<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[_] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CENTURY SOUTHBANKS
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF CENTURYSOUTHBANKS, INC. APPEARS HERE]
April 8, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Century South Banks, Inc. ("CSBI") which will be held at 10:00 a.m., Atlanta,
Georgia time, Wednesday, May 13, 1998, at Buckhead Club, Justus Martin Room,
Atlanta Financial Center, 3343 Peachtree Road, NE, East Tower, Suite 1800
Atlanta, Georgia 30326. The enclosed Notice of Annual Meeting and Proxy
Statement contain details regarding the business to come before the Shareholders
at the Annual Meeting. Please sign and return your proxy in the enclosed
envelope at your earliest convenience to assure that your shares will be
represented and voted at the Annual Meeting even if you cannot attend. If you
do attend and wish to vote in person, you may cancel the proxy at the meeting.
It is important that you complete and mail your proxy as soon as possible.
Matters which will be discussed at the Annual Meeting include proposals to
(i) establish the number of members of the Board of Directors at 11, (ii) elect
11 regular directors to serve for the ensuing year, (iii) approve the adoption
of the 1998 Executive Stock Plan; (iv) approve a amendment to the Articles of
Incorporation of CSBI in order to increase the number of authorized number of
shares of common stock 15,000,000 shares to 30,000,000 shares; and (v) ratify
the appointment of KPMG Peat Marwick LLP as independent certified public
accountants of CSBI for calendar year 1998.
The Board of Directors at present knows of no other business to be
presented at the Annual Meeting. If other matters properly come before the
Annual Meeting, the persons named in the proxy will have discretionary authority
to vote proxies with respect to such matters in accordance with the
recommendations of the Board of Directors of CSBI. If you should have questions
concerning the Annual Meeting of CSBI, please feel free to call me.
For the Board of Directors,
Susan J. Anderson, Senior Vice
President Secretary-Treasurer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1998
TO THE HOLDERS OF COMMON STOCK OF CENTURY SOUTH BANKS, INC.
The Annual Meeting of Shareholders of Century South Banks, Inc. ("CSBI")
will be held at Buckhead Club, Justus Martin Room, Atlanta Financial Center,
3343 Peachtree Road, NE, East Tower, Suite 1800 Atlanta, Georgia 30326 on
Wednesday, May 13, 1998 at 10:00 a.m., Atlanta, Georgia time, for the following
purposes:
1. To vote on a proposal to establish the number of members of the Board
of Directors at 11;
2. To vote on a proposal to elect 11 directors to serve for the ensuing
year;
3. To vote on a proposal to approval the Century South Banks, Inc. 1998
Executive Stock Plan;
4. To vote on a proposal to amend the Articles of Incorporation of CSBI
to increase the authorized number of shares of common stock of CSBI
from 15,000,000 shares to 30,000,000 shares;
5. To vote on a proposal to ratify the appointment of KPMG Peat Marwick
LLP to serve as independent certified public accountants of CSBI for
the 1998 calendar year;
6. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Management at present knows of no other business to be presented at the
meeting. If other matters properly come before the meeting, the persons named
in the proxy will have discretionary authority to vote proxies with respect to
such matters in accordance with the recommendation of the Board of Directors.
Shareholders of record at the close of business on March 24, 1998 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
Century South Banks, Inc.
Susan J. Anderson, Senior Vice President
Secretary-Treasurer
Dahlonega, Georgia
April 8, 1998
YOU ARE URGED TO VOTE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED AS
SOON AS POSSIBLE, EVEN IF YOU DO PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE
MEETING, YOU MAY, IF YOU SO DESIRE, REVOKE THE PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE>
[CENTURY SOUTHBANKS LOGO APPEARS HERE]
POST OFFICE BOX 1000
DAHLONEGA, GEORGIA 30533
PROXY STATEMENT
This Proxy Statement is furnished to the Shareholders of Century South
Banks, Inc. ("CSBI") in connection with the solicitation of proxies for the
purposes stated herein by CSBI's Board of Directors for use at the Annual
Meeting of Shareholders to be held at the Buckhead Club, Justus Martin Room,
Atlanta Financial Center, 3343 Peachtree Road, NE, East Tower, Suite 1800
Atlanta, Georgia 30326, on Wednesday, May 13, 1998 at 10:00 a.m. Atlanta,
Georgia time, or any adjournments thereof. The approximate date of the mailing
of this Proxy Statement and the accompanying proxy to the Shareholders is April
8, 1998. The cost of this solicitation of proxies will be borne by CSBI.
The Board of Directors encourages the personal attendance of Shareholders
at the Annual Meeting, and the giving of the proxy does not preclude the right
to vote in person should the person giving the proxy so desire. The person
giving the proxy has the power to revoke the proxy at any time before the proxy
is exercised. The proxy may be revoked by attending the Annual Meeting and
voting in person, or by filing a subsequent proxy with the secretary of CSBI
prior to or at the time of the Annual Meeting.
The close of business on March 24, 1998 has been fixed as the record date
for the determination of Shareholders of CSBI entitled to vote at the Annual
Meeting. At the close of business on that date, CSBI had issued and outstanding
10,883,013 shares of common stock, $1.00 par value per share, which were held of
record by 2,733 Shareholders. Each share of the common stock of CSBI is
entitled to one vote on all matters to be voted upon. The affirmative vote of a
majority of the outstanding shares of common stock shall be required as to the
election of directors and as to the proposed amendment to the Articles of
Incorporation. The affirmative vote of a majority of the shares represented and
entitled to vote at the Annual Meeting shall constitute the affirmative act of
the Shareholders regarding all other matters to be voted on at the Annual
Meeting as set forth in this Proxy Statement.
The following matters will be voted upon at the Annual Meeting:
ITEM NUMBER 1 - ESTABLISHING THE NUMBER OF MEMBERS OF THE BOARD OF DIRECTORS.
The By-laws of CSBI provide that the number of members of the Board of
Directors shall be not less than five nor more than 25. The Board of Directors
recommends that the number of members of the Board of Directors be established
at 11. If a Shareholder specifies a choice on the proxy, the shares represented
by the proxy will be voted as specified. If no specification is made, the
shares represented by the proxy will be voted "FOR" approval of Item Number 1.
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF ITEM NUMBER 1 IN ORDER TO ESTABLISH THE NUMBER OF MEMBERS OF THE
BOARD OF DIRECTORS AT 11.
<PAGE>
ITEM NUMBER 2 - ELECTION OF DIRECTORS
The persons listed below have been nominated for election to the Board of
Directors of CSBI. Each of the nominees is currently serving as directors of
CSBI until the 1998 Annual Meeting of the Shareholders. The name, age, principal
occupation and employment for the past five years of each of the director
nominees of CSBI are as follows:
Regular Directors
- -----------------
- --------------------------------------------------------------------------------
WILLIAM H. ANDERSON, II
Director since 1997
Age 59
Mr. Anderson has been the Chairman of CSBI since December 16, 1997. Mr.
Anderson is also the Chairman of Southern Trust Insurance Company, Macon,
Georgia.
- --------------------------------------------------------------------------------
JAMES R. BALKCOM, JR.
Director since 1997
Age 53
Mr. Balkcom has been Chairman of PAMECO Corp., a distributor of heating,
ventilation and air conditioning equipment and parts, located in Norcross,
Georgia since February, 1996. Mr. Balkcom served as Chairman and President of
Techsonic Industries, Inc. from 1977 through 1995.
- --------------------------------------------------------------------------------
WILLIAM L. CHANDLER
Director since 1996
Age 75
Mr. Chandler is owner of Chandler Farm, and is President of Chandler-Stovall, a
real estate investment and management company in Danielsville, Georgia.
- -------------------------------------------------------------------------------
JOSEPH W. EVANS
Director since 1997
Age 48
Mr. Evans has been the President, Chief Operating Officer and Chief Financial
Officer of CSBI since December 16, 1997. Mr. Evans was the President and Chief
Operating Officer of Bank Corporation of Georgia prior to its merger into CSBI
in December 1997.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
JAMES A. FAULKNER
Director since 1981
Age 53
Mr. Faulkner has been the Chief Executive Officer of CSBI since December 1997.
Prior to December 1997, Mr. Faulkner was President and Chief Executive Officer
of CSBI.
- -------------------------------------------------------------------------------
THOMAS T. FOLGER, JR.
Director since 1981
Age 63
Mr. Folger is a partner in Folger Poultry Farms.
- --------------------------------------------------------------------------------
QUILL O. HEALEY
Director since 1997
Age 58
Mr. Healey is the Chairman and Chief Executive Officer of Sedgwick, Inc.
Atlanta, Ga.
- --------------------------------------------------------------------------------
J. RUSSELL IVIE
Director since 1981
Age 62
Mr. Ivie is the Vice Chairman of the Board of CSBI.
- -------------------------------------------------------------------------------
FRANK C. JONES
Director since 1997
Age 62
Mr. Jones is a partner in the law firm of King & Spalding, Atlanta, Georgia.
- -------------------------------------------------------------------------------
JOHN B. MCKIBBON, III
Director since 1997
Age 42
Mr. McKibbon is the Chief Executive Officer of McKibbon Brothers, Inc., a hotel
development and management company with holdings in six southeastern states.
Mr. McKibbon is also a director of HCI Communications, Inc. and Applied
Innovations, Inc.
- -------------------------------------------------------------------------------
3
<PAGE>
- -------------------------------------------------------------------------------
E. PAUL STRINGER
Director since 1981
Age 66
Mr. Stringer is owner and operator of Stringer Insurance Agency.
- -------------------------------------------------------------------------------
All nominees for director have been engaged in their respective principal
occupations and associated with their respective employers for the past five
years except as otherwise disclosed. The business locations for all nominees
for director are in Dahlonega, Georgia, unless otherwise noted above.
There are no family relationships among the nominees for director or
between any nominee and any executive officer.
If a Shareholder specifies a choice on the proxy, the shares represented by
the proxy will be voted for the nominees as specified. If no specification is
made and the power to vote the shares is not withheld, the shares represented by
the proxy will be voted "FOR" each nominee for and director named on the proxy.
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF ITEM NUMBER 2 IN ORDER TO ELECT THE SLATE OF 11 DIRECTORS.
Board Committees and Meetings
- -----------------------------
The Board of Directors of CSBI held 14 meetings during the year ended
December 31, 1997. All of the directors attended at least 75% of the aggregate
of such meetings.
Certain information regarding the functions of the various committees of
the Board of Directors of CSBI and their present membership is presented below.
The Audit Committee annually reviews and recommends to the Board of
Directors the firm to be engaged as independent certified public accountants of
CSBI for the next calendar year, reviews the plan and results of the audit
engagement with the independent certified public accountants, inquires as to the
adequacy of CSBI's internal control structure, and considers each professional
service provided by the independent certified public accountants, and whether
the providing of such service impairs the independence of the accountants. The
members of the Audit Committee are: Frank C. Jones, Chairman; William L.
Chandler; John B. McKibbon, III and E. Paul Stringer. The Audit Committee met
three times during 1997.
The Nominating Committee nominates individuals to serve as members of the Board
of Directors. The present members of the Nominating Committee are: William L.
Chandler, James A. Faulkner and Thomas T. Folger, Jr. The Nominating Committee
met one time during 1997.
4
<PAGE>
The Personnel and Compensation Committee ("Compensation Committee") periodically
reviews the compensation and other benefits provided to personnel of CSBI and
advises the Board of Directors with respect to such compensation. The members
of the Compensation Committee are: James R. Balkcom, Chairman, Quill O. Healey
and Thomas T. Folger, Jr.. The Compensation Committee met seven times during
1998.
Director Compensation
- ---------------------
Officers of CSBI who are also regular directors do not receive any fee or
remuneration for services as members of the Board of Directors. In 1997, non-
management regular directors of CSBI received a fee of $500 per month and $75
per committee meeting, with the exception that members of the loan committee
received $100 per committee meeting and members of the executive committee
received $100 per committee meeting attended for their services.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of CSBI's outstanding
common stock by (i) the current director nominees and executive officers named
herein, and (ii) all executive officers and the current directors as a group,
as of March 1, 1998. Unless otherwise indicated, the listed persons are the
owners of record and have sole voting and investment powers over their shares.
<TABLE>
<CAPTION>
Amount and Nature of
Name Beneficial Ownership Percent of Class*
----- -------------------- ----------------
<S> <C> <C>
William H. Anderson, II 722,005(1) 6.6 %
James B. Balkcom, Jr. 1,000(2) *
William L. Chandler 232,000(3) 2.1
Tony E. Collins 13,823(4) *
Gary L. Evans 13,293(5) *
Stephen W. ,Doughty 30,389(6) *
Joseph W. Evans 653,764(7) 6.0
James A. Faulkner 99,709(8) *
Thomas T. Folger, Jr. 173,433(9) 1.6
Quill O. Healey 8,437(10) *
J. Russell Ivie 300,380(11) 2.8
Frank C. Jones 3,700(12) *
John B. McKibbon, III 4,800(13) *
E. Paul Stringer 228,882(14) 2.1
Sidney J. Wooten 28,000(15) *
All Executive Officers and
Current Directors as a
Group (15 persons) 2,513,615(16) 23.3
- ----------------------------------------
* less than 1% not applicable
</TABLE>
5
<PAGE>
(1) Includes 56,820 shares owned individually and an aggregate of 663,294
shares held by certain corporations, partnership, and trusts as to which he
has voting and/or investment power. Does not include 1,891 shares owned by
his wife individually as to which he disclaims beneficial ownership.
(2) Includes 1,000 shares owned individually which are held in street name.
(3) Includes 112,000 shares owned individually and 120,000 shares owned by a
corporation which he controls. Does not include 5,600 shares owned by his
wife individually to which he disclaims beneficial ownership.
(4) Includes 3,690 shares owned individually which are held in street name, 302
shares owned jointly with his father; 8,831 shares held in a 401(k) Plan
and an employee stock ownership plan, and 1,000 shares subject to stock
options under the CSBI Incentive Stock Option Plan as to which he disclaims
beneficial ownership.
(5) Includes 4,060 shares owned individually, 8,233 shares held in a 401(k)
Plan and an employee stock ownership plan, and 1,000 shares subject to
stock options under the CSBI Incentive Stock Option Plan as to which he
disclaims beneficial ownership.
(6) Includes 30,389 shares subject to stock options under the CSBI Incentive
Stock Option Plan as to which he disclaims beneficial ownership.
(7) Includes 229,028 shares owned individually and 377,486 shares held in a
401(k) Plan and an employee stock ownership plan to which he has voting
rights and 47,250 shares subject to stock options under the CSBI Stock
Option Plan as to which he disclaims beneficial ownership.
(8) Includes 72,887 shares owned individually, 56 shares owned jointly with his
wife, 2,000 shares held in street name owned jointly with his wife, 16,766
shares held in a 401(k) Plan and an employee stock ownership plan, 5,000
shares of restricted stock options and 3,000 shares subject to stock
options under the CSBI Incentive Stock Option Plan as to which he disclaims
beneficial ownership.
(9) Includes 166,623 shares owned individually, 5,234 shares held in a self-
directed retirement account owned individually and 1,576 shares held in
street name in a retirement account owned individually. Does not include
19,629 shares owned individually by his wife, and 4,698 shares owned by his
wife jointly with their children.
(10) Includes 8,437 shares owned individually, held in street name.
(11) Includes 144,514 shares owned individually, 14,434 shares owned jointly
with his wife, 16,506 shares held in street name, 19,277 shares for which
he serves as trustee under the will of his father, 14,429 shares held in
street name owned individually in a retirement account, 32,357 shares held
in street name owned by a limited partnership, 44,696 shares owned by a
limited partnership and 14,167 shares held in a 401(k) Plan and an employee
stock ownership plan. Does not include 120 shares owned by his wife to
which he disclaims beneficial ownership.
6
<PAGE>
(12) Includes 3,700 shares owned individually held in street name.
(13) Includes 4,700 shares owned individually held in street name and 100 shares
owned by McKibbon Brothers held in street name.
(14) Includes 200,262 shares owned individually, 5,946 shares owned jointly with
his wife and children, 750 shares owned jointly with his wife, 18,924
shares owned by his insurance agency for which he has exclusive voting
rights, and 3,000 shares held in a retirement account owned individually.
Does not include 43,164 shares owned individually by his wife or 1,904
shares held in street name in a retirement account owned individually by
his wife to which he disclaims beneficial ownership.
(15) Includes 3,000 shares owned individually held in street name in a
retirement account and 25,000 shares subject to stock options under the
CSBI Incentive Stock Option Plan as to which he disclaims beneficial
ownership.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Under rules established by the Securities and Exchange Commission, CSBI is
required to provide certain data and information in regard to the compensation
and benefits provided to CSBI's chief executive officer and to four additional
executive officers. The disclosure requirements for the named executive officers
include the use of tables and a report explaining the rationale and
consideration that led to fundamental executive compensation decisions affecting
these individuals.
The following table shows all cash and noncash compensation paid or accrued
over the past three years for the chief executive officer and the named
executive officers.
7
<PAGE>
SUMMARY COMPENSATION TABLE
Annual
Compensation
------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
All Other
Salary Bonus Compensation
Name and Principal Position Year ($) ($) ($)(1)
- -------------------------- ---- ------ ----- ------------
James A. Faulkner, Chief 1997 210,000 84,000 10,085
Executive Officer 1996 210,000 50,476 9,956
1995 195,000 400 9,861
Joseph W. Evans, President, 1997 178,400 80,100 12,735
Chief Operations Officer and 1996 178,000 48,060 8,229
Chief Financial Officer(2) 1995 178,000 96,734 10,699
Stephen W. Doughty, 1997 120,000 48,000 37,872
Executive Vice President 1996 120,000 34,216 28,800
and Chief Credit Officer(3) 1995 110,000 40,693 53,204
Gary L. Evans, Senior Vice 1997 115,000 25,000 7,935
President, CCO and 1996 115,000 16,462 7,285
Assistant Secretary 1995 105,000 15,350 7,041
Tony E. Collins, Executive 1997 100,000 25,000 6,376
Vice President and Chief 1996 100,000 14,296 6,171
Administrative Officer 1995 95,000 400 6,027
</TABLE>
(1) For 1997 includes: for Mr. Faulkner, deferred compensation of $3,600,
insurance premiums paid by CSBI of $1,235, and contributions to the ESOP of
$5,250; for Joseph W. Evans, insurance premiums paid by CSBI of $769 and
contributions to the ESOP of $11,966; for Mr. Doughty, deferred
compensation of $10,000, insurance premiums paid by CSBI of $518,
contributions to the ESOP of $12,210, and $15,144 pursuant to the
forgiveness of certain indebtedness; for Gary L. Evans, deferred
compensation of $2,250, insurance premiums paid by CSBI of $1,122, and
contributions to the ESOP of $4,563; and for Mr. Collins, deferred
compensation of $1,800, insurance premiums paid by CSBI of $826, and
contributions to the ESOP of $3,750.
(2) Mr. Evans assumed this position in December 1997. Amounts prior to such
time were paid by Bank Corporation of Georgia, which was acquired by CSBI
in December 1997.
(3) Mr. Doughty assumed this position in December 1997. Amounts prior to such
time were paid by Bank Corporation of Georgia, which was acquired by CSBI
in December 1997.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table shows stock option exercises by the named executive
officers during 1997, including the aggregate value of gains on the date of
exercise. In addition, this table includes the number of shares covered by both
exercisable and non-exercisable options as of December 31, 1997. Also reported
is the positive spread between the exercise price of any such existing options
and the year end price of the common stock of CSBI.
<TABLE>
<CAPTION>
Securities Underlying Value of Unexercised
Unexercised In-the-Money
Options at FY-end (#) Options at FY-end($)
-------------------- --------------------
Shares Exercisable/ Exercisable/
Acquired on Value ----------- ------------
Name Exercise (#) Realized ($) Unexercisable Unexercisable
---- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
James A. Faulkner -0- -0- 5,000/0 $94,375/$0
-0- -0- 3,000/0 35,625/$0
Joseph W. Evans -0- -0- 47,250/0 903,094/$0
Stephen W. Doughty 12,599 $230,612 -0- -0-
-0- -0- 31,449/0 612,041/$0
-0- -0- 23,625/0 451,547/$0
Tony E. Collins -0- -0- 1,000/0 11,875/$0
Gary L. Evans -0- -0- 1,000/0 11,875/$0
</TABLE>
9
<PAGE>
PERFORMANCE GRAPH
The following is a performance graph comparing CSBI's cumulative total
shareholder return with the total return of (i) a performance indicator of broad
equity market index that includes companies whose securities are traded on the
Nasdaq National Market. CSBI has selected the Nasdaq National Market (US
Companies) as the broad equity market index. This index includes all domestic
common shares traded on the NASDAQ National Market Value Index; and, (ii) a peer
group comparison. The peer group comparison is the Media General Industry Group
which was comprised of 96 South Atlantic Banks.
10
<PAGE>
Board Compensation Committee Report
- -----------------------------------
The Compensation Committee approves compensation objectives and policy for
all employees and sets compensation for CSBI's executive officers, including the
individuals named in the Summary Compensation Table. In 1997 the Compensation
Committee did not adjust salaries of the executive officers. The Compensation
Committee reviewed information relative to CSBI's performance compared to a peer
group consisting of 26 banking organizations in the State of Georgia, Florida,
North Carolina and South Carolina ranging in size from $500 million in assets to
$1 billion in assets and from $500 to 900 million in assets. This information
included comparisons by asset size, return on assets, and CEO's compensation.
In addition the Compensation Committee reviewed salary survey data prepared by
the Georgia Bankers Association, as well as a survey of CSBI's stock performance
compared to other companies of similar size. In addition, the committee reviewed
five proxy compensation tables from banking organizations of similar size. It
is the consensus of the Compensation Committee that salaries of the executive
officers of CSBI, including Mr. Faulkner's salary, be comparable to the median
salaries of the peer group. Messrs. Faulkner and Ivie abstained from voting on
all matters regarding their compensation.
The amounts paid to Joseph W. Evans and Stephen W. Doughty were established by
the Board of Directors of Bank Corporation of Georgia prior to its acquisition
by CSBI in December 1997.
E. H. Chambers, Jr. J. Russell Ivie
James A. Faulkner E. Paul Stringer
Thomas T. Folger, Jr. George A. Winn
Incentive Stock Option Plan
- ---------------------------
CSBI has adopted an Incentive Stock Option Plan (the "ISO Plan") pursuant
to which an aggregate of 500,000 shares of Common Stock could be granted. The
ISO Plan authorizes CSBI to grant incentive stock options to eligible employees
as determined by the ISO Plan. The ISO Plan is administered by the Compensation
Committee, which determines those eligible employees to whom options will be
granted and the number of options granted to each eligible employee. The
Compensation Committee also prescribes the terms and conditions of each option
granted, including the purchase price per share which is subject to each option.
During 1997, 33,375 options were granted under the ISO Plan.
Employment and Severance Agreements
- -----------------------------------
Messrs. Faulkner and Collins, and Gary L. Evans have entered into
employment agreements with CSBI. These agreements, which are substantially
similar, are for one year terms ending on November 1, 1998 and provide
compensation to the officers in the form of annual base salaries in the amount
of $210,000 for Mr. Faulkner $110,000 for Mr. Collins and $115,000 for Mr. Gary
Evans in 1997. These agreements shall automatically renew for one year terms
without further action by the parties, commencing on the one year anniversary of
the agreements and each
11
<PAGE>
anniversary thereafter unless written notice that these agreements shall not be
so extended is provided by either party to the other party at least 90 days
prior to any said anniversary date.
The employment agreements also provide that in the event of termination of
employment by CSBI other than for cause the officer will receive severance
benefits equal to the remaining term under the one year contract. In the event
of the termination of employment by the officer for reasons such as material
change by CSBI in the officers' duties and responsibilities or as a result of
merger or consolidation of CSBI, or the death or disability of the officer, the
officer shall receive severance benefits from CSBI. These severance benefits
are equal to two and eleven twelfths (2-11/12) multiplied by the officers annual
compensation from CSBI, including salary, bonuses, all perquisites, and all
other forms of compensation paid to officer for his benefit or the benefit of
his family for the fiscal year ended immediately preceding the date of change of
control.
Stephen W. Doughty is party to an agreement which provides that in the event
of (i) his termination of employment other than for cause or (ii) termination of
his employment for reasons such as a material change by CSBI in his duties and
responsibilities or as a result of a merger or consolidation of Company, Mr.
Doughty shall receive severance benefits from the Company. The these severance
benefits include the right to receive continued salary for a period of 36
months, bonus payments for four calendar years following termination of
employment, health and life insurance coverage for a three year period following
termination of employment, and the ability to participate in certain employee
retirement plans for a period of 36 months following the termination of
employment.
Defined Contribution Plan
- -------------------------
The Board of Directors of CSBI converted its 401(k) retirement plan into
the employee stock ownership plan of CSBI ("ESOP") effective as of January 1,
1989. All employees of CSBI and its subsidiaries who meet the minimum age,
minimum hours worked and related requirements may participate in the ESOP. The
amount set aside for the ESOP each year is based on the number of participants
in the ESOP and the amount of contributions by the participants through salary
deductions. CSBI's contribution to the ESOP for the year ended December 31,
1997 was $512,000. Contributions made by CSBI during such year were $5,250 for
Mr. Faulkner, $3,750 for Mr. Collins and $4,563 for Mr. G. Evans. Messrs.
Faulkner, Collins and Evans are fully vested pursuant to the terms of the ESOP.
Messrs. Faulkner and Ivie did not serve as administrator of either the Incentive
Stock Option Plan or the development of the Incentive Bonus Plan.
Deferred Compensation Plan
- --------------------------
CSBI has entered into salary continuation agreements with James A.
Faulkner, Tony E. Collins and Gary L. Evans. These agreements provide for CSBI
to pay death and disability benefits to them or their beneficiaries, subject to
certain vesting requirements and other limitations, and are funded by life
insurance policies. No benefits were paid under these agreements in 1997.
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Compensation Committee is comprised of: James R. Balkcom, Jr. as
Chairman, Thomas T. Folger, Jr. and Quill O. Healey.
E. Paul Stringer, director, is the owner of Stringer Insurance Agency in
Dahlonega, Georgia, and was a member of the Compensation Committee in 1997 was
paid insurance premiums during 1997 by CSBI and its subsidiaries in an amount
equal to $205,423 for insurance services.
Transactions with Management
- ----------------------------
In the ordinary course of banking business, CSBI and its subsidiaries have
had and anticipate that they will continue to have transactions with various
directors, officers, principal shareholders of CSBI, and their associates. All
loans and commitments to extend loans included in such transactions were made
substantially on the same terms, including interest rates and collateral, as
those prevailing from time to time for comparable transactions with other
unaffiliated persons. In the opinion of the Board of Directors such loans and
commitments do not involve more than a normal risk of collectibility or present
any other unfavorable features. In the Board of Directors' opinion, the
aggregate amount of extensions of credit outstanding at any time from January 1,
1996 to date of a director, director nominee, executive officer or principal
security holder and their associates did not exceed the maximum permitted under
applicable banking regulations.
William D. Reeves, director, is a party to a lease agreement with a
subsidiary of CSBI for a term ending in June, 1999 with a five year renewal
option, at a rate which the parties believe to be fair market value. Mr. Reeves
received $195,554.84 from lease payments in 1997.
ITEM NUMBER 3 - APPROVAL OF THE EXECUTIVE STOCK PLAN
On April 1, 1998, the Board of Directors of CSBI adopted the Century South
Banks, Inc. 1998 Executive Stock Plan (the "Executive Stock Plan") and directed
that the Executive Stock Plan be submitted to the shareholders for their
approval at the 1998 Annual Meeting. The Executive Stock Plan would become
effective upon the approval by the holders of a majority of the issued and
outstanding shares of common stock of CSBI. The purpose of the Executive Stock
Plan is to encourage and provide an additional incentive to officers and other
key employees of CSBI to increase the value of CSBI and its common stock by
permitting them to acquire a significant equity interest in CSBI. The Executive
Stock Plan is also intended to aid CSBI in attracting and retaining superior
personnel and to strengthen their desire to remain in CSBI's employ. The
following summary description of the Executive Stock Plan is qualified in its
entirety by reference to the full text of the Executive Stock Plan which appears
in Exhibit A.
An aggregate 500,000 shares of common stock of CSBI has been reserved for
issuance in connection with awards granted under the Executive Stock Plan. Such
shares may be awarded from authorized and unissued shares or from previously
issued shares which are acquired in open market purchases.
13
<PAGE>
The Executive Stock Plan is to be administered by the Compensation Committee
of the Board of Directors, none of the members of which are eligible to
participate in the Executive Stock Plan (the "Committee"). The qualifications
of the Committee members will comply with Rule 16b-3 promulgated under the 1934
Act or any successor rule or regulation. The Committee has the discretion to
determine, among other things, the officers and key employees to whom awards are
to be granted and the number of shares that may be awarded to each such officer
and key employee.
The Executive Stock Plan provides for the issuance of shares of common stock
through grants of options to purchase common stock, grants of stock appreciation
rights, and grants of restricted stock. The Executive Stock Plan allows for the
issuance of incentive stock options and options which will not be treated as
incentive stock options. Participants are not required to pay for shares of
common stock of CSBI awarded as restricted sock.
The Committee may, in its sole discretion and on terms and conditions it
shall determine consistent with Rule 16b-3 under the 1934 Act, approve or
disapprove the election of a participant for CSBI to withhold shares of stock as
the deemed cash settlement to satisfy CSBI's withholding tax obligations
relating to the removal of restrictions with respect to shares awarded under the
Executive Stock Plan.
Each share of common stock issued under the Executive Stock Plan will require
that upon the receipt of shares the participant shall, if requested by CSBI,
hold such shares for investment and not with a view of resale or distribution to
the public. CSBI shall at its expense take such action as it deems necessary or
appropriate to register the original issuance of the common stock subject to the
Executive Stock Plan under the Securities Act of 1933, as amended.
The Board of Directors of CSBI or its Compensation Committee may amend,
suspend or terminate the Executive Stock Plan at any time without the approval
of share owners. Nevertheless, no such amendment, suspension or termination
will affect previously granted awards without the participants' consent unless
the Compensation Committee determines that the change is in the best interests
of all participants who have received awards.
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
APPROVAL OF ITEM NUMBER 3 IN ORDER TO ADOPT THE EXECUTIVE STOCK PLAN.
ITEM NUMBER 4 PROPOSAL TO AMEND CSBI'S ARTICLES OF INCORPORATION
On January 28, 1998, the Board of Directors unanimously adopted resolutions
approving a proposal to amend CSBI's Articles of Incorporation in order to
increase the number of shares of common stock which CSBI is authorized to issue
from 15,00,000, par value $1.00 per share, to 30,000,000, par value $1.00 per
share. The Board of Directors has determined that such amendment is advisable
and directed that the proposed amendment be considered at the Annual Meeting.
The affirmative vote of the holders of a majority of the outstanding shares of
common stock of CSBI is required to approve the proposed amendment.
The full text of the proposed amendment to the Articles of Incorporation is
set forth in Appendix B to this Proxy Statement.
14
<PAGE>
The proposed amendment would increase the number of shares of common stock
which CSBI is authorized to issue from 15,000,000 to 30,000,000. The additional
shares would be a part of the existing class of common stock and, if and when
issued, would have the same rights and privileges as the shares of common stock
presently issued and outstanding. The holders of common stock of CSBI are not
entitled to preemptive rights or cumulative voting. If the proposed amendment
to the Articles of Incorporation of CSBI is adopted by the required vote of a
majority of the outstanding shares of common stock, such amendment will become
effective upon the effectiveness of the filing of Articles of Amendment to the
Articles of Incorporation of CSBI.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS A VOTE "FOR" THE APPROVAL OF ITEM
NUMBER 4 IN ORDER TO AMEND CSBI'S ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK OF CSBI TO 30,000,000 SHARES, PAR VALUE $1.00.
ITEM NUMBER 5 - RATIFICATION OF ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP to
serve as independent certified public accountants of CSBI for the calendar year
ending December 31, 1998, subject to ratification by the Shareholders of CSBI.
KPMG Peat Marwick LLP has served as independent certified public accountants of
CSBI since 1983.
CSBI expects a representative of KPMG Peat Marwick LLP to attend the Annual
Meeting of the Shareholders and expects that the representative will have the
opportunity to make a statement if he desires to do so. It is further
anticipated that such representative will be available to respond to appropriate
questions.
If a Shareholder specifies a choice on the proxy, the shares represented by
the proxy will be voted as specified. If no specification is made, the shares
represented by the proxy will be voted "FOR" approval of Item Number 5.
THE BOARD OF DIRECTORS OF CSBI RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF ITEM NUMBER 5 IN ORDER TO RATIFY THE APPOINTMENT OF KPMG PEAT
MARWICK LLP TO SERVE AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 1998.
UNDER SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires CSBI's
officers and directors, and persons who own more than 10% of the common stock of
CSBI, to file reports of ownership and changes in ownership of such securities
with the Securities and Exchange Commission and the Nasdaq National Market
System.
Officers, directors and greater than 10% beneficial owners are required by
applicable regulations to furnish CSBI with copies of all Section 16(a) forms
they file. CSBI is not aware of any beneficial owner of more than 10% of its
common stock.
15
<PAGE>
Based solely upon a review of the copies of the forms furnished to CSBI,
CSBI believes that during the 1997 fiscal year all filings applicable to its
officers and directors were complied with.
SHAREHOLDER PROPOSALS
Any proposal that a Shareholder intends to present at the 1999 Annual
Meeting must be received at CSBI's principal executive offices (please address
to the attention of Susan J. Anderson, Corporate Secretary, Century South Banks,
Inc., P. O. Box 1000, Dahlonega, Georgia 30533), not later than December 1,
1998.
OTHER BUSINESS
Action will be taken on whatever other business may properly come before
the meeting. The Board of Directors is not aware of any other business matters
to be considered at the Annual Meeting. If other matters properly come before
the meeting, the persons named in the proxy will have discretionary authority to
vote proxies with respect to such matters and in accordance with the
recommendations of the Board of Directors.
No director has informed CSBI that he intends to oppose any recommended
action as specified in the Proxy Statement. All directors have an interest in
the vote regarding the election of directors to office and the adoption of the
Executive Stock Plan.
The Board of Directors urges you to sign and return the enclosed proxy as
promptly as possible, whether or not you plan to attend the meeting in person.
--------------
If you do attend, you may then withdraw your proxy.
16
<PAGE>
Exhibit A
CENTURY SOUTH BANKS, INC. 1999 EXECUTIVE STOCK PLAN
SECTION 1. BACKGROUND AND PURPOSE
The name of this Plan is the Century South Banks, Inc. 1999 Executive Stock
Plan. The purpose of this Plan is to promote the interest of Century South
Banks, Inc., a Georgia corporation ("CSBI") and its Subsidiaries through grants
to Key Employees of Options to purchase Stock, grants of stock appreciation
rights and grants of Restricted Stock in order (1) to attract and retain Key
Employees, (2) to provide an additional incentive to each Key Employee to work
to increase the value of Stock and (3) to provide each Key Employee with a stake
in the future of CSBI which corresponds to the stake of each of CSBI's
shareholders.
SECTION 2. DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.
2.1. Board - means the Board of Directors of CSBI.
2.2. Change in Control - means a change in control of CSBI of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Exchange Act as in effect on January 1,
1999, provided that such a change in control shall be deemed to have occurred at
such time as (i) any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), is or becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) directly or indirectly, of securities
representing 20% or more of the combined voting power for election of directors
of the then outstanding securities of CSBI or any successor of CSBI; (ii) during
any period of two consecutive years or less, individuals who at the beginning of
such period constitute the Board cease, for any reason, to constitute at least a
majority of the Board, unless the election or nomination for election of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period; (iii) the
shareholders of CSBI approve any merger, consolidation or share exchange as a
result of which the common stock of CSBI shall be changed, converted or
exchanged (other than a merger with a wholly-owned subsidiary of CSBI), or any
dissolution or liquidation of CSBI or any sale or the disposition of 50% or more
of the assets or business of CSBI; or (iv) the shareholders of CSBI approve any
merger or consolidation to which CSBI is a party or a share exchange in which
CSBI shall exchange its shares for shares of another corporation as a result of
which the persons who were shareholders of CSBI immediately prior to the
effective date of the merger, consolidation or share exchange shall have
beneficial ownership of less than 50% of the combined voting power for election
of directors of the surviving corporation following the effective date of such
merger, consolidation or share exchange;
<PAGE>
provided, however, and notwithstanding the occurrence of any of the events
previously described in this definition, that no "Change in Control" shall be
deemed to have occurred under this definition if following such time as a
"Change in Control" would otherwise be deemed to have occurred under this
definition, at least two of the following three officers of CSBI shall have
continued to serve CSBI [for a period of one year] with the same (or greater)
authority and position such individuals possessed immediately prior to such
event. For purposes of the preceding proviso, such individuals shall be,
respectively, the Chairman, the Chief Executive Officer, and the President of
CSBI.
2.3. Code - means the Internal Revenue Code of 1986, as amended.
2.4. Committee - means a Committee of the Board to which the
responsibility to administer this Plan is delegated by the Board and which shall
consist of at least two members of the Board (i) none of whom shall be eligible
to receive grants of Options, SARS or Restricted Stock and (ii) each of whom
shall be a "non-employee director" person within the meaning of Rule 16b-3 under
the Exchange Act and each of whom shall be (or be treated as) an "outside
director" for purposes of Section 162(m) of the Code.
2.5. Covered Employee - means a Key Employee who the Committee on the date
he or she is granted an Option, a SAR or Restricted Stock deems likely to be a
"covered employee" (within the meaning of Section 162(m) of the Code) as of any
date on or after the date of such grant.
2.6. Exchange Act - means the Securities Exchange Act of 1934, as amended.
2.7. Fair Market Value - means (i) the closing price on any date for a
share of Stock as reported by The Wall Street Journal under the National
Association of Securities Dealers Automated Transactions Quotation System
("NASDAQ") (or under any successor quotation system) or, if Stock is no longer
traded on the NASDAQ, under the quotation system under which such closing price
is reported or, if The Wall Street Journal no longer reports such closing price,
such closing price as reported by a newspaper or trade journal selected by the
Committee or, if no such closing price is available on such date, (ii) such
closing price as so reported in accordance with Section 2.7(i) for the
immediately preceding business day, or, if no newspaper or trade journal reports
such closing price, (iii) the price for which the Committee acting in good faith
determines through any reasonable valuation method, that a share of Stock might
change hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or to sell and both having reasonable knowledge of the
relevant facts.
2.8. ISO - means an option granted under this Plan to purchase Stock which
is evidenced by an Option Agreement which provides that the option is intended
to satisfy the requirements for an incentive stock option under Section 422 of
the Code.
2.9. Key Employee - means any employee of CSBI or any Subsidiary who, in
the judgment of the Committee acting in its absolute discretion, is a key to the
success of CSBI or such Subsidiary and who is not a Ten Percent Shareholder.
<PAGE>
2.10. NQO - means an option granted under this Plan to purchase Stock
which is evidenced by an Option Agreement which provides that the option shall
not be treated as an incentive stock option under Section 422 of the Code.
2.11. Option - means an ISO or a NQO.
2.12. Option Agreement - means the written agreement or instrument which
sets forth the terms of an Option granted to a Key Employee under Section 7 of
this Plan.
2.13. Option Price - means the price which shall be paid to purchase one
share of Stock upon the exercise of an Option granted under this Plan.
2.14. Parent Corporation - means any corporation which is a parent of CSBI
within the meaning of Section 424(e) of the Code.
2.15. Plan - means this Century South Banks, Inc. 1999 Executive Stock
Plan, as amended from time to time.
2.16. Restricted Stock - means Stock granted to a Key Employee under
Section 8 of this Plan.
2.17. Restricted Stock Agreement - means the written agreement or
instrument which sets forth the terms of a Restricted Stock grant to a Key
Employee under Section 8 of this Plan.
2.18. Rule 16b-3 - means the exemption under Rule 16b-3 to Section 16b of
the Exchange Act or any successor to such rule.
2.19. Stock - means the common stock of $1.00 par value of CSBI.
2.20. SAR - means a right which is granted pursuant to the terms of
Section 7 of this Plan to the appreciation in the Fair Market Value of a share
of Stock in excess of the SAR Share Value for such a share.
2.21. SAR Agreement - means the written agreement or instrument which sets
forth the terms of a SAR granted to a Key Employee under Section 7 of this Plan.
2.22. SAR Share Value - means the figure which is set forth in each SAR
Agreement and which is no less than the Fair Market Value of a share of Stock on
the date the related SAR is granted.
2.23. Subsidiary - means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) of CSBI except a corporation
which has subsidiary corporation status under Section 424(e) of the Code
exclusively as a result of CSBI or a CSBI subsidiary holding stock in such
corporation as a fiduciary with respect to any trust, estate, conservatorship,
guardianship or agency.
<PAGE>
2.24. Ten Percent Shareholder - means a person who owns (after taking into
account the attribution rules of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of either CSBI, a
Subsidiary or a Parent Corporation.
SECTION 3. SHARES RESERVED UNDER PLAN
There shall be not more than 3 1/2% of the then outstanding shares of
Stock reserved for use under this Plan. All such shares of Stock shall be
reserved to the extent that CSBI deems appropriate from authorized but unissued
shares of Stock and from shares of Stock which have been reacquired by CSBI.
Furthermore, any shares of Stock subject to an Option which remain unissued
after the cancellation, expiration or exchange of such Option and any Restricted
Shares which are forfeited thereafter shall again become available for use under
this Plan, but any shares of Stock used to satisfy a withholding obligation
under Section 14.3 shall not again become available for use under this Plan.
The exercise of a SAR or a surrender right in an Option with respect to any
shares of Stock shall be treated for purposes of this Section 3 the same as the
exercise of an Option for the same number of shares of Stock.
SECTION 4. EFFECTIVE DATE
This Plan shall be effective on _______________, 1999, provided the
shareholders of CSBI (acting at a duly called meeting of such shareholders)
approve this Plan within twelve (12) months after such date and such approval
satisfies the requirements for shareholder approval under Rule 16b-3 and Code
Section 422(b)(1). Any Restricted Stock, any Option and any SAR granted under
this Plan before such shareholder approval automatically shall be granted
subject to such shareholder approval.
SECTION 5. COMMITTEE
This Plan shall be administered by the Committee. The Committee acting in
its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have the
power to interpret this Plan and (subject to Section 5, 11, 12 and 13) to take
such other action in the administration and operation of this Plan as the
Committee deems equitable under the circumstances, which action shall be binding
on CSBI, on each affected Key Employee and on each other person directly or
indirectly affected by such action. The Committee shall use its best efforts to
grant Options, SARs and Restricted Stock under this Plan to a Covered Employee
which will qualify as "performance-based compensation" for purposes of Section
162(m) of the Code, except where the Committee deems that CSBI's interests when
viewed broadly will be better served by a grant which is free of the conditions
required to so qualify any such grant for purposes of Section 162(m) of the
Code.
SECTION 6. ELIGIBILITY
Only Key Employees shall be eligible for the grant of Options, SARs or
Restricted Stock under this Plan.
<PAGE>
SECTION 7. OPTIONS AND SARS
7.1. Options. The Committee acting in its absolute discretion shall have
the right to grant Options to Key Employees under this Plan from time to time to
purchase shares of Stock. Each grant of an Option shall be evidenced by an
Option Agreement, and each Option Agreement shall set forth whether the Option
is an ISO or a NQO and shall set forth such other terms and conditions of such
grant as the Committee acting in its absolute discretion deems consistent with
the terms of this Plan.
7.2. $100,000 Limit. The aggregate Fair Market Value of ISOs granted to a
Key Employee under this Plan and incentive stock options granted to such Key
Employee under any other stock option plan adopted by CSBI, a Subsidiary or a
Parent Corporation which first become exercisable in any calendar year, shall
not exceed $100,000. Such Fair Market Value figure shall be determined by the
Committee on the date the ISO or other incentive stock option is granted, and
the Committee shall interpret and administer the limitation set forth in this
Section 7.2 in accordance with Section 422(d) of the Code.
7.3. Share Limitation.
(a) A Key Employee (other than a Key Employee who is CSBI's chief executive
officer) may be granted in any calendar year one or more Options, or one or more
SARS, or one or more Options and SARs in any combination which, individually or
in the aggregate, relate to no more than 60,000 shares of Stock.
(b) A Key Employee who is CSBI's chief executive officer may be granted in
any calendar year one or more Options, or one or more SARS, or one or more
Options and SARs in any combination which, individually or in the aggregate,
relate to no more than 100,000 shares of Stock.
7.4. Option Price. The Option Price for each share of Stock subject to an
Option shall be no less than the Fair Market Value of a share of Stock on the
date the Option is granted. The Option Price shall be payable in full upon the
exercise of any Option, and an Option Agreement at the discretion of the
Committee can provide for the payment of the Option Price (i) in cash or by a
check acceptable to the Committee, (ii) in Stock which has been held by the Key
Employee for a period acceptable to the Committee and which Stock is otherwise
acceptable to the Committee, (iii) through a broker facilitated exercise
procedure acceptable to the Committee or (d) in any combination of the three
methods described in this Section 7.4 or any other method which is acceptable to
the Committee and is set forth in the applicable Option Agreement. Any payment
made in Stock shall be treated as equal to the Fair Market Value of such Stock
on the date the properly endorsed certificate for such Stock is delivered to the
Committee.
7.5. Exercise Period. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Option Agreement, but no Option Agreement
<PAGE>
shall make an Option exercisable before the date such Option is granted or after
the earlier of:
(1) the date such Option is exercised in full, or
(2) the date which is the tenth anniversary of the date such Option is
granted.
An Option Agreement may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever, including
death or disability, subject to the rules of Section 422 of the Code, as such
rules affect ISOs.
7.6. Nontransferability. Except to the extent the Committee deems
permissible under Section 422(b) of the Code and Rule 16b-3 and consistent with
the best interests of CSBI, neither an Option granted under this Plan nor any
related surrender rights nor any SAR shall be transferable by a Key Employee
other than by will or by the laws of descent and distribution, and such Option
and any such surrender rights and any such SAR shall be exercisable during a Key
Employee's lifetime only by the Key Employee. The person or persons to whom an
Option or a SAR is transferred by will or by the laws of descent and
distribution thereafter shall be treated as the Key Employee under this Plan.
7.7. SARs.
(a) SARs. The Committee acting in its absolute discretion may grant a Key
-----
Employee a SAR which will give the Key Employee the right to the appreciation in
one, or more than one, share of Stock, and any such appreciation shall be
measured from the related SAR Share Value. The Committee shall have the right
to make any such grant subject to such additional terms as the Committee deems
appropriate, and such terms shall be set forth in the related SAR Agreement.
(b) Procedure. The exercise of a SAR shall be effected by the delivery of
---------
the related SAR Agreement to the Committee (or to its delegate) together with a
statement signed by the Key Employee which specifies the number of shares of
Stock as to which the Key Employee, as appropriate, exercises his or her SAR (at
the Key Employee's option) how he or she desires payment to be made with respect
to such shares.
(c) Payment. A Key Employee who exercises his or her SAR shall receive a
-------
payment in cash or in Stock, or in a combination of cash and Stock, equal in
amount on the date such exercise is effected to (i) the number of shares of
Stock with respect to which, as applicable, the SAR is exercised times (ii) the
excess of the Fair Market Value of a share of Stock on such date over, as
applicable, the SAR Share Value for a share of Stock subject to the SAR. The
Committee acting in its absolute discretion shall determine the form and timing
of such payment, and the Committee shall have the right to take into account
whatever factors the Committee deems appropriate under the circumstances,
including any written request made by the Key Employee and delivered to the
Committee (or to its delegate). Any cash payment under this Section 7.7 shall
be made from CSBI's general assets, and a Key Employee shall be no more than a
general and unsecured creditor of CSBI with respect to such payment.
<PAGE>
(d) Restrictions. Each SAR Agreement shall incorporate such additional
------------
restrictions on the exercise of such SAR or surrender right as the Committee
deems necessary to satisfy the conditions to the exemption under Rule 16b-3.
SECTION 8. RESTRICTED STOCK
8.1. Committee Action. The Committee acting in its absolute discretion
shall have the right to grant Restricted Stock to Key Employees under this Plan
from time to time. Each Restricted Stock grant shall be evidenced by a
Restricted Stock Agreement, and each Restricted Stock Agreement shall set forth
the conditions, if any, which will need to be timely satisfied before the grant
will be effective and the conditions, if any, under which the Key Employee's
interest in the related Stock will be forfeited.
8.2. Effective Date. A Restricted Stock grant shall be effective (i) as
of the date set by the Committee when the grant is made or, if the grant is made
subject to one, or more than one, condition, (ii) as of the date the Committee
determines that such conditions have been timely satisfied.
8.3. Conditions.
(a) Grant Conditions. The Committee acting in its absolute discretion may
----------------
make the grant of Restricted Stock to a Key Employee subject to the satisfaction
of one, or more than one, objective employment, performance or other grant
condition which the Committee deems appropriate under the circumstances for Key
Employees generally or for a Key Employee in particular, and the related
Restricted Stock Agreement shall set forth each such condition and the deadline
for satisfying each such grant condition. If a Restricted Stock grant will
become effective only upon the satisfaction of one, or more than one, condition,
the related shares of Stock shall be unavailable under Section 3 for the period
which begins on the date as of which such grant is made and, if a Restricted
Stock grant fails to become effective in whole or in part under Section 8.2,
such period shall end on the date of such failure (i) for the related shares of
Stock subject to such grant (if the entire grant fails to become effective) or
(ii) for the related shares of Stock subject to that part of the grant which
fails to become effective (if only part of the grant fails to become effective).
If such period ends for any such shares of Stock, such shares shall be treated
under Section 3 as forfeited at the end of such period and shall again become
available under Section 3.
(b) Forfeiture Conditions. The Committee may make each Restricted Stock
---------------------
grant (if, when and to the extent that the grant becomes effective) subject to
one, or more than one, objective employment, performance or other forfeiture
condition which the Committee acting in its absolute discretion deems
appropriate under the circumstances for Key Employees generally or for a Key
Employee in particular, and the related Restricted Stock Agreement shall set
forth each such condition and the deadline for satisfying each such forfeiture
condition. A Key Employee's nonforfeitable interest in the shares of Stock
related to a Restricted Stock grant shall depend on the extent to which each
such condition is timely satisfied. Each share of Stock related to a Restricted
Stock grant shall
<PAGE>
again become available under Section 3 after such grant becomes effective if
such share is forfeited as a result of a failure to timely satisfy a forfeiture
condition, in which event such share of Stock shall again become available under
Section 3 as of the date of such failure. A Stock certificate shall be issued
(subject to the conditions, if any, described in this Section 8.3(b) and Section
8.4) to, or for the benefit of the Key Employee with respect to the number of
shares for which a grant has become effective as soon as practicable after the
date the grant becomes effective.
8.4. Dividends and Voting Rights.
(a) Each Restricted Stock Agreement shall state whether the Key Employee
shall have a right to receive any cash dividends which are paid with respect to
his or her Restricted Stock after the date his or her Restricted Stock grant has
become effective and before the first day that the Key Employee's interest in
such stock is forfeited completely or becomes completely nonforfeitable. If a
Restricted Stock Agreement provides that a Key Employee has no right to receive
a cash dividend when paid, such agreement shall set forth the conditions, if
any, under which the Key Employee will be eligible to receive one, or more than
one, payment in the future to compensate the Key Employee for the fact that he
or she had no right to receive any cash dividends on his or her Restricted Stock
when such dividends were paid. If a Restricted Stock Agreement calls for any
such payments to be made, CSBI shall make such payments from CSBI's general
assets, and the Key Employee shall be no more than a general and unsecured
creditor of CSBI with respect to such payments.
(b) If a Stock dividend is declared on such a share of Stock after the
grant is effective but before the Key Employee's interest in such Stock has been
forfeited or has become nonforfeitable, such Stock dividend shall be treated as
part of the grant of the related Restricted Stock, and a Key Employee's interest
in such Stock dividend shall be forfeited or shall become nonforfeitable at the
same time as the Stock with respect to which the Stock dividend was paid is
forfeited or becomes nonforfeitable.
(c) If a dividend is paid other than in cash or Stock, the disposition of
such dividend shall be made in accordance with such rules as the Committee shall
adopt with respect to each such dividend.
(d) A Key Employee shall have the right to vote the Stock related to his or
her Restricted Stock grant after the grant is effective with respect to such
Stock but before his or her interest in such Stock has been forfeited or has
become nonforfeitable.
8.5. Satisfaction of Forfeiture Conditions. A share of Stock shall cease
to be Restricted Stock at such time as a Key Employee's interest in such Stock
becomes nonforfeitable under this Plan, and the certificate representing such
share shall be reissued as soon as practicable thereafter without any further
restrictions related to Section 8.3(b) or Section 8.4 and shall be transferred
to the Key Employee.
SECTION 9. SECURITIES REGISTRATION
<PAGE>
Each Option Agreement, SAR Agreement and Restricted Stock Agreement shall
provide that, upon the receipt of shares of Stock as a result of the exercise of
an Option (or any related surrender right) or a SAR or the satisfaction of the
forfeiture conditions under a Restricted Stock Agreement, the Key Employee
shall, if so requested by CSBI, hold such shares of Stock for investment and not
with a view of resale or distribution to the public and, if so requested by
CSBI, shall deliver to CSBI a written statement satisfactory to CSBI to that
effect. As for Stock issued pursuant to this Plan, CSBI at its expense shall
take such action as it deems necessary or appropriate to register the original
issuance of such Stock to a Key Employee under the Securities Act of 1933, as
amended, or under any other applicable securities laws or to qualify such Stock
for an exemption under any such laws prior to the issuance of such Stock to a
Key Employee; however, CSBI shall have no obligation whatsoever to take any such
action in connection with the transfer, resale or other disposition of such
Stock by a Key Employee.
SECTION 10. LIFE OF PLAN
No Option or SAR or Restricted Stock shall be granted under this Plan after
the earlier of
(1) One day before the 10th Anniversary of Plan Effective Date, in which
event this Plan otherwise thereafter shall continue in effect until all
outstanding Options (and any related surrender rights) and SARs have been
exercised in full or no longer are exercisable and all Restricted Stock grants
under this Plan have been forfeited or the forfeiture conditions on the related
Stock have been satisfied in full, or
(2) the date on which all of the Stock reserved under Section 3 of this
Plan has (as a result of the exercise of all Options (and any related surrender
rights) and all SARs granted under this Plan or the satisfaction of the
forfeiture conditions on Restricted Stock) been issued or no longer is available
for use under this Plan, in which event this Plan also shall terminate on such
date.
SECTION 11. ADJUSTMENT
The number of shares of Stock reserved under Section 3 of this Plan, the
number of shares of Stock related to Restricted Stock grants under this Plan and
any related grant conditions and forfeiture conditions, the number of shares of
Stock subject to Options granted under this Plan and the Option Price of such
Options and the SAR Grant Value and the number of shares of stock related to any
SAR all shall be adjusted by the Board in an equitable manner to reflect any
change in the capitalization of CSBI, including, but not limited to, such
changes as stock dividends or stock splits. Furthermore, the Board shall have
the right to adjust (in a manner which satisfies the requirements of Section
424(a) of the Code) the number of shares of Stock reserved under Section 3 of
this Plan, the number of shares of Stock related to Restricted Stock grants
under this Plan and any related grant conditions and forfeiture conditions, the
number of shares subject to Options granted under this Plan and the Option Price
of such Options and the SAR Grant Value and the number of shares of Stock
related to any SAR in the event of any corporate transaction described in
Section 424(a) of the Code which provides for the substitution or assumption of
such Options, SARs or Restricted Stock grants. If any adjustment under
<PAGE>
this Section 11 would create a fractional share of Stock or a right to acquire a
fractional share of Stock, such fractional share shall be disregarded and the
number of shares of Stock reserved under this Plan and the number subject to any
Options or related to any SARs or Restricted Stock grants under this Plan shall
be the next lower number of shares of Stock, rounding all fractions downward. An
adjustment made under this Section 11 by the Board shall be conclusive and
binding on all affected persons and, further, shall not constitute an increase
in "the number of shares reserved under Section 3" within the meaning of Section
13(i) of this Plan.
SECTION 12. CHANGE IN CONTROL
If there is a Change in Control and the Board determines that no adequate
provision has been made as part of such Change in Control for either the
assumption of the Options, SARs and Restricted Stock grants outstanding under
this Plan or for the granting of comparable, substitute stock options, stock
appreciation rights and restricted stock grants, (i) each outstanding Option and
SAR at the direction and discretion of the Board (a) may (subject to such
conditions, if any, as the Board deems appropriate under the circumstances) be
canceled unilaterally by CSBI in exchange for the number of whole shares of
Stock (and cash in lieu of a fractional share), if any, which each Key Employee
would have received if on the date set by the Board he or she had exercised his
or her SAR in full or if he or she had exercised a right to surrender his or her
outstanding Option in full under Section 7.7 of this Plan or (b) may be canceled
unilaterally by CSBI if the Option Price or SAR Share Value equals or exceeds
the Fair Market Value of a share of Stock on such date and (ii) the grant
conditions, if any, and forfeiture conditions on all outstanding Restricted
Stock grants may be deemed completely satisfied on the date set by the Board.
SECTION 13. AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of CSBI (i) to increase
the number of shares reserved under Section 3, (ii) to extend the maximum life
of the Plan under Section 10 or the maximum exercise period under Section 7.5,
(iii) to decrease the minimum option price under Section 7.4 or the minimum SAR
Share Value, (4) to change the class of employees eligible for Options, SARs or
Restricted Stock grants under Section 6. The Board also may suspend the
granting of Options, SARs and Restricted Stock under this Plan at any time and
may terminate this Plan at any time; provided, however, CSBI shall not have the
right to modify, amend or cancel any Option, SAR or Restricted Stock granted
before such suspension or termination unless (1) the Key Employee consents in
writing to such modification, amendment or cancellation or (2) there is a
dissolution or liquidation of CSBI or a transaction described in Section 11 or
Section 12 of this Plan.
SECTION 14. MISCELLANEOUS
14.1. Shareholder Rights. No Key Employee shall have any rights as a
shareholder of CSBI as a result of the grant of an Option or a SAR under this
Plan or his or her exercise of such Option or SAR pending the actual delivery of
the Stock subject to such Option to such Key Employee. Subject to
<PAGE>
Section 8.4, a Key Employee's rights as a shareholder in the shares of Stock
related to a Restricted Stock grant which is effective shall be set forth in the
related Restricted Stock Agreement.
14.2. No Contract of Employment. The grant of an Option, SAR or
Restricted Stock to a Key Employee under this Plan shall not constitute a
contract of employment and shall not confer on a Key Employee any rights upon
his or her termination of employment in addition to those rights, if any,
expressly set forth in the Option Agreement which evidences his or her Option,
the SAR Agreement which evidences his or her SAR or the Restricted Stock
Agreement related to his or her Restricted Stock.
14.3. Withholding. The exercise of any Option or SAR granted under this
Plan and the acceptance of a Restricted Stock grant shall constitute a Key
Employee's full and complete consent to whatever action the Committee deems
necessary to satisfy the federal and state tax withholding requirements, if any,
which the Committee acting in its discretion deems applicable to such exercise
or such Restricted Stock. The Committee also shall have the right to provide in
an Option Agreement, SAR Agreement or Restricted Stock Agreement that a Key
Employee may elect to satisfy federal and state tax withholding requirements
through a reduction in the number of shares of Stock actually transferred to him
or to her under this Plan, and any such election and any such reduction shall be
effected so as to satisfy the conditions to the exemption under Rule 16b-3.
14.4. Construction. This Plan shall be construed under the laws of the
State of Georgia.
<PAGE>
EXHIBIT B
RESOLVED, that the Articles of Incorporation of CSBI be, and the same
hereby is amended by deleting the current Article V. thereof and substituting
the following:
V.
The Corporation shall have the authority to issue not more than 30,000,000
shares of common stock of $1.00 par value.
<PAGE>
CENTURY SOUTH BANKS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of Century South Banks, Inc. ("CSBI")
appoint(s) Susan J. Anderson, J. Marvin Anderson and James H. Sanders, Sr. and
each of them, as proxies with full power of substitution, acting by majority or
by any of them if only one is present and acting, to vote all shares of common
stock of CSBI which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders to be held on May 13, 1998 at
Buckhead Club, Justus Martin Room, Atlanta Financial Center, 3343 Peachtree
Road, NE, East Tower, Suite 1800 Atlanta, Georgia 30326 at 10:00 a.m. Atlanta,
Georgia time, and at any adjournments thereof, upon the proposals described in
the accompanying Notice of the Annual Meeting and the Proxy Statement relating
to the Annual Meeting, receipt of which is hereby acknowledged.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE "FOR" THE FOLLOWING
PROPOSALS:
1. Proposal to establish the number of members of the Board of Directors at 11.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS:
[ ]FOR all nominees listed below (except as marked to the contrary below)
[ ]WITHHOLD AUTHORITY to vote for all nominees listed below:
William H. Anderson, II; James R. Balkcom, Jr.; William L. Chandler; Joseph W.
Evans; James A. Faulkner; Thomas T. Folger, Jr.; Quill O. Healey; J. Russell
Ivie; Frank C. Jones; John B. McKibbon, III; E. Paul Stringer;
Instructions: To withhold authority to vote for any individual nominee write
that nominee's name on the space provide below:
- -------------------------------------------------------------------------------
3. Proposal to approve the adoption of the CSBI 1998 Executive Stock Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
4. Proposal to amend the Articles of Incorporation of CSBI in order to increase
the authorized number of shares of Common Stock, $1.00 par value, from
15,000,000 shares to 30,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to ratify the appointment of KPMG Peat Marwick LLP as independent
certified public accountants of CSBI for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
PROXIES MUST BE RECEIVED BY CSBI PRIOR TO THE COMMENCEMENT OF THE ANNUAL MEETING
IN ORDER TO BE VOTED. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSALS SET OUT IN 1, 3, 4, AND 5 ABOVE AND FOR EACH NOMINEE LISTED IN 2
ABOVE. THE PROXY MAY BE REVOKED BY ATTENDING THE ANNUAL MEETING AND VOTING IN
PERSON, OR BY FILING A SUBSEQUENT PROXY WITH THE SECRETARY OF CSBI PRIOR TO OR
AT THE TIME OF THE ANNUAL MEETING.
- ---------------------------------- -------------------------------------
Signature of Shareholder(s) Signature of Shareholder(s)
- ----------------------------------
(Please be sure to date)
IF THE STOCK IS HELD BY JOINT TENANTS, OR IN THE NAME OF MORE THAN ONE PERSON,
ALL HOLDERS SHOULD SIGN. Signatures should correspond exactly with the name(s)
appearing on the label above. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
the partnership's name by authorized person(s). If signing as attorney,
executor, trustee, administrator, guardian or custodian, please indicate the
capacity in which you are acting. PLEASE MARK, DATE AND SIGN THIS PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE PAID ENVELOPE.
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