FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 14, 1998
ANCHOR FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 0-13759 57-0778015
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification number)
2002 Oak St., Myrtle Beach, S. C. 29577
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (843) 448-1411
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ITEM 5. OTHER EVENTS
On April 14, 1998, Anchor Financial Corporation (the "Corporation") announced
that it executed a definitive Agreement and Plan of Merger with ComSouth
Bankshares, Inc. ("ComSouth"), Columbia, South Carolina, dated April 14, 1998
(the "Agreement"). The Agreement was unanimously approved by the boards of
directors of both companies.
The Agreement provides that the proposed transaction is to be accounted for as a
pooling of interests and is to be a tax-free exchange of 0.75 shares of Anchor
Financial Corporation common stock for each outstanding share of ComSouth common
stock. In addition, each outstanding and unexercised option to purchase a share
of ComSouth common stock will be converted into and become an option to purchase
Anchor common stock, adjusted on a basis to reflect the exchange ratio. The
transaction is expected to be completed in the third quarter of 1998 subject to
the approval of shareholders of both companies and appropriate regulatory
agencies. For information regarding the terms of the transaction, reference is
made to the Agreement and the news release, dated April 14, 1998, attached to
this Report as Exhibits 2 and 99, respectively.
After consummation, ComSouth's two banks, The Bank of Charleston, N.A., located
at 276 East Bay Street, Charleston, South Carolina and The Bank of Columbia,
N.A., located at 1350 Main Street, Columbia, South Carolina will become part of
the Corporation's banking network. The Corporation does not anticipate
significant changes in ComSouth's current banking routine. Four current
directors of ComSouth or its subsidiary banks will join the Anchor Financial
Corporation board of directors upon completion of the merger. Arthur P. Swanson,
president and chief executive officer of the Bank of Charleston, and J. Michael
Kapp, president and chief executive officer of the Bank of Columbia, will remain
in charge of operations in those cities.
Based on March 31, 1998 figures, the Corporation will be approximately $842
million in total assets after the merger is completed.
Anchor Financial Corporation, with assets of $624.7 million at March 31, 1998,
is the parent of The Anchor Bank, which operates nineteen banking offices in
South Carolina and North Carolina. The Anchor Bank offers a full line of banking
products and services.
ComSouth, with assets of $217 million at March 31, 1998, is the parent of The
Bank of Charleston, N.A. and The Bank of Columbia, N.A. Both of ComSouth's
subsidiary banks offer a full line of banking products and services.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements - not applicable.
(b) Pro forma financial information - not applicable.
(c) Exhibits:
(2) Agreement and Plan of Merger, dated April 14, 1998
(99) News release issued by Anchor Financial Corporation,
dated April 14, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ John J. Moran
------------------------------------
John J. Moran, Senior Vice President
and Comptroller
Date: April 16, 1998
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EXHIBIT 2
<PAGE>
AGREEMENT AND PLAN OF MERGER
between
ANCHOR FINANCIAL CORPORATION
and
COMSOUTH BANKSHARES, INC.
dated April 14, 1998
<PAGE>
TABLE OF CONTENTS
Page
PREAMBLE...................................................................1
RECITALS...................................................................1
DEFINITIONS................................................................2
ARTICLE I. MERGER.......................................................7
1.1 THE MERGER...............................................7
1.2 EFFECTIVE DATE...........................................7
ARTICLE II. MERGER CONSIDERATION.........................................7
2.1 CONSIDERATION............................................7
2.2 SHAREHOLDER RIGHTS; STOCK TRANSFERS......................8
2.3 FRACTIONAL SHARES........................................8
2.4 EXCHANGE PROCEDURES......................................8
2.5 DISSENTING SHARES........................................9
2.6 RESERVATION OF RIGHT TO REVISE TRANSACTION...............9
2.7 OPTIONS..................................................9
2.8 ANTI-DILUTION ADJUSTMENTS...............................10
ARTICLE III. COMSOUTH ACTIONS PENDING CONSUMMATION.......................11
3.1 CAPITAL STOCK...........................................11
3.2 DISTRIBUTIONS...........................................11
3.3 LIABILITIES.............................................11
3.4 OPERATIONS..............................................11
3.5 LIENS AND ENCUMBRANCES..................................11
3.6 EMPLOYMENT ARRANGEMENTS.................................12
3.7 BENEFIT PLANS...........................................12
3.8 CONTINUANCE OF BUSINESS.................................12
3.9 AMENDMENTS..............................................12
3.10 CLAIMS..................................................12
3.11 CONTRACTS...............................................12
3.12 LOANS...................................................13
ARTICLE IV. ANCHOR ACTIONS PENDING CONSUMMATION.........................13
ARTICLE V. REPRESENTATIONS AND WARRANTIES..............................13
5.1 COMSOUTH'S REPRESENTATIONS AND WARRANTIES...............13
5.2 ANCHOR'S REPRESENTATIONS AND WARRANTIES.................25
5.3 EXCEPTIONS TO REPRESENTATIONS...........................28
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Page
ARTICLE VI. COVENANTS...................................................29
6.1 BEST EFFORTS............................................29
6.2 THE PROXY...............................................29
6.3 REGISTRATION STATEMENT - COMPLIANCE
WITH SECURITIES LAWS....................................29
6.4 REGISTRATION STATEMENT EFFECTIVENESS....................30
6.5 PRESS RELEASES..........................................30
6.6 ACCESS; INFORMATION.....................................30
6.7 ACQUISITION PROPOSALS...................................31
6.8 REGISTRATION STATEMENT PREPARATION; REGULATORY
APPLICATIONS PREPARATION................................32
6.9 APPOINTMENT OF DIRECTORS................................32
6.10 EMPLOYMENT AGREEMENTS...................................32
6.11 BLUE-SKY FILINGS........................................32
6.12 AFFILIATE AGREEMENTS....................................33
6.13 TAKEOVER LAW............................................33
6.14 NO RIGHTS TRIGGERED.....................................33
6.15 SHARES LISTED...........................................33
6.16 CURRENT INFORMATION.....................................33
6.17 SEVERANCE...............................................34
6.18 INDEMNIFICATION.........................................34
ARTICLE VII. CONDITIONS TO CONSUMMATION
OF THE MERGER...........................................................34
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS..................34
7.2 CONDITIONS TO OBLIGATIONS OF ANCHOR.....................36
7.3 CONDITIONS TO OBLIGATIONS OF COMSOUTH...................37
ARTICLE VIII. TERMINATION.................................................38
8.1 EVENTS OF TERMINATION...................................38
8.2 CONSEQUENCES OF TERMINATION.............................41
ARTICLE IX. OTHER MATTERS...............................................41
9.1 SURVIVAL................................................41
9.2 WAIVER; AMENDMENT.......................................41
9.3 COUNTERPARTS............................................42
9.4 GOVERNING LAW...........................................42
9.5 EXPENSES................................................42
9.6 CONFIDENTIALITY.........................................42
9.7 NOTICES.................................................42
9.8 ENTIRE UNDERSTANDING; NO THIRD PARTY
BENEFICIARIES...........................................43
9.9 HEADINGS................................................43
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 14, 1998 (the
"Agreement"), is made and entered into by and between ANCHOR FINANCIAL
CORPORATION ("Anchor"), a South Carolina corporation, and COMSOUTH BANKSHARES,
INC. ("ComSouth"), a South Carolina corporation.
PREAMBLE
The management and Boards of Directors of Anchor and ComSouth believe,
respectively, that the business combination transaction provided for herein, in
which ComSouth will, subject to the terms and conditions set forth herein, merge
with and into Anchor so that Anchor is the surviving corporation in the Merger,
is in the best interests of Anchor and ComSouth's shareholders.
RECITALS
A. ANCHOR. Anchor is a corporation duly organized and validly existing
under South Carolina law and is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended, with its principal offices located at
2002 Oak Street, Myrtle Beach, South Carolina. As of the date of this Agreement,
Anchor has 7,000,000 authorized shares of common stock, par value $6.00 per
share ("Anchor Common Stock") (no other class of capital stock being
authorized), of which 3,890,323 shares of Anchor Common Stock are issued and
outstanding and of which 388,784 shares are subject to issuance pursuant to
certain stock options.
B. COMSOUTH. ComSouth is a corporation duly organized and validly
existing under South Carolina law and is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended, with its principal executive
offices located at 1136 Washington Street, Suite 200, Columbia, South Carolina.
As of the date of this Agreement, ComSouth has 75,000,000 authorized shares of
common stock, no par value per share ("ComSouth Common Stock") (with preferred
stock being authorized but no shares of which are issued), of which 2,341,320
shares of ComSouth Common Stock are issued and outstanding and of which 214,254
shares of ComSouth Common Stock are subject to issuance pursuant to certain
stock options.
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C. APPROVALS. At meetings of the respective Boards of Directors of
Anchor and ComSouth, each such Board has approved and authorized the execution
of this Agreement.
D. INTENTION OF THE PARTIES. The parties intend the Merger to qualify,
for accounting purposes, as a "pooling of interests." The parties intend the
Merger to qualify, for federal income tax purposes, as a tax-free reorganization
under Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended.
In consideration of their mutual promises and obligations, Anchor and
ComSouth agree as follows:
DEFINITIONS
A. DEFINITIONS. Capitalized terms used in this Agreement have the
following meanings:
"Acquisition Proposal" has the meaning assigned in Section 6.7(A).
--------------------
"Agreement" means this Agreement and Plan of Merger.
---------
"Anchor" means Anchor Financial Corporation, a South Carolina
------
corporation.
"Anchor Common Stock" has the meaning assigned in Recital A.
-------------------
"Anchor Financial Reports" has the meaning assigned in
------------------------
Section 5.2(G).
"Anchor Option" has the meaning assigned in Section 2.7.
-------------
"Appraisal Laws" has the meaning assigned in Section 2.5.
--------------
"Asset Classification" has the meaning assigned in Section 5.1(5).
--------------------
"Charleston Bank" means The Bank of Charleston, a national banking
---------------
association.
"Code" has the meaning assigned in Section 5.1(P)(2).
----
"Columbia Bank" means The Bank of Columbia, a national banking
-------------
association.
"Compensation and Benefit Plans" has the meaning assigned in
------------------------------
Section 5.1(P)(1).
"ComSouth" means ComSouth Bankshares, Inc., a South Carolina
--------
corporation.
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"ComSouth Common Stock" has the meaning assigned in Recital B.
---------------------
"ComSouth Financial Reports" has the meaning assigned in Section
--------------------------
5.1(H).
"ComSouth Option" has the meaning assigned in Section 2.7.
---------------
"Dissenting Shares" means the shares of ComSouth Common Stock
------------------
held by those shareholders of ComSouth who have timely and properly
exercised their dissenters' rights in accordance with the Appraisal Laws.
"Effective Date" has the meaning assigned in Section 1.2.
--------------
"Eligible ComSouth Common Stock" means shares of ComSouth
--------------------------------
Common Stock validly issued and outstanding on the Effective Date other than
Dissenting Shares.
"Employment Agreement" means Exhibit C.
--------------------
"Environmental Law" means (1) any federal state, and/or local
------------------
law, statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, judgment, decree, injunction,
requirement or agreement with any governmental entity, relating to (a) the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource) or human
health or safety, or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Material, in each case as amended
and as now in effect, including the Federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970, and (2) any common
law or equitable doctrine (including injunctive relief and tort doctrines such
as negligence, nuisance, trespass and strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Material.
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"ERISA" has the meaning assigned in Section 5.1(P)(2).
-----
"ERISA Affiliate" has the meaning assigned in Section 5.1(P)(3).
---------------
"ERISA Plans" has the meaning assigned in Section 5.1(P)(2).
-----------
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, together with the rules and regulations promulgated under such statute.
"Exchange Agent" has the meaning assigned in Section 2.4.
--------------
"Exchange Ratio" has the meaning assigned in Section 2.1(B).
--------------
"FDIC" means the Federal Deposit Insurance Corporation.
----
"Federal Reserve Board" means the Board of Governors of the
---------------------
Federal Reserve System.
"GAAP" means generally accepted accounting principles
----
consistently applied.
"Hazardous Material" means any substance presently listed,
------------------
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or
quantity, including any oil or other petroleum product, toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, asbestos containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
"Joint Proxy Statement" has the meaning assigned in Section 6.2.
---------------------
"Loan/Fiduciary Property" means any property owned or
-------------------------
controlled by ComSouth or either of its Subsidiaries or in which ComSouth or
either of its Subsidiaries holds a security or other interest, and, where
required by the context, includes any such property where ComSouth or either of
its Subsidiaries constitutes the owner or operator of such property, but only
with respect to such property.
"Material Adverse Effect" means, with respect to any Party, an
-----------------------
event, occurrence or circumstance (including (i) the making of any provisions
for possible loan and lease losses, write-downs of other real estate owned and
taxes, and (ii) any breach of a representation or warranty contained in this
Agreement by such Party) that (a) has or is reasonably likely to have a material
adverse effect on the financial condition, results of operations, business or
prospects of such Party and its Subsidiaries, taken as a whole, or
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(b) would materially impair such party's ability to perform its obligations
under this Agreement or the consummation of any of the transactions contemplated
by this Agreement.
"Meeting" has the meaning assigned in Section 6.2.
-------
"Merger" has the meaning assigned in Section 1.1.
------
"Multiemployer Plans" has the meaning assigned in Section 5.1(P)(2).
-------------------
"NASDAQ" means the National Association of Securities Dealers
------
Automated Quotations system.
"OCC" means the Office of the Comptroller of the Currency.
---
"Participation Facility" means any facility in which ComSouth
-----------------------
or its Subsidiaries participates in the management and, where required by the
context, includes the owner or operator of such facility.
"Party" means a party to this Agreement.
-----
"Pension Plan" has the meaning assigned in Section 5.1(P)(2).
------------
"Person" means any individual, corporation (including any
------
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
governmental body, or other entity.
"Registration Statement" has the meaning assigned in Section 6.2.
----------------------
"Regulatory Authorities" means federal or state governmental
-----------------------
agencies, authorities or departments charged with the supervision or regulation
of depository institutions or engaged in the insurance of deposits.
"Rights" means securities or obligations convertible into or
------
exchangeable for, or giving any Person any right to subscribe for or acquire, or
any options, calls or commitments relating to, shares of capital stock.
"Schedule" refers to information provided by a Party in a
--------
Schedule that is delivered contemporaneously with the execution of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
--------------
together with the rules and regulations promulgated under such statute.
"SEC" means the Securities and Exchange Commission.
---
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"Subsidiary" means, with respect to any entity, each
----------
partnership, limited liability company, or corporation the majority of the
outstanding partnership interests, membership interests, capital stock or voting
power of which is (or upon the exercise of all outstanding warrants, options and
other rights would be) owned, directly or indirectly, at the time in question by
such entity.
"Tax Returns" has the meaning assigned in Section 5.1(Z).
-----------
"Taxes" means federal, state, local or foreign income, gross
-----
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes imposed on
the income, properties or operations of the respective Party or its
Subsidiaries, together with any interest, additions, or penalties relating to
such taxes and any interest charged on those additions or penalties.
B. GENERAL INTERPRETATION. Except as otherwise expressly provided in
this Agreement or unless the context clearly requires otherwise, the following
rules of interpretation apply: (i) the terms defined in this Agreement include
the plural as well as the singular; (ii) the phrase "in this Agreement" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and (iii) references in this
Agreement to Articles, Sections, Schedules, and Exhibits refer to Articles and
Sections of and Schedules and Exhibits to this Agreement. Whenever the words
"include," "includes," or "including" are used in this Agreement, they will be
deemed to be following by the words "without limitation." Unless otherwise
stated references to Subsections refer to the Subsections of the Section in
which the reference appears. All pronouns used in this Agreement include the
masculine, feminine and neuter gender, as the context requires
ARTICLE I. MERGER
1.1 THE MERGER. Subject to the provisions of this Agreement and in
accordance with the terms of Section 33-11-101 of the Code of Laws of South
Carolina of 1976, as amended (the "South Carolina Code"), on the Effective Date,
ComSouth will merge with and into Anchor, under the Articles of Incorporation of
Anchor (the "Merger"), and the resulting corporation will operate under the name
"Anchor Financial Corporation" (the "Merged Company"). After the Effective Date,
the Board of Directors
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of the Merged Company will consist of the directors of Anchor immediately
preceding the Effective Date plus four additional directors to be designated
from the current directors of ComSouth or its Subsidiary banks. ComSouth may
offer suggestions to Anchor, and Anchor shall make the final
designation of such directors.
1.2 EFFECTIVE DATE. Unless the Parties agree upon another date, the
"Effective Date" will be the tenth business day after the fulfillment or waiver
of all conditions precedent set forth in, and the granting of all approvals (and
expiration of any waiting period) required by, Article VII of this Agreement. A
business day is any day other than a Saturday, Sunday or legal holiday in the
State of South Carolina. If the Merger is not consummated in accordance with
this Agreement on or before December 31, 1998, Anchor or ComSouth may terminate
this Agreement in accordance with Article VIII.
ARTICLE II. MERGER CONSIDERATION
2.1 CONSIDERATION. Subject to the provisions of this Agreement, on the
Effective Date:
(A) OUTSTANDING ANCHOR COMMON STOCK. The shares of Anchor
Common Stock issued and outstanding immediately prior to the Effective Date
will, on and after the Effective Date, remain as issued and outstanding shares
of Anchor Common Stock.
(B) OUTSTANDING COMSOUTH COMMON STOCK. Except as provided below
in Section 2.3, each share of Eligible ComSouth Common Stock issued and
outstanding immediately prior to the Effective Date will, by virtue of the
Merger, automatically and without any action on the part of the holder of the
share, be converted into the right to receive 0.75 shares of Anchor Common Stock
(the "Exchange Ratio").
2.2 SHAREHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date, all
shares, other than Dissenting Shares, of ComSouth Common Stock issued and
outstanding immediately prior to the Effective Date will be converted into
shares of Anchor Common Stock in accordance with Section 2.1(B) by virtue of the
Merger. After the Effective Date, there will be no transfers on the stock
transfer books of ComSouth of
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the shares of ComSouth Common Stock that were issued and outstanding
immediately prior to the Effective Date.
2.3 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, no fractional shares of Anchor Common Stock and no certificates or
other evidence of ownership of such fractional shares will be issued in the
Merger. Anchor will pay to each holder of ComSouth Common Stock who would
otherwise be entitled to a fractional share an amount in cash (without interest)
determined by multiplying such fractional part of a share of Anchor Common Stock
by the closing price of Anchor Common Stock on the Effective Date on The Nasdaq
Stock Market (as reported in The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by Anchor).
2.4 EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Date, Anchor will send or cause to be sent to each former shareholder of
ComSouth of record immediately prior to the Effective Date transmittal materials
for use in exchanging such shareholder's certificates for Anchor Common Stock
for the consideration set forth in this Article II. The certificates
representing the shares of Anchor Common Stock for which shares of such
shareholder's ComSouth Common Stock are exchanged on the Effective Date, and any
fractional share checks that such shareholder will be entitled to receive will
be delivered to such shareholder only upon delivery to Anchor's exchange agent
(the "Exchange Agent") of the certificates representing all such shares of
ComSouth Common Stock (or indemnity satisfactory to Anchor and the Exchange
Agent, in their judgment, if any of such certificates are lost, stolen or
destroyed). Certificates surrendered for exchange by any person constituting an
"affiliate" of ComSouth for purposes of Rule 145 of the Securities Act will not
be exchanged for certificates representing Anchor Common Stock until Anchor has
received a written agreement from such person as specified in Section 6.12.
2.5 DISSENTING SHARES. Notwithstanding anything to the contrary in this
Agreement, each Dissenting Share whose holder, as of the Effective Date of the
Merger, has not effectively withdrawn or lost his dissenters' rights under
Section 33-13-102 of the South Carolina Code (the "Appraisal Laws") will not be
converted into or represent a
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right to receive Anchor Common Stock, but the holder of such Dissenting
Share will be entitled only to such rights as are granted by the Appraisal
Laws. Each holder of Dissenting Shares who becomes entitled to payment for
his ComSouth Common Stock pursuant to the provisions of the Appraisal Laws will
receive payment for such Dissenting Shares from Anchor (but only after the
amount of payment is agreed upon or finally determined pursuant to the
Appraisal Laws).
2.6 RESERVATION OF RIGHT TO REVISE TRANSACTION. In its sole discretion,
and notwithstanding any other provision of this Agreement to the contrary,
Anchor may at any time change the method of effecting its acquisition of
ComSouth, but no such change will (A) change the amount or kind of consideration
to be issued to holders of ComSouth Common Stock as provided for in this
Agreement, or (B) adversely affect the tax treatment to the ComSouth
shareholders as a result of receiving such consideration. If Anchor elects to
change the method of acquisition, ComSouth will cooperate with and assist Anchor
with any necessary amendment to this Agreement, and with the preparation and
filing of such applications, documents, instruments and notices as may be
necessary or desirable, in the opinion of counsel for Anchor, to obtain all
necessary shareholder approvals and approvals of any regulatory agency,
administrative body or governmental entity.
2.7 OPTIONS. On the Effective Date, by virtue of the Merger and without
any action on the part of any holder of an option, each option granted by
ComSouth to purchase shares of ComSouth Common Stock ("ComSouth Option") that
has been outstanding and unexercised will be converted into and become an option
to purchase Anchor Common Stock ("Anchor Option") on the same terms and
conditions as are in effect with respect to the ComSouth Options immediately
prior to the Effective Date, except that (A) each such Anchor Option may be
exercised solely for shares of Anchor Common Stock, (B) the number of shares of
Anchor Common Stock subject to such Anchor Options will be equal to the number
of shares of ComSouth Common Stock subject to such ComSouth Options immediately
prior to the Effective Date, multiplied by the Exchange Ratio, the product being
rounded, if necessary, up or down to the nearest whole share, and (C) the per
share exercise price under each such Anchor Option will be
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adjusted by dividing the per share exercise price of the ComSouth Option by the
Exchange Ratio, and rounding up or down to the nearest cent. The number of
shares of ComSouth Common Stock that are issuable upon exercise of ComSouth
Options as of the date of this Agreement are disclosed in Schedule 2.7.
2.8 ANTI-DILUTION ADJUSTMENTS. In the event Anchor changes the number
of shares of Anchor Common Stock issued and outstanding prior to the Effective
Date as a result of a stock split, stock dividend or similar recapitalization
with respect to Anchor Common Stock, and the record date therefore (in the case
of a stock dividend) or the effective date thereof (in the case of stock split
or similar recapitalization for which a record date is not established) shall be
prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted.
ARTICLE III. COMSOUTH ACTIONS PENDING CONSUMMATION
Unless otherwise agreed to in writing by Anchor, ComSouth and its
Subsidiaries will conduct their business in the ordinary and usual course
consistent with past practice and will use their best efforts to maintain and
preserve their business organizations, employees and advantageous business
relationships and retain the services of their officers and key employees
identified by Anchor, and ComSouth, without the prior written consent of Anchor,
will not:
3.1 CAPITAL STOCK. Issue, sell or otherwise permit to become
outstanding any additional shares of capital stock of ComSouth, except pursuant
to the exercise of stock options outstanding on the date hereof, or grant any
Rights with respect to its capital stock, or enter into any agreement to do any
of the foregoing, or permit any additional shares of ComSouth Common Stock to
become subject to grants of employee stock options, stock appreciation rights or
similar stock-based employee compensation rights.
3.2 DISTRIBUTIONS. Make, declare or pay any dividend on or in respect
of, or declare or make any distribution on, or directly or indirectly combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock or authorize the creation or issuance of, or issue, any additional shares
of its capital stock or grant any Rights with respect to its capital stock.
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3.3 LIABILITIES. Other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise as an accommodation become responsible
or liable for the obligations of any other individual corporation or other
entity.
3.4 OPERATIONS. Except as may be directed by any regulatory agency, (A)
change its lending, investment, liability management or other material banking
policies in any material respect, or (B) commit to incur any capital
expenditures other than in the ordinary course of business and not exceeding
$15,000 individually or $25,000 in the aggregate.
3.5 LIENS AND ENCUMBRANCES. Impose, or suffer the imposition, on any
shares of stock of any of its Subsidiaries, any lien, charge or encumbrance, or
permit any such lien, charge or encumbrance to exist, except such liens, charges
or encumbrances occurring in the ordinary course of business which do not have a
material adverse effect on ComSouth.
3.6 EMPLOYMENT ARRANGEMENTS. Hire any new employees, increase the
number of full time employees disclosed in Schedule 3.6, enter into or amend any
employment, severance or similar agreement or arrangement with any of its
directors, officers or employees, or grant any salary or wage increase, amend
the terms of any ComSouth Option or increase any employee benefit (including
incentive or bonus payments), except normal individual increases in regular
compensation to employees in the ordinary course of business consistent with
past practice or as disclosed in Schedule 3.6.
3.7 BENEFIT PLANS. Enter into or modify (except as may be required by
applicable law or to continue coverage) any pension, retirement, stock option,
stock purchase, savings, profit sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit, incentive or welfare contract,
plan or arrangement, or any trust agreement related thereto, in respect of any
of its directors, officers or other employees, including taking any action that
accelerates the vesting or exercise of any benefits payable thereunder.
3.8 CONTINUANCE OF BUSINESS. Dispose of or discontinue any portion of
its assets, business or properties, that is material to ComSouth or any one of
its
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Subsidiaries taken as a whole, or merge or consolidate with, or acquire all
or any portion of, the business or property of any other entity that is material
to ComSouth or any one of its Subsidiaries taken as a whole (except foreclosures
or acquisitions by Comsouth or any one of its Subsidiaries in its fiduciary
capacity, in each case in the ordinary course of business consistent with past
practice).
3.9 AMENDMENTS. Amend its Articles of Incorporation or Bylaws.
3.10 CLAIMS. Settle any claim, litigation, action or proceeding
involving any liability for material money damages or restrictions upon the
operations of ComSouth.
3.11 CONTRACTS. Enter into, renew, terminate or make any change in any
material contract, agreement or lease, except in the ordinary course of business
consistent with past practice with respect to contracts, agreements and leases
that are terminable by it without penalty on no more than 60 days prior written
notice.
3.12 LOANS. Extend credit or account for loans and leases other than in
accordance with existing lending policies and accounting practices. With regard
to any new extension of credit in excess of $500,000, the Chief Financial
Officer of ComSouth will report to the Chief Financial Officer of Anchor, as
expeditiously as possible, the substance and nature of the transaction for the
purpose of keeping Anchor abreast of the ongoing credit quality at ComSouth.
ARTICLE IV. ANCHOR ACTIONS PENDING CONSUMMATION
From the date of this Agreement until the earlier of the Effective Date
or the termination of this Agreement, Anchor will continue to conduct the
business of Anchor and its Subsidiaries in a manner designed in its reasonable
judgment to enhance the long-term value of Anchor Common Stock and the business
prospects of Anchor, and will not: (1) make any distributions with respect to
its capital stock except its regular quarterly dividends made in accordance with
its past practices; or (2) take any action which would materially adversely
affect the ability of Anchor or ComSouth to obtain any regulatory approvals or
other consents required for the Merger described in this Agreement without
imposition of any condition or restriction that would adversely impact the
transactions contemplated hereby or prevent the Merger from qualifying as a
pooling of interests for accounting purposes or as a tax free organization
within the meaning of Section
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368(a)(1)(A) of the Internal Revenue Code, or materially adversely affect
the ability of any party to this Agreement to perform its covenants or
agreements under this Agreement.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.1 COMSOUTH'S REPRESENTATIONS AND WARRANTIES. ComSouth hereby
represents and warrants to Anchor as follows:
(A) RECITALS. The facts set forth in the Recitals of this
Agreement with respect to ComSouth are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. ComSouth is duly
qualified to do business and is in good standing in the States of the
United States and foreign jurisdictions where the failure to be duly qualified,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it. ComSouth and its Subsidiaries have in effect all federal
state, local and foreign governmental authorizations necessary for them to own
or lease their properties and assets and to carry on their businesses as they
are now conducted. The Columbia Bank and the Charleston Bank are "insured
depository institutions" as defined in the Federal Deposit Insurance Act, as
amended, and applicable regulations under such statute, and their deposits are
insured by the Bank Insurance Fund of the FDIC.
(C) SHARES. The outstanding shares of ComSouth's capital
stock are validly issued and outstanding, fully paid and nonassessable and are
not subject to preemptive rights of ComSouth's shareholders. Except as ComSouth
disclosed in Schedule 5.1(C), there are no shares of capital stock or other
equity securities of ComSouth outstanding and no outstanding Rights with respect
to its capital stock or other equity securities.
(D) SUBSIDIARIES. ComSouth has two Subsidiaries, The Bank of
Columbia and The Bank of Charleston.
(E) CORPORATE POWER. ComSouth has the corporate power and
authority to carry on its business as it is now being conducted and to own all
its material properties and assets.
(F) CORPORATE AUTHORITY. Subject to any necessary receipt
of approval by its shareholders referred to in Section 7.1(A), this Agreement
has been
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authorized by all necessary corporate action of ComSouth, and this
Agreement is a valid and binding agreement of ComSouth, enforceable against
ComSouth in accordance with its terms, subject to bankruptcy, insolvency and
other laws of general applicability relating to or affecting creditors' rights
and to general equitable principles.
(G) NO DEFAULTS. Subject to the approval by its
shareholders referred to in Section 7.1(A), the required regulatory approvals
referred to in Section 7.1(B), and the required filings under federal and state
securities laws, and except as set forth on Schedule 5.1(G), the execution,
delivery and performance of this Agreement and the consummation by ComSouth of
the transactions contemplated by this Agreement do not and will not (1)
constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of ComSouth or to which ComSouth or its
properties is subject or bound, (2) constitute a breach or violation of, or a
default under its articles of incorporation or bylaws, or (3) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order governmental permit or license or the consent or approval of any other
party to any such agreement, indenture or instrument.
(H) FINANCIAL REPORTS. ComSouth's audited consolidated
statements of financial condition and the related consolidated statements of
income, changes in shareholders' equity and cash flows for the fiscal year ended
December 31, 1997 (collectively, the "ComSouth Financial Reports") do 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; and
each of the consolidated balance sheets in or incorporated by reference into the
ComSouth Financial Reports (including the related notes and schedules thereto)
fairly presents and will fairly present the financial position of ComSouth as of
its date, and each of the consolidated statements of income and changes in
shareholders' equity and cash flows (including any related notes and schedules
thereto) fairly presents and will fairly present the results of operations,
changes in shareholders' equity and cash flows, as the case may be, for the
periods set forth therein, in accordance with GAAP.
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(I) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set
forth on Schedule 5.1(I), ComSouth has no obligation or liability (contingent or
otherwise) except (1) as reflected in the ComSouth Financial Reports prior to
the date of this Agreement, and (2) for commitments and obligations made, or
liabilities incurred, in the ordinary course of business consistent with past
practice since December 31, 1997.
(J) NO EVENTS. Since December 31, 1997, no event has occurred
that, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on ComSouth.
(K) PROPERTIES. ComSouth has good and marketable title,
free and clear of all liens, encumbrances, charges, defaults, or equities of any
character, to all of the properties and assets, tangible and intangible,
reflected in the ComSouth Financial Reports as being owned by ComSouth as of the
dates of the ComSouth Financial Reports, except those sold or otherwise disposed
of in the ordinary course of business. All buildings and all material fixtures,
equipment, and other property and assets that are held under leases or subleases
by ComSouth are held under valid leases or subleases enforceable in accordance
with their respective terms.
(L) LITIGATION. Except as disclosed in Schedule 5.2(L), before
the date of this Agreement:
(1) no criminal or administrative investigations or
hearings, before or by any Regulatory Authorities, or civil, criminal or
administrative actions, suits, claims or proceedings, before or by any
person (including any Regulatory Authority) are pending or, to the
knowledge of its executive officers, threatened, against it (including
under the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act,
or any fair lending law or other law relatingto discrimination); and
(2) neither ComSouth or either of its Subsidiaries
nor any of their officers, directors, controlling persons, nor any of their
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, any Regulatory Authority charged with the supervision
or regulation of depository institutions or engaged in the insurance
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of deposits (including the FDIC) or the supervision or regulation of ComSouth
or either of its Subsidiaries, and they have not been advised by any such
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter
or similar submission.
(M) COMPLIANCE WITH LAWS. ComSouth and its Subsidiaries:
(1) are in compliance, in the conduct of their
businesses, with all applicable federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees, including
the Bank Secrecy Act, the Truth in Lending Act, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage
Disclosure act and all applicable fair lending laws or other laws relating to
discriminations;
(2) have all permits, licenses, certificates of
authority, orders, and approvals of, and have made all filings, applications,
and registrations with, federal, state, local, and foreign governmental or
regulatory bodies that are required in order to permit them to carry on their
businesses as they are presently conducted;
(3) have no notification or other communication from
any Regulatory Authority (including any bank, insurance and securities
regulatory authorities) or its staff (1) asserting a failure to comply with any
of the statutes, regulations or ordinances that such Regulatory Authority
enforces, (2) threatening to revoke any license, franchise, permit or
governmental authorization, or (3) threatening or contemplating revocation or
limitation of, or that would have the effect of revoking or limiting, FDIC
deposit insurance (nor do any grounds for any of the foregoing exist);
(4) are not required to notify any federal banking agency
before adding directors to their boards of directors or employing senior
executives (except notifications required as a result of the Merger); and
(5) have adopted and are implementing a program to address
any problems associated with the capacity of the computer software operated
by ComSouth and its Subsidiaries and their vendors to properly process
transactions after December 31, 1999.
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(N) MATERIAL CONTRACTS. Neither ComSouth nor either of
its Subsidiaries nor their assets, businesses or operations, is a party to, or
bound or affected by, or receives benefits under, any material contract or
agreement or amendment to such contract or agreement. ComSouth or either of its
Subsidiaries is not in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party,
by which its assets, business or operations may be bound or affected or under
which it or its respective assets, business or operations receives benefits, and
there has not occurred any event that, with the lapse of time or the giving of
notice or both, would constitute such a default. ComSouth or either of its
Subsidiaries is not subject to or bound by any contract containing covenants
that limit its ability to compete in any line of business or with any Person or
that involve any restriction of geographical area in which, or method by which,
it may carry on its business (other than as may be required by law or any
applicable Regulatory Authority).
(O) REPORTS. Since January 1, 1993, ComSouth and its
Subsidiaries filed all reports and statements, together with any required
amendments, that they were obligated to file with (1) the OCC, (2) the FDIC, (3)
the Federal Reserve Board and (4) any other Regulatory Authorities having
jurisdiction over ComSouth and/or its Subsidiaries. As of their respective dates
(and without giving effect to any amendments or modification filed after the
date of this Agreement with respect to reports and documents filed before the
date of this Agreement), each of such reports and documents, including the
financial statements, exhibits and schedules to the financial statements,
complied with all of the statutes, rules and regulations enforced or promulgated
by the Regulatory Authority with which they were filed and did not contain any
untrue statement of fact or omit to state any fact necessary in order to make
the statements, in light of the circumstances under which they were made, not
misleading.
(P) EMPLOYEE BENEFIT PLANS.
(1) Schedule 5.1(P)(1) contains a complete list of
all bonus, deferred compensation, pension, retirement, profit-sharing, thrift
savings, employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, all employment or severance contracts, all medical,
dental, health and life insurance plans, all
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other employee benefit plans, contracts or arrangements and any applicable
"change of control" or similar provisions in any plan, contract or arrangement
maintained on contributed to by Comsouth and/or its Subsidiaries for the benefit
of employees, former employees, directors, former directors or their
beneficiaries (the "Compensation and Benefit Plans"). True and complete copies
of all Compensation and Benefit Plans of ComSouth and/or its Subsidiaries,
including any trust instruments and/or insurance contracts, if any, forming
a part of such plans, and all related amendments, have been supplied to Anchor.
(2) All "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), other than "multiemployer plans" within the meaning of
Section 3(37) of ERISA ("Multiemployer Plans"), covering employees or former
employees of Comsouth and/or its Subsidiaries (the "ERISA Plans"), to the extent
subject to ERISA, are in substantial compliance with ERISA. Each ERISA Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA ("Pension Plan") and which is intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986 (as amended, the "Code") has
received a favorable determination letter from the Internal Revenue Service, and
ComSouth is not aware of any circumstances reasonably likely to result in the
revocation or denial of any such favorable determination letter or the inability
to receive such favorable determination letter. There is no material pending or,
to its knowledge, threatened litigation relating to the ERISA Plans. ComSouth or
either of its Subsidiaries has not engaged in a transaction with respect to any
ERISA Plan that could subject ComSouth or either of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA.
(3) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by ComSouth or either of its
Subsidiaries with respect to any ongoing, frozen or terminated "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by it, or the single-employer plan of any entity which is considered
one employer with ComSouth or either of its Subsidiaries under Section
4001(a)(15) of ERISA or Section 414 of the Code (an
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"ERISA Affiliate"). ComSouth or either of its Subsidiaries does not presently
contribute to a Multiemployer Plan, nor has it contributed to such a plan within
the past five calendar years. 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 Pension Plan or by
any ERISA Affiliate within the past 12-month period.
(4) All contributions required to be made under the
terms of any ERISA Plan have been timely made. Neither any Pension Plan
nor any single-employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA. Comsouth or either of its Subsidiaries
has not provided, or is not required to provide, security to any Pension Plan
or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(5) Under each Pension Plan which is a
single-employer plan, as of the last day of the most recent plan year, the
actuarially determined present value of all "benefit liabilities," within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the plan's most recent actuarial valuation)
did not exceed the then current value of the assets of such plan, and there has
been no material changes in the financial condition of such plan since the last
day of the most recent plan year.
(6) ComSouth has no obligations for retiree health and
life benefits under any plan, except as set forth in Schedule 5.1(P)(6).
There are no restrictions on the rights of ComSouth to amend or terminate any
such plan without incurring any liability under the plan.
(7) Except as set forth on Schedule 5.1(P)(7),
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement will (a) result in any payment
(including severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or any employee of ComSouth or its Subsidiaries
under any Compensation and Benefit Plan or otherwise from ComSouth or its
Subsidiaries, (b) increase any benefits otherwise payable
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under any Compensation and Benefit Plan, or (c) result in any acceleration of
the time of payment or vesting of any such benefit.
(Q) NO KNOWLEDGE. ComSouth knows of no reason why the regulatory
approvals referred to in Section 7.1(B) will not be obtained.
(R) LABOR AGREEMENTS. ComSouth is neither a party to nor
bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is ComSouth the
subject of a proceeding asserting that it has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel it
to bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it pending or, to the
best of its knowledge, threatened, nor is it aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
(S) ASSET CLASSIFICATION. ComSouth has disclosed to
Anchor in Schedule 5.1(S) a list, accurate and complete in all material
respects, of the aggregate amounts of loans, extensions of credit or other
assets of ComSouth and its Subsidiaries that have been classified by them as of
December 31, 1997 (the "Asset Classification"): and no amounts of loans,
extensions of credit or other assets that have been classified as of December
31, 1997 by any regulatory examiner as "Other Loans Specially Mentioned,"
"Substandard," "Doubtful," "Loss," or words of similar import are excluded from
the amounts disclosed in the Asset Classification, other than amounts of loans,
extension of credit or other assets that were charged off by ComSouth and its
Subsidiaries prior to December 31, 1997.
(T) ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for
possible loan losses shown on the consolidated balance sheet in the December 31,
1997, Financial Reports was, and the allowance for possible loan losses to be
shown on subsequent Financial Reports will be, adequate in the opinion of the
Board of Directors of ComSouth to provide for possible losses, net of recoveries
relating to loans previously charged off, on loans outstanding (including
accrued interest receivable) as of the dates noted.
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(U) INSURANCE. ComSouth has taken all requisite action
(including the making of claims and the giving of notices) pursuant to its
directors' and officers' liability insurance policy or policies in order to
preserve all rights under the policy or policies. Set forth in Schedule 5.1(U)
is a list of all insurance policies maintained by or for the benefit of ComSouth
and its Subsidiaries and their directors, officers, employees or agents.
(V) AFFILIATES. Except as disclosed in Schedule 5.1(V),
there is no person who, as of the date of this Agreement, may be deemed to be an
"affiliate" of ComSouth as that term is used in Rule 145 under the Securities
Act.
(W) TAKEOVER LAWS, ARTICLES OF ASSOCIATION. ComSouth has
taken all necessary action to exempt this Agreement, and the transactions
contemplated by this Agreement from, and this Agreement and such transactions
are exempt from (1) any applicable takeover laws, and (2) any takeover-related
provisions of Comsouth's Articles of Incorporation.
(X) NO FURTHER ACTION. ComSouth has taken all action so
that entering into this Agreement and the consummation of the transactions
contemplated by this Agreement (including the Merger) or any other action or
combination of actions, or any other transactions, contemplated by this
Agreement do not and will not (1) require a vote of shareholders (other than as
set forth in Section 7.1(A)), or (2) result in the grant of any rights to any
Person under the Articles of Incorporation or Bylaws of ComSouth under any
agreement to which Comsouth is a party, or (3) restrict or impair in any way the
ability of Anchor to exercise the rights granted under this Agreement.
(Y) ENVIRONMENTAL MATTERS.
(1) To ComSouth and its Subsidiaries' knowledge, the
Participation Facilities and the Loan/Fiduciary Properties are, and have been,
in compliance with all Environmental Laws.
(2) There is no proceeding pending or, to ComSouth
and its Subsidiaries' knowledge, threatened before any court, governmental
agency or board or other forum in which ComSouth or either of its Subsidiaries
or any Participation Facility has been, or with respect to threatened
proceedings, reasonably would be expected to be,
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named as a defendant or potentially responsible party (a) for alleged
noncompliance (including by any predecessor) with any Environmental Law, or
(b) relating to the release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a site owned, leased or
operated by ComSouth or either of its Subsidiaries or any Participation
Facility.
(3) There is no proceeding pending or, to ComSouth or
its Subsidiaries' knowledge, threatened before any court, governmental agency or
board or other forum in which any Loan/Fiduciary Property (or ComSouth or its
Subsidiaries in respect of any Loan/Fiduciary Property) has been, or with
respect to threatened proceedings, reasonably would be expected to be, named as
a defendant or potentially responsible party (a) for alleged noncompliance
(including by any predecessor) with any Environmental Law, or (b) relating to
the release or threatened release into the environment of any Hazardous
Material, whether or not occurring at or on a Loan/Fiduciary Property.
(4) To Comsouth or its Subsidiaries' knowledge,
there is no reasonable basis for any proceeding of a type described in
subparagraph (2) or (3) of this paragraph (Y).
(5) To ComSouth or its Subsidiaries' knowledge,
during the period of (a) ownership or operation by ComSouth or either of its
Subsidiaries of any of its current properties, (b) participation in the
management of any Participation Facility by ComSouth or either of its
Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary
Property by ComSouth or either of its Subsidiaries, there have been no releases
of Hazardous Material in, on, under or affecting any such property,
Participation Facility or Loan Fiduciary Property.
(6) To ComSouth or its Subsidiaries' knowledge, prior
to the period of (a) ownership or operation by ComSouth or either of its
Subsidiaries of any of its current properties, (b) participation in the
management of any Participation Facility by ComSouth or either of its
Subsidiaries or (c) holding of a security or other interest in a Loan/Fiduciary
Property by ComSouth or either of its Subsidiaries, there was no release
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of Hazardous Material in, on, under or affecting any such property,
Participation Facility or Loan) Fiduciary Property.
(Z) TAX REPORTS. (1) All reports and returns with respect
to Taxes that are required to be filed by or with respect to ComSouth, including
consolidated federal income tax returns of ComSouth, (collectively, the "Tax
Returns"), have been duly filed, or requests for extensions have been timely
filed and have not expired, for periods ended on or prior to the most recent
fiscal year-end, and such Tax Returns were true, complete and accurate, (2) all
Taxes shown to be due on the Tax Returns have been paid in full, (3) the Tax
Returns have been examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority, or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired, (4) all Taxes due with respect to completed and settled examinations
have been paid in full, (5) no issues have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns except as
reserved against in the Financial Reports, and (6) no waivers of statutes of
limitations (excluding such statutes that relate to years under examination by
the Internal Revenue Service) have been given by or requested with respect to
any Taxes of ComSouth.
(AA) ACCURACY OF INFORMATION. The statements with respect
to ComSouth and its Subsidiaries contained in this Agreement, the Schedules and
any other written documents executed and delivered by or on behalf of ComSouth
and its Subsidiaries or any other Party pursuant to the terms of or relating to
this Agreement are true and correct, and such statements and documents do not
omit any fact necessary to make the statements, in light of the circumstances
under which they were made, not misleading.
(BB) DERIVATIVES CONTRACTS. ComSouth is not a party to nor
has it agreed to enter into a Derivatives Contract or to own securities that are
referred to as "structured notes," except as set forth on Schedule 5.1(BB).
(CC) ACCOUNTING CONTROLS. ComSouth has devised and
maintained systems of internal accounting controls sufficient to provide
reasonable assurances that (1) all transactions are executed in accordance with
management's general
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or specific authorization, (2) all transactions are recorded as necessary
to permit the preparation of financial statements in conformity with GAAP,
and to maintain proper accountability for items, (3) access to the material
property and assets of ComSouth is permitted only in accordance with
management's general or specific authorization, and (4) the recorded
accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences.
(DD) COMMITMENTS AND CONTRACTS. ComSouth or either of its
Subsidiaries is not a party or subject to any of the following (whether written
or oral, express or implied):
(1) except disclosed in Schedule 5.1(DD)(1), any
employment contract or understanding (including any understandings or
obligations with respect to severance or termination pay liabilities or fringe
benefits) with any present or former officer, director or employee (other than
those which are terminable at will by ComSouth or its Subsidiaries without any
obligation on the part of ComSouth or its Subsidiaries to make any payment in
connection with such termination);
(2) except as disclosed in Schedule 5.1(DD)(2),
any real or personal property lease with annual rental payments aggregating
$5,000 or more; or
(3) any material contract with any affiliate.
5.2 ANCHOR'S REPRESENTATIONS AND WARRANTIES. Anchor hereby represent
and warrants to ComSouth as follows:
(A) RECITALS. The facts set forth in the Recitals of this
Agreement with respect to Anchor are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Anchor is duly
qualified to do business and is in good standing in the States of the United
States and foreign jurisdictions where the failure to be duly qualified,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it. Anchor and its Subsidiaries have in effect all federal
state, local and foreign governmental authorizations necessary for them to own
or lease their properties and assets and to carry on their businesses as they
are now conducted.
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(C) SHARES. The outstanding shares of Anchor's capital
stock are, and the shares to be issued in exchange for ComSouth Common Stock
when issued will be, validly issued and outstanding, fully paid and
nonassessable and subject to no preemptive rights.
(D) CORPORATE POWER. Anchor has the corporate power and
authority to carry on its business as it is now being conducted or will be
conduced and to own all its material properties and assets.
(E) CORPORATE AUTHORITY. Subject to the approval by its
shareholders referred to in Section 7.1(A), this Agreement has been authorized
by all necessary corporate action of Anchor and is a valid and binding agreement
of Anchor, enforceable against Anchor in accordance with its terms, subject to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equitable principles.
(F) NO DEFAULTS. Subject to the approval by its
shareholders referred to in Section 7.1(A), subject to receipt of the required
regulatory approvals referred to in Section 7.1(B), and the required filings
under federal and state securities laws, the execution, delivery and performance
of this Agreement and the consummation by Anchor and each of its Subsidiaries of
the transactions contemplated by this Agreement does not and will not (1)
constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of Anchor or any of its Subsidiaries or to
which Anchor or any of its Subsidiaries or its properties is subject or bound,
(2) constitute a breach or violation of, or a default under its articles of
incorporation or bylaws of Anchor or any of its Subsidiaries, or (3) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license or the consent or approval of any other
party to any such agreement, indenture or instrument.
(G) FINANCIAL REPORTS. The Annual Report of Anchor on
Form 10-K for the fiscal year ended December 31, 1997, and all other documents
filed or to be filed subsequent to December 31, 1997 under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, in the form filed with the SEC (in each
such case, the "Anchor Financial
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Reports") did not and will not contain any untrue statement of fact or omit to
state a fact required to be stated or necessary to make the statements made,
in light of the circumstances under which they were made, not misleading; and
each of the consolidated balance sheets in or incorporated by reference into
the Anchor Financial Reports (including the related notes and schedules
thereto) fairly presents and will fairly present the financial position of the
entity or entities to which it relates as of its date, and each of the
consolidated statements of income and changes in shareholders' equity and cash
flows or equivalent statements in the Anchor Financial Reports (including any
related notes and schedules thereto) fairly presents and will fairly present
the results of operations, changes in shareholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for the
periods set forth herein, in each case in accordance with GAAP, except as may
be noted therein.
(H) NO EVENTS. Since December 31, 1997, no event has occurred
which is reasonably likely to have a Material Adverse Effect on Anchor.
(I) LITIGATION; REGULATORY ACTION. No litigation,
proceeding or controversy before any court or governmental agency is pending
that alleges claims under any fair lending law or other law relating to
discrimination, including the Equal Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act and the Home Mortgage Disclosure Act, and no such
litigation, proceeding or controversy has been threatened; and neither Anchor
nor any of its Subsidiaries or any of its or their material properties or their
officers, directors or controlling persons is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, any Regulatory Authority,
and neither Anchor nor any of its Subsidiaries has been advised by any of such
Regulatory Authorities that such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter or
similar submission.
(J) REPORTS. Since December 31, 1993, Anchor and its
Subsidiaries have filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (1)
the FDIC, (2) the Federal Reserve
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Board, and (3) any other Regulatory Authorities having jurisdiction with
respect to Anchor and its Subsidiaries. As of their respective dates (and
without giving effect to any amendments or modifications filed after the date
of this Agreement with respect to reports and documents filed before the date
of this Agreement), each of such reports and documents, including the
financial statements, exhibits and schedules thereto, complied in all material
respects with all of the statutes, rules and regulations enforced or
promulgated by the Regulatory Authority with which they were filed and did not
contain any untrue statement of fact or omit to state any fact necessary in
order to make the statements made, in light of the circumstances under
which they were made, not misleading.
(K) ACCURACY OF INFORMATION. The statements with respect
to Anchor and its Subsidiaries contained in this Agreement, the Schedules and
any other written documents executed and delivered by or on behalf of Anchor or
any other Party pursuant to the terms of this Agreement are true and correct,
and such statements and documents do not omit any material fact necessary to
make the statements, in light of the circumstances under which they were made,
not misleading.
(L) ABSENCE OF UNDISCLOSED LIABILITIES. Neither Anchor
nor any of its Subsidiaries has any obligation or liability (contingent or
otherwise) except (1) as reflected the Anchor Financial Reports prior to the
date of this Agreement, and (2) for commitments and obligations made, or
liabilities incurred, in the ordinary course of business consistent with past
practice since December 31, 1997. Since December 31, 1997, neither Anchor nor
any of its Subsidiaries has incurred or paid any obligation or liability that,
individually or in the aggregate, is unreasonably likely to have Material
Adverse Effect on Anchor.
(M) NO KNOWLEDGE. Anchor knows of no reason why the regulatory
approvals referred to in Section 7.1(B) will not be obtained.
(N) YEAR 2000 COMPLIANCE. Anchor has taken and is taking
appropriate steps to assure, and believes, that computer software operated by
Anchor and its Subsidiaries and their vendors will be able to properly process
transactions and function after December 31, 1999.
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5.3 EXCEPTIONS TO REPRESENTATIONS.
(A) DISCLOSURE OF EXCEPTIONS. Each exception set forth in a
Schedule is disclosed only for purposes of the representations referred in that
exception, but the following conditions apply:
(1) no exception is required to be set forth in a
Schedule if its absence would not result in the related representation being
found untrue or incorrect under the standard established by Section
5.3(B); and
(2) the mere inclusion of an exception in a Schedule is
not an admission by a party that the exception represents a material fact,
material set of facts, or material event or would result in a Material Adverse
Effect with respect to that party.
(B) NATURE OF EXCEPTIONS. No representation contained in
this Article V will be found untrue or incorrect and no party to this Agreement
will have breached a representation due to the following: the existence of any
fact, set of facts, or event if the fact or event individually or taken together
with other facts or events would not, or, in the case of Article V is not
reasonably likely to, have a Material Adverse Effect with respect to such party.
ARTICLE VI. COVENANTS
ComSouth hereby covenants to Anchor, and Anchor hereby covenants to
ComSouth, that:
6.1 BEST EFFORTS. Subject to the terms and conditions of this Agreement
and to the exercise by its Board of Directors of such Board's fiduciary duties,
it will use its best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as soon as practicable and to otherwise enable consummation of the
transactions contemplated by this Agreement and will cooperate fully with the
other Parties to that end.
6.2 THE PROXY. ComSouth will promptly assist Anchor in the preparation
of a joint proxy statement (the "Joint Proxy Statement") to be mailed to the
holders of ComSouth Common Stock in connection with the transactions
contemplated by this Agreement and to be filed by Anchor in a registration
statement (the "Registration
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Statement") with the SEC as provided in Section 6.8, which will conform to
all applicable legal requirements. ComSouth and Anchor will call meetings
(the "Meetings") of the holders of ComSouth Common Stock and the holders of
Anchor Common Stock to be held as soon as practicable for purposes of voting
upon the transactions contemplated by this Agreement, and ComSouth and Anchor
will use their respective best efforts to solicit and obtain votes of the
holders of ComSouth Common Stock and the holders of Anchor Common Stock in favor
of the transactions contemplated by this Agreement and, subject to the exercise
of their respective fiduciary duties, the Boards of Directors of ComSouth and
Anchor will recommend approval of such transactions by such holders.
6.3 REGISTRATION STATEMENT -- COMPLIANCE WITH SECURITIES LAWS. When the
Registration Statement or any post-effective amendment or supplement to the
Registration Statement becomes effective, and at all times subsequent to such
effectiveness, up to and including the dates of the Meetings, such Registration
Statement, and all amendments or supplements thereto, with respect to all
information set forth therein furnished or to be furnished by or on behalf of
ComSouth relating to ComSouth and by or on behalf of Anchor relating to Anchor,
(A) will comply in all material respects with the provisions of the Securities
Act and any other applicable statutory or regulatory requirements, and (B) will
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 contained
therein not misleading. But, no Party will be liable for any untrue statement of
a material fact or omission to state a material fact in the Registration
Statement made in reliance upon, and in conformity with, written information
concerning another Party furnished by or on behalf of such other Party
specifically for use in the Registration Statement.
6.4 REGISTRATION STATEMENT EFFECTIVENESS. Anchor will advise ComSouth,
promptly after Anchor receives any notice of the time when the Registration
Statement has become effective or any supplement or amendment has been filed, of
the issuance of any stop order or the suspension of the qualification of the
Anchor Common Stock for offering or sale in any jurisdiction, of the initiation
or threat of any proceeding
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for any such purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional information.
6.5 PRESS RELEASES. ComSouth will not, without the prior approval of
Anchor, and Anchor will not, without the prior approval of ComSouth, issue any
press release or written statement for general circulation relating to the
transactions contemplated by this Agreement, except as otherwise required by
law.
6.6 ACCESS; INFORMATION.
(A) Upon reasonable notice, each party will afford the
other party and its officers, employees, counsel, accountants and other
authorized representatives, access, during normal business hours throughout the
period up to the Effective Date, to all of its properties, books, contracts,
commitments and records and, during the period up to the Effective Date,
ComSouth will promptly furnish (and cause its accountants and other agents to
promptly furnish) to Anchor (1) a copy of each material report, schedule and
other document filed by ComSouth with any Regulatory Authority, (2) such
representations and certifications as are necessary for purposes of the pooling
letter described in Section 7.2(F), and (3) all other information concerning the
business, properties and personnel of ComSouth as Anchor may reasonably request,
provided that no investigation pursuant to this Section 6.6 will affect or be
deemed to modify or waive any representation or warranty made by ComSouth in
this Agreement or the conditions to the obligations of ComSouth to consummate
the transactions contemplated by this Agreement; and
(B) Anchor will not use any information obtained pursuant
to this Section 6.6 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement and, if this Agreement is
terminated, will hold all confidential information and documents obtained
pursuant to this paragraph in confidence (as provided in Section 9.6) unless and
until such time as such information or documents become publicly available other
than by reason of any action or failure to act by Anchor or as it is advised by
counsel that any such information or document is required by law or applicable
stock exchange rule to be disclosed, and in the event of the termination of this
Agreement, Anchor will, upon request by ComSouth, deliver to ComSouth all
documents so obtained
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by Anchor or destroy such documents and, in the case of destruction, will
certify such fact to ComSouth.
6.7 ACQUISITION PROPOSALS.
(A) ComSouth will not solicit, initiate or encourage
inquiries or proposals with respect to, or, except as required by the fiduciary
duties of the Board of Directors of ComSouth (as advised in writing by its
outside counsel), furnish any nonpublic information relating to or participate
in any negotiations or discussions concerning, any acquisition or purchase of
all or a substantial portion of the assets of, or a substantial equity interest
in, ComSouth or any merger or other business combination with ComSouth other
than as contemplated by this Agreement ("Acquisition Proposal"); it will
instruct its officers, directors, agents, advisors and affiliates to refrain
from doing any of the foregoing; and it will notify Anchor immediately if any
such inquiries or proposals are received by, or any such negotiations or
discussions are sought to be initiated with, ComSouth.
(B) ComSouth will immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Anchor with respect to any
Acquisition Proposal.
6.8 REGISTRATION STATEMENT PREPARATION; REGULATORY APPLICATIONS
PREPARATION. Anchor will, as promptly as practicable following the date of this
Agreement, prepare and file the Registration Statement with the SEC with respect
to the shares of Anchor Common Stock to be issued to the holders of ComSouth
Common Stock pursuant to this Agreement, and Anchor will use its best efforts to
cause the Registration Statement to be declared effective as soon as practicable
after the filing of the Registration Statement. Anchor will, as promptly as
practicable following the date of this Agreement, prepare and file all necessary
notices or applications with Regulatory Authorities having jurisdiction with
respect to the transactions contemplated by this Agreement.
6.9 APPOINTMENT OF DIRECTORS. Immediately after the Effective Date,
Anchor will cause the appointment of four directors from the current directors
of
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ComSouth or its Subsidiaries to the Board of Directors of Anchor to hold
office until such time as his or her successor is elected and qualified.
6.10 EMPLOYMENT AGREEMENTS. Employment agreements, in form
substantially similar to that attached as Exhibit C, will have been duly
executed and delivered by Anchor and the parties to such employment agreements,
including J. Michael Kapp, Arthur P. Swanson, John P. Barnwell, and Carmel
Dodds, provided such persons have not terminated their employment with ComSouth
or its Subsidiaries at or prior to the Effective Date.
6.11 BLUE-SKY FILINGS. Anchor will use its best efforts to obtain,
prior to the effective date of the Registration Statement, any necessary state
securities laws or "blue sky" permits and approvals, provided that Anchor will
not be required as a result to submit to general jurisdiction in any state.
6.12 AFFILIATE AGREEMENTS. Comsouth will use its best efforts to induce
each person who may be deemed to be an "affiliate" of ComSouth for purposes of
Rule 145 under the Securities Act to execute and deliver to Anchor on or before
the mailing of the Joint Proxy Statement for the ComSouth Meeting an agreement
in the form attached hereto as Exhibit A restricting the disposition of such
affiliate's shares of ComSouth Common Stock and the shares of Anchor Common
Stock to be received by such person in exchange for such person's shares of
ComSouth Common Stock. In the case of Anchor, Anchor agrees to use its best
efforts to maintain the availability of Rule 145 for use by such "affiliates".
6.13 TAKEOVER LAW. ComSouth will not take any action that would cause
the transactions contemplated by this Agreement to be subject to any applicable
takeover statute, and ComSouth will take all necessary steps to exempt (or
ensure the continued exemption of) the transactions contemplated by this
Agreement from, or, if necessary, challenge the validity or applicability of,
any applicable takeover law.
6.14 NO RIGHTS TRIGGERED. ComSouth will take all necessary steps to
ensure that entering into this Agreement and the consummation of the
transactions contemplated by this Agreement and any other action or combination
of actions, or any other transactions contemplated by this Agreement, do not and
will not (A) result in the grant
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of any rights to any Person under the Articles of Incorporation or Bylaws of
ComSouth or under any agreement to which ComSouth is a party, or (B) restrict
or impair in any way the ability of Anchor to exercise the rights granted to
Anchor under this Agreement or the Stock Option Agreement.
6.15 SHARES LISTED. Anchor will use its best efforts to cause to be
listed, prior to the Effective Date, on The Nasdaq Stock Market, upon official
notice of issuance, the shares of Anchor Common Stock to be issued to the
holders of ComSouth Common Stock.
6.16 CURRENT INFORMATION.
(A) During the period from the date of this Agreement to
the Effective Date, both ComSouth and Anchor will, and will cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(B) Both ComSouth and Anchor will promptly notify the
other of (1) any material change in the business or operations of it or its
Subsidiaries, (2) any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any Regulatory
Authority relating to it or its Subsidiaries, (3) the initiation or threat of
material litigation involving or relating to it or its Subsidiaries, or (4) any
event or condition that might reasonably be expected to cause any of its
representations or warranties set forth in this Agreement not to be true and
correct in all material respects as of the Effective Date or prevent it or its
Subsidiaries from fulfilling its or their obligations under this Agreement.
6.17 SEVERANCE. On the Effective Date, Anchor will adopt a severance
plan for employees of ComSouth and its Subsidiaries with terms as set forth in
Schedule 6.17.
6.18 INDEMNIFICATION.
(A) Anchor shall indemnify each officer, director and former
director of ComSouth or its Subsidiaries named as a defendant in the lawsuit
styled Roof v. Swanson et al which is pending in the Court of Common Pleas for
Richland County, South Carolina, including the advancing of the expenses of
defending the case.
(B) Anchor agrees to purchase and keep in force for not less
than three years directors' and officers' liability insurance to the extent
available providing coverage for
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actions and omissions by officers and directors of ComSouth and its Subsidiaries
for claims made during the period commencing with and after the Effective Date.
(C) Following the Effective Date, each director and
officer of ComSouth or any of its Subsidiaries shall be indemnified to the
fullest extent permitted by South Carolina law by Anchor against all liabilities
and the expense of defending claims of liability connected with or arising out
of such director's or officer's service as such.
ARTICLE VII. CONDITIONS TO
CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each Party to consummate the transactions contemplated by this Agreement are
subject to the written waiver by such Party or the fulfillment on or prior to
the Effective Date of each of the following conditions:
(A) SHAREHOLDER VOTES. This Agreement will have been duly
approved by the requisite vote of ComSouth's shareholders and of Anchor's
shareholders under applicable law and the Articles of Incorporation and Bylaws
of, respectively, ComSouth and Anchor.
(B) REGULATORY APPROVALS. The Parties will have procured
all necessary regulatory consents and approvals by the appropriate Regulatory
Authorities, any waiting periods relating to such consents and approvals will
have expired, and no such approval or consent will have imposed any condition or
requirement that, in the opinion of Anchor, would deprive Anchor of the material
economic or business benefits of the transactions contemplated by this
Agreement.
(C) NO INJUNCTION. There will not be in effect any order,
decree or injunction of any court or agency of competent jurisdiction that
enjoins or prohibits consummation of any of the transactions contemplated by
this Agreement.
(D) EFFECTIVE REGISTRATION STATEMENT. The Registration
Statement will have become effective and no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceedings for that purpose will have been initiated or threatened by the SEC
or any other Regulatory Authority.
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(E) BLUE SKY PERMITS. Anchor will have received all state
securities laws and "blue sky" permits necessary to consummate the Merger.
(F) TAX OPINION. Anchor and ComSouth will have received
an opinion from Gerrish & McCreary, P.C. to the effect that (1) the Merger
constitutes a tax-free merger under Section 368(a)(1)(A) of the Code, and (2) no
gain or loss will be recognized by shareholders of ComSouth who receive shares
of Anchor Common Stock in exchange for their shares of the ComSouth Common
Stock, except that gain or loss may be recognized as to cash received in lieu of
fractional share interests and, in rendering their opinion, Gerrish & McCreary,
P.C. may require and rely upon representations contained in certificates of
officers of Anchor, ComSouth and others.
(G) NASDAQ LISTING. The shares of Anchor Common Stock to
be issued pursuant to this Agreement will have been approved for listing on The
Nasdaq Stock Market subject only to official notice of issuance.
(H) FAIRNESS OPINION. Anchor will have received,
immediately prior to the mailing of the Joint Proxy Statement to Anchor's
shareholders, an opinion of Sandler O'Neill to the effect that the financial
terms of the Merger are fair from a financial point of view to Anchor's
shareholders.
7.2 CONDITIONS TO OBLIGATIONS OF ANCHOR. The obligations of Anchor to
consummate the transactions contemplated by this Agreement also are subject to
the written waiver by Anchor or the fulfillment on or prior to the Effective
Date of each of the following conditions:
(A) LEGAL OPINION. Anchor will have received an opinion,
dated the Effective Date, of Sinkler & Boyd, P.A., counsel for ComSouth,
incorporating the opinions set forth in Exhibit B.
(B) OFFICERS' CERTIFICATE. (1) Each of the
representations and warranties contained in this Agreement of ComSouth will be
true and correct as of the date of this Agreement and upon the Effective Date
with the same effect as though all such representations and warranties had been
made on the Effective Date, except for any such representations and warranties
that specifically relate to an earlier date, which will be true and correct as
of such earlier date, and (2) the chief executive officers, chief
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financial officers, and chief lending officers of ComSouth and its Subsidiaries
will sign a certificate, dated the Effective Date, certifying that each and
all of the agreements and covenants of ComSouth to be performed and complied
with pursuant to this Agreement on or prior to the Effective Date have been duly
performed and complied with in all material respects.
(C) RECEIPT OF AFFILIATE AGREEMENTS. Anchor will have received
from each affiliate of ComSouth the agreement referred to in Section 6.11.
(D) ADVERSE CHANGE. During the period from December 31,
1997 to the Effective Date, there will not have been any material adverse change
in the financial position or results of operations of ComSouth, nor will
ComSouth have sustained any loss or damage to its properties, whether or not
insured, that materially affects its ability to conduct its business; and Anchor
will have received a certificate dated the Effective Date signed by the Chief
Executive Officer of ComSouth to such effect.
(E) DISSENTERS' RIGHTS. The number of shares of ComSouth
Common Stock for which cash is to be paid because dissenters' rights of
appraisal under the Appraisal Laws will have been effectively preserved as of
the Effective Date or because of the payment of cash in lieu of fractional
shares of Anchor Common Stock, will not exceed in the aggregate 6% of the
outstanding shares of ComSouth Common Stock.
(F) POOLING LETTER. Anchor will have received a letter
dated as of the Effective Date, in form and substance acceptable to Anchor, from
Price Waterhouse LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
(G) CAPITAL. ComSouth's capital will not be less than
$16,500,000 on the Effective Date.
(H) ALLOWANCE FOR LOAN AND LEASE LOSSES. ComSouth's allowance
for possible loan and lease losses will not be less than 1.2% of ComSouth's
total outstanding loans and leases and will be adequate to absorb ComSouth's
anticipated loan and lease losses.
7.3 CONDITIONS TO OBLIGATIONS OF COMSOUTH. The obligations of ComSouth
to consummate the transactions contemplated by this Agreement also are
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subject to the written waiver by ComSouth or the fulfillment on or prior
to the Effective Date of each of the following conditions:
(A) OFFICER'S CERTIFICATE. (1) Each of the
representations and warranties of Anchor contained in this Agreement will be
true and correct as of the date of this Agreement and upon the Effective Date,
with the same effect as though all such representations and warranties had been
made on the Effective Date, except for any such representations and warranties
that specifically relate to an earlier date, which will be true and correct as
of such earlier date, and (2) each and all of the agreements and covenants of
Anchor to be performed and complied with pursuant to this Agreement on or prior
to the Effective Date will have been duly performed and complied with in all
material respects, and ComSouth will have received a certificate dated the
Effective Date signed by an executive officer of Anchor to such effect.
(B) ADVERSE CHANGE. During the period from December 31,
1997 to the Effective Date, there will not have been any material adverse change
in the financial position or results of operations of Anchor, nor will Anchor
have sustained any loss or damage to its properties, whether or not insured,
that materially affects its ability to conduct its business; and ComSouth will
have received a certificate dated the Effective Date signed by an executive
officer of Anchor to such effect.
(C) FAIRNESS OPINION. ComSouth will have received,
immediately prior to the mailing of the Joint Proxy Statement to ComSouth's
shareholders, an opinion of a qualified firm to the effect that the financial
terms of the Merger are fair from a financial point of view to ComSouth's
shareholders.
(D) LEGAL OPINION. ComSouth will have received an
opinion, dated the Effective Date, of Gerrish & McCreary, P.C., counsel for
Anchor, incorporating the opinions set forth in Exhibit D.
ARTICLE VIII. TERMINATION
8.1 EVENTS OF TERMINATION. This Agreement may be terminated prior to
the Effective Date, either before or after receipt of required shareholder
approvals:
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(A) MUTUAL CONSENT. By the mutual consent of Anchor and
ComSouth, if the Board of Directors of each so determines by vote of a majority
of the members of its entire board.
(B) BREACH. By Anchor or ComSouth, if its Board of
Directors so determines by vote of a majority of the members of its entire
Board, in the event of (A) a material breach by any other Party of any
representation or warranty in this Agreement, which breach cannot be or has not
been cured within 30 days after written notice of the breach has been given to
the breaching Party, or (B) a material breach by any other Party of any of the
covenants or agreements in this Agreement, which breach cannot be or has not
been cured within 30 days after written notice of the breach has been given to
the breaching Party.
(C) DELAY. By Anchor or ComSouth, if its Board of
Directors so determines by vote of a majority of the members of the entire
Board, in the event that the Merger is not consummated by December 31, 1998;
provided, however, that no Party that is in material breach of any of the
provisions of this Agreement will be entitled to terminate this Agreement
pursuant to this Section 8.1(C).
(D) NO SHAREHOLDER APPROVAL. By Anchor or ComSouth, if
its Board of Directors so determines by a vote of a majority of the members of
its entire Board, if the shareholder approval contemplated by Section 7.1(A) is
not obtained at the Meetings or any adjournment(s) of the Meetings.
(E) MARKET PRICE. By the Board of Directors of ComSouth,
if it determines by a vote of a majority of the members of its entire Board, at
any time during the ten-day period commencing two days after the Determination
Date, if both of the following conditions are satisfied:
(1) the Average Closing Price shall be twenty percent(20%)
less than the Starting Price; and
(2) (i) the quotient of the Average Closing Price
divided by the Starting Price (such quotient being the "Anchor Ratio")
shall be less than (ii) the quotient of the Average Index Price divided
by the Index Price on the Starting Date less 0.10 of such quotient
(which quotient less 0.10 shall be the "Index Ratio");
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subject, however, to the following: If ComSouth refuses to consummate the Merger
pursuant to this Section 8.1(E), it shall give prompt written notice thereof to
Anchor; provided, that such notice of election to terminate may be withdrawn at
any time within the aforementioned ten-day period. During the five-day period
commencing with its receipt of such notice, Anchor shall have the option to
elect to increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of 0.80, the Starting Price and the
Exchange Ratio (as then in effect) by (2) the Average Closing Price, and (ii)
the quotient obtained by dividing (1) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (2) the Anchor Ratio. If Anchor makes an
election contemplated by the preceding sentence, within such five-day period, it
shall give prompt written notice to ComSouth of such election pursuant to this
Section 8.1(E) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this Section 8.1(E).
For purposes of this Section 8.1(E), the following terms shall have
the meanings indicated:
"Average Closing Price" shall mean the average of the
daily last sales prices of Anchor Common Stock as reported on The
Nasdaq Stock Market (as reported by The Wall Street Journal or,
if not reported thereby, another authoritative source as chosen by
Anchor) for the 20 consecutive full trading days in which such shares
are traded ending at the closing of trading on the Determination Date.
"Average Index Price" shall mean the average of the
daily current market price of the Index for the 20 consecutive full
trading days ending at the closing of trading on the Determination
Date.
"Determination Date" shall mean the date on which the
last consent of the Board of Governors of the Federal Reserve System
shall be received.
"Index" shall mean the NASDAQ Bank Index which is a
broad-based capitalization-weighted index of domestic and foreign
common stock of banks that
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are traded on the Nasdaq National Market System as well as the SmallCap
Market. The Index was developed with a base level of 100 as of
February 5, 1971.
"Index Price" on a given date shall mean the current
market price of the Index for that day.
"Starting Date" shall mean April 14, 1998.
"Starting Price" shall mean $41.00 per share.
If Anchor declares or effects a stock dividend,
reclassification, recapitalization, split up, combination, exchange of shares,
similar transaction between the date of this Agreement and the Determination
Date, the prices for the common stock of Anchor shall be appropriately adjusted
for the purposes of applying this Section 8.1(E).
8.2 CONSEQUENCES OF TERMINATION.
(A) GENERAL CONSEQUENCES. Subject to Section 6.6, in the
event of the termination or abandonment of this Agreement pursuant to the
provisions of this Section 8.1, this Agreement will become void and have no
force or effect, without any liability on the part of the Parties or any of
their respective directors or officers or shareholders with respect to this
Agreement.
(B) OTHER CONSEQUENCES. Notwithstanding anything in this
Agreement to the contrary, no termination of this Agreement will relieve any
Party of any liability for any breach of this Agreement or for any
misrepresentation under this Agreement or be deemed to constitute a waiver of
any remedy available for such breach or misrepresentation. In any action or
proceeding in connection with such breach or misrepresentation, the prevailing
Party will be entitled to reasonable attorneys' fees and expenses.
(C) TERMINATION FEE. If this Agreement is terminated:
(1)(i) by Anchor, if at any time prior to the
ComSouth Meeting, the Board of Directors of ComSouth shall have failed to
recommend the Merger to the holders of ComSouth Common Stock, withdrawn such
recommendation or modified or changed such recommendation in a manner adverse in
any respect to the interests of Anchor, or (ii) by the action of the Board of
Directors of ComSouth if a tender offer or exchange offer for 25% or more of the
outstanding shares of ComSouth Common Stock
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is commenced (other than by Anchor) and the Board of ComSouth recommends that
the stockholders of ComSouth tender their shares in such tender or exchange
offer or otherwise fails to recommend that such stockholders reject such
tender offer or exchange offer within ten business days after the commencement
thereof (which, in the case of an exchange offer, shall be the effective date of
the registration statement relating to such exchange offer);
(2) by ComSouth or Anchor because of a failure to
obtain the required approval of the stockholders of ComSouth after an
Acquisition Proposal for ComSouth shall have been publicly disclosed, or any
Person shall have publicly disclosed an intention (whether or not conditional)
to make an Acquisition Proposal; or
(3) by Anchor pursuant to Section 8.1(B) if the
breach by ComSouth giving rise to such termination was willful and, at or prior
to such termination, an Acquisition Proposal shall have been made known to
ComSouth or any of its Subsidiaries or shall have been publicly disclosed to
ComSouth's stockholders or any Person shall have made known to ComSouth or any
of its Subsidiaries or otherwise publicly disclosed an intention (whether or not
conditional) to make an Acquisition Proposal and regardless of whether such
Acquisition Proposal shall have been rejected by ComSouth or withdrawn prior to
the time of such termination, then, in such case, ComSouth shall pay to Anchor a
termination fee of $2.5 million (the "Termination Fee"). Any Termination Fee
that becomes payable pursuant to this Section shall be paid promptly following
the receipt of a written request for Termination Fee to ComSouth from Anchor.
Notwithstanding the foregoing, in no event shall ComSouth be obligated to pay
any Termination Fee if ComSouth shall be entitled to terminate this Agreement
pursuant to Section 8.1(B) due to a breach by Anchor.
ARTICLE IX. OTHER MATTERS
9.1 SURVIVAL. Only those agreements and covenants in this Agreement
that, by their express terms apply in whole or in part after the Effective Date,
will survive the Effective Date. All other representations, warranties, and
covenants will be deemed only to be conditions of the Merger and will not
survive the Effective Date. If the Merger is
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abandoned and this Agreement is terminated, the provisions of Article VIII
will apply and the agreements of the Parties in Section 6.6 will survive such
abandonment and termination.
9.2 WAIVER; AMENDMENT. Prior to the Effective Date, any provision of
this Agreement may be (A) waived in writing by the Party benefitted by the
provision, or (B) amended or modified at any time (including the structure of
the transactions contemplated by this Agreement) by an agreement in writing
among the Parties approved by their respective Boards of Directors and executed
in the same manner as this Agreement, except that, after the votes by the
shareholders of Anchor and ComSouth, the consideration to be received by the
shareholders of ComSouth for each share of ComSouth Common Stock will not
thereby be altered. Nothing contained in this Section 9.2 is intended to modify
Anchor's rights pursuant to Section 6.7.
9.3 COUNTERPARTS. This Agreement may be executed in one or more
facsimile counterparts, each of which will be deemed to constitute an original.
This Agreement will become effective when one counterpart has been signed by
each Party.
9.4 GOVERNING LAW. This Agreement will be governed by, and interpreted
in accordance with, the laws of the State of South Carolina, except as federal
law may be applicable.
9.5 EXPENSES. Each Party will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated by this
Agreement.
9.6 CONFIDENTIALITY. Except as otherwise provided in Section 6.6(B),
each of the Parties and their respective agents, attorneys and accountants will
maintain the confidentiality of all information provided in connection herewith
which has not been publicly disclosed.
9.7 NOTICES. All notices, requests and other communications hereunder
to a "Party" will be in writing and will be deemed to have been duly given when
delivered by hand, telegram, certified or registered mail, overnight courier,
telecopier or telex (confirmed in writing) to such Party at its address set
forth below or such other address as such Party may specify by notice to the
Parties.
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Anchor: Anchor Financial Corporation
2002 Oak Street
Myrtle Beach, SC 29578
. Attn: Stephen L. Chryst
with a copy to: Gerrish & McCreary, P.C.
700 Colonial Road - Suite 200
Memphis, TN 38117
Attn: Ann W. Langston, Esq.
ComSouth: ComSouth Bancshares, Inc.
1136 Washington Street
Suite 200
Columbia, SC 29201
Attn: Arthur M. Swanson
with a copy to: Sinkler & Boyd, P.A.
1426 Main Street, Twelfth Floor
Columbia, SC 29201
Attn: George S. King, Jr., Esq.
9.8 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement
represents the entire understanding of the Parties with reference to
transactions contemplated by this Agreement and supersedes any and all other
oral or written agreements previously made. 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.
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9.9 HEADINGS. The headings contained in this Agreement are for
reference purposes only and are not part of this Agreement.
ANCHOR FINANCIAL CORPORATION
By: /s/ Stephen L. Chryst
----------------------
Stephen L. Chryst
Its President and Chief Executive Officer
COMSOUTH BANKSHARES, INC.
By: /s/ Arthur M. Swanson
----------------------
Arthur M. Swanson
Its President
p:\clients\a10209\awl\agrepla2.mrg
44
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EXHIBIT 99
<PAGE>
ANCHOR FINANCIAL CORPORATION 2002 OAK STREET, MYRTLE BEACH, SC 29577
(803)448-1411
(Anchor News Release logo appears here)
Anchor Financial Corporation and ComSouth Bankshares Announce Merger Agreement
Anchor Financial Pushes Toward $1 Billion in Assets
Myrtle Beach, SC, April 14, 1998 - Anchor Financial Corporation and ComSouth
Bankshares, Inc. today announced the signing of a definitive agreement to merge.
The agreement has been unanimously approved by the boards of directors of both
companies and is subject to the approval of shareholders of both companies and
appropriate regulatory agencies. The transaction is expected to be completed in
the third quarter of 1998.
Upon completion, ComSouth's two banks, the Bank of Charleston, located at 276
East Bay Street, and the Bank of Columbia, located at 1350 Main Street, will
become part of Anchor's banking network. The result of this combination will
bring Anchor Financial Corporation's asset size to nearly $842 million and
expand its banking network to 21 offices in South Carolina and North Carolina.
The proposed transaction is expected to be accounted for as a pooling of
interests and provides for a tax-free exchange of 0.75 shares of Anchor
Financial Corporation common stock for each outstanding share of ComSouth common
stock. Based on Anchor Financial Corporation's April 9 closing stock price of
$41.00 and ComSouth's approximately 2.3 million outstanding shares of common
stock, the transaction would have a value of approximately $30.75 per share, or
a purchase price of $71.3 million. The merger is expected to have a positive
impact on Anchor's earnings beginning in 1999.
Stephen L. Chryst, president and chief executive officer of Anchor Financial
Corporation, stated, "The addition of ComSouth's two banks fits well with our
growth strategies. With this merger, we have strengthened our presence in the
Charleston market, where we already have two locations, while The Bank of
Columbia provides us with a tremendous opportunity to expand into Richland
County and the Midlands. Both companies have a demonstrated ability to grow
rapidly and the combination of resources will only enhance this ability."
Arthur M. Swanson, chairman of the board of ComSouth, said, "The affiliation
with Anchor Financial Corporation will allow us to provide our customers with a
wider variety of products and services, including access to investment and trust
services. We share a commitment to superior community bank service and look
forward to the partnership that is being created."
(M O R E)
<PAGE>
Anchor Financial Corporation Announces Merger Agreement P. 2
Four current directors of ComSouth or its subsidiary banks will join the Anchor
Financial Corporation board of directors upon completion of the merger,
increasing to 20 the size of the Anchor board.
Arthur P. Swanson, president and chief executive officer of the Bank of
Charleston, and J. Michael Kapp, president and chief executive officer of the
Bank of Columbia, will remain in charge of operations in those cities and are
expected to take on additional responsibilities in the leadership of the entire
company. Chryst said, "The management culture of both companies is strong and
the combination of management strengths is a key factor in this partnership."
Customers of both banks will continue to be served by the same employees who
have helped them in the past and will not need to make any changes in their
banking routine. After the merger is completed, customers of both institutions
will be able to do their banking at any of The Anchor Bank offices in North
Carolina and South Carolina. Customers will also have access to investment and
trust services, as well as an array of electronic products.
Anchor Financial Corporation, with assets of $624.7 million, is the parent of
The Anchor Bank, which operates nineteen banking offices in South Carolina and
North Carolina. The Anchor Bank offers a full line of banking products and
services.
Anchor Financial Corporation's common stock trades on the Nasdaq Stock MarketSM
under the symbol AFSC.
ComSouth Bankshares, Inc. has assets of $217 million and is the parent of The
Bank of Charleston, N.A. and The Bank of Columbia, N.A. Both banks offer a full
line of banking products and services.
ComSouth Bankshares' common stock is traded on the American Stock Exchange
(AMEX) under the ticker symbol CSB.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Statements in this news release looking forward in time involve risks and
uncertainties, including regulatory approvals, completion of the due diligence
process, success of acquiring new locations and integrating newly-acquired
branches, additional expansion opportunities, the effect of changing economic
conditions, product demand, changes in the regulatory environment, and other
risk factors detailed in Anchor's Securities and Exchange Commission filings.
Note: Transmitted on Business Wire at 8:45 A.M. EST, April 14, 1998.
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