<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-l(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Haywood Bancshares, Inc.
-----------------------
(Name of Issuer)
Common Stock, $1.00 Par Value Per Share
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(Title of Class of Securities)
421334 10 3
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(CUSIP Number)
James A. Faulkner
Vice Chairman and Chief Executive Officer
60 Main Street West
Dahlonega, Georgia 30533
706/864-2121
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 5, 1999
--------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-l(e), 13d-l(f) or 13d-l(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act.
The total number of shares reported herein is 249,946, which constitutes
approximately 19.9% of the total number of shares of the issuer outstanding as
of June 30, 1999. Unless otherwise indicated, all ownership percentages set
forth herein assume that, as of June 30, 1999, there were 1,500,302 shares of
the issuer issued and outstanding.
(Continued on following pages)
(Page 1 of 10 Pages)
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CUSIP No. 421334 10 3 13D Page 2 of 10 Pages
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1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (Entities Only)
Century South Banks, Inc.
IRS Identification No.: 58-1455591
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
Not Applicable (b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
Not Applicable
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia
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7 SOLE VOTING POWER
249,946(l)
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 249,946(l)
PERSON WITH ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
249,946(l)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
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14 TYPE OF REPORTING PERSON
CO, HC
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- ---------------
(1) The Reporting Person disclaims beneficial ownership of these shares
pursuant to Rule 13d-4 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). See Item 5 of this Schedule 13D.
* SEE INSTRUCTIONS BEFORE FILLING OUT!
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Page 3 of 10 Pages
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, $1.00 par value per share
("Haywood Common Stock," an individual share of which, a "Share"), of Haywood
Bancshares, Inc. ("Haywood"), a corporation organized and existing under the
laws of the State of North Carolina and registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA"). The
principal executive offices of Haywood are located at 370 North Main Street,
Waynesville, North Carolina 28786.
Item 2. Identity and Background.
This Schedule 13D is filed by Century South Banks, Inc. ("CSBI"), a
corporation organized and existing under the laws of the State of Georgia and
registered as a bank holding company under the BHCA. Through its subsidiaries,
CSBI provides a wide range of commercial and retail banking services located in
Georgia, Tennessee and Alabama. CSBI's principal offices are located at 60 Main
Street West, Dahlonega, Georgia 30533.
Each executive officer and each director of CSBI is a citizen of the United
States. The name, business address, and present principal occupation of each
executive officer and director is set forth in Exhibit 1 to this Schedule 13D
---------
and is specifically incorporated herein by this reference.
During the last five years, neither CSBI nor, to the best of CSBI's
knowledge, any of its executive officers or directors has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which CSBI or such person was or is
subject to a judgment, decree, or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to a stock option agreement, dated as of August 5, 1999, by and
between Haywood, as issuer, and CSBI, as grantee (the "Haywood Option
Agreement"), Haywood has granted CSBI an irrevocable option to purchase Shares
covered by this Schedule 13D (the "Haywood Option"). Specifically, the Haywood
Option grants CSBI the right to purchase up to 249,946 Shares (approximately
19.9% of the number of Shares outstanding on June 30, 1999, without giving
effect to the issuance of any Shares pursuant to an exercise of the Haywood
Option), subject to certain adjustments, at a price, subject to certain
adjustments, of $16.30 per Share. The Haywood Option was granted by Haywood as a
condition of, and in consideration for, CSBI's entering into an Agreement and
Plan of Merger, dated as of August 5, 1999, by and among Haywood, CSBI and HBI
Acquisition Corp. ("HAC"), a corporation organized and existing under the laws
of the State of North Carolina (the "Merger Agreement").
The exercise of the Haywood Option for the full number of Shares currently
covered thereby would require aggregate funds of $4,074,120. It is anticipated
that, should the Haywood Option become exercisable and should CSBI elect to
exercise the Haywood Option, CSBI would obtain the funds for purchase from
working capital.
A copy of the Haywood Option Agreement is included as Exhibit 2 to this
---------
Schedule 13D and is specifically incorporated herein by this reference.
Item 4. Purpose of Transaction.
On August 5, 1999, immediately before the execution and delivery of the
Haywood Option Agreement, Haywood, CSBI and HAC entered into the Merger
Agreement, pursuant to which HAC will, subject to the conditions and upon the
terms stated therein, merge with and into Haywood (the "Merger"), with Haywood
surviving the Merger as a wholly-owned subsidiary of CSBI. The Haywood Option
was granted by Haywood as a condition of, and in consideration for, CSBI
entering into the Merger Agreement.
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Page 4 of 10 Pages
A copy of the Merger Agreement is included as Exhibit 3 to this Schedule
---------
13D and is specifically incorporated herein by this reference.
In accordance with the Merger Agreement, each share (other than shares held
by CSBI or any of its subsidiaries other than in a fiduciary capacity or as a
result of debts previously contracted) of Haywood Common Stock outstanding
immediately prior to the effective time of the Merger (the "Effective Time")
will at the Effective Time be converted into the right to receive 0.8874 of a
share (as adjusted pursuant to the Merger Agreement, the "Exchange Ratio") of
CSBI common stock (with cash in lieu of fractional shares) (the "Per Share Stock
Consideration"), provided that, in lieu of CSBI common stock, holders of Haywood
Common Stock may elect to receive cash in an amount equal to the average closing
price of CSBI common stock as reported on the Nasdaq National Market ("Nasdaq")
during the 20 consecutive trading day period during which CSBI common stock is
traded on Nasdaq ending on the tenth calendar day prior to the Effective Time.
At the Effective Time, each share of CSBI common stock issued and outstanding
immediately prior to the Effective Time will be unchanged and will remain issued
and outstanding.
The Articles of Incorporation and Bylaws of Haywood in effect immediately
prior to the Effective Time shall be the Articles of Incorporation and Bylaws of
the surviving corporation. Following the Merger, the Shares will be delisted
from the American Stock Exchange and the registration of the Shares under the
Exchange Act will be terminated.
In connection with their approval of the Merger Agreement, the members of
the Board of Directors of Haywood resolved to vote their shares in favor of the
Merger and the Merger Agreement at the Haywood shareholders' meeting where the
Merger and Merger Agreement will be considered.
The Merger is subject to customary closing conditions, including, among
other things, (i) approval of the Merger and the Merger Agreement by the
shareholders of Haywood, (ii) the receipt of certain regulatory approvals, (iii)
the receipt from counsel of a favorable legal opinion with respect to the tax
consequences of the transactions contemplated by the Merger Agreement, and (iv)
the receipt of a fairness opinion from Haywood's investment banker to the effect
that the consideration to be received by Haywood's shareholders is fair from a
financial point of view. In addition, the Merger is conditioned upon the
effectiveness of a registration statement to be filed by CSBI with the
Securities and Exchange Commission (the "SEC") with respect to the shares of
CSBI common stock to be issued in the Merger, and the absence of any legal
restraint or injunction. None of the foregoing approvals has yet been obtained,
and there is no assurance as to if or when such approvals will be obtained. The
Merger and the transactions contemplated by the Merger Agreement will be
submitted for approval of the shareholders of Haywood at a meeting that is
expected to occur in the fourth quarter of 1999.
The Merger Agreement contains certain covenants of the parties regarding
the conduct of their respective businesses pending the consummation of the
Merger. The parties agreed not to take any action which would adversely affect
the ability of any party to obtain the required consents or to perform its
covenants and agreements under the Merger Agreement. CSBI also agreed to
continue to conduct its business in a manner designed, in its reasonable
judgment, to enhance the long-term value of its common stock and its business
prospects. Haywood agreed to (i) operate its business in the usual, regular and
ordinary course, (ii) to preserve intact its business organization and assets
and maintain its rights and franchises, to use its reasonable efforts to cause
its representations and warranties to be correct at all times, (iii) to use its
reasonable efforts to ensure, to the extent consistent with its Board of
Directors' fiduciary duty, that its merger-related expenses are reasonable, and
(iv) to take all steps necessary to terminate its employee benefit plans (or
obtain waivers of claims against it from the beneficiaries thereunder) as of the
Effective Time. Haywood further agreed that it would not (i) amend its Articles
of Incorporation or Bylaws, (ii) repurchase, redeem or otherwise acquire or
exchange (other than exchanges in the ordinary course under employee benefit
plans) any shares or any securities convertible into any shares of the capital
stock of Haywood, (iii) declare or pay any dividends, except for its regular
quarterly dividend at a rate not to exceed $0.16 per Share, (iv) except pursuant
to the Merger Agreement or the Haywood Stock Option Agreement, issue, sell,
pledge, encumber, authorize the issuance of, enter into any such contract or
otherwise permit to become outstanding any additional Shares or any other
capital stock or any stock appreciation rights, or any option, warrant,
conversion or other right to acquire any such stock, and (v) adjust, split,
combine or reclassify any capital stock of Haywood. The Merger Agreement also
contains certain restrictions on Haywood relating to,
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Page 5 of 10 Pages
among other things, (i) the incurrence of additional indebtedness and the
imposition or continued existence of liens, (ii) the sale or encumbrance of the
capital stock of any of its subsidiaries or of the assets of Haywood or any of
its subsidiaries, (iii) the purchase of securities or the making of material
investments, (iv) the making of certain increases in employee and director
compensation, (v) modifications to certain employee benefit plans or employment
contracts or the adoption or entry into of new ones, (vi) changes in tax and
accounting methods, (vii) the commencement or settlement of litigation, (viii)
the modification or termination of material contracts, (ix) the disposition of
assets and (x) the cancellation of indebtedness owed to Haywood.
The Merger Agreement further restricts Haywood or any of its
representatives from directly or indirectly soliciting any acquisition proposal,
including any proposal for a tender offer or exchange offer or any proposal for
a merger, acquisition of all of the stock or assets of or other business
combination involving Haywood or its subsidiaries, unless otherwise required by
the fiduciary duties of Haywood's Boards of Directors.
It is expected that the Board of Directors of Haywood will continue to
serve as directors of the surviving corporation. In addition, it is expected
that the Board of Directors of HAC will also serve as directors of the surviving
corporation. It is the current intention of CSBI, subsequent to the Effective
Time, to retain a significant portion of Haywood's management team with the
authority and responsibility for operating Haywood and its subsidiaries in
substantially the same manner and fashion as it has been historically.
The Merger Agreement may be terminated (i) by mutual consent of the Boards
of Directors of the parties, (ii) by a non-breaching party if the other party
(a) provided that the terminating party is also not in material breach of its
Merger Agreement, materially breaches any of the representations or warranties
contained in the Merger Agreement, or (b) breaches any material covenant or
agreement contained in the Merger Agreement, in each case if such breach has not
been or cannot be cured within 30 days after notice, (iii) by the Board of
Directors of any party if certain required regulatory approvals or consents are
not obtained, (iv) by any party if Haywood's shareholders do not approve the
Merger Agreement at the shareholders' meeting where the Merger and Merger
Agreement will be considered, (v) by either CSBI or Haywood if the Merger is not
consummated by March 31, 2000, unless the failure to consummate the Merger is
due to a breach by the party seeking to terminate its obligations under the
Merger Agreement, (vi) by the Board of Directors of either party, provided that
the terminating party is also not in material breach of the Merger Agreement, if
any of the conditions precedent to the obligation of such party to consummate
the Merger cannot be satisfied or fulfilled by March 31, 2000, or (vii) by CSBI
in the event Haywood's Board of Directors fails to reaffirm its approval of the
Merger after Haywood's receipt of an acquisition proposal.
In the event the Merger Agreement is terminated by either party as a result
of the other party's failure to satisfy any of its representations, warranties
or covenants set forth therein, the Merger Agreement provides that the breaching
party shall reimburse the non-breaching party for its reasonable direct costs
and expenses relating to the Merger plus $100,000.
The Haywood Option Agreement provides for the purchase by CSBI of up to
249,946 Shares, subject to certain adjustments (the "Haywood Option Shares") at
an exercise price, subject to certain adjustments, of $16.30 per Share. The
Haywood Option Shares, if issued pursuant to the Haywood Option Agreement, would
represent approximately 19.9% of the Haywood Common Stock issued and outstanding
without giving effect to the issuance of any Shares pursuant to an exercise of
the Haywood Option.
The number of Shares subject to the Haywood Option will be increased or
decreased to the extent that Haywood issues additional Shares (otherwise than
pursuant to an exercise of the Haywood Option) or redeems, repurchases, retires
or otherwise causes to be no longer outstanding Shares such that the number of
Shares subject to the Haywood Option continues to equal 19.9% of the Haywood
Common Stock then issued and outstanding, without giving effect to the issuance
of Shares pursuant to an exercise of the Haywood Option. In the event of any
change in, or distributions in respect of, the Haywood Common Stock by reasons
of stock dividends, splitups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on or in respect
of the Haywood Common Stock that would be prohibited under the terms of the
Merger Agreement, or the like, the type and number of Shares subject to the
Haywood Option, and the applicable exercise price per
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Page 6 of 10 Pages
Haywood Option Share, will be appropriately adjusted in such manner as to fully
preserve the economic benefits provided under the Haywood Option Agreement.
CSBI or any other holder or holders of the Haywood Option (collectively,
the "Holder") may exercise the Haywood Option, in whole or in part by sending
written notice after the occurrence of an "Initial Triggering Event" and a
"Subsequent Triggering Event" prior to termination of the Haywood Option. The
term "Initial Triggering Event" is defined as the occurrence of any of the
following events:
(i) Haywood or any of its subsidiaries (each a "Haywood Subsidiary"),
without having received CSBI's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of the Haywood Option Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act, and the rules and regulations thereunder) other than CSBI or any
of its subsidiaries (each a "CSBI Subsidiary") or the Board of Directors of
Haywood shall have recommended that the shareholders of Haywood approve or
accept any such Acquisition Transaction. For purposes of the Haywood Option
Agreement, "Acquisition Transaction" means (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of Haywood or any Significant Subsidiary (as defined in the Haywood
Option Agreement) of Haywood, (y) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Haywood, or (z) any
substantially similar transaction; provided, however, that in no event shall any
merger, consolidation, purchase or similar transaction involving only Haywood
and one or more Haywood Subsidiaries or involving only any two or more of such
Haywood Subsidiaries, be deemed to be an Acquisition Transaction so long as any
such transaction is not entered into in violation of the terms of the Merger
Agreement.
(ii) Haywood or any Haywood Subsidiary, without having received CSBI's
prior written consent, shall have authorized, recommended, proposed or publicly
announced its intention to authorize, recommend or propose, to engage in an
Acquisition Transaction with any person other than CSBI or a CSBI Subsidiary, or
the Board of Directors of Haywood shall have publicly withdrawn or modified, or
publicly announced its intention to withdraw or modify, in any manner adverse to
CSBI, its recommendation that the shareholders of Haywood approve the
transactions contemplated by the Merger Agreement in anticipation of engaging in
an Acquisition Transaction;
(iii) Any person other than CSBI, any CSBI Subsidiary, or any Haywood
Subsidiary acting in a fiduciary capacity in the ordinary course of its business
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Haywood Common Stock (the
term "beneficial ownership" for purposes of the Haywood Option Agreement having
the meaning assigned thereto in Section 13(d) of the Exchange Act, and the rules
and regulations thereunder) other than any person who beneficially owned 10% or
more of Haywood Common Stock on August 5, 1999;
(iv) Any person other than CSBI or any CSBI Subsidiary shall have made
a bona fide proposal to Haywood or its shareholders by public announcement or
written communication that is or becomes the subject of public disclosure to
engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Haywood or its
shareholders to engage in an Acquisition Transaction, Haywood shall have
breached any covenant or obligation contained in the Merger Agreement and such
breach (x) would entitle CSBI to terminate the Merger Agreement and (y) shall
not have been cured prior to the date in which the Holder gives notice of its
exercise of the Haywood Option; or
(vi) Any person other than CSBI or any CSBI Subsidiary, other than in
connection with a transaction to which CSBI has given its prior written consent,
shall have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), or other federal or state bank
regulatory authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
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Page 7 of 10 Pages
The term "Subsequent Triggering Event" is defined as either (A) the
acquisition by any person of beneficial ownership of 25% or more of the then
outstanding Haywood Common Stock, or (B) the occurrence of the Initial
Triggering Event described in paragraph (i) above, except that the percentage
referred to in clause (y) thereof shall be 25%.
After a Subsequent Triggering Event and prior to the termination of the
Haywood Option, CSBI may demand that the Haywood Option and the related Haywood
Option Shares be registered under the Securities Act of 1933, as amended. Upon
such demand, Haywood must effect such registration promptly, subject to certain
exceptions. CSBI is entitled to two such registrations.
The Haywood Option terminates at or upon, and each of the following
constitutes an Exercise Termination Event, (i) the Effective Time, (ii)
termination of the Merger Agreement in accordance with the terms thereof prior
to the occurrence of an Initial Triggering Event, or (iii) the passage of 12
months after termination of the Merger Agreement following the occurrence of an
Initial Triggering Event or a termination by CSBI pursuant to Section 10.1(b)
of the Merger Agreement.
In the event that prior to termination of the Haywood Option, Haywood
enters into an agreement (i) to consolidate with or merge into any person other
than CSBI or any CSBI Subsidiary and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person other
than CSBI or any CSBI Subsidiary to merge into Haywood with Haywood as the
continuing or surviving corporation, but in connection therewith the then
outstanding shares of Haywood Common Stock are changed into or exchanged for
securities of any other person or cash or any other property, or the then
outstanding shares of Haywood Common Stock after such merger represent less than
50% of the outstanding voting shares and voting share equivalents of the merged
company, or (iii) to sell or transfer all or substantially all of its assets to
any entity other than CSBI or any CSBI Subsidiary, then such agreement shall
provide that the Haywood Option be converted into or exchanged for an option
(the "Substitute Option") to purchase shares of common stock of, at the Holder's
option, either (x) the continuing or surviving corporation of a merger or
consolidation or the transferee of all or substantially all of Haywood's assets,
or (y) the person controlling such continuing or surviving corporation or
transferee. The number of shares subject to the Substitute Option and the
exercise price per share will be determined in accordance with a formula in the
Haywood Option Agreement. To the extent possible, the Substitute Option will
contain terms and conditions that are the same as those in the Haywood Option.
The issuer of the Substitute Option will be required to repurchase the
Substitute Option at the request of the holder thereof and to repurchase any
shares of such issuer's common stock ("Substitute Common Stock") issued upon
exercise of a Substitute Option ("Substitute Shares") at the request of the
holder thereof. The repurchase price for the Substitute Option will equal the
amount by which (A) the "Highest Closing Price" (as defined below) exceeds (B)
the exercise price of the Substitute Option, multiplied by the number of
Substitute Shares for which the Substitute Option may then be exercised plus (C)
CSBI's reasonable out-of-pocket expenses. The repurchase price for the
Substitute Shares shall equal the Highest Closing Price multiplied by the number
of Substitute Shares to be repurchased. As used herein, "Highest Closing Price"
means the highest closing price for Substitute Shares within the six-month
period immediately preceding the date the holder gives notice of the required
repurchase of the Substitute Option or the owner gives notice of the required
repurchase of Substitute Shares, as the case may be.
Neither Haywood nor CSBI may assign any of its respective rights and
obligations under the Haywood Option Agreement or the Haywood Option to any
other person without the other party's express written consent, except that if a
Subsequent Triggering Event occurs prior to termination of the Haywood Option,
CSBI, subject to the express provisions of the Haywood Option Agreement, may
assign in whole or in part its rights and obligations thereunder within 60 days
following such subsequent Triggering Event (or such later period); provided,
however, that until 15 days after the Federal Reserve approves an application by
CSBI to acquire the Haywood Option Shares, CSBI may not assign its rights under
the Haywood Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in excess
of 2% of the voting shares of Haywood, (iii) an assignment to a single party for
the purpose of conducting a widely dispersed public distribution on CSBI's
behalf, or (iv) any other manner approved by the Federal Reserve.
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Page 8 of 10 Pages
The rights and obligations of Haywood and CSBI under the Haywood Option
Agreement are subject to receipt of any required regulatory approvals, and both
parties have agreed to use their best efforts in connection therewith. These
include, but are not limited to, applying to the Federal Reserve for approval to
acquire the Haywood Option Shares.
On August 5, 1999, CSBI and Haywood announced the Merger and the material
terms of the Merger Agreement. A copy of the August 5, 1999 press release is
attached as Exhibit 4 to this Schedule 13D and is specifically incorporated
---------
herein by this reference.
Except as set forth herein or in the Exhibits hereto, CSBI does not have
any current plans or proposals that relate to or would result in:
(a) The acquisition by any person of additional Shares or the
disposition of Shares;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Haywood or any Haywood
Subsidiary;
(c) A sale or transfer of a material amount of assets of Haywood or
any Haywood Subsidiary;
(d) Any change in the present Board of Directors or management of
Haywood, including any plans or proposals to change the number
or terms of directors or to fill any existing vacancies on
Haywood's Board of Directors;
(e) Any material change in the present capitalization or dividend
policy of Haywood;
(f) Any other material change in Haywood's business or corporate
structure;
(g) Any changes in Haywood's Articles of Incorporation or Bylaws or
instruments corresponding thereto or other actions which may
impede the acquisition of control of Haywood by any person;
(h) Causing a class of securities of Haywood to be delisted from a
national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered
national securities association;
(i) A class of equity securities of Haywood becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of Issuer.
As of June 30, 1999, to the best of CSBI's knowledge, there were 1,250,356
Shares issued and outstanding.
(a) Pursuant to the Haywood Option Agreement, CSBI has the right to acquire
up to 249,946 additional Shares, subject to adjustment, representing
approximately 19.9% of the outstanding Shares as of June 30, 1999 before giving
effect to the exercise of the Haywood Option. CSBI may be deemed to be the
beneficial owner of the Haywood Option Shares, but disclaims such beneficial
ownership.
As of the date hereof, to the best of CSBI's knowledge, no director or
executive officer of CSBI beneficially owns any Shares.
<PAGE>
Page 9 of 10 Pages
In the event a director or executive officer beneficially owns Shares, CSBI
disclaims any ownership of such Shares. Except as stated herein, neither CSBI
nor, to the best of CSBI's knowledge, any executive officer or director of CSBI,
is the beneficial owner of, or has the right to acquire, directly or indirectly,
any Shares.
(b) Currently, CSBI has no right to vote or dispose of the Haywood Option
Shares. CSBI will not acquire the right to vote or dispose of the Haywood Option
Shares until such time as it exercises the Haywood Option. The Haywood Option is
not currently exercisable and will become exercisable only upon the occurrence
of certain events described above and in the Haywood Option Agreement.
(c) Except for the issuance of the Haywood Option, no transactions in
Haywood Common Stock were effected during the past 60 days by CSBI or, to the
best of CSBI's knowledge, by any executive officer or director of CSBI.
(d) So long as CSBI has not exercised the Haywood Option, CSBI does not
have the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, any of the Haywood Option Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
As described above, the Merger Agreement contains certain customary
restrictions on the conduct of the business of Haywood, including certain
customary restrictions relating to Haywood Common Stock.
Except as provided in the Merger Agreement, the Haywood Option Agreement
and as described above, neither CSBI nor, to the best of CSBI's knowledge, any
executive officer or director of CSBI has any contracts, arrangements,
understandings, or relationships (legal or otherwise), with any person with
respect to any securities of Haywood, including, but not limited to, transfer or
voting of any securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Name, Business Address, and Present Principal Occupation of Each
Director and Executive Officer of Century South Banks, Inc.
Exhibit 2 - Stock Option Agreement, dated as of August 5, 1999, by and between
Haywood Bancshares, Inc., as Issuer, and Century South Banks, Inc.,
as Grantee.
Exhibit 3 - Agreement and Plan of Merger, dated as of August 5, 1999, by and
among Haywood Bancshares, Inc., Century South Banks, Inc. and HAC
Acquisition Corp.
Exhibit 4 - Press Release, dated August 5, 1999, relating to transactions
between Century South Banks, Inc. and Haywood Bancshares, Inc.
<PAGE>
Page 10 of 10 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
CENTURY SOUTH BANKS, INC.
By: /s/ James A. Faulkner
---------------------
Name: James A. Faulkner
Title: Vice Chairman and Chief Executive Officer
August 12, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1 Name, Business Address and Present Principal Occupation of Each
Director and Executive Officer of Century South Banks, Inc.
2 Stock Option Agreement, dated as of August 5, 1999, by and between
Haywood Bancshares, Inc., as Issuer, and Century South Banks,
Inc., as Grantee.
3 Agreement and Plan of Merger, dated as of August 5, 1999, by and
among Haywood Bancshares, Inc., Century South Banks, Inc. and HAC
Acquisition Corp.
4 Press Release, dated August 5, 1999, relating to transactions
between Century South Banks, Inc. and Haywood Bancshares, Inc.
<PAGE>
EXHIBIT 1
---------
NAME, BUSINESS ADDRESS AND PRINCIPAL OCCUPATION
OF EACH DIRECTOR AND EXECUTIVE OFFICER OF
CENTURY SOUTH BANKS, INC.
DIRECTORS
- ---------
The principal business address of each director and executive officer of
Century South Banks, Inc. is c/o 60 Main Street West, Dahlonega, Georgia 30533.
William H. Anderson, II
Chairman of Century South Banks, Inc. ("CSBI") and Southern Trust Insurance
Company, Macon, Georgia.
James R. Balkcom, Jr.
Chairman, President and Chief Executive officer of PAMECO Corp., a distributor
of heating, ventilation and air conditioning equipment and parts, Norcross,
Georgia.
William L. Chandler
President of Chandler-Stovall, a real estate investment and management company,
Ila, Georgia.
Joseph W. Evans
President, Chief Operating Officer and Chief Financial Officer of CSBI.
James A. Faulkner
Vice-Chairman and Chief Executive Officer of CSBI.
Thomas T. Folger, Jr.
Partner in Folger Poultry Farms, Dahlonega, Georgia.
Quill 0. Healey
Chairman of the United States affiliate of J&H Marsh & McLennan, a multi-line
insurance broker, Atlanta, Georgia.
Frank C. Jones
Partner in the law firm of King & Spalding, Atlanta, Georgia.
John B. McKibbon, III
Chief Executive Officer of McKibbon Brothers, Inc., a hotel development and
management company, Gainesville, Georgia.
E. Paul Stringer
Owner and operator of Stringer Insurance Agency, Dahlonega, Georgia.
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
- ----------------------------------------
Tony E. Collins
Executive Vice President and Chief Administrative Officer.
E. Max Crook
Executive Vice President and Regional Executive.
Stephen W. Doughty
Executive Vice President and Chief Credit Officer.
J. Perry Hendrix
Executive Vice President and Regional Executive.
Sidney J. Wooten
Executive Vice President and Regional Executive.
J. Thomas Wiley, Jr.
Executive Vice President and Regional Executive.
<PAGE>
EXHIBIT 2
- --------------------------------------------------------------------------------
STOCK OPTION AGREEMENT
Dated as of August 5, 1999
Between
Haywood Bancshares, Inc., as Issuer,
and Century South Banks, Inc., as Grantee
- --------------------------------------------------------------------------------
<PAGE>
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of August 5, 1999, between Haywood
Bancshares, Inc., a North Carolina corporation ("Issuer") and Century South
Banks, Inc., a Georgia corporation ("Grantee"),
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to 249,946 fully paid and
non-assessable shares of Issuer's Common Stock, $1.00 par value ("Common
Stock"), at a price of $16.30 per share (the "Option Price"); provided, however,
that in no event shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.99% of the Issuer's issued and outstanding
shares of Common Stock without giving effect to any shares subject to or issued
pursuant to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of the Agreement, the number of
shares of Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such issuance, such number equals 19.99% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2
<PAGE>
2. Provided that (i) Grantee shall not have materially breached its
representations or warranties and cure rights thereto expired as contained in
this Agreement or in the Merger Agreement, and (ii) no preliminary or permanent
injunction or other order against the delivery of shares covered by the Option
issued by any court of competent jurisdiction shall then be in effect, (a) The
Holder (as hereinafter defined) may exercise the Option, in whole or part, and
from time to time, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
90 days following such Subsequent Triggering Event. Each of the following shall
be an "Exercise Termination Event": (i) the Effective Time (as defined in the
Merger Agreement) of the Merger; (ii) termination of the Merger Agreement in
accordance with the provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a termination by Grantee
pursuant to Section 10.1(b) of the Merger Agreement; or (iii) the passage of 12
months after termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 10.1(b) of the Merger Agreement (provided that if an Initial
Triggering Event continues or occurs beyond such termination and prior to the
passage of such 12-month period, the Exercise Termination Event shall be 12
months from the expiration of the Last Triggering Event but in no event more
than 18 months after such termination). The "Last Triggering Event" shall mean
the last Initial Triggering Event to expire. The term "Holder" shall mean the
holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
power of Issuer, or (z) any substantially similar transaction; provided,
however, that in no event shall any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such Subsidiaries, be
deemed to be an Acquisition Transaction, provided that any such transaction
is not entered into in violation of the terms of the Merger Agreement;
3
<PAGE>
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its intention to
withdraw or modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions contemplated by
the Merger Agreement in anticipation of engaging in an Acquisition
Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder) other than any person who
has the beneficial ownership of 10% or more of the outstanding common stock
on the date hereof;
(iv) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board or other federal or state regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 25% or
more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 25%.
4
<PAGE>
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 45 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy
5
<PAGE>
of a letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that such legend is
not required for purposes of the 1933 Act; (ii) the reference to the provisions
of this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer: (ii) promptly to take all action as may from time to time
be required (including (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. (S) 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; (iii) that if both an Initial Triggering
Event and a Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event, the Issuer shall use its best
efforts to obtain additional authorized but unissued shares which are free of
preemptive rights so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock and
(iv) promptly to take all action provided herein to protect the rights of the
Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may
6
<PAGE>
be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, splitups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares,
distributions on or in respect of the Common Stock that would be prohibited
under the terms of the Merger Agreement, or the like, the type and number of
shares of Common Stock purchasable upon exercise hereof and the Option Price
shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction to provide for such proper adjustment
and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. Notwithstanding the foregoing, if, at
the time of any request by the Holder for registration of Option Shares as
provided above, Issuer is in registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if none, the sole underwriter
or underwriters, of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise to be covered in
the registration statement contemplated hereby may be reduced; provided further,
however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practical and no reduction
shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any
7
<PAGE>
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary offering
underwriting agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Notwithstanding anything
to the contrary contained herein, in no event shall Issuer be obligated to
effect more than two registrations pursuant to this Section 6 by reason of the
fact that there shall be more than one Grantee as a result of any assignment or
division of this Agreement.
7. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation merger with Issuer (if other than Issuer),
(ii) Issuer in a merger in which Issuer is the continuing surviving person,
and (iii) the transferee of all or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the highest of (i) the price per share
of Common Stock at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of Common Stock to be paid by any third
party pursuant to an agreement With Issuer, (iii) the highest closing price
for shares of Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of
this Option or the owner of the Option Shares (the "Owner") gives notice of
the required repurchase of Option Shares, as the case may be, or (iv) in
the event of a sale of all or a substantial portion of Issuer's assets, the
sum of the price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as determined
8
<PAGE>
by a nationally recognized investment banking firm selected by the Holder
or the Owner, as the case may be, and reasonably acceptable to the Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Assigned Value, the value of
consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as
the case may be, and reasonably acceptable to the Issuer.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event lower than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.99% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Acquiring Corporation.
9
<PAGE>
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 7 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
8. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to (x) the amount by which (i) the Highest
Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute Common Stock
for which the Substitute Option may then be exercised plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously reimbursed), and
at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Grantee's reasonable Out-of-
Pocket Expenses (to the extent not previously reimbursed). The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Stock within the six-month period immediately preceding the date the Substitute
Option Holder gives notice of the required repurchase of the Substitute Option
or the Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 8 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 8. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 8 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the
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portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 8 prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as practicable
in order to accomplish such repurchase), the Substitute Option Holder or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering, and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
9. The 60-day period for exercise of certain rights under Sections 2, 6,
and 12 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
10. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Subject to Section 3, Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all times from the
date hereof through the termination of this Agreement in accordance with its
terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued fully
paid, nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
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11. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the 1933 Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 60
days following such Subsequent Triggering Event (or such later period as
provided in Section 9); provided, however, that until the date 15 days following
the date on which the Federal Reserve Board approves an application by Grantee
under the BHCA to acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (e.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve Board or any
other regulatory authority having appropriate jurisdiction.
13. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation applying to the Federal Reserve
Board under the BHCA or any other governmental authority for approval to acquire
the shares issuable hereunder, but Grantee shall not be obligated to apply to
state banking authorities for approval to acquire the shares of Common Stock
issuable hereunder until such time, if ever, as it deems appropriate to do so.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid void or unenforceable, the remainder of the
terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not
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permitted to acquire the full number of shares of Common Stock provided in
Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is
the express intention of Issuer to allow the Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
21. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
CENTURY SOUTH BANKS, INC.
ATTEST:
/s/ Susan F. Anderson /s/ James A. Faulkner
- ------------------------------------ ------------------------------------
Susan F. Anderson Secretary James A. Faulkner, Vice-Chairman and
Chief Executive Officer
(CORPORATE SEAL)
HAYWOOD BANCSHARES, INC.
ATTEST:
/s/ Paul W. Trantham /s/ Larry R. Ammons
- ------------------------------------ ------------------------------------
Paul W. Trantham, Secretary Larry R. Ammons, President and Chief
Executive Officer
(CORPORATE SEAL)
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EXHIBIT 3
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 5, 1999 by and among Haywood Bancshares, Inc. ("Haywood"), a
corporation organized and existing under the Laws of the State of North
Carolina, with its principal office located in Waynesville, North Carolina,
Century South Banks, Inc. ("CSBI"), a corporation organized and existing under
the Laws of the State of Georgia, with its principal office located in
Dahlonega, Georgia and HBI Acquisition Corp. ("HAC"), a corporation organized
and existing under the Laws of the State of North Carolina with its principal
office located in Waynesville, North Carolina and a wholly owned subsidiary of
CSBI.
Preamble
The Boards of Directors of Haywood and CSBI are of the opinion that the
transaction described herein is in the best interest of the parties and their
respective shareholders. This Agreement provides for the merger of HAC with and
into Haywood such that Haywood will become a wholly owned subsidiary of CSBI
(the "Merger"). At the Effective Time of the Merger, the outstanding shares of
the capital stock of Haywood shall be converted into the right to receive shares
of the common stock of CSBI (except as provided herein). As a result,
shareholders of Haywood shall become shareholders of CSBI. The transaction
described in this Agreement is subject to the approvals of the shareholders of
Haywood and HAC, applicable Regulatory Authorities and the satisfaction of
certain other conditions described in this Agreement. It is the intention of
the parties to this Agreement that the Merger for federal income tax purposes
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code. In connection with the execution of this Agreement,
Haywood and CSBI will enter into a stock option agreement (the "Stock Option
Agreement") in the form attached hereto as Exhibit A.
Immediately following the Closing of the Merger, Haywood Savings Bank,
Inc., SSB ("Bank"), a North Carolina-chartered savings bank, Great Smokies
Financial Corporation, a North Carolina corporation, and Great Smokies Insurance
Agency, Inc., a North Carolina corporation, each a wholly-owned subsidiary of
Haywood, with their main offices located in Waynesville, North Carolina, will
remain in existence under their respective Articles of Incorporation and Bylaws,
as in effect immediately prior to the Effective Time, as wholly-owned
subsidiaries of Haywood.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the parties agree as
follows:
<PAGE>
ARTICLE 1
TRANSACTION AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, HAC shall be merged with and into Haywood in accordance with the
provisions of Section 55-11-05 of the NCBCA and with the effect provided in
Section 55-11-06 of the NCBCA. Haywood shall be the Surviving Corporation
resulting from the Merger as a wholly owned subsidiary of CSBI, and the separate
existence of HAC shall cease. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the respective
Boards of Directors of Haywood, HAC and CSBI.
1.2 Time and Place of Closing. The Closing will take place at 9:30 a.m. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:30 a.m.), or at such other time as the Parties,
acting through their Chief Executive Officers, may mutually agree. The place of
Closing shall be at the offices of Troutman Sanders LLP, Atlanta, Georgia, or
such other place as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger contemplated by this Agreement shall become
effective on the date and at the time the Articles of Merger reflecting the
Merger shall become effective with the Secretary of State of the State of North
Carolina. Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon in writing by the Chief Executive Officers of each Party, the
Parties shall use their reasonable efforts to cause the Effective Time to occur
on the last business day of the month in which occurs the last to occur of (i)
the effective date (including expiration of any applicable waiting period) of
the last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, (ii) the date on which the shareholders of
Haywood approve this Agreement, or (iii) such later date as may be mutually
agreed upon in writing by the Chief Executive Officers of each Party.
1.4 Execution of Support and Non Competition Agreements. Immediately
prior to the execution of this Agreement and as a condition hereto, each of the
executive officers and directors of Haywood and Bank listed in Exhibit E is
executing and delivering to CSBI a Support Agreement and Non Competition
Agreement in substantially the form as attached hereto as Exhibit B.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. The Articles of Incorporation of Haywood
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Haywood in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.
2.3 Directors and Officers of Haywood and Bank. The directors of Haywood
and Bank in office prior to the Effective Time may continue, at their
discretion, to serve as directors
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of the Surviving Corporation and Bank for a period of the later of their
attaining age 70 or five years after the Closing but in no event later than any
individual's 75th birthday. The directors will receive directors' fees in the
amount of $400 per month for their combined service to Haywood and Bank. The
officers of Haywood immediately prior to the Effective Time shall become
officers of the Surviving Corporation.
2.4 Directors and Officers of CSBI and HAC. The directors and officers of
CSBI in office immediately prior to the Effective Time shall serve as the
officers and directors of CSBI from and after the Effective Time in accordance
with the Bylaws of CSBI. The directors of HAC in office immediately prior to
the Effective Time shall become additional directors of the Surviving
Corporation from and after the Effective Time until their successors shall have
been duly elected and qualified or until their earlier death, resignation or
removal in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES AND OPTIONS
3.1 Conversion of Shares. Subject to the provisions of this Agreement, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of CSBI Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and after
the Effective Time.
(b) Subject to adjustment as outlined below and as set forth in Section 3.4
of this Agreement, the election rights set forth in Section 3.2 of this
Agreement, the allocation provisions set forth in Section 3.3 of this Agreement
and the conditions set forth herein, each share of Haywood Common Stock issued
and outstanding at the Effective Time shall be converted into .8874 shares (the
"Exchange Ratio") of CSBI Common Stock (the "Per Share Stock Consideration"),
provided, however, that if (i) the Valuation Period Market Value of CSBI Common
- -------- -------
Stock is less than $24.00 per share, then the Exchange Ratio shall be increased
by an amount equal to the product of (A) the Exchange Ratio multiplied by (B)
the quotient of the difference between $24.00 less the Valuation Period Market
Value divided by the Valuation Period Market Value or (ii) the Valuation Period
Market Value of CSBI Common Stock is greater than $27.00 per share, then the
Exchange Ratio shall be decreased by an amount equal to the product of (A) the
Exchange Ratio multiplied by (B) the quotient of the difference between the
Valuation Period Market Value less $27.00, divided by the Valuation Period
Market Value.
(c) Subject to adjustment as outlined above and as set forth in Section 3.4
of this Agreement, the election rights set forth in Section 3.2 of this
Agreement, the allocation provisions set forth in Section 3.3 of this Agreement
and the conditions set forth herein, each share of Haywood Common Stock
(excluding shares held by CSBI or any of its Subsidiaries or by Haywood, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted) issued and outstanding at the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
the Per Share Stock Consideration.
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3.2 Cash Election. Notwithstanding the foregoing, Holders of Haywood
Common Stock who beneficially own less than 100 shares shall receive cash
consideration in lieu of receiving CSBI Common Stock in the Merger. In
addition, all other holders of Haywood Common Stock may elect to receive cash
consideration in lieu of receiving CSBI Common Stock in accordance with the
election procedures set forth below in this Section 3.2. Holders who are to
receive cash in lieu of exchanging their shares of Haywood Common Stock for CSBI
Common Stock as specified below shall receive an amount in cash (the "Per Share
Cash Consideration") in respect of each share of Haywood Common Stock that is so
converted equal to the Exchange Ratio (subject to adjustment of the Exchange
Ratio as set forth in Section 3.1(b) of this Agreement) and the product of the
Valuation Period Market Value. For purposes of this Agreement:
(i) "Valuation Period Market Value" shall mean the average of the closing
sales prices for CSBI Common Stock as reported on the NASDAQ (as reported in The
Wall Street Journal or, in the absence thereof, by another authoritative source)
during the Valuation Period; and
(ii) "Valuation Period" shall mean the 20 consecutive trading day period
during which the shares of CSBI Common Stock are traded on the NASDAQ ending on
the 10th calendar day immediately prior to the anticipated Effective Time.
An election form and other appropriate and customary transmittal materials
("Election Form") (which shall specify that delivery shall be effected, and risk
of loss and title to the certificates theretofore representing Haywood Common
Stock ("Old Certificates")) shall pass, only upon proper delivery of such Old
Certificates to an exchange agent designated by CSBI (the "Exchange Agent")
shall be mailed together with the Proxy Statement on such date as Haywood and
CSBI shall mutually agree ("Mailing Date") to each holder of record of Haywood
Common Stock as of the record date for eligibility to vote at the Special
Meeting.
Each Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of Haywood Common
Stock to elect to receive cash with respect to all or a portion of such holder's
Haywood Common Stock (shares as to which the election is made being "Cash
Election Shares"). The "Cash Election Amount" shall be equal to the Per Share
Cash Consideration multiplied by the total number of Cash Election Shares.
Shares as to which the holder (or beneficial owner elects to receive the Per
Share Stock Consideration (if eligible to so elect) are referred to herein as
"Stock Election Shares."
Any share of Haywood Common Stock with respect to which the holder (or the
beneficial owner, as the case may be) shall not have submitted to the Exchange
Agent an effective, properly completed Election Form on or before 5:00 p.m. on
the 20th day following the Mailing Date (the "Election Deadline") shall be
converted either into the Per Share Stock consideration or the Per Share Cash
Consideration at the election of CSBI (such shares being "No Election Shares")
with the exception that shares held by a holder of less than 100 shares shall be
deemed to be Cash Election Shares.
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CSBI shall make available one or more Election Forms as may be reasonably
requested by all persons who become holders (or beneficial owners) of Haywood
Common Stock between the Mailing Date and the close of business on the business
day prior to the Election Deadline, and Haywood shall provide to the Exchange
Agent all information reasonably necessary for it to perform as specified
herein.
Any such election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by the Election
Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more certificates (or customary affidavits and
indemnification regarding the loss or destruction of such certificates or the
guaranteed delivery of such certificates) representing all shares of Haywood
Common Stock covered by such Election Form, together with duly executed
transmittal materials included in the Election Form. Any Election Form may be
revoked or changed by the person submitting such Election Form at or prior to
the Election Deadline. In the event an Election Form is revoked prior to the
Election Deadline, the shares of Haywood Common Stock represented by such
Election Form shall become No Election Shares and CSBI shall cause the
certificates representing Haywood Common Stock to be promptly returned without
charge to the person submitting the Election Form upon written request to that
effect from the person who submitted the Election Form. Subject to the terms of
this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in the
Election Forms, and any good faith decisions of the Exchange Agent regarding
such matters shall be binding and conclusive. Neither CSBI nor the Exchange
Agent shall be under any obligation to notify any person of any defect in an
Election Form.
3.3 Allocation. Within five business days after the Election Deadline,
unless the Effective Time has not yet occurred, in which case as soon thereafter
as practicable, CSBI shall cause the Exchange Agent to effect the allocation
among the holders of Haywood Common Stock so that 50% of the aggregate
consideration paid in exchange for shares of Haywood Common Stock in the Merger
(the "Total Merger Consideration") shall be paid in CSBI Common Stock (the
"Stock Amount") and 50% of the Total Merger Consideration shall be paid in cash
(the "Cash Amount"). The allocation shall be effected by the Exchange Agent as
follows:
(i) If the Cash Amount is greater than the Cash Election Amount, then:
(a) each Cash Election Share shall be converted into the right to
receive an amount of cash equal to the Per Share Cash Consideration;
(b) the Exchange Agent will select, on a pro rata basis, first
from among the holders of No Election Shares and then, if necessary, from among
the holders of Stock Election Shares, a sufficient number of such shares ("Cash
Designee Shares") such that the sum of Cash Designee Shares and Cash Election
Shares multiplied by the Per Share Cash Consideration equals as closely as
practicable the Cash Amount (each Cash Designee Share shall be converted into
the right to receive an amount of cash equal to the Per Share Cash
Consideration); and
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(c) any Stock Election Shares and any No Election Shares, in each
case, not so selected as Cash Designee Shares shall be converted into the right
to receive the Per Share Stock Consideration.
(ii) If the Cash Amount is less than the Cash Election Amount, then:
(a) each Stock Election Share and each No Election Share shall be
converted into the right to receive the Per Share Stock Consideration;
(b) the Exchange Agent will select, on a pro rata basis from among
the holders of Cash Election Shares, a sufficient number of such shares ("Stock
Designee Shares") such that the number of Stock Designee Shares multiplied by
the Per Share Cash Consideration equals as closely as practicable the difference
between the Cash Election Amount and the Cash Amount (the Stock Designee Shares
shall be converted into the right to receive the Per Share Stock Consideration);
and
(c) any Cash Election Shares not so selected as Stock Designee
Shares shall be converted into the right to receive an amount of cash equal to
the Per Share Cash Consideration.
In the event that the Exchange Agent is required pursuant to this Section
3.3 to designate from among all Stock Election Shares the Cash Designee Shares
to receive cash, each holder of Stock Election Shares shall be allocated a pro
rata portion of the remainder of the total Cash Designee Share less the number
of No Election Shares which are Cash Designee Shares. Such proration shall
reflect the proportion that the number of Stock Election Shares of each holder
of Stock Election Shares bears to the total number of Stock Election Shares. In
the event the Exchange Agent is required pursuant to this Section 3.3 to
designate from among all holders of Cash Election Shares the Stock Designee
Shares to receive the Per Share Stock Consideration, each holder of Cash
Election Shares shall be allocated a pro rata portion of the total Stock
Designee Shares. Such proration shall reflect the proportion that the number of
Cash Election Shares of each holder of Cash Election Shares bears to the total
number of Cash Election Shares.
Notwithstanding anything to the contrary contained in this Section 3.3,
CSBI may at CSBI's sole discretion, waive the maintenance of the Cash Amount if
the difference between the Cash Amount and the aggregate amount of cash elected
by holders of Haywood Common Stock, including the cash paid for fractional
shares is less than 10% of the Cash Amount.
3.4 Adjustment to Exchange Ratio. In the event that Haywood's consolidated
shareholders' equity (as determined below) is less than $21,000,000, there shall
be an adjustment to the Exchange Ratio. In such event, the Exchange Ratio shall
be adjusted by multiplying it by a fraction the numerator of which is Haywood's
consolidated shareholders' equity (as determined below) and the denominator of
which is $21,000,000. The determination of Haywood's consolidated shareholders'
equity, as adjusted, shall be based on Haywood's consolidated balance sheet
prepared in accordance with GAAP dated as of the end of the month immediately
preceding the Effective Time, including (i) all normal and recurring adjustments
necessary in accordance with GAAP; (ii) all adjustments necessary to record
obligations with respect to
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benefit obligations of Haywood or any of its subsidiaries under its employment
agreements, deferred compensation agreements, directors' retirement plan,
severance plan, and retention bonus plan assuming a change in control triggering
event; (iii) all adjustments necessary to record estimated obligations payable
by Haywood or any of its subsidiaries upon the termination of its defined
benefit pension plan; and (iv) all accruals and liabilities for fees and
expenses of consultants, attorneys, accountants and the like in connection with
the Merger and the due diligence conducted by Haywood in regard to the Merger
other than (x) the fees to be paid to Trident , (y) the direct costs associated
with printing and mailing of the Proxy Statement, and (z) any costs, fees and
expenses reasonably and directly incurred by Haywood and Bank in connection with
any charter conversion by Bank.
3.5 Anti-Dilution Provisions. In the event Haywood or CSBI changes the
number of shares of Haywood Common Stock or CSBI Common Stock, respectively,
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or similar recapitalization with respect to such stock and the
record date therefor (in the case of a stock dividend) or the effective date
therefor (in the case of a stock split or similar recapitalization) shall be
prior to the Effective Time, the Total Merger Consideration shall be
proportionately adjusted.
3.6 Shares Held by Haywood or CSBI. Each of the shares of Haywood Common
Stock held by Haywood or by any CSBI Companies, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time, and no consideration shall be issued
in exchange therefor.
3.7 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of Haywood Common Stock exchanged pursuant to
the Merger, who would otherwise have been entitled to receive a fraction of a
share of CSBI Common Stock (after taking into account all Old Certificates
delivered by such holder), shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Haywood
Common Stock multiplied by the market value of one share of CSBI Common Stock at
the Effective Time. The market value of one share of CSBI Common Stock at the
Effective Time shall be the last sales price of the CSBI Common Stock on NASDAQ
on the last business day preceding the Effective Time. No such holder will be
entitled to dividends, voting rights or any other rights as a shareholder in
respect of any fractional shares.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. (a) Immediately prior to the Effective Time,
CSBI shall deposit, or shall cause to be deposited, with the Exchange Agent, for
the benefit of the holders of Old Certificates for exchange in accordance with
this Article 4, certificates representing the shares of CSBI Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with respect thereto (without any
interest thereon), being hereinafter referred to as the "Exchange Fund") to be
paid pursuant to this Article 4 in exchange for outstanding shares of Haywood
Common Stock.
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(b) Within 20 days after the Effective Date, CSBI shall send or
cause to be sent to each former holder of record of shares (other than Cash
Election Shares or Treasury Shares) of Haywood Common Stock immediately prior to
the Effective Time transmittal materials for use in exchanging such
shareholder's Old Certificates for the consideration set forth in this Article
3. CSBI shall cause the New Certificates into which shares of a shareholder's
Haywood Common Stock are converted on the Effective Date and/or any check in
respect of the Per Share Cash Consideration and any fractional share interests
or dividends or distributions which such person shall be entitled to receive to
be delivered to such shareholders upon delivery to the Exchange Agent of Old
Certificates representing such shares of Haywood Common Stock (or indemnity
reasonably satisfactory to CSBI and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such shareholder. No
interest will be paid on any such cash to be paid pursuant to Article 3 upon
such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of Haywood Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to CSBI
Common Stock with a record date occurring after the Effective Time shall be paid
to the holder of any unsurrendered Old Certificate representing shares of
Haywood Common Stock converted in the Merger into shares of such CSBI Common
Stock until the holder thereof shall surrender such Old Certificate in
accordance with this Article 4. After the surrender of an Old Certificate in
accordance with this Article 4, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of CSBI Common Stock
represented by such Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Haywood for 12 months after the Effective Time shall be paid to
CSBI. Any shareholders of Haywood who have not theretofore complied with this
Article 4 shall thereafter look only to CSBI for payment of the shares of CSBI
Common Stock, cash in lieu of any fractional shares and unpaid dividends and
distributions on the CSBI Common Stock deliverable in respect of each share of
Haywood Common Stock such shareholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
4.2 Rights of Former Shareholders. At the Effective Time, the stock
transfer books of Haywood shall be closed as to holders of Haywood Common Stock
immediately prior to the Effective Time, and no transfer of Haywood Common Stock
by any such holder shall thereafter be made or recognized. Until surrendered
for exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of Haywood Common Stock (other
than shares to be canceled pursuant to Section 3.6 of this Agreement) shall from
and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Sections 3.1 and 3.2 of this Agreement in
exchange therefor. To the extent permitted by Law, former shareholders of
record of Haywood shall be entitled to vote after the Effective Time at any
meeting of CSBI shareholders the number of whole shares of CSBI Common Stock
into which their respective shares of Haywood Common Stock are converted,
regardless of whether such holders have exchanged their certificates
representing
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Haywood Common Stock for certificates representing CSBI Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by CSBI on the CSBI Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares issuable pursuant to this Agreement, but no
dividend or other distribution payable to the holders of record of CSBI Common
Stock as of any time subsequent to the Effective Time shall be delivered to the
holder of any certificate representing shares of Haywood Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 4.1 of this Agreement. However, upon
surrender of such Haywood Common Stock certificate, both the CSBI Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered cash payments to be paid for fractional
share interests (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF HAYWOOD
Haywood hereby represents and warrants to CSBI and HAC as follows:
5.1 Organization, Standing and Power. Haywood is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina and is duly registered as a bank holding company under the BHC
Act. Haywood has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. Neither Haywood nor any
Subsidiary owns any property or conducts any business outside of the State of
North Carolina which would require any of them to be qualified as a foreign
corporation in any jurisdiction except for such jurisdictions in which the
failure to be so qualified is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Haywood.
5.2 Authority; No Breach By Agreement.
(a) Haywood has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and, subject
to approval by its stockholders, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Haywood, subject to the approval of this Agreement by the
holders of at least a majority of the outstanding shares of Haywood Common
Stock, which is the only shareholder vote required for approval of this
Agreement and consummation of the Merger by Haywood. Subject to such requisite
shareholder approval and Consents of applicable Regulatory Authorities, this
Agreement represents a legal, valid and binding obligation of Haywood,
enforceable against Haywood in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
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(b) Except as Previously Disclosed, neither the execution and
delivery of this Agreement by Haywood nor the consummation by Haywood of the
transactions contemplated hereby, nor compliance by Haywood with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of Haywood's Articles of Incorporation or Bylaws, or (ii) constitute or result
in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on either Haywood or any Subsidiary or all of them under,
any Contract or Permit of either Haywood or any Subsidiary or all of them, where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Haywood, or (iii) subject to receipt of the requisite approvals referred to in
Section 9.1(a) and (b) of this Agreement, violate any Law or Order applicable to
either Haywood or Bank or both or any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate , banking and securities Laws
and rules of the AMEX, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the IRS or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, and
other than Consents, filings or notifications which, if not obtained or made,
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Haywood no notice to, filing with or Consent of, any public
body or authority is necessary for the consummation by Haywood of the Merger and
the other transactions contemplated in this Agreement.
5.3 Capital Stock and Other Securities.
(a) The authorized capital stock of Haywood consists of 5,000,000
shares of Haywood Preferred Stock and 10,000,000 shares of Haywood Common Stock.
As of the date of this Agreement, there are no shares of Haywood Preferred Stock
outstanding and 1,250,356 shares of Haywood Common Stock issued and outstanding.
No more than 1,250,356 shares of Haywood Common Stock will be issued and
outstanding at the Effective Time. All of the issued and outstanding shares of
capital stock of Haywood are duly and validly issued and outstanding and are
fully paid and nonassessable under the NCBCA. None of the outstanding shares of
capital stock of Haywood has been issued in violation of any preemptive rights
of the current or past shareholders of Haywood. There are no outstanding Haywood
Options that have been granted and are unexercised.
(b) Except as set forth in Section 5.3(a) of this Agreement or
there are no shares of capital stock or other equity securities of Haywood
outstanding and no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of
Haywood or contracts, commitments, understandings or arrangements by which
Haywood is or may be bound to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock.
5.4 Haywood's Subsidiaries. Haywood has the following subsidiaries: (i)
Bank; (ii) Great Smokies Financial Corporation; and (iii) Great Smokies
Insurance Agency, Inc.
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5.5 SEC Filings; Financial Statements.
(a) Haywood has filed and made available to CSBI all forms, reports
and documents required to be filed by Haywood with the SEC since December 31,
1995 (collectively, the "Haywood SEC Reports"). The Haywood SEC Reports (i) at
the time filed, complied in all Material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Haywood SEC Reports or necessary in order to make the
statements in such Haywood SEC Reports, in light of the circumstances under
which they were made, not misleading. Except for Haywood Subsidiaries that are
registered as a broker, dealer or investment advisor or filings due to fiduciary
holdings of the Haywood Subsidiaries, none of the Haywood Subsidiaries is
required to file any forms, reports or other documents with the SEC;
(b) Haywood has Previously Disclosed, and delivered to CSBI prior to
the execution of this Agreement, copies of all Haywood Financial Statements for
periods ended prior to the date hereof and will deliver to CSBI copies of all
Haywood Financial Statements prepared subsequent to the date hereof. The Haywood
Financial Statements (as of the dates thereof and for the periods covered
thereby) (i) are or will be, if dated after the date of this Agreement, in
accordance with the books and records of Haywood, which are or will be,
materially complete and correct and which have been or will have been maintained
in accordance with good business practices, and (ii) present or will present
fairly the financial position of Haywood as of the dates indicated and the
results of operations, changes in shareholders' equity and cash flows of Haywood
for the periods indicated, in accordance with GAAP (subject to any exceptions as
to consistency specified therein or as may be indicated in the notes thereto or,
in the case of interim financial statements, to normal recurring year-end
adjustments that are not Material).
5.6 Absence of Undisclosed Liabilities. Neither Haywood nor any
Subsidiary has any Liabilities that are reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Haywood, except Liabilities
which are accrued or reserved against in the consolidated balance sheets of
Haywood as of December 31, 1998 and June 30, 1999 included in the Haywood
Financial Statements or reflected in the notes thereto. Neither Haywood nor any
Subsidiary has incurred or paid any Liability since June 30, 1999, except for
(i) such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Haywood, or
(ii) in connection with the transaction contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since June 30, 1999, (i) there
have been no events, changes or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Haywood, (ii) neither Haywood nor any Subsidiary has taken any action, or failed
to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a Material breach or violation of any of the covenants and agreements of Haywood
provided in Article 7 of this Agreement, and (iii) Haywood and each Subsidiary
have conducted their
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respective businesses in the ordinary and usual course (excluding the incurrence
of expenses in connection with this Agreement and the transactions contemplated
hereby).
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of Haywood or
any Subsidiary have been timely filed or requests for extensions have been
timely filed, granted and have not expired for periods ended on or before
December 31, 1998, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Haywood, and all Tax Returns filed are complete and accurate
in all Material respects to the Knowledge of Haywood. All Taxes shown on filed
returns have been paid as of the date of this Agreement, and there is no audit
examination, deficiency, or refund Litigation with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a Material Adverse Effect on Haywood, except as reserved
against in the Haywood Financial Statements delivered prior to the date of this
Agreement. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.
(b) Neither Haywood nor any Subsidiary has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid Tax deficiency has been asserted
in writing against or with respect to Haywood or any Subsidiary, which
deficiency is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Haywood.
(c) Adequate provision for any Taxes due or to become due by Haywood
or Bank for the period or periods through and including the date of the
respective Haywood Financial Statements has been made and is reflected on such
Haywood Financial Statements.
(d) Deferred Taxes of Haywood and its Subsidiaries have been provided
for in accordance with GAAP. Effective January 1, 1994, Haywood adopted
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes."
(e) Haywood and its Subsidiaries are in compliance with, and their
respective records contain all information and documents (including, without
limitation, properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under federal,
state and local Tax Laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Internal
Revenue Code, except for such instances of noncompliance and such omissions as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Haywood and its Subsidiaries.
(f) Except as set forth in Schedule 5.8(f) attached hereto, neither
Haywood nor any Subsidiary has made any payments, is obligated to make any
payments or is a party to any contract, agreement or other arrangement that
could obligate it to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Internal Revenue Code.
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(g) There are no Material Liens with respect to Taxes upon any of the
Assets of either Haywood or any of its Subsidiaries except for liens for Taxes
not yet due or being contested in good faith and for which adequate provision
thereof has been made.
(h) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of either Haywood or any of its Subsidiaries that
occurred during or after any Taxable Period in which either Haywood or any of it
Subsidiaries incurred a net operating loss that carries over to any Taxable
Period ending after December 31, 1996.
(i) Neither Haywood nor any of its Subsidiaries has filed any consent
under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(j) After the date of this Agreement, no Material election with
respect to Taxes will be made by Haywood or any of its Subsidiaries without the
prior consent of CSBI, which consent will not be unreasonably withheld.
(k) Neither Haywood nor any of its Subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
5.9 Allowance. The Allowance shown on the consolidated balance sheets of
Haywood included in the most recent Haywood Financial Statements dated prior to
the date of this Agreement was, and the Allowance shown on the consolidated
balance sheets of Haywood included in the Haywood Financial Statements as of
dates subsequent to the execution of this Agreement will be, as of the dates
thereof, adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for losses relating to or inherent in the
loan and lease portfolios (including accrued interest receivables) of any
Subsidiary and other extensions of credit (including letters of credit and
commitments to make loans or extend credit) by any Subsidiary as of the dates
thereof, except where the failure of such Allowance to be so adequate is not
reasonably likely to have a Material Adverse Effect on Haywood.
5.10 Assets. Except as Previously Disclosed or as disclosed or reserved
against in the Haywood Financial Statements, Haywood and its Subsidiaries each
has good and marketable title, free and clear of all Liens, to all of their
respective Assets. Except as set forth in Schedule 5.10 attached hereto, all
Material tangible properties used in the business of Haywood and its
Subsidiaries are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with Haywood's and each
Subsidiaries' past practices. All Assets which are Material to Haywood's and
its Subsidiaries' respective businesses held under leases or subleases by either
Haywood or its Subsidiaries, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The
policies of fire, theft, liability and other insurance maintained with respect
to the Assets or businesses of
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either Haywood or its Subsidiaries provide adequate coverage under current
industry practices against loss or Liability, and the fidelity and blanket bonds
in effect as to which any Subsidiary is a named insured are reasonably
sufficient. Neither Haywood nor any Subsidiary has received notice from any
insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated or (ii) premium costs with respect to
such policies of insurance will be substantially increased. The Assets of each
Subsidiary include all assets required to operate the business of such
Subsidiary as presently conducted.
5.11 Environmental Matters.
(a) To the Knowledge of Haywood, Haywood, and its Subsidiaries, their
respective Participation Facilities and Loan Properties are, and have been, in
full compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Haywood.
(b) There is no Litigation pending or, to the Knowledge of Haywood,
threatened before any court, governmental agency, board, authority or other
forum in which either Haywood or any Subsidiary or any of their respective
Participation Facilities and Loan Properties has been or, with respect to
threatened Litigation, may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under or involving a site
owned, leased or operated by either Haywood or any Subsidiary or any of their
respective Participation Facilities and Loan Properties, except for such
Litigation pending or threatened which is not likely to have, individually or in
the aggregate, a Material Adverse Effect on Haywood.
(c) To the Knowledge of Haywood, there is no reasonable basis for any
Litigation of a type described in subsection (b), except such as is not likely
to have, individually or in the aggregate, a Material Adverse Effect on Haywood.
(d) To the Knowledge of Haywood, there have been no releases, spills
or discharges of Hazardous Material or other conditions involving Hazardous
Materials in, on, under or affecting any Participation Facility or Loan
Property, except such as are not likely to have, individually or in the
aggregate, a Material Adverse Effect on Haywood.
5.12 Compliance with Laws. Haywood is duly registered as a bank holding
company under the BHC Act. Bank is duly chartered as a state savings bank under
applicable Laws and is an "insured depository institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and its
deposits are insured up to applicable limits by the Savings Association
Insurance Fund. Bank and its Subsidiaries have in effect all Permits necessary
for them to own, lease or operate their respective Assets and to carry on their
respective businesses as now conducted, except for those Permits the absence of
which are not likely to have, individually or in the aggregate, a Material
Adverse Effect on Haywood or its Subsidiaries, and there has occurred no Default
under any such Permit, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Haywood or
its Subsidiaries. Neither Haywood nor any Subsidiary:
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(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not likely to have, individually or in the aggregate, a Material Adverse Effect
on Haywood; and
(b) except as set forth on Schedule 5.12(b) attached hereto, has
received any notification or communication from any agency or department of
federal, state or local government or any Regulatory Authority or the staff
thereof (i) asserting that either Haywood or Bank is not in compliance with any
of the Laws or Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on either Haywood or any Subsidiary,
(ii) threatening to revoke any Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
either Haywood or any Subsidiary, or (iii) requiring Haywood or any Subsidiary
to enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the conduct
of its businesses, or in any manner relates to their respective capital
adequacy, credit or reserve policies, management or the payment of dividends.
5.13 Labor Relations. Neither Haywood nor its Subsidiaries is the subject
of any Litigation asserting that either of them has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel Haywood or its Subsidiaries to bargain with any
labor organization as to wages or conditions of employment, nor is Haywood or
its Subsidiaries a party to or bound by any collective bargaining agreement,
Contract or other agreement or understanding with a labor union or labor
organization, nor is there any strike or other labor dispute involving either of
them, pending or threatened, nor to their respective Knowledge, is there any
activity involving Haywood's or its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.14 Employee Benefit Plans.
(a) Schedule 5.14(a) attached hereto sets forth correct and complete
copies in each case of all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus or other incentive plans, all other written employee programs,
arrangements or agreements, all medical, vision, dental or other health plans,
all life insurance plans and all other employee benefit plans or fringe benefit
plans, including, without limitation, "employee benefit plans" as that term is
defined in Section 3(3) of ERISA currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by Haywood or any Affiliate thereof for
the benefit of employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries and under which such persons are eligible to
participate (collectively, the "Haywood Benefit Plans"). Any of the Haywood
Benefit Plans which is an "employee welfare benefit plan," as that term is
defined in Section 3(l) of ERISA, or an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a "Haywood
ERISA Plan." Each Haywood ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j) of the Internal Revenue Code or
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Section 3(35) of ERISA) is referred to herein as a "Haywood Pension Plan." No
Haywood Pension Plan is or has been a "multi-employer plan" within the meaning
of Section 3(37) of ERISA. Except as set forth on Schedule 5.14(a) attached
hereto, Haywood does not, and may not ever, participate in either a multi-
employer plan or a multiple employer plan.
(b) Haywood has delivered or made available to CSBI prior to the
execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such
Haywood Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Haywood Benefit Plans or amendments, all
determination letters, Material rulings, Material opinion letters, Material
information letters or Material advisory opinions issued by the IRS, the United
States Department of Labor or the Pension Benefit Guaranty Corporation after
December 31, 1994, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports and summary annual
reports prepared for any Haywood Benefit Plan with respect to the most recent
plan year, and (iv) the most recent summary plan descriptions and any Material
modifications thereto.
(c) All Haywood Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws, the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Haywood. Each Haywood ERISA Plan
which is intended to be qualified under Section 401(a) of the Internal Revenue
Code has received a favorable determination letter from the IRS, and Haywood is
not aware of any circumstances which will or could reasonably result in
revocation of any such favorable determination letter or failure of an Haywood
ERISA Plan intended to satisfy Internal Revenue Code Section 401 to satisfy the
Tax qualification provisions of the Internal Revenue Code applicable thereto.
Neither Haywood nor Bank has engaged in a transaction with respect to any
Haywood Benefit Plan that, assuming the Taxable Period of such transaction
expired as of the date hereof, would subject Haywood or Bank to a Material Tax
or penalty imposed by either Section 4975 of the Internal Revenue Code or
Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Haywood.
(d) Except as set forth on Schedule 5.14(d) attached hereto, no
Haywood Pension Plan has any "unfunded current liability," as that term is
defined in Section 302(d)(8)(A) of ERISA, based on actuarial assumptions set
forth for such plan's most recent actuarial valuation, and the fair market value
of the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no Material change in the financial position or
funded status of any Haywood Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Haywood Pension Plan, and (iii) no increase in
benefits under any Haywood Pension Plan as a result of plan amendments or
changes in applicable Law, any of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Haywood or
materially affect the funding status of any such plan. Neither any Haywood
Pension Plan nor any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by Haywood, or the
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single-employer plan of any entity which is considered one employer with Haywood
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, which is reasonably likely to
have a Material Adverse Effect on Haywood. Haywood has not provided, and is not
required to provide, security to a Haywood Pension Plan or to any single-
employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Internal Revenue Code. All premiums required to be paid under ERISA Section 4006
have been timely paid by Haywood, except to the extent any failure to do so
would not have a Material Adverse Effect on Haywood.
(e) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by Haywood with respect to any ongoing, frozen or terminated single-
employer plan or the single-employer plan of any ERISA Affiliate, which
Liability is reasonably likely to have a Material Adverse Effect on Haywood.
Except as Previously Disclosed, Haywood has not incurred any withdrawal
Liability with respect to a multi-employer plan under Subtitle B of Title IV of
ERISA (regardless of whether based on contributions of an ERISA Affiliate),
which Liability is reasonably likely to have a Material Adverse Effect on
Haywood. No notice of a "reportable event," within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any Haywood Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof.
(f) Except as set forth on Schedule 5.14(f) attached hereto or as
required under Title I, Part 6 of ERISA and Internal Revenue Code Section 4980B,
neither Haywood nor Bank has any obligations to provide health and life benefits
under any of the Haywood Benefit Plans to former employees, and there are no
restrictions on the rights of Haywood to amend or terminate any such plan
without incurring any Liability thereunder, which Liability is reasonably likely
to have a Material Adverse Effect on Haywood.
(g) Except as set forth on Schedule 5.14(g) attached hereto, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any officer, director or any employee of Haywood from
Haywood or its Subsidiaries under any Haywood Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Haywood Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit.
(h) Except as set forth on Schedule 5.14(h) attached hereto, the
actuarial present values of all accrued deferred compensation entitlements
(including, without limitation, entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of Haywood and its respective beneficiaries, other than entitlements
accrued pursuant to funded retirement plans subject to the provisions of Section
412 of the Internal Revenue Code or Section 302 of ERISA, have been fully
reflected on the Haywood Financial Statements to the extent required by and in
accordance with GAAP.
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5.15 Material Contracts. Except as set forth on Schedule 5.15 attached
hereto or otherwise reflected in the Haywood Financial Statements, neither
Haywood, its Subsidiaries nor any of their respective Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $50,000, (ii) any Contract relating to the borrowing of money by
Haywood or any Subsidiary or the guarantee by Haywood or any Subsidiary of any
such obligation (other than Contracts evidencing deposit liabilities, purchases
of federal funds, fully-secured repurchase agreements, trade payables, Federal
Home Loan Bank advances and Contracts relating to borrowings or guarantees made
in the ordinary course of business), and (iii) any other Contract or amendment
thereto would be required to be filed as an exhibit to a Form 10-K filed by
Haywood with the SEC as of the date of this Agreement that has not been filed by
Haywood with the SEC or incorporated by reference as an exhibit to Haywood's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (together
with all Contracts referred to in Sections 5.10 and 5.14(a) of this Agreement,
the "Haywood Contracts"). With respect to each Haywood Contract, (i) the
Contract is in full force and effect, (ii) neither Haywood nor Bank is in
Default thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Haywood, (iii)
neither Haywood nor its Subsidiaries has repudiated or waived any material
provision of any such Contract, and (iv) no other party to any such Contract is,
to the knowledge of Haywood, in Default in any respect, other than Defaults
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Haywood, or has repudiated or waived any Material
provision thereunder. Except as set forth on Schedule 5.15 attached hereto, all
of the indebtedness of Haywood or any Subsidiary for money borrowed is
prepayable at any time by Haywood or any Subsidiary without penalty or premium.
5.16 Legal Proceedings. There is no Litigation pending, or, to the
Knowledge of Haywood, threatened against either Haywood or any Subsidiary, or
against any of their Assets, employee benefit plans, interests or rights that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Haywood, nor are there any Orders of any Regulatory Authorities, other
governmental authorities or arbitrators outstanding against either Haywood or
any Subsidiary, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Haywood.
5.17 Reports. Except as set forth on Schedule 5.17 attached hereto, since
December 31, 1994, Haywood and its Subsidiaries have timely filed all reports
and statements, together with any amendments required to be made with respect
thereto, that they were required to file with Regulatory Authorities and any
applicable state securities or banking authorities, except failures to file
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Haywood or its Subsidiaries. As of their respective
dates, each of such reports and documents, including the financial statements,
exhibits and schedules thereto, complied in all material respects with all
applicable Laws. As of their respective dates, each such report and document
did not contain any untrue statement of a Material fact or omit to state a
Material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
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5.18 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by Haywood or any Subsidiary or any
Affiliate thereof to CSBI pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of Material fact or will omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
Haywood or any Subsidiary or any Affiliate thereof for inclusion in the
Registration Statement to be filed by CSBI with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any Material fact, or omit to state any Material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by Haywood or any Subsidiary or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to Haywood's shareholders in connection with
the Haywood Meeting, and any other documents to be filed by Haywood or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy Statement, when first mailed
to the shareholders of Haywood, be false or misleading with respect to any
Material fact, or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Haywood Meeting be false or misleading
with respect to any Material fact, or omit to state any Material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Haywood Meeting. All documents that Haywood or
any Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all Material respects with the provisions of applicable Law.
5.19 Tax and Regulatory Matters. Neither Haywood, nor any Subsidiary nor
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the second
sentence of such Section. To the Knowledge of Haywood, there exists no fact,
circumstance or reason why the requisite Consents referred to in Section 9.1(b)
of this Agreement cannot be received in a timely manner without the imposition
of any condition or restriction of the type described in the second sentence of
such Section 9.1(b) other than with respect to anti-trust or competitive effects
issues.
5.20 State Takeover Laws. Haywood has taken all necessary action to exempt
the transactions contemplated by this Agreement from any applicable
"moratorium," "control share," "fair price," "business combination" or other
state takeover Law.
5.21 Articles of Incorporation Provisions. Haywood has taken all actions so
that the entering into of this Agreement and the consummation of the Merger
contemplated hereby do not and will not result in the grant of any rights to any
Person under the Articles of Incorporation, Bylaws or other governing
instruments of Haywood (other than voting, dissenters' rights of appraisal or
other similar rights) or restrict or impair the ability of CSBI or any of its
Subsidiaries
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to vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of Haywood Common Stock that may be acquired or controlled by it.
5.22 Derivatives. All interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management arrangements,
whether entered into for Haywood's own account, or for the account of Bank or
its customers, were entered into (i) in accordance with prudent business
practices and all applicable Laws, and (ii) with counterparties believed to be
financially responsible.
5.23 Year 2000. To the Knowledge of Haywood, all computer software and
hardware necessary for the conduct of business by Haywood (the "Haywood
Software") is designed to be used before, on, and after January 1, 2000 and the
Haywood Software will operate during each such time period without error
relating to the year 2000, specifically including any error relating to, or the
product of, any date data representing or referring to any particular date. As
used in this Section 5.23, "operate" further includes, but is not limited to,
accepting input of dates without ambiguity, outputting all dates without
ambiguity, and performing calculations, comparisons, extractions, sorting and
any other processing or taking actions or making decisions using dates or time
periods without suffering any abends, aborts, invalid or incorrect results or
other interruptions, whether before, on, or after January 1, 2000. Haywood has
received all year 2000 examinations and certifications as required by applicable
Law and will, within ten business days of this Agreement, make available for
CSBI's review all (i) such examinations and certifications, (ii) contingency
plans in the event the Software fails to operate, and (iii) costs associated
with or related to the Haywood Software.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CSBI AND HAC
CSBI and HAC, jointly and severally, hereby represent and warrant to
Haywood as follows:
6.1 Organization, Standing and Power. CSBI is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Georgia and
is duly registered as a bank holding company under the BHC Act. HAC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina. CSBI has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its Assets.
CSBI is duly qualified or licensed to transact business as a foreign corporation
in good standing in the states of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on CSBI.
6.2 Authority, No Breach By Agreement.
(a) CSBI and HAC each have the corporate power and authority necessary to
execute, deliver and perform their respective obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the
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Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of CSBI and HAC. Subject to the Consents of
Regulatory Authorities, this Agreement represents a legal, valid, and binding
obligation of CSBI and HAC, enforceable against CSBI and HAC in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by either CSBI or
HAC, nor the consummation by either CSBI or HAC of the transactions contemplated
hereby, nor compliance by either CSBI or HAC with any of the provisions hereof,
will (i) conflict with or result in a breach of any provision of CSBI's or HAC's
Articles of Incorporation or Bylaws, or (ii) constitute or result in a Default
under, or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any CSBI Companies under, any Contract or Permit of any CSBI
Companies, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CSBI, or (iii) subject to receipt of the requisite approvals referred
to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any CSBI Companies or any of their respective Material Assets.
(c) No notice to, filing with or Consent of any public body or authority is
necessary for the consummation by either CSBI or HAC of the Merger and the other
transactions contemplated in this Agreement other than (i) in connection or
compliance with the provisions of the Securities Laws, applicable state
corporate and securities Laws and rules of the NASD, (ii) Consents required from
Regulatory Authorities, (iii) notices to or filings with the IRS or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, and
(iv) Consents, filings or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CSBI.
6.3 Capital Stock.
(a) The authorized capital stock of CSBI consists of 30,000,000 shares of
CSBI Common Stock. As of June 30, 1999, there were 11,754,156 shares of CSBI
Common Stock issued and outstanding. CSBI is authorized to issue one or more
series of preferred stock with such powers, preferences and rights as may be
established by CSBI's Board of Directors. As of the date of this Agreement, no
preferred stock has been issued. As of June 30, 1999, 500,000 shares of CSBI
Common Stock were reserved for issuance upon the exercise of issued and
outstanding stock options under the 1994 Incentive Stock Option Plan and 500,000
shares of CSBI Common Stock were reserved under the 1998 Century South Banks,
Inc. Executive Stock Plan (collectively, the "CSBI Option Plans"). All of the
issued and outstanding shares of CSBI Common Stock are, and all of the shares of
CSBI Common Stock to be issued in exchange for shares of Haywood Common Stock
upon consummation of the Merger, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and fully paid
and nonassessable under the GBCC. None of the outstanding shares of CSBI Common
Stock has been, and none of the shares of CSBI Common Stock to be issued in
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exchange for shares of Haywood Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
shareholders of CSBI.
(b) Except as set forth in Section 6.3(a) of this Agreement, or as provided
pursuant to the CSBI Option Plans, or as Previously Disclosed, as of the date of
this Agreement, there are no shares of capital stock or other equity securities
of CSBI outstanding and no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of CSBI or contracts, commitments, understandings or arrangements by which
CSBI is or may be bound to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock.
(c) At the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the Haywood Meeting, the CSBI Common Stock
shall either be listed on a national securities exchange or held of record by at
least 2,000 shareholders.
6.4 SEC Filings; Financial Statements.
(a) CSBI has filed and made available to Haywood all forms, reports and
documents required to be filed by CSBI with the SEC since December 31, 1994
(collectively, the "CSBI SEC Reports"). The CSBI SEC Reports (i) at the time
filed, complied in all Material respects with the applicable requirements of the
1933 Act and the 1934 Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated in such
CSBI SEC Reports or necessary in order to make the statements in such CSBI SEC
Reports, in light of the circumstances under which they were made, not
misleading. Except for CSBI Subsidiaries that are registered as a broker, dealer
or investment advisor or filings due to fiduciary holdings of the CSBI
Subsidiaries, none of the CSBI Subsidiaries is required to file any forms,
reports or other documents with the SEC;
(b) CSBI has Previously Disclosed and delivered to Haywood prior to the
execution of this Agreement copies of all CSBI Financial Statements for periods
ended prior to the date hereof and will deliver to Haywood copies of all CSBI
Financial Statements prepared subsequent to the date hereof. The CSBI Financial
Statements (as of the dates thereof and the periods covered thereby) (i) are or,
if dated after the date of this Agreement, will be in accordance with the books
and records of the CSBI Companies, which are or will be, materially complete and
correct and which have been or will have been, maintained in accordance with
good business practices, and (ii) present or will present fairly the
consolidated financial position of the CSBI Companies as of the dates indicated
and the consolidated results of operations, changes in shareholders' equity and
cash flows of the CSBI Companies for the periods indicated, in accordance with
GAAP (subject to exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year end adjustments that are not Material).
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6.5 Absence of Undisclosed Liabilities. None of the CSBI Companies have any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of CSBI as of
December 31, 1998 and June 30, 1999 included in the CSBI Financial Statements or
reflected in the notes thereto. No CSBI Company has incurred or paid any
Liability since March 31, 1999, except for (i) such Liabilities incurred or paid
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CSBI, or (ii) in connection with the transactions
contemplated by this Agreement.
6.6 Absence of Certain Changes or Events. Since June 30, 1999, except as
Previously Disclosed, (i) there have been no events, changes or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI, and (ii) the CSBI Companies have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a Material breach or violation of any of the
covenants and agreements of CSBI provided in Article 7 of this Agreement.
6.7 Compliance with Laws. CSBI is duly registered as a bank holding company
under the BHC Act. Each of the CSBI Companies has in effect all permits
necessary to own, lease or operate its Assets and to carry on its business as
now conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
CSBI, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI. None of the CSBI Companies:
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on CSBI; and
(b) except as Previously Disclosed, has received any notification or
communication from any agency or department of federal, state or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any of the CSBI Companies are not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CSBI, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI, or (iii) requiring any CSBI
Companies to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts materially
the conduct of its business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management or the payment of dividends.
6.8 Legal Proceedings. There is no Litigation instituted or pending, or, to
the Knowledge of CSBI, threatened against any CSBI Companies, or against any
Asset, interest or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material
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Adverse Effect on CSBI, nor are there any Orders of any Regulatory Authorities,
other governmental authorities or arbitrators outstanding against any CSBI
Companies, that are reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on CSBI.
6.9 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by any CSBI Companies or any
Affiliate thereof to Haywood pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of Material fact or will omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
CSBI Companies or any Affiliate thereof for inclusion in the Registration
Statement to be filed by CSBI with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any Material
fact, or omit to state any Material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
any CSBI Companies or any Affiliate thereof for inclusion in the Proxy Statement
to be mailed to Haywood shareholders in connection with the Haywood Meeting, and
any other documents to be filed by any CSBI Companies or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of Haywood, be false or misleading with respect to any Material
fact, or omit to state any Material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Haywood Meeting, be false or misleading
with respect to any Material fact, or omit to state any Material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Haywood Meeting. All documents that any CSBI
Companies or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form in all Material respects with the provisions of applicable Law.
6.10 Tax and Regulatory Matters. No CSBI Company or any Affiliate thereof
has taken any action or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the second sentence of such
Section 9.1(b). To the Knowledge of CSBI, there exists no fact, circumstance or
reason why the requisite Consents referred to in Section 9.1(b) of this
Agreement cannot be received in a timely manner without the imposition of any
condition or restriction of the type described in the second sentence of such
Section 9.1(b) other than with respect to anti-trust or competitive effects
issues.
6.11 Reports. Except as Previously Disclosed, since December 31, 1994, CSBI
and its Subsidiaries have timely filed all reports and statements, together with
any amendments required to be made with respect thereto (or have obtained
written waivers from the applicable Regulatory Authority waiving all
consequences from the failure to timely file), that they were required to file
with Regulatory Authorities and any applicable state securities or banking
authorities, except
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failure to file which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI or its Subsidiaries. As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits and schedules thereto, complied in all material respects
with all applicable Laws. As of their respective dates, each such report and
document did not contain any untrue statement of a Material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
6.12 Year 2000. To the Knowledge of CSBI, all computer software and
hardware necessary for the conduct of business by CSBI (the "CSBI Software") is
designed to be used before, on, and after January 1, 2000 and the CSBI Software
will operate during each such time period without error relating to the Year
2000, specifically including any error relating to, or the product of, any date
data representing or referring to any particular date. As used in this Section
6.12, "operate" further includes, but is not limited to, accepting input of
dates without ambiguity, outputting all dates without ambiguity, and performing
calculations, comparisons, extractions, sorting and any other processing or
taking actions or making decisions using dates or time periods without suffering
any abends, aborts, invalid or incorrect results or other interruptions, whether
before, on, or after January 1, 2000. CSBI has received all Year 2000
examinations and certifications as required by applicable Law and will, within
ten business days of this Agreement, make available for Haywood's review all (i)
such examinations and certifications, (ii) contingency plans in the event the
software fails to operate, and (iii) costs associated with or related to the
CSBI Software.
6.13 Merger Consideration. CSBI has unissued shares of CSBI Common Stock
that are not reserved for any other purposes and are sufficient to provide the
aggregate number of shares of CSBI Common Stock to be issued in the Merger and
has available to it sources of funds sufficient to provide the aggregate Per
Share Cash Consideration. The shares of CSBI Common Stock to be issued in the
Merger have been duly authorized and when issued pursuant to the Merger will be
validly issued, fully paid and non-assessable with the same rights as each other
outstanding shares of CSBI Common Stock.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Haywood. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement unless
the prior written consent of CSBI shall have been obtained, and except as
otherwise contemplated herein, Haywood agrees: (i) to operate its business and
cause each Subsidiary to operate its business in the usual, regular and ordinary
course; (ii) to preserve intact its business organizations and Assets and
maintain its rights and franchises; (iii) to use its reasonable efforts to cause
its representations and warranties to be correct at all times; (iv) to use its
reasonable efforts to ensure, to the extent consistent with the Board of
Directors' exercise of its fiduciary duties, that the aggregate Merger-related
expenses it incurs are reasonable; (v) to take all steps necessary to terminate
the Haywood Benefit Plans (or obtain waivers of claims against Haywood from the
beneficiaries thereunder as approved by CSBI in its sole discretion) as of the
Effective Time; and (vi) to take no action which would (a) adversely affect the
ability of any Party to obtain any
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Consents required for the transactions contemplated hereby without imposition of
a condition or restriction of the type referred to in the last sentence of
Section 9.1(b) of this Agreement or (b) adversely affect in any Material respect
the ability of either Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of Haywood. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Haywood
covenants and agrees that it and each Subsidiary will not do or agree or commit
to do, any of the following without the prior written consent of the Chief
Executive Officer of CSBI, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of Haywood or the Charter, Bylaws or other governing instruments of
each Subsidiary; or
(b) incur any additional debt obligation or other obligation for borrowed
money in excess of an aggregate of $50,000 except in the ordinary course of the
business of Haywood and each Subsidiary consistent with past practices (which
shall include creation of deposit liabilities, purchases of federal funds,
advances from the Federal Home Loan Bank and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any share of stock of each Subsidiary held by Haywood of any Lien
or permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers' acceptances, "treasury, tax and loan" accounts
established in the ordinary course of business and Liens in effect as of the
date hereof that are Previously Disclosed); or
(c) repurchase, redeem or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of Haywood, or declare or pay any dividend or make any other
distribution in respect of Haywood capital stock provided that Haywood may, in
its sole discretion (to the extent legally and contractually permitted to do
so), but shall not be obligated to, declare and pay quarterly cash dividends at
a rate not to exceed sixteen cents ($0.16) per share consistent with past
practices to its shareholders; or
(d) except for this Agreement or in connection with the exercise of any
option pursuant to the Stock Option Agreement, issue or sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of Haywood Common Stock, or any stock
appreciation rights, or any option, warrant, conversion or other right to
acquire any such stock; or
(e) adjust, split, combine or reclassify any capital stock of Haywood or
issue or authorize the issuance of any other securities in respect of or in
substitution for shares of either Haywood Common Stock or each Subsidiary's
common stock or buy, sell, lease, mortgage or otherwise dispose of or otherwise
encumber any Asset having a book value in excess of $10,000 or that exceed in
the aggregate the sum of $100,000 during the term of this Agreement (other than
in the ordinary course of business for reasonable and adequate consideration);
or
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(f) acquire direct or indirect control over any real property, other than
in connection with (i) foreclosures in the ordinary course of business, or (ii)
acquisitions of control by Haywood in its fiduciary capacity; or
(g) except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of three years or less,
and purchases of investment grade bonds issued by municipalities located within
the State of North Carolina with a maturity of five years or less, purchase any
bonds or securities or make any Material investment, either by purchase of
stock, bonds or securities, contributions to capital, Asset transfers or
purchase of any Assets, in any Person other than Bank, or otherwise acquire
direct or indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of control by
a depository institution Subsidiary in its fiduciary capacity, or (iii) the
creation of new, wholly-owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(h) grant any increase in compensation or benefits to the employees or
officers of Haywood or any Subsidiary (including such discretionary increases as
may be contemplated by existing employment agreements), except in accordance
with past practice Previously Disclosed or as required by Law, pay any bonus,
enter into or amend any severance agreements with officers of either Haywood or
any Subsidiary, grant any increase in fees or other increases in compensation or
other benefits to directors of either Haywood or any Subsidiary except in
accordance with past practice Previously Disclosed; or
(i) enter into or amend any employment Contract between Haywood or any
Subsidiary and any Person (unless such amendment is required by Law) that
Haywood or any Subsidiary, as the case may be, does not have the unconditional
right to terminate without Liability (other than Liability for services already
rendered), at any time on or after the Effective Time; or
(j) adopt any new employee benefit plan of Haywood or any Subsidiary or
make any Material change in or to any existing employee benefit plans of Haywood
or any Subsidiary other than any such change that is required by Law or that, in
the opinion of counsel, is necessary or advisable to maintain the tax qualified
status of any such plan; or
(k) make any significant change in any Tax or accounting methods or systems
of internal accounting controls, except as may be appropriate to conform to
changes in regulatory accounting requirements or GAAP; or
(l) commence any Litigation other than in accordance with past practice,
settle any Litigation involving any Liability of Haywood or any Subsidiary for
money damages in excess of $25,000 or Material restrictions upon the operations
of Haywood or Subsidiary; or
(m) except in the ordinary course of business, modify, amend or terminate
any Material Contract or waive, release, compromise or assign any Material
rights or claims; or
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(n) extend credit to any borrower which requires the approval of Haywood's
Board of Directors.
7.3 Covenants of CSBI and HAC.
(a) From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, unless the prior written consent of
Haywood shall have been obtained, CSBI and HAC, jointly and severally, covenant
and agree that each of them shall (i) continue to conduct their respective
businesses and the business of its Subsidiaries in a manner designed in their
respective reasonable judgment to enhance the long term value of the CSBI Common
Stock and the business prospects of the CSBI Companies, (ii) to the extent
consistent therewith, use all reasonable efforts to preserve intact the CSBI
Companies' core businesses and goodwill with their respective employees and the
communities they serve, (iii) use their respective reasonable efforts to cause
their respective representations and warranties to be correct at all times, and
(iv) take no action which would (a) adversely affect the ability of any Party to
obtain any Consents required for the transaction contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement, or (b) adversely affect in any
Material respect the ability of any Party to perform its covenants and
agreements under this Agreement.
(b) CSBI shall take all action necessary to approve, in accordance with
Rule 16b-3 of the 1934 Act, the acquisition of shares of the common stock of
CSBI and CSBI stock options by Haywood shareholders who will become Section 16
insiders of CSBI upon consummation of the Merger.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) is reasonably likely to cause
or constitute a Material breach of any of its representations, warranties or
covenants contained herein and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year end adjustments that are not Material). As of their
respective dates, such reports filed with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Shareholder Approval. Haywood shall take, in accordance with applicable
Law and its Articles of Incorporation and Bylaws, all action necessary to
convene the Haywood Meeting to consider and vote upon the approval of this
Agreement and any other matters required to be approved by Haywood shareholders
for consummation of the Merger (including any adjournment or postponement
thereof), as promptly as practicable after the Registration Statement is
declared effective. The Board of Directors of Haywood shall (subject to
compliance with its fiduciary duties as advised by counsel and the receipt from
Trident of a letter dated not more than three days prior to the date of the
mailing of the Proxy Statement to the effect that the consideration to be
received in the merger by the holders of Haywood Common Stock is fair, from a
financial point of view, to such holders) recommend such approval, and Haywood
(subject to the direction of the Haywood Board acting in compliance with its
fiduciary duties as advised by counsel) shall take all reasonable lawful action
to solicit such approval by its shareholders. CSBI, as sole shareholder of HAC,
will vote its HAC Common Stock in favor of the Merger.
8.2 Registration Statement.
(a) Each of CSBI and Haywood agrees to cooperate in the preparation of a
Registration Statement to be filed by CSBI with the SEC in connection with the
issuance of CSBI Common Stock in the Merger (including the Proxy Statement and
all related documents). Provided Haywood has cooperated as required above, CSBI
agrees to file the Registration Statement with the SEC as promptly as
practicable, but in no event later than 90 days after the date of this
Agreement. Each of Haywood and CSBI agrees to use all reasonable efforts to
cause the Registration Statement to be declared effective under the 1933 Act as
promptly as reasonably practicable after filing thereof. CSBI also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Haywood agrees to furnish CSBI all information concerning
Haywood, Bank and their respective officers, directors and shareholders as may
be reasonably requested in connection with the foregoing.
(b) Each of Haywood and CSBI agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the 1933 Act, contain any untrue statement of a Material
fact or omit to state any Material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to Haywood shareholders and at the time of the Haywood Meeting, contain any
untrue statement of a Material fact or omit to state any Material fact required
to be stated therein or necessary to make the statements therein not misleading
with respect to any Material fact, or which will omit to state any Material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier statement in the Proxy
Statement or any amendment or supplement thereto. Each of Haywood and CSBI
further agrees that if it shall become aware prior to the
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Effective Date of any information that would cause any of the statements in the
Proxy Statement to be false or misleading with respect to any Material fact, or
to omit to state any Material fact necessary to make the statements therein not
false or misleading, to promptly inform the other Party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) In the case of CSBI, CSBI will advise Haywood, promptly after CSBI
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, or of the issuance of
any stop order or the suspension of the qualification of the CSBI Common Stock
for offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
(d) Nothing in this Section 8.2 or elsewhere in this Agreement shall
prohibit accurate disclosure by Haywood of information that is required to be
disclosed in the Registration Statement of the Proxy Statement or in any other
document required to be filed with the SEC (including, without limitation, a
Solicitation/Recommendation Statement on Schedule 14D-9) or otherwise required
to be publicly disclosed by applicable Law or the regulations and rules of the
AMEX.
8.3 Applications. CSBI shall promptly prepare and file, Haywood and each
Subsidiary shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. CSBI
shall permit Haywood to review (and approve with respect to information relating
to Haywood) such applications prior to filing same.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, Haywood shall execute and file the Articles of
Merger with the Secretary of State of the State of North Carolina and the
Savings Institution Division of the State of North Carolina in connection with
the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use its reasonable efforts to
take all actions, and to do all things necessary, proper or advisable under
applicable Laws, as promptly as practicable so as to permit consummation of the
Merger at the earliest possible date and to otherwise enable consummation of the
transactions contemplated hereby and shall cooperate fully with the other Party
hereto to that end (it being understood that any amendments to the Registration
Statement filed by CSBI in connection with the CSBI Common Stock to be issued in
the Merger or a resolicitation of proxies as a consequence of an acquisition
agreement by CSBI or any of its Subsidiaries shall not violate this covenant
provided CSBI agrees to pay all direct expenses associated with any such
resolicitation), including, without limitation, using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its
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reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party will keep the other Party
advised of all Material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transaction contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to, maintain
the confidentiality of all confidential information furnished to it by any other
Party concerning its and its Subsidiaries' businesses, operations and financial
condition except in furtherance of the transactions contemplated by this
Agreement. In the event that a Party is required by applicable Law or valid
court process to disclose any such confidential information, then such Party
shall provide the other Party with prompt written notice of any such requirement
so that the other Party may seek a protective order or other appropriate remedy
and/or waive compliance with this Section 8.6. If in the absence of a
protective order or other remedy or the receipt of a waiver by the other Party,
a Party is nonetheless, in the written opinion of counsel, legally compelled to
disclose any such confidential information to any tribunal or else stand liable
for contempt or suffer other censure or penalty, a Party may, without liability
hereunder, disclose to such tribunal only that portion of the confidential
information which such counsel advises such Party is legally required to be
disclosed; provided that such disclosing Party use its best efforts to preserve
the confidentiality of such confidential information, including without
limitation, by cooperating with the other Party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded such confidential information by such tribunal. If this Agreement is
terminated prior to the Effective Time, each Party shall promptly return all
documents and copies thereof and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a Material breach of
any representation, warranty, covenant or agreement of the other Party or which
has had or is reasonably likely to have a Material Adverse Effect on the other
Party.
(d) Neither Party nor any of their respective Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of its customers, jeopardize
the attorney-client or similar privilege with respect to such information or
contravene any Law, rule, regulation, Order, judgment, decree, fiduciary duty or
agreement entered into prior to the date of this Agreement. The Parties will
use
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their reasonable efforts to make appropriate substitute disclosure arrangements,
to the extent practicable, in circumstances in which the restrictions of the
preceding sentence apply.
8.7 Press Releases. Prior to the Effective Time, Haywood and CSBI shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
-------- -------
8.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, neither Haywood nor any Affiliate thereof nor
any investment banker, attorney, accountant or other representative
(collectively, the "Representatives") retained by Haywood or Bank shall directly
or indirectly solicit any Acquisition Proposal by any Person. Except to the
extent necessary to comply with the fiduciary duties of Haywood Board of
Directors as determined by the Haywood Board of Directors after consulting with
and considering the advice of counsel, neither Haywood nor any Affiliate or
Representative thereof shall furnish any non public information that it is not
legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but Haywood may communicate
information about such an Acquisition Proposal to its shareholders if and to the
extent that it is required to do so in order to comply with its legal
obligations as advised by counsel; provided that Haywood shall promptly advise
CSBI verbally and in writing following the receipt of any Acquisition Proposal
and the Material details thereof. Haywood shall (i) immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
Persons conducted heretofore with respect to any of the foregoing and (ii)
subject to its fiduciary duties, direct and use its reasonable efforts to cause
all of its Representatives not to engage in any of the foregoing.
8.9 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not to qualify for treatment as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 State Takeover Laws. Haywood and each Subsidiary shall take all
reasonable steps to exempt the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable state
takeover Law.
8.11 Articles of Incorporation Provisions. Haywood and each Subsidiary
shall take all necessary action to ensure that the entering into of this
Agreement and the consummation of the Merger does not and will not result in the
grant of any rights to any Person under the Articles, Bylaws or other governing
instruments of Haywood or any Subsidiary (other than voting, dissenters' rights
of appraisal or other similar rights) or restrict or impair the ability of CSBI
or any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of Haywood or any Subsidiary that may be
acquired or controlled by it.
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8.12 Agreement of Affiliates. Haywood has Previously Disclosed all Persons
whom it reasonably believes is an "affiliate" of Haywood for purposes of Rule
145 under the 1933 Act. Haywood shall use its reasonable efforts to cause each
such Person to deliver to CSBI not later than 30 days after the date of this
Agreement, a written agreement, substantially in the form of Exhibit C,
providing that such Person will not sell, pledge, transfer or otherwise dispose
of the shares of Haywood Common Stock held by such Person except as contemplated
by such agreement or by this Agreement and will not sell, pledge, transfer or
otherwise dispose of the shares of CSBI Common Stock to be received by such
Person upon consummation of the Merger except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder. CSBI shall
not be required to maintain the effectiveness of the Registration Statement
under the 1933 Act for the purposes of resale of CSBI Common Stock by such
affiliates.
8.13 Employee Benefits and Contract. Following the Effective Time, CSBI
shall provide generally to officers and employees of Haywood, who at or after
the Effective Time become employees of a CSBI Company, employee benefits under
employee benefit plans including severance plans set forth herein on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the CSBI Companies to their similarly situated officers
and employees. CSBI shall waive any pre-existing condition exclusion under any
employee health plan for which any employees and/or officers and dependents
covered by Haywood Benefit Plans as of Closing shall become eligible by virtue
of the preceding sentence, to the extent (i) such pre-existing condition was
covered under the Haywood Benefit Plans and (ii) the individual affected by the
pre-existing condition was covered by the Haywood Entity's corresponding plan on
the date which immediately precedes the Effective Time. For purposes of
participation, vesting and benefit accrual under all qualified benefit plans,
the service of the employees of Haywood or Bank prior to the Effective Time
shall be treated as service with the CSBI Companies participating in all
qualified benefit plans. Bank will enter into an employment contract acceptable
to CSBI with Larry R. Ammons as of the date of Closing to the extent he is
available and agrees to such employment.
8.14 Exchange Listing. CSBI shall use its reasonable efforts to list, prior
to the Effective Time, on the NASDAQ, subject to official notice of issuance,
the shares of CSBI Common Stock to be issued to the holders of Haywood Common
Stock pursuant to the Merger.
8.15 D&O Coverage. At the Effective Time, CSBI will provide directors and
officers insurance coverage for Haywood's directors and officers either, at
CSBI's election, (i) by purchasing continuation coverage under Haywood's current
policy for directors and officers for a period not less than three years after
the Effective Time, or (ii) obtain coverage under CSBI's current directors' and
officers' policy to provide coverage for Haywood's directors and officers on a
prior acts basis for a period not less than three years prior to the Effective
Time.
8.16 Indemnification. CSBI shall cause Haywood to continue to, indemnify,
defend and hold harmless the present and former directors, officers, employees
and agents of the Haywood Companies (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions arising out of the Indemnified
Party's service or services as directors, officers, employees or agents of
Haywood or, at Haywood's request, of another corporation, partnership,
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joint venture, trust or other enterprise occurring at or prior to the Effective
Time (including the transactions contemplated by this Agreement) to the extent
currently provided by Haywood's Articles of Incorporation and bylaws as in
effect as of the date hereof, including any provisions relating to advances of
expenses incurred in the defense of any Litigation.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and to consummate the Merger are subject to
the satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6 of this Agreement:
(a) Shareholder Approval. The shareholders of Haywood shall have
approved this Agreement and the consummation of the Merger as and to the extent
required by Law and by the provisions of any of its governing instruments and by
the rules of the AMEX.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including, without limitation, requirements relating to the raising of
additional capital or the disposition of Assets or deposits) which in the
reasonable judgment of the Board of Directors of CSBI would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement so as to render inadvisable the consummation of
the Merger.
(c) Consents and Approvals. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 9.1(b) of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
which in the reasonable judgment of the Board of Directors of CSBI would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(d) Legal Proceedings. No court or governmental or Regulatory Authority
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law or Order (whether temporary, preliminary or permanent) or taken
any other action which prohibits, restricts or makes illegal consummation of the
transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the
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effectiveness thereof shall have been initiated and be continuing, and all
necessary approvals under state securities Laws or the 1933 Act or 1934 Act
relating to the issuance or trading of the shares of CSBI Common Stock issuable
pursuant to the Merger shall have been received.
(f) Tax Matters. Haywood and CSBI shall have received a written opinion
of counsel from Troutman Sanders LLP in form reasonably satisfactory to each of
them (the "Tax Opinion"), substantially to the effect that for federal income
tax purposes (i) the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, (ii) the exchange in the Merger
of Haywood Common Stock solely for CSBI Common Stock will not give rise to gain
or loss to the shareholders of Haywood with respect to such exchange (except to
the extent of any cash received), and (iii) neither of Haywood nor CSBI will
recognize gain or loss as a consequence of the Merger except for income and
deferred gain recognized pursuant to Treasury regulations issued under Section
1502 of the Internal Revenue Code. In rendering such Tax Opinion, Troutman
Sanders LLP shall be entitled to rely upon representations of officers of
Haywood, CSBI and HAC reasonably satisfactory in form and substance to such
counsel.
(g) Employment Agreement. Haywood and Bank shall have offered Larry R.
Ammons the employment agreement in substantially the form set forth in Exhibit D
to this Agreement.
9.2 Conditions to Obligations of CSBI. The obligations of CSBI to perform
this Agreement and to consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by CSBI pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. The representations and warranties
of Haywood set forth or referred to in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.3 of this Agreement, which
shall be true and correct in all Material respects) the inaccuracies of which
relate to matters that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Haywood.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Haywood to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all Material
respects.
(c) Certificates. Haywood shall have delivered to CSBI (i) a certificate,
dated as of the Effective Time and signed on its behalf by its Chief Executive
Officer and Chief Financial Officer, to the effect that the conditions of its
obligations set forth in Section 9.2(a) and 9.2(b) of this Agreement have been
satisfied, and (ii) certified copies of resolutions duly adopted
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by the Haywood Board of Directors and shareholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as CSBI and its counsel shall request.
(d) Opinion of Counsel. CSBI shall have received a written opinion from
Housley Kantarian & Bronstein, P.C., counsel to Haywood, dated as of the
Closing, in form reasonably satisfactory to CSBI, as to the matters set forth in
Exhibit F hereto.
(e) Accountant's Letters. CSBI shall have received from KPMG LLP letters
dated not more than five (5) days prior to (i) the date of the Proxy Statement
and (ii) the Effective Time, with respect to certain financial information
regarding Haywood and Bank, in form and substance reasonably satisfactory to
CSBI, which letters shall be based upon customary specified procedures
undertaken by such firm.
(f) Affiliate Agreements. CSBI shall have received from each affiliate of
Haywood the affiliate agreement referred to in Section 8.12 hereof, in
substantially the form attached hereto as Exhibit C.
(g) Support Agreements. Each of the executive officers and directors of
Haywood listed in Exhibit E shall have executed and delivered to CSBI a Support
Agreement in substantially the form attached hereto as Exhibit B.
9.3 Conditions to Obligations of Haywood. The obligations of Haywood to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Haywood pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. The representations and warranties of
CSBI set forth or referred to in this Agreement shall be true and correct in all
Material respects as of the date of this Agreement and as of the Effective Time
with the same effect as though all such representations and warranties had been
made on and as of the Effective Time (provided that representations and
warranties which are confined to a specified date shall speak only as of such
date), except (i) as expressly contemplated by this Agreement, or (ii) for
representations and warranties (other than the representations and warranties
set forth in Section 6.3 of this Agreement, which shall be true and correct in
all Material respects) the inaccuracies of which relate to matters that are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CSBI.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of CSBI to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all Material
respects.
(c) Certificates. CSBI shall have delivered to Haywood (i) a certificate,
dated as of the Effective Time and signed on its behalf by its Chief Executive
Officer and its Chief
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Financial Officer, to the effect that the conditions of its obligations set
forth in Section 9.3(a) and 9.3(b) of this Agreement have been satisfied, and
(ii) certified copies of resolutions duly adopted by CSBI's Board of Directors
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, all in such reasonable detail as Haywood
and its counsel shall request.
(d) Opinion of Counsel. Haywood shall have received an opinion of
Troutman Sanders LLP, counsel to CSBI, dated as of the Effective Time, in form
reasonably satisfactory to Haywood, as to matters set forth in Exhibit G hereto.
(e) Share Listing. The shares of CSBI Common Stock issuable pursuant to
the Merger shall have been approved for listing on NASDAQ.
(f) Fairness Opinion. Haywood shall have received from Trident a letter
dated not more than three days prior to the mailing of the Proxy Statement to
the effect that, in the opinion of such firm, the consideration to be received
by Haywood Shareholders in connection with the Merger is fair from a financial
point of view to such shareholders.
(g) Exchange Agent Certificate. The Exchange Agent shall have delivered
to Haywood a certificate, dated as of the Effective Time, to the effect that the
Exchange Agent has received from CSBI certificates for the required number of
whole shares of CSBI Common Stock to be issued in the Merger and cash to cover
fractional shares and the Cash Amount.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of
Haywood, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the respective Boards of Directors of CSBI and
Haywood; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
of a breach by the other Parties of any representation or warranty contained in
this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach and which breach
would provide the non breaching party the ability to refuse to consummate the
Merger under the standard set forth in Section 9.2(a) of this Agreement in the
case of CSBI and Section 9.3(a) of this Agreement in the case of Haywood; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
(i) any Consent of any Regulatory Authority required
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for consummation of the Merger shall have been denied by final nonappealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal, or (ii) the shareholders of Haywood
fail to vote their approval of this Agreement and the transaction contemplated
hereby at the Haywood Meeting where the transaction was presented to such
shareholders for approval and voted upon; or
(d) By the Board of Directors of either Party in the event that the Merger
shall not have been consummated by March 31, 2000, but only if the failure to
consummate the transactions contemplated hereby on or before such date is not
caused by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 10.1(d); or
(e) By the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 10.1(d) of this Agreement; or
(f) By CSBI in the event that the Board of Directors of Haywood shall have
failed to reaffirm, following a written request by CSBI for such reaffirmation
after Haywood shall have received any inquiry or proposal with respect to an
Acquisition Proposal, its approval of the Merger (to the exclusion of any other
Acquisition Proposal), or shall have resolved not to reaffirm the Merger.
10.2 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 10.1 of this Agreement, this Agreement
shall become void and have no effect, except that (i) the provisions of this
Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall survive
any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b) or 10.1(e) of this Agreement shall not relieve the breaching
Party from Liability for an uncured willful breach of a representation,
warranty, covenant or agreement giving rise to such termination; provided that
such Liability shall be determined solely in accordance with the effect of
Section 11.2(b) of this Agreement.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants and agreements of the
Parties shall not survive the Effective Time except for this Section 10.3 and
Articles 2, 3, 4, and 11 and Section 8.12 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. Except as otherwise provided herein, the capitalized
terms set forth below (in their singular and plural forms as applicable) shall
have the following meanings:
"AMEX" shall mean the American Stock Exchange.
"Acquisition Proposal" with respect to a Party shall mean any tender offer
or exchange offer or any proposal for a merger, acquisition of all of the stock
or Assets of, or other business
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combination involving such Party or any of its Subsidiaries or the acquisition
of a substantial equity interest in, or a substantial portion of the Assets of,
such Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person, (ii) any officer, director, partner,
employer or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"Allowance" shall mean the allowance for possible loan or credit losses for
the periods set forth in Section 5.9 of this Agreement.
"Articles of Merger" shall mean the Articles of Merger to be executed by
CSBI, HAC and Haywood and filed with the Secretary of State of the State of
North Carolina relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"Bank" shall have the meaning set forth in the Preamble of this Agreement.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Cash Amount" shall have the meaning set forth in Section 3.3 of this
Agreement.
"Cash Election Shares" shall have the meaning set forth in Section 3.2 of
this Agreement.
"Closing" shall mean the closing of the transaction contemplated hereby, as
described in Section 1.2 of this Agreement.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver or similar affirmation by any Person pursuant to any Contract,
Law, Order or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character or other document to which any Person is a party or that is binding on
any Person or its capital stock, Assets or business.
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"CSBI Common Stock" shall mean the One Dollar ($1.00) par value per share
common stock of CSBI.
"CSBI Companies" shall mean, collectively, CSBI and all CSBI Subsidiaries.
"CSBI Financial Statements" shall mean (i) the consolidated statements of
condition (including related notes and schedules, if any) of CSBI as of June 30,
1999, and as of December 31, 1998, 1997, 1996 and 1995, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the three months ended June 30, 1999,
and for each of the four years ended December 31, 1998, 1997, 1996 and 1995, as
filed by CSBI in SEC Documents and (ii) the consolidated statements of condition
of CSBI (including related notes and schedules, if any) and related statements
of income, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1998.
"CSBI Option Plans" shall have the meaning set forth in Section 6.3 of this
Agreement.
"CSBI Subsidiaries" shall mean the subsidiaries of CSBI including HAC.
"Default" shall mean (i) any breach or violation of or default under any
Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of control or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase or impose any Liability
under, any Contract, Order or Permit.
"Effective Time" shall mean the date and time at which the Articles of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of North Carolina.
"Election Deadline" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Election Form" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Environmental Laws" shall mean all federal, state, municipal and local
laws, statutes, orders, regulations, decrees, resolutions, proclamations,
permits, licenses, approvals, authorizations, consents, judgments, judicial
decisions and other governmental requirements, limitations and standards
relating to the environment, health and safety issues, including, without
limitation, the manufacture, generation, use, processing, treatment, recycling,
storage, handling, "Release" (as hereinafter defined), investigation, removal,
remediation and cleanup of or other corrective action for "Hazardous Materials"
(as hereinafter defined), exposure to Hazardous Materials and personal injury,
natural resource damage, property damage and interference with the use of
property caused by or resulting from Hazardous Materials.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning provided in Section 5.14 of this
Agreement.
"ERISA Plan" shall have the meaning provided in Section 5.14 of this
Agreement.
"Exchange Agent" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Exchange Ratio" shall mean the ratio formed by the number of shares of
CSBI Common Stock Haywood shareholders will receive for each share of Haywood
Common Stock as set forth herein to one.
"Exhibits" A through G, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"FICG" shall mean the Financial Institutions Code of Georgia.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Haywood Benefit Plans" shall have the meaning set forth in Section 5.14 of
this Agreement.
"Haywood Common Stock" shall mean the One Dollar ($1.00) par value per
share common stock of Haywood.
"Haywood Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Haywood as of June 30,
1999, and as of December 31, 1998, 1997, 1996 and 1995, and the related
statements of income, changes in shareholders' equity and cash flows (including
related notes and schedules, if any) for the three and six months ended June 30,
1999, and for each of the four fiscal years ended December 31, 1998, 1997, 1996
and 1995, and (ii) the consolidated balance sheets of Haywood (including related
notes and schedules, if any) and related statements of income, changes in
shareholders' equity and cash flows (including related notes and schedules, if
any) with respect to periods ended subsequent to June 30, 1999, with related
prior year comparable financial statements.
"Haywood Meeting" shall mean the special meeting of the shareholders of
Haywood or any adjournment or postponement thereof to vote on the matters set
forth in the Proxy Statement.
"Haywood Preferred Stock" shall mean the One Dollar ($1.00) par value per
share serial preferred stock of Haywood.
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"Hazardous Materials" shall mean all hazardous, toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic and
volatile substances, materials, compounds, chemicals and waste, and all other
industrial waste, sanitary waste, pollutants and contaminants, and all
constituents thereof, including, without limitation, petroleum hydrocarbons,
asbestos-containing materials, lead-based paints and all substances, materials,
wastes, chemicals, compounds, contaminants and pollutants regulated or addressed
by Environmental Laws.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" as used with respect to a Person shall mean the knowledge,
after all appropriate due inquiry, of the Chairman, President, Chief Executive
Officer, Chief Financial Officer, Chief Accounting Officer, Chief Credit
Officer, General Counsel, or any Senior or Executive Vice President or Manager
of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule or statute and all Environmental Laws applicable to
a Person or its Assets, Liabilities or business, including, without limitation,
those promulgated, interpreted or enforced by any of the Regulatory Authorities.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due and
payable, (ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary course of the banking
business, (iii) Liens which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on a Party; and (iv) Liens which
have been Previously Disclosed.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, request for information, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any Person
alleging potential Liability or requesting information relating to or affecting
a Party, its business, its Assets (including, without limitation, Contracts
related to it) or the
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transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"Loan Property" shall mean any property owned, leased or operated by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security or other interest (including an interest in a
fiduciary capacity), and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
"Mailing Date" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Material" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"Material Adverse Effect" on a Party shall mean an event, change, condition
or occurrence which has a Material adverse impact on (i) the financial position,
business or results of operations of such Party and its Subsidiaries, taken as a
whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement; provided that "Material Adverse Effect" shall not be deemed to
include the impact of (x) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(y) changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, and (z) actions and omissions of a Party (or
any of its Subsidiaries) taken with the prior written consent of the other
Parties to the Agreement and the direct effects of compliance with this
Agreement on the operating performance of the Party, including expenses incurred
by such Party in consummating the transactions contemplated by this Agreement.
"Merger" shall mean the merger of Haywood with and into CSBI referred to in
the Preamble of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"NCBCA" shall mean the North Carolina Business Corporation Act.
"No Election Shares" shall have the meaning set forth in Section 3.2 of
this Agreement.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling or writ of
any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
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"Participation Facility" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
(including, but not limited to, any property or facility held in a joint
venture) and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility or
property.
"Party" shall mean either Haywood, HAC or CSBI, and "Parties" shall mean
Haywood, HAC and CSBI.
"Per Share Cash Consideration" shall have the same meaning set forth in
Section 3.2 of this Agreement.
"Per Share Stock Consideration" shall have the same meaning set forth in
Section 3.1(b) of this Agreement.
"Permit" shall mean any federal, state, local and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its capital stock, Assets,
Liabilities or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert or any person acting in a
representative capacity.
"Previously Disclosed" shall mean information delivered in writing prior to
the date specified in Section 10.1(h) of this Agreement in the manner and to the
Party or counsel or both described in Section 11.8 of this Agreement and
entitled "Previously Disclosed Information Delivered Pursuant to the Agreement
and Plan of Merger" describing in reasonable detail the matters contained
therein or identifying the information disclosed; provided that in the case of
-------- ----
Subsidiaries acquired after the date of this Agreement, such information may be
so delivered by the acquiring Party to the other Party prior to the date of such
acquisition.
"Proxy Statement" shall mean the proxy statement used by Haywood to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement and shall include the prospectus of CSBI relating to shares of CSBI
Common Stock to be issued to the shareholders of Haywood and other proxy
solicitation materials of Haywood consisting of a part thereof.
"Registration Statement" shall mean the Registration Statement on Form S-4,
or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by CSBI under the 1933 Act
in connection with the transactions contemplated by this Agreement.
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"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Department of Banking and Finance, the FDIC,
the NASD and the SEC, all state regulatory agencies having jurisdiction over the
Parties and their respective Subsidiaries.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, abandonment or
disposing into or migration within the environment.
"Representatives" shall have the meaning set forth in Section 8.8 of this
Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall mean all forms, proxy statements, reports,
registration statements, schedules and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Stock Designees" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Stock Option Agreement" shall have the meaning set forth in the Preamble
of this Agreement.
"Subsidiaries" shall mean all those corporations, banks, association, or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 5% or more of the outstanding equity securities
is owned directly or indirectly by its parent; provided, however, there shall
-------- -------
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean Haywood as the surviving corporation
resulting from the Merger.
"Tax" or "Taxes" shall mean all federal, state, county, local and foreign
taxes, charges, fees, levies, imposts, duties or other assessments, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
the United States or any state, local, or foreign government or subdivision or
agency thereof, including interest and penalties thereon or additions with
respect thereto.
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"Taxable Period" shall mean any period prescribed by any governmental
authority, including the United States or any state, local or foreign government
or subdivision or agency thereof for which a Tax Return required to be filed or
Tax is required to be paid.
"Tax Return" shall mean any report, return or other information required to
be supplied to a taxing authority in connection with Taxes, including any return
of an affiliated or combined or unitary group that includes a Party or its
Subsidiaries.
"Total Merger Consideration" shall have the meaning set forth in Section
3.3 of this Agreement.
"Trident" shall mean Trident Securities, a division of McDonald Investments
Inc., Haywood's investment banker.
"Valuation Period" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Valuation Period Market Value" shall have the meaning set forth in Section
3.2 of this Agreement.
11.2 Expenses.
(a) General. Except as otherwise provided in this Section 11.2 of
-------
this Agreement, each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel except that CSBI shall bear and pay
the filing fees payable in connection with the Registration Statement and the
Proxy Statement and one-half of the printing costs incurred in connection with
the printing of the Registration Statement and the Proxy Statement.
(b) Breach by either Party. In addition to the foregoing, if prior to
----------------------
the Effective Time, this Agreement is terminated by either Party as a result of
the other Party's breach of such Party's representations, warranties or
agreements set forth herein of this Agreement, such Party shall pay to the non-
breaching Party as its sole and exclusive remedy resulting from such
termination, an amount in cash equal to the sum of:
(i) the reasonable direct costs and expenses incurred by or on
behalf of the non-breaching Party in connection with the transactions
contemplated by this Agreement, plus
----
(ii) the sum of $100,000,
which sum represents compensation for the non-breaching Party's loss as the
result of the transactions contemplated by this Agreement not being consummated.
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11.3 Brokers and Finders. Haywood represents and warrants that neither it
nor any of its officers, directors, employees or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions or finders' fees in
connection with this Agreement or the transactions contemplated hereby except
Haywood has engaged Trident to render financial advisory services. In the event
of a claim by any broker or finder based upon his or its representing or being
retained by or allegedly representing or being retained by Haywood, Haywood
shall indemnify and hold CSBI harmless of and from any Liability in respect of
any such claim and reduce the Total Merger Consideration by an amount equal to
such claim as determined by CSBI.
11.4 Entire Agreement. Except as otherwise expressly provided herein or
as set forth in that certain letter agreement between the parties of even date
herewith, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transaction contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; whether before or after
shareholder approval of the Merger has been obtained provided, however, that
-------- -------
after any such approval by the holders of Haywood Common Stock, there shall be
made no amendment decreasing the consideration to be received by Haywood
shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, CSBI, acting through its Board
of Directors, Chief Executive Officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Haywood, to waive or extend the time for the compliance or fulfillment by
Haywood of any and all of its obligations under this Agreement and to waive any
or all of the conditions precedent to the obligations of CSBI under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of CSBI.
(b) Prior to or at the Effective Time, Haywood, shall have the right
to waive any Default in the performance of any term of this Agreement by CSBI,
to waive or extend the time for the compliance or fulfillment by CSBI of any and
all of its obligations under this Agreement and to waive any or all of the
conditions precedent to the obligations of Haywood under this Agreement, except
any condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly authorized
officer of Haywood.
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(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
CSBI and HAC: Century South Banks, Inc.
60 Main Street West - Third Floor
Dahlonega, Georgia 30533
706/864-7966 - FAX
Attn: James A. Faulkner, Vice Chairman and Chief
Executive Officer
Copy to Counsel: Troutman Sanders LLP
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308-2218
404/962-6658 - FAX
Attn: Thomas O. Powell, Esquire
Haywood and Bank: Haywood Bancshares, Inc.
370 North Main Street
Waynesville, North Carolina 28786
Attn: Larry R. Ammons, President and Chief
Executive Officer
Copy to Counsel: Housley Kantarian & Bronstein, P.C.
1220 19th Street, N.W., Suite 700
Washington, D.C. 20036
202/822-0140 - FAX
Attn: James C. Stewart, Esquire
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11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at Law or in equity.
11.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
11.14 Interpretation of Agreement. The Parties hereto acknowledge and
agree that each Party has participated in the drafting of this Agreement and
that this document has been reviewed, negotiated and accepted by all parties and
their respective counsel, and the normal rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
applied to the interpretation of this Agreement. No inference in favor, or
against, any party shall be drawn from the fact that one party has drafted any
portion hereof.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
"HAYWOOD"
ATTEST:
HAYWOOD BANCSHARES, INC.
/s/ Paul W. Trantham
- --------------------------------- /s/ Larry R. Ammons
Paul W. Trantham, Secretary ------------------------------------
Larry R. Ammons, President and Chief
Executive Officer
(CORPORATE SEAL)
"CSBI"
ATTEST:
CENTURY SOUTH BANKS, INC.
/s/ Susan F. Anderson
- --------------------------------- /s/ James A. Faulkner
Susan F. Anderson, Secretary ------------------------------------
James A. Faulkner, Vice-Chairman and
Chief Executive Officer
(CORPORATE SEAL)
"HAC"
ATTEST:
HBI ACQUISITION CORP.
/s/ Susan F. Anderson
- --------------------------------- /s/ James A. Faulkner
Susan F. Anderson, Secretary ------------------------------------
James A. Faulkner, Vice-Chairman and
Chief Executive Officer
(CORPORATE SEAL)
50
<PAGE>
EXHIBIT 4
FOR IMMEDIATE RELEASE
Century South Banks, Inc.
P. O. Box 1000 Contact: James A. Faulkner Larry Ammons
Dahlonega, Georgia 30533 (706) 864-3915 (828) 456-9092
P. O. Box 14099 Joe Evans Susan Anderson
Macon, Georgia 31203 (912) 475-4340 (706) 864-1111
CENTURY SOUTH BANKS, INC. TO ACQUIRE
HAYWOOD BANCSHARES, INC.
DAHLONEGA,GA/WAYNESVILLE, NC. -- Century South Banks, Inc. (NasdaqNMS:CSBI)
and Haywood Bancshares, Inc. (AMEX:HBS) today announced that they have entered
into an Agreement and Plan of Merger whereby Haywood would be merged with a
wholly-owned subsidiary of Century South and Haywood's shareholders would
receive approximately $21.30 for each share of Haywood's common stock based on
the current value of Century South stock.
Subject to certain limitations, Haywood shareholders will have the right to
elect to receive the merger consideration in cash or in shares of Century South
common stock with cash paid in lieu of fractional shares.
In connection with the agreement, Haywood has granted Century South an
option to acquire up to 249,946 shares of Haywood's common stock (equal to
approximately 19.9% of Haywood's shares outstanding). The option will only be
exercisable following in the event of a termination of the agreement or in
certain other limited events.
The merger is subject to customary terms and conditions including
shareholder and regulatory approvals and is expected to close in the first
quarter of 2000. The merger will be accounted for as a purchase.
"Century South is pleased to bring Haywood into our family of community
banks," stated James A. Faulkner, Vice-Chairman and Chief Executive Officer of
Century South. "Under the leadership of President and Chief Executive Officer
Larry Ammons, Haywood has established a rich heritage of outstanding customer
service. We look forward to continuing that tradition and providing several new
services to Haywood's customer. Western North Carolina is a natural complement
to our current market and we are very excited at the prospect of building a
significant market presence for Century South in this area."
"We are extremely excited about the prospect of joining with Century
South." Larry Ammons, the President and Chief Executive Officer of Haywood
stated. "The Board of Directors believes that Century South's community bank
philosophy mirrors our approach to banking and will result in greater
convenience and service to our customers. At the present time, Haywood will
continue to operate under its current name and in its current locations."
Haywood is a one-bank holding company with $150 million in assets as of
June 30, 1999 and with branches located in Waynesville, Murphy, Andrews and
Sylva, North Carolina. Century South is a $1.2 billion multi-bank, multi-state
holding company with eleven affiliate banks: Bank of Dahlonega, Dahlonega, GA;
The Bank of Ellijay, Ellijay, GA; First Bank of Polk County, Copperhill, TN;
Georgia First Bank, N.A., Gainesville, GA; Fannin County Bank, N.A., Blue Ridge,
GA; First Community Bank of Dawsonville, Dawsonville, GA; Peoples Bank, Lavonia,
GA; Bank of Danielsville, Danielsville, GA.; AmeriBank, N.A., Savannah, GA.; and
First South Bank, N.A., Macon, GA; and The Independent Bank of Oxford, Oxford,
AL.
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