<PAGE>
As filed with the Securities and Exchange Commission on December 14, 1999
Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
CENTURY SOUTH BANKS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Georgia 6712 58-1455591
(State or Other Jurisdiction Primary Standard (I.R.S. Employer
of Incorporation Industrial Identification
or Organization) Classification Code Number) Number)
60 Main Street West
Dahlonega, Georgia 30533
(706) 864-3915
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
James A. Faulkner
Century South Banks, Inc.
60 Main Street West
Dahlonega, Georgia 30533
(706) 864-3915
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
With copies to:
Thomas O. Powell, Esquire Walter G. Moeling, IV, Esquire
Troutman Sanders LLP Powell, Goldstein, Frazer & Murphy LLP
600 Peachtree Street, N.E. 191 Peachtree Street
Suite 5200 Suite 1600
Atlanta, Georgia 30308-2216 Atlanta, Georgia 30303
(404) 885-3294 (404) 572-6600
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.
------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title Of Each Class Proposed Maximum Proposed Maximum
Of Securities To Be Amount To Be Offering Price Aggregate Amount Of
Registered Registered(1) Per Share Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par
value per share 1,844,139 (2) $12,265,610(3) $3,239
- ---------------------------------------------------------------------------------------------------
</TABLE>
The footnotes to this calculation are contained on the following page.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Calculation of Registration Fee
- ------------
(1) Based upon an estimate of the maximum number of shares of the Registrant's
common stock which may be issued in connection with the proposed merger
(the "Merger") of Lanier Bankshares, Inc. ("Lanier") with and into the
Registrant.
(2) Not applicable.
(3) Computed in accordance with Rule 457(f)(2) under the Securities Act of
1933, as amended, solely for the purpose of calculating the registration
fee. The registration fee was calculated based on the aggregate book value,
at September 30, 1999, of the maximum number of shares of Lanier Common
Stock (1,279,000) to be received by the Registrant in exchange for the
securities registered hereby.
<PAGE>
Proxy Statement of Prospectus of
Lanier Bankshares, Inc. Century South Banks, Inc.
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of Lanier Bankshares, Inc. and Century South Banks,
Inc. have approved a merger in which Lanier will be acquired by CSBI. CSBI is a
$1.2 billion bank holding company that provides a wide range of commercial and
retail banking services in Georgia, Tennessee, and Alabama. We are sending you
this proxy statement/prospectus to ask you to vote in favor of the merger.
If we complete the merger, each share of your Lanier common stock
(excluding shares held by Lanier shareholders who perfect their dissenters'
rights) will be converted into the right to receive a number of shares of CSBI
common stock based on a predetermined formula. The number of shares of CSBI
common stock you receive for each share of your Lanier common stock is referred
to as the exchange ratio. The precise exchange ratio will depend upon the
average closing price of CSBI common stock on the Nasdaq Stock Market over a 20-
day trading period ending five days prior to the effective time of the merger.
If the average closing price of CSBI common stock is less than or equal to
$21.50, the exchange ratio will be 1.44186. If the average closing price of CSBI
common stock is greater than or equal to $26.50, the exchange ratio will be
1.16981. If the average closing price of CSBI common stock is greater than
$21.50, but less than $26.50, the exchange ratio will be between 1.44186 and
1.16981. In addition, the number of shares of CSBI common stock received in the
merger will be reduced if some of Lanier's merger-related expenses exceed
$100,000.
The merger will turn your shares of Lanier common stock into shares of a
publicly-traded, larger and more diversified financial services company. CSBI
common stock trades on the Nasdaq National Market under the symbol "CSBI." On
__________, 1999, the closing price of CSBI common stock was $_______.
The merger cannot be completed without the approval of Lanier shareholders.
Lanier has scheduled a special meeting of its shareholders to vote on the merger
agreement. Lanier shareholders will also be asked to consider and vote upon a
proposal to adjourn the special meeting if more time is needed to solicit
proxies.
Your vote is very important. Whether or not you plan to attend the special
shareholder meeting, please take the time to vote by completing and mailing the
enclosed proxy card. If you sign, date and mail your proxy card without
indicating how you want to vote, Lanier will vote your proxy in favor of the
merger agreement. If you do not return your card, the effect will be the same as
a vote against the merger agreement.
Each member of Lanier's board of directors supports the acquisition of
Lanier by CSBI and Lanier's board of directors unanimously recommends that you
vote in favor of the merger agreement.
This proxy statement/prospectus provides detailed information about the
merger. You should read it carefully. The merger involves risks. See "Risk
Factors" on page 10 of this proxy statement/prospectus.
The date, time and place of the special meeting are:
_________ ____, 2000, _______ p.m.
Lanier National Bank
854 Washington Street
Gainesville, Georgia 30503
On behalf of your board of directors, we thank you for your support and
urge you to vote FOR approval of the merger.
----------------------------- -------------------------------------
C. Edmondson Daniel Joseph D. Chipman, Jr.
Chairman of the Board President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved of the securities to be issued under this
proxy statement/prospectus or determined if this proxy statement/prospectus is
accurate or adequate. Any representation to the contrary is a criminal offense.
These securities are not savings or deposit accounts or other obligations
of any bank or non-bank subsidiary of any of the parties, and they are not
insured by the Federal Deposit Insurance Corporation, the Bank Insurance Fund or
any other governmental agency.
This proxy statement/prospectus is dated _________ ____, 1999
and was first mailed to shareholders on or about _________ ____, 1999.
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about CSBI and Lanier from documents that are not included
in or delivered with this proxy statement/prospectus. You can obtain documents
incorporated by reference in this proxy statement/prospectus, excluding any
exhibits to those documents (unless the exhibit is specifically incorporated by
reference into the document referenced in this proxy statement/prospectus), by
requesting them in writing or by telephone from:
Century South Banks, Inc. Lanier Bankshares, Inc.
60 Main Street West 854 Washington Street
Dahlonega, Georgia 30533 Gainesville, Georgia 30503
Attention: Secretary Attention: Secretary
Telephone: (706) 864-1111 Telephone: (770) 536-2265
You will not be charged for any of the documents that you request (other
than certain exhibits to those documents). If you would like to request
documents from us, please do so by _______, 2000 in order to receive them before
Lanier's special shareholder meeting.
See "Where You Can Find More Information" on page 47.
<PAGE>
LANIER BANKSHARES, INC.
854 Washington Street
Gainesville, Georgia 30503
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
________ ____, 1999
To the Shareholders of Lanier Bankshares, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Lanier
Bankshares, Inc. will be held at the main office of Lanier National Bank located
at 854 Washington Street, Gainesville, Georgia, at _____ p.m., local time, on
________ _____, 2000, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of October 20, 1999, by and between Lanier and Century South
Banks, Inc., providing for the merger of Lanier with and into CSBI. A copy of
the merger agreement is attached as Appendix A to this proxy
statement/prospectus.
2. To adjourn the special meeting, if necessary, to permit further
solicitation of proxies in the event there are not sufficient votes at the time
of the special meeting to approve the merger agreement.
3. To transact any other business as may properly come before the special
meeting or any adjournments or postponements of the meeting.
Only holders of record of Lanier common stock at the close of business
on __________ ___, 1999 are entitled to receive notice of, and to vote, at the
special meeting or any adjournments or postponements of the meeting. Approval
of the merger agreement requires the affirmative vote of at least a majority of
all of the votes entitled to be cast at the special meeting.
LANIER'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT LANIER SHAREHOLDERS
VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
Notice of Right to Dissent. If Proposal 1 above is approved and the merger
is consummated, each shareholder of Lanier will have the right to dissent from
approval of the merger and will be entitled to the rights and remedies of
dissenting shareholders provided in the Georgia Business Corporation Code. The
right of any such shareholder to any dissenters' rights is contingent upon
consummation of the merger and upon strict compliance with the requirements of
Sections 14-2-1301 through 14-2-1332 of the Georgia Business Corporation Code.
The full text of these sections is attached as Appendix B to this proxy
statement/prospectus. For a summary of these requirements, see "THE MERGER--
Dissenter and Appraisal Rights" in this proxy statement/prospectus.
Each shareholder, whether or not he or she plans to attend the special
meeting, is requested to sign, date and return the enclosed proxy without delay
in the enclosed postage-paid envelope. Any proxy given by the shareholder may
be revoked by filing with Lanier's Secretary a written revocation or a duly
executed proxy bearing a later date. Any shareholder present at the special
meeting may revoke his or her proxy and vote personally on each matter brought
before the special meeting. However, if you are a shareholder whose shares are
not registered in your own name, you will need additional documentation from
your record holder to vote personally at the special meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
Susan R. Bell, Corporate Secretary
- --------------------------------------------------------------------------------
IMPORTANT: The prompt return of proxies will save Lanier the expense of
further requests for proxies in order to insure a quorum at the special
meeting. A self-addressed envelope is enclosed for your convenience. No
postage is required if mailed in the United States.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY.................................................................... 1
The Companies............................................................. 1
The Merger................................................................ 1
What Lanier Shareholders Will Receive..................................... 1
Lanier's Reasons for the Merger........................................... 1
Lanier's Special Meeting of Shareholders.................................. 1
Lanier's Board of Directors' Recommendation
to Lanier Shareholders................................................... 2
Record Date; Voting Power................................................. 2
Vote Required............................................................. 2
Interests of Persons Involved in the Merger
that are Different from Yours............................................ 2
Conditions to the Merger.................................................. 2
Termination of the Merger Agreement....................................... 2
Regulatory Matters........................................................ 3
Accounting Treatment...................................................... 3
Important Federal Tax Consequences........................................ 3
Dissenters' and Appraisal Rights.......................................... 3
Recent Developments....................................................... 3
Market Prices of CSBI and Lanier Common Stock; Dividend Payments.......... 4
CSBI and Lanier Selected Comparative Per Share Data....................... 5
CSBI Selected Financial Data.............................................. 7
Lanier Selected Financial Data............................................ 8
CSBI and Lanier Pro Forma Selected Financial Data......................... 9
RISK FACTORS............................................................... 10
A WARNING ABOUT FORWARD-LOOKING STATEMENTS................................. 12
THE SPECIAL MEETING........................................................ 13
General................................................................... 13
Meeting Date, Time and Place and Record Date.............................. 13
Matters to be Considered.................................................. 13
Vote Required............................................................. 13
Voting of Proxies......................................................... 13
Revocability of Proxies................................................... 14
Solicitation of Proxies................................................... 14
Recommendation of Lanier's Board of Directors............................. 14
Information About Lanier's Auditors....................................... 15
THE MERGER................................................................. 16
General................................................................... 16
Background of the Merger.................................................. 16
Lanier's Reasons for the Merger........................................... 17
CSBI's Reasons for the Merger............................................. 18
Opinion of TSJ&A.......................................................... 18
Merger Consideration...................................................... 19
Effective Time of the Merger.............................................. 20
Exchange of Certificates.................................................. 20
Important Federal Income Tax Consequences................................. 21
Management and Operations After the Merger................................ 22
Interests of Lanier's Employees and Directors in the Merger............... 22
Conditions to Consummation................................................ 23
Regulatory Matters........................................................ 24
Amendment, Waiver and Termination......................................... 26
Conduct of Business Pending the Merger.................................... 26
Expenses and Fees......................................................... 28
Accounting Treatment...................................................... 28
i
<PAGE>
Resales of CSBI Common Stock.............................................. 28
Dissenters' and Appraisal Rights.......................................... 29
PRO FORMA COMBINED FINANCIAL DATA.......................................... 31
INFORMATION ABOUT CSBI..................................................... 38
General................................................................... 38
Recent Developments....................................................... 38
Subsidiaries.............................................................. 38
Acquisitions.............................................................. 39
Additional Information.................................................... 39
INFORMATION ABOUT LANIER................................................... 40
General................................................................... 40
Subsidiaries.............................................................. 40
Additional Information.................................................... 40
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 41
COMPARATIVE RIGHTS OF LANIER SHAREHOLDERS AND CSBI SHAREHOLDERS............ 42
Authorized Capital Stock.................................................. 42
Amendments to Articles of Incorporation and Bylaws........................ 42
Board of Directors and Absence of Cumulative Voting....................... 43
Removal of Directors...................................................... 43
Indemnification of Directors and Officers................................. 44
Special Meetings of Shareholders.......................................... 44
Mergers, Share Exchanges and Sales of Assets.............................. 45
Shareholders Rights to Examine Books and Records.......................... 46
Dividends................................................................. 46
EXPERTS.................................................................... 47
LEGAL MATTERS.............................................................. 47
SHAREHOLDER PROPOSALS AND OTHER MATTERS.................................... 47
WHERE YOU CAN FIND MORE INFORMATION........................................ 47
Appendix A -- Agreement and Plan of Merger, dated as of October 20, 1999, by and
between Lanier Bankshares, Inc. and Century South Banks, Inc.
Appendix B -- Dissenter and Appraisal Rights, Georgia Business Corporation Code,
Sections 14-2-1301 et seq.
Appendix C -- Opinion of T. Stephen Johnson & Associates, Inc.
ii
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully, and for more complete descriptions of the legal terms of the
merger, you should read carefully this entire document and the documents we have
referred you to. (The terms "we," "our," and "us" refer to both CSBI and Lanier
together.)
The Companies (Pages ___ and ___)
Century South Banks, Inc.
60 Main Street West
Dahlonega, Georgia 30533
(706) 864-1111
CSBI is a $1.2 billion bank holding company. Through its banking
subsidiaries, CSBI provides a wide range of commercial and retail banking
services in Georgia, Tennessee and Alabama.
Lanier Bankshares, Inc.
854 Washington Street
Gainesville, Georgia 30503
(770) 536-2265
Lanier is a $115 million bank holding company. Through its banking
subsidiary, Lanier provides full service commercial banking, without trust
powers, to its primary market of Hall County, Georgia.
The Merger (Page __)
The acquisition of Lanier by CSBI is governed by a merger agreement. The
merger agreement provides that, if all of the conditions set forth in the merger
agreement are satisfied or waived, Lanier will merge with and into CSBI, with
CSBI remaining in existence as the surviving corporation in the merger. Lanier
National Bank, a wholly-owned subsidiary of Lanier, will become a wholly-owned
subsidiary of CSBI following the merger. After the merger, we expect Lanier
National Bank will merge with and into Georgia First Bank, N.A., CSBI's
Gainesville, Georgia, national bank subsidiary. In the event the banks merge,
we anticipate that Georgia First will be the surviving bank and will assume
Lanier National Bank's locations. We encourage you to read the merger
agreement, which is attached as Appendix A.
What Lanier Shareholders Will Receive (Page ___)
If we complete the merger, each share of your Lanier common stock will be
converted into the right to receive a number of shares of CSBI common stock
which will be determined by a formula. This number of shares is the exchange
ratio. The precise exchange ratio will depend upon the average closing price of
CSBI common stock on the Nasdaq National Market over a 20-day trading period
ending five days prior to the effective time of the merger. If the average
closing price of CSBI common stock is less than or equal to $21.50, the exchange
ratio will be 1.44186. If the average closing price of CSBI common stock is
greater than or equal to $26.50, the exchange ratio will be 1.16981. If the
average closing price is greater than $21.50, but less than $26.50, the exchange
ratio will be between 1.44186 and 1.16981. In addition, the number of shares of
CSBI common stock you will receive in the merger will be reduced if some of
Lanier's merger-related expenses exceed $100,000.
You should not send in your Lanier stock certificates until requested to do
so after the merger is completed.
Lanier's Reasons for the Merger (Page ___)
Lanier's board of directors believes that the merger will create value for
Lanier shareholders. It also believes that CSBI is offering a fair price to
Lanier shareholders for their shares of Lanier common stock. The merger will
turn your Lanier shares into shares of a larger and more diversified financial
services company. Lanier's board of directors believes that the merger will
enable Lanier to serve its customers better than its competitors by offering
more diverse products and services.
Lanier's Special Meeting of Shareholders (Page ___)
Lanier's special meeting of shareholders to vote on the merger will be held
at 854 Washington Street, Gainesville, Georgia, at _____ p.m., on ________ ___,
2000.
1
<PAGE>
Lanier's Board of Directors' Recommendation to Lanier Shareholders (Page ___)
Lanier's board of directors believes that the merger is in the best
interests of Lanier shareholders and recommends that you vote "FOR" the proposal
to approve the merger agreement.
Record Date; Voting Power (Page ___)
You may vote at Lanier's special meeting if you owned Lanier common stock
as of the close of business on ________ ___, 1999. You will have one vote for
each share of Lanier common stock you owned on that date.
Vote Required (Page ___)
The merger agreement must be approved by at least a majority of all of the
votes entitled to be cast at Lanier's special meeting. As of ___________, 1999,
Lanier's directors, executive officers and their affiliates beneficially owned
approximately 36% of the outstanding shares of Lanier common stock entitled to
vote at Lanier's special meeting. These individuals, intend to vote in favor of
the proposals considered at the special meeting.
Interests of Persons Involved in the Merger that are Different from Yours
(Page ___)
Some of Lanier's employees and directors may have interests in the merger
that differ from the interests of Lanier shareholders generally, including
employment arrangements and benefits as well as directors' indemnification.
Conditions to the Merger (Page ___)
The completion of the merger depends on the fulfillment of a number of
conditions, including the following:
. Lanier shareholders must approve the merger agreement;
. we must receive all required regulatory approvals and any waiting periods
required by law must have passed;
. we must receive a letter from CSBI's accountants confirming that the merger
will qualify as a pooling of interests transaction;
. we must receive a legal opinion from CSBI's counsel confirming the tax-free
nature of the merger;
. each parties' representations and warranties, which are contained in the
merger agreement, must be accurate in all material respects;
. each party must have delivered officers' certificates and its counsel's legal
opinions to the other; and
. shares of CSBI common stock issuable pursuant to the merger must be approved
for listing on the Nasdaq National Market.
Unless prohibited by law, either CSBI or Lanier can elect to waive a
condition that has not been satisfied and complete the merger anyway. We cannot
be certain whether or when any of these conditions will be satisfied, or waived
where permissible, or that we will complete the merger.
Termination of the Merger Agreement (Page ___)
Notwithstanding the approval of the merger by Lanier shareholders at
Lanier's special meeting, CSBI and Lanier can agree at any time to terminate the
merger agreement before completing the merger.
Either CSBI or Lanier can also terminate the merger agreement:
. if the merger is not approved by at least a majority of all of the votes
entitled to be cast at the special meeting;
. if the other party materially violates any of its representations or
warranties under the merger agreement and fails to cure the violation;
. if we do not complete the merger by March 31, 2000; or
. if any government body whose approval is necessary to complete the merger
makes a final decision not to approve the merger.
CSBI can also terminate the merger if Lanier receives an acquisition offer
from a third party and Lanier's board of directors fails to reaffirm the merger
at the request of CSBI.
2
<PAGE>
Regulatory Matters (Page ___)
We cannot complete the merger unless we obtain the approval of various
regulatory agencies. While we do not know of any reason why we would not obtain
the regulatory approvals in a timely manner, we cannot be certain when or if we
will obtain them.
Accounting Treatment (Page ___)
We expect the merger to qualify as a pooling of interests transaction,
which means that CSBI will treat CSBI and Lanier as if they had always been
combined for accounting and financial reporting purposes.
Important Federal Tax Consequences (Page ___)
Our obligations to complete the merger are conditioned upon our receipt of
an opinion from counsel to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code.
Provided that the merger qualifies as a reorganization, neither CSBI nor
Lanier will recognize any gain or loss for federal income tax purposes as a
result of the merger. We expect that the merger will be tax-free to Lanier
shareholders for federal income tax purposes (except for tax payable because of
cash received for fractional shares or pursuant to the exercise of dissenters'
rights).
Dissenters' and Appraisal Rights (Page ___)
Georgia law permits Lanier shareholders to dissent from the merger
agreement and to have the fair value of their shares paid to them in cash. To
do this, Lanier shareholders must follow specific procedures, including filing a
written notice with Lanier, prior to either abstaining from voting or voting
against the merger. If you hold shares of Lanier common stock and you follow
the required procedures, your Lanier shares will not become shares of CSBI
common stock. Instead, your only right will be to receive the fair value of
your shares of Lanier common stock in cash.
Recent Developments (Page ___)
In August of 1999, CSBI announced a plan to consolidate its two Georgia
headquarters into one office located in Alpharetta, Georgia, a suburb of
Atlanta. The dual Georgia headquarters had resulted from a previously
consummated merger transaction. As part of its post-merger integration plan,
CSBI also announced that it would build a single identity for its 11 different
bank brands. In connection with the headquarters consolidation and single bank
brand initiative, CSBI expects to record merger-related charges of approximately
$1.8 million, after taxes, during the fourth quarter of 1999. While this is
CSBI's best estimate of the expected costs of its post-merger integration plan,
there can be no assurance that CSBI will not incur additional charges in excess
of its estimate.
Also in August of 1999, CSBI entered into a definitive agreement to acquire
Haywood Bancshares, Inc., a bank holding company headquartered in Waynesville,
North Carolina, with consolidated assets, as of September 30, 1999, of
approximately $150 million. It is expected that the acquisition, which is
subject to shareholder and regulatory approvals, will be accounted for as a
purchase and will be valued at approximately $25.6 million.
In October of 1999 CSBI announced a stock repurchase program whereby CSBI
will repurchase up to 550,000 shares of its common stock. CSBI suspended its
repurchase program on November 12, 1999 and will not restart the program until
after it has completed the acquisition of Haywood. As of December ___, 1999,
CSBI had repurchased a total of 244,000 shares of its common stock.
3
<PAGE>
Market Prices of CSBI and Lanier Common Stock; Dividend Payments
<TABLE>
<CAPTION>
Sales Price Per Share of Cash
CSBI Common Stock(1) Dividend Declared
------------------------ -----------------
High Low
------ ------
<S> <C> <C> <C>
1997
First Quarter $20.50 $17.75 $0.10250
Second Quarter 20.00 18.00 0.10375
Third Quarter 20.38 18.00 0.10500
Fourth Quarter 25.00 19.75 0.10625
1998
First Quarter $25.75 $23.50 $0.10750
Second Quarter 38.25 24.50 0.10875
Third Quarter 38.00 25.00 0.11000
Fourth Quarter 30.50 25.75 0.11125
1999
First Quarter $30.13 $22.63 $0.12000
Second Quarter 27.50 22.00 0.12000
Third Quarter 25.00 20.88 0.12000
Fourth Quarter
(through December
__, 1999)
</TABLE>
There is neither an established public trading market for shares of Lanier
common stock nor are there any uniformly quoted price for such shares. There
are, however, occasional transactions in Lanier common stock as a result of
private negotiations. Management of Lanier does not maintain a record of the
sales prices of trades of Lanier common stock. The last known sales of Lanier
common stock were reported to have occurred on ________, 1999 at a price of
$26.00 per share. Lanier does not know whether these sales reflected inter-
dealer prices, without retail mark-ups, mark-downs or commissions.
The following table sets forth the closing sales prices per share of CSBI
common stock on October 19, 1999, the last trading day prior to the public
announcement of the merger agreement, and on __________, 1999, the latest
practicable date prior to the mailing of this proxy statement/prospectus, as
well the equivalent per share value of Lanier common stock on those dates.
CSBI Equivalent Price of
Common Stock Lanier Common Stock(1)
------------ ----------------------
October 19, 1999 $22.38 $31.00
December __, 1999 $ $
- ------------
(1) The equivalent prices per share of Lanier common stock have been calculated
by multiplying the exchange ratio by the closing price of CSBI common stock
on that date.
In 1999, Lanier paid an annual dividend of $0.34 per share. In 1998, Lanier
paid an annual dividend of $0.29 share. In 1997, Lanier paid an annual dividend
of $0.20 per share.
CSBI common stock was held by approximately _____ shareholders of record as
of ___________, 1999.
Lanier common stock was held by approximately 490 shareholders of record as
of ____________, 1999.
Because the exchange ratio is fixed within certain average closing prices of
CSBI common stock and because the closing price of CSBI common stock is subject
to fluctuation, the market value of the shares of CSBI common stock that you may
receive in the merger may increase or decrease prior to and following the
merger. You are urged to obtain current market quotations for CSBI common
stock.
4
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Selected Comparative Per Share Data
(Unaudited)
<TABLE>
<CAPTION>
As of or for the years ended
As of or for the nine December 31,
months ended ----------------------------
September 30, 1999 1998 1997 1996
---------------------- -------- -------- --------
<S> <C> <C> <C> <C>
CSBI Common Stock
Net income per common share:
Historical - basic $ 1.01 $ 1.32 $ 0.95 $ 1.21
Historical - diluted 1.00 1.30 0.93 1.18
Pro forma CSBI and Lanier
combined - basic 0.99 1.30 0.95 1.15
combined - diluted 0.98 1.28 0.93 1.13
Pro forma CSBI, Lanier and Haywood
combined - basic 0.98 1.20 N/A N/A
combined - diluted 0.97 1.18 N/A N/A
Dividends per common share:
Historical 0.36 0.44 0.42 0.40
Pro forma CSBI and Lanier combined(1) 0.36 0.44 0.42 0.40
Pro forma CSBI, Lanier and Haywood combined(1) 0.36 0.44 N/A N/A
Book value per common share:
Historical 11.12 10.77 9.99 9.32
Pro forma CSBI and Lanier combined(2) 10.69 10.31 9.50 8.89
Pro forma CSBI, Lanier and Haywood combined(2) 11.19 10.84 N/A N/A
Lanier Common Stock
Net income per common share:
Historical - basic 1.17 1.51 1.15 0.96
Historical - diluted 1.14 1.48 1.13 0.94
Equivalent pro forma CSBI and Lanier(3)
combined - basic 1.28 1.68 1.23 1.49
combined - diluted 1.27 1.65 1.20 1.46
Equivalent pro forma CSBI, Lanier and Haywood(3)
combined - basic 1.12 1.49 N/A N/A
combined - diluted 1.11 1.47 N/A N/A
Dividends per common share:
Historical 0.17 0.29 0.20 0.13
Equivalent pro forma CSBI and Lanier combined(4) 0.47 0.57 0.54 0.52
Equivalent pro forma CSBI, Lanier and Haywood combined(4) 0.47 0.57 N/A N/A
Book value per common share:
Historical 9.59 8.86 7.61 6.72
Equivalent pro forma CSBI and Lanier combined(3) 13.81 13.32 12.27 11.48
Equivalent pro forma CSBI, Lanier and Haywood combined(3) 14.45 14.00 N/A N/A
</TABLE>
5
<PAGE>
- ------------
(1) Pro forma combined dividends per common share represent historical
dividends per share paid by CSBI.
(2) Determined by dividing pro forma combined shareholders' equity by pro forma
shares outstanding as follows:
CSBI and Lanier
Pro Forma Equity Pro Forma Shares
------------------------ ----------------
(in thousands)
12/31/96 $115,684 13,018
12/31/97 $124,631 13,115
12/31/98 $136,681 13,251
09/30/99 $142,362 13,318
CSBI, Lanier and Haywood
Pro Forma Equity Pro Forma Shares
------------------------ ----------------
(in thousands)
12/31/98 $149,697 13,806
09/30/99 $155,286 13,873
(3) For CSBI and Lanier combined, determined by multiplying the applicable pro
forma amount by the assumed exchange ratio of 1.29167 to 1. For CSBI, Lanier
and Haywood combined, determined by multiplying the applicable pro forma
amount by the exchange ratio of 1.29167 to 1.
(4) For CSBI and Lanier combined, determined by multiplying the applicable CSBI
historical amount by the assumed exchange ratio of 1.29167 to 1. For CSBI,
Lanier and Haywood combined, determined by multiplying the applicable CSBI
historical amount by the exchange ratio of 1.29167 to 1.
6
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES(1)
Selected Financial Data
(Unaudited)
<TABLE>
<CAPTION>
As of or for
the nine months
ended September 30, As of or for the years ended December 31,
------------------------ ----------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(Amounts in thousands, except per share data and percentages)
Summary of
Operations:
Net interest income $ 43,689 $ 42,678 $ 56,867 $ 53,604 $ 50,837 $ 46,613 $ 40,595
Provision for
possible loan losses 1,743 1,727 3,135 5,397 2,350 2,261 1,464
Net income 11,796 11,785 15,378 10,969 13,823 11,591 10,012
Per Share Data:
Net income - basic $ 1.01 $ 1.01 $ 1.32 $ 0.95 $ 1.21 $ 1.03 $ 0.84
Net income - diluted 1.00 0.99 1.30 0.93 1.18 1.01 0.82
Cash dividends declared 0.36 0.33 0.44 0.42 0.40 0.38 0.34
Book value 11.12 10.64 10.77 9.99 9.32 8.33 7.51
Tangible book value 10.75 10.08 10.38 9.36 8.62 7.65 6.81
Balance Sheet
Summary:
Investments $ 196,653 $ 163,047 $ 171,566 $ 204,691 $ 215,973 $ 211,698 $211,584
Loans, net 912,504 846,710 833,853 796,951 729,123 681,655 622,014
Deposits 1,029,560 1,017,161 993,308 1,033,778 991,239 905,155 847,572
Assets 1,222,176 1,161,217 1,146,720 1,170,023 1,120,205 1,035,846 966,095
Federal funds purchased 10,895 -- -- 970 1,360 -- 80
Long-term debt and
other borrowings 232 196 35 -- -- -- --
Federal Home
Loan Bank advances 39,205 8,306 16,280 6,881 6,982 14,183 15,183
Average shareholders' equity 128,205 117,769 121,204 112,052 100,867 90,664 81,136
Average total assets 1,187,694 1,151,190 1,151,993 1,133,676 1,072,562 984,993 904,086
Financial Ratios:
Net income to average assets 1.33% 1.37% 1.33% 0.97% 1.29% 1.18% 1.11%
Overhead ratio 2.73% 2.69% 2.68% 2.91% 2.72% 2.88% 2.89%
Net income to average
shareholders' equity 12.30% 13.15% 12.69% 9.79% 13.70% 12.78% 12.34%
Dividend payout ratio 35.64% 32.67% 31.29% 32.53% 22.32% 19.87% 16.22%
Average shareholders' equity
to average total assets 10.79% 10.40% 10.52% 9.88% 9.40% 9.20% 8.97%
</TABLE>
- ------------
(1) On April 13, 1999, CSBI completed a merger with Independent Bancorp, Inc.
and its subsidiary bank, The Independent Bank of Oxford in Oxford, Alabama.
This acquisition was accounted for as a pooling of interests and,
accordingly, all financial information preceding the date of the merger has
been restated to include the financial position and results of operations of
the acquired entity.
7
<PAGE>
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
<TABLE>
<CAPTION>
As of or for the
nine months ended
September 30, As of or for the years ended December 31,
-------------------------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------------- --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(Amounts in thousands, except per share data and percentages)
Summary of Operations:
Net interest income $ 3,829 $ 3,604 $ 4,850 $ 4,057 $ 3,393 $ 2,924 $ 2,502
Provision for loan losses 120 210 290 170 120 110 100
Net income 1,401 1,342 1,817 1,406 1,087 807 604
Per Share Data:
Net income - basic $ 1.17 $ 1.12 $ 1.51 $ 1.15 $ 0.96 $ 0.77 $ 0.58
Net income - diluted 1.14 1.09 1.48 1.13 0.94 0.70 0.53
Cash dividends declared 0.17 0.14 0.29 0.20 0.13 0.11 0.13
Book value 9.59 8.61 8.86 7.61 6.72 6.47 5.57
Tangible book value 9.59 8.61 8.86 7.61 6.72 6.47 5.57
Balance Sheet Summary:
Investments $ 30,124 $ 22,221 $ 25,612 $17,764 $20,973 $13,768 $13,195
Loans, net 74,635 73,622 76,100 66,997 50,579 49,155 41,163
Deposits 106,677 96,978 101,747 83,015 73,846 64,776 53,380
Assets 120,891 110,265 115,751 94,472 83,939 73,829 61,466
Federal Home Loan Bank advances 1,318 1,340 1,334 350 350 700 1,500
Other borrowings 175 183 221 463 296 329 --
Average shareholders' equity 11,068 9,736 9,981 8,778 7,521 6,444 5,835
Average total assets 116,246 103,401 106,338 88,043 78,277 67,274 57,074
Financial Ratios:
Net income to average assets 1.61% 1.73% 1.71% 1.60% 1.39% 1.20% 1.06%
Overhead ratio 1.99% 1.91% 1.87% 2.08% 2.21% 2.49% 2.76%
Net income to average shareholders'
equity 16.88% 18.38% 18.20% 16.02% 14.46% 12.52% 10.35%
Dividend payout ratio 14.56% 12.52% 18.92% 17.78% 13.09% 15.71% 23.15%
Average shareholders' equity to
average total assets 9.52% 9.42% 9.39% 9.97% 9.61% 9.58% 10.22%
</TABLE>
8
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
AND LANIER BANKSHARES, INC. AND SUBSIDIARIES
Pro Forma Selected Financial Data
(Unaudited)
CSBI and Lanier
---------------
<TABLE>
<CAPTION>
As of or for the nine As of or for the years ended December 31,
months ended ----------------------------------------------------
September 30, 1999 1998 1997 1996
------------------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
(Amounts in thousands, except per share data and percentages)
Summary of Operations:
Net interest income $ 47,518 $ 61,717 $ 57,661 $ 54,230
Provision for loan losses 1,863 3,425 5,567 2,470
Net income 13,197 17,195 12,375 14,910
Per Share Data:
Net income - basic $ 0.99 $ 1.30 $ 0.95 $ 1.15
Net income - diluted 0.98 1.28 0.93 1.13
Cash dividends declared 0.36 0.44 0.42 0.40
Book value 10.69 10.31 9.50 8.89
Tangible book value 10.35 9.97 8.95 8.53
Balance Sheet Summary:
Investments $ 222,146 $ 192,160 $ 222,455 $ 236,946
Loans, net 987,139 909,953 863,948 779,702
Deposits 1,136,237 1,095,055 1,116,793 1,065,085
Assets 1,343,067 1,262,471 1,264,495 1,204,144
Federal funds purchased 10,895 -- 970 1,360
Long-term debt and other borrowings 407 257 88 646
Federal Home Loan Bank advances 40,523 17,614 7,606 6,982
Average shareholders' equity 139,120 131,185 120,830 108,388
Average total assets 1,303,821 1,258,331 1,221,719 1,150,839
Financial Ratios:
Net income to average assets 1.35% 1.37% 1.01% 1.30%
Overhead ratio 2.66% 1.92% 2.85% 2.69%
Net income to average shareholders' 12.68% 13.11% 10.24% 13.76%
equity
Dividend payout ratio 36.36% 33.85% 44.21% 34.78%
Average shareholders' equity to
average total assets 10.67% 10.43% 9.89% 9.42%
</TABLE>
9
<PAGE>
RISK FACTORS
If the merger is consummated, you will receive shares of CSBI common stock
in exchange for your shares of Lanier common stock (unless you dissent from the
merger and receive the appraised value of your shares of Lanier common stock in
cash). An investment in CSBI common stock is subject to a number of risks and
uncertainties, many of which also apply to your existing investment in Lanier
common stock. Risks and uncertainties relating to economic conditions and other
matters that would affect other financial institutions in similar ways are
generally not summarized below. Those risks, among others, are highlighted on
page 12 under the heading "A Warning About Forward-Looking Statements."
However, there are a number of other risks and uncertainties relating to
CSBI and your decision on the merger that you should consider in addition to the
risks and uncertainties associated with financial institutions generally. Many
of these risks and uncertainties could affect CSBI's future financial results
and may cause CSBI's future earnings and financial condition to be less
favorable than CSBI's expectations. This section summarizes those risks.
CSBI's operating costs after the merger and other recent acquisitions may be
greater than expected, and CSBI's costs savings from the merger and other recent
acquisitions may be less than expected, or CSBI may be unable to obtain those
cost savings as soon as expected.
CSBI's rapid growth over the last several years resulting from acquisitions
it has made - as well as the possibility of future growth from acquisitions -
produces risks of unknown liabilities that may cause costs after the merger and
other past and potential future acquisitions to be greater than expected.
Expectations concerning future earnings depend in part on CSBI being able to
combine the operations of acquired institutions with CSBI's own operations
promptly and efficiently, and also on CSBI being correct in its assumptions
about the financial impact of its acquisitions.
CSBI expects that it can achieve cost savings as a result of its
acquisition of Lanier and its other recently completed acquisitions. There is a
risk that the anticipated savings may not be realized or that they may be less
than CSBI expects.
CSBI may be unable to successfully integrate Lanier and other acquired
businesses or may have more trouble integrating acquired businesses than
expected.
There is a risk that the maintenance of an acquired institution's -
including Lanier's - key customers and personnel and the conversion of its
systems and procedures to CSBI's systems and procedures may not be possible or
completed on schedule or may be more difficult and costly than expected, which
could cause the acquired operations to perform below expectations. Maintaining
an acquired institution's key customers and personnel and converting its systems
and procedures to CSBI's systems and procedures is an important part of CSBI's
acquisition program.
Prior to acquiring an institution, CSBI frequently estimates that it will
be able to maintain most of the institution's key customers and personnel and
convert its systems and procedures with a minimal amount of costs and diversion
of management time and attention. There is a risk that integrating Lanier and
other acquired businesses may take a greater amount of resources than CSBI
expects.
Your merger consideration may be fixed despite a change in CSBI's stock price.
Each share of Lanier common stock owned by you will be converted into the
right to receive CSBI common stock based on an exchange ratio which is based on
the average closing price of CSBI common stock over a 20-day trading period
ending five days prior to the effective time of the merger. If the average
closing price of CSBI common stock during this time is less than $21.50 per
share, each share of Lanier common stock will be converted into 1.44186 shares
of CSBI common stock. Accordingly, there is a risk that you will receive less
value for your shares of Lanier common stock if CSBI's average closing price
decreases further below $21.50 per share. The price of CSBI common stock when
the merger takes place may vary from its price at the date of this proxy
statement/prospectus and at the date of Lanier's special meeting. Such
variations in the price of CSBI common stock may result from changes in the
business, operations or prospects of CSBI, regulatory considerations, general
market and economic conditions and other factors. At the time of Lanier's
special meeting, you will not know the exact value of the consideration you will
receive when the merger is completed. See "THE MERGER -- Merger Consideration."
10
<PAGE>
Your merger consideration may be reduced regardless of CSBI's stock price.
If Lanier's merger-related expenses (excluding fees paid to Lanier's
financial advisor, T. Stephen Johnson & Associates, Inc.) total more than
$100,000, the exchange ratio will be reduced proportionately and Lanier
shareholders will receive less for their shares. Lanier's expenses will
increase if unexpected delays or other problems arise in consummating the
merger. For purposes of the merger agreement, Lanier may disregard the effect
of several costs related to the merger in calculating its total merger-related
expenses. At ________________, Lanier's merger-related expenses calculated in
accordance with the merger agreement were approximately $________. There can be
no assurance, however, that Lanier's merger-related expenses will not increase
so much that the your merger consideration will not be reduced.
Lanier's directors may have interests in the merger that are different from
yours, which may present them with potential conflicts of interest.
In considering the recommendation of the merger by Lanier's board of
directors, you should be aware that Lanier's directors may have interests in the
merger that may present them with potential conflicts of interest. These
interests relate to, among other things, provisions in the merger agreement
regarding directors' indemnification. There is a risk that these interests may
have influenced the decision by Lanier's board of directors to recommend to you
the merger. See "THE MERGER -- Interests of Lanier's Employees and Directors in
the Merger."
CSBI's computer systems, or those of its service providers, suppliers, or
customers, may not operate properly on year 2000-sensitive dates.
The year 2000 issue refers generally to the data structure problem that
will prevent systems from properly recognizing dates after the year 1999. CSBI
has appointed a year 2000 committee with a full-time year 2000 coordinator to
conduct a comprehensive review of its operational and financial systems to
determine how the year 2000 will impact the operation of these systems. The
committee has developed a plan to identify all critical systems and developed
solutions for all systems that are found not to be ready for the year 2000. In
addition, confirmations have been received from CSBI's primary processing
vendors and counterparties that plans have been developed to address processing
of transactions in the year 2000. However, because the identification and
solving of all year 2000 issues is a complex problem, there is a risk that
CSBI's computer systems and the systems of other companies with whom CSBI
conducts business will not be ready for the year 2000 prior to December 31,
1999. Additionally, if our commercial customers are not ready for the year 2000
prior to December 31, 1999, and they suffer adverse effects on their operations
as a result, their ability to meet their obligations to CSBI may be adversely
affected.
11
<PAGE>
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
We make forward-looking statements in this proxy statement/prospectus,
and, in the case of our public documents to which we refer, that are subject to
risks and uncertainties. These forward-looking statements include information
about possible or assumed future results of our operations or the performance of
CSBI after the merger. Also, when we use words such as "believes," "expects,"
"anticipates" or similar expressions, we are making forward-looking statements.
Many possible events or factors could affect our future financial results and
performance. This could cause our results or performance to differ materially
from those expressed in our forward-looking statements. You should consider
these important factors when you vote on the merger agreement. Factors that may
cause actual results to differ materially from those contemplated by our
forward-looking statements include the following:
. CSBI's operating costs after the merger and other recent acquisitions
may be greater than expected, and CSBI's cost savings from the merger
and other recent acquisitions may be less than expected, or CSBI may be
unable to obtain those cost savings as soon as expected;
. CSBI may be unable to successfully integrate Lanier and other acquired
businesses or may have more trouble integrating acquired businesses
than expected;
. CSBI's estimate of the merger-related integration charge to be incurred
in connection with its headquarters consolidation and single bank brand
initiative may be greater than expected;
. Competition among depository and other financial institutions may
increase significantly;
. Changes in the interest rate environment may reduce operating margins;
. General economic or business conditions, including acquisition and
growth opportunities, may be worse than expected;
. Legislative or regulatory changes may adversely affect our businesses;
and
. Disruption in data processing caused by computer malfunctions
associated with the year 2000 problem may be greater than expected.
We have based our forward-looking statements on our current expectations
about future events. Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we cannot guarantee you that these
expectations actually will be achieved. We are under no duty to update any of
the forward-looking statements after the date of this proxy statement/prospectus
to conform those statements to actual results. In evaluating these statements,
you should consider various factors, including the risks outlined in the section
entitled "Risk Factors," beginning on page 10. You should also consider the
cautionary statements contained in our filings with the Securities and Exchange
Commission (the "SEC"). These factors may cause our actual results to differ
materially from our forward-looking statements.
12
<PAGE>
THE SPECIAL MEETING
General
This proxy statement/prospectus is being mailed by Lanier to Lanier
shareholders on or about ________, 1999, together with the notice of the special
meeting of shareholders of Lanier and a form of proxy solicited by Lanier's
board of directors for use at the special meeting and at any adjournments or
postponements of the meeting.
Meeting Date, Time and Place and Record Date
The special meeting will be held at the main office of Lanier National
Bank, located at 854 Washington Street, Gainesville, Georgia, at ______ p.m.,
local time, on ______ ____, 2000. Only holders of Lanier common stock of record
at the close of business on _________ ______, 1999 will be entitled to receive
notice of and to vote at the special meeting. As of the record date, there were
1,200,000 shares of Lanier common stock outstanding and entitled to vote, with
each such share entitled to one vote.
Matters to be Considered
At the special meeting, Lanier shareholders will be asked to consider and
vote upon a proposal to approve the Agreement and Plan of Merger, dated as of
October 20, 1999, by and between Lanier and CSBI. Under the merger agreement,
Lanier will merge with and into CSBI and shares of Lanier common stock will be
converted into the right to receive shares of CSBI common stock. Lanier
shareholders may also be asked to consider any other business that properly
comes before the special meeting. Finally, Lanier shareholders may be asked to
vote on a proposal to adjourn or postpone the special meeting, which could be
used to allow more time for soliciting additional votes to approve the merger
agreement. Each copy of this proxy statement/prospectus mailed to Lanier
shareholders is accompanied by a form of proxy for use at the special meeting.
Vote Required
Under Georgia law, approval of the merger agreement requires the
affirmative vote of at least a majority of all of the votes entitled to be cast
at the special meeting. On the record date, there were approximately 1,200,000
outstanding shares of Lanier common stock, each of which is entitled to one vote
at the special meeting. On that date, the directors and officers of Lanier and
their affiliates beneficially owned a total of approximately 36% of the
outstanding shares of Lanier common stock. Each of Lanier's directors has
agreed, subject to several conditions, to vote his shares of Lanier common stock
in favor of the merger agreement. Each of Lanier's officers who is not also a
director is expected to vote in favor of the merger agreement. At the date of
this proxy statement/prospectus, neither CSBI nor any of its affiliates owned
any of the outstanding shares of Lanier common stock. The presence, in person
or by proxy, of shares of Lanier common stock representing a majority of
Lanier's outstanding shares entitled to vote at the special meeting is necessary
in order for there to be a quorum at the special meeting. There must be a
quorum present in order for the vote on the merger agreement to occur.
Voting of Proxies
Shares of Lanier common stock represented by properly executed proxies
received at or prior to the special meeting will be voted at the special meeting
in the manner specified by the holders of such shares. Properly executed
proxies which do not contain voting instructions will be voted "FOR" approval
and adoption of the merger agreement, and as determined by a majority of the
proxies, as to any other matter that may come before the special meeting,
including, among other things, a motion to adjourn or postpone the special
meeting to another time for the purpose of soliciting additional proxies or
otherwise. However, no proxy with instructions to vote against the merger will
be voted in favor of any adjournment or postponement of the special meeting.
Any shareholder present in person or by proxy (including broker non-votes, which
generally occur when a broker who holds shares in street name for a customer
does not have the authority to vote on certain non-routine matters because its
customer has not provided any voting instructions with respect to the matter) at
the special meeting who abstains from voting will be counted for purposes of
determining whether a quorum exists.
13
<PAGE>
Because approval of the merger agreement requires the affirmative vote of
at least a majority of all the votes entitled to be cast at the special meeting,
abstentions and broker non-votes will have the same effect as negative votes.
Accordingly, Lanier's board of directors urges its shareholders to complete,
date, and sign the accompanying form of proxy and return it promptly in the
enclosed, postage-paid envelope.
If any other matters are properly presented at the special meeting, the
person or persons named in the form of proxy enclosed with this proxy
statement/prospectus and acting thereunder will have discretion to vote on such
matters in accordance with their best judgment, unless the proxy indicates
otherwise. Lanier has no knowledge of any matters to be presented at the
special meeting, other than the matters described in this proxy
statement/prospectus.
Revocability of Proxies
The grant of a proxy on the enclosed form of proxy does not preclude you
from voting in person or otherwise revoking a proxy. You may revoke a proxy at
any time prior to its exercise by delivering to the Secretary of Lanier either a
duly executed revocation or a proxy bearing a later date. In addition, you may
revoke a proxy prior to its exercise by voting in person at the special meeting.
All written notices of revocation and other communications with respect to the
revocation of Lanier proxies should be addressed to Lanier Bankshares, Inc., 854
Washington Street, Gainesville, Georgia 30503, Attention: Secretary.
Attendance at the special meeting will not in and of itself constitute
revocation of a proxy.
Solicitation of Proxies
Lanier will pay all of the costs of soliciting proxies in connection with
the special meeting, except that CSBI will pay the costs of filing the
registration statement with the SEC, of which this proxy statement/prospectus is
a part, and one-half of the costs of printing the registration statement and
this proxy statement/prospectus.
Solicitation of proxies may be made in person or by mail, telephone, or
facsimile, or other form of communication by directors, officers, and employees
of Lanier, who will not be specially compensated for such solicitation.
Nominees, fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and to secure their voting
instructions, if necessary, and will be reimbursed for the expenses incurred in
sending proxy materials to beneficial owners.
No person is authorized to give any information or to make any
representation not contained in this proxy statement/prospectus and, if given or
made, such information or representation should not be relied upon as having
been authorized by Lanier, CSBI or any other person. The delivery of this proxy
statement/prospectus does not, under any circumstances, create any implication
that there has been no change in the business or affairs of Lanier or CSBI since
the date of the proxy statement/prospectus.
Recommendation of Lanier's Board of Directors
Lanier's board of directors has unanimously approved the merger agreement
and the transactions contemplated thereby, believes that the merger is in the
best interests of Lanier and its shareholders, and recommends that Lanier
shareholders vote "FOR" approval of the merger agreement.
In the course of reaching its decision to approve the merger agreement and
the transactions contemplated in the merger agreement, Lanier's board of
directors, among other things, consulted with its legal advisors regarding the
legal terms of the merger agreement and with its financial advisor, T. Stephen
Johnson & Associates, Inc. ("TSJ&A"), as to the fairness, from a financial point
of view, of the consideration to be received by the holders of Lanier common
stock in the merger. For a discussion of the factors considered by Lanier's
board of directors in reaching its conclusion, see "THE MERGER -- Background of
the Merger" and "-- Lanier's Reasons for the Merger."
Lanier shareholders should note that Lanier's directors have certain
interests in, and may derive benefits as a result of, the merger that are in
addition to their interests as shareholders of Lanier. See "THE MERGER --
Interests of Lanier's Employees and Directors in the Merger."
14
<PAGE>
Information About Lanier's Auditors
A representative of Mauldin & Jenkins, LLC is expected to be present at
the special meeting and will have the opportunity to make a statement, if he or
she desires, and respond to appropriate questions.
15
<PAGE>
THE MERGER
The descriptions of the terms and conditions of the merger, the merger
agreement, and any related documents in this proxy statement/prospectus are
qualified in their entirety by reference to the copy of the merger agreement
attached as Appendix A to this proxy statement/prospectus, to the registration
statement, of which this proxy statement/prospectus is a part, and to the
exhibits to the registration statement.
General
The merger agreement provides that, if all of the conditions set forth in
the merger agreement are satisfied or waived, Lanier will merge with and into
CSBI, with CSBI remaining in existence as the surviving corporation in the
merger. Lanier National Bank, a wholly-owned subsidiary of Lanier will become a
wholly-owned subsidiary of CSBI following the merger. After the merger, we
expect Lanier National Bank will merge with and into Georgia First Bank, N.A.,
CSBI's Gainesville, Georgia, national bank subsidiary. In the event the banks
merge, we anticipate that Georgia First will be the surviving bank and will
assume Lanier National Bank's locations. At the time the merger of Lanier and
CSBI becomes effective, each share of issued and outstanding Lanier common stock
(excluding shares held by CSBI, Lanier and their respective subsidiaries, other
than shares held on behalf of third parties ("Excluded Shares")) will be
converted into the right to receive a number of shares of CSBI common stock
which will be determined by a formula described below in "Merger Consideration."
If the merger agreement is approved at the special meeting, all required
governmental and other consents and approvals are obtained, and all other
conditions to the obligations of the parties to consummate the merger are either
satisfied or waived (as permitted), the merger will be consummated.
Background of the Merger
During the last several years, there has been a trend toward consolidation
in the banking industry. This trend has been fueled by, among other things,
recent national and state banking-related legislation and has enabled
participants in business combinations to benefit from the economies of scale and
greater efficiencies available to the combined entities. Financial institutions
have increasingly sought suitable combinations as a means of obtaining such
benefits.
Upon the recommendation of Lanier's board of directors, on July 16, 1999,
Lanier's senior management met with TSJ&A to review the state of the equity
markets for independent community-based financial institutions and to discuss
strategic alternatives to enhance shareholder value.
After meeting with TSJ&A, Lanier's senior management and TSJ&A reported to
Lanier's board of directors that there were certain factors identified that
could impact shareholder value. These factors, presented in no order of
importance, included:
. the continued growth of Lanier in terms of asset size and earnings;
. the current trading value of Lanier common stock;
. the current trading value of other institutions in the banking
industry;
. the number of potential acquirers currently in the market place;
. expansion opportunities within Hall County and throughout North
Georgia;
. proposed changes in the accounting rules regarding the treatment of
mergers; and
. the general economy.
Faced with these factors, Lanier's board of directors retained TSJ&A in
July 1999 to formally explore its strategic options, including using TSJ&A's
best efforts as Lanier's financial advisor to solicit, confidentially,
indications of interest from various financial institutions and other
appropriate potential acquirers. Lanier selected TSJ&A for reasons which
included, among others, its familiarity with Lanier's business and market area,
as well as its knowledge of southeastern financial institutions and its previous
experience with mergers and acquisitions
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involving financial institutions. The goal of Lanier's board of directors was to
obtain a high value for shareholders, possibly receive shares of stock that
would enjoy greater liquidity and maintain a community bank identity in the
local market place. To achieve this goal, TSJ&A selected the companies most
likely to be interested in a combination with Lanier based on geographic
proximity and the financial ability to fairly compensate Lanier shareholders.
TSJ&A contacted prospective acquirers, including CSBI, and, upon obtaining
confidentiality agreements, provided them with information on Lanier. In August
1999, CSBI and other interested parties submitted initial indications of
interest to TSJ&A. Lanier conducted further discussions with CSBI and other
interested parties and asked for final indications of interest from those
parties. In August 1999, TSJ&A met with Lanier's board of directors to evaluate
the final indications of interest. Lanier's board of directors decided that
CSBI's proposal met its criteria and represented the highest value to Lanier
shareholders. At that time, Lanier's board of directors voted to begin
negotiating a definitive merger agreement with CSBI.
On September 20, 1999, CSBI began detailed due diligence on Lanier. CSBI's
due diligence, together with visits by CSBI representatives to Lanier's offices,
continued through the end of September 1999.
On October 20, 1999, Lanier's legal counsel presented to Lanier's board of
directors a summary of the merger agreement. At that meeting the board of
directors discussed the terms of the merger agreement and TSJ&A's verbal opinion
that the consideration to be received from CSBI was fair, from a financial point
of view, to Lanier shareholders. At the conclusion of this meeting and subject
to the receipt of TSJ&A's written fairness opinion, the merger agreement was
approved by Lanier's board of directors. On __________, 1999, TSJ&A delivered
its written opinion to Lanier's board of directors that the consideration to be
received from CSBI was fair, from a financial point of view, to Lanier
shareholders. See "--Opinion of T. Stephen Johnson & Associates, Inc." The
merger agreement was approved by CSBI's board of directors as of October 27,
1999.
Lanier's Reasons for the Merger
Lanier's board of directors believes that the merger is in the best interest
of Lanier shareholders. Lanier's board of directors considered a number of
factors in deciding to approve and recommend the terms of the merger agreement
to Lanier shareholders, including:
. the value of the consideration to be received by Lanier shareholders
relative to the book value and earnings per share of Lanier common stock;
. certain information concerning the financial condition, results of
operations and business prospects of CSBI;
. the financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected
combinations with the terms of the proposed transaction with CSBI;
. the alternatives to the merger, including remaining an independent
institution;
. the competitive and regulatory environment for financial institutions
generally;
. the fact that the merger will enable Lanier shareholders to exchange
their shares of Lanier common stock, in a tax-free transaction, for
shares of common stock of a regional company, the stock of which is more
widely held and actively traded; and
. the opinion of TSJ&A that the consideration to be received by Lanier
shareholders as a result of the merger is fair from a financial point of
view.
The foregoing discussion of the information and factors considered by
Lanier's board of directors is not intended to be exhaustive. Lanier's board of
directors did not assign any relative or specific weights to the foregoing
factors, and individual directors may have given different weights to different
factors.
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CSBI's Reasons for the Merger
CSBI's board of directors, after consideration of relevant business,
financial, legal and market factors, approved the merger agreement. In reaching
this decision, CSBI's board of directors considered all material factors,
although it did not assign any relative or specific weight to any individual
factor. CSBI's board of directors also took into account its stated strategic
long-term goal of expanding CSBI throughout the Southeast, so as to become one
of the leading independent bank holding companies in the region. In this
regard, CSBI looked at the profit position of Lanier, giving consideration to
Lanier's size, its shareholder base, management expertise, and location. Of
particular importance to CSBI was the fact that after the merger, CSBI would
rank third in deposit market share in the Hall County market. After considering
these factors, CSBI determined that the merger would help accomplish its long-
term goals and would enhance value for CSBI shareholders, while permitting CSBI
to continue to grow and expand as an independent bank holding company.
Opinion of TSJ&A
TSJ&A is an investment banking and financial services firm located in
Atlanta, Georgia. As part of its investment banking business, TSJ&A engages in
the review of the fairness of bank acquisition transactions from a financial
perspective and in the valuation of banks and other businesses and their
securities in connection with mergers, acquisitions and other transactions.
Neither TSJ&A nor any of its affiliates has a material financial interest in
Lanier or CSBI. TSJ&A was selected to advise Lanier's board of directors based
upon its familiarity with Lanier, the regional community banking industry, and
its knowledge of the banking industry as a whole. No instructions were given or
limitations imposed by Lanier's board of directors upon TSJ&A regarding the
scope of its investigation or the procedures it followed in rendering its
opinion.
TSJ&A has rendered its opinion (the "Fairness Opinion") to the board of
directors of Lanier that the consideration to be received by the holders of
Lanier common stock under the merger agreement is fair to such shareholders from
a financial point of view. A copy of the Fairness Opinion, which sets forth
certain assumptions made, matters considered and limitations on the review
undertaken, is attached as Appendix C to this proxy statement/prospectus and
should be read in its entirety. The summary of the Fairness Opinion set forth
herein is qualified in its entirety by reference to the text of the Fairness
Opinion.
In addition to rendering the Fairness Opinion, TSJ&A was engaged by Lanier
to act as an advisor to the board of directors during the negotiations with CSBI
for which a fee of $_______ will be paid upon the closing of the merger. This
fee includes rendering the Fairness Opinion.
In arriving at the Fairness Opinion, TSJ&A performed merger analyses
described below. TSJ&A also reviewed certain publicly available business and
financial information relating to Lanier and CSBI. TSJ&A also considered
certain financial and stock market data of Lanier and CSBI, compared that data
with similar data for certain other publicly-held banks and bank holding
companies and considered the financial terms of certain other recent comparable
community bank acquisition transactions in the southeastern United States, as
further discussed below. TSJ&A also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria that it deemed relevant. In connection with its review, TSJ&A
did not independently verify the foregoing information and relied on such
information as being complete and accurate in all material respects. Financial
forecasts prepared by Lanier management and submitted to TSJ&A were based on
assumptions believed by TSJ&A to be reasonable and to reflect currently
available information, but TSJ&A did not independently verify such information.
TSJ&A did not make an independent evaluation or appraisal of the assets of
Lanier or CSBI.
In connection with rendering the Fairness Opinion, TSJ&A performed a
variety of financial analyses, including those summarized below. The summary
set forth below does not purport to be a complete description of the analyses
performed by TSJ&A in this regard. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, notwithstanding the separate factors
summarized below, TSJ&A believes that its analyses must be considered as a whole
and that selecting portions of its analyses and the factors considered by it,
without considering all analyses and factors, could create an incomplete view of
the evaluation process underlying its opinion. In performing its analyses,
TSJ&A made numerous assumptions with respect to industry performance, business
and economic conditions and other matters, many of which are beyond Lanier's or
CSBI's control. The analyses performed by TSJ&A are not necessarily indicative
of actual values or future results, which may be
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significantly more or less favorable than suggested by such analyses. No company
or transaction considered as a comparison in the analyses is identical to
Lanier, CSBI or the merger. Accordingly, an analysis of the results of such
comparisons is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
companies and other factors that could affect the public trading value of the
companies involved in such comparisons. In addition, the analyses do not purport
to be appraisals or reflect the process by which or the prices at which
businesses actually may be sold or the prices at which any securities may trade
at the present time or at any time in the future.
Merger Analysis: The merger consideration to be received by Lanier
shareholders is based on a defined exchange ratio equal to the fraction formed
by $31.00 as the numerator and the market value of shares of CSBI common stock,
which currently trade on the Nasdaq Stock Market, as the denominator. However,
if the market value of shares of CSBI common stock is less than or equal to
$21.50 per share or greater than or equal to $26.50 per share, then each share
of Lanier common stock will be converted into the right to receive 1.44186
shares or 1.16981 shares of CSBI common stock, respectively. The November 24,
1999 closing price of CSBI common stock was $23.875 per share. Assuming this
closing price is equal to the defined market value of CSBI common stock, the
exchange ratio would be 1.29843 and the transaction value of each of the
1,200,000 shares of Lanier common stock would be $31.00. This transaction value
equals 3.233 times the September 30, 1999 book value of Lanier and 19.872 times
Lanier's 12 months earnings per share. The purchase price was calculated to
equal 34.87% of deposits as of September 30, 1999.
Comparable Transactions Analysis: TSJ&A reviewed the merger as of November
24, 1999 for the purpose of determining purchase premiums that could be used in
comparing the merger with other announced transactions. TSJ&A reviewed the
purchase premiums paid in all nine transactions that were announced since
September 30, 1998 involving selling institutions headquartered in Florida and
Georgia. A listing of these transactions is included with the Fairness Opinion.
On average, the comparable transactions reported an announced deal price to book
value of 3.0233 times, an announced deal price to earnings of 25.30 times, and a
purchase price as a percent of deposits of 35.04%. The merger compares
favorably with these transactions with the deal price to book value. The deal
price to earnings and the purchase premium as a percent of core deposits each
rank well within the range of the comparable transactions.
Dividend Analysis: TSJ&A reviewed the historical dividend payouts of
Lanier in an effort to equate such payouts to the current dividend payouts of
CSBI. Lanier shareholders received $0.34 per common share during 1999.
Assuming the current CSBI dividend payout of $0.48 per share, Lanier
shareholders would receive the equivalent of $0.62 per current Lanier share,
based on an exchange ratio of 1.29843.
Merger Consideration
At the effective time of the merger, each issued and outstanding share of
Lanier common stock (except for Excluded Shares) will be converted into the
right to receive shares of CSBI common stock. Excluded Shares will be canceled.
The number of shares to be received by Lanier shareholders will be based
upon an exchange ratio that will depend upon the market value of CSBI common
stock. The market value of CSBI common stock will be equal to the average
closing price of CSBI common stock as reported on the Nasdaq Stock Market over
a 20-day trading period ending five days prior to the effective time of the
merger. If the average closing price of CSBI common stock is less than or
equal to $21.50, the exchange ratio will be 1.44186. If the average closing
price of CSBI common stock is greater than or equal to $26.50, the exchange
ratio will be 1.16981. If the average closing price is greater than $21.50, but
less than $26.50, the exchange ratio will be between 1.44186 and 1.16981.
Under the merger agreement, each holder of shares of Lanier common stock
converted pursuant to the merger, who would otherwise have been entitled to
receive a fraction of a share of CSBI common stock will receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of a
share of CSBI common stock multiplied by the last sale price for CSBI common
stock on the Nasdaq Stock Market on the business day prior to the effective time
of the merger.
The merger agreement provides that the merger consideration to be received
for all of the shares of Lanier common stock will be reduced by the sum of all
amounts in excess of $100,000 paid or to be paid by Lanier or Lanier National
Bank or both for fees and expenses (other than fees and expenses associated with
the services of TSJ&A) of consultants, attorneys, accountants and the like in
connection with the merger and the due diligence
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conducted by Lanier in regard to the merger. In the event of an adjustment, (i)
the merger consideration shall be reduced by that number of whole shares of CSBI
common stock equal to the dollar amount in excess of $100,000 divided by the
market value of the CSBI common stock, and (ii) the exchange ratio decreased
accordingly.
Effective Time of the Merger
If the merger agreement is approved by the requisite votes of Lanier
shareholders and all other required governmental and other consents and
approvals are received, and if the other conditions to the obligations of the
parties to consummate the merger are satisfied or waived (as permitted), the
merger will be consummated and effected on the date and at the time the Articles
of Merger reflecting the merger become effective with the Secretary of State of
Georgia. Unless otherwise mutually agreed upon in writing by our chief
executive officers, we will use our reasonable efforts to cause the effective
time of the merger to occur on the last business day of the month in which
occurs the last to occur of:
. 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;
. the date on which Lanier shareholders approve the merger agreement; or
. a later date if agreed upon in writing by our chief executive officers.
Assuming satisfaction of all of the conditions to consummation of the
merger, the merger is expected to be made effective during the first quarter of
2000.
Either of us may terminate the merger agreement prior to the effective
time, under several circumstances. See "-- Conditions to Consummation" and
"-- Amendment, Waiver and Termination."
Exchange of Certificates
Within 20 days after the effective time of the merger, CSBI will mail
appropriate transmittal materials to each record holder of Lanier common stock
for use in effecting the surrender and cancellation of those certificates in
exchange for CSBI common stock. Risk of loss and title to the certificates will
remain with the holder until proper delivery of such certificates to CSBI by
former Lanier shareholders. Lanier shareholders should not surrender their
certificates for exchange until they receive a letter of transmittal and
instructions from CSBI. After the effective time of the merger, each holder of
shares of Lanier common stock, except holders exercising dissenters' rights,
issued and outstanding at the effective time must surrender the certificate or
certificates representing their shares to CSBI and will, within 20 days after
surrender, receive the consideration they are entitled to under the merger
agreement, together with all undelivered dividends or distributions in respect
of such shares (without interest). As provided in the merger agreement, each
record holder of Lanier common stock shall also receive cash in lieu of any
fractional share of CSBI common stock to which he or she would be otherwise
entitled (without interest). CSBI will not be obligated to deliver the
consideration to which any former holder of Lanier common stock is entitled
until the holder surrenders the certificate or certificates representing his or
her shares for exchange. The certificate or certificates so surrendered must be
duly endorsed as CSBI may require. CSBI will not be liable to a holder of
Lanier common stock for any property delivered in good faith to a public
official pursuant to any applicable abandoned property law.
After the effective time of the merger (and prior to the surrender of
certificates of Lanier common stock to CSBI), record holders of certificates
that represented outstanding Lanier common stock immediately prior to the
effective time of the merger will have no rights with respect to the
certificates other than the right to surrender the certificates and receive in
exchange for the certificates a certificate or certificates representing the
aggregate number of whole shares of CSBI common stock to which the holder is
entitled pursuant to the merger agreement, together with a check for the amount
(without interest) representing any fractional share.
In the event that any dividend or distribution, the record date for which
is on or after the effective time of the merger, is declared by CSBI on CSBI
common stock, no such dividend or other distributions will be delivered to the
holder of a certificate representing shares of Lanier common stock immediately
prior to the effective time of the merger until such holder surrenders such
certificate as set forth above.
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In addition, holders of certificates that represented outstanding Lanier
common stock immediately prior to the effective time of the merger will be
entitled to vote after the effective time of the merger at any meeting of CSBI
shareholders the number of whole shares of CSBI common stock into which such
shares have been converted, even if such holder has not surrendered such
certificates for exchange as set forth above.
Important Federal Income Tax Consequences
The following summarizes the material federal income tax consequences of
the merger to Lanier shareholders. This summary is based on current law, which
is subject to change at any time, possibly with retroactive effect. This
summary is not a complete description of all of the tax consequences of the
merger and, in particular, may not address federal income tax consequences
applicable to you if you are subject to special treatment under federal income
tax law, such as rules relating to Lanier shareholders who are not citizens or
residents of the United States, who are financial institutions, foreign
corporations, tax-exempt organizations, insurance companies or dealers in
securities, shareholders who acquired their shares of Lanier common stock
pursuant to the exercise of options or similar derivative securities or
otherwise as compensation, and shareholders who hold their shares of Lanier
common stock as part of a straddle or conversion transaction. In addition, this
summary does not address the tax consequences of the merger under applicable
state, local or foreign laws. This discussion assumes you hold your shares of
Lanier common stock as a capital asset within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"). Each Lanier shareholder
should consult with his or her tax advisor about the tax consequences of the
merger in light of his or her individual circumstances, including the
application of any federal, state, local or foreign law.
The merger is intended to be a "reorganization" under Section 368(a) of the
Code. A condition to completing the merger is that, on the closing date, CSBI
and Lanier receive an opinion from Troutman Sanders LLP, counsel to CSBI, that
the merger will qualify as a reorganization. The closing date opinion will be
based on customary assumptions and customary representations made by Lanier and
CSBI. An opinion of counsel represents the counsel's best legal judgment and is
not binding on the Internal Revenue Service or any court. If the merger does
not qualify as a reorganization, the exchange of Lanier common stock for CSBI
common stock in the merger will be a taxable transaction.
Neither Lanier nor CSBI intends to waive the condition that it receive an
opinion that the merger will qualify as a reorganization. If, however, Lanier
decides to waive the condition, Lanier will recirculate this document to
disclose the waiver and to make all related material disclosures, and will
resolicit proxies from the Lanier shareholders.
Provided the merger qualifies as a reorganization, neither Lanier nor CSBI
will recognize any gain or loss for federal income tax purposes, and the federal
income tax consequences to you as a Lanier shareholder will be as follows:
. You will not recognize any gain or loss on the exchange of your Lanier
common stock for CSBI common stock, except for the receipt of cash
instead of a fractional share.
. If you receive cash instead of a fractional share of CSBI common
stock, you will recognize gain or loss equal to the difference between
the amount of the cash received and your tax basis allocable to the
fractional share. This gain or loss generally will be capital gain or
loss.
. If you exercise your dissenters' rights under Georgia law and receive
payment in cash for the fair value of your shares of Lanier common
stock, you will be treated as having exchanged such shares for cash in
a redemption subject to Section 302 of the Code, and you generally
will recognize capital gain or loss in such exchange equal to the
difference between the cash received and the tax basis of such shares.
. Your aggregate tax basis for the shares of CSBI common stock received
for your Lanier common stock will be the same as your aggregate tax
basis for the Lanier common stock surrendered in exchange therefor,
excluding any basis allocable to a fractional share of CSBI common
stock for which cash is received.
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. Your holding period for shares of CSBI common stock received for your
Lanier common stock will include your holding period for the Lanier
common stock exchanged for CSBI common stock if your shares of Lanier
common stock are held as a capital asset within the meaning of Section
1221 of the Code at the effective time of the merger.
Each Lanier shareholder is urged to consult his or her personal tax and
financial advisor as to his or her specific federal income tax consequences,
based on his or her own particular status and circumstances, and also as to any
state, local, foreign or other tax consequences arising out of the merger.
Management and Operations After the Merger
Directors and Executive Officers of Lanier and Lanier National Bank. At
the effective time of the merger, Lanier will merge with and into CSBI.
Immediately prior to the effective time of the merger, the directors and
officers of Lanier will resign as of the effective time. The directors and
officers of Lanier National Bank in office prior to the effective time of the
merger may continue, at their discretion, to serve as directors and officers of
the bank until the next regularly scheduled meeting of the bank's board of
directors or until such time as their respective successors are duly elected.
After the merger of Lanier and CSBI, we expect Lanier National Bank will merge
with and into Georgia First Bank, N.A., CSBI's Gainesville, Georgia, national
bank subsidiary. In the event the banks merge, we anticipate that Georgia First
will be the surviving bank and will assume Lanier National Bank's locations.
Further, Joseph D. Chipman, Jr., Lanier National Bank's current President and
Chief Executive Officer, would become President and Chief Executive Officer of
Georgia First and Ricky H. Pugh, Lanier National Bank's current Executive Vice
President and Chief Lending Officer, would become Executive Vice President of
Georgia First.
Directors and Officers of CSBI. The directors and executive officers of
CSBI in office at the effective time of the merger will remain in their
positions in accordance with CSBI's bylaws.
Interests of Lanier's Employees and Directors in the Merger
General. Some of Lanier's employees and directors may be deemed to have
interests in the merger in addition to their interests as shareholders of Lanier
generally. These interests include, among others, proposed employee benefits
for those who become employees of a CSBI subsidiary after the merger, employment
agreements with two of Lanier National Bank's current executive officers, and
insurance coverage for Lanier's directors and officers, as described below.
Employee Benefits. The merger agreement generally provides that CSBI will
furnish to those employees of Lanier who become employees of a CSBI subsidiary
after the effective time of the merger benefits under employee benefit plans
which, when taken as a whole, are substantially similar to those currently
provided by CSBI and its subsidiaries to their similarly situated employees.
However, for a period of 12 months after the effective time of the merger, CSBI
will provide generally to officers and employees of Lanier and Lanier National
Bank benefits in accordance with the policies of CSBI. Furthermore, CSBI will
waive any pre-existing condition exclusion under any employee health plan to the
extent the condition was covered under the relevant Lanier benefit plan and the
individual was covered by the Lanier benefit plan on the date which immediately
precedes the effective time of the merger. For purposes of participation,
vesting and benefit accrual under CSBI's employee benefit plans, service with
Lanier prior to the effective time of the merger will be treated as service with
CSBI or its subsidiaries.
Employment Agreements. Lanier, Lanier National Bank and its President and
Chief Executive Officer, Joseph D. Chipman, Jr., are currently bound by an
employment agreement that provides, among other things, for a payment to Mr.
Chipman following a change in control of Lanier. In order to avoid payment
under the terms of the existing employment agreement and as a condition to the
merger, Lanier, Lanier National Bank and Mr. Chipman will amend and restate the
existing contract upon consummation of the merger. Pursuant to the amended and
restated employment agreement, Mr. Chipman will serve as President and Chief
Executive Officer of Lanier National Bank and then CSBI's Gainesville, Georgia,
national bank subsidiary, Georgia First Bank, N.A., in the event Lanier National
Bank merges with and into Georgia First. Similarly, Ricky H. Pugh, Executive
Vice President and Chief Lending Officer of Lanier National Bank, currently has
an employment agreement with Lanier and Lanier National Bank and will enter into
an amended and restated employment agreement with Lanier and Lanier National
Bank upon consummation of the merger of Lanier and CSBI. Under this agreement,
Mr. Pugh will serve as Executive Vice President of Lanier National Bank and then
Georgia First in the event Lanier National Bank merges with and into Georgia
First.
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Mr. Chipman's employment agreement is for a term of three years and
provides for an annual salary of $127,000, which is equal to his annual salary
with Lanier National Bank as of the date of the merger agreement. Mr. Pugh's
employment agreement is for a term of two years and provides for an annual
salary of $82,000, which is equal to Mr. Pugh's annual salary with Lanier
National Bank as of the date of the merger agreement. The compensation of
Messrs. Chipman and Pugh will be reviewed by the board of directors of Lanier
National Bank and, in the event Lanier National Bank merges with and into
Georgia First, by the board of directors of Georgia First if Georgia First is
the surviving bank resulting from the merger. The compensation of Messrs.
Chipman and Pugh may be adjusted from year to year during the term of each of
their respective agreements, subject to the approval of CSBI's compensation
committee. During the term of their respective employment agreements, Messrs.
Chipman and Pugh will be entitled to benefits substantially similar to those
provided to executive officers of CSBI and its affiliated companies.
In the event that either Messrs. Chipman's or Pugh's employment is
terminated during the term of their respective employment agreements other than
for "cause," or if Lanier National Bank breaches their employment agreements,
the terminated employee will be entitled to receive compensation and benefits
otherwise payable for the remaining portion of the term of the agreement
(subject to several conditions). In the event there is a change in control of
CSBI, if Lanier National Bank terminates the employment of either Messrs.
Chipman or Pugh without cause, the terminated employee will receive a lump sum
cash payment in an amount equal to the product of two and eleven twelfth's
multiplied by the employee's highest annual compensation during the term of the
employment agreement.
Directors. Pursuant to the merger agreement, each director of Lanier
National Bank may, at his discretion, serve as a director of Lanier National
Bank until the next regularly scheduled meeting of the board of directors and
officers of the bank or until such time as their respective successors are duly
elected. Accordingly, those who continue to serve as directors of Lanier
National Bank (and Georgia First in the event Lanier National Bank merges with
and into Georgia First) will receive director fees at a rate that can be
controlled by CSBI.
Insurance. CSBI has agreed to provide directors' and officers' insurance
coverage for those directors and officers of Lanier National Bank who continue
to serve in such capacity after the effective time of the merger.
Conditions to Consummation
The obligations of Lanier and CSBI to consummate the merger are subject to
the satisfaction or waiver (to the extent permitted) of several conditions,
including:
. Lanier shareholders must have approved the merger agreement and the
consummation of the merger as and to the extent required by law,
Lanier's governing corporate instruments and the rules of the National
Association of Securities Dealers;
. the required regulatory approvals described under "Regulatory Matters"
must have been received, generally without any conditions or
requirements which would, in the reasonable judgment of CSBI's board
of directors, materially adversely affect the economic or business
benefits of the transactions contemplated by the merger agreement so
as to render inadvisable the consummation of the merger;
. each party must have received all consents (other than those described
in the preceding paragraph) required for consummation of the merger
and for the prevention of a default under any contract of such party
which, if not obtained or made, would reasonably likely have,
individually or in the aggregate, a material adverse effect on such
party, generally without any conditions or requirements which would,
in the reasonable judgment of CSBI's board of directors, materially
adversely affect the economic or business benefits of the transactions
contemplated by the merger agreement so as to render inadvisable the
consummation of the merger;
. no court or regulatory authority may have taken any action which
prohibits, restricts or makes illegal the consummation of the
transactions contemplated by the merger agreement;
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. the registration statement registering the shares of CSBI common stock
to be received by Lanier shareholders, of which this proxy
statement/prospectus is a part, must have been declared effective by
the SEC, no stop order suspending the effectiveness of the
registration statement may have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness of
the registration statement may have been initiated and be continuing
and all necessary approvals under federal and state securities laws
relating to the issuance or trading of the shares of CSBI common stock
issuable pursuant to the merger must have been received;
. each party must have received an opinion of Troutman Sanders LLP as to
the matters set forth above under "Important Federal Income Tax
Consequences;"
. each of Joseph D. Chipman, Jr. and Ricky H. Pugh shall have entered
into employment agreements with Lanier and Lanier National Bank, and
each shall have terminated their existing employment agreements with
such entities;
. the other party's representations and warranties must remain accurate,
and the other party must have performed all of the agreements and
covenants to be performed by it pursuant to the merger agreement, and
must have delivered certificates confirming satisfaction of the
foregoing requirements and certain other matters;
. each party must have received an opinion of the other party's counsel,
dated the closing date, as to certain matters;
. CSBI must have received letters from KPMG LLP with respect to certain
financial information regarding Lanier;
. CSBI must have received from each "affiliate" of Lanier an agreement
stating, among other things, that he or she will comply with federal
securities laws when transferring any shares of CSBI common stock
received in the merger (see " Resales of CSBI Common Stock");
. CSBI must have received from certain of the directors and executive
officers of Lanier and Lanier National Bank an agreement stating,
among other things, that he or she will support the merger and not
compete against CSBI under certain conditions;
. CSBI must have received a letter, dated as of the effective time of
the merger, from KPMG LLP to the effect that the merger will qualify
for pooling of interests accounting treatment; and
. the shares of CSBI common stock issuable pursuant to the merger must
have been approved for listing on the Nasdaq Stock Market.
No assurances can be provided as to when or if all of the conditions
precedent to the merger can or will be satisfied or waived by the appropriate
party. As of the date of this proxy statement/prospectus, the parties know of
no reason to believe that any of the conditions set forth above will not be
satisfied.
The conditions to consummation of the merger may be waived, in whole or in
part, to the extent permissible under applicable law, by the party for whose
benefit the condition has been imposed, without the approval of Lanier
shareholders.
Regulatory Matters
The merger is subject to the prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve"), and the Georgia Department
of Banking and Finance (the "Georgia Department"). Under these agencies'
regulations, they are required, when approving a transaction such as the merger,
to take into consideration the financial and managerial resources (including the
competence, experience and integrity of the officers, directors and principal
shareholders) and future prospects of the existing and proposed institutions and
the convenience and needs of the communities to be served. In considering the
financial resources and future prospects of the existing and proposed
institutions, the Federal Reserve and the Georgia Department will, among other
things, evaluate the adequacy of the capital level of the parties to the
proposed transaction.
24
<PAGE>
In addition, federal regulations will prohibit the acquisition of a bank if
it would result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or if its effect in any section of the country
would be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner result in a restraint of trade, unless the
federal regulators find that the anti-competitive effects of an acquisition are
clearly outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. In addition, under the Community Reinvestment Act of 1978, federal
regulators must take into account CSBI's and Lanier's performance record in
meeting the credit needs of their respective communities, including moderate and
low-income neighborhoods.
The merger generally may not be consummated until 15 days following the
date of applicable federal regulatory approval, during which time the United
States Department of Justice (the "Justice Department") may challenge the merger
on antitrust grounds. The commencement of an antitrust action would stay the
effectiveness of the Federal Reserve's approval unless a court specifically
ordered otherwise. CSBI and Lanier believe that the merger does not raise any
other significant regulatory concerns.
Federal regulations provide for the publication of notices and the
administrative hearings relating to the federal filings noted above and permit
interested parties to intervene in the proceedings. If interested parties
intervene, administrative and judicial proceedings relating to the Federal
Reserve filing could substantially delay the regulatory approvals required for
consummation of the acquisition.
CSBI and Lanier have filed or will file all applications and notices and
have taken (or will take) other appropriate action with respect to any requisite
approvals or other action of any governmental authority.
The merger agreement provides that the obligation of each of CSBI and
Lanier to consummate the acquisition is conditioned upon the receipt of all
requisite regulatory approvals, including the approval of the Federal Reserve.
There can be no assurance that any governmental agency will approve or take any
other required action with respect to the acquisition, and, if approvals are
received or action is taken, there can be no assurance as to the date of such
approvals or action, that such approvals or action will not be conditioned upon
matters that would cause the parties to abandon the acquisition, or that no
action will be brought challenging such approvals or action, including a
challenge by the Justice Department, if such a challenge is made, its result.
Other than as summarized above, we are not aware of any governmental
approvals or actions that may be required for consummation of the acquisition of
Lanier. Should any other approval or action be required, we currently
contemplate that we would seek such approval or action. To the extent that the
above summary describes statutes and regulations, it is qualified in its
entirety by reference to those particular statutes and regulations.
The acquisition of Lanier cannot proceed in the absence of the requisite
regulatory approvals. There can be no assurance that any regulatory approvals
will be obtained or as to the dates of any such approvals. There can also be no
assurance that our regulatory approvals will not contain a condition or
requirement which causes them to fail to satisfy the conditions set forth in the
merger agreement.
See "-- Effective Time of the Merger," "-- Conditions to Consummation" and
"-- Amendment, Waiver and Termination."
In addition to the approvals and notifications of the regulatory
authorities summarized above, we are subject to ongoing supervision, regulation
and periodic examination by various federal and state regulatory agencies.
Detailed discussions of such ongoing regulatory oversight and the laws and
regulations under which it is carried out can be found in our Annual Reports on
Form 10-K incorporated by reference herein. See "WHERE YOU CAN FIND MORE
INFORMATION." Those discussions are qualified in their entirety by the actual
language of the laws and regulations, which are subject to change based on
possible future legislation and regulatory action.
25
<PAGE>
Amendment, Waiver and Termination
To the extent permitted by law, Lanier and CSBI, with the approval of their
respective boards of directors, may amend the merger agreement by written
agreement at any time without the approval of Lanier shareholders. However,
after the approval of the merger by Lanier shareholders, no amendment may
decrease the consideration to be received without the approval of Lanier
shareholders.
Prior to or at the effective time of the merger, either CSBI or Lanier may
waive any default in the performance of any term of the merger agreement by the
other party, may waive or extend the time for the fulfillment by the other party
of any of its obligations under the merger agreement, and may waive any of the
conditions precedent to the obligations of such party under the merger
agreement, except any condition that, if not satisfied, would result in the
violation of an applicable law.
The merger agreement may be terminated, and the merger abandoned, at any
time prior to its effective time, by mutual consent of CSBI's and Lanier's
boards of directors. In addition, the merger agreement may be terminated, and
the merger abandoned, prior to the effective time of the merger by either CSBI
or Lanier if:
. the other party breaches and does not timely cure any representation
or warranty contained in the merger agreement;
. any consent of any regulatory authority required for consummation of
the merger is denied by final nonappealable action of the regulatory
authority or if any action taken by the regulatory authority is not
appealed within the time limit for appeal, or Lanier shareholders fail
to approve the merger agreement at the special meeting;
. the merger has not been consummated by March 31, 2000 and the failure
to consummate the merger by that date is not caused by a breach of the
terminating party; or
. any of the conditions precedent to the obligation of the terminating
party to consummate the merger cannot be satisfied by March 31, 2000.
The merger agreement may also be terminated by CSBI in the event that
Lanier's board of directors fails to reaffirm, following a written request by
CSBI for such reaffirmation, after Lanier has received an inquiry or proposal
with respect to an "acquisition proposal" (generally, a tender offer or proposal
for a merger, asset acquisition or other business combination), its approval of
the merger and the transactions contemplated by the merger agreement (to the
exclusion of any other acquisition proposal), or determines not to reaffirm the
merger.
Conduct of Business Pending the Merger
Under the merger agreement, Lanier has agreed, except as otherwise
contemplated by the merger agreement or with the prior written consent of CSBI,
to:
. operate its business only in the usual, regular and ordinary course;
. preserve intact its business organizations and assets and maintain its
rights and franchises;
. use its reasonable efforts to cause its representations and warranties
to be correct at all times,
. take no action which would (i) adversely affect the ability of any
party to obtain any consents required for the transactions
contemplated by the merger agreement without imposition of a condition
or restriction which, in the reasonable judgment of CSBI's board of
directors, would so materially adversely impact the economic or
business benefits of the transactions contemplated by the merger
agreement as to render inadvisable the consummation of the merger, or
(ii) adversely affect in any material respect the ability of either
party to perform its covenants and agreements under the merger
agreement.
26
<PAGE>
In addition, Lanier has agreed in the merger agreement not to take certain
actions relating to the operation of its businesses pending consummation of the
merger without the prior consent of the Chief Executive Officer of CSBI (which
consent will not be unreasonably withheld). Such actions include, without
limitation:
. amending the articles of incorporation, bylaws or other governing
corporate instruments of Lanier;
. becoming responsible for any obligation for borrowed money in excess
of an aggregate of $50,000, except in the ordinary course of business
of Lanier consistent with past practices or allowing the imposition of
a lien on any asset of Lanier;
. acquiring or exchanging (other than exchanges in the ordinary course
under employee benefit plans) any shares (or securities convertible
into any shares) of capital stock of Lanier or paying any dividend on
Lanier common stock, except that Lanier may pay a cash dividend at a
rate not to exceed $0.19 per share to shareholders of record on
December 30, 1999, unless the closing of the merger occurs prior to
such date in which case any unpaid semiannual dividend shall not be
paid;
. subject to certain exceptions, issuing, selling or pledging additional
shares of Lanier common stock, any rights to acquire any such stock or
any security convertible into such stock;
. adjusting or reclassifying any capital stock of Lanier or issuing or
authorizing the issuance of any other securities in respect of or in
substitution for shares of Lanier common stock or its subsidiaries'
common stock, or otherwise disposing of any asset(s) having a book
value in excess of $25,000, other than in the ordinary course for
reasonable and adequate consideration;
. acquiring control over any real property, subject to certain
exceptions such as foreclosures and acquisitions made in a fiduciary
capacity;
. purchasing any securities or making any material investments in any
person or otherwise acquiring direct or indirect control over any
person subject to certain exceptions;
. granting any increase in compensation or benefits to the employees or
officers of Lanier or Lanier National Bank in excess of 5% on an
annual basis (except in accordance with past practice and as
previously disclosed to CSBI, or as required by law), paying any
bonus, entering into or amending any severance agreements with
officers of Lanier, granting any increase in compensation or other
benefits to directors of Lanier or Lanier National Bank (except as
previously disclosed to CSBI);
. entering into or amending (unless required by law) any employment
contract that Lanier or Lanier National Bank does not have the
unconditional right to terminate without certain liability;
. subject to certain exceptions, adopting any new employee benefit plan
of Lanier or materially changing any existing plan or program;
. making any significant change in tax or accounting methods, except for
any change required by law or generally accepted accounting
principles;
. commencing any litigation other than in accordance with past practice
or settling any litigation for money damages in excess of $25,000 or
which places material restrictions on the operations of Lanier or any
of its subsidiaries;
. except in the ordinary course of business, modifying, amending or
terminating any material contracts or waiving, releasing or assigning
any material rights or claims; or
. extending credit to any borrower in excess of an aggregate of
$750,000.
27
<PAGE>
In addition, Lanier has agreed that neither it, nor its affiliates or
representatives, will solicit an acquisition proposal (generally, a tender offer
or proposal for a merger, asset acquisition or other business combination),
other than the transactions contemplated by the merger agreement. Pursuant to
the merger agreement, except to the extent necessary to comply with the
fiduciary duties of Lanier's board of directors as determined by it after
consulting with and considering the advice of counsel, neither Lanier, nor any
affiliate or representative of Lanier, will furnish any non-public information
that it is not legally obligated to furnish, or negotiate with respect to, or
enter into any contract with respect to, any acquisition proposal. However,
Lanier may communicate information about 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. In the merger
agreement, Lanier also agreed to terminate any negotiations conducted prior to
the date of the merger agreement with any parties other than CSBI with respect
to any of the foregoing and agreed to use its reasonable efforts to cause its
representatives to comply with any of the foregoing. Lanier has further agreed
to promptly advise CSBI following the receipt of any acquisition proposal and
its material details.
Expenses and Fees
The merger agreement provides that each party will be responsible for its
own direct costs and expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by the merger agreement, except
that CSBI will pay the filing fee in connection with the registration statement
and this proxy statement/prospectus and one-half of the printing costs incurred
in connection with printing the registration statement and this proxy
statement/prospectus. If the merger agreement is terminated by either party as
a result of the other party's breach of its representations, warranties or
agreements set forth in the merger agreement, breaching party will pay to the
terminating party, as its sole remedy, the reasonable direct costs and expenses
incurred by the terminating party in connection with the merger, plus
$1,000,000.
Accounting Treatment
The merger is anticipated to be accounted for on a pooling of interests
basis. Under this method of accounting, as of the effective time of the merger,
the assets and liabilities of CSBI and Lanier will be combined on CSBI's
consolidated balance sheet. The unaudited pro forma financial information
contained in this proxy statement/prospectus has been prepared using the pooling
of interests accounting method. See "PRO FORMA COMBINED FINANCIAL DATA."
Resales of CSBI Common Stock
The shares of CSBI common stock to be issued to Lanier shareholders in the
merger have been registered under the Securities Act of 1933, as amended (the
"Securities Act"). Such shares may be traded freely and without restriction by
those shareholders not deemed to be "affiliates" of Lanier or CSBI as that term
is defined under the Securities Act. Any subsequent transfer of such shares,
however, by any person who is an affiliate of Lanier at the time the merger is
submitted for a vote or consent of the shareholders of Lanier will, under
existing law, require either:
. the further registration under the Securities Act of the shares of
CSBI common stock to be transferred;
. compliance with Rule 145 promulgated under the Securities Act
(permitting limited sales under certain circumstances); or
. the availability of another exemption from registration.
An "affiliate" of Lanier, as defined by the rules promulgated pursuant to
the Securities Act, is a person who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
Lanier. In addition, under the requirements for the pooling of interests method
of accounting, the shares of CSBI common stock issued to affiliates are not
transferable until such time as financial results covering at least 30 days of
combined operations of CSBI and Lanier have been published. The foregoing
restrictions are expected to apply to the directors, certain officers, and the
beneficial holders of 10% or more of Lanier common stock (and to certain
relatives or the spouse of any such person and any trust, estates, corporations,
or other entities in which any such person has a 10% or greater beneficial or
equity interest).
28
<PAGE>
In addition, Lanier has agreed that it will use its reasonable efforts to
cause each person or entity that is an "affiliate" for purposes of complying
with Rule 145 and the pooling of interests accounting rules to enter into a
written agreement relating to such restrictions on sale or other transfer.
Dissenters' and Appraisal Rights
Pursuant to the provisions of Sections 14-2-1301 through 14-2-1332 of the
Georgia Business Corporation Code (the "Dissenters' Provisions"), any Lanier
shareholder who desires to receive the "fair value" of his or her Lanier common
stock in cash rather than to receive shares of CSBI common stock as part of the
merger may do so if he or she complies with the Dissenters' Provisions. The
following is a summary of the Dissenters' Provisions and is qualified in its
entirety by the copy of the Dissenters' Provisions attached to this proxy
statement/prospectus as Appendix B, which is incorporated by reference herein.
The Dissenters' Provisions provide that any dissenting shareholder desiring
to object to the merger and receive payment in cash for his or her shares of
Lanier common stock must deliver, prior to the vote of Lanier shareholders on
the merger agreement, written notice of his or her intent to demand payment for
his or her shares of Lanier common stock if the merger is completed. The notice
must be delivered to Lanier Bankshares, Inc., Attention: Corporate Secretary,
854 Washington Street, Gainesville, Georgia 30501. The demand must be in
addition to, and separate from, any proxy or vote against the merger. Any
dissenting shareholder must not vote in favor of the merger agreement.
If the merger agreement is approved by Lanier shareholders, within ten days
after the vote of the shareholders, Lanier will send by mail a written notice
(the "Dissenters' Notice") to each Lanier shareholder who filed a written notice
of his or her intent to dissent and who has not voted in favor of the merger
agreement. The Dissenters' Notice will:
. state where demand for payment must be sent, and set a date by which
Lanier must receive the payment demand, which date may not be fewer
than 30 nor more than 60 days after the date of the Dissenters'
Notice;
. specify where and when share certificates must be deposited, or, in
the case of uncertificated shares, the restrictions on the transfer of
the uncertificated shares after the payment demand is received by
Lanier; and
. be accompanied by a copy of the Dissenters' Provisions.
The Dissenters' Notice is to be sent to each dissenting shareholder at his
or her address as it appears in the Lanier stock transfer books or at such
address as the dissenting shareholder supplies by notice to Lanier. Any
dissenting shareholder who fails to demand payment or deposit share certificates
where required by the date set in the Dissenters' Notice will no longer be
entitled to payment for his or her shares of Lanier common stock under the
Dissenters' Provisions.
Within ten days after the later of (i) the effective time of the merger, or
(ii) the receipt of a demand for payment from a shareholder, Lanier must make a
written offer of payment to each Lanier shareholder who demanded payment and
deposited certificates as required, in the amount Lanier estimates to be the
fair value of the dissenting shareholder's shares, plus any accrued interest
from the effective time of the merger. Lanier's offer of payment must be
accompanied by:
. Lanier financial statements as of the end of a fiscal year ending not
more than 16 months before the date of payment, and the latest
available interim financial statements of Lanier;
. a statement of Lanier's estimate of the fair value of the Lanier
shares;
. an explanation of how the interest was calculated;
. a statement of the dissenter's right to demand payment under Section
14-2-1327 of the Georgia Business Corporation Code; and
29
<PAGE>
. a copy of the Dissenters' Provisions of the Georgia Business
Corporation Code.
If the Lanier shareholder accepts Lanier's offer by written notice to
Lanier within 30 days after Lanier's offer, or is deemed to have accepted such
offer by failure to respond within 30 days, payment for his or her shares will
be made within 60 days after the making of the offer or the effective time of
the merger, whichever is later. If the merger is not completed within 60 days
after the date set for demanding payment and depositing share certificates,
Lanier shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares. If the merger is later
consummated, Lanier must send a new Dissenters' Notice and repeat the payment
demand procedure.
Any dissenting shareholder who believes that Lanier's offer is less than
the fair value of the shareholder's shares of Lanier, or who believes that
Lanier has incorrectly calculated the interest due, may, in writing, notify
Lanier of the shareholder's estimate of the fair value of the shares or interest
due. If the shareholder's demand for payment remains unsettled, Lanier must
commence a proceeding within 60 days after receiving the payment demand and
petition the Superior Court of Hall County, Georgia to determine the fair value
of the shares and the accrued interest. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the fair
value of the shares. Each dissenting shareholder whose demand remains unsettled
will be made a party to the proceeding and will be entitled to judgment for the
amount the court finds to be the fair value of the shareholder's shares of
Lanier, plus interest to the date of judgment.
The court shall assess the costs of the appraisal proceeding against
Lanier, however the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment for their shares. The court may also assess fees and attorneys expenses
against any party the court finds to have acted arbitrarily, vexatiously, or not
in good faith with respect to the rights provided by the Dissenters' Provisions.
No action by any dissenter to enforce dissenters' rights may be brought
more than three years after the effective time of the merger, regardless of
whether notice of the merger and the right to dissent was given by Lanier in
accordance with the Dissenters' Provisions.
30
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Pro Forma Condensed Combined Financial Data
December 31, 1998
(Unaudited)
The following unaudited pro forma condensed combined balance sheet as of
December 31, 1998 gives effect, using the pooling of interests method of
accounting, to the proposed acquisition by CSBI of 100% of Lanier (see note (a))
as if Lanier had been acquired by CSBI on January 1, 1998. This pro forma
condensed balance sheet as of December 31, 1998 also gives effect, using the
purchase method of accounting, to the proposed acquisition by CSBI of 100% of
Haywood Bancshares, Inc. and its subsidiaries (see notes b - m). This pro forma
condensed combined balance sheet should be read in conjunction with the notes to
the pro forma financial statements and the separate financial statements and
related notes of the respective entities.
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma
CSBI Lanier Adjustments Consolidated Haywood Adjustments Consolidated
------------ ----------- ------------ ------------- ----------- --------------- -------------
(Amounts in thousands, except percentages and ratios)
Assets
- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks $ 51,420 $ 4,788 $ 56,208 $ 1,525 $ 57,733
Federal funds sold 30,550 2,600 33,150 1,714 34,864
Interest bearing deposits 4,949 42 4,991 805 5,796
Investment securities 166,884 25,276 192,160 29,769 $ 30 (d) 221,959
Net loans 833,853 76,100 909,953 110,793 1,020,746
Premises and equipment 25,300 3,508 28,808 1,565 1,750 (f) 32,123
Goodwill and intangibles 4,637 -- 4,637 675 3,856 (h) 9,168
FHLB stock 4,682 336 5,018 1,427 6,445
Investment in mortgage
servicing rights -- -- -- 978 978
Foreclosed assets 4,773 9 4,782 7 4,789
Other assets 19,672 3,092 22,764 1,698 24,462
--------------------------------------------------------------------------------------------------
Total Assets $1,146,720 $115,751 $1,262,471 $150,956 $ 5,636 $1,419,063
==================================================================================================
Liabilities
- -----------
Deposits:
Noninterest bearing $ 143,008 $ 17,033 $ 160,041 $ 242 $ 160,283
Other interest bearing 850,300 84,714 935,014 116,520 1,051,534
--------------------------------------------------------------------------------------------------
Total Deposits $ 993,308 $101,747 $1,095,055 $116,762 $1,211,817
Federal funds purchased $ -- $ -- $ -- $ --
FHLB advances 16,280 1,334 $ 17,614 10,500 28,114
Long term debt 35 51 86 -- 86
Other borrowed funds -- 171 171 -- $13,311 (b) 13,482
Other liabilities 11,045 1,819 12,864 2,147 856 (g) 15,867
--------------------------------------------------------------------------------------------------
Total Liabilities $1,020,668 $105,122 $1,125,790 $129,409 $14,167 $1,269,366
Shareholders' Equity
- --------------------
Common stock $ 11,787 $ 1,238 $ 312 13,337 $ 1,250 $ (695)(b)(e) $ 13,892
Surplus 36,106 5,230 (731) 40,605 3,522 9,234 (b)(c) 53,361
Retained earnings 78,219 4,491 82,710 16,937 (17,232)(e) 82,415
Treasury stock (1,051) (419) 419 (1,051) -- (1,051)
Unearned compensation-
restricted stock awards --
Accumulated other comprehensive
income (loss) 991 89 1,080 (162) 162 (e) 1,080
--------------------------------------------------------------------------------------------------
Total Shareholders' Equity $ 126,052 $ 10,629 $ -- 136,681 $ 21,547 $(8,531) $ 149,697
--------------------------------------------------------------------------------------------------
Total Shareholders' Equity
and Liabilities $1,146,720 $115,751 $ -- $1,262,471 $150,956 $ 5,636 (e) $1,419,063
==================================================================================================
Tier 1 Capital to Assets 10.54% 9.11% 10.41% 14.00% 9.89%
Long-Term Debt to Equity Ratio 0.03% 2.09% 0.19% 0.00% 9.06%
</TABLE>
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<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Pro Forma Condensed Combined Balance Sheet
September 30, 1999
(Unaudited)
The following unaudited pro forma condensed combined balance sheet as of
September 30, 1999 gives effect, using the pooling of interests method of
accounting, to the proposed acquisition by CSBI of 100% of Lanier (see note (a))
as if Lanier had been acquired by CSBI on January 1, 1999. This pro forma
condensed balance sheet as of September 30, 1999 also gives effect, using the
purchase method of accounting, to the proposed acquisition by CSBI of 100% of
Haywood Bancshares, Inc. and its subsidiaries (see notes b - m). This pro forma
condensed combined balance sheet should be read in conjunction with the notes to
the pro forma financial statements and the separate financial statements and
related notes of the respective entities.
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma
CSBI Lanier Adjustment Consolidated Haywood Adjustments Consolidated
------------ ----------- ----------- ------------- ----------- --------------- -------------
(Amounts in thousands, except percentages and ratios)
Assets
- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks $ 39,442 $ 4,600 $ 44,042 $ 2,070 $ 46,112
Federal funds sold 14,380 4,600 18,980 694 19,674
Interest bearing deposits 2,444 22 2,466 158 2,624
Investment securities 192,369 29,777 222,146 30,669 $ (340)(d) 252,475
Net loans 912,504 74,635 987,139 108,560 1,095,699
Premises and equipment 26,692 3,469 30,161 1,486 1,704 (f) 33,351
Goodwill and intangibles 4,295 -- 4,295 636 3,755 (h) 8,686
FHLB stock 4,284 347 4,631 1,108 5,739
Investment in mortgage
servicing rights -- -- -- 1,228 1,228
Foreclosed assets 3,358 160 3,518 60 3,578
Other assets 22,408 3,281 25,689 1,478 27,167
--------------------------------------------------------------------------------------------------
Total Assets $1,222,176 $120,891 -- $1,343,067 $148,147 $ 5,119 $1,496,333
==================================================================================================
Liabilities
- -----------
Deposits:
Noninterest bearing $ 137,282 $ 16,326 $ 153,608 $ 383 $ 153,946
Other interest bearing 892,278 90,351 982,629 116,621 1,099,250
--------------------------------------------------------------------------------------------------
Total Deposits $1,029,560 $106,677 -- $1,136,237 $116,959 $1,253,196
Federal funds purchased 10,895 -- 10,895 -- 10,895
FHLB advances 39,205 1,318 40,523 7,000 47,523
Long term debt 32 21 53 -- 53
Other borrowed funds 200 154 354 -- $13,311 (b) 13,665
Other liabilities 11,429 1,214 12,643 2,342 730 (g) 15,715
--------------------------------------------------------------------------------------------------
Total Liabilities $1,091,321 $109,384 -- $1,200,705 $126,301 $14,041 $1,341,047
Shareholders' Equity
- ---------------------
Common stock $ 11,768 $ 1,238 $ 312 $ 13,318 $ 1,250 $ (695)(b)(e) $ 13,873
Surplus 36,002 5,230 (731) 40,501 3,522 9,234 (b)(e) 53,257
Retained earnings 85,805 5,688 91,493 17,346 (17,380)(e) 91,459
Treasury stock -- (419) 419 -- -- -- --
Unearned compensation-
restricted stock awards (795) (795) -- (795)
Accumulated other comprehensive
income (loss) (1,925) (230) (2,155) (272) (81)(c) (2,508)
--------------------------------------------------------------------------------------------------
Total Shareholders' Equity $ 130,855 $ 11,507 -- $ 142,362 $ 21,846 $(8,922)(e) $ 155,286
Total Shareholders' Equity and
Liabilities $1,222,176 $120,891 -- $1,343,067 $148,147 $ 5,119 $1,496,333
===================================================================================================
Tier 1 Capital to Assets 10.55% 9.71% 10.47% 14.56% 10.02%
Long-Term Debt to Equity Ratio 0.18% 1.52% 0.29% 0.00% 8.83%
</TABLE>
32
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Pro Forma Financial Information
Pro Forma Condensed Combined Statements of Income
For the nine months ended September 30, 1999
(Unaudited)
The following unaudited pro forma condensed combined statements of income
for the nine months ended September 30, 1999 gives effect to the proposed
acquisition of all of the issued and outstanding shares of Lanier (see note (a))
using the pooling of interests method of accounting. The pro forma condensed
combined statement of income reflects the pro forma results of operations of
CSBI and Lanier together with applicable adjustments, as if Lanier had been
acquired by CSBI on January 1, 1999. This pro forma condensed combined
statement of income for the nine months ended September 30, 1999 also gives
effect, using the purchase method of accounting, to the proposed acquisition by
CSBI of all of the issued and outstanding shares of Haywood Bancshares, Inc. and
its subsidiaries (see notes b - m). This pro forma combined statement of income
should be read in conjunction with the notes to the pro forma financial
statements and the separate financial statements and related notes of the
respective entities.
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma
CSBI Lanier Adjustments Consolidated Haywood Adjustments Consolidated
---------- ---------- ----------- ------------ ---------- --------------- ------------
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $74,107 $7,055 $81,162 $7,976 $ 4 (i) $89,142
Interest expense 30,148 3,226 33,644 4,116 699 (j) 38,459
----------------------------------------------------------------------------------------------
Net interest income 43,689 3,829 47,518 3,860 (695) 50,683
Provision for loan losses 1,743 120 1,863 170 2,033
----------------------------------------------------------------------------------------------
Net interest income after
provision for loan 41,946 3,709 45,655 3,690 (695) 48,650
losses
Noninterest income 9,226 525 9,751 524 10,275
Noninterest expense 33,466 2,262 35,728 2,599 224 (k)(l) 38,551
----------------------------------------------------------------------------------------------
Income before income 17,706 1,972 19,678 1,615 (919) 20,374
taxes
Income tax expense (benefit) 5,910 571 6,481 606 (260)(m) 6,827
----------------------------------------------------------------------------------------------
Net Income $11,796 $1,401 $13,197 $1,009 $(659) $13,547
==============================================================================================
Earnings per share:
Basic $1.01 $1.17 $0.99 $0.81 $0.98
Diluted $1.00 $1.14 $0.98 $0.81 $0.97
Weighted average shares
outstanding:
Basic 11,745 1,200 1,550 13,295 1,250 555(c) 13,850
Diluted 11,854 1,234 1,594 13,448 1,250 555(c) 14,003
</TABLE>
33
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Pro Forma Financial Information
Pro Forma Condensed Combined Statements of Income
For the year ended December 31, 1998
(Unaudited)
The following unaudited pro forma condensed combined statements of income
for the year ended December 31, 1998 gives effect to the proposed acquisition of
all of the issued and outstanding shares of Lanier (see note (a)) using the
pooling of interests method of accounting. The pro forma condensed combined
statement of income reflects the pro forma results of operations of CSBI and
Lanier together with applicable adjustments, as if Lanier had been acquired by
CSBI on January 1, 1998. This pro forma condensed combined statement of income
for the year ended December 31, 1998 also gives effect, using the purchase
method of accounting, to the proposed acquisition by CSBI of all of the issued
and outstanding shares of Haywood Bancshares, Inc. and its subsidiaries (see
notes (b - m)). This pro forma combined statement of income should be read in
conjunction with the notes to the pro forma financial statements and the
separate financial statements and related notes of the respective entities.
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma
CSBI Lanier Adjustments Consolidated Haywood Adjustments Consolidated
---------- ---------- ----------- ------------ ----------- --------------- ------------
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $99,478 $9,131 $108,609 $11,086 $ 4 $119,699
Interest expense 42,611 4,281 46,892 6,061 979 (I) 53,932
-----------------------------------------------------------------------------------------------
Net interest income 56,867 4,850 61,717 5,025 (975) 65,767
Provision for loan losses 3,135 290 3,425 20 3,445
-----------------------------------------------------------------------------------------------
Net interest income
after provision for loan
losses 53,732 4,560 58,292 5,005 (975) 62,322
Noninterest income 15,824 724 16,548 (1,345) 15,203
Noninterest expense 46,766 2,711 49,477 3,247 295 (k)(l) 53,019
-----------------------------------------------------------------------------------------------
Income before income
taxes 22,790 2,573 25,363 413 (1,270) 24,506
Income tax expense 7,412 756 8,168 155 (363)(m) 7,960
-----------------------------------------------------------------------------------------------
Net Income $15,378 $1,817 $ 17,195 $ 258 $ (907) $ 16,546
===============================================================================================
Earnings per share:
Basic $1.32 $1.51 $1.30 $0.21 $1.20
Diluted $1.30 $1.48 $1.28 $0.21 $1.18
Weighted average shares
outstanding:
Basic 11,664 1,200 1,550 13,214 1,248 555 (c) 13,769
Diluted 11,861 1,230 1,589 13,450 1,248 555 (c) 14,005
</TABLE>
34
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Pro Forma Financial Information
Pro Forma Condensed Combined Statements of Income
For the year ended December 31, 1997
(Unaudited)
The following unaudited pro forma condensed combined statements of income
for the year ended December 31, 1997 gives effect to the proposed acquisition of
all of the issued and outstanding shares of Lanier (see note (a)) using the
pooling of interests method of accounting. The pro forma condensed combined
statement of income reflects the pro forma results of operations of CSBI and
Lanier together with applicable adjustments, as if Lanier had been acquired by
CSBI on January 1, 1997. This pro forma combined statement of income should be
read in conjunction with the notes to the pro forma financial statements and the
separate financial statements and related notes of the respective entities.
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
CSBI Lanier Adjustments Consolidated
-------------- -------------- --------------- ---------------
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest income $97,317 $7,604 $104,921
Interest expense 43,713 3,547 47,260
--------------------------------------------------------------------------------
Net interest income 53,604 4,057 57,661
Provision for loan losses 5,397 170 5,567
--------------------------------------------------------------------------------
Net interest income after
provision for loan losses 48,207 3,887 52,094
Noninterest income 10,933 654 11,587
Noninterest expense 43,952 2,488 46,440
--------------------------------------------------------------------------------
Income before income taxes 15,188 2,053 17,241
Income tax expense (benefit) 4,219 647 4,866
--------------------------------------------------------------------------------
Net Income $10,969 $1,406 $ 12,375
================================================================================
Earnings per share:
Basic $0.95 $1.15 $0.95
Diluted $0.93 $1.13 $0.93
Weighted average shares
outstanding:
Basic 11,537 1,225 1,550 13,087
Diluted 11,801 1,248 1,550 13,351
</TABLE>
35
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Pro Forma Financial Information
Pro Forma Condensed Combined Statements of Income
For the year ended December 31, 1996
(Unaudited)
The following unaudited pro forma condensed combined statements of income
for the year ended December 31, 1996 gives effect to the proposed acquisition of
all of the issued and outstanding shares of Lanier (see note (a)) using the
pooling of interests method of accounting. The pro forma condensed combined
statement of income reflects the pro forma results of operations of CSBI and
Lanier together with applicable adjustments, as if Lanier had been acquired by
CSBI on January 1, 1996. This pro forma combined statement of income should be
read in conjunction with the notes to the pro forma financial statements and the
separate financial statements and related notes of the respective entities.
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
CSBI Lanier Adjustments Consolidated
-------------- -------------- --------------- ----------------
(Amounts in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest income $92,756 $6,637 $99,393
Interest expense 41,919 3,243 45,162
------------------------------------------------------------------------------------
Net interest income 50,837 3,393 54,230
Provision for loan losses 2,350 120 2,470
------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 48,487 3,273 51,760
Noninterest income 10,234 547 10,781
Noninterest expense 39,461 2,248 41,709
------------------------------------------------------------------------------------
Income before income taxes 19,260 1,573 20,833
Income tax expense (benefit) 5,437 486 5,923
------------------------------------------------------------------------------------
Net Income $13,823 $1,087 $14,910
====================================================================================
Earnings per share:
Basic $1.21 $0.96 $1.15
Diluted $1.18 $0.94 $1.13
Weighted average shares
outstanding:
Basic 11,468 1,138 1,550 13,018
Diluted 11,701 1,152 1,550 13,251
</TABLE>
36
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES AND
LANIER BANKSHARES, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Financial Statements
The following notes describe the pro forma adjustments necessary to
reflect the acquisition of Lanier, as described in note (a), by CSBI as of
September 30, 1999 and December 31, 1998.
(a) On October 20, 1999, CSBI entered into a Merger Agreement whereby CSBI
will acquire 1,200,000 outstanding shares of Lanier common stock in an
exchange of its common stock. Pursuant to the terms of the Merger
Agreement, CSBI will exchange its common shares for the shares of
Lanier common stock. The precise Exchange Ratio will depend upon the
average closing price of CSBI common stock on the Nasdaq National
Market over a 20-day trading period ending five days prior to the
effective time of the merger. If the average closing price of CSBI
common stock is less than or equal to $21.50, the exchange ratio will
be 1.44186. If the average closing price of CSBI common stock is
greater than or equal to $26.50, the exchange ratio will be 1.16981.
If the average closing price is greater than $21.50 but less than
$26.50, the exchange ratio will be between 1.44186 and 1.16981. For
purposes of the pro formas the exchange ratio of 1.29167 was used.
On August 5, 1999, CSBI entered into the Merger Agreement whereby CSBI
will acquire 1,250,356 outstanding shares of Haywood common stock in
an exchange of its common shares and cash. Pursuant to the terms of
the Merger Agreement, as amended, CSBI will exchange its common shares
and cash for the shares of Haywood common stock. The precise Exchange
Ratio will depend upon the market value of CSBI common stock
immediately prior to the Effective Time. In addition the Merger
Agreement, as amended, provides that 50% of the total merger
consideration paid by CSBI must be paid in CSBI common stock and 50%
must be paid in cash. If CSBI's market value is between $24.00 and
$27.00 per share, the exchange ratio will be decreased so that
Haywood's common stock will be valued at approximately $23.95 per
share. If CSBI's market value is lower than $24.00 per share, the
exchange ratio will be increased so that Haywood's common stock will
be valued at approximately $21.30 per share.
(b) Reflects the issuance of approximately 555,000 shares of CSBI common
stock and a draw on CSBI's line of credit approximately $13,311,000
based on an exchange ratio of .8874 and CSBI's stock price of $24.00.
(c) Pro forma weighted average number of common shares and share
equivalents includes the historical amounts for CSBI increased by the
additional shares that would have been outstanding had the acquisition
of Haywood taken place as of the beginning of the respective periods.
(d) Reflects the write-up/write-down of investment securities of Haywood
to approximate fair value as of September 30, 1999 and December 31,
1998.
(e) Reflects the elimination of the equity accounts of Haywood.
(f) Reflects the write-up of the land and buildings of Haywood to
approximate fair value, including the income tax effects.
(g) Reflects the funding of all existing benefit plans of Haywood to
provide for termination of the plans as provided in the Merger
Agreement.
(h) Reflects the excess of the purchase price of Haywood over the net
assets acquired after reflecting the adjustments to the purchase price
and to the approximate fair value described in notes (d), (f) and (g).
The excess of the purchase price over net assets acquired has been
recorded as goodwill. Goodwill is being amortized on a straight-line
basis over 20 years.
(i) Reflects the accretion over the estimated terms of the related
securities of the discount applied to investment securities of Haywood
in writing down such securities to approximate fair value.
(j) Reflects interest expense at the prime rate minus 1% based on an
average prime rate of 8% for the period ended September 30, 1999 and
8.355% for the year ended December 31, 1998.
(k) Reflects the amortization of the excess purchase price over the net
assets acquired of Haywood using the straight-line method over a 20
year period.
(l) Reflects the depreciation on the adjustment to write-up Haywood's
premises to approximate fair value on a straight-line basis over 20
years.
(m) Reflects the income tax adjustments in notes (g), (i), (j), (k), and
(l) using a tax rate of 34%. Amortization of goodwill is treated as a
non-deductible expense in computing the income tax effect.
37
<PAGE>
INFORMATION ABOUT CSBI
General
CSBI is a multi-bank holding company headquartered in Dahlonega and Macon,
Georgia. CSBI conducts operations in Georgia, Tennessee, and Alabama through
its 11 commercial banking subsidiaries. The principal assets of CSBI are all of
the issued and outstanding shares of common stock of its bank subsidiaries.
CSBI's bank subsidiaries do not currently operate under a single brand name.
As of September 30, 1999, on a consolidated basis, CSBI had approximately
$1.2 billion in assets, $1.03 billion in deposits, 30 offices and 650 employees.
Recent Developments
In August of 1999, CSBI announced a plan to consolidate its two Georgia
headquarters into one office located in Alpharetta, Georgia, a suburb of
Atlanta. The dual Georgia headquarters had resulted from a previously
consummated merger transaction. As part of its post-merger integration plan,
CSBI also announced that it would build a single identity for its 11 different
bank brands. When CSBI's single bank brand initiative is completed, all of
CSBI's banks will operate under the "Century South Bank" brand name. Each of
CSBI's banks will continue to foster and promote CSBI's community bank
philosophy of autonomous decision-making and responsive, personal service.
In connection with the headquarters consolidation and single bank brand
initiative, CSBI expects to record charges of approximately $1.8 million, after
taxes, during the fourth quarter of 1999. While this is CSBI's best estimate of
the expected costs of its post-merger integration plan, there can be no
assurance that CSBI will not incur additional charges in excess of its estimate.
The non-recurring charge includes costs to: (i) move CSBI's Dahlonega and Macon,
Georgia headquarters to Alpharetta, Georgia; (ii) reduce employment at the two
headquarters and pay related severance benefits; (iii) rename CSBI's banks and
market the uniform "Century South Bank" brand name; (iv) revise and update
operating policies and procedures; and (v) write-off redundant and outdated
equipment.
Also in August of 1999, CSBI entered into a definitive agreement to acquire
Haywood Bancshares, Inc., a bank holding company headquartered in Waynesville,
North Carolina, with consolidated assets, as of September 30, 1999, of
approximately $150 million. It is expected that the acquisition, which is
subject to shareholder and regulatory approvals, will be accounted for as a
purchase and will be valued at approximately $25.6 million. See "PRO FORMA
COMBINED FINANCIAL DATA."
In October of 1999, CSBI announced a stock repurchase program whereby
CSBI will repurchase up to 550,000 shares of its common stock to be used in
proposed business combinations. CSBI suspended its repurchase program on
November 12, 1999 and will not restart the program until after it has completed
the acquisition of Haywood. See "THE MERGER -- Merger Consideration." As of
November 12, 1999, CSBI had repurchased a total of 244,000 shares of its common
stock.
Subsidiaries
CSBI's business strategy has been to focus primarily on providing
quality, community-based financial services to the communities its banking
subsidiaries serve. It has sought to achieve economies of scale by centralizing
the credit analyses, loan reviews, check clearing, statement preparation, and
investment, audit, and data processing needs of its subsidiary banks.
CSBI's subsidiary banks provide a wide range of banking services in
their local markets for individuals and commercial customers, including small
and mid-size businesses, public agencies and local governments. The lending
policy of its subsidiary banks is to minimize credit losses by following uniform
credit approval standards, maintain a diversified loan portfolio, maintain a
relatively modest average loan size and conduct ongoing review and management of
the loan portfolio. CSBI's subsidiary banks are active residential mortgage
lenders and their commercial loans are generally made to established local
businesses. The banks neither have a significant amount of construction loans,
highly leveraged transaction loans nor loans to foreign countries. No material
portion of the banks' deposits has been obtained from a single or small group of
customers and the loss of any customer's deposits, or a small group of
customers' deposits, would not have a material adverse effect on the business of
CSBI.
38
<PAGE>
Acquisitions
CSBI's profitability and market share have increased largely through
CSBI's acquisitions of other financial institutions. Listed below are
acquisitions completed in the last several years:
. On April 14, 1995, CSBI completed the acquisition of Gwinnett Bancorp,
Inc., a bank holding company for Gwinnett National Bank, and First
Community Bank of Dawsonville, in transactions accounted for as a
pooling of interests.
. On December 14, 1995, CSBI completed the acquisition of Peoples Bank in
a transaction accounted for as a pooling of interests.
. On December 27, 1995, CSBI completed the acquisition of Bank of
Danielsville in a transaction accounted for as a pooling of interests.
. On December 16, 1997, CSBI completed the acquisition of Bank Corporation
of Georgia, a bank holding company for First South Bank, N.A. and
AmeriBank, N.A., in a transaction accounted for as a pooling of
interests.
. On April 13, 1999, CSBI completed the acquisition of Independent
Bancorp, Inc., a bank holding company for Independent Bank of Oxford, in
a transaction accounted for as a pooling of interests.
As CSBI's recent and pending acquisitions indicate, CSBI regularly
evaluates the potential acquisition of, and holds discussions with, various
financial institutions and other businesses of a type eligible for bank holding
company investment. CSBI expects to continue to develop its franchise through
acquisitions which may, among other things and depending on the terms of these
transactions, have a dilutive effect on the per share earnings or book value of
CSBI common stock. Moreover, these acquisitions sometimes result in significant
front-end charges against earnings, although cost savings, especially incident
to in-market acquisitions, also frequently occur.
Additional Information
More information about CSBI can be found in its Annual Report on Form
10-K and Quarterly Reports on Form 10-Q incorporated by reference herein. See
"WHERE YOU CAN FIND MORE INFORMATION."
39
<PAGE>
INFORMATION ABOUT LANIER
General
Lanier is a registered bank holding company incorporated in Georgia on
November 3, 1988. Lanier was formed for the purpose of serving as the holding
company for its banking subsidiary, Lanier National Bank. Lanier's primary
activities consist of holding all of the common stock of Lanier National Bank
and operating its banking business.
Subsidiaries
Lanier's principal subsidiary is Lanier National Bank, which opened for
business on August 1, 1989 as a full-service commercial bank without trust
powers. Lanier National Bank offers personal and business checking accounts,
interest-bearing checking accounts, savings accounts, and various types of
certificates of deposit. Lanier National Bank also offers consumer/installment
loans, construction loans, and home equity lines of credit. In addition, Lanier
National Bank provides the following services: official bank checks and money
orders, Mastercard credit cards, safe deposit boxes, travelers' checks, bank-by-
mail, direct deposit of payroll and Social Security checks, U.S. Savings Bonds,
wire transfer of funds, and a night depository. Lanier National Bank also
offers individual retirement accounts.
Additional Information
More information about Lanier can be found in its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999 and its Annual Report on Form
10-K for the fiscal year ended December 31, 1998, which accompany this proxy
statement/prospectus and are incorporated by reference herein. See also "WHERE
YOU CAN FIND MORE INFORMATION."
40
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of _________________,
regarding shares of Lanier common stock beneficially owned by (i) each of
Lanier's directors and executive officers; (ii) all of Lanier's directors and
executive officers as a group; and (iii) each person known by Lanier to be the
beneficial owner of more than 5% of Lanier common stock. Except as otherwise
noted below, the information in the table is based on information furnished by
each owner to Lanier.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
- ------------------------ -------------------- --------
<S> <C> <C>
John W. Browning, III, M.D.................................. 42,590 3.5
Joseph D. Chipman, Jr....................................... 87,820(1) 7.2
C. Edmondson Daniel......................................... 35,950 3.0
J. Austin Edmondson......................................... 32,840 2.7
Jeffrey D. Hunt............................................. 17,207(3) 1.4
Jerry D. Jackson............................................ 39,034(4) 3.3
R. Thomas Jarrard.......................................... 41,000(5) 3.4
Ricky H. Pugh............................................... 17,240(6) 1.4
Carlton W. Rogers, Sr....................................... 9,100 0.8
Stewart Teaver.............................................. 40,588(7) 3.4
Michael Wilson.............................................. 2,500 0.2
Henry W. Wallis, Jr.(8)..................................... 80,000 6.7
Directors and executive officers as a group (11 persons).... 445,879 36.0
</TABLE>
- --------------
(1) Consists of (a) 65,600 shares owned directly by Mr. Chipman, (b) 4,600
shares owned by his spouse as to which beneficial ownership is shared, (c)
1,620 shares owned by Mr. Chipman's sons as to which beneficial ownership
is shared, and (d) 16,000 shares of immediately exercisable options. Mr.
Chipman's business address is 854 Washington Street, Gainesville, Georgia
30503.
(2) Consists of (a) 6,400 shares owned directly by Mr. Coker, (b) 32,200 shares
owned by Lewis W. Coker Enterprises, as to which beneficial ownership is
shared, and (c) 18,000 shares owned by Coker Equipment Co., as to which
beneficial ownership is shared.
(3) Consists of (a) 6,507 shares owned directly by Mr. Hunt, (b) 200 shares as
custodian for his children, and (c) 10,500 shares in immediately
exercisable options.
(4) Consists of 18,200 shares owned directly by Mr. Jackson, (b) 20,534 shares
owned jointly by Mr. Jackson and his spouse, and (c) 300 shares owned by
Mr. Jackson's spouse, as to which beneficial ownership is shared.
(5) Consists of 37,000 shares owned directly by Mr. Jarrard, and (b) 4,000
shares owned jointly by Mr. Jarrard and his spouse.
(6) Consists of (a) 3,000 shares owned directly by Mr. Pugh, (b) 1,474 shares
held by Mr. Pugh's spouse, as to which beneficial ownership is shared, (c)
383 shares held by Mr. Pugh as custodian for his son, as to which
beneficial ownership is shared, (d) 383 shares held by Mr. Pugh as
custodian for his other son, as to which beneficial ownership is shared,
and (e) 12,000 shares in immediately exercisable options.
(7) Consists of (a) 7,393 shares owned directly by Mr. Teaver, (b) 7,462 shares
held by Mr. Teaver as custodian for his son, as to which beneficial
ownership is shared, (c) 7,470 shares held by Mr. Turner as custodian for
his daughter, as to which beneficial ownership is shared, (d) 10,800 shares
held jointly By Mr. Teaver and his spouse, and (e) 7,393 shares held by Mr.
Teaver's spouse, as to which beneficial ownership is shared.
(8) Mr. Wallis' address is 60 Club Drive, Gainesville, Georgia 30503.
41
<PAGE>
COMPARATIVE RIGHTS OF LANIER SHAREHOLDERS
AND CSBI SHAREHOLDERS
The following is a comparison of certain rights of Lanier shareholders and
those of CSBI shareholders. Certain significant differences in the rights of
Lanier shareholders and those of CSBI shareholders arise from differing
provisions of Lanier's and CSBI's respective governing corporate instruments.
The following summary does not purport to be a complete statement of the
provisions affecting, and differences between, the rights of Lanier shareholders
and those of CSBI shareholders. The identification of specific provisions or
differences is not meant to indicate that other equally or more significant
differences do not exist. This summary is qualified in its entirety by
reference to the Georgia Business Corporation Code and to the respective
governing corporate instruments of Lanier and CSBI, to which Lanier shareholders
are referred.
Authorized Capital Stock
Lanier. Lanier is authorized to issue 10,000,000 shares of common stock,
$1.00 par value per share, of which 1,200,000 shares were issued and outstanding
as of the date of this proxy statement/prospectus. Lanier's articles of
incorporation provide that shareholders do not have a preemptive right to
acquire authorized and unissued shares of Lanier.
Under Lanier's bylaws, each shareholder is entitled to one vote for each
share of common stock owned. A majority of Lanier's outstanding shares entitled
to vote, represented in person or by proxy, constitutes a quorum. A majority of
the shares represented and entitled to vote at a meeting of shareholders is
sufficient to take action on a matter, unless otherwise provided by applicable
law, the articles of incorporation or bylaws. As allowed under Georgia law,
action required or permitted to be taken at a shareholders' meeting may be taken
without a meeting if the action is taken by all of the shareholders entitled to
vote by means of a written consent signed by all of the shareholders entitled to
take action.
CSBI. CSBI is authorized to issue 30,000,000 shares of common stock, $1.00
par value per share, of which _________ shares were issued and outstanding as of
__________________. CSBI has no authorized shares of preferred stock. As of
_________________, 500,000 shares of CSBI common stock were reserved for
issuance upon the exercise of outstanding stock options and purchases under
CSBI's 1994 Incentive Stock Option Plan; 500,000 shares were reserved for
issuance under CSBI's 1998 Executive Stock Plan; 500,000 shares were reserved
pursuant to CSBI's Dividend Reinvestment Plan, 500,000 shares were reserved
pursuant to CSBI's Employee Stock Ownership Plan; and _____________ shares were
reserved pursuant to options granted to certain executive officers outside of
CSBI's stock-based plans.
CSBI common stock is not divided into classes, and CSBI has no classes or
series of capital stock issued or outstanding other than CSBI common stock. The
holders of a majority of the stock issued and outstanding and entitled to vote,
present in person or represented by proxy, shall constitute a quorum for the
transaction of business at all meetings of the shareholders except as otherwise
provided by statute or by CSBI's articles of incorporation or bylaws. In
deciding on questions at meetings, except in the election of directors, each
shareholder shall be entitled to one vote for each share of stock held and the
majority of votes so cast shall prevail. In elections of directors, each
shareholder shall have the right to vote the number of shares held for each of
the persons nominated. Action required or permitted to be taken at a
shareholders' meeting may be taken without a meeting if the action is taken by
all of the shareholders entitled to vote by means of one or more written
consents signed by all of the shareholders entitled to take the action.
Amendments to Articles of Incorporation and Bylaws
Lanier. Under Georgia law, amendment of a corporation's articles of
incorporation generally requires approval by a majority of the votes entitled to
be cast on the amendment by each voting group entitled to vote on the amendment.
Lanier's articles of incorporation provide that amendments to the provisions
regarding a classified board of directors, removal of directors, the shareholder
voting requirements to approve a merger, sale, lease exchange or disposition of
substantially all of the assets to another corporation owning 5% or more of
Lanier's stock, the factors the board of directors may consider when evaluating
a tender offer or merger, and limitations on the liability of directors, require
the affirmative vote of the holders of two-thirds (2/3) of the issued and
outstanding
42
<PAGE>
shares of Lanier entitled to vote on the matter, unless two-thirds (2/3) of the
directors then in office approve the change.
The board of directors and shareholders of Lanier have the power to alter
or amend Lanier's bylaws, or adopt new bylaws. However, if such action is to be
taken by the shareholders, notice of the general nature of the change in the
bylaws must be given in the notice of the meeting. The shareholders may provide
by resolution that any bylaw provision repealed, amended, adopted or altered by
them may not be repealed, amended, adopted, or altered by the board of
directors.
CSBI. Under Georgia law, amendment of a corporation's articles of
incorporation generally requires approval by a majority of the votes entitled to
be cast on the amendment by each voting group entitled to vote on the amendment.
CSBI's board of directors has the power to alter, amend, or repeal CSBI's bylaws
or adopt new bylaws, but any bylaws adopted by the board of directors may be
altered, amended or repealed, and new bylaws adopted, by shareholders.
Shareholders may prescribe that any bylaw or bylaws adopted by them shall not be
altered, amended or repealed by the board of directors.
Board of Directors and Absence of Cumulative Voting
Lanier. Lanier's bylaws provide that the board of directors shall consist
of not less than five nor more than 12 members. Lanier's board of directors
currently has ten members. Lanier's articles of incorporation provides for a
classified board of directors, with the directors divided into three classes as
nearly equal in number as possible. Directors serve for three year terms.
Lanier's articles of incorporation and bylaws do not provide for cumulative
voting for the election of directors. If any vacancy occurs in the membership
of the board of directors, it may be filled by the directors then in office. A
director appointed to fill a vacancy shall be appointed for a term of office
continuing until the expiration of the term of the director whose place became
vacant.
CSBI. CSBI's bylaws provide for a board of directors having not less than
five nor more than 25 members, the precise number to be fixed by resolution of
the shareholders or the board of directors. CSBI's board of directors currently
has 11 members. Each director, except in the case of death, resignation or
retirement, disqualification or removal, shall serve until his successor shall
have been elected and qualified. Directors shall be elected by the shareholders
at CSBI's annual meeting of shareholders for a one year term. Each director of
CSBI must be a United States citizen, and at least 60% of the directors shall
reside in the State of Georgia and in the county in which the registered office
of CSBI is located, or within 40 miles of any office of a subsidiary bank
authorized to offer a complete line of banking services. Each director shall
own in his name 500 shares of CSBI's common stock unhypothecated. No director
may be re-elected after the age 70 unless such director is elected to the board
of directors for his initial term having then attained the age of 70. In such
case, the director may serve no more than five successive one-year terms. In
elections of directors, each shareholder has the right to vote the number of
shares held for each person nominated for election.
In elections of directors, each shareholder has the right to vote the
number of shares held for each person nominated as a director. When a vacancy
occurs among the directors, the remaining members of the board of directors may
appoint a director to fill such vacancy at any regular meeting of the board of
directors, or at a special meeting called for that purpose.
Removal of Directors
Lanier. Under Lanier's bylaws, at a meeting of shareholders called
expressly for the purpose of removing a director, such director may be removed
(i) without cause only upon the affirmative vote of the holders of at least 80%
of the issued and outstanding shares of Lanier capital stock, or (ii) with cause
(as defined in Lanier's articles of incorporation) only upon the affirmative
vote of a majority of the issued and outstanding shares of Lanier capital stock.
CSBI. Pursuant to Georgia law, any director may be removed from office
with or without cause by the affirmative vote of the holders of a majority of
the votes entitled to be cast by the holders of voting stock of CSBI. Removal
of a director may be taken at any meeting of shareholders with respect to which
notice of such purpose has been given. A successor director may be elected to
serve the removed director's unexpired term at the same meeting.
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Indemnification of Directors and Officers
Lanier. Georgia law provides for the indemnification of directors and
officers of Georgia corporations against expenses, judgments, fines and
settlements in connection with litigation. Under these provisions,
indemnification is available if it is determined that the proposed indemnitee
acted in good faith and reasonably believed (i) in the case of conduct in his or
her official capacity, that such conduct was in the best interests of the
corporation, (ii) in all other cases, that such conduct was at least not opposed
to the best interests of the corporation, and (iii) with respect to any criminal
action or proceeding, that the individual had no reasonable cause to believe his
or her conduct was unlawful. To the extent that a proposed indemnitee has been
successful on the merits or otherwise in defense of any action, suit or
proceeding (or any claim, issue or matter therein), he or she must be
indemnified against expenses (including attorney fees) actually and reasonably
incurred by him or her in connection therewith.
Under Georgia law, indemnification permitted in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding. A corporation may not
indemnify a director or officer in connection with a proceeding in which he or
she was adjudged liable on the basis that a personal benefit was improperly
received.
Lanier's bylaws provide that Lanier must indemnify any person who was or is
a party or threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of Lanier) by reason of
the fact that the person is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in a manner he or she reasonably believed to be in or not opposed
to the best interests of Lanier, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
In addition, Lanier's bylaws provide that Lanier must indemnify such persons
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of Lanier; except that no
indemnification is allowed in respect of any claim, issue or matter as to which
such person has been adjudged to be liable to Lanier, unless and only to the
extent that the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for expenses which the court deems proper.
CSBI. The provisions of Georgia law regarding indemnification of officers
and directors are also applicable to CSBI. CSBI's bylaws provide that CSBI may
indemnify any person who is involved in any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director, officer, employee or agent of
CSBI, or is or was serving at the request of CSBI as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, against expenses (including attorney's fees),
judgments, fines, and amounts paid in settlement, in accordance with Georgia
law. In the case of a claim, issue, or matter as to which a person has been
adjudged to be liable to CSBI, CSBI's bylaws only permit indemnification to the
extent that the Superior Court or the court in which such action or suit was
brought determines upon application that such person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper. CSBI's
bylaws also provide for mandatory indemnification of directors, officers,
employees, or agents of CSBI in the circumstances required by Georgia law.
Special Meetings of Shareholders
Lanier. Lanier's bylaws provide that special meetings of shareholders may
be called at any time by the board of directors, the president, or the
corporation upon the written request of any three or more shareholders, owning
an aggregate of not less than 25% of the outstanding shares of Lanier.
CSBI. CSBI's bylaws provide that a special meeting of shareholders, unless
otherwise prescribed by law, may be called for any purpose at any time by the
board of directors or by any three or more shareholders owning, in the
aggregate, not less than one-third (1/3) of the stock of CSBI.
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Mergers, Share Exchanges and Sales of Assets
Lanier. Georgia law provides for certain voting rules and fair price
requirements concerning business combinations with "interested shareholders."
This provision is designed to protect shareholders of Georgia corporations
against the inequities of certain tactics which have been utilized in hostile
takeover attempts. Under the fair price provisions, business combinations with
interested shareholders (generally, a person who beneficially owns 10% or more
of the corporation's voting shares) must meet one of three criteria designed to
protect minority shareholders: (i) the transaction must be unanimously approved
by the "continuing directors" of the corporation (generally, directors who
served prior to the time the interested shareholder acquired 10% ownership and
who are unaffiliated with the interested shareholder); (ii) the transaction must
be approved by two-thirds (2/3) of the continuing directors and a majority of
shares held by shareholders other than the interested shareholders; or (iii) the
terms of the transaction must meet specified fair pricing criteria and certain
other tests which are intended to assure that all shareholders receive a fair
price and equivalent consideration for their shares regardless at which point in
time they sell to the acquiring party.
Lanier's articles of incorporation provide additional shareholder voting
rules for the approval of a merger or consolidation with, or sale, lease,
exchange or other disposition of all or substantially all of Lanier's assets to,
any corporation, person or entity who is the beneficial owner, directly or
indirectly, of 5% or more of the issued and outstanding shares of Lanier.
Approval of such a transaction requires the affirmative vote of at least two-
thirds (2/3) of the issued and outstanding shares of Lanier.
The fair price requirements under Georgia law are not applicable to any
corporation unless they are specifically incorporated in the bylaws of the
corporation. Lanier's bylaws do not contain these requirements. However,
certain provisions of Lanier's bylaws still may have the effect of preventing,
discouraging, or delaying any change of control of Lanier. Lanier's articles of
incorporation provide that when evaluating an offer from another party to make a
tender offer or exchange offer, to merge or consolidate with Lanier, or to
purchase or acquire all or substantially all of Lanier's assets, the board must
consider, in determining what is in the best interests of Lanier and its
shareholders, all relevant factors. Such relevant factors include, without
limitation (i) the short-term and long-term social and economic effects on the
employees, customers, shareholders and other constituents of Lanier and its
subsidiaries, and on the communities within which Lanier and subsidiaries
operate; and (ii) the consideration being offered by the other party in relation
to the then-current value of Lanier in a freely negotiated transaction and in
relation to the board of directors' then estimate of the future value of Lanier
as an independent
entity.
CSBI. The special voting rules under Georgia law concerning business
combinations with interested shareholders are applicable to CSBI. CSBI's bylaws
do not specifically incorporate the fair price provisions of Georgia law, and
thus the fair price requirements are not applicable to CSBI. However, certain
provisions of CSBI's bylaws still may have the effect of preventing,
discouraging, or delaying any change of control of CSBI. The board of directors
of CSBI may, if it deems it advisable, oppose a tender or other offer for CSBI's
securities, whether the offer is in cash or in the securities of a corporation
or otherwise. When considering whether to oppose an offer, the board of
directors may, but is not legally obligated to, consider any pertinent issues;
including, but not limited to: (i) whether the offer price is acceptable based
on the historical and present operating results or financial condition of the
corporation; (ii) whether a more favorable price could be obtained for CSBI's
securities in the future; (iii) the impact which an acquisition of CSBI would
have on the employees, depositors and customers of CSBI and its subsidiaries and
the communities which they serve; (iv) the reputation and business practices of
the offeror and its management and affiliates; (v) the value of the securities,
if any, that the offeror is offering in exchange for CSBI's securities, based on
an analysis of the worth of CSBI as compared to the offeror or any other entity
whose securities are being offered; and (vi) any antitrust or other legal or
regulatory issues that are raised by the offer.
If the board of directors determines that an offer should be rejected, it
may take any lawful action to accomplish its purpose including, but not limited
to, any or all of the following: (i) advising shareholders not to accept the
offer; (ii) litigation against the offeror; (iii) filing complaints with
governmental and regulatory authorities; (iv) acquiring CSBI's securities; (v)
selling or otherwise issuing authorized but unissued securities of CSBI or
treasury stock or granting options or rights with respect thereto; (vi)
acquiring a company to create an antitrust or other regulatory problem for the
offeror; and (vii) soliciting a more favorable offer from another individual
entity.
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<PAGE>
Shareholder Rights to Examine Books and Records
Lanier. Georgia law provides that a shareholder is entitled to inspect and
copy certain books and records (such as the corporation's articles of
incorporation or bylaws) upon written demand at least five days before the date
on which he or she wishes to inspect such books and records. A shareholder is
entitled to inspect certain other documents (such as minutes of the meetings of
the board of directors, accounting records and the record of shareholders of the
corporation) provided that (i) such inspection must occur during regular
business hours at a reasonable location determined by Lanier, and (ii) any such
demand for inspection will only be permitted if (a) the demand for inspection is
made in good faith or made for a proper purpose, (b) the shareholder describes
with particularity his or her purpose for the inspection and the documents he or
she wishes to inspect, (c) the records requested for inspection are directly
connected to the stated purpose, and (d) the records are to be used only for the
stated purpose.
Lanier's bylaws provide that any person who (i) has been a shareholder for
at least six months immediately preceding his or her demand, or (ii) who is the
holder, or is authorized in writing by the holders of at least 5% of the
outstanding shares of Lanier, has the right to examine in person, by agent, or
by attorney, at any reasonable time or times, for any proper purpose, the books
and records of accounts, minutes and record of shareholders and to make extracts
therefrom. Any such inspection may be denied to a shareholder or other person
upon his or her refusal to furnish an affidavit that such inspection is (i) for
a proper purpose and is not desired for a purpose which is in the interest of a
business or object other than the business of Lanier, (ii) that he or she has
not within the five years preceding the date of the affidavit sold or offered
for sale, and does not now intend to sell or offer for sale, any list of
shareholders of Lanier or any other corporation, and (iii) that he or she has
not within the five year period aided or abetted any other person to procure any
list of shareholders for the purpose of selling the shareholder list.
CSBI. CSBI's bylaws contain no provisions regarding the inspection of
books and records by shareholders. However, the provisions of the Georgia
Business Corporation Code regarding shareholder inspection rights, which are
substantially similar to the provisions contained in Lanier's bylaws, are also
applicable to CSBI.
Dividends
Lanier. Lanier's articles of incorporation provide that Lanier may
distribute to shareholders a portion of its assets out of the capital surplus of
Lanier. Georgia law allows a corporation to declare dividends on its common
stock unless doing so would cause the corporation to be unable to pay its debts
as they come due in the usual course of business, or cause the corporation's
total assets to be less than the sum of its total liabilities plus the amount
needed to satisfy any dissolution preferences. The ability of Lanier to pay
distributions to Lanier shareholders depends, however, to a large extent upon
the amount of dividends its bank subsidiary, which is subject to restrictions
imposed by regulatory authorities, pay to Lanier. In addition, the Federal
Reserve could oppose a distribution by Lanier if it determined that such a
distribution would harm Lanier's ability to support its bank subsidiary.
CSBI. Under Georgia law, CSBI's board of directors may declare dividends
on CSBI common stock unless doing so would cause CSBI to be unable to pay its
debts as they come due in the usual course of business, or CSBI's total assets
to be less than the sum of its total liabilities plus the amount needed to
satisfy any dissolution preferences. Like Lanier, since CSBI is a bank holding
company, the ability of CSBI to pay distributions to CSBI shareholders depends
to a large extent upon the amount of dividends its bank subsidiaries may provide
to it under their regulatory guidelines and the Federal Reserve will permit.
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<PAGE>
EXPERTS
The consolidated financial statements of CSBI as of December 31, 1998 and
1997, and for each of the years in the three-year period ended December 31, 1998
have been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements of Lanier as of December 31, 1998 and
1997, and for each of the years in the three-year period ended December 31, 1998
accompanying this proxy statement/prospectus have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of Maudlin
& Jenkins, LLC, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL MATTERS
The legality of the shares of CSBI common stock being offered hereby is
being passed upon for CSBI by Troutman Sanders LLP, Atlanta, Georgia, counsel
for CSBI. Troutman Sanders LLP will also opine as to certain federal income tax
consequences of the merger. See "THE MERGER -- Important Federal Income Tax
Consequences." As of the date of this proxy statement/prospectus, certain
members of Troutman Sanders LLP owned approximately _______ shares of CSBI
common stock. Certain additional legal matters relating to the merger are being
passed upon for CSBI by Troutman Sanders LLP and for Lanier by Powell,
Goldstein, Frazer & Murphy LLP, Atlanta, Georgia.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
Any shareholder proposal intended for inclusion in Lanier's proxy statement
for next year's annual meeting, if the merger is not consummated before the time
of such meeting, must be received at Lanier's main office at 854 Washington
Street, Gainesville, Georgia 30503, no later than December 3, 1999. In
addition, if the merger is not consummated before the time of such meeting, the
proxy solicited by Lanier's board of directors for that annual meeting will
confer discretionary authority to the persons named in that proxy at that
meeting, unless Lanier is provided with notice by January 17, 2000.
Under Georgia law, only business within the purpose or purposes described
in the Notice of Special Meeting may be conducted at the special meeting.
Any shareholder proposal intended for inclusion in CSBI's proxy statement
for next year's annual meeting of shareholders must be received at the principal
offices of CSBI not later than November 29, 1999. In addition, the proxy
solicited by CSBI's board of directors for that meeting will confer
discretionary authority to vote on any shareholder proposal presented at that
meeting unless CSBI is provided with notice of such proposal by February 11,
2000.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information filed by us at the SEC's public reference room in Washington,
D.C., at 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also
maintains public reference rooms in New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on its public
reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the Internet web site maintained
by the SEC at "http://www.sec.gov."
CSBI has filed a Registration Statement on Form S-4 to register with the
SEC CSBI common stock to be issued to Lanier shareholders in the merger. This
proxy statement/prospectus is a part of that Registration Statement and
constitutes a prospectus of CSBI in addition to a proxy statement of Lanier for
Lanier's special meeting. As allowed by SEC rules, this proxy
statement/prospectus does not contain all of the information you can find in the
Registration Statement or the exhibits to the Registration Statement.
The SEC allows us to "incorporate by reference" information into this proxy
statement/prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC by either
of us. The information incorporated by reference is deemed to be part of this
proxy
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<PAGE>
statement/prospectus, except for any information superseded by information
in the proxy statement/prospectus. This proxy statement/prospectus incorporates
by reference the documents set forth below that we have previously filed with
the SEC. These documents contain important information about our respective
businesses.
<TABLE>
<CAPTION>
CSBI Filings (SEC File No. 0-26254) Period
- ----------------------------------- ------
<S> <C>
. CSBI's Annual Report on Form 10-K. For the fiscal year ended December 31, 1998 as filed on
March 31, 1999.
. CSBI's Amended Annual Report on For the fiscal year ended December 31, 1998 as filed on
Form 10-K/A. April 21, 1999.
. CSBI's Amended Annual Report on For the fiscal year ended December 31, 1998 as filed on
Form 10-K/A. June 4, 1999.
. CSBI's Quarterly Report on Form 10-Q. For the fiscal quarter ended March 31, 1999 as filed on
May 14, 1999.
. CSBI's Quarterly Report on Form 10-Q. For the fiscal quarter ended June 30, 1999 as filed on
August 14, 1999.
. CSBI's Quarterly Report on Form 10-Q. For the fiscal quarter ended September 30, 1999 as filed
on November 15, 1999.
. The description of CSBI common stock contained in
CSBI's Registration Statement on Form 8-A, as filed
on April 28, 1989, and any amendment or report filed
for the purpose of updating such description.
Lanier Filings (SEC File No. 0-21498) Period
- ------------------------------------ ------
. Lanier's Annual Report on Form 10-K. For the fiscal year ended December 31, 1998 as filed on
March 31, 1999.
. Lanier's Quarterly Report on Form 10-Q. For the fiscal quarter ended March 31, 1999 as filed on
May 14, 1999.
. Lanier's Quarterly Report on Form 10-Q. For the fiscal quarter ended June 30, 1999 as filed on
August 12, 1999.
. Lanier's Quarterly Report on Form 10-Q. For the fiscal quarter ended September 30, 1999 as filed
on November 15, 1999.
</TABLE>
CSBI further incorporates by reference additional documents that it files
with the SEC between the date of this proxy statement/prospectus and the
consummation of the merger or the termination of the merger agreement. These
documents include periodic reports, such as its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
CSBI has supplied all of the information contained or incorporated by
reference in this proxy statement/prospectus relating to CSBI and Lanier has
supplied all of the information contained in this proxy statement/prospectus
relating to Lanier.
If you are a Lanier shareholder, you can obtain any of the documents
incorporated by reference in this proxy statement/prospectus from either of us
(as the case may be), the SEC or the SEC's Internet web site as described above.
Documents incorporated by reference are available from either of us without
charge, excluding all exhibits, except those that we have specifically
incorporated by reference in this proxy statement/prospectus. See
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<PAGE>
"REFERENCE TO ADDITIONAL INFORMATION" located on the inside front cover of this
proxy statement/prospectus for further details on how to request documents
incorporated by reference.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus to vote on the merger. We have not
authorized anyone to provide you with information that is different from what is
contained in this proxy statement/prospectus. This proxy statement/prospectus
is dated _________, 1999. You should not assume that the information contained
in this proxy statement/prospectus is accurate as of any date other than such
date, and neither the mailing of this proxy statement/prospectus to Lanier
shareholders nor the issuance of CSBI common stock in the merger may create any
implication to the contrary. This proxy statement/prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, any
securities, or the solicitation of a proxy, in any jurisdiction to or from any
person to whom it is not lawful to make any such offer or solicitation in such
jurisdiction. Neither the delivery of this proxy statement/prospectus nor any
distribution of securities made hereunder may, under any circumstances, create
an implication that there has been no change in the affairs of either of our
companies or their respective subsidiaries since the date hereof or that the
information herein is correct as of any time subsequent to its date.
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APPENDIX A
----------
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of October 20, 1999, by and between Lanier Bankshares, Inc. ("Lanier"),
a corporation organized and existing under the laws of the State of Georgia,
with its principal office located in Gainesville, Georgia, and 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.
Preamble
The Boards of Directors of Lanier 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 Lanier with
and into CSBI (the "Merger"). At the effective time of the Merger, the
outstanding shares of the capital stock of Lanier shall be converted into the
right to receive shares of the common stock of CSBI (except as provided herein).
As a result, shareholders of Lanier shall become shareholders of CSBI. The
transaction described in this Agreement is subject to the approvals of the
shareholders of Lanier, the Board of Governors of the Federal Reserve System,
and the Department of Banking and Finance of the State of Georgia, and the
satisfaction of certain other conditions described in this Agreement. It is the
intention of the parties to this Agreement that the Merger (i) for federal
income tax purposes shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code, and (ii) for accounting purposes
shall qualify for treatment as a "pooling of interests".
Immediately following the Closing of the Merger, Lanier National Bank
("Bank"), a financial institution organized under the laws of the United States
and a wholly-owned subsidiary of Lanier, with its main office located in
Gainesville, Georgia, will remain in existence under its Articles of
Incorporation and Bylaws, as in effect immediately prior to the Effective Time,
as a wholly-owned subsidiary of CSBI. Thereafter, Bank and Georgia First Bank,
N.A., a financial institution organized under the laws of the United States and
also a wholly-owned subsidiary of CSBI, will merge with their resulting main
office located in Gainesville, Georgia.
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:
ARTICLE I
TRANSACTION AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, Lanier shall be merged with and into CSBI in accordance with the
provisions of Section 14-2-1101 of the GBCC and with the effect provided in
Section 14-2-1106 of the GBCC. CSBI shall be the Surviving Corporation
resulting from the Merger and the separate existence of Lanier 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 Lanier 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
Georgia. 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
<PAGE>
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 Lanier 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 Lanier and Bank listed in Exhibit D is
executing and delivering to CSBI a Support Agreement and Non Competition
Agreement in substantially the form as attached hereto as Exhibit A.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. The Articles of Incorporation of CSBI 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 CSBI 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 Lanier and Bank. The directors and officers
of Lanier immediately prior to the Effective Time shall resign as of the
Effective Date. The directors and officers of Bank in office prior to the
Effective Time may continue, at their discretion, to serve as directors and
officers of Bank until the next regularly scheduled meeting of the board of
directors and officers of the Bank or until such time as their respective
successors are duly elected.
2.4 Directors and Officers of CSBI. 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.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, 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; and
(b) Subject to adjustment as outlined below and the conditions set forth
herein, each share of Lanier Common Stock issued and outstanding at the
Effective Time (excluding shares held by CSBI or any of its Subsidiaries or by
Lanier, in each case other than in a fiduciary capacity or as a result of debts
previously contracted, and excluding shares held by Lanier shareholders who
perfect their dissenters' rights of appraisal as provided in Section 3.4 of this
Agreement) shall be converted into the right to receive a number of shares of
CSBI Common Stock equal to the fraction formed by $31.00, as the numerator, and
the Deemed Market Value of CSBI Common Stock, as the denominator; provided,
however, that if either (i) the Deemed Market Value of CSBI Common Stock is less
than or equal to $21.50, then the Exchange Ratio shall be equal to 1.44186; or
(ii) the Deemed Market Value of CSBI Common Stock is greater than or equal to
$26.50, then the Exchange Ratio shall be 1.16981. The aggregate number of
shares of CSBI Common Stock issuable pursuant to the immediately preceding
sentence is sometimes hereinafter referred to as the "Merger Consideration."
The following table provides examples showing the Merger Consideration and
the number of shares of CSBI Common Stock into which each share of Lanier Common
Stock would be exchanged for using several
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assumptions (including the conversion of all outstanding options prior to the
Effective time and that no adjustments are made pursuant to Section 3.1(d)).
<TABLE>
<CAPTION>
And each share of Lanier Common
If the Stock would be exchanged for Number of shares of CSBI Common
Deemed Market Value the following number of shares Stock comprising the
of CSBI Common Stock is of CSBI Common Stock Merger Consideration
----------------------- -------------------------------- --------------------------------
<S> <C> <C>
$20.00 1.44186 1,844,140
21.00 1.44186 1,844,140
21.50 1.44186 1,844,140
22.00 1.40909 1,802,227
23.00 1.34783 1,723,870
24.00 1.29167 1,652,042
25.00 1.24000 1,585,960
26.00 1.19231 1,524,962
26.50 1.16981 1,496,189
27.00 1.16981 1,496,189
28.00 1.16981 1,496,189
</TABLE>
(c) As of the Effective Time, each share of Lanier Common Stock as set
forth in Section 3.1(b) of this Agreement shall cease to be outstanding and each
holder of a certificate representing any such shares of Lanier Common Stock
shall cease to have any rights with respect thereto, except the right to receive
such holders' pro rata portion of the Merger Consideration and any cash in lieu
of fractional shares of CSBI Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section 4.1 of
this Agreement, without interest; and
(d) The Merger Consideration shall be reduced by the sum of all
amounts in excess of $100,000 paid or to be paid by either Lanier or Bank or
both for the fees and expenses (other than the fees and expenses associated with
the services of T. Stephen Johnson & Associates, Inc.), of consultants,
attorneys, accountants and the like in connection with the Merger and the due
diligence conducted by Lanier in regard to the Merger. In the event of an
adjustment pursuant to this Section 3.1(d), (i) the Merger Consideration shall
be reduced by that number of whole shares of CSBI Common Stock equal to the
dollar amount determined in accordance with Section 3.1(d) divided by the Deemed
Market Value, and (ii) the Exchange Ratio decreased accordingly.
3.2 Anti-Dilution Provisions. In the event Lanier or CSBI changes the
number of shares of Lanier 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 Merger Consideration shall be proportionately
adjusted.
3.3 Shares Held by Lanier or CSBI. Each of the shares of Lanier Common
Stock held by Lanier 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.
3.4 Dissenting Shareholders. Any holder of shares of Lanier Common Stock
who perfects his dissenters' rights of appraisal in accordance with and as
contemplated by Sections 14-2-1301 et seq. of the GBCC shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, however, that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder has complied
with the applicable provisions of the GBCC and surrendered to Lanier the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of
Lanier fails to perfect, or effectively withdraws or loses, his right to
appraisal and of payment for his shares, Lanier shall issue and deliver the
consideration to which such holder of shares of Lanier Common Stock is entitled
under this Article 3 (without interest) upon surrender by such holder of
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the certificate or certificates representing the shares of Lanier Common Stock
held by him.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of Lanier 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 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 CSBI 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.
3.6 Conversion of Stock Options.
(a) At the Effective Time, all rights with respect to Lanier Common
Stock pursuant to stock options (the "Lanier Options") granted by Lanier under
the Lanier 199_ Employee Stock Option Plan (the "Lanier Option Plan"), which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to CSBI Common Stock, and CSBI
shall assume each Lanier Option in accordance with the terms of the Lanier
Option Plan and the stock option agreement by which it is evidenced. From and
after the Effective Time, (i) each Lanier Option assumed by CSBI may be
exercised solely for shares of CSBI Common Stock, (ii) the number of shares of
CSBI Common Stock subject to such Lanier Option shall be equal to the product of
the number of shares of Lanier Common Stock subject to such Lanier Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
(iii) the per share exercise price under each such Lanier Option shall be
adjusted by dividing the per share exercise price under each such Lanier Option
by the Exchange Ratio and rounding down to the nearest cent. Lanier agrees to
take all necessary steps to effectuate the foregoing provisions of this Section
3.6.
(b) All restrictions or limitations on transfer with respect to Lanier
Common Stock awarded under the Lanier Option Plan or any other plan, program or
arrangement of Lanier or Bank, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program or arrangement, shall remain in full force and
effect with respect to shares of CSBI Common Stock into which such restricted
stock is converted pursuant to Section 3.1 of this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Within 20 days after the Effective Time, CSBI
shall, as exchange agent, mail to the former shareholders of Lanier appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Lanier Common Stock shall pass, only upon proper delivery of such certificates
to CSBI). After the Effective Time, each holder of shares of Lanier Common
Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which dissenters' rights of appraisal have been perfected as
provided in Section 3.4 of this Agreement) issued and outstanding at the
Effective Time shall surrender the certificate or certificates representing such
shares to CSBI and shall within 20 days after surrender thereof receive in
exchange therefor the consideration provided in Section 3.1 of this Agreement,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2 of this Agreement. To
the extent required by Section 3.5 of this Agreement, each holder of shares of
Lanier Common Stock issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of CSBI Common Stock to which such
holder may be otherwise entitled (without interest). CSBI shall not be
obligated to deliver the consideration to which any former holder of Lanier
Common Stock is entitled as a result of the Merger until such holder surrenders
his certificate or certificates representing the shares of Lanier Common Stock
for exchange as provided in this Section 4.1. The certificate or certificates
of Lanier Common Stock so surrendered shall be duly endorsed as CSBI may
require. Any other provision of this Agreement notwithstanding, CSBI shall not
be liable to a holder of Lanier Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
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4.2 Rights of Former Shareholders. At the Effective Time, the stock
transfer books of Lanier shall be closed as to holders of Lanier Common Stock
immediately prior to the Effective Time, and no transfer of Lanier 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 Lanier Common Stock (other
than shares to be canceled pursuant to Sections 3.3 and 3.4 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 3.5 of this
Agreement in exchange therefor. To the extent permitted by Law, former
shareholders of record of Lanier 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 Lanier Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing Lanier 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
Lanier 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 Lanier 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 LANIER
Lanier hereby represents and warrants to CSBI as follows:
5.1 Organization, Standing and Power. Lanier 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.
Lanier has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. Neither Lanier nor Bank owns
any property or conducts any business outside of the State of Georgia which
would require either of them to be qualified as a foreign corporation in any
jurisdiction.
5.2 Authority; No Breach By Agreement.
(a) Lanier has the corporate power and authority necessary to execute,
deliver and perform its 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 Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Lanier, subject to the
approval of this Agreement by the holders of at least a majority of the
outstanding shares of Lanier Common Stock, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by
Lanier. Subject to such requisite shareholder approval and Consents of
Regulatory Authorities, this Agreement represents a legal, valid and binding
obligation of Lanier, enforceable against Lanier 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) Except as Previously Disclosed, neither the execution and delivery
of this Agreement by Lanier nor the consummation by Lanier of the transactions
contemplated hereby, nor compliance by Lanier with any of the provisions hereof,
will (i) conflict with or result in a breach of any provision of Lanier'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 Lanier or Bank or both under, any Contract or Permit of either Lanier
or Bank or both, 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 Lanier, 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 Lanier or Bank or both or any of their
respective Assets.
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<PAGE>
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws and rules of the
NASD, 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
Lanier no notice to, filing with or Consent of, any public body or authority is
necessary for the consummation by Lanier of the Merger and the other
transactions contemplated in this Agreement.
5.3 Capital Stock and Other Securities.
(a) The authorized capital stock of Lanier consists of 10,000,000
shares of Lanier Common Stock. As of the date of this Agreement, there are (i)
1,200,000 shares of Lanier Common Stock issued and outstanding and (ii) 79,000
shares of Lanier Common Stock reserved for issuance upon the exercise of issued
and outstanding stock options under the Lanier Option Plan. No more than
1,279,000 shares of Lanier Common Stock will be issued and outstanding at the
Effective Time (assuming that all the Lanier Options are exercised prior to the
Effective Time). All of the issued and outstanding shares of capital stock of
Lanier are duly and validly issued and outstanding and are fully paid and
nonassessable under the GBCC. None of the outstanding shares of capital stock
of Lanier has been issued in violation of any preemptive rights of the current
or past shareholders of Lanier.
(b) Except as provided pursuant to the Lanier Options, there are no
shares of capital stock or other equity securities of Lanier 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 Lanier or
contracts, commitments, understandings or arrangements by which Lanier 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 Lanier's Subsidiaries. Other than Bank, Lanier has no subsidiaries.
5.5 SEC Filings; Financial Statements.
(a) Lanier has filed and made available to CSBI all Lanier forms,
reports and documents required to be filed by Lanier with the SEC since December
31, 1994 (collectively the "Lanier SEC Reports"). The Lanier 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 Lanier SEC Reports or necessary in order to make the
statements in such Lanier SEC Reports, in light of the circumstances under which
they were made, not misleading. Except for Lanier Subsidiaries that are
registered as a broker, dealer or investment advisor or filings due to fiduciary
holdings of the Lanier Subsidiaries, none of the Lanier Subsidiaries is required
to file any forms, reports or other documents with the SEC;
(b) Lanier has Previously Disclosed, and delivered to CSBI prior to
the execution of this Agreement, copies of all Lanier Financial Statements for
periods ended prior to the date hereof and will deliver to CSBI copies of all
Lanier Financial Statements and monthly financial statements for Lanier prepared
subsequent to the date hereof. The Lanier 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 Lanier,
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 Lanier as of the dates
indicated and the results of operations, changes in shareholders' equity and
cash flows of Lanier 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 period-end adjustments that are not Material).
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5.6 Absence of Undisclosed Liabilities. Neither Lanier nor Bank has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on either Lanier or Bank, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Lanier as of December 31, 1998 and June 30, 1999 included in the
Lanier Financial Statements or reflected in the notes thereto. Neither Lanier
nor Bank has incurred or paid any Liability since June 30, 1999, except for 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 Lanier.
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
Lanier (ii) neither Lanier nor Bank 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 Lanier provided in
Article 7 of this Agreement, and (iii) Lanier and Bank have conducted their
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 Lanier or
Bank 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 Lanier, and all returns filed are complete and accurate in all
Material respects to the Knowledge of Lanier. 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 Lanier, except as reserved
against in the Lanier 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 Lanier nor Bank 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 Lanier or Bank, which deficiency is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Lanier.
(c) Adequate provision for any Taxes due or to become due by Lanier or
Bank for the period or periods through and including the date of the respective
Lanier Financial Statements has been made and is reflected on such Lanier
Financial Statements.
(d) Deferred Taxes of Lanier or Bank have been provided for in
accordance with GAAP. Effective January 1, 1993 for Bank and effective May 1,
1995 for Lanier, Bank and Lanier adopted Financial Accounting Standards Board
Statement 109, "Accounting for Income Taxes."
(e) Lanier and Bank 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
Lanier.
(f) Neither Lanier nor Bank 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.
(g) There are no Material Liens with respect to Taxes upon any of
the Assets of either Lanier or Bank.
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(h) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of either Lanier or Bank that occurred during or
after any Taxable Period in which either Lanier or Bank incurred a net operating
loss that carries over to any Taxable Period ending after December 31, 1996.
(i) Neither Lanier nor Bank 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 without the prior consent of CSBI, which consent
will not be unreasonably withheld.
(k) Neither Lanier nor Bank 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
Lanier included in the most recent Lanier Financial Statements dated prior to
the date of this Agreement was, and the Allowance shown on the consolidated
balance sheets of Lanier included in the Lanier 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 Bank and other extensions
of credit (including letters of credit and commitments to make loans or extend
credit) by Bank 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 Lanier.
5.10 Assets. Except as Previously Disclosed or as disclosed or reserved
against in the Lanier Financial Statements, Lanier and Bank each has good and
marketable title, free and clear of all Liens, to all of their respective
Assets. All Material tangible properties used in the business of Lanier and
Bank are in good condition, reasonable wear and tear excepted, and are usable in
the ordinary course of business consistent with Lanier's and Bank's past
practices except for deficiencies that are not likely to have individually or in
the aggregate a Material Adverse Effect on Lanier or Bank. All Assets which are
Material to Lanier's and Bank's respective businesses held under leases or
subleases by either Lanier or Bank, 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.
Management believes that the policies of fire, theft, liability and other
insurance maintained with respect to the Assets or businesses of either Lanier
or Bank provide adequate coverage against loss or Liability, and the fidelity
and blanket bonds in effect as to which Bank is a named insured are, in the
reasonable belief of Lanier's management, reasonably sufficient. Neither Lanier
nor Bank 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 Bank include all assets required to
operate the business of Bank as presently conducted.
5.11 Environmental Matters.
(a) To the Knowledge of Lanier, Lanier, Bank, 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 Lanier or on Bank.
(b) There is no Litigation pending or, to the Knowledge of Lanier,
threatened before any court, governmental agency, board, authority or other
forum in which either Lanier or Bank 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 Lanier or Bank 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 Lanier or on Bank.
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(c) To the Knowledge of Lanier 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 either
Lanier or Bank.
(d) To the Knowledge of Lanier during the period of (i) Lanier's or
Bank's ownership or operation of any of their respective current properties,
(ii) Lanier's or Bank's participation in the management of any Participation
Facility or (iii) Lanier's or Bank's holding of a security interest in a Loan
Property, 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
either Lanier or Bank.
5.12 Compliance with Laws. Lanier is duly registered as a bank holding
company under the BHC Act. Bank is duly registered as a financial institution
under the laws of the United States. Bank has in effect all Permits necessary
for it 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 likely to have,
individually or in the aggregate, a Material Adverse Effect on Lanier, 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 Lanier. Neither Lanier nor Bank:
(a) is in violation of any Laws, Environmental 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 Lanier; nor
(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
either Lanier 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 Lanier or Bank, (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 Lanier or Bank, or (iii)
requiring Lanier or Bank 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 Lanier nor Bank 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 Lanier or Bank to bargain with any labor organization as to
wages or conditions of employment, nor is Lanier or Bank 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 to their respective
Knowledge threatened, nor to their respective Knowledge, is there any activity
involving Lanier's or Bank's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.14 Employee Benefit Plans.
(a) Lanier has Previously Disclosed, and delivered or made available
to CSBI prior to the execution of this Agreement, 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 Lanier 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 "Lanier Benefit Plans"). Any of the Lanier 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 "Lanier ERISA Plan." Each
Lanier ERISA Plan which is also a "defined benefit plan" (as defined in Section
414(j) of the Internal
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Revenue Code or Section 3(35) of ERISA) is referred to herein as a "Lanier
Pension Plan". No Lanier Pension Plan is or has been a "multi-employer plan"
within the meaning of Section 3(37) of ERISA. Lanier does not, and may not ever,
participate in either a multi-employer plan or a multiple employer plan.
(b) Lanier 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
Lanier Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Lanier 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 Lanier 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 Lanier 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 Lanier. Each Lanier 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 Lanier is
not aware of any circumstances likely to reasonably result in revocation of any
such favorable determination letter or failure of an Lanier ERISA Plan intended
to satisfy Internal Revenue Code Section 401 to satisfy the Tax qualification
provisions of the Internal Revenue Code applicable thereto. Neither Lanier nor
Bank has engaged in a transaction with respect to any Lanier Benefit Plan that,
assuming the Taxable Period of such transaction expired as of the date hereof,
would subject Lanier 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 Lanier.
(d) No Lanier 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 Lanier Pension Plan, (ii) no change
in the actuarial assumptions with respect to any Lanier Pension Plan, and (iii)
no increase in benefits under any Lanier 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 Lanier or
materially affect the funding status of any such plan. Neither any Lanier
Pension Plan nor any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by Lanier or the single-
employer plan of any entity which is considered one employer with Lanier 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 Lanier. Lanier has not provided, and is not required to
provide, security to a Lanier 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 Lanier except to the extent any failure to do so would not have a Material
Adverse Effect on Lanier.
(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 Lanier 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 Lanier.
Except as Previously Disclosed, Lanier 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 Lanier. 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 Lanier Pension Plan or by any ERISA Affiliate within the 12-
month period ending on the date hereof.
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(f) Except as required under Title I, Part 6 of ERISA and Internal
Revenue Code Section 4980 B, neither Lanier nor Bank has any obligations to
provide health and life benefits under any of the Lanier Benefit Plans to former
employees, and there are no restrictions on the rights of Lanier to amend or
terminate any such plan without incurring any Liability thereunder, which
Liability is reasonably likely to have a Material Adverse Effect on Lanier.
(g) Except as Previously Disclosed, 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 Lanier from Lanier or Bank under any Lanier
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Lanier Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit, where such payment, increase or
acceleration is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Lanier.
(h) The actuarial present values of all accrued deferred compensation
entitlements (including, without limitation, entitlements under any executive
compensation, supplemental retirement, or employment agreement) of directors and
employees and former directors and employees of Lanier 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 Lanier Financial
Statements to the extent required by and in accordance with GAAP.
5.15 Material Contracts. Except as Previously Disclosed or otherwise
reflected in the Lanier Financial Statements, neither Lanier, Bank 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 Lanier or Bank or the guarantee by Lanier
or Bank of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
trade payables, letters of credit 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 an
Lanier Regulatory Report filed by Lanier with any Regulatory Authority as of the
date of this Agreement that has not been filed by Lanier with any Regulatory
Authority as an exhibit to any Lanier Regulatory Report 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 "Lanier Contracts"). With respect to
each Lanier Contract, (i) the Contract is in full force and effect, (ii) neither
Lanier 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 Lanier, (iii) neither Lanier nor Bank 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 Lanier, 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 Lanier, or has repudiated or waived any
Material provision thereunder. Except as Previously Disclosed, all of the
indebtedness of Lanier or Bank for money borrowed is prepayable at any time by
Lanier or Bank without penalty or premium.
5.16 Legal Proceedings. There is no Litigation pending, or, to the
Knowledge of Lanier threatened against either Lanier or Bank, 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
Lanier nor are there any Orders of any Regulatory Authorities, other
governmental authorities or arbitrators outstanding against either Lanier or
Bank, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Lanier.
5.17 Reports. Lanier and Bank 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 Lanier. 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 Lanier or Bank 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 Lanier or
Bank 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 Lanier or Bank or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to Lanier's
shareholders in connection with the Lanier Meeting, and any other documents to
be filed by Lanier 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 Lanier 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 Lanier 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 Lanier Meeting. All
documents that Lanier 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 Accounting, Tax and Regulatory Matters. Neither Lanier, Bank 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
for pooling-of-interests accounting treatment or 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.
5.20 State Takeover Laws. Lanier 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. Lanier 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 Lanier (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 Lanier 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 Lanier'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. Lanier has disclosed to CSBI a complete and accurate copy
of Lanier's plan, including an estimate of anticipated associated costs, for
implementing modifications to Lanier's hardware, software and computer systems,
chips and microprocessors, to ensure proper execution and accurate processing of
all date-related data, whether from years in the same century or in different
centuries. Between the date of this Agreement and the Effective Time, Lanier
shall endeavor to continue its efforts to implement such plan.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CSBI
CSBI hereby represents and warrants to Lanier 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.
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 has the corporate power and authority necessary to execute,
deliver and perform its 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 Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of CSBI. Subject to the
Consents of Regulatory Authorities, this Agreement represents a legal, valid,
and binding obligation of CSBI, enforceable against CSBI 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 CSBI, nor
the consummation by CSBI of the transactions contemplated hereby, nor compliance
by either CSBI with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of CSBI'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 Assets.
(c) No notice to, filing with or Consent of any public body or
authority is necessary for the consummation by CSBI 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, (iv)
under the HSR Act, and (v) 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. 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 are 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 Lanier 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
exchange for shares of Lanier Common Stock upon
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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.
6.4 SEC Filings; Financial Statements.
(a) CSBI has filed and made available to Lanier 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 Lanier 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 Lanier 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 period-end adjustments that are not Material).
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 Companies have incurred or paid any
Liability since June 30, 1999, except for 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.
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 their Assets and to carry on their 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
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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 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 Lanier 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 Lanier shareholders in connection with the Lanier 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 Lanier, 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 Lanier 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 Lanier 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 Accounting, 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
for pooling-of-interests accounting treatment or 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).
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Lanier. 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, Lanier agrees: (i) to operate its business and
cause Bank 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; and (iv) to take no
action which would (a) adversely affect the ability of any Party to obtain any
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 Lanier. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Lanier
covenants and agrees that it and Bank 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 Lanier or the Articles of Association, Bylaws or other governing
instruments of Bank; 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 Lanier and Bank consistent with past practices (which
shall include creation of deposit liabilities, purchases of federal funds 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 Bank
held by Lanier of any Lien or permit any such Lien to exist; 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 Lanier, or declare or pay any dividend or make any other
distribution in respect of Lanier capital stock provided that Lanier may, in its
sole discretion (to the extent legally and contractually permitted to do so),
but shall not be obligated to, declare and pay a cash dividend at a rate not to
exceed nineteen cents (19c) per share to shareholders of record on December 30,
1999 unless the Closing occurs prior to such date in which case any then unpaid
semi-annual dividend shall not be paid; or
(d) except for this Agreement, or as Previously Disclosed, 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 Lanier 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 Lanier
or issue or authorize the issuance of any other securities in respect of or in
substitution for shares of either Lanier Common Stock or Bank's common stock or
sell, lease, mortgage or otherwise dispose of or otherwise encumber any Asset
having a book value in excess of $25,000 other than in the ordinary course of
business for reasonable and adequate consideration; or
(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 Lanier 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, purchase any securities or make any Material investment, either
by purchase of stock 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
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continue activities otherwise permitted by this Agreement; or
(h) grant any increase in compensation or benefits to the employees or
officers of Lanier or Bank (including such discretionary increases as may be
contemplated by existing employment agreements) exceeding 5% individually or in
the aggregate on an annual basis, 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 Lanier or Bank, grant any
increase in fees or other increases in compensation or other benefits to
directors of either Lanier or Bank except in accordance with past practice
Previously Disclosed; or
(i) enter into or amend any employment Contract between Lanier or Bank
and any Person (unless such amendment is required by Law) that Lanier or Bank,
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 Lanier or Bank or make any
Material change in or to any existing employee benefit plans of Lanier or Bank
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 Lanier or Bank for
money damages in excess of $25,000 or Material restrictions upon the operations
of Lanier or Bank;
(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
(n) make any loan or extension of credit to any borrower of Lanier
or Bank in excess of an aggregate of $750,000.
7.3 Covenants of CSBI. 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 Lanier shall have been obtained, CSBI covenants and agrees
that it shall (i) continue to conduct business and the business of its
Subsidiaries in a manner designed in its 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 its
employees and the communities they serve, (iii) use its reasonable efforts to
cause its representations and warranties to be correct at all times, (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, and (v) not take any action reasonably likely to result in any
stop order or suspension from trading to be issued regarding the listed shares
of the common stock of CSBI.
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 Regulatory Authorities, such
financial statements will fairly present the consolidated financial
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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 period-end adjustments that are
not Material). As of their respective dates, such reports filed with the
Regulatory Authorities 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.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Shareholder Approval. Lanier shall take, in accordance with
applicable law and its Articles of Incorporation and Bylaws, all action
necessary to convene the Lanier Meeting to consider and vote upon the approval
of this Agreement and any other matters required to be approved by Lanier
shareholders for consummation of the Merger (including any adjournment), as
promptly as practicable after the Registration Statement is declared effective.
The Board of Directors of Lanier shall (subject to compliance with its fiduciary
duties as advised by counsel) recommend such approval, and Lanier (subject to
the direction of the Lanier 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.
8.2 Registration Statement.
(a) Each of CSBI and Lanier 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 Lanier 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 60 days after the date of this
Agreement. Each of Lanier 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. Lanier agrees to furnish CSBI all information concerning
Lanier, Bank and their respective officers, directors and shareholders as may be
reasonably requested in connection with the foregoing.
(b) Each of Lanier 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 Lanier shareholders and at the time of the Lanier 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 Lanier and CSBI
further agrees that if it shall become aware prior to the 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 Lanier, 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.
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(d) Nothing in this Section 8.2 or elsewhere in this Agreement shall
prohibit accurate disclosure by Lanier 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
NASD.
8.3 Applications. CSBI shall promptly prepare and file, Lanier and Bank
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 Lanier and Bank to review (and approve with respect to information
relating to Lanier and Bank) such applications prior to filing same.
8.4 Filings with State Office. Upon the terms and subject to the
conditions of this Agreement, the Parties shall execute and file the Articles of
Merger with the Secretary of State of the State of Georgia 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),
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 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.
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(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 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, Lanier 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 Lanier nor any Affiliate thereof nor
any investment banker, attorney, accountant or other representative
(collectively, the "Representatives") retained by Lanier or Bank shall directly
or indirectly solicit or engage in negotiations concerning any Acquisition
Proposal by any Person, or provide any confidential information or assistance
to, or have any discussions with, any Person with respect to an Acquisition
Proposal. Except to the extent necessary to comply with the fiduciary duties of
Lanier Board of Directors as determined by the Lanier Board of Directors after
consulting with and considering the advice of counsel, neither Lanier 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 Lanier 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 Lanier shall promptly
advise CSBI verbally and in writing following the receipt of any Acquisition
Proposal and the Material details thereof. Lanier 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) direct and use its reasonable efforts to cause all of its Representatives
not to engage in any of the foregoing.
8.9 Accounting and 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 pooling-of-interests accounting
treatment and 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. Lanier and Bank 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. Lanier and Bank 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 Lanier or Bank (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 Lanier or Bank that may be acquired or controlled by it.
8.12 Agreement of Affiliates. Lanier has Previously Disclosed all Persons
whom it reasonably believes is an "affiliate" of Lanier for purposes of Rule 145
under the 1933 Act. Lanier 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 B,
providing that such Person will not sell, pledge, transfer or otherwise dispose
of the shares of Lanier Common Stock held by such Person except as contemplated
by such
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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 and until such time as the
financial results covering at least 30 days of combined operations of CSBI and
Lanier have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. If the Merger will qualify for
pooling-of-interests accounting treatment, (i) shares of CSBI Common Stock
issued to such affiliates of Lanier in exchange for shares of Lanier Common
Stock and (ii) shares of CSBI Common Stock held by affiliates of CSBI shall not
be transferable until such time as financial results referred to in this Section
8.12 have been published as set forth in this Section 8.12, regardless of
whether each such affiliate has provided the written agreement referred to in
this Section 8.12 (and CSBI shall be entitled to place restrictive legends upon
certificates for shares of CSBI Common Stock issued to affiliates of Lanier
pursuant to this Agreement to enforce the provisions of this Section 8.12);
provided, further that no affiliate of Lanier may dispose of or reduce the risks
of ownership in their respective shares of CSBI Common Stock or Lanier Common
Stock within 30 days prior to the Effective Time. 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 Contracts. Following the Effective Time, CSBI
shall provide generally to officers and employees of Lanier, who at or after the
Effective Time become employees of a CSBI Company, employee benefits under
employee benefit plans (other than stock option or other plans involving the
potential issuance of CSBI Common Stock except as set forth in this Section
8.13) 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; provided, that, for a period of 12 months after
the Effective Time, CSBI shall provide generally to officers and employees of
Lanier and Bank benefits in accordance with the policies of CSBI. CSBI shall
waive any pre-existing condition exclusion under any employee health plan for
which any employees and/or officers and dependents covered by Lanier 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 Lanier
Benefit Plans and (ii) the individual affected by the pre-existing condition was
covered by the Lanier 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
Lanier or Bank prior to the Effective Time shall be treated as service with the
CSBI Companies participating in all qualified benefit plans.
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 Lanier
Common Stock pursuant to the Merger.
8.15 D&O Coverage. Immediately after the Effective Time, CSBI will
provide directors and officers insurance coverage for Bank's directors and/or
officers who continue to serve in such capacity on terms and conditions which,
when taken as a whole, are substantially similar to the coverage provided by the
CSBI Companies to their similarly situated directors and/or officers.
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 Lanier 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 NASD.
(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
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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 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. Each of the parties 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 Lanier Common Stock for CSBI Common Stock will not give rise to gain
or loss to the shareholders of Lanier with respect to such exchange (except to
the extent of any cash received in lieu of a fractional share interest in CSBI
Common Stock), and (iii) neither of Lanier 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 Lanier and CSBI reasonably
satisfactory in form and substance to such counsel.
(g) Employment Agreements. Each of Joseph D. Chipman, Jr. and Ricky
---------------------
H. Pugh shall have entered into the employment agreements with Bank in
substantially the form set forth in Exhibits C-1 and C-2 to this Agreement and
each of them shall have terminated their existing employment agreements with
Lanier and Bank.
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 Lanier 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 Lanier.
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(b) Performance of Agreements and Covenants. Each and all of the
---------------------------------------
agreements and covenants of Lanier 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. Lanier 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 by the Lanier 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 Powell, Goldstein, Frazer & Murphy, counsel to Lanier, dated as of the
Closing, in form reasonably satisfactory to CSBI, as to the matters set forth in
Exhibit E hereto.
(e) Accountant's Letters. CSBI shall have received from KPMG LLP
--------------------
letters dated not more than five days prior to (i) the date of the Proxy
Statement and (ii) the Effective Time, with respect to certain financial
information regarding Lanier 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 Lanier the affiliate agreement referred to in Section 8.12 hereof,
in substantially the form attached hereto as Exhibit B, to the extent necessary
to assure in the reasonable judgment of CSBI that the transaction contemplated
hereby will qualify for pooling-of-interests accounting treatment.
(g) Support Agreements. Each of the executive officers and directors
------------------
of Lanier listed in Exhibit D shall have executed and delivered to CSBI a
Support Agreement in substantially the form attached hereto as Exhibit A.
(h) Pooling Letter. CSBI shall have received a letter, dated as of
--------------
the Effective Time, in form and substance reasonably acceptable to CSBI, from
KPMG LLP to the effect that the Merger will qualify for pooling-of-interests
accounting treatment.
9.3 Conditions to Obligations of Lanier The obligations of Lanier 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 Lanier 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 Lanier (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
Chief Executive Officer and its Chief 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
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(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 Lanier
and its counsel shall request.
(d) Opinion of Counsel. Lanier shall have received an opinion of
------------------
Troutman Sanders LLP, counsel to CSBI, dated as of the Effective Time, in form
reasonably satisfactory to Lanier, as to matters set forth in Exhibit F hereto.
(e) Share Listing. The shares of CSBI Common Stock issuable pursuant
-------------
to the Merger shall have been approved for listing on NASDAQ.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of
Lanier, 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 Lanier; 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 Lanier; 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 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 Lanier fail to vote their approval of this
Agreement and the transaction contemplated hereby at the Lanier 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 Lanier shall
have failed to reaffirm, following a written request by CSBI for such
reaffirmation after Lanier 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
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<PAGE>
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:
"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 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 and Lanier and filed with the Secretary of State of the State of Georgia
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.
"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.
"CSBI Common Stock" shall mean the One Dollar ($1.00) par value common
stock of CSBI.
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"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 six months ended June 30, 1999 and
1998, 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 Subsidiaries" shall mean the subsidiaries of CSBI.
"Deemed Market Value" shall mean the arithmetic average of the closing
price for CSBI Common Stock as reported on NASDAQ for the 20 consecutive trading
days immediately preceding the date which is five calendar days prior to the
Effective Time.
"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 Georgia.
"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.
"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 Ratio" shall mean the ratio formed by the number of shares of
CSBI Common Stock Lanier shareholders will receive for each share of Lanier
Common Stock as set forth herein to one.
"Exhibits" A through F, 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.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"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
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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.
"IRS" shall mean the Internal Revenue Service.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person shall mean the knowledge,
after all appropriate due inquiry, of the Chairman, President, Chief Financial
Officer, Chief Accounting Officer, Chief Credit Officer, General Counsel, or any
Senior or Executive Vice President or Manager of such Person.
"Lanier Benefit Plans" shall have the meaning set forth in Section 5.14 of
this Agreement.
"Lanier Common Stock" shall mean the One Dollar ($1.00) par value common
stock of Lanier.
"Lanier Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Lanier 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 six months ended June 30, 1999 and
1998 and each of the four fiscal years ended December 31, 1998, 1997, 1996, and
1995, as filed by Lanier in SEC Documents, and (ii) the consolidated statements
of condition of Lanier (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 file
with respect to periods ended subsequent to December 31, 1998.
"Lanier Meeting" shall mean the special meeting of the shareholders of
Lanier or any adjournment thereof to vote on the matters set forth in the Proxy
Statement.
"Lanier Regulatory Report" shall mean any form, report, or document either
(i) filed or required to be filed by Lanier or Bank or both with any Regulatory
Authority, or (ii) received by Lanier or Bank or both from any Regulatory
Authority.
"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 transactions contemplated by this Agreement, but shall not
include regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
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"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.
"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
and (y) changes in GAAP or regulatory accounting principles generally applicable
to banks and their holding companies.
"Merger" shall mean the merger of Lanier with and into CSBI referred to in
the Preamble of this Agreement.
"Merger Consideration" shall mean the aggregate consideration to be
received for all of the shares of Lanier Common Stock.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the Nasdaq Stock Market, Inc.
"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.
"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 Lanier or CSBI, and "Parties" shall mean Lanier
and CSBI.
"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 of this Agreement marked as such and 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
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acquiring Party to the other Party prior to the date of such acquisition.
"Proxy Statement" shall mean the proxy statement used by Lanier 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 Lanier and other proxy
solicitation materials of Lanier 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.
"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
Federal Deposit Insurance Corporation, the Office of the Comptroller of the
Currency, all state regulatory agencies having jurisdiction over the Parties and
their respective Subsidiaries, NASD and the SEC.
"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.
"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.
"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 CSBI 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.
"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.
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11.2 Expenses.
(a) General. Except as otherwise provided in this Section 11.2, 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 willful 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 $1,000,000, which sum represents compensation for
the non-breaching Party's loss as the result of the transactions contemplated by
this Agreement not being consummated.
11.3 Brokers and Finders. Lanier 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
Lanier has engaged T. Stephen Johnson & Associates, Inc. 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 Lanier, Lanier shall indemnify and hold CSBI harmless of and from
any Liability in respect of any such claim and reduce the Merger Consideration
by an amount equal to such claim as determined by CSBI.
11.4 Entire Agreement. Except as otherwise expressly provided herein, 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 Lanier Common Stock, there shall be
made no amendment decreasing the consideration to be received by Lanier
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 Lanier, to waive or extend the time for the compliance or fulfillment by
Lanier 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, Lanier, acting through its
Board of Directors, 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 Lanier 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
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duly authorized officer of Lanier.
(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: 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
Lanier and Bank: Lanier Bankshares, Inc.
Lanier National Bank
854 Washington Street
Gainesville, Georgia 30501-3543
770/535-1549 - FAX
Attn: Joseph D. Chipman, Jr., President and
Chief Executive Officer
Copy to Counsel: Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, Suite 1600
Atlanta, Georgia 30303
404/572-6999 - FAX
Attn: Walter G. Moeling, IV, Esquire
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.
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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.
<TABLE>
<CAPTION>
<S> <C>
"LANIER "
ATTEST: LANIER BANKSHARES, INC.
/s/ Susan R. Bell /s/ C. Edmundson Daniel
- --------------------------------------------- ------------------------------------------------
Susan R. Bell, Secretary C. Edmundson Daniel, Chairman
(CORPORATE SEAL) /s/ Joseph D. Chipman, Jr.
------------------------------------------------
Joseph D. Chipman, Jr., President
"CSBI"
ATTEST: CENTURY SOUTH BANKS, INC.
/s/ Susan F. Anderson /s/ James A. Faulkner
- --------------------------------------------- ------------------------------------------------
James A. Faulkner, Vice-Chairman and
Susan F. Anderson, Secretary Chief Executive Officer
(CORPORATE SEAL)
</TABLE>
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<PAGE>
APPENDIX B
----------
DISSENTER AND APPRAISAL RIGHTS
GEORGIA BUSINESS CORPORATION CODE
TITLE 14, CHAPTER 2, ARTICLE 13
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. Definitions.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under Code Section 14-2-1302 and who exercises that right when and in the
manner required by Code Sections 14-2-1320 through 14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(6) "Interest" means interest from the effective date of the corporate action
until the date of payment, at a rate that is fair and equitable under all the
circumstances.
(7) "Record shareholder" means the person in whose name shares are registered
in the records of a corporation or the beneficial owner of shares to the extent
of the rights granted by a nominee certificate on file with a corporation.
(8) "Shareholder" means the record shareholder or the beneficial shareholder.
(Code 1981, (S) 14-2-1301, enacted by Ga. L. 1988, p. 1070, (S) l; Ga. L. 1993,
p. 1231, (S) 16.)
14-2-1302. Right to dissent.
(a) A record shareholder of the corporation is entitled to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party:
(A) If approval of the shareholders of the corporation is required for
the merger by Code Section 14-2-1103 or 14-2-1104 or the articles of
incorporation and the shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its parent
under Code Section 14-2-1104;
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(2) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of the
property of the corporation if a shareholder vote is required on the sale or
exchange pursuant to Code Section 14-2-1202, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed to the
shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through issuance
of shares or other securities with similar voting rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of the
class; or
(5) Any corporate action taken pursuant to a shareholder vote to the extent
that Article 9 of this chapter, the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares under
this article may not challenge the corporate action creating his entitlement
unless the corporate action fails to comply with procedural requirements of this
chapter or the articles of incorporation or bylaws of the corporation or the
vote required to obtain approval of the corporate action was obtained by
fraudulent and deceptive means, regardless of whether the shareholder has
exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or share
exchange to accept for their shares anything except shares of the surviving
corporation or another publicly held corporation which at the effective date
of the merger or share exchange are either listed on a national securities
exchange or held of record by more than 2,000 shareholders, except for scrip
or cash payments in lieu of fractional shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise. (Code 1981, (S) 14-
2-1302, enacted by Ga. L. 1988, p. 1070, (S) 1; Ga. L. 1989, p. 946, (S) 58.)
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14-2-1303. Dissent by nominees and beneficial owners.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf he
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders. (Code 1981, (S)
14-2-1303, enacted by Ga. L. 1988, p. 1070, (S) 1.)
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PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
14-2-1320. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Code Section 14-2-
1302 is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in Code Section 14-2-
1322 no later than ten days after the corporate action was taken. (Code 1981,
(S) 14-2-1320, enacted by Ga. L. 1988, p. 1070, (S) 1; Ga. L. 1993, p. 1231, (S)
17.)
14-2-1321. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written notice
of his intent to demand payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of subsection
(a) of this Code section is not entitled to payment for his shares under this
article. (Code 1981, (S) 14-2-1321, enacted by Ga. L. 1988, p. 1070, (S) 1.)
14-2-1322. Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than 30 nor more than 60 days after the date the
notice required in subsection (a) of this Code section is delivered; and
(4) Be accompanied by a copy of this article. (Code 1981, (S) 14-2-1322,
enacted by Ga. L. 1988, p. 1070, (S) 1.)
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14-2-1323. Duty to demand payment.
(a) A record shareholder sent a dissenters' notice described in Code Section
14-2-1322 must demand payment and deposit his certificates in accordance with
the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article. (Code 1981, (S) 14-
2-1323, enacted by Ga. L. 1988, p. 1070, (S) 1.)
14-2-1324. Share restrictions.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action. (Code 1981, (S) 14-
2-1324, enacted by Ga. L. 1988, p. 1070, (S) 1.)
14-2-1325. Offer of payment.
(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall by notice to each dissenter who complied with Code
Section 14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year ending
not more than 16 months before the date of payment, an income statement for
that year, a statement of changes in shareholders' equity for that year, and
the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within said 30 days, payment for
his or her shares shall be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later. (Code 1981,
(S) 14-2-1325, enacted by Ga. L. 1988, p. 1070, (S) 1; Ga. L. 1989, p. 946, (S)
59; Ga. L. 1993, p. 1231, (S) 18.)
14-2-1326. Failure to take action.
(a) If the corporation does not take the proposed action within 60 days after
the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
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(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure. (Code 1981, (S) 14-2-1326, enacted by Ga. L. 1988, p. 1070, (S) 1;
Ga. L. 1990, p. 257, (S) 20.)
14-2-1327. Procedures if shareholder dissatisfied with payment or offer.
(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section 14-2-
1325 is less than the fair value of his shares or that the interest due is
incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or she
notifies the corporation of his or her demand in writing under subsection (a) of
this Code section within 30 days after the corporation offered payment for his
or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under subsection
(b) of Code Section 14-2-1325, and the corporation shall provide the
information to the shareholder within ten days after receipt of a written
demand for the information; and
(2) The shareholder may at any time, subject to the limitations period of
Code Section 14-2-1332, notify the corporation of his own estimate of the
fair value of his shares and the amount of interest due and demand payment of
his estimate of the fair value of his shares and interest due. (Code 1981,
(S) 14-2-1327, enacted by Ga. L. 1988, p. 1070, (S) 1; Ga. L. 1989, p. 946,
(S) 60; Ga. L. 1990, p. 257, (S) 21; Ga. L. 1993, p. 1231, (S) 19.)
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PART 3
JUDICIAL APPRAISAL OF SHARES
14-2-1330. Court action.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding
within the 60 day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(b) The corporation will commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) of this Code section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them or in any amendment to it. Except as
otherwise provided in this chapter, Chapter 11 of Title 9, known as the "Georgia
Civil Practice Act," applies to any proceeding with respect to dissenters'
rights under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment for
the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment. (Code 1981, (S) 14-2-1330, enacted by Ga. L.
1988, p. 1070, (S) 1; Ga. L. 1989, p. 946, (S) 61; Ga. L. 1993, p. 1231, (S)
20.)
14-2-1331. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under Code Section 14-2-
1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section 14-2-
1327.
(b) The court may also assess the fees and expenses of attorneys and experts
for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the
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court may award to these attorneys reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited. (Code 1981, (S) 14-2-1331, enacted
by Ga. L. 1988, p. 1070, (S) 1.)
14-2-1332. Limitation of actions.
No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322. (Code 1981, (S) 14-2-1332, enacted by Ga. L. 1988, p.
1070, (S) 1.)
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APPENDIX C
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[LETTERHEAD OF T. STEPHEN JOHNSON & ASSOCIATES, INC.]
December __, 1999
Board of Directors
Lanier Bankshares, Inc.
P.O. Box 26
Gainesville, Georgia 30503
Dear Directors:
T. Stephen Johnson & Associates, Inc., Roswell, Georgia ("TSJ&A") has been asked
to render an opinion as to the fairness from a financial point of view of the
consideration to be received by the shareholders of Lanier Bankshares, Inc..
("Lanier") in connection with the proposed merger of Lanier with and into
Century South Banks, Inc. ("CSBI"), pursuant to an Agreement and Plan of Merger
dated as of October 20, 1999 (the "Merger Agreement"). The Merger Agreement
calls for each outstanding share of Lanier common stock to be converted into the
right to receive CSBI common shares based on the defined Exchange Ratio equal to
the fraction formed by $31.00 as the numerator and the market value of CSBI
common shares, which currently trade on NASDAQ, as the denominator. However, if
the market value of CSBI common shares is less than of equal to $21.50 per share
of greater than or equal to $26.50 per share, then each share of Lanier will be
converted into the right to receive 1.44186 shares or 1.16981 shares of CSBI
common shares, respectively. The November 24, 1999 closing price for CSBI common
shares was $23.875 per share.
TSJ&A is an investment banking and consulting firm that specializes in the
valuation of closely-held corporations and provides fairness opinions as part of
its practice. Because of its prior experience in the appraisal of southeastern
financial institutions involved in mergers, it has developed an expertise in
fairness opinions related to the securities of southeastern financial
institutions. Lanier retained TSJ&A to serve as financial advisor to analyze the
value of Lanier in a merger or acquisition transaction; solicit potential
acquirers' interest in entering into a merger or acquisition transaction with
Lanier, and to negotiate the Board of Directors terms, amount and form of
consideration; consult with management regarding merger or acquisition
transaction; and provide a fairness opinion for which compensation will be
received.
In performing its analysis, TSJ&A relied upon and assumed without independent
verification, the accuracy and completeness of all information provided to it.
TSJ&A has not performed any independent appraisal or evaluation of the assets of
Lanier or of CSBI or any of its subsidiaries. As such, TSJ&A does not express
an opinion as to the fair market value of Lanier. The opinion of financial
fairness expressed herein is necessarily based on market, economic and other
relevant considerations as they exist and can be evaluated as of November 24,
1999.
In arriving at its opinion, TSJ&A reviewed and analyzed audited and unaudited
financial information regarding Lanier and CSBI, the merger, the Merger
Agreement, a draft of SEC filings, as well as publicly available information and
actual comparable transactions.
The merger consideration to be received by Lanier Shareholders is based on the
defined Exchange Ratio for CSBI common shares. The value of the shares to be
received is the current market value of CSBI common shares which currently trade
on NASDAQ. The November 24, 1999 closing price for CSBI common shares was
$23.785 per share. The transaction value would equal $31.00 per share. This
transaction value equals 3.233 times September 30, 1999 book value and 19.872
times last twelve months earnings per share. The purchase price was calculated
to equal 34.87 percent of deposits as of September 31, 1999.
TSJ&A reviewed the Merger as of November 24, 1999, for the purpose of
determining purchase premiums that could be used in comparing the Merger with
other announced transactions. TSJ&A reviewed the purchase
<PAGE>
Lanier Bankshares, Inc.
December __, 1999
Page 2
premiums paid in all nine transactions that were announced since September
30, 1998 involving selling institutions headquartered in Florida and Georgia. A
listing of these transactions is included with the Fairness Opinion. On average,
the comparable transactions reported an announced deal price to book value of
3.0233 times, an announced deal price to earnings of 25.30 times and a purchase
price as a percent of deposits of 35.04 percent. The Merger compares favorably
with these transactions with the deal price to book value. The deal price to
earnings and the purchase premium as a percent of core deposits each rank
well within the range of the comparable transactions.
TSJ&A reviewed the historical dividend payouts at Lanier in an effort to equate
such payouts to the current dividend payout at CSBI. The Lanier shareholders
received $.34 per common share during 1999. Assuming on the current CSBI
dividend payout of $0.48 per share, the Lanier shareholders would receive the
equivalent of $0.62 per current Lanier share, based on the Exchange Ratio of
1.29843.
Therefore, in consideration of the above, it is the opinion of TSJ&A that, based
on the structure of the Merger and the analyses that have been performed, the
consideration to be received by the shareholders of Lanier is fair from a
financial point of view.
Sincerely,
T. Stephen Johnson & Associates, Inc.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
The provisions of the Georgia Business Corporation Code and the
Registrant's bylaws set forth the extent to which the Registrant's directors and
officers may be indemnified against liabilities they may incur while serving in
such capacities. Under these indemnification provisions, the Registrant is
required to indemnify any of its directors or officers against any reasonable
expenses (including attorneys' fees) incurred by such director or officer in
defense of any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and whether formal or informal, to which such
director or officer was made a party, or in defense of any claim, issue or
matter therein, by reason of the fact that such director or officer is or was a
director or officer of the Registrant or who, while a director of the
Registrant, is or was serving at the Registrant's request as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
to the extent that such director or officer has been successful, on the merits
or otherwise, in such defense. The Registrant may indemnify any of its
directors or its officers, against any liability incurred in connection with any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, and whether formal or informal, by
reason of the fact that such director or officer is or was a director or officer
of the Registrant or who, while a director or officer of the Registrant, is or
was serving at the Registrant's request as a director, officer, partner,
trustee, employee, or agent of another corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise, if such director or officer
acted in a manner such director or officer believed in good faith to be in, or
not opposed to, the best interests of the Registrant, or, with respect to any
criminal proceeding, had no reasonable cause to believe such director's or
officer's conduct was unlawful, if a determination has been made that the
director or officer has met these standards of conduct. No indemnification shall
be made in respect of any claim, issue, or matters as to which such person shall
have been adjudged liable to the Registrant unless and only to the extent that
the Superior Court or court in which such action or suit was brought shall
determine upon application that, despite the adjudication of the liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Superior Court or
such other court shall deem proper. The Registrant may also provide advancement
of expenses incurred by a director or officer in defending any such action,
suit, or proceeding upon receipt of a written affirmation of such officer or
director that such director or officer has met certain standards of conduct and
an undertaking by or on behalf of such director or officer to repay such
advances unless it is ultimately determined that such director or officer is
entitled to indemnification by the Registrant.
The Registrant's articles of incorporation contain a provision which
provides that, to the fullest extent permitted by the Business Corporation Code
of Georgia, directors of the Registrant shall not be personally liable to the
Registrant or its shareholders for monetary damages for breach of his duty of
care or any other duty as a director.
The Registrant maintains an insurance policy insuring the Registrant
and directors and officers of the Registrant against certain liabilities,
including liabilities under the Securities Act of 1933.
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Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits.
Exhibit
Number Description of Exhibits
- -------------------------------------------------------------------------------
2(a) Agreement and Plan of Merger, dated as of October 20, 1999, by and
between Lanier Bankshares, Inc. and Century South Banks, Inc. (included
as Appendix A to the proxy statement/prospectus and incorporated by
reference herein)
3(a) Articles of incorporation, as amended (included as Exhibit 3(a) to the
Registration Statement No. 333-72579 on Form S-4 of Century South Banks,
Inc., previously filed with the Commission on March 8, 1999, and
incorporated by referenced herein).
3(b) Bylaws, as amended (included as Exhibit 3(b) to the Registrant's Form
10-K for the fiscal year ended December 31, 1996, previously filed with
the Commission and incorporated by reference herein)
4(a) See Exhibits 3(a) and 3(b) for provisions of the Articles of
Incorporation and Bylaws of the Registrant defining rights of holders of
common stock of the Registrant
5* Securities Opinion of Troutman Sanders LLP
8* Tax Opinion of Troutman Sanders LLP
11 Statement regarding computation of per share earnings (included in Pro
Forma Financial Information in this Registration Statement)
23(a) Consent of Troutman Sanders LLP (included in Exhibits 5 and 8)
23(b) Consent of KPMG LLP as to Century South Banks, Inc.
23(c) Consent of Mauldin & Jenkins, LLC as to Lanier Bankshares, Inc.
23(d) Consent of T. Stephen Johnson & Associates, Inc.
24 Power of Attorney (included in the signature page of page II-5 of this
Registration Statement)
99.1 Form of Proxy Card
- ----------
*To be filed by amendment.
(b) Financial Statement Schedules.
Schedules are omitted because they are not required or are not
applicable, or the required information is shown in the financial statements or
notes thereto.
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
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(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the Registrant's articles of incorporation or
bylaws, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(f) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
II-3
<PAGE>
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona bide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dahlonega,
State of Georgia, on December 13, 1999.
CENTURY SOUTH BANKS, INC.
By:/s/ James A. Faulkner
------------------------------------------
James A. Faulkner, Vice-Chairman and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints jointly and severally, James A. Faulkner
and Joseph W. Evans, and each of them acting individually, their respective
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or their respective substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------------- ------------------------------------------- -----------------
<S> <C> <C>
Chairman of the Board of Directors and
- ---------------------------------------------- Director
William H. Anderson, II
/s/ J. Russell Ivie Vice-Chairman of the Board of Directors December 13, 1999
- ---------------------------------------------- and Director
J. Russell Ivie
/s/ James A. Faulkner Vice-Chairman of the Board of Directors, December 13, 1999
- ---------------------------------------------- Director, Chief Executive Officer
James A. Faulkner (Principal Executive Officer)
/s/ Joseph W. Evans President, Chief Operating Officer, Chief December 13, 1999
- ---------------------------------------------- Financial Officer and Director (Principal
Joseph W. Evans Financial Officer)
Director
- ----------------------------------------------
James R. Balkcom, Jr.
Director
- ----------------------------------------------
William L. Chandler
/s/ Thomas T. Folger, Jr. Director December 13, 1999
- ----------------------------------------------
Thomas T. Folger, Jr.
/s/ Quill O. Healey Director December 13, 1999
- ----------------------------------------------
Quill O. Healey
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------------- ------------------------------------------- -----------------
<S> <C> <C>
- ---------------------------------------------- Director
Frank C. Jones
- ---------------------------------------------- Director
John B. McKibbon, III
/s/ E. Paul Stringer
- ---------------------------------------------- Director December 13, 1999
E. Paul Stringer
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- -------------------------------------------------------------------------------
23(b) Consent of KPMG LLP as to Century South Banks, Inc.
23(c) Consent of Mauldin & Jenkins, LLC as to Lanier Bankshares, Inc.
23(d) Consent of T. Stephen Johnson & Associates, Inc.
99.1 Form of Lanier Proxy Card
<PAGE>
EXHIBIT 23(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Century South Banks, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Proxy
Statement/Prospectus.
/s/ KPMG LLP
Atlanta, Georgia
December 14, 1999
<PAGE>
EXHIBIT 23(c)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Lanier Bankshares, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Proxy
Statement/Prospectus.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
December 13, 1999
<PAGE>
EXHIBIT 23(d)
CONSENT OF FINANCIAL ADVISOR
We consent to the use in this Registration Statement of Century South Banks,
Inc. on Form S-4 of our opinion related to Lanier Bankshares, Inc. included in
the Proxy Statement/Prospectus to such Registration Statement as Exhibit C and
to the reference to our firm in the Proxy Statement/Prospectus under the caption
"THE MERGER--Opinion of TSJ&A."
/s/ T. Stephen Johnson & Associates, Inc.
December 13, 1999
<PAGE>
EXHIBIT 99.1
REVOCABLE PROXY
LANIER BANKSHARES, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints _______ and _________ as Proxies, each
with the power to appoint his substitute, and hereby authorizes either one or
both of them to represent and to vote, as designated below, all of the shares of
common stock of Lanier Bankshares, Inc. ("Lanier"), par value $1.00 per share,
held of record by the undersigned on ________ __, 1999, at the special meeting
of Lanier shareholders to be held at _____ p.m., local time, on ________ __,
2000, at the main office of Lanier located at 854 Washington Street,
Gainesville, Georgia.
1. PROPOSAL TO: Approve the Agreement and Plan of Merger, dated as
of October 20, 1999 (the "Merger Agreement"), by and between Lanier and Century
South Banks, Inc. ("CSBI"), pursuant to which, among other matters, (a) Lanier
will merge with and into CSBI; and (b) shares of Lanier common stock will be
converted into the right to receive shares of CSBI common stock, as described in
the Proxy Statement/Prospectus dated _______ __, 1999.
FOR AGAINST ABSTAIN
2. In their discretion, to vote upon such other business as may
properly come before the special meeting including, among other things, a motion
to adjourn or postpone the Lanier special meeting to another time for the
purpose of soliciting additional proxies or otherwise. However, no proxy with
instructions to vote against the Merger Agreement will be voted in favor of any
adjournment or postponement of the special meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign exactly as the name appears below. When shares are held by joint
tenants, all joint tenants should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If shares are held by a corporation, an authorized corporate officer should sign
in full corporate name. If shares are held by a partnership, an authorized
person should sign in partnership name.
DATED:______________________________
_____________________________________
Signature
_____________________________________
Signature if held jointly
