or waivers from, the code of conduct with respect to its directors and executive officers in accordance with the rules and regulations of the SEC and the Nasdaq Stock Market, LLC. If such disclosure is made on the Company’s website, it will be located on the “Investor Relations” section of the website at www.greenbankusa.com.

Compensation Committee Report

The following Compensation Committee Report shall not be deemed filed or incorporated by reference into any other document, including the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report into any such filing by reference.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K of the rules and regulations of the SEC and contained in this Proxy Statement. Based on this review and discussion, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement. The Compensation Committee has met with the Company’s senior risk officials to ensure that the Company’s compensation arrangements do not encourage the named executive officers to take unnecessary risks that threaten the Company.

Submitted by the 2008 Compensation Committee of the Company’s board of directors

John Tolsma, Chairman
Martha Bachman
Bruce Campbell
W.T. Daniels
Charles Whitfield, Jr.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

The Compensation Committee of the Company’s board, which also serves as the Compensation Committee of the Bank, is presently comprised of five members of the board of directors and is responsible for developing and making recommendations to the full board of directors concerning compensation paid to the Chief Executive Officer and the President and Chief Operating Officer. Additionally, after considering the recommendations of the Chief Executive Officer, the Compensation Committee will recommend to the full board of directors compensation for other “named executive officers”. The Compensation Committee is further responsible for administering all aspects of the Company’s executive compensation program.

Each member of the Compensation Committee is independent within the meaning of the listing standards of the Nasdaq Stock Market, LLC and is appointed annually. Members of the Compensation Committee consist of Martha Bachman, W.T. Daniels, Bruce Campbell, John Tolsma and Charles Whitfield, Jr., with Mr. John Tolsma serving as Chairman. The Compensation Committee meets periodically to evaluate the compensation and fringe benefits of the directors, officers and employees of the Bank and the Company and recommend compensation changes to the respective boards of directors. The Compensation Committee met two times during 2008.

The Compensation Committee has a written charter which sets out the duties and responsibilities of the Compensation Committee, a copy of which is available on the “Investor Relations” section of the Company’s website at www.greenbankusa.com.

For the calendar year 2008 the Compensation Committee independently determined the compensation mix and total compensation level of the Chief Executive Officer and the President and Chief Operating Officer of the Company based upon information obtained from peer data contained in the SNL Southeast Bank Index and in peer data provided by Clark Consulting. The Chief Executive Officer and the President and Chief Operating Officer provide recommendations to the Compensation Committee for the mix and total compensation level of each of the named executive officers reporting to them. The Compensation Committee, based upon data from the peer group (discussed below), independently reviews these recommendations and either approves or modifies them prior to recommending them to the full board of directors. For calendar year 2009, the Compensation Committee is involved in setting compensation philosophy and strategy for the top five executive officers of the Company.

Executive Compensation Philosophy

The Company seeks to provide an executive compensation package that is driven by overall financial performance, increase in shareholder value, success of the business unit directly impacted by the executive’s performance and the performance of the individual executive. Executive compensation is intended to be set at levels that the Compensation Committee, based upon information from peer data contained in the SNL Southeast Bank Index and in peer data provided by Clark Consulting, believes is consistent with a peer group of banks independently selected by the consultant and approved by the Compensation Committee.

As a result of the significant increase in asset size of the organization during 2007, relating to the acquisition of Civitas BankGroup, the peer group of banks used in 2007 for benchmarking was no longer deemed appropriate. A listing of Banks of similar size prepared by Clark Consulting was reviewed by the Committee. The Committee selected banks with high performance characteristics located in the Southeast as the applicable peer group within this broader group of peers. For 2008 the peer group of banks consisted of 5 publicly traded financial institutions of comparable asset size and performance characteristics located primarily in the Southeast. Management is not involved in this selection process. The peer group banks used in establishing the named executive officers’ compensation in 2008 consisted of: Capital City Bank Group, Inc, First Bancorp, Pinnacle Financial Partners, Inc., Renasant Corporation and SCBT Financial Corporation.

Objectives of Executive Compensation

The objectives of the Company’s executive compensation program are to attract and retain experienced, quality executive leadership and to enhance the individual executive’s performance. This is accomplished through the alignment of incentives with each business unit most directly impacted by the executive’s leadership and performance with the key objectives to increase shareholder value and improve overall performance.

The Compensation Committee bases its executive compensation program on the same objectives that guide the Company in establishing all of its compensation programs. Compensation is based upon the level of job responsibility, individual performance and company performance. As employees progress to higher levels of responsibility in the organization, an increasing proportion of their pay should be linked to company performance and shareholder returns, because they are more able to affect company results. Additionally, compensation should reflect the value of the job in the marketplace. To attract and retain a highly skilled workforce the Company must remain competitive with the pay of other employers who compete with us for talent. Compensation programs must deliver top-tier compensation for top-tier individual and company performance. Where individual performance falls short of expectations and/or company performance lags the industry, the programs should deliver lower-tier compensation. In addition, the objectives of pay for performance and retention must be balanced. Even in periods of temporary downturns in company performance, the programs should continue to ensure that successful, high-achieving employees will remain motivated and committed to the Company.

The Compensation Committee strives to meet these objectives while maintaining market competitive pay levels and ensuring that the Company makes efficient use of shares and have predictable expense recognition.

Competitive Positioning

Based upon data received, a customized peer group of banks, indentified above, reflecting the Company’s asset size level, geographic location and high-growth characteristics was developed in order to benchmark both director and the top two executive officer compensation packages. The peer group was based upon a number of factors including company focus, growth and earnings, location, asset size and outside investment analyst reviews. A proxy analysis was performed comparing directors’ and the top two executive officers’ total compensation to directors and comparable executives in the peer group institutions. Based upon the review of market data, the Company set annual incentive and equity award levels for the Chief Executive Officer and the President and Chief Operating Officer which would ensure market competitive pay at the 50th percentile when performance goals are met and at the 75th percentile when performance goals are exceeded. Additionally, the Compensation Committee established benchmarks associated with the Bank maintaining a top rating from its primary bank regulator. For 2008, the Compensation Committee set target base compensation increases in the range of 3% to 5% and target cash incentive compensation levels in the range of 40% to 60% of base compensation based upon corporate performance goals relative to peers. The performance goals established include the year-to-date change in: return on average assets, year-to-date core earnings per share change, return on average stockholders’ equity and stock price performance all equally weighted, compared with overall performance of the peer group for the twelve month period ending September 30^th. In January 2008, Mr. Puckett and Mr. Vaught received increases to their base salaries of $37,750 and $16,342, respectively. These adjustments brought their base compensation in line with the average base salary of the comparable executives within the peer group. Additionally, Mr. Puckett received a merit increase of 3.5% in January 2008 for 2007 performance and Mr. Vaught received a merit increase of 5.4%.

In January 2008 for 2007 performance and based upon the previously identified earnings performance goals of the Company compared with the peer group of banks in 2007, Mr. Puckett was awarded a cash incentive award of $94,048.50 equal to 28.9% of his adjusted base compensation for 2007, an award of $25,000 reflecting the Bank’s supervisory regulatory rating and $15,000 for the successful integration of the Civitas acquisition completed in 2007. In total, the incentive payments received in January 2008 reflected a decrease of 55.6% from the prior year. In January 2008 for 2007 performance, Mr. Vaught received a cash incentive award of $80,106 equal to 30.0% of his adjusted base compensation for 2007, an award of $20,000 reflecting the Bank’s supervisory regulatory rating and $12,000 for the successful integration of the Civitas acquisition. In total, these incentive payments received in January 2008 reflected a decrease of 49.13% from the prior year.

In January 2008, the Compensation Committee awarded restricted shares and cash-settled stock appreciation rights to each of the named executive officers in the following amounts in recognition of the Company’s performance in 2007:


			Cash-Settled
			Stock
	Restricted		Appreciation
Named Executive Officer	Shares		Rights
R. Stan Puckett		2,571		2,571
Kenneth R. Vaught		2,571		2,571
James E. Adams		2,058		2,058
Steve L. Droke		1,654		1,654
William C. Adams		1,558		1,558

The restricted shares and cash-settled stock appreciation rights each vest over a five year period, with 20% of the award vesting annually on the anniversary date of the award. If the named executive officer leaves employment of the Company, all unvested restricted stock awards and cash-settled stock appreciation rights are forfeited. The vested portion of the cash-settled stock appreciation rights expire if not exercised at the time that the forfeiture restrictions on the related restricted shares lapse. The restricted shares represent 50% of the total equity-based awards granted to each of the named executive officers in 2008, with the remaining 50% represented by the cash-settled stock appreciation awards. Restricted shares are full value awards that always have value for the executive officer because the awards do not have an exercise or grant price. Conversely, cash-settled stock appreciation rights only have value to the extent that the Company’s common stock trades at a value above the grant or exercise price after the award vests. The compensation element associated with cash-settled stock appreciation rights is totally at risk in the event that the stock price falls below the grant or exercise price at the vesting date.

Based upon earnings performance for 2008, none of the named executive officers received an increase in base compensation for 2009.

Based upon the Company’s performance in 2008, none of the named executive officers received any cash bonus in 2009.

The Company attempts to position the compensation of its senior executives as follows:

	•		Base salaries for executives generally are targeted between the 40th and 50th percentile.

	•		The annual incentive plan provides cash compensation at the 50th percentile of the peer group when target goals are achieved and between the 60th and 75th percentile, if target goals are exceeded. No bonuses will be paid if annual performance goals are not met. More specifically, the Compensation Committee reviews the weighted average bonuses paid by the peer group and then discounts, or supplements, those by taking the weighted average of the delta in Return on Assets, Return on Equity, Earnings per Share and Stock Price Performance. Based upon the Company’s performance in 2008, relative to the 2008 peer group of historically high performing banks, there were no annual incentive payouts made in January 2009 for 2008 performance.

	•		Long term equity incentives are used to reward Company performance and align the executive’s interests with shareholders’ interests; retain executives through long-term vesting and provide for potential wealth accumulation if the Company’s stock price increases. The long term equity incentives will provide equity compensation at the 50th percentile of the peer group when target goals are met, with the potential for awards between the 60th and 75^th of the peer group percentile when long term goals are exceeded. No equity awards will be made if performance goals are not met. Vesting periods of five years have been selected based upon the preponderance of proxy data reviewed for the peer group companies. In recent years, the Compensation Committee has awarded a ~~required clawback~~mix of equity-based awards to the named executive officers with a portion of the award being made in shares of restricted stock and a portion of the award being made in cash-settled stock appreciation rights. The Compensation Committee has also in the past utilized stock options which, like stock appreciation rights, only have value to the extent that the Company’s stock price exceeds the grant or exercise price of the award after vesting. No restricted stock awards were granted to the Company’s named executive officers in 2009 for 2008 performance.

	•		Base salaries for the named executive officers, other than Mr. Puckett and Mr. Vaught, are determined initially by evaluating the responsibilities of the positions held, and by reference to the competitive marketplace for talent, including a comparison of base salaries for comparable positions at comparable companies within the financial services industry. Annual salary adjustments are determined by evaluating the competitive marketplace, the performance of the Company and the performance of the other named executive officers. No salary increases were granted to the other named executive officers in 2009 based upon the Company’s 2008 performance.

Composition of Total Compensation

The Company provides a competitive mix of pay elements that seek to align executive incentives with shareholder value. The executive compensation includes both short and long term compensation, with an emphasis on long-term compensation that is tied to corporate and stock price performance. In 2008, the Company had chosen to use restricted stock awards in the long-term component of total compensation for named executive officers. Incentive performance measures promote shareholder return and earnings growth, and the plan design assures clear linkages between performance measures and a participant’s ability to influence such measures and award levels. By emphasizing longer performance measurement periods by using long-term incentives, we align our executive’s interests with our shareholders’ and create a strong retention tool.

Base salaries are designed to provide competitive levels of compensation for executives in relation to comparable employees at peer institutions based upon their experience, duties and scope of responsibility. Base salaries are provided to ensure a basic level of compensation and are necessary to recruit and retain executives. An important aspect of base salaries is the Compensation Committee’s ability to use annual base salary adjustments to reflect an individual’s performance or change in responsibilities. The Compensation Committee places a greater emphasis targeting the total amount of direct compensation to peer practices and emphasizes a mix of compensation weighted towards variable compensation for the Chief Executive Officer and the President and Chief Operating Officer. At lower executive levels, base salaries represent a larger proportion of total compensation, and at the other named executive levels are progressively replaced with larger variable compensation opportunities.

Annual bonus incentives are used as a short-term incentive to drive achievement of annual performance goals including the support of strategic business objectives, financial goals, specific performance goals and to encourage team work. Under the ARRA, the Company may be prohibited from paying or accruing bonuses, retention awards or incentive compensation to the Company’s top five most highly compensated employees, except for long-term restricted stock that does not fully vest until after the Company has repaid the Treasury the amounts invested under the CPP, is less than one third of the executive’s annual compensation and that complies with other requirements imposed by the Treasury. These restrictions do not apply to bonuses required to be paid pursuant to employment contracts in place prior to February 11, 2009. Although regulations under the ARRA have not yet been promulgated, these provisions may significantly limit the Company’s ability to pay annual cash incentive payments to the Company’s named executive officers under the Company’s annual cash incentive plan and may result in the Compensation Committee deciding to increase the named executive officers’ base salaries until the Treasury has been repaid.

The benefits component of total compensation includes the Company’s 401(k) Plan and a non-qualified deferred compensation plan. Under the terms of the qualified 401(k) Plan the Company maintains a contributory profit sharing plan (“PSP”) covering certain employees with more than one year of service. The Company contributes a discretionary and immediately vested 3% of compensation, excluding bonuses and overtime, to the PSP. In addition, the Company’s Board of Directors has the authority to contribute an additional discretionary 3% of compensation, excluding bonuses, commissions and overtime, which vests after two years of employment. The PSP allowed employees to contribute the maximum allowed by current ERISA.

The Company has entered into Employment Agreements, which include a change in control provision, with both the Chief Executive Officer and the President and Chief Operating Officer. The agreements were initially for a three year period with an annual automatic renewal unless either party notifies the other of a termination at least 90 days prior to the end of the then current term.

Additionally, the Company has entered into Change in Control Agreements with selected members of senior management, including each of the named executive officers. The Change in Control agreements were entered into as a function of the consolidation occurring in the financial services industry and to avoid having our executives distracted by a rumored, or actual, change in control. If a change in control were to occur, we want our executives to be focused on the business and the interests of the shareholders. We believe that it is important that our executives react neutrally to a potential change in control and not be influenced by personal financial concerns. Our change in control agreements are consistent with market practices and assist us in retaining our executive talent. The level of benefits have been set at either 1.99 times or 2.99 times the participating executive’s base amount within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), payable in a lump sum six months following a Change in Control. This structure is common and deemed necessary to remain competitive within the banking industry as a whole and, more specifically, with our peer group. In establishing the multiples of base salary and bonus that a terminated named executive officer would be entitled to receive following his or her termination, either before or after a change of control, the Compensation Committee considered the need to be able to competitively recruit and retain talented executive officers who often times seek protection against the possibility that they might be terminated without cause or be forced to resign without cause, particularly following a change of control. When establishing the multiples, the Compensation Committee also sought to provide benefits at a level that it believed would provide appropriate compensation for the named executive officer in the event of consummating a transaction that, although possibly detrimental to the individual’s employment prospects with the resulting company, would be beneficial to the Company’s shareholders.

The Compensation Committee believes that the protections afforded in employment agreements and change in control agreements are reasonable and are an important element in retaining the Company’s named executive officers and certain other members of senior management.

In connection with the Company’s sale of preferred stock to the U.S. Treasury in connection with the CPP, each of our named executive officers executed letter agreements with the Company on December 23, 2008 in which each officer agreed that (i) the Company is prohibited from paying any “golden parachute” payment (as originally defined in Section 111(b)(2)(c) of the EESA) to the officer during any period that the executive is a senior executive officer of the Company and the U.S. Treasury holds any equity or debt securities of the Company issued in the CPP; (ii) any bonus or incentive compensation paid to the named executive officer during any period that the officer is a senior executive officer of the Company and the U.S. Treasury holds any equity or debt securities of the Company issued in the CPP is subject to recovery or “clawback” by the Company if the payments were based on materially inaccurate financial statements or performance metric criteria; and (iii) each of the Company’s benefit plans were amended with respect to the named executive officer to the extent necessary to give effect to the limitations described above in this paragraph. As described below, the ARRA includes certain additional restrictions and limits concerning executive compensation of companies that participated in the CPP, including a provision prohibiting any payment to any named executive officer for departure from a company for any reason, except for payments for services performed or benefits accrued. Regulations or guidance proposed by the U.S. Treasury with respect to these additional restrictions may require the Company to seek additional modifications to the agreements that it has entered into with its named executive officers, including its employment agreements and change in control agreements.

Both the Chief Executive Officer and the President and Chief Operating Officer have entered into Non-competition Agreements with the Company. In consideration for entering into these agreements, the Company has provided certain deferred compensation benefits which have been funded by individual insurance policies. The benefits payable to both individuals range from 7 to 10 years based upon certain events occurring such as age, retirement, disability or death and are described in more detail below. If either of these individuals are terminated for cause, then the Company will be released from its obligation.

Emergency Economic Stabilization Act of 2008

On December 23, 2008, the Company sold a series of its preferred stock and common stock purchase warrants to the U.S. Department of Treasury under the CPP created under EESA. As a result of this transaction, the Company became subject to certain executive compensation requirements under the CPP, the EESA, and Treasury Department regulations. Those requirements apply to the Company’s named executive officers and potentially other senior executive officers of the Company (collective, the “SEOs”). Those requirements are:

	•		A prohibition on providing incentive compensation arrangements that encourage SEOs to take unnecessary and excessive risks

	•		Recovery of any bonus or incentive compensation paid to an SEO where the ~~Company’s senior executive officers~~payment was later found to have been based on statements of earnings, gains, or other criteria ~~that are later proven~~which prove to be materially ~~inaccurate;~~inaccurate

	•		~~not make any “golden parachute payment” (as defined~~Limits on the amounts that can be paid under change in ~~the Internal Revenue Code) to any~~control and similar agreements which provide payments upon separation of ~~the Company’s senior executive officers; and~~service

	•		~~agree not~~Limits on the Company’s tax deduction for compensation paid to ~~deduct for tax purposes executive compensation in excess~~any SEO of $500,000 ~~in any one fiscal year for each of the Company’s senior executive officers.~~annually

~~The Company is currently reviewing its benefit plans~~American Reinvestment and ~~contracts to determine whether any amendments or modifications will be required to comply with the limits on executive compensation established by Section 111 of the Emergency Economic Stabilization~~Recovery Act of ~~2008. If any such modifications or amendments are required,~~2009

On February 17, 2009, the Company and its senior executive officers, if necessary, will modify or amend such plans and agreements prior to the Company’s entering into the definitive documentation necessary to consummate the investment. The Company’s senior executive officers have indicated that they are prepared to execute any such required amendments or modifications.

~~While the Company has applied to participate in the TARP capital purchase program, the Company has not yet been informed by~~President of the United States ~~Treasury that it has been accepted for participation in~~signed into law the ~~program.~~ARRA. The Company can give you no assurance that the Company will ultimately be selected by the United States Treasury for participation in the program or that, if selected, it will choose to participate. If the Company were to participate, the minimum amount of preferred stock issuable would be approximately $24.1 million and the maximum amount would be approximately $72.3 million, based on the Company’s risk-weighted assets as of September 30, 2008. In its application, the Company requested that it be allowed to participate at the maximum amount. The Company does not yet know how many shares of preferred stock, and related warrants, that it would issue to the United States Treasury if it does participate, but, if it participates at the maximum level, it believes the total number of preferred shares it would sell to the United States Treasury would be approximately 72,300. Financial institutions that desired to participate in the program were required to notify their primary federal regulator of such desire by 5:00 p.m. on November 14, 2008. The Board of Directors, in determining whether to participate in the program if the Company is accepted, will consider various factors, including but not limited to the ultimate terms of any preferred stock issuable, the impact of additional capital on the Company’s strategic plans, growth opportunities, competitive position and safety and soundness, the impact of preferred stock dividends on earnings available to common shareholders, the dilutive impact of the common stock warrants, the restrictions associated with participation in the program, includingARRA contains expansive new restrictions on executive compensation ~~and severance payments to executive officers and any other matters relevant.~~

~~If the Company participates~~for participants in the ~~TARP capital purchase program at~~CPP. The ARRA amends the 1%executive compensation and corporate governance provisions of risk-weighted assets level, it would receive approximately $24.1 million in additional capital and its subsidiary bank’s Tier 1 leverage ratio would improve from 8.77% to 9.38%. At this 1% participation level, the Company’s subsidiary bank’s Tier 1 risk-based capital ratio would improve from 10.34% to 11.35% and its subsidiary bank’s total risk-based capital ratio would increase from 11.59% to 12.60%. If the Company participates in the TARP capital purchase program at the 3% of risk-weighted assets level, it would receive approximately $72.3 million in additional capital and its subsidiary bank’s pro forma Tier 1 leverage ratio would be 11.03%. At this 3% participation level, the Company’s subsidiary bank’s pro forma Tier 1 risk-based capital ratio would be 13.34% and its subsidiary bank’s pro forma total risk-based capital ratio would be 14.59%. Thus, whether the Company participates in the TARP capital purchase program or not the Company’s subsidiary bank’s capital levels are expected to continue to exceed the minimum capital levels required to be deemed a well-capitalized financial institution.EESA.

~~Anti-Takeover Effects~~Key features of the ~~Proposed Amendment~~ARRA are:

~~This proposal will, if approved, supplement and strengthen the Company’s existing takeover defenses.~~

The issuance of preferred stock with voting rights could, under certain circumstances, have the effect of delaying or preventing a change of control of the Company by increasing the number of outstanding shares entitled to vote and by increasing the number of votes required to approve a change of control of the Company. Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued, to make it more difficult to obtain control of the Company by means of a tender offer, proxy contest, merger or otherwise. The ability of the Board of Directors to issue such additional shares of preferred stock, with the rights and preferences it deems advisable, could discourage potential

	•		A prohibition of the payment of any “bonus, retention award, or incentive compensation” to named executive officers, and possibly other senior executive officers, for as long as any CPP- related obligations are outstanding. The prohibition does not apply to bonuses payable pursuant to “employment contracts” in effect prior to February 11, 2009.

	•		“Long-term” restricted stock is excluded from the ARRA’s bonus prohibition, but only to the extent the value of the stock does not exceed one-third of the total amount of annual compensation of the employee receiving the stock, the stock does not “fully vest” until after all CPP obligations have been satisfied, and any other conditions which the Treasury may specify have been met.

	•		Prohibition on any payment to the named executive officers of a company upon departure from the company for any reason (except for payments for services performed or benefits accrued) for as long as any CPP obligations remain outstanding.

~~acquirors,~~

	•		Recovery of any bonus or other incentive payment made on the basis of materially inaccurate financial or other performance criteria that is paid to the named executive officers of a company and the next 20 most highly compensated employees.

	•		Prohibition on compensation plans that “encourage” earnings manipulation.

	•		A requirement that the CEO and CFO provide a written certification of compliance with the executive compensation restrictions in ARRA in the Company’s annual filings with the SEC.

	•		Implementation of a company-wide policy regarding excessive or luxury expenditures.

	•		The U.S. Treasury will review bonuses, retention awards, and other compensation paid to the named executive officers and the next 20 most highly-compensated employees of each company receiving CPP assistance before the ARRA was enacted, and to “seek to negotiate” with the CPP recipient and affected employees for reimbursement if it finds any such payments were inconsistent with the TARP or otherwise in conflict with the public interest.

The ARRA requires both the U.S. Treasury and ~~could therefore deprive shareholders~~the SEC to issue rules to implement these new executive compensation restrictions. As a result, until Treasury and the SEC publish their new rules, many aspects of the above restrictions will not be clear.

After the U.S. Treasury and the SEC publish these rules and related regulations, the Committee will consider these new limits on executive compensation and determine how they impact the Company’s executive compensation program and may decide to revise certain elements of 2009 compensation to its executive officers, including the named executive officers, and/or make other changes to the Company’s executive compensation programs.

Tax Considerations

It has been the Committee’s intent that all incentive payments be deductible unless maintaining such deductibility would undermine our ability to meet our primary compensation objectives or is otherwise not in our best interest.

Federal Income Tax Deductibility Limitations.The Compensation Committee believes it is appropriate to take into account the $500,000 limit on the deductibility of executive compensation for federal income tax purposes pursuant to Section 162(m) of the Code of and to seek to qualify the Company’s performance-based cash and equity-based compensation for exclusions from Section 162(m) so such compensation will qualify as a tax deductible expense. The Compensation Committee will continue to evaluate whether it will approve annual compensation arrangements exceeding $500,000 and whether it will attempt to qualify any such amounts for deductibility under the federal tax laws.

Sections 280G and 4999.We provide our named executive officers with employment agreements or change in control agreements that provide for payments to the executives following certain terminations of employment after a change in control. Certain of these agreements provide for tax protection in the form of a gross-up payment to reimburse the executive for any excise tax under Section 4999 of the Code as well as any additional income and employment taxes resulting from such reimbursement. Code Section 4999 of the Code imposes a 20% non-deductible excise tax on the recipient of an “excess parachute payment” and Section 280G of the Code disallows the tax deduction to the payor of any amount of excess parachute payment that is contingent upon a change in control. Payments related to a change in control must not exceed 3 times the executive’s base amount in order to be considered an excess parachute payment, and then the excise tax is imposed on the parachute payments that exceed the executive’s base amount. The intent of the tax gross-up is to provide a benefit without tax penalty to certain executives who are displaced in the event of a change in control. We believe that the provision of tax protection for certain of our executive officers is consistent with market practice, is a valuable executive talent retention provision, and is consistent with the objectives of our overall executive compensation program.

2008 SUMMARY COMPENSATION TABLE


														Change in Pension
														Value and
											Non-Equity			Nonqualified
							Stock		Option		Incentive Plan			Deferred		All Other
Name and			Salary		Bonus		Awards		Awards		Compensation			Compensation		Compensation		Total
Principal Position	Year		($)		($)		(1)($)		(1)($)		($)			Earnings (3)($)		(4)($)		($)
R. Stan Puckett,		2008	$	325,000	$	—	$	8,512	$	34,515	$	—		$	—	$	139,749	$	507,776
Chairman of the		2007		278,250		—		—		13,887		134,048	(2)		2,195		131,573		559,953
Board and Chief		2006		265,000		—		—		—		184,000			7,589		127,451		584,040
Executive Officer of the Company and the Bank (“CEO”)

Kenneth R. Vaught,		2008	$	267,000	$	—	$	8,512	$	65,552	$	—		$	—	$	106,792	$	447,856
Director, President		2007		237,000		—		—		42,632		112,106	(2)		513		98,170		490,421
and Chief Operating		2006		225,000		—		—		27,333		155,000			1,537		94,174		503,044
Officer of the Company and the Bank (“COO”)

James E. Adams,		2008	$	228,000	$	—	$	6,759	$	11,598	$	—		$	—	$	25,079	$	271,436
Executive Vice		2007		200,000		—		—		4,629		72,000	(2)		—		23,835		300,464
President, Chief		2006		175,000		—		—		—		80,000			—		11,809		266,809
Financial Officer and Secretary of the Company and the Bank (“CFO”)

Steve L. Droke,		2008	$	183,325	$	—	$	5,430	$	20,922	$	—		$	—	$	18,329	$	228,006
Senior Vice		2007		160,813		—		—		14,600		36,400	(2)		—		17,094		228,907
President and Chief		2006		155,000		—		—		11,556		52,000			—		16,651		235,207
Credit Officer of the Bank (“CCO”)

William C. Adams,		2008	$	172,682	$	—	$	5,118	$	18,907	$	—		$	—	$	13,135	$	209,482
Jr., Senior Vice		2007		151,475		—		—		12,972		36,450	(2)		—		11,900		212,797
President and Chief		2006		146,000		—		—		9,921		40,500			—		11,459		207,880
Information Officer of the Bank (“CIO”)


(1)		The amounts in column captioned “Stock Awards” and “Option Awards” reflect the dollar amount recognized for financial statement reporting purposes for the fiscal years ended December 31, 2008, 2007 and 2006, in accordance with FAS 123(R) for stock awards, stock options and stock appreciation rights awarded pursuant to the Company’s equity incentive plans and thus may include amounts from awards granted in and prior to 2008, 2007 and 2006, as applicable. For a description of the assumptions used by the Company in valuing these awards please see “Note 13 — Stock Options” to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission on March 13, 2009. The amounts below the caption “Option Awards” also include any amount attributable to fair value accounting for cash-settled stock appreciation rights that were granted. For a description of the assumptions used by the Company in valuing these cash-settled stock appreciation rights please see “Note 13 — Stock Options” to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission on March 13, 2008.

(2)		Payment for 2007 performance paid in January 2008.

(3)		The amount in the column captioned “Change in Pension Value and Nonqualified Deferred Compensation Earnings” is the deemed above-market interest earned on deferred compensation based upon 120% of the Long Term Annual Applicable Federal Rate (“AFR”) published by the Internal Revenue Service in May 2006 (6.02%). The Company’s interest rate for 2008 was 0.0%, 6.72% in 2007 and 8.930% in 2006. Please see “Note 9 — Benefit Plans” to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission on March 13, 2009. No earnings were credited for the year ending December 31, 2008 because the Company had a negative Return on Shareholders’ Equity for 2008.

GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2008

The following table summarizes certain information regarding grants of plan based awards to the Named Executive Officers during fiscal year 2008. The Company only awards cash-settled stock appreciation rights (“SARs”).


															All Other			All Other
															Stock			Option
															Awards:			Awards:					Grant Date
			Estimated Possible Payouts Under						Estimated Future Payouts						Number			Number of			Exercise or		Fair Value
			Non-Equity Incentive Plan Awards						Under Equity Incentive Plan						of Shares			Securities			Base Price of		of Stock
			(3)						Awards						of Stock			Underlying			Option		and Option
	Grant		Threshold		Target		Maximum		Threshold		Target		Maximum		or Units			Options			Awards		Awards
Name	Date		($)		($)		($)		(#)		(#)		(#)		(#)			(#)			($/Sh)		($)

R. Stan Puckett		1/14/08				—				—		—		—		2,571	(1)		—		$	—	$	42,576
		1/14/08				—				—		—		—		—			2,571	(2)	$	16.56	$	—
			$	—	$	130,000	$	195,000		—		—		—		—			—		$	—	$	—
Kenneth R. Vaught		1/14/08				—				—		—		—		2,571	(1)		—		$	—	$	42,576
		1/14/08				—				—		—		—		—			2,571	(2)	$	16.56	$	—
			$	—	$	106,800	$	160,200		—		—		—		—			—		$	—	$	—
James E. Adams		2/27/08				—				—		—		—		2,058	(1)		—		$	—	$	40,008
		2/27/08				—				—		—		—		—			2,058	(2)	$	19.44	$	—
			$	—	$	91,200	$	136,800		—		—		—		—			—		$	—	$	—
Steve L. Droke		2/27/08				—				—		—		—		1,654	(1)		—		$	—	$	32,154
		2/27/08				—				—		—		—		—			1,654	(2)	$	19.44	$	—
			$	—	$	73,330	$	109,995		—		—		—		—			—		$	—	$	—
William C. Adams		2/27/08				—				—		—		—		1,558	(1)		—		$	—	$	30,288
		2/27/08				—				—		—		—		—			1,558	(2)	$	19.44	$	—
			$	—	$	69,073	$	103,609		—		—		—		—			—		$	—	$	—


(1)		Reflects restricted stock awarded to the named executive officer. The term of the restricted stock awards provide for vesting in five equal annual installments commencing one year from the grant date.

(2)		Reflects cash-settled stock appreciation rights granted to the named executive officer. Each grant provides the participant with the right to receive payment in cash, upon exercise of each cash-settled stock appreciation right, for the difference between the appreciation in market value of a specified number of shares of the Company’s Common Stock over the award’s exercise price. The cash-settled stock appreciation rights vest over the same period as the restricted stock awards issued and can only be exercised in tandem with the restricted stock awards The per-share exercise price of a cash-settled stock appreciation right is equal to the closing market price of a share of the Company’s Common Stock on the date of grant.

(3)		The amounts shown reflect the payment levels of 0%, 40% and 60% of base compensation under the Company’s Cash Incentive Plan assuming the Company’s performance level falls in the 50^th percentile of its peer group of banks.

OUTSTANDING EQUITY AWARDS AT 2008 FISCAL YEAR END

The following table sets forth certain information with respect to outstanding equity awards at December 31, 2008:


	Option Awards												Stock Awards
																			Equity
																	Equity		Incentive
																	Incentive		Plan
						Equity											Plan		Awards:
						Incentive											Awards:		Market or
						Plan											Number of		Payout
						Awards:									Market		Unearned		Value of
	Number		Number of			Number of							Number of		Value of		Shares,		Unearned
	of		Securities			Securities							Shares or		Shares or		Units or		Shares,
	Securities		Underlying			Underlying							Units of		Units of		Other		Units or
	Underlying		Unexercised			Unexercised		Option					Stock That		Stock That		Rights That		Other Rights
	Unexercised		Options(#)			Unearned		Exercise		Option			Have Not		Have Not		Have Not		That Have
	Options(#)		Unexercisable			Options		Price		Expiration			Vested		Vested		Vested		Not Vested
Name	Exercisable		(1)			(#)		($)		Date			(#) (4)		($) (5)		(#)		($)

R. Stan Puckett		9,000		—			—	$	13.41		12/31/09	(2)		—		—		—		—
		9,000		—			—	$	13.86		12/31/10	(2)		—		—		—		—
		9,000		—			—	$	15.09		12/31/11	(2)		—		—		—		—
		9,000		—			—	$	16.41		01/13/13	(2)		—		—		—		—
		9,000		—			—	$	19.97		01/09/14	(2)		—		—		—		—
		9,000		—			—	$	26.89		01/25/15	(2)		—		—		—		—
		3,600		5,400			—	$	28.90		02/21/16	(2)		—		—		—		—
		1,800		7,200			—	$	34.63		03/19/17	(2)		—		—		—		—
		1,800		7,200	(3)		—	$	34.63		03/19/17	(2)		—		—		—		—
		—		—			—	$	—		—			2,571	$	34,811		—		—
		—		2,571	(6)		—	$	16.56		01/14/13	(6)		—		—		—		—

Kenneth R. Vaught		1,455		—			—	$	30.00		12/31/09	(2)		—		—		—		—
		1,455		—			—	$	32.00		12/31/10	(2)		—		—		—		—
		8,000		2,000			—	$	23.99		12/31/14	(2)		—		—		—		—
		6,000		4,000			—	$	26.89		12/31/15	(2)		—		—		—		—
		4,000		6,000			—	$	28.90		02/17/16	(2)		—		—		—		—
		2,000		8,000			—	$	34.63		03/19/17	(2)		—		—		—		—
		2,000		8,000	(3)		—	$	34.63		03/19/17	(2)		—		—		—		—
		—		—			—	$	—		—			2,571	$	34,811		—		—
		—		2,571	(6)		—	$	16.56		01/14/13	(6)		—		—		—		—

James E. Adams		1,200		1,800			—	$	28.90		2/21/16	(2)		—		—		—		—
		600		2,400			—	$	36.32		2/20/17	(2)		—		—		—		—
		—		—			—	$	—		—			2,058	$	22,395		—		—
		—		2,058			—	$	19.44		02/27/13	(6)		—		—		—		—

Steve L. Droke		2,800		—			—	$	30.00		12/31/09	(2)		—		—		—		—
		2,800		—			—	$	32.00		12/31/10	(2)		—		—		—		—
		590		—			—	$	19.00		01/10/13	(2)		—		—		—		—
		2,357		590			—	$	23.21		01/09/14	(2)		—		—		—		—
		1,656		1,104			—	$	26.89		01/25/15	(2)		—		—		—		—
		1,320		1,982			—	$	28.90		02/21/16	(2)		—		—		—		—
		505		2,022			—	$	36.32		02/20/17	(2)		—		—		—		—
		—		—			—	$	—		—			1,654	$	22,395		—		—
		—		1,654	(6)		—	$	19.44		02/27/13	(6)		—		—		—		—

William C. Adams		2,450		—			—	$	30.00		12/31/09	(2)		—		—		—		—
		2,450		—			—	$	32.00		12/31/10	(2)		—		—		—		—
		2,579		—			—	$	16.00		12/31/11	(2)		—		—		—		—
		2,579		—			—	$	19.00		12/31/13	(2)		—		—		—		—
		2,063		516			—	$	23.21		01/10/14	(2)		—		—		—		—
		1,359		906			—	$	26.89		01/09/15	(2)		—		—		—		—
		1,255		1,844			—	$	28.90		01/25/16	(2)		—		—		—		—
		476		1,904			—	$	36.32		02/21/17	(2)		—		—		—		—
		—		—			—	$	—		—			1,558	$	21,095		—		—
		—		1,558	(6)		—	$	19.44		02/27/13	(6)		—		—		—		—


(1)		Options or cash-settled stock appreciation rights become exercisable in five equal annual installments beginning on the first anniversary of date of grant.

(2)		The expiration date of each option or cash-settled stock appreciation right occurs ten years after the date of grant for each option.

(3)		Cash-settled stock appreciation rights. These cash-settled stock appreciation rights vest in tandem with the stock options they were granted with and can only be exercised if the market price of the Company’s stock is greater than the issue price of the stock appreciation right on the date of exercise of the option.

(4)		These are restricted stock awards that become vested in five equal annual installments beginning on the first anniversary of the date of grant.

(5)		Market value is determined by multiplying the closing market price of the Company’s common stock on December 31, 2008 by the number of shares.

(6)		Cash-settled stock appreciation rights. The annual vested potion of these cash-settled stock appreciation rights expire if not exercised with the vesting of the restricted stock awards they are linked to and expire in five years from grant date. These cash-settled stock appreciation rights can only be exercised if the market price of the Company’s stock is greater than the issue price of the stock appreciation right on the date of vesting.

OPTIONS EXERCISED AND STOCK VESTED TABLE FOR FISCAL 2008

The following table sets forth certain information with respect to options exercised by the Named Executive Officers in fiscal 2008:

Option Awards

Stock Awards

Number of Shares

Value Realized

Number of Shares

Value Realized

Acquired on Exercise

on Exercise

Acquired on Vesting

on Vesting

Name

(#)

($) (1)

(#)

($)

R. Stan Puckett

9,000

13,860

—


(1)		Represents the difference between the exercise price and the fair market value of the common stock on the date of exercise.

PENSION BENEFITS

The Company has entered into non-compete agreements with each of Messrs. Puckett and Vaught, pursuant to which the Company has agreed to provide certain retirement benefits. Information regarding potential payments pursuant to these agreements is set forth below:

Present

Value of

Payments

Number of Years

Accumulated

During Last

Credited Service

Benefit

Fiscal Year

Name

Plan Name

(#)

($)

R. Stan Puckett

Non-Compete Agreement

418,742

—

Kenneth R. Vaught

Non-Compete Agreement

268,832

—

Pursuant to Mr. Puckett’s non-compete agreement, he has agreed not to, among other things, during the term of his employment or following termination of his employment until his sixtieth (60th) birthday, engage in the business of banking in any county of any state in which the Company has an office or branch at the time of his termination. In consideration for this agreement, the Company has agreed to pay Mr. Puckett a deferred compensation benefit for a period of seven years following the termination of his employment, or upon his sixtieth (60th) birthday if Mr. Puckett is still employed with the Company on such date. If Mr. Puckett dies before age 54 while still employed by the Company, the benefit will be paid to his beneficiary as if he had retired on his fifty-fourth (54th) birthday. Mr. Puckett’s non-compete agreement also provides for the payment of benefits ~~they might otherwise obtain from an attempt to acquire ownership or~~for seven years following a change in control of the Company ~~such as selling their shares at~~or Mr. Puckett becoming disabled. The Company accrued $94,942 for the payment of the benefit under this agreement in 2008.

Pursuant to Mr. Vaught’s non-compete agreement, he has agreed that, in exchange for his receipt of a ~~premium over market price. Moreover,~~deferred compensation benefit, that during the ~~issuance~~term of ~~such additional shares to persons friendly to~~his employment or following his termination by the ~~Board of Directors could make it more difficult to remove incumbent directors from office~~Company without cause or his voluntary resignation, until his forty-six (46th) birthday, he would not either directly or indirectly engage in the ~~event such change were~~business of banking, or any other business in which the Company directly or indirectly engages during the term of his employment with the Company in any county of any state in which the Company has an office or branch at the time of his termination.

In consideration of his agreement not to ~~be deemed advisable~~compete, the Company agreed to pay to Mr. Vaught, upon his reaching age 50, deferred compensation benefits for a period of 10 years following the termination of his employment or upon his fiftieth (50th) birthday if still employed by the ~~shareholders.~~Company at that date. If Mr. Vaught dies before age 50 while still employed by the Company, the benefits will be paid to his beneficiary beginning on August 1, 2014. If he dies after his fiftieth (50th) birthday while still employed by the Company, the benefit payments will commence within ninety days following his death. The agreement also provides that Mr. Vaught can defer receipt of these payments until age 60 if he is still employed by the Company at age 50. Mr. Vaught’s non-compete agreement also provides for the payment of benefits for ten years following a change in control. The Company accrued $68,609 for the payment of the benefit under this agreement in 2008.

~~While~~NONQUALIFIED DEFERRED COMPENSATION TABLE FOR FISCAL 2008

The following table sets forth certain information with respect to deferrals made by the ~~proposed amendment~~Company’s Named Executive Officers pursuant to the Company’s ~~Charter may have anti-takeover consequences,~~nonqualified deferred compensation plan described below, the ~~Board~~earnings thereon and the aggregate balance at December 31, 2008:


	Executive		Registrant				Aggregate		Aggregate Balance
	Contributions in		Contributions in		Aggregate Earnings		Withdrawals/		at Last
	Last FY(1)		Last FY (1)		in Last FY (1)(3)		Distributions		FYE
Name	($)		($)		($)		($)		($)

R. Stan Puckett (2)	$	—	$	—	$	—	$	—	$	333,564

Kenneth R. Vaught		9,200		—		—		—		92,163

James E. Adams		—		—		—		—		—

Steve L. Droke		—		—		—		—		—

William C. Adams		—		—		—		—		—


(1)		All amounts reported in the columns titled “Executive Contributions in Last FY”, “Registrant Contributions in Last FY” and “Aggregate Earnings in Last FY” are also reported as compensation to such named executive officer in the Summary Compensation Table on page 26.

(2)		Mr. Puckett did not defer any compensation for the year ending December 31, 2008.

(3)		No earnings were credited for the year ending December 31, 2008 because the Company had a negative Return on Shareholders’ Equity for 2008.

During 2008, 2007 and 2006, the Bank maintained a deferred compensation plan (the “Original Plan”) pursuant to which the Chief Executive Officer and the President and Chief Operating Officer could elect to defer receipt of ~~Directors believes that~~a portion of their salaries by entering into deferred salary agreements with the ~~benefits it would confer on the Company outweigh any disadvantages.~~Bank. In addition to the ~~ability~~salary deferral, the agreements also provided for payment of benefits under certain events of disability, early retirement, termination of employment or death. The Bank is the beneficiary of life insurance acquired with respect to ~~participate~~officers participating in the Original Plan. During 2006, the Company began using a formula which provides an annual earnings crediting rate based upon 75% of the Company’s return on average stockholders’ equity on balances in the plan, until the officer is separated from service, and, thereafter at an earnings crediting rate of 56.25% of the Company’s return on average stockholders’ equity for the year then ending. For the year ended December 31, 2008, the Company’s Return on Average Equity was (1.64%) and no earnings were credited.

On September 20, 2004, the Company approved a separate deferred compensation plan for nonemployee directors (the “Nonemployee Plan”) which, effective July 1, 2004, enabled nonemployee directors to defer additional board and committee meeting fees, beyond those being deferred under the Original Plan, into certain investment vehicles, including a “deemed” investment in the Company’s common stock. Mrs. Bachman and former director Mr. Bachman are currently the only participants in the Nonemployee Plan. Mrs. Bachman deferred $12,625 and Mr. Bachman deferred $14,200, prior to his retirement, of their director fees into the Nonemployee Plan and lost value of $12,836 and $19,706, respectively, on their accounts during 2008. On December 13, 2004, the Company amended and restated the Nonemployee Plan for the principal purpose of ensuring that it complies with The American Jobs Creation Act of 2004. On December 16, 2005, the Company approved additional changes to its Nonemployee Plan effective January 1, 2005, which further facilitate compliance with Section 409A of the Code.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and arrangements to which the Named Executive Officers would be entitled upon termination of employment as of December 31, 2008.


			Continuation
	Cash		of Medical		Acceleration of Equity				Total
	Severance		and Welfare		Awards (Intrinsic		Non-Compete		Termination
Name	Payment⁽¹⁾		Benefits		Value at 12/31/08)		Agreement		Benefits

R. Stan Puckett
• Voluntary termination	$	—	$	—	$	—	$	—	$	—
• Involuntary termination		—		—		—		—		—
• Involuntary without cause termination prior to a change in control		392,024		—		—		566,405		958,429
• Involuntary or good reason termination after change in control (CIC)		971,750		—		—		700,000		1,671,750

Kenneth R. Vaught
• Voluntary termination		—		—		—		—		—
• Involuntary termination		—		—		—		—		—
• Involuntary without cause termination prior to a change in control		323,053		—		—		531,770		854,823
• Involuntary or good reason termination after change in control (CIC)		798,330		—		—		1,110,000		1,908,330

James E. Adams
• Voluntary termination		—		—		—		—		—
• Involuntary termination		—		—		—		—		—
• Involuntary or good reason termination after change in control (CIC)		453,720		—		—		—		453,720

Steve L. Droke
• Voluntary termination		—		—		—		—		—
• Involuntary termination		—		—		—		—		—
• Involuntary or good reason termination after change in control (CIC)		364,817		—		—		—		364,817

William C. Adams
• Voluntary termination		—		—		—		—		—
• Involuntary termination		—		—		—		—		—
• Involuntary or good reason termination after change in control (CIC)		343,637		—		—		—		343,637


⁽¹⁾		Pursuant to Employment Agreement or Change in Control Protection Plan.

On December 31, 2007, the Company entered into an employment agreement with each of R. Stan Puckett and Kenneth R. Vaught, the Company’s chief executive officer and president, respectively (the “Employment Agreements”), which agreements replaced the existing employment agreements with each of these individuals. Pursuant to the terms of the Employment Agreements, the Company agreed to employ Mr. Puckett and Mr. Vaught as the chief executive officer and president, respectively, of the Company for a three-year term ending December 31, 2010. Pursuant to the terms of the Employment Agreements, each employee’s term may be extended for additional three-year periods if the Company or the employee fails to notify the other of an intent to terminate the Employment Agreement upon not less than 90 days’ notice prior to the end of the then current term. Under the terms of the Employment Agreements, Mr. Puckett and Mr. Vaught will be entitled to a beginning base salary of $278,250 and $237,000, respectively, as well as director fees for service on the Company’s and its subsidiaries’ boards of directors, life insurance, participation in Company-sponsored benefit plans, including equity-based plans and cash incentive plans, and other fringe benefits.

The Company may terminate Mr. Puckett’s or Mr. Vaught’s employment immediately for cause, in which event the Company shall have no further obligations to pay Mr. Puckett or Mr. Vaught, as the case may be, for his services, except for any accrued and unpaid salary through the termination date. The Company may also terminate the employment of Mr. Puckett or Mr. Vaught, as the case may be, without cause, in which case the Company shall pay to Mr. Puckett or Mr. Vaught, not earlier than six (6) months following the date of termination, a lump sum payment equal to the sum of one year of such employee’s base salary plus an amount that is the average of the employee’s previous two years’ bonus. Mr. Puckett or Mr. Vaught may each also terminate his employment under the Employment Agreements voluntarily on not less than 60 days’ notice.

“Cause” is defined in the Employment Agreements to include (i) permanent disability of the executive; (ii) death of the executive; (iii) material breach of the Employment Agreement by the executive; (iv) failure of the executive to perform his duties in a manner that the Company requires; (v) an act of gross negligence by the executive that causes harm to the Company; (vi) the executive’s conviction of, or pleading guilty (including a plea ofnole contendere) to, a criminal act which is a felony or which is a misdemeanor involving moral turpitude; (vii) excessive absenteeism by the executive; and (viii) any misrepresentation or breach of the covenants and warranties contained in the Employment Agreement by the executive.

Under the terms of the Employment Agreements, if within 18 months following a change in control the Company or its successor terminates Mr. Puckett or Mr. Vaught, as the case may be, without cause or Mr. Puckett or Mr. Vaught voluntarily resigns following a change in position, a reduction in title or a significant reduction in the duties which he is to perform for the Company or its successor, then the Company or its successor shall pay to Mr. Puckett or Mr. Vaught, as the case may be, a lump sum payment equal to 2.99 times Mr. Puckett’s or Mr. Vaught’s annual base salary and bonus for the year immediately preceding termination. This payment shall be made no earlier than six months’ following the date of termination. If payments to Mr. Puckett or Mr. Vaught following a change in control would create an excise tax for the employee under the excess parachute rules of Section 4999 of the Code, the Company is required to pay to the employee the amount of such excise tax and all federal and state income or other taxes with respect to any such additional amounts (the “Gross-Up Amount”) and such additional amount as is necessary to offset any tax liability of the employee as a result of the Gross-Up Amount.

A “Change in Control” is defined in the Employment Agreements to include a change in the ownership of the Company, a change in the effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company as provided under Section 409A of the Code and any Internal Revenue Service guidance and regulations issued in connection with Section 409A of the Code.

PROPOSAL 4 — TO RATIFY USE OF THE PERFORMANCE MEASURES IN THE COMPANY’S AMENDED AND RESTATED 2004 LONG-TERM INCENTIVE PLAN

Reason for Shareholder Approval of this Proposal

In 2004, the Company’s shareholders approved the material terms of the performance measures of the Company’s Amended and Restated 2004 Long-Term Incentive Plan. You are being asked to re-approve these terms in order for the Company to preserve, subject to the limitations on deductibility described above as a result of the Company’s participation in the U.S. Treasury’s capital purchase program, ~~component~~the Company’s federal income tax deduction for performance-based payments under the Amended and Restated 2004 Long Term Incentive Plan to certain executive officers named in the Summary Compensation Table, or the Covered Officers. There has been no change to the terms of the ~~TARP program to support potential future growth, to finance purchases and secure capital, the Company would gain a degree of protection from hostile takeovers that might be contrary to the interests~~performance measures. Under Section 162(m) of the ~~Company and~~Code, we must seek you approval at five-year intervals to preserve the ~~shareholders.~~ federal income tax deduction.

The ~~Board of Directors believes it is in the best interest~~following description of the ~~Company and the shareholders to encourage potential acquirers to negotiate directly with the Board of Directors rather than taking unilateral action. Only when empowered to negotiate on behalf~~material terms of the ~~Company can~~performance measures under the ~~board have~~Amended and Restated 2004 Long-Term Incentive Plan is qualified in its entirety by the ~~best possible opportunity to secure the terms that best serve the interests of the Company and all the shareholders.~~

~~Although the Company believes that the material~~ provisions of the ~~amendment to the Charter are set forth above, reference should be made to the text of the amendment,~~2004 Long-Term Incentive Plan, a copy of which is attached ~~to this proxy statement~~ as~~Appendix A~~.

~~Pro Forma Financial Information~~

The following unaudited pro forma information of the Company for the fiscal year ended December 31, 2007 and the nine months ended September 30, 2008 show the effects of a minimum of $24.1 million and a maximum of $72.3 million of senior preferred shares issued an exhibit to the United States Treasury pursuant to the TARP capital purchase program. The unaudited pro forma consolidated financial data gives effect to the events discussed below as if they had occurred on January 1, 2007 in the case of the statement of income data and September 30, 2008 in the case of the balance sheet data.

~~The pro forma financial data presented may change materially under either the “Minimum” or “Maximum” scenario based upon the actual proceeds received under the capital purchase program if the~~ Company’s application is approved by the Treasury, the timing and utilization of the proceeds as well as certain other factors including the strike price of the warrants, any subsequent changes in the Company’s common stock price, and the discount rate used to determine the fair value of the preferred stock. Accordingly, the Company can provide no assurance that the “Minimum” or “Maximum” pro forma scenarios included in the following unaudited pro forma financial data will ever be achieved. The Company has included the following unaudited pro forma condensed consolidated data solely for the purpose of providing shareholders with information that may be useful for purposes of considering and evaluating the proposal to amend the Company’s Charter.

~~The information should be read in conjunction with the Company’s audited financial statements and the related notes as filed as part of the Company’s Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2007,~~2008.

The performance measures are limited to one or more of the following financial performance measures relating to the Company or any of its affiliates or business units:

basic, diluted, or adjusted earnings per share;

sales or revenue;

earnings before interest, taxes, and other adjustments (in total or on a per share basis);

basic or adjusted net income;

returns on equity, assets, capital, revenue or similar measure;

economic value added;

working capital;

total shareholder return; and

product development, product market share, research, licensing, litigation, human resources, information services, mergers, acquisitions, sales of assets of Affiliates or business units.

With respect to Performance Compensation Awards, the Amended and Restated 2004 Long-Term Incentive Plan requires that the Compensation Committee specify in writing the performance period to which the Award relates, and an objective formula by which to measure whether and the ~~Company’s unaudited consolidated financial statements and~~extent to which the ~~related notes filed as part~~Award is earned on the basis of the ~~Company’s Quarterly Report on Form 10-Q~~level of performance achieved with respect to one or more performance measures. Once established for a performance period, the ~~quarter ended September 30, 2008.~~

~~The following unaudited pro forma condensed consolidated financial data is~~performance measures and performance formula applicable to the Award may not ~~necessarily indicative~~be amended or modified in a manner that would cause the compensation payable under the Award to fail to constitute performance-based compensation under Section 162(m) of the ~~Company’s financial position or results~~Code.

Each measure will be, to the extent applicable, determined in accordance with generally accepted accounting principles as consistently applied by the Company (or such other standard applied by the Compensation Committee) and, if so determined by the Compensation Committee, and in the case of ~~operations that actually would have been attained had proceeds from~~a Performance Compensation Award, to the ~~capital purchase program been received, or the issuance~~extent permitted under Section 162(m) of the ~~warrants pursuant~~Code, adjusted to omit the ~~capital purchase program been made, at~~effects of extraordinary items, gain or loss on the ~~dates indicated,~~disposal of a business segment, unusual or infrequently occurring events and ~~is not necessarily indicative~~transactions and cumulative effects of ~~the Company’s financial position~~changes in accounting principles. Performance measures may vary from performance period to performance period, and from Participant to Participant, and may be established on a stand-alone basis, in tandem or ~~results of operations that will be achieved~~ in the future. In addition, as noted above, the Company’s application to participate in the capital purchase program has not been approved by the United States Treasury. Accordingly, the Company can provide no assurance that the minimum or maximum estimated proceeds included in the following unaudited pro forma condensed consolidated financial data will ever be received.

The Company has included the following unaudited pro forma condensed consolidated financial data solely for the purpose of providing shareholders with information that may be useful for purposes of considering and evaluating the proposals to amend the Company’s Charter. The Company’s future results are subject to prevailing economic and industry specific conditions and financial, business and other known and unknown risks and uncertainties, certain of which are beyond the Company’s control. These factors include, without limitation, those described in this proxy statement and those described under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

alternative.

~~Pro Forma Condensed Consolidated Income Statement Data~~
~~Estimated Impact of Minimum TARP Proceeds Received of $24,100,000 with 195,000~~¹ ~~Warrants~~
~~Issued and Maximum TARP Proceeds Received of $72,300,000 with 586,000~~¹ ~~Warrants Issued~~

~~For the Nine Months ended September 30, 2008~~

Pro Forma
Actual Minimum TARP Maximum TARP
(In thousands, except shares and per share data)
Condensed Income Statement Data:
Net interest income²
$ 73,900 $ 74,081 $ 74,442
Provision for loan losses 20,527 20,527 20,527

Net interest income after provision for loan losses 53,373 53,554 53,915
Noninterest income 23,428 23,428 23,428
Noninterest expense 61,645 61,645 61,645

Income before income taxes 15,156 15,337 15,698
Provision for income taxes 5,282 5,351 5,488

Net Income $ 9,874 $ 9,986 $ 10,210
Preferred stock dividend³
— 1,160 3,481

Net income available to common shareholders $ 9,874 $ 8,826 $ 6,729

Earning per share data:
Basic $ 0.76 $ 0.68 $ 0.52

Diluted 0.76 0.68 0.52

Weighted Average Shares Outstanding:
Basic 12,931,538 12,931,538 12,931,538

Diluted⁴
12,936,084 12,936,084 12,936,084

¹~~The stock price of $18.50 was used to calculate the warrants. This was the last 20 - -day average closing price of GRNB stock on the NASDAQ Global Select Market on November 14, 2008.~~

²Assumes that the estimated TARP capital purchase program proceeds are used to temporarily increase short-term investments with an assumed annualized interest rate of 1%. The actual impact to net interest income would be different as the Company plans to utilize a portionmaterial terms of the ~~proceeds to fund loan growth~~Amended and for other corporate purposes. However, such impact cannot be determined at this time as the actual results would vary based upon the timing of when the loans are funded and the actual pricing of any such loans.

³Consists of dividends on preferred stock at a 5% annual rate as well as accretion on discount on preferred stock upon issuance. The discount is determined based on the value that is allocated to the warrants upon issuance. The discount is accreted back to par value on a constant effective yield method (approximately 7%) over a five year term, which is the expected life of the preferred stock upon issuance. The estimated accretion is based on a number of assumptions which are subject to change. These assumptions include the discount (market rate at issuance) rate on the preferred stock, and assumptions underlying the value of the warrants. The estimated proceeds are allocated based on the relative fair value of the warrants as compared to the fair value of the preferred stock. The fair value of the warrants is determined under a Black-Scholes model. The model includes assumptions regardingRestated 2004 Long-Term Incentive Plan was included in the Company’s common stock price, dividend yield, stock price volatility, as well as assumptions regarding the risk-free interest rate. The lower the value of the warrants, the less negative impact on net income and earnings per share available to common shareholders. The fair value of the preferred stock is determined based on assumptions regarding the discount rate (market rate) on the preferred stock (currently estimated at 12%). The lower the discount rate, the less negative impact on net income and earnings per share available to common shareholders.

⁴~~The calculated issue price of $18.50 on the stock warrants (the 20-day average closing price~~definitive Proxy Statement for the Company’s ~~common stock~~2004 Annual Meeting as filed with the SEC on ~~November 14, 2008) was greater than the average calculated $16.73 stock price used for~~March 26, 2004. The following table sets forth certain information with respect to securities to be issued under the Company’s ~~earning per share calculation (treasury stock method ) at September 30, 2008, thus the warrants were not included in the pro forma diluted shares.~~

~~Pro Forma Condensed Consolidated Income Statement Data~~
~~Estimated Impact~~equity compensation plans as of ~~Minimum TARP Proceeds Received of $24,100,000 with 195,000~~¹ ~~Warrants~~
~~Issued and Maximum TARP Proceeds Received of $72,300,000 with 586,000~~¹ ~~Warrants Issued~~

~~For the Twelve Months ended~~ December 31, ~~2007~~

Pro Forma
Actual Minimum TARP Maximum TARP
(In thousands, except shares and per share data)
Condensed Income Statement Data:
Net interest income²
$ 94,653 $ 94,894 $ 95,376
Provision for loan losses 14,483 14,483 14,483

Net interest income after provision for loan losses 80,170 80,411 80,893
Noninterest income 27,678 27,678 27,678
Noninterest expense 69,328 69,328 69,328

Income before income taxes 38,520 38,761 39,243
Provision for income taxes 14,146 14,238 14,421

Net Income $ 24,374 $ 24,523 $ 24,822
Preferred stock dividend³
— 1,547 4,641

Net income available to common shareholders $ 24,374 $ 22,976 $ 20,181

Earning per share data:
Basic $ 2.07 $ 1.95 $ 1.72

Diluted 2.07 1.94 1.68

Weighted Average Shares Outstanding:
Basic 11,756,699 11,756,699 11,756,699

Diluted 11,799,142 11,873,368 12,022,202

¹~~The stock price of $18.50 was used to calculate the warrants. This was the last 20 - -day average closing price of GRNB stock on the NASDAQ Global Select Market on November 14,~~ 2008.

²Assumes that the estimated TARP capital purchase program proceeds are used to temporarily increase short-term investments with an assumed annualized interest rate of 1%. The actual impact to net interest income would be different as the Company plans to utilize a portion of the proceeds to fund loan growth and for other corporate purposes. However, such impact cannot be determined at this time as the actual results would vary based upon the timing of when the loans are funded and the actual pricing of any such loans.

(c)

(a)

(b)

Number of securities

Weighted-average

remaining available for

to be issued upon

exercise price of

future issuance under

exercise of

outstanding

equity compensation plans

outstanding options,

options, warrants

(excluding securities

Plan Category

warrants and rights

and rights

reflected in column (a))

Equity compensation plans approved by security holders

379,443

27.33

219,729

Equity compensation plans not approved by security holders

45,000

15.75

Total

424,443

26.10

219,729


^*		R. Stan Puckett, was the sole participant under this plan, which was a part of Mr. Puckett’s employment agreement. This employment agreement was amended during 2005 to provide that future option grants to the key executive would be made at no less than fair market value on the date of grant in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended.

³Consists of dividends on preferred stock at a 5% annual rate as well as accretion on discount on preferred stock upon issuance. The discount is determined based on the value that is allocated to the warrants upon issuance. The discount is accreted back to par value on a constant effective yield method (approximately 7%) over a five year term, which is the expected life of the preferred stock upon issuance. The estimated accretion is based on a number of assumptions which are subject to change. These assumptions include the discount (market rate at issuance) rate on the preferred stock, and assumptions underlying the value of the warrants. The estimated proceeds are allocated based on the relative fair value of the warrants as compared to the fair value of the preferred stock. The fair value of the warrants is determined under a Black-Scholes model. The model includes assumptions regarding the Company’s common stock price, dividend yield, stock price volatility, as well as assumptions regarding the risk-free interest rate. The lower the value of the warrants, the less negative impact on net income and earnings per share available to common shareholders. The fair value of the preferred stock is determined based on assumptions regarding the discount rate (market rate) on the preferred stock (currently estimated at 12%). The lower the discount rate, the less negative impact on net income and earnings per share available to common shareholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE PERFORMANCE MEASURES IN THE GREEN BANKSHARES, INC. AMENDED AND RESTATED 2004 LONG-TERM INCENTIVE PLAN.

~~Vote Required~~PROPOSAL 5 — ADISORY VOTE ON EXECUTIVE COMPENSATION PROGRAM AND PROCEDURES

On February 17, 2009, the President of the United States signed into law the ARRA. The ARRA revised Section 111 of the EESA to require any recipient of funds in the TARP to permit a separate shareholder vote to approve the compensation of executives, as disclosed pursuant to the compensation disclosure rules of the SEC. Thus, in order to comply with the ARRA as a recipient of TARP funds, the Board of Directors has ~~approved adoption of this proposal and recommends a~~decided to provide shareholders with the right to cast an advisory vote ~~“FOR” approval of this proposal. Approval~~to approve the compensation of the ~~proposal requires the affirmative vote of a majority of the total votes entitled to be cast~~Company’s executives at the ~~Special Meeting at which~~Annual Meeting.

This proposal, commonly known as a ~~quorum is present.~~

“say-on-pay” proposal, gives you as a shareholder the opportunity to endorse or not endorse our executive pay program through the following resolution:

~~DESCRIPTION OF THE PREFERRED STOCK~~RESOLVED

~~General~~

~~The proposed amendment to~~, that the ~~Company’s Charter would grant~~shareholders approve the ~~Board of Directors~~overall executive compensation policies and procedures employed by the ~~authority to issue 1,000,000 shares of preferred stock with no par value per share without further shareholder approval. The preferred stock would be issuable~~Company, as described in ~~one or more series, from time to time, with each such series to consist of such number of shares~~“Compensation Discussion and ~~to have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights,~~Analysis” and the ~~qualifications, limitations or restrictions thereof, as shall be stated in~~tabular disclosure regarding named executive officer compensation (together with the ~~resolution or resolutions providing for the issuance of such series adopted by the Board of Directors.~~

~~Capital Purchase Program~~

The following is a brief description of the terms of the shares (the “Shares”) of preferred stock that the Company may issue to the United States Treasury through the TARP capital purchase program, the only shares of preferred stock that the Company contemplates issuing in the proximate future. This description is based upon information currently available to the Company concerning the terms of the TARP capital purchase program and does not purport to be complete in all respects. The final terms of the Shares will be approved by the Company’s Board of Directors, or an authorized committee thereof, and will be reflected in a subsequent amendment to the Company’s Charter that will be adopted without shareholder approval.

~~General~~

Under the Company’s Charter, as proposed to be amended, the Company will have authority to issue up to 1,000,000 shares of preferred stock, with no par value per share. Pending approval of the amendment to the Charter describedaccompanying narrative disclosure) in this Proxy Statement ~~and the approval of the United States Treasury, the Company anticipates issuing between 24,000 and 72,300 Shares~~ for an aggregate purchase price of between $24.1 million and $72.3 million pursuant to the capital purchase program based on the Company’s risk-weighted assets as of September 30, 2008. Subject to limitations on use of proceeds that may be specified by the United States Treasury, the Company intends to use the proceeds of the issuance of the Shares for general corporate purposes. When issued, the Shares will be validly issued, fully paid and nonassessable. Holders of the Shares will be entitled to receive cash dividends when, as and if declared out of assets legally available for payment in respect of the Shares by the Company’s Board of Directors or a duly authorized committee of the Board of Directors in their sole discretion. Dividends will be cumulative.its 2009 Annual Meeting.

Prior to the issuance of the Shares, the Company will have filed Articles of Amendment to the Company’s Charter with respect to the Shares with the Secretary of State of Tennessee. When issued, the Shares will have a fixed liquidation preference of $1,000 per share. If the Company liquidates, dissolves or winds up its affairs, holders of the Shares will be entitled to receive, out of the Company’s assets that are available for distribution to shareholders, an amount per Share equal to the liquidation preference per Share plus any accrued but unpaid dividends to the date of payment of the liquidation preference. The SharesBecause your vote is advisory, it will not be ~~convertible~~binding upon the Board. However, the Compensation Committee will take into account the ~~Company’s common stock or any other class or series~~outcome of the ~~Company’s securities and will not be subject to any sinking fund or any other obligation of the Company for their repurchase or retirement.~~vote when considering future executive compensation arrangements.

~~Ranking~~THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE EXECUTIVE COMPENSATION POLICIES AND PROCEDURES EMPLOYED BY THE COMPENSATION COMMITTEE, AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS, AND THE TABULAR DISCLOSURE REGARDING NAMED EXECUTIVE OFFICER COMPENSATION (TOGETHER WITH THE ACCOMPANYING NARRATIVE DISCLOSURE) IN THIS PROXY STATEMENT.

~~With respect to the payment of dividends and the amounts to be paid upon liquidation, the Shares will rank:~~

	•		~~senior to the Company’s common stock and all other equity securities designated as ranking junior to the Shares; and~~

	•		~~at least equally with all other equity securities designated as ranking on parity with the Shares as to payment of dividends or the amounts to be paid upon liquidation, as applicable.~~

~~For as long as any Shares remain outstanding, unless all accrued and unpaid dividends for all past Dividend Periods (as defined below) are fully paid:~~

	•		~~no dividend whatsoever may be paid or declared on the Company’s common stock or other junior stock or other equity securities designated as ranking~~~~pari passu~~~~with the Shares as to payment of dividends, other than, in the case of shares ranking~~~~pari passu~~~~with the Shares, dividends paid on a~~~~pro rata~~~~basis with the Shares and in the case of common stock and shares ranking~~~~pari passu~~~~with the Shares, dividends payable solely in shares of common stock;~~

	•		~~no common stock or other junior stock or~~~~pari passu~~~~with the Shares may be purchased, redeemed or otherwise acquired for consideration by the Company.~~

Subject to the foregoing, such dividends (payable in cash, stock or otherwise) as may be determined by the Company’s Board of Directors (or a duly authorized committee of the board) may be declared and paid on the Company’s common stock and any other stock ranking~~pari passuwith or junior to the Shares from time to time out of any funds legally available for such payment, and the Shares shall not be entitled to participate in any such dividend;~~~~provided, however,~~that the consent of the United States Treasury will be required for any increase in the dividends paid to the common stock until the earlier of (i) the third anniversary of the date of issue of the Shares and (ii) the date on which the Shares have been redeemed in whole or the United States Treasury has transferred all Shares to third parties.

~~Dividends~~

Holders of Shares, in preference to the holders of the Company’s common stock and of any other shares of the Company’s stock ranking junior to the Shares as to payment of dividends, will be entitled to receive, only when, as and if declared by the Company’s Board of Directors or a duly authorized committee of the board, out of assets legally available for payment, cash dividends. These dividends will be payable at a rate of 5.00%~~per annum~~~~until the fifth anniversary of the date of issuance, and thereafter at a rate of 9.00%~~~~per annum~~~~(the “Dividend Rate”), applied to the $1,000 liquidation preference per share and will be paid quarterly in arrears on the 15~~^th day of February, May, August and November of each year commencing on February 15, 2009 (each, a “Dividend Payment Date”), with respect to the Dividend Period, or portion thereof, ending on the day preceding the respective Dividend Payment Date. A “Dividend Period” means each period commencing on (and including) a Dividend Payment Date and continuing to (but not including) the next succeeding Dividend Payment Date, except that the first Dividend Period for the initial issuance of Shares will commence upon the date of original issuance of the Shares. Dividends will be paid to holders of record on the respective date fixed for that purpose by the Company’s Board of Directors or a committee thereof in advance of payment of each particular dividend.

~~The amount of dividends payable per Share on each Dividend Payment Date will be calculated on the basis of a 360-day year consisting of twelve 30-day months.~~

The Company is subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The Federal Reserve is authorized to determine, under certain circumstances relating to the financial condition of a bank holding company, such as the Company, that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. In addition, the Company is subject to Tennessee state laws and the bank is subject to the terms and regulations of the TDFC relating to the payment of dividends.

~~Conversion Rights~~

~~The Shares will not be convertible into shares of any other class or series of the Company’s stock.~~

~~Redemption~~

The Shares may not be redeemed prior to the first Dividend Payment Date falling on or after the third anniversary of the date of issuance, except with the proceeds of a Qualified Equity Offering (as defined below) that results in proceeds to the Company of not less than 25% of the issue price of the Shares. A “Qualified Equity Offering” is the sale by the Company for cash, following the date of issuance of the Shares, of common stock or perpetual preferred stock that qualifies as Tier 1 capital under the risk-based capital guidelines of the Federal Reserve. On any date after the first Dividend Payment Date falling on or after the third anniversary of the date of issuance the Shares may be redeemed, in whole or in part, at the Company’s option, from any source of funds. Any such redemption will be at a cash redemption price of $1,000 per Share, plus any accrued and unpaid dividends for all prior Dividend Periods for that Share. Holders of Shares will have no right to require the redemption or repurchase of the Shares.

Any redemption of the Shares is subject to prior approval of the Federal Reserve. Subject to this limitation or of any outstanding debt instruments, the Company or its affiliates may from time to time purchase any outstanding Shares by tender, in the open market or by private agreement.

~~Liquidation Rights~~

In the event that the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs, holders of Shares will be entitled to receive an amount per Share (the “Total Liquidation Amount”) equal to the fixed liquidation preference of $1,000 per Share, plus any accrued and unpaid dividends to the date of payment of the Total Liquidation Amount. Holders of the Shares will be entitled to receive the Total Liquidation Amount out of the Company’s assets that are available for distribution to shareholders, after payment or provision for payment of the Company’s debts and other liabilities but before any distribution of assets is made to holders of the Company’s common stock or any other shares ranking, as to that distribution, junior to the Shares.

If the Company’s assets are not sufficient to pay the Total Liquidation Amount in full to all holders of Shares and all holders of any shares of the Company’s stock ranking as to any such distribution~~pari passuwith the Shares, the amounts paid to the holders of Shares and to such other shares will be paid~~~~pro rata~~in accordance with the respective Total Liquidation Amount for those holders. If the Total Liquidation Amount per Share has been paid in full to all holders of Shares and the liquidation preference of any other shares ranking on parity with the Shares has been paid in full, the holders of the Company’s common stock or any other shares ranking, as to such distribution, junior to the Shares will be entitled to receive all of the Company’s remaining assets according to their respective rights and preferences.

For purposes of the liquidation rights, neither the sale, conveyance, exchange or transfer of all or substantially all of the Company’s property and assets, nor the consolidation or merger by the Company with or into any other corporation or by another corporation with or into the Company will constitute a liquidation, dissolution or winding up of the Company’s affairs.

~~Voting Rights~~

~~Except as indicated below or otherwise required by law, holders of the Shares will not have any voting rights.~~

If, and whenever, the dividends on the Shares have not been declared and paid for an aggregate of at least six Dividend Periods (whether or not consecutive), the number of directors then constituting the Company’s Board of Directors will be increased by two. Holders of the Shares will be entitled to elect the two additional members of the Company’s Board of Directors (the “Preferred Stock Directors”) at any annual meeting of shareholders or any special meeting of the holders of the Shares.

Whenever all dividends on the Shares have been paid in full then the right of the holders of the Shares to elect the Preferred Stock Directors will cease (but subject always to the same provisions for the vesting of these voting rights in the case of any similar non-payment of dividends in respect of future Dividend Periods), the terms of office of all Preferred Stock Directors will immediately terminate and the number of directors constituting the Company’s Board of Directors will be reduced accordingly.

The Shares shall have the right to vote separately as a class (with approval requiring the affirmative vote of holders owning at least 66 2/3% of the Shares) on (1) any authorization or issuance of shares ranking senior to the Shares; (2) any amendment to the rights of the Shares so as to adversely affect the rights, preferences, privileges or voting power of the Shares; or (3) consummation of any merger, share exchange or similar transaction unless the Shares remain outstanding, or if the Company is not the surviving entity in such transaction, are converted into or exchanged for preference securities of the surviving entity and the Shares remaining outstanding or such preference securities have such rights, preferences, privileges and voting power as are not materially less favorable to the holders than the rights, preferences, privileges and voting power of the Shares. Under Tennessee law, holders of the Shares will be entitled to vote as a separate voting group on certain amendments to the Company’s charter and in connection with certain mergers. When voting as a separate class on these matters, Tennessee law provides that the vote of holders of a majority of the Shares outstanding is required.

~~Regulatory Capital Treatment~~

~~The Company expects the Shares to qualify as Tier I capital under the Federal Reserve’s risk-based capital guidelines applicable to bank holding companies.~~

1236

~~Transferability~~DIRECTOR COMPENSATION TABLE

The ~~Shares will not be subject to any contractual restrictions on transferability, and~~table below summarizes the compensation paid by the Company ~~will be obligated~~ to ~~file~~directors for the fiscal year ended December 31, 2008:


									Change in
									Pension Value
									and
									Nonqualified
	Fees Earned						Non-Equity		Deferred
	or Paid in				Option		Incentive Plan		Compensation		All Other
	Cash		Stock Awards		Awards		Compensation		Earnings		Compensation			Total
Name	($)		($) (3)(4)		($)		($)		($)		($)			($)

Martha M. Bachman	$	22,575	$	10,002	$	—	$	—	$	—		—		$	32,577

Phil M. Bachman(1)		8,525		10,002		—		—		—		—			18,527

Charles S. Brooks(1)		6,950		10,002		—		—		—		—			16,952

Bruce Campbell		14,000		10,002		—		—		—		—			24,002

W.T. Daniels		29,350		10,002		—		—		—		—			39,352

Robin Haynes(2)		8,200		10,002		—		—		—		—			18,202

Jerald K. Jaynes(1)		7,925		10,002		—		—		—		—			17,927

Robert K. Leonard		22,700		10,002		—		—		—		—			32,702

Terry Leonard(1)		4,925		10,002		—		—		—		—			14,927

Samuel E. Lynch		16,400		10,002		—		—		—		—			26,402

Ronald E. Mayberry		10,400		10,002		—		—		—	$	176,816	(5)		197,218

John Tolsma		21,800		10,002		—		—		—		—			31,802

Charles H. Whitfield, Jr.		24,100		10,002		—		—		—		—			34,102


(1)		Retired from the Board on April 28, 2008 after reaching mandatory retirement age.

(2)		Resigned from the Board on September 4, 2008 to devote more time to her family business interest.

(3)		Non-employee directors, including employee director Mr. Mayberry, received 604 shares of restricted stock on January 14, 2008 for the $10,000 portion of their annual $15,000 retainer for 2008. All restrictions on these shares were released January 14, 2009.

(4)		The amounts in column captioned “Stock Awards” reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008 in accordance with FAS 123(R) for stock awards pursuant to the Company’s equity incentive plans. For a description of the assumptions used by the Company in valuing these awards please see “Note 13 — Stock Options” to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the SEC on March 13, 2009.

(5)		Includes his base salary of $172,000 and his 2007 bonus of $4,816, which was paid in February 2008.

Directors of the Company meet as a ~~registration statement under the Securities Act of 1933,~~board every month on a regular scheduled basis, or more often as ~~amended, as promptly as practicable after issuing the Shares~~needed, to address matters relating to the ~~United States Treasury. The United States Treasury may transfer the Shares to third parties at any time.~~

~~PROPOSAL 2 — ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING~~

The Company may ask its shareholders to vote on a proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the timeoperation and direction of the ~~adjournment or postponement~~Company.

Directors of the Company are also directors of the Bank. The Bank compensates members of its board of directors for all regular and special meetings. Directors of the Bank received $600 for each regular monthly and specially-called board meeting attended in 2008, plus payment of such fee for up to ~~approve~~two absences during a year. The Bank’s board of directors met eight times in 2008. Each Bank director also received, in 2008, an annual retainer fee of $15,000, of which $10,000 was available in the ~~amendment~~form of Restricted Stock Awards and $5,000 payable in equal quarterly cash amounts of $1,250. Members of the Executive Committee of the Bank’s board of directors also received $450 for each twice-monthly meeting of the Executive Committee attended, and Messrs. Martha Bachman and W.T. Daniels, the two permanent members of the Committee, received an annual retainer of $1,500. During 2008, members of the Company’s Audit Committee received $450 per each quarterly meeting and specially-called meetings, as well as an annual retainer fee of $1,500 paid in equal quarterly amounts. In addition, the Chairman of the Audit Committee received an annual retainer of $6,000. During 2008, members of the Company’s Compensation Committee received $300 per each meeting and specially-called meetings, as well as an annual retainer fee of $1,500 paid in equal quarterly amounts. In addition, the Chairman of the Compensation Committee received an annual retainer of $2,500. Compensation for all other committee meetings was $300 per meeting during 2008.

During 2008, pursuant to the ~~Company’s charter~~Original Plan, all directors could elect to ~~authorize~~defer receipt of a ~~class~~portion of ~~blank-check preferred stock. The Company does not currently intend to propose adjournment or postponement at~~their fees by entering into deferred fee agreements with the ~~Special Meeting if there are sufficient votes to approve the amendment~~Bank. In addition to the fee deferral, the agreements also provided for payment of benefits under certain events of disability, early retirement, termination of employment or death. The Bank is the beneficiary of life insurance acquired with respect to directors participating in the Original Plan. During 2006, the Company began using a formula which provides an annual earnings crediting rate based upon 75% of the Company’s ~~Charter. If~~return on average stockholders’ equity on balances in the ~~proposal to adjourn or postpone~~plan, until the ~~Special Meeting~~Director is separated from service, and, thereafter at an earnings crediting rate of 56.25% of the Company’s return on average stockholders’ equity for the ~~purpose~~year ending.

Security Ownership of soliciting additional proxies is submitted to the Company’s shareholders for approval at the Special Meeting, the approval requires that there be more votes in favor of the proposal to adjourn or postpone the Special Meeting than votes against the proposal to adjourn or postpone the Special Meeting.

The Company’s Board of Directors recommends that the Company’s shareholders vote “FOR” approval of the proposal to adjourn or postpone the Special Meeting, if necessary, to solicit additional proxies.Certain Beneficial Owners and Management

~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT~~

Persons and groups beneficially owning more than 5% of the ~~Company’s common stock~~Common Stock are required under federal securities laws to file certain reports with the ~~Securities and Exchange Commission (“SEC”)~~SEC detailing their ownership. The following table sets forth the amount and percentage of the ~~common stock~~Common Stock beneficially owned by any person or group of persons known to the Company to be a beneficial owner of more than 5% of the common stock as of the record date.

Name and Address of Amount and Nature of Percent of Common
Beneficial Owner Beneficial Ownership (a) Stock Outstanding
Scott M. Niswonger 942,155 (b) 7.25 %
P.O. Box 938
Greeneville, Tennessee 37744

Phil M. Bachman
Martha Bachman
881,670 (c) 6.78 %
100 N. Main Street
P.O. Box 1120
Greeneville, Tennessee 37743

Columbia Wanger Asset Management, LP
700,965 (d) 5.39 %
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606

Amount and Nature
Name and Address of of Beneficial Percent of Common
Beneficial Owner Ownership (a) Stock Outstanding

Scott M. Niswonger 1,198,164 (b) 9.14 %
P.O. Box 938
Greeneville, TN 37744

Phil M. Bachman 888,750 (c) 6.75 %
Martha Bachman
100 N. Main Street, P.O. Box 1120
Greeneville, Tennessee 37743

Columbia Wagner Assets Management, L.P. 707,452 (d) 5.39 %
227 West Monroe Street, Suite 3000
Chicago, IL 60606


(a)		For purposes of this table, an individual or entity is considered to “beneficially own” any share of ~~common stock~~Common Stock which he, she or it directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares: (1) voting power, which includes the power to vote, or to direct the voting of, such security; and/or (2) investment power, which includes the power to dispose, or to direct the disposition of, such security. In addition, an individual or entity is deemed to be the beneficial owner of any share of ~~common stock~~Common Stock of which he, she or it has the right to acquire voting or investment power within 60 days of the record date.

(b)		Based upon information set forth in a Schedule 13D/A, filed with the SEC on ~~July 16, 2008~~February 18, 2009 by Mr. Niswonger, who has sole voting and dispositive power with respect to ~~942,155~~1,198,164 shares.

(c)		Martha Bachman is a director and the wife of retired director Phil Bachman. Includes ~~196,799~~197,882 shares of common stock held directly or indirectly by Martha Bachman, ~~as to which Phil Bachman disclaims beneficial ownership, 666,871~~672,702 shares owned by Phil Bachman individually and ~~18,000~~18,166 shares owned by Mr. and Mrs. Bachman jointly.

(d)		Based solely ~~upon~~on the information contained in a Schedule 13G filed by Columbia ~~Wanger~~Wagner Asset Management, ~~LLP~~L.P. with the ~~Securities and Exchange Commission~~SEC on February 5, 2009, as of ~~June 30,~~December 31, 2008.

The following table sets forth, as of the record date, certain information known to the Company as to ~~common stock~~Common Stock beneficially owned by each director and ~~named executive officer~~Named Executive Officer of the Company and by all directors and executive officers of the Company as a group. The address for each of our directors and executive officers listed below is c/o Green Bankshares, Inc., 100 North Main Street, P.O. Box 1120, Greeneville, Tennessee ~~37744.~~37743. As of the record date, there were 13,176,681 shares of the Company’s stock outstanding.


										Number of Shares Beneficially Owned
	Amount and Nature												Shares					Percent of
	of			Shares Acquirable			Percent of			Common Shares			Acquirable					Common
	Beneficial Ownership			in			Common Stock			Beneficially			in					Stock
Name and Position	(a)(b)			60 Days (c)			Outstanding			Owned(a)(b)			60 Days (c)			Total		Outstanding
R. Stan Puckett, Chairman of the Board and Chief Executive Officer		119,125			68,400	(d)		1.44	%		121,634			61,200	(d)		182,834		1.38	%
Martha Bachman, Director		881,670	(e)		—			6.78	%		888,750	(e)(g)		—			888,750		6.75	%
Bruce Campbell, Director		5,985			—			*			6,096			—			6,096		*
W.T. Daniels, Director		10,304			—			*			12,098			—			12,098		*
Robert K. Leonard, Director		70,111	(f)		—			*
Samuel E. Lynch, Director		604			—			*
Bobby Leonard, Director											73,437	(f)(g)		—			73,437		*
Samuel Lynch, Director											2,021			—			2,021		*
John Tolsma, Director		2,006			—			*			3,941			—			3,941		*
Charles H. Whitfield, Jr., Director		7,303			—			*			8,797			—			8,797		*
Kenneth R. Vaught, Director, President and Chief Operating Officer											16,433			28,910			45,343		*
Ronald E. Mayberry, Director, Regional Executive, Sumner County		62,742			17,487			*			66,606			18,987			85,593		*
Kenneth R. Vaught, Director, President and Chief Operating Officer		16,190			22,910			*
James E. Adams, Executive Vice President, Chief Financial Officer and Assistant Secretary		5,173			1,800			*
James E. Adams, Executive Vice President, Chief Financial Officer and Secretary											5,545			3,000			8,545		*
William C. Adams, Senior Vice President and Chief Information Officer		20,777			17,497			*			30,679	(g)		17,284			47,963		*
Steve L. Droke, Senior Vice President and Chief Credit Officer		13,322			14,815			*			13,545			14,336			27,881		*

All directors and executive officers as a group (15 persons)		1,405,971			168,161			10.68	%		1,277,337			170,382			1,447,719		10.85	%

PROPOSAL 6 — Ratification of the Appointment of Independent Registered Public Accounting Firm

It is anticipated that the Audit Committee of the Company’s board of directors will appoint Dixon Hughes PLLC (“Dixon Hughes”) as the Company’s independent registered public accounting firm for 2009 at its next upcoming meeting, subject to ratification by a majority of the shares represented at the Annual Meeting. The decision of the Audit Committee will be based on a review of the qualifications, independence, past performance and quality controls of the auditor. The decision will take into account the proposed audit scope, staffing and approach, including coordination of the external auditor’s efforts with the Company’s outsourced internal audit function, as well as audit fees for the coming year. Dixon Hughes is considered to be well qualified.

In view of the difficulty and expense involved in changing auditors on short notice, should the shareholders not ratify the selection of Dixon Hughes, it is contemplated that the appointment of Dixon Hughes for the fiscal year ending December 31, 2009, will be permitted to stand unless the board of directors finds compelling reasons for making a change. Disapproval by the shareholders will be considered a recommendation that the board select other auditors for the following year. In order for the proposal to ratify the appointment of Dixon Hughes as the Company’s independent registered public accounting firm, the number of shares voted in favor of the proposal must exceed the number of shares voted against the proposal.

Representatives of Dixon Hughes are expected to be present at the Annual Meeting and will be given the opportunity to make a statement, if they desire, and to respond to appropriate questions.

During the years ended December 31, 2008 and December 31, 2007, the Company incurred (including those billed or expected to be billed) the following principal independent auditor fees from Dixon Hughes:

2008 2007

Audit Fees(a): $ 347,000 $ 379,000
Audit-Related Fees(b): 26,600 24,675
Tax Fees(c) 29,500 17,895
All Other Fees(d): — —


(a)		Includes fees related to the annual independent audit of the Company’s consolidated financial statements and reviews of the Company’s annual report on Form 10-K, review of the Company’s interim financial statements, issuance of consents, Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) attest services, Sarbanes-Oxley Section 404 attest services, review of registration statements and quarterly reports on Form 10-Q, report on management’s assertion regarding internal control over financial reporting.

(b)		Fees incurred were for (a) general accounting matters and related consultations and an employee benefit plan audit. The Audit Committee has considered whether the provision of these services is compatible with maintaining the independence of Dixon Hughes.

(c)		Fees incurred were for income tax return preparation and compliance services. The Audit Committee has considered whether the provision of these services is compatible with maintaining the independence of Dixon Hughes.

(d)		There were no additional fees billed to the Company by Dixon Hughes for 2008 and 2007.

The Audit Committee has adopted a formal policy concerning approval of audit and non-audit services to be provided by the Company’s independent auditor. The policy requires that all services provided by the independent auditor, including audit services and permitted audit-related and non-audit services, be pre-approved by the Audit Committee. The Audit Committee approved all audit and non-audit services provided by the Company’s independent auditor during 2008.

THE COMPANY’S BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED APPOINTMENT OF DIXON HUGHES AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM IS IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, HAS UNANIMOUSLY APPROVED ADOPTION OF THIS PROPOSAL AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE” FOR” THIS PROPOSAL.

Executive Officers of Green Bankshares, Inc.


Name	Age		Title
R. Stan Puckett		53	Chairman of the Board and Chief Executive Officer
Kenneth R. Vaught		44	President and Chief Operating Officer
James E. Adams		64	Executive Vice President, Chief Financial Officer and Secretary
Steve L. Droke		59	Senior Vice President and Chief Credit Officer
William C. Adams, Jr.		53	Senior Vice President and Chief Information Officer
Steve D. Ottinger		59	Senior Vice President and Chief Human Resources Officer
G. Frank Snyder		49	Senior Vice President and Retail Banking Manager

R. Stan Puckettcurrently serves as Chief Executive Officer of the Company and the Bank and has held that position since 1990. He also is currently Chairman of the board of directors. He has served as Chief Executive Officer of GreenBank since February 1989. He is a graduate of Bristol University with a degree in business administration. He served as President of First American National Bank of Johnson City, Tennessee from December 1987 to February 1989 and as its Vice President from June 1986 to December 1987. He was Assistant Vice President of First Union National Bank in Asheville, North Carolina from September 1983 to June 1986 and served as commercial loan officer of Signet Bank in Bristol, Virginia from September 1977 to June 1983.

Kenneth R. Vaughtcurrently serves as President and Chief Operating Officer of the Company and the Bank and has held these positions since June 2002. He also was elected to the Company’s board of directors on that date. Previously, he served as Senior Vice-President and Regional Executive for the Bank’s Blount and Knox County, Tennessee offices. Prior to joining the Company, Mr. Vaught began his banking career in 1987 as a Management Trainee with Hamilton Bank (SunTrust affiliate) in Johnson City, Tennessee. He later joined First Tennessee Bank in 1989 as a Commercial Loan Officer. In 1991, he was promoted to Vice President and transferred to First Tennessee Bank, Maryville, Tennessee. He left First Tennessee Bank in 1998 as Senior Vice President and Commercial Banking Manager to join what was then Greene County Bank. He is a graduate of East Tennessee State University with a degree in Finance.

James E. Adamsjoined the Company in December 2005 and assumed the role of Senior Vice President, Chief Financial Officer and Assistant Secretary. He was promoted to Executive Vice President in 2007. Prior to the Company, Mr. Adams served as Executive Vice President and Chief Financial Officer of Rurban Financial Corporation from 2003 to 2005. Prior to that, he was retired after having served as Executive Vice President and Chief Financial Officer of Integra Bank Corporation from 1999 through 2002; and Executive Vice President and Chief Financial Officer of MainStreet Financial Corporation from 1994 to 1999. He has held executive management positions at several multi-billion dollar bank holding companies, which have subsequently been acquired, since 1978. Mr. Adams began his career in 1970 as a Certified Public Accountant upon graduation from Michigan State University and subsequently began his banking career in 1974. He has co-authored two books used throughout the financial services industry and was appointed to serve a three year term on the Finance and Accounting Commission of the Bank Administration Institute in the mid 80’s.

Steve L. Drokehas served as Senior Vice President and Chief Credit Officer of the Bank since July 1997, with responsibilities for risk management including Credit Policy development and implementation and oversight of Compliance and Loan Operations. Prior to joining the Bank, he was Senior Vice President and Senior Credit Officer with First American Corporation. His 32-year banking career includes a varied background in bank management, risk management, and lending. Mr. Droke is a graduate of East Tennessee State University with a B.S. in Finance, the Graduate School of Retail Bank Management at the University of Virginia, and the Graduate School of Commercial Bank Lending at the University of Oklahoma. He is a member of Tennessee Bankers Association.

William C. Adams, Jr.has served as Senior Vice President and Chief Information Officer of the Bank since 1998, with responsibilities for oversight of the information technology and operations functions. Prior to joining the Bank he served as CEO of Premier Bank of East Tennessee from 1991 to 1998. Prior to that he was Senior Regional Lender for First American Bank (subsequently Regions Bank) in Maryville, Tennessee and Commercial Lender for Third National Bank (subsequently SunTrust) in Nashville, Tennessee. Early in his 28 year banking career he served as Installations Coordinator for a major national financial services software provider, where he oversaw or participated in over 50 community bank software installations and conversions nationwide. He is a graduate of the University of Tennessee.

Steve D. Ottingerjoined the Bank in October of 1975. He currently serves as Senior Vice President and Chief Human Resources Officer, with responsibilities for training, certain areas of risk management and compliance, customer privacy, and customer information security. Prior to joining the bank, Mr. Ottinger spent five years in city government as Director of Parks and Recreation for the town of Greeneville, Tennessee. His experience includes both retail banking and operations. Throughout his career he has been very involved in community activities having served in leadership capacities in many non-profit organizations and that continues. He is a member of the Society for Human Resource Management, a graduate of The Tennessee School of Banking, and holds a Bachelor’s of Business Administration with an emphasis in Human Resources from East Tennessee State University.

G. Frank Snyderjoined the Bank in 1995 and currently serves as Senior Vice President and Retail Banking Manager. Prior to be appointed to his current position, he had served in various capacities of increasing responsibility including loan officer, branch manager, electronic banking manager and regional executive. Before entering the financial services industry, Frank served for 10 years in the not-for-profit industry in leadership capacities with the United Way and the YMCA organizations. He is a graduate of the University of Tennessee with a degree in education.

FUTURE SHAREHOLDER PROPOSALS

If a shareholder wishes to have a proposal included in the Company’s proxy statement for the Company’s ~~2009~~2010 Annual Meeting of Shareholders, that proposal must be received by the Company at its executive offices in Greeneville, Tennessee by ~~December 4, 2008.~~November 25, 2009. If a shareholder wishes to present a proposal at the Company’s ~~2009~~2010 annual meeting of shareholders and the proposal is not intended to be included in the Company’s proxy statement relating to that meeting, the shareholder must give advance notice to the Company prior to the deadline for such meeting determined in accordance with the Company’s Amended and Restated Charter (the “Charter Deadline”). Under the Company’s Amended and Restated Charter, in order to be deemed properly presented, notice must be delivered to the Company’s Secretary at the Company’s principal executive offices no less than forty (40) nor more than sixty (60) days prior to the scheduled date of the meeting at which such matter is to be acted upon; provided, however, that if notice or public disclosure of such meeting is given fewer than fifty (50) days before the meeting, notice by the shareholder must be delivered to the Company not later than the close of business on the tenth (10th) day following the day on which notice of the meeting was mailed to shareholders. If a shareholder gives notice of such a proposal after the Charter Deadline, the shareholder will not be permitted to present the proposal to the shareholders for a vote at the meeting.

The SEC rules also establish a different deadline for submission of shareholder proposals that are not intended to be included in the Company’s proxy statement with respect to discretionary voting (the “Discretionary Voting Deadline”). This deadline for the ~~2009~~2010 annual meeting of shareholders is February ~~17, 2009.~~8, 2010. If a shareholder gives notice of a proposal after this deadline, the persons named as proxies in the proxy statement for the ~~2009~~2010 annual meeting will be allowed to use their discretionary voting authority to vote against the shareholder proposal when, and if, the proposal is raised at the ~~2009~~2010 annual meeting. Because the Charter Deadline is not capable of being determined until the Company gives notice of, or publicly announces, the date for the ~~2009~~2010 annual meeting of shareholders, it is possible that the Charter Deadline may occur after the Discretionary Voting Deadline, in which case a proposal received after the Discretionary Voting Deadline but before the Charter Deadline would be eligible to be presented at the ~~2009~~2010 annual meeting of shareholders and the Company believes that the persons named as proxies in the proxy statement would be allowed to use the discretionary authority granted by the proxy card to vote against the proposal at the meeting without including any disclosures of the proposal in the proxy statement relating to the meeting.

The Company has not been notified by any shareholder of his or her intent to present a shareholder proposal from the floor at the Annual Meeting. The enclosed proxy card grants proxy holders discretionary authority to vote on any matter properly brought before the Annual Meeting, including any shareholder proposals received between the date of this proxy statement and the Charter Deadline for the Annual Meeting, which is April 4, 2009.

Shareholder proposals should be addressed to Secretary, Green Bankshares, Inc., 100 North Main Street, P.O. Box 1120, Greeneville, Tennessee 37743 and must comply with the provisions of the Company’s Amended and Restated Charter. Nothing in this paragraph shall be deemed to require the Company to include in its proxy statement and form of proxy relating to the Company’s ~~2009~~2010 Annual Meeting of Shareholders any shareholder proposal that does not satisfy the requirements for inclusion as established by the SEC at the time of receipt.

~~INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE~~

The Company files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document the Company files at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The Company’s SEC filings are also available to the public at the SEC’s website at http://www.sec.gov.

The Company has elected to “incorporate by reference” certain information into this proxy statement. By incorporating by reference, the Company can disclose important information to you by referring you to another document the Company has filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for information incorporated by reference that is superseded by information contained in this proxy statement or any document the Company subsequently files with the SEC that is incorporated or deemed to be incorporated by reference into this proxy statement. Likewise, any statement in this proxy statement or any document which is incorporated or deemed to be incorporated by reference herein will be deemed to have been modified or superseded to the extent that any statement contained in any document that the Company subsequently files with the SEC that is incorporated or deemed to be incorporated by reference herein modifies or supersedes that statement. The following financial statements and other portions of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as filed with the SEC on March 14, 2008 (the “Form 10-K”), and the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008, as filed with the SEC on November 6, 2008 (the “Form 10-Q”) are incorporated by reference herein:

	•		~~The audited consolidated financial statements and notes thereto as of and for the fiscal year ended December 31, 2007 appearing in Part II, Item 8 of the Form 10-K;~~

	•		~~The unaudited consolidated financial statements and notes thereto as of and for the three and nine months ended September 30, 2008 appearing in Part I, Item 1 of the Form 10-Q;~~

	•		~~Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Part II, Item 7 of the Form 10-K and Part I, Item 2 of the Form 10-Q;~~

	•		~~Quantitative and Qualitative Disclosures About Market Risk appearing in Part II, Item 7A of the Form 10-K and Part I, Item 3 of the Form 10-Q; and~~

	•		~~Changes in and Disagreements with Accountants appearing in Part II, Item 9 of the Form 10-K.~~

Those portions of any future filings containing the information similar to that described in the bullet points above that the Company makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, after the date of this proxy statement and prior to the date of the Special Meeting are incorporated by reference herein. The Company shall provide a copy of the Annual Report on Form 10-K or Quarterly Reports on Form 10-Q without charge to persons who were shareholders as of the record date upon written request to the Secretary, Green Bankshares, Inc., 100 North Main Street, P.O. Box 1120, Greeneville, Tennessee 37744 or by calling (423) 639-5111.

OTHER MATTERS

A representative of Dixon Hughes PLLC, the Company’s independent registered public accounting firm, is expected to be present at the Special Meeting and will be given the opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions.

As of the date of this document, the Company’s board of directors is not aware of any matters that will be presented for consideration at the Company’s ~~Special~~Annual Meeting. If any other matters come before either of the meetings or any adjournments or postponements of the meeting and are voted upon, the enclosed proxy will confer discretionary authority on the individuals named as proxies to vote the shares represented by the proxy as to any other matters. The individuals named as proxies intend to vote in accordance with their best judgment as to any other matters.

The Company’s 2008 Annual Report to Shareholders (the “Annual Report”), including financial statements, is being mailed with this Proxy Statement to all persons who were shareholders of record as of the close of business on the record date. Any shareholder who does not receive a copy of the Annual Report may obtain a copy by writing to the Secretary of the Company. The Annual Report is not to be treated as a part of this proxy solicitation material or as having been incorporated herein by reference.


	BY ORDER OF THE BOARD OF DIRECTORS
	/s/ James E. Adams
	James E. Adams
	Corporate Secretary

Greeneville, Tennessee
~~November 20,~~March 25, 2009

ANNUAL REPORT ON FORM 10-K

A copy of the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2008,

as filed with the Securities and Exchange Commission will be furnished without charge to persons who were shareholders as of the record date upon written request to the Secretary, Green Bankshares, Inc., 100 North Main Street, P.O. Box 1120, Greeneville, Tennessee 37743 or by calling (423) 639-5111.

~~Appendix A~~

~~ARTICLES OF AMENDMENT~~
~~TO THE CHARTER~~
OF
~~GREEN BANKSHARES, INC.~~

In accordance with the provisions of Section 48-20-106 of the Tennessee Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment (the “Articles of Amendment”) to its Charter (the “Charter”):

~~1. Name of Corporation. The name of the Corporation is Green Bankshares, Inc.~~

~~2. Article 6 of the Charter is hereby deleted in its entirety and replaced with the following:~~

~~“6. The maximum number of shares which the Corporation shall have the authority to issue is:~~

b) Twenty million (20,000,000) shares of Common Stock, with a par value of Two Dollars ($2.00) per share. Each share of Common Stock shall be entitled to one vote. No holder of any Common Stock of the Corporation, now or hereafter authorized, shall have any right, as such holder, to purchase, subscribe for or otherwise acquire any shares of stock of the Corporation, or any securities or obligations convertible into, or exchangeable for, or any right, warrant or option to purchase, any shares of any class which the Corporation may at any time hereafter issue or sell, whether now or hereafter authorized, but any and all such stock, securities, obligations, rights, warrants or options may be issued and disposed of by the Board of Directors to such persons, firms or corporations, and for such lawful consideration and on such terms as the Board of Directors in its discretion may, from time to time, determine, without first offering the same to the shareholders of the Corporation.

c) One million (1,000,000) shares of preferred stock, no par value per share. The preferred stock may be issued by the Corporation from time to time in one or more series and in such amounts as may be determined by the Board of Directors. The designations, voting rights, amounts of preference upon distribution of assets, rates of dividends, premiums of redemption, conversion rights and other variations, if any, the qualifications, limitations or restrictions thereof, if any, of the preferred stock, and of each series thereof, shall be such as are fixed by the Board of Directors, authority so to do being hereby expressly granted, and as are stated and expressed in a resolution or resolutions adopted by the Board of Directors providing for the issue of such series of preferred stock.”

~~3. Except as amended by these Articles of Amendment, the Charter of the Corporation shall remain in full force and effect.~~

~~4. Adoption. These Articles of Amendment were duly adopted by the Board of Directors on October 28, 2008, and by the shareholders of the Corporation on _________, 2008.~~

~~5. Effective Date. These Articles of Amendment will be effective when filed with the Secretary of State.~~

~~Date: ___, 2008~~


	~~GREEN BANKSHARES, INC.~~

	~~Name:~~	~~James E. Adams~~
	~~Title:~~	~~Executive Vice President, Chief Financial Officer and Secretary~~

Form of Proxy

TO VOTE BY MAIL

To vote by mail, complete both sides, sign and date the proxy card below. Detach the card below and return it in the envelope provided.

TO VOTE BY INTERNET

Your Internet vote is quick, confidential and your vote is immediately submitted. Just follow these easy steps:

	1.		Read the accompanying Proxy Statement.

	2.		Visit our Internet voting site at ~~http:/~~www.illinoisstocktrnasfer.com, click on the ~~heading~~ “Internet Voting” tab and ~~follow the instructions on the screen.~~

	3.		~~When prompted for~~enter your Voter Control Number ~~enter~~and the ~~number~~last four digits of your Tax Identification Number that is associated with the account you are voting in the designated fields. Your Voter Control Number is printed ~~just above your name~~ on the front of ~~the proxy~~this card.

Please note that all votes cast by Internet must becompletedandsubmittedprior to Wednesday, ~~December 17, 2008~~April 22, 2009 at 11:59 p.m. Central Time.

Your Internet vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned the proxy card.

This is a “secured” web page site. Your software and/or Internet provider must be “enabled” to access this site. Please call your software or Internet provider for further information if needed.

If you vote By Internet, Please Do Not Return Your Proxy Card By Mail

TO VOTE BY TELEPHONE

Your telephone vote is quick, confidential and immediate. Just follow these easy steps:

	1.		Read the accompanying Proxy Statement.

	2.		Using a Touch-Tone telephone, call Toll Free 1-800-555-8140 and follow the instructions.

When asked for your Voter Control Number, enter the number printed just above your name on the front of the proxy card.

You will also be asked to enter the last four digits of your Tax Identification Number that is associated with the account you are voting.

Please note that all votes cast by Internet must becompletedandsubmittedprior to Wednesday, ~~December 17, 2008~~April 22, 2009 at 11:59 p.m. Central Time.

Your telephone vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned the proxy card.

If you vote By Telephone, Please Do Not Return Your Proxy Card By Mail

The undersigned hereby acknowledges receipt of a copy of the accompanying Notice of Annual Meeting of the Shareholders and Proxy Statement and the Annual Report to Shareholders for the fiscal year ended December 31, 2008, and hereby revokes any proxy heretofore given.This proxy may be revoked at any time before its exercise.

~~Date: __________________~~

~~Signature: _________________~~

~~Signature: __________________~~
Date:
Signature:
Signature:

Please mark, date and sign as your name appears herein and return in the enclosed envelope.If acting as executor, administrator, trustee, guardian, etc. you should so indicate when signing. If the signor is a corporation, please sign the full name by duly appointed officer. If a partnership, please sign in partnership name by authorized person. If shares are held jointly, each shareholder named should sign.

o
oPreliminary Proxy Statement
o
oConfidential, for Use of the Commission Only (as permitted by Rule ~~14a-6(e)~~14a-6(e)(2))
þ
xDefinitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12


2007
			Amounts
			Accrued under						Health and Life
	Directors Fees Paid		Non-Compete		Company 401(k)		Company Car		Insurance Paid
Name	or Earned		Agreement		Contribution		Allowance		by the Company		Country Club Dues
R. Stan Puckett	$	17,800	$	88,983	$	13,500		—	$	3,216	$	8,074
Kenneth R. Vaught	$	17,800	$	62,379	$	13,500		—	$	1,525	$	2,966
James E. Adams		—		—	$	11,593	$	9,375		—	$	2,867
Steve L. Droke		—		—	$	9,590		—	$	4,637	$	2,867
William C. Adams		—		—	$	9,033		—		—	$	2,867


	Pro Forma Condensed Consolidated Balance Sheet Data
			Pro Forma
			September 30, 2008
	Actual
	September 30, 2008		Minimum TARP		Maximum TARP
	(in thousands)
ASSETS
Cash and due from banks	$	46,168	$	46,168	$	46,168
Securities and short term investments¹		365,432		389,532		437,732
Loans, net of unearned income		2,323,076		2,323,076		2,323,076
Other assets		277,365		277,365		277,365

Total assets	$	3,012,041	$	3,036,141	$	3,084,341


LIABILITIES AND EQUITY
Liabilities
Deposits	$	2,276,198	$	2,276,198	$	2,276,198
Borrowings		383,910		383,910		383,910
Other liabilities		25,451		25,451		25,451

Total liabilities		2,685,559		2,685,559		2,685,559

Shareholders’ Equity
Preferred stock¹		—		22,392		67,169
Warrants¹		—		1,708		5,131
Common stock		25,998		25,998		25,998
Retained earnings		114,742		114,742		114,742
Additional paid in capital		185,631		185,631		185,631
Accumulated comprehensive income		111		111		111

Total shareholders’ equity		326,482		350,582		398,782

Total liabilities and shareholders’ equity	$	3,012,041	$	3,036,141	$	3,084,341


				Pro Forma Capital Ratios
	Capital Ratios			September 30, 2008
	Actual
	September 30, 2008			Minimum TARP			Maximum TARP
Tier 1 leverage ratio		9.03	%		9.63	%		11.28	%
Tier 1 risk-based capital		10.34	%		11.64	%		13.63	%
Total risk-based capital		11.89	%		12.89	%		14.88	%
Equity to assets ratio		10.84	%		11.55	%		12.93	%
Tangible equity to tangible assets ratio¹		5.97	%		6.75	%		8.29	%





	(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):

	•		~~approve an amendment~~elect three persons to serve as directors of the ~~Company’s Charter~~Company, each for a three-year term, those persons to ~~authorize a class~~serve until the end of ~~blank check preferred stock, consisting of one million (1,000,000) authorized shares, which may be issued in one or more series, with such rights, preferences, privileges~~their respective terms and ~~restrictions as shall be fixed by the Company’s Board of Directors;~~until their respective successors are duly elected and qualified;

	•		consider and vote ~~on any~~upon a shareholder proposal regarding majority election of directors;

	•		consider and vote upon a shareholder proposal regarding annual election of directors;

	•		consider and vote upon a proposal to ~~adjourn or postpone~~ratify the ~~Special Meeting, if necessary or appropriate, to solicit additional proxies in favor~~use of the ~~proposal to amend~~performance measures in the Company’s ~~Charter to authorize~~Amended and Restated 2004 Long-Term Incentive Plan;

	•		consider and vote upon a ~~class of blank-check preferred stock if there are insufficient votes at the time of such adjournment or postponement~~proposal to approve the ~~amendment~~Company’s executive compensation program and procedures in accordance with recently enacted “say on pay” regulations of the American Recovery and Reinvestment Act of 2009;

	•		consider and vote upon a proposal to ratify the appointment of Dixon Hughes PLLC as the Company’s ~~Charter;~~independent registered public accounting firm for 2009; and

	•		to transact such other business as may properly come before the ~~Special~~Annual Meeting or any adjournments thereof.

	•		~~ensure that~~reviewing the Company’s employee compensation plans;

	•		identifying the features of the Company’s named executive officers’ (as defined below) incentive compensation ~~programs for its senior~~arrangements that could lead the named executive officers ~~do not encourage~~to take unnecessary and excessive risks that could threaten the value of the Company;

	•		~~implement~~reviewing with the Company’s senior risk officers incentive compensation arrangements with the named executive officers to ensure that the named executive officers are not encouraged to take unnecessary and excessive risks;


(4)		The amounts shown as “All Other Compensation” for 2008, 2007 and 2006 include the following:


Name and Address of	Amount and Nature of			Percent of Common
Beneficial Owner	Beneficial Ownership (a)			Stock Outstanding
Scott M. Niswonger		942,155	(b)		7.25	%
P.O. Box 938 Greeneville, Tennessee 37744

Phil M. Bachman Martha Bachman		881,670	(c)		6.78	%
100 N. Main Street P.O. Box 1120 Greeneville, Tennessee 37743

Columbia Wanger Asset Management, LP		700,965	(d)		5.39	%
227 West Monroe Street, Suite 3000 Chicago, Illinois 60606


	Amount and Nature
Name and Address of	of Beneficial			Percent of Common
Beneficial Owner	Ownership (a)			Stock Outstanding

Scott M. Niswonger		1,198,164	(b)		9.14	%
P.O. Box 938 Greeneville, TN 37744

Phil M. Bachman		888,750	(c)		6.75	%
Martha Bachman 100 N. Main Street, P.O. Box 1120 Greeneville, Tennessee 37743

Columbia Wagner Assets Management, L.P.		707,452	(d)		5.39	%
227 West Monroe Street, Suite 3000 Chicago, IL 60606


*		Less than 1% of the outstanding Common Stock.

(a)		For the definition of ~~“beneficial ownership,~~“beneficially owned,” see Note (a) to the preceding table.

(b)		Includes shares owned directly by directors and executive officers of the Company as well as shares held by their spouses and children, ~~trusts~~trust of which certain directors are trustees and corporations in which certain directors own a controlling interest.

(c)		Represents options to purchase ~~common stock~~Common Stock which are exercisable within 60 days of the record date.

(d)		Includes options to acquire ~~54,000~~45,000 shares of ~~common stock~~Common Stock currently exercisable (or exercisable within 60 days of the record date) by Mr. Puckett at an exercise price equal to 150% of the book value of the ~~common stock~~Common Stock at the date of grant (a weighted average price of approximately ~~$15.16~~$15.75 per share) and options to acquire ~~14,400~~16,200 shares of ~~common stock~~Common Stock currently exercisable (or exercisable within 60 days of the record date) by Mr. Puckett at an exercise price equal to the fair market value at the date of grant (a weighted average price of approximately ~~$29.61~~$28.42 per share).

(e)		Martha Bachman is a director and the wife of retired director Phil Bachman. Includes ~~196,799~~197,882 shares of common stock held directly or indirectly by Martha Bachman, ~~as to which Phil Bachman disclaims beneficial ownership, 666,871~~672,702 shares owned by Phil Bachman individually and ~~18,000~~18,166 shares owned by Mr. and Mrs. Bachman jointly.

(f)		Includes ~~40,820 shares~~41,197shares of common stock in a limited partnership of which ~~Robert~~Mr. Leonard is a limited partner. Mr. Leonard disclaims beneficial ownership of ~~33,881~~32,216 of these shares. Also includes 504 shares of common stock in a limited liability company that Mr. Leonard has an interest in. Mr. Leonard disclaims beneficial ownership of 363 of these shares.

(g)		As of March 12. 2009, the following individuals have pledged the following amounts of their common shares beneficially owned to secure lines of credits or other indebtedness: Martha Bachman and retired director Phil Bachman — 320,687 shares; Robert Leonard — 15,000 shares held in a limited liability partnership; and William C. Adams — 5,000 shares.


	2008		2007

Audit Fees(a):	$	347,000	$	379,000
Audit-Related Fees(b):		26,600		24,675
Tax Fees(c)		29,500		17,895
All Other Fees(d):		—		—

For terms to expire in 2012

WITHHOLD
AUTHORITY

01Martha Bachman

02W.T. Daniels

03Charles H. Whitfild, Jr.