EXHIBIT 3
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 5, 1999 by and among Xxxxxxx Bancshares, Inc. ("Xxxxxxx"), a
corporation organized and existing under the Laws of the State of North
Carolina, with its principal office located in Waynesville, North Carolina,
Century South Banks, Inc. ("CSBI"), a corporation organized and existing under
the Laws of the State of Georgia, with its principal office located in
Dahlonega, Georgia and HBI Acquisition Corp. ("HAC"), a corporation organized
and existing under the Laws of the State of North Carolina with its principal
office located in Waynesville, North Carolina and a wholly owned subsidiary of
CSBI.
Preamble
The Boards of Directors of Xxxxxxx and CSBI are of the opinion that the
transaction described herein is in the best interest of the parties and their
respective shareholders. This Agreement provides for the merger of HAC with and
into Xxxxxxx such that Xxxxxxx will become a wholly owned subsidiary of CSBI
(the "Merger"). At the Effective Time of the Merger, the outstanding shares of
the capital stock of Xxxxxxx shall be converted into the right to receive shares
of the common stock of CSBI (except as provided herein). As a result,
shareholders of Xxxxxxx shall become shareholders of CSBI. The transaction
described in this Agreement is subject to the approvals of the shareholders of
Xxxxxxx and HAC, applicable Regulatory Authorities and the satisfaction of
certain other conditions described in this Agreement. It is the intention of
the parties to this Agreement that the Merger for federal income tax purposes
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code. In connection with the execution of this Agreement,
Xxxxxxx and CSBI will enter into a stock option agreement (the "Stock Option
Agreement") in the form attached hereto as Exhibit A.
Immediately following the Closing of the Merger, Xxxxxxx Savings Bank,
Inc., SSB ("Bank"), a North Carolina-chartered savings bank, Great Smokies
Financial Corporation, a North Carolina corporation, and Great Smokies Insurance
Agency, Inc., a North Carolina corporation, each a wholly-owned subsidiary of
Xxxxxxx, with their main offices located in Waynesville, North Carolina, will
remain in existence under their respective Articles of Incorporation and Bylaws,
as in effect immediately prior to the Effective Time, as wholly-owned
subsidiaries of Xxxxxxx.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the parties agree as
follows:
ARTICLE 1
TRANSACTION AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, HAC shall be merged with and into Xxxxxxx in accordance with the
provisions of Section 55-11-05 of the NCBCA and with the effect provided in
Section 55-11-06 of the NCBCA. Xxxxxxx shall be the Surviving Corporation
resulting from the Merger as a wholly owned subsidiary of CSBI, and the separate
existence of HAC shall cease. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the respective
Boards of Directors of Xxxxxxx, HAC and CSBI.
1.2 Time and Place of Closing. The Closing will take place at 9:30 a.m. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:30 a.m.), or at such other time as the Parties,
acting through their Chief Executive Officers, may mutually agree. The place of
Closing shall be at the offices of Xxxxxxxx Xxxxxxx LLP, Atlanta, Georgia, or
such other place as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger contemplated by this Agreement shall become
effective on the date and at the time the Articles of Merger reflecting the
Merger shall become effective with the Secretary of State of the State of North
Carolina. Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon in writing by the Chief Executive Officers of each Party, the
Parties shall use their reasonable efforts to cause the Effective Time to occur
on the last business day of the month in which occurs the last to occur of (i)
the effective date (including expiration of any applicable waiting period) of
the last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, (ii) the date on which the shareholders of
Xxxxxxx approve this Agreement, or (iii) such later date as may be mutually
agreed upon in writing by the Chief Executive Officers of each Party.
1.4 Execution of Support and Non Competition Agreements. Immediately
prior to the execution of this Agreement and as a condition hereto, each of the
executive officers and directors of Xxxxxxx and Bank listed in Exhibit E is
executing and delivering to CSBI a Support Agreement and Non Competition
Agreement in substantially the form as attached hereto as Exhibit B.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. The Articles of Incorporation of Xxxxxxx
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Xxxxxxx in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.
2.3 Directors and Officers of Xxxxxxx and Bank. The directors of Xxxxxxx
and Bank in office prior to the Effective Time may continue, at their
discretion, to serve as directors
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of the Surviving Corporation and Bank for a period of the later of their
attaining age 70 or five years after the Closing but in no event later than any
individual's 75th birthday. The directors will receive directors' fees in the
amount of $400 per month for their combined service to Xxxxxxx and Bank. The
officers of Xxxxxxx immediately prior to the Effective Time shall become
officers of the Surviving Corporation.
2.4 Directors and Officers of CSBI and HAC. The directors and officers of
CSBI in office immediately prior to the Effective Time shall serve as the
officers and directors of CSBI from and after the Effective Time in accordance
with the Bylaws of CSBI. The directors of HAC in office immediately prior to
the Effective Time shall become additional directors of the Surviving
Corporation from and after the Effective Time until their successors shall have
been duly elected and qualified or until their earlier death, resignation or
removal in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES AND OPTIONS
3.1 Conversion of Shares. Subject to the provisions of this Agreement, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of CSBI Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and after
the Effective Time.
(b) Subject to adjustment as outlined below and as set forth in Section 3.4
of this Agreement, the election rights set forth in Section 3.2 of this
Agreement, the allocation provisions set forth in Section 3.3 of this Agreement
and the conditions set forth herein, each share of Xxxxxxx Common Stock issued
and outstanding at the Effective Time shall be converted into .8874 shares (the
"Exchange Ratio") of CSBI Common Stock (the "Per Share Stock Consideration"),
provided, however, that if (i) the Valuation Period Market Value of CSBI Common
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Stock is less than $24.00 per share, then the Exchange Ratio shall be increased
by an amount equal to the product of (A) the Exchange Ratio multiplied by (B)
the quotient of the difference between $24.00 less the Valuation Period Market
Value divided by the Valuation Period Market Value or (ii) the Valuation Period
Market Value of CSBI Common Stock is greater than $27.00 per share, then the
Exchange Ratio shall be decreased by an amount equal to the product of (A) the
Exchange Ratio multiplied by (B) the quotient of the difference between the
Valuation Period Market Value less $27.00, divided by the Valuation Period
Market Value.
(c) Subject to adjustment as outlined above and as set forth in Section 3.4
of this Agreement, the election rights set forth in Section 3.2 of this
Agreement, the allocation provisions set forth in Section 3.3 of this Agreement
and the conditions set forth herein, each share of Xxxxxxx Common Stock
(excluding shares held by CSBI or any of its Subsidiaries or by Xxxxxxx, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted) issued and outstanding at the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
the Per Share Stock Consideration.
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3.2 Cash Election. Notwithstanding the foregoing, Holders of Xxxxxxx
Common Stock who beneficially own less than 100 shares shall receive cash
consideration in lieu of receiving CSBI Common Stock in the Merger. In
addition, all other holders of Xxxxxxx Common Stock may elect to receive cash
consideration in lieu of receiving CSBI Common Stock in accordance with the
election procedures set forth below in this Section 3.2. Holders who are to
receive cash in lieu of exchanging their shares of Xxxxxxx Common Stock for CSBI
Common Stock as specified below shall receive an amount in cash (the "Per Share
Cash Consideration") in respect of each share of Xxxxxxx Common Stock that is so
converted equal to the Exchange Ratio (subject to adjustment of the Exchange
Ratio as set forth in Section 3.1(b) of this Agreement) and the product of the
Valuation Period Market Value. For purposes of this Agreement:
(i) "Valuation Period Market Value" shall mean the average of the closing
sales prices for CSBI Common Stock as reported on the NASDAQ (as reported in The
Wall Street Journal or, in the absence thereof, by another authoritative source)
during the Valuation Period; and
(ii) "Valuation Period" shall mean the 20 consecutive trading day period
during which the shares of CSBI Common Stock are traded on the NASDAQ ending on
the 10th calendar day immediately prior to the anticipated Effective Time.
An election form and other appropriate and customary transmittal materials
("Election Form") (which shall specify that delivery shall be effected, and risk
of loss and title to the certificates theretofore representing Xxxxxxx Common
Stock ("Old Certificates")) shall pass, only upon proper delivery of such Old
Certificates to an exchange agent designated by CSBI (the "Exchange Agent")
shall be mailed together with the Proxy Statement on such date as Xxxxxxx and
CSBI shall mutually agree ("Mailing Date") to each holder of record of Xxxxxxx
Common Stock as of the record date for eligibility to vote at the Special
Meeting.
Each Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of Xxxxxxx Common
Stock to elect to receive cash with respect to all or a portion of such xxxxxx'x
Xxxxxxx Common Stock (shares as to which the election is made being "Cash
Election Shares"). The "Cash Election Amount" shall be equal to the Per Share
Cash Consideration multiplied by the total number of Cash Election Shares.
Shares as to which the holder (or beneficial owner elects to receive the Per
Share Stock Consideration (if eligible to so elect) are referred to herein as
"Stock Election Shares."
Any share of Xxxxxxx Common Stock with respect to which the holder (or the
beneficial owner, as the case may be) shall not have submitted to the Exchange
Agent an effective, properly completed Election Form on or before 5:00 p.m. on
the 20th day following the Mailing Date (the "Election Deadline") shall be
converted either into the Per Share Stock consideration or the Per Share Cash
Consideration at the election of CSBI (such shares being "No Election Shares")
with the exception that shares held by a holder of less than 100 shares shall be
deemed to be Cash Election Shares.
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CSBI shall make available one or more Election Forms as may be reasonably
requested by all persons who become holders (or beneficial owners) of Xxxxxxx
Common Stock between the Mailing Date and the close of business on the business
day prior to the Election Deadline, and Xxxxxxx shall provide to the Exchange
Agent all information reasonably necessary for it to perform as specified
herein.
Any such election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by the Election
Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more certificates (or customary affidavits and
indemnification regarding the loss or destruction of such certificates or the
guaranteed delivery of such certificates) representing all shares of Xxxxxxx
Common Stock covered by such Election Form, together with duly executed
transmittal materials included in the Election Form. Any Election Form may be
revoked or changed by the person submitting such Election Form at or prior to
the Election Deadline. In the event an Election Form is revoked prior to the
Election Deadline, the shares of Xxxxxxx Common Stock represented by such
Election Form shall become No Election Shares and CSBI shall cause the
certificates representing Xxxxxxx Common Stock to be promptly returned without
charge to the person submitting the Election Form upon written request to that
effect from the person who submitted the Election Form. Subject to the terms of
this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in the
Election Forms, and any good faith decisions of the Exchange Agent regarding
such matters shall be binding and conclusive. Neither CSBI nor the Exchange
Agent shall be under any obligation to notify any person of any defect in an
Election Form.
3.3 Allocation. Within five business days after the Election Deadline,
unless the Effective Time has not yet occurred, in which case as soon thereafter
as practicable, CSBI shall cause the Exchange Agent to effect the allocation
among the holders of Xxxxxxx Common Stock so that 50% of the aggregate
consideration paid in exchange for shares of Xxxxxxx Common Stock in the Merger
(the "Total Merger Consideration") shall be paid in CSBI Common Stock (the
"Stock Amount") and 50% of the Total Merger Consideration shall be paid in cash
(the "Cash Amount"). The allocation shall be effected by the Exchange Agent as
follows:
(i) If the Cash Amount is greater than the Cash Election Amount, then:
(a) each Cash Election Share shall be converted into the right to
receive an amount of cash equal to the Per Share Cash Consideration;
(b) the Exchange Agent will select, on a pro rata basis, first
from among the holders of No Election Shares and then, if necessary, from among
the holders of Stock Election Shares, a sufficient number of such shares ("Cash
Designee Shares") such that the sum of Cash Designee Shares and Cash Election
Shares multiplied by the Per Share Cash Consideration equals as closely as
practicable the Cash Amount (each Cash Designee Share shall be converted into
the right to receive an amount of cash equal to the Per Share Cash
Consideration); and
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(c) any Stock Election Shares and any No Election Shares, in each
case, not so selected as Cash Designee Shares shall be converted into the right
to receive the Per Share Stock Consideration.
(ii) If the Cash Amount is less than the Cash Election Amount, then:
(a) each Stock Election Share and each No Election Share shall be
converted into the right to receive the Per Share Stock Consideration;
(b) the Exchange Agent will select, on a pro rata basis from among
the holders of Cash Election Shares, a sufficient number of such shares ("Stock
Designee Shares") such that the number of Stock Designee Shares multiplied by
the Per Share Cash Consideration equals as closely as practicable the difference
between the Cash Election Amount and the Cash Amount (the Stock Designee Shares
shall be converted into the right to receive the Per Share Stock Consideration);
and
(c) any Cash Election Shares not so selected as Stock Designee
Shares shall be converted into the right to receive an amount of cash equal to
the Per Share Cash Consideration.
In the event that the Exchange Agent is required pursuant to this Section
3.3 to designate from among all Stock Election Shares the Cash Designee Shares
to receive cash, each holder of Stock Election Shares shall be allocated a pro
rata portion of the remainder of the total Cash Designee Share less the number
of No Election Shares which are Cash Designee Shares. Such proration shall
reflect the proportion that the number of Stock Election Shares of each holder
of Stock Election Shares bears to the total number of Stock Election Shares. In
the event the Exchange Agent is required pursuant to this Section 3.3 to
designate from among all holders of Cash Election Shares the Stock Designee
Shares to receive the Per Share Stock Consideration, each holder of Cash
Election Shares shall be allocated a pro rata portion of the total Stock
Designee Shares. Such proration shall reflect the proportion that the number of
Cash Election Shares of each holder of Cash Election Shares bears to the total
number of Cash Election Shares.
Notwithstanding anything to the contrary contained in this Section 3.3,
CSBI may at CSBI's sole discretion, waive the maintenance of the Cash Amount if
the difference between the Cash Amount and the aggregate amount of cash elected
by holders of Xxxxxxx Common Stock, including the cash paid for fractional
shares is less than 10% of the Cash Amount.
3.4 Adjustment to Exchange Ratio. In the event that Xxxxxxx'x consolidated
shareholders' equity (as determined below) is less than $21,000,000, there shall
be an adjustment to the Exchange Ratio. In such event, the Exchange Ratio shall
be adjusted by multiplying it by a fraction the numerator of which is Xxxxxxx'x
consolidated shareholders' equity (as determined below) and the denominator of
which is $21,000,000. The determination of Xxxxxxx'x consolidated shareholders'
equity, as adjusted, shall be based on Xxxxxxx'x consolidated balance sheet
prepared in accordance with GAAP dated as of the end of the month immediately
preceding the Effective Time, including (i) all normal and recurring adjustments
necessary in accordance with GAAP; (ii) all adjustments necessary to record
obligations with respect to
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benefit obligations of Xxxxxxx or any of its subsidiaries under its employment
agreements, deferred compensation agreements, directors' retirement plan,
severance plan, and retention bonus plan assuming a change in control triggering
event; (iii) all adjustments necessary to record estimated obligations payable
by Xxxxxxx or any of its subsidiaries upon the termination of its defined
benefit pension plan; and (iv) all accruals and liabilities for fees and
expenses of consultants, attorneys, accountants and the like in connection with
the Merger and the due diligence conducted by Xxxxxxx in regard to the Merger
other than (x) the fees to be paid to Trident , (y) the direct costs associated
with printing and mailing of the Proxy Statement, and (z) any costs, fees and
expenses reasonably and directly incurred by Xxxxxxx and Bank in connection with
any charter conversion by Bank.
3.5 Anti-Dilution Provisions. In the event Xxxxxxx or CSBI changes the
number of shares of Xxxxxxx Common Stock or CSBI Common Stock, respectively,
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or similar recapitalization with respect to such stock and the
record date therefor (in the case of a stock dividend) or the effective date
therefor (in the case of a stock split or similar recapitalization) shall be
prior to the Effective Time, the Total Merger Consideration shall be
proportionately adjusted.
3.6 Shares Held by Xxxxxxx or CSBI. Each of the shares of Xxxxxxx Common
Stock held by Xxxxxxx or by any CSBI Companies, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time, and no consideration shall be issued
in exchange therefor.
3.7 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of Xxxxxxx Common Stock exchanged pursuant to
the Merger, who would otherwise have been entitled to receive a fraction of a
share of CSBI Common Stock (after taking into account all Old Certificates
delivered by such holder), shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Xxxxxxx
Common Stock multiplied by the market value of one share of CSBI Common Stock at
the Effective Time. The market value of one share of CSBI Common Stock at the
Effective Time shall be the last sales price of the CSBI Common Stock on NASDAQ
on the last business day preceding the Effective Time. No such holder will be
entitled to dividends, voting rights or any other rights as a shareholder in
respect of any fractional shares.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. (a) Immediately prior to the Effective Time,
CSBI shall deposit, or shall cause to be deposited, with the Exchange Agent, for
the benefit of the holders of Old Certificates for exchange in accordance with
this Article 4, certificates representing the shares of CSBI Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with respect thereto (without any
interest thereon), being hereinafter referred to as the "Exchange Fund") to be
paid pursuant to this Article 4 in exchange for outstanding shares of Xxxxxxx
Common Stock.
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(b) Within 20 days after the Effective Date, CSBI shall send or
cause to be sent to each former holder of record of shares (other than Cash
Election Shares or Treasury Shares) of Xxxxxxx Common Stock immediately prior to
the Effective Time transmittal materials for use in exchanging such
shareholder's Old Certificates for the consideration set forth in this Article
3. CSBI shall cause the New Certificates into which shares of a shareholder's
Xxxxxxx Common Stock are converted on the Effective Date and/or any check in
respect of the Per Share Cash Consideration and any fractional share interests
or dividends or distributions which such person shall be entitled to receive to
be delivered to such shareholders upon delivery to the Exchange Agent of Old
Certificates representing such shares of Xxxxxxx Common Stock (or indemnity
reasonably satisfactory to CSBI and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such shareholder. No
interest will be paid on any such cash to be paid pursuant to Article 3 upon
such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of Xxxxxxx Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to CSBI
Common Stock with a record date occurring after the Effective Time shall be paid
to the holder of any unsurrendered Old Certificate representing shares of
Xxxxxxx Common Stock converted in the Merger into shares of such CSBI Common
Stock until the holder thereof shall surrender such Old Certificate in
accordance with this Article 4. After the surrender of an Old Certificate in
accordance with this Article 4, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of CSBI Common Stock
represented by such Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Xxxxxxx for 12 months after the Effective Time shall be paid to
CSBI. Any shareholders of Xxxxxxx who have not theretofore complied with this
Article 4 shall thereafter look only to CSBI for payment of the shares of CSBI
Common Stock, cash in lieu of any fractional shares and unpaid dividends and
distributions on the CSBI Common Stock deliverable in respect of each share of
Xxxxxxx Common Stock such shareholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
4.2 Rights of Former Shareholders. At the Effective Time, the stock
transfer books of Xxxxxxx shall be closed as to holders of Xxxxxxx Common Stock
immediately prior to the Effective Time, and no transfer of Xxxxxxx Common Stock
by any such holder shall thereafter be made or recognized. Until surrendered
for exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of Xxxxxxx Common Stock (other
than shares to be canceled pursuant to Section 3.6 of this Agreement) shall from
and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Sections 3.1 and 3.2 of this Agreement in
exchange therefor. To the extent permitted by Law, former shareholders of
record of Xxxxxxx shall be entitled to vote after the Effective Time at any
meeting of CSBI shareholders the number of whole shares of CSBI Common Stock
into which their respective shares of Xxxxxxx Common Stock are converted,
regardless of whether such holders have exchanged their certificates
representing
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Xxxxxxx Common Stock for certificates representing CSBI Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by CSBI on the CSBI Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares issuable pursuant to this Agreement, but no
dividend or other distribution payable to the holders of record of CSBI Common
Stock as of any time subsequent to the Effective Time shall be delivered to the
holder of any certificate representing shares of Xxxxxxx Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 4.1 of this Agreement. However, upon
surrender of such Xxxxxxx Common Stock certificate, both the CSBI Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered cash payments to be paid for fractional
share interests (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby represents and warrants to CSBI and HAC as follows:
5.1 Organization, Standing and Power. Xxxxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina and is duly registered as a bank holding company under the BHC
Act. Xxxxxxx has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. Neither Xxxxxxx nor any
Subsidiary owns any property or conducts any business outside of the State of
North Carolina which would require any of them to be qualified as a foreign
corporation in any jurisdiction except for such jurisdictions in which the
failure to be so qualified is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Xxxxxxx.
5.2 Authority; No Breach By Agreement.
(a) Xxxxxxx has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and, subject
to approval by its stockholders, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Xxxxxxx, subject to the approval of this Agreement by the
holders of at least a majority of the outstanding shares of Xxxxxxx Common
Stock, which is the only shareholder vote required for approval of this
Agreement and consummation of the Merger by Xxxxxxx. Subject to such requisite
shareholder approval and Consents of applicable Regulatory Authorities, this
Agreement represents a legal, valid and binding obligation of Xxxxxxx,
enforceable against Xxxxxxx in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
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(b) Except as Previously Disclosed, neither the execution and
delivery of this Agreement by Xxxxxxx nor the consummation by Xxxxxxx of the
transactions contemplated hereby, nor compliance by Xxxxxxx with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of Xxxxxxx'x Articles of Incorporation or Bylaws, or (ii) constitute or result
in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on either Xxxxxxx or any Subsidiary or all of them under,
any Contract or Permit of either Xxxxxxx or any Subsidiary or all of them, where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Xxxxxxx, or (iii) subject to receipt of the requisite approvals referred to in
Section 9.1(a) and (b) of this Agreement, violate any Law or Order applicable to
either Xxxxxxx or Bank or both or any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate , banking and securities Laws
and rules of the AMEX, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the IRS or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, and
other than Consents, filings or notifications which, if not obtained or made,
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Xxxxxxx no notice to, filing with or Consent of, any public
body or authority is necessary for the consummation by Xxxxxxx of the Merger and
the other transactions contemplated in this Agreement.
5.3 Capital Stock and Other Securities.
(a) The authorized capital stock of Xxxxxxx consists of 5,000,000
shares of Xxxxxxx Preferred Stock and 10,000,000 shares of Xxxxxxx Common Stock.
As of the date of this Agreement, there are no shares of Xxxxxxx Preferred Stock
outstanding and 1,250,356 shares of Xxxxxxx Common Stock issued and outstanding.
No more than 1,250,356 shares of Xxxxxxx Common Stock will be issued and
outstanding at the Effective Time. All of the issued and outstanding shares of
capital stock of Xxxxxxx are duly and validly issued and outstanding and are
fully paid and nonassessable under the NCBCA. None of the outstanding shares of
capital stock of Xxxxxxx has been issued in violation of any preemptive rights
of the current or past shareholders of Xxxxxxx. There are no outstanding Xxxxxxx
Options that have been granted and are unexercised.
(b) Except as set forth in Section 5.3(a) of this Agreement or
there are no shares of capital stock or other equity securities of Xxxxxxx
outstanding and no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of
Xxxxxxx or contracts, commitments, understandings or arrangements by which
Xxxxxxx is or may be bound to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock.
5.4 Xxxxxxx'x Subsidiaries. Xxxxxxx has the following subsidiaries: (i)
Bank; (ii) Great Smokies Financial Corporation; and (iii) Great Smokies
Insurance Agency, Inc.
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5.5 SEC Filings; Financial Statements.
(a) Xxxxxxx has filed and made available to CSBI all forms, reports
and documents required to be filed by Xxxxxxx with the SEC since December 31,
1995 (collectively, the "Xxxxxxx SEC Reports"). The Xxxxxxx SEC Reports (i) at
the time filed, complied in all Material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Xxxxxxx SEC Reports or necessary in order to make the
statements in such Xxxxxxx SEC Reports, in light of the circumstances under
which they were made, not misleading. Except for Xxxxxxx Subsidiaries that are
registered as a broker, dealer or investment advisor or filings due to fiduciary
holdings of the Xxxxxxx Subsidiaries, none of the Xxxxxxx Subsidiaries is
required to file any forms, reports or other documents with the SEC;
(b) Xxxxxxx has Previously Disclosed, and delivered to CSBI prior to
the execution of this Agreement, copies of all Xxxxxxx Financial Statements for
periods ended prior to the date hereof and will deliver to CSBI copies of all
Xxxxxxx Financial Statements prepared subsequent to the date hereof. The Xxxxxxx
Financial Statements (as of the dates thereof and for the periods covered
thereby) (i) are or will be, if dated after the date of this Agreement, in
accordance with the books and records of Xxxxxxx, which are or will be,
materially complete and correct and which have been or will have been maintained
in accordance with good business practices, and (ii) present or will present
fairly the financial position of Xxxxxxx as of the dates indicated and the
results of operations, changes in shareholders' equity and cash flows of Xxxxxxx
for the periods indicated, in accordance with GAAP (subject to any exceptions as
to consistency specified therein or as may be indicated in the notes thereto or,
in the case of interim financial statements, to normal recurring year-end
adjustments that are not Material).
5.6 Absence of Undisclosed Liabilities. Neither Xxxxxxx nor any
Subsidiary has any Liabilities that are reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Xxxxxxx, except Liabilities
which are accrued or reserved against in the consolidated balance sheets of
Xxxxxxx as of December 31, 1998 and June 30, 1999 included in the Xxxxxxx
Financial Statements or reflected in the notes thereto. Neither Xxxxxxx nor any
Subsidiary has incurred or paid any Liability since June 30, 1999, except for
(i) such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Xxxxxxx, or
(ii) in connection with the transaction contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since June 30, 1999, (i) there
have been no events, changes or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Xxxxxxx, (ii) neither Xxxxxxx nor any Subsidiary has taken any action, or failed
to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a Material breach or violation of any of the covenants and agreements of Xxxxxxx
provided in Article 7 of this Agreement, and (iii) Xxxxxxx and each Subsidiary
have conducted their
11
respective businesses in the ordinary and usual course (excluding the incurrence
of expenses in connection with this Agreement and the transactions contemplated
hereby).
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of Xxxxxxx or
any Subsidiary have been timely filed or requests for extensions have been
timely filed, granted and have not expired for periods ended on or before
December 31, 1998, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Xxxxxxx, and all Tax Returns filed are complete and accurate
in all Material respects to the Knowledge of Xxxxxxx. All Taxes shown on filed
returns have been paid as of the date of this Agreement, and there is no audit
examination, deficiency, or refund Litigation with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a Material Adverse Effect on Xxxxxxx, except as reserved
against in the Xxxxxxx Financial Statements delivered prior to the date of this
Agreement. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.
(b) Neither Xxxxxxx nor any Subsidiary has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid Tax deficiency has been asserted
in writing against or with respect to Xxxxxxx or any Subsidiary, which
deficiency is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Xxxxxxx.
(c) Adequate provision for any Taxes due or to become due by Xxxxxxx
or Bank for the period or periods through and including the date of the
respective Xxxxxxx Financial Statements has been made and is reflected on such
Xxxxxxx Financial Statements.
(d) Deferred Taxes of Xxxxxxx and its Subsidiaries have been provided
for in accordance with GAAP. Effective January 1, 1994, Xxxxxxx adopted
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes."
(e) Xxxxxxx and its Subsidiaries are in compliance with, and their
respective records contain all information and documents (including, without
limitation, properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under federal,
state and local Tax Laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Internal
Revenue Code, except for such instances of noncompliance and such omissions as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Xxxxxxx and its Subsidiaries.
(f) Except as set forth in Schedule 5.8(f) attached hereto, neither
Xxxxxxx nor any Subsidiary has made any payments, is obligated to make any
payments or is a party to any contract, agreement or other arrangement that
could obligate it to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Internal Revenue Code.
12
(g) There are no Material Liens with respect to Taxes upon any of the
Assets of either Xxxxxxx or any of its Subsidiaries except for liens for Taxes
not yet due or being contested in good faith and for which adequate provision
thereof has been made.
(h) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of either Xxxxxxx or any of its Subsidiaries that
occurred during or after any Taxable Period in which either Xxxxxxx or any of it
Subsidiaries incurred a net operating loss that carries over to any Taxable
Period ending after December 31, 1996.
(i) Neither Xxxxxxx nor any of its Subsidiaries has filed any consent
under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(j) After the date of this Agreement, no Material election with
respect to Taxes will be made by Xxxxxxx or any of its Subsidiaries without the
prior consent of CSBI, which consent will not be unreasonably withheld.
(k) Neither Xxxxxxx nor any of its Subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
5.9 Allowance. The Allowance shown on the consolidated balance sheets of
Xxxxxxx included in the most recent Xxxxxxx Financial Statements dated prior to
the date of this Agreement was, and the Allowance shown on the consolidated
balance sheets of Xxxxxxx included in the Xxxxxxx Financial Statements as of
dates subsequent to the execution of this Agreement will be, as of the dates
thereof, adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for losses relating to or inherent in the
loan and lease portfolios (including accrued interest receivables) of any
Subsidiary and other extensions of credit (including letters of credit and
commitments to make loans or extend credit) by any Subsidiary as of the dates
thereof, except where the failure of such Allowance to be so adequate is not
reasonably likely to have a Material Adverse Effect on Xxxxxxx.
5.10 Assets. Except as Previously Disclosed or as disclosed or reserved
against in the Xxxxxxx Financial Statements, Xxxxxxx and its Subsidiaries each
has good and marketable title, free and clear of all Liens, to all of their
respective Assets. Except as set forth in Schedule 5.10 attached hereto, all
Material tangible properties used in the business of Xxxxxxx and its
Subsidiaries are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with Xxxxxxx'x and each
Subsidiaries' past practices. All Assets which are Material to Xxxxxxx'x and
its Subsidiaries' respective businesses held under leases or subleases by either
Xxxxxxx or its Subsidiaries, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The
policies of fire, theft, liability and other insurance maintained with respect
to the Assets or businesses of
13
either Xxxxxxx or its Subsidiaries provide adequate coverage under current
industry practices against loss or Liability, and the fidelity and blanket bonds
in effect as to which any Subsidiary is a named insured are reasonably
sufficient. Neither Xxxxxxx nor any Subsidiary has received notice from any
insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated or (ii) premium costs with respect to
such policies of insurance will be substantially increased. The Assets of each
Subsidiary include all assets required to operate the business of such
Subsidiary as presently conducted.
5.11 Environmental Matters.
(a) To the Knowledge of Haywood, Haywood, and its Subsidiaries, their
respective Participation Facilities and Loan Properties are, and have been, in
full compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Xxxxxxx.
(b) There is no Litigation pending or, to the Knowledge of Xxxxxxx,
threatened before any court, governmental agency, board, authority or other
forum in which either Xxxxxxx or any Subsidiary or any of their respective
Participation Facilities and Loan Properties has been or, with respect to
threatened Litigation, may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under or involving a site
owned, leased or operated by either Xxxxxxx or any Subsidiary or any of their
respective Participation Facilities and Loan Properties, except for such
Litigation pending or threatened which is not likely to have, individually or in
the aggregate, a Material Adverse Effect on Xxxxxxx.
(c) To the Knowledge of Xxxxxxx, there is no reasonable basis for any
Litigation of a type described in subsection (b), except such as is not likely
to have, individually or in the aggregate, a Material Adverse Effect on Xxxxxxx.
(d) To the Knowledge of Xxxxxxx, there have been no releases, spills
or discharges of Hazardous Material or other conditions involving Hazardous
Materials in, on, under or affecting any Participation Facility or Loan
Property, except such as are not likely to have, individually or in the
aggregate, a Material Adverse Effect on Xxxxxxx.
5.12 Compliance with Laws. Xxxxxxx is duly registered as a bank holding
company under the BHC Act. Bank is duly chartered as a state savings bank under
applicable Laws and is an "insured depository institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and its
deposits are insured up to applicable limits by the Savings Association
Insurance Fund. Bank and its Subsidiaries have in effect all Permits necessary
for them to own, lease or operate their respective Assets and to carry on their
respective businesses as now conducted, except for those Permits the absence of
which are not likely to have, individually or in the aggregate, a Material
Adverse Effect on Xxxxxxx or its Subsidiaries, and there has occurred no Default
under any such Permit, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Xxxxxxx or
its Subsidiaries. Neither Xxxxxxx nor any Subsidiary:
14
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not likely to have, individually or in the aggregate, a Material Adverse Effect
on Xxxxxxx; and
(b) except as set forth on Schedule 5.12(b) attached hereto, has
received any notification or communication from any agency or department of
federal, state or local government or any Regulatory Authority or the staff
thereof (i) asserting that either Xxxxxxx or Bank is not in compliance with any
of the Laws or Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on either Xxxxxxx or any Subsidiary,
(ii) threatening to revoke any Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
either Xxxxxxx or any Subsidiary, or (iii) requiring Xxxxxxx or any Subsidiary
to enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the conduct
of its businesses, or in any manner relates to their respective capital
adequacy, credit or reserve policies, management or the payment of dividends.
5.13 Labor Relations. Neither Xxxxxxx nor its Subsidiaries is the subject
of any Litigation asserting that either of them has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel Xxxxxxx or its Subsidiaries to bargain with any
labor organization as to wages or conditions of employment, nor is Xxxxxxx or
its Subsidiaries a party to or bound by any collective bargaining agreement,
Contract or other agreement or understanding with a labor union or labor
organization, nor is there any strike or other labor dispute involving either of
them, pending or threatened, nor to their respective Knowledge, is there any
activity involving Xxxxxxx'x or its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.14 Employee Benefit Plans.
(a) Schedule 5.14(a) attached hereto sets forth correct and complete
copies in each case of all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus or other incentive plans, all other written employee programs,
arrangements or agreements, all medical, vision, dental or other health plans,
all life insurance plans and all other employee benefit plans or fringe benefit
plans, including, without limitation, "employee benefit plans" as that term is
defined in Section 3(3) of ERISA currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by Xxxxxxx or any Affiliate thereof for
the benefit of employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries and under which such persons are eligible to
participate (collectively, the "Xxxxxxx Benefit Plans"). Any of the Xxxxxxx
Benefit Plans which is an "employee welfare benefit plan," as that term is
defined in Section 3(l) of ERISA, or an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a "Xxxxxxx
ERISA Plan." Each Xxxxxxx ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j) of the Internal Revenue Code or
15
Section 3(35) of ERISA) is referred to herein as a "Xxxxxxx Pension Plan." No
Xxxxxxx Pension Plan is or has been a "multi-employer plan" within the meaning
of Section 3(37) of ERISA. Except as set forth on Schedule 5.14(a) attached
hereto, Xxxxxxx does not, and may not ever, participate in either a multi-
employer plan or a multiple employer plan.
(b) Xxxxxxx has delivered or made available to CSBI prior to the
execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such
Xxxxxxx Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Xxxxxxx Benefit Plans or amendments, all
determination letters, Material rulings, Material opinion letters, Material
information letters or Material advisory opinions issued by the IRS, the United
States Department of Labor or the Pension Benefit Guaranty Corporation after
December 31, 1994, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports and summary annual
reports prepared for any Xxxxxxx Benefit Plan with respect to the most recent
plan year, and (iv) the most recent summary plan descriptions and any Material
modifications thereto.
(c) All Xxxxxxx Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws, the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Xxxxxxx. Each Xxxxxxx ERISA Plan
which is intended to be qualified under Section 401(a) of the Internal Revenue
Code has received a favorable determination letter from the IRS, and Xxxxxxx is
not aware of any circumstances which will or could reasonably result in
revocation of any such favorable determination letter or failure of an Xxxxxxx
ERISA Plan intended to satisfy Internal Revenue Code Section 401 to satisfy the
Tax qualification provisions of the Internal Revenue Code applicable thereto.
Neither Xxxxxxx nor Bank has engaged in a transaction with respect to any
Xxxxxxx Benefit Plan that, assuming the Taxable Period of such transaction
expired as of the date hereof, would subject Xxxxxxx or Bank to a Material Tax
or penalty imposed by either Section 4975 of the Internal Revenue Code or
Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx.
(d) Except as set forth on Schedule 5.14(d) attached hereto, no
Xxxxxxx Pension Plan has any "unfunded current liability," as that term is
defined in Section 302(d)(8)(A) of ERISA, based on actuarial assumptions set
forth for such plan's most recent actuarial valuation, and the fair market value
of the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no Material change in the financial position or
funded status of any Xxxxxxx Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Xxxxxxx Pension Plan, and (iii) no increase in
benefits under any Xxxxxxx Pension Plan as a result of plan amendments or
changes in applicable Law, any of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx or
materially affect the funding status of any such plan. Neither any Xxxxxxx
Pension Plan nor any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by Xxxxxxx, or the
16
single-employer plan of any entity which is considered one employer with Xxxxxxx
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, which is reasonably likely to
have a Material Adverse Effect on Xxxxxxx. Xxxxxxx has not provided, and is not
required to provide, security to a Xxxxxxx Pension Plan or to any single-
employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Internal Revenue Code. All premiums required to be paid under ERISA Section 4006
have been timely paid by Xxxxxxx, except to the extent any failure to do so
would not have a Material Adverse Effect on Xxxxxxx.
(e) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by Xxxxxxx with respect to any ongoing, frozen or terminated single-
employer plan or the single-employer plan of any ERISA Affiliate, which
Liability is reasonably likely to have a Material Adverse Effect on Xxxxxxx.
Except as Previously Disclosed, Xxxxxxx has not incurred any withdrawal
Liability with respect to a multi-employer plan under Subtitle B of Title IV of
ERISA (regardless of whether based on contributions of an ERISA Affiliate),
which Liability is reasonably likely to have a Material Adverse Effect on
Xxxxxxx. 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 Xxxxxxx Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof.
(f) Except as set forth on Schedule 5.14(f) attached hereto or as
required under Title I, Part 6 of ERISA and Internal Revenue Code Section 4980B,
neither Xxxxxxx nor Bank has any obligations to provide health and life benefits
under any of the Xxxxxxx Benefit Plans to former employees, and there are no
restrictions on the rights of Xxxxxxx to amend or terminate any such plan
without incurring any Liability thereunder, which Liability is reasonably likely
to have a Material Adverse Effect on Xxxxxxx.
(g) Except as set forth on Schedule 5.14(g) attached hereto, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any officer, director or any employee of Xxxxxxx from
Xxxxxxx or its Subsidiaries under any Xxxxxxx Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Xxxxxxx Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit.
(h) Except as set forth on Schedule 5.14(h) attached hereto, the
actuarial present values of all accrued deferred compensation entitlements
(including, without limitation, entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of Xxxxxxx and its respective beneficiaries, other than entitlements
accrued pursuant to funded retirement plans subject to the provisions of Section
412 of the Internal Revenue Code or Section 302 of ERISA, have been fully
reflected on the Xxxxxxx Financial Statements to the extent required by and in
accordance with GAAP.
17
5.15 Material Contracts. Except as set forth on Schedule 5.15 attached
hereto or otherwise reflected in the Xxxxxxx Financial Statements, neither
Xxxxxxx, its Subsidiaries nor any of their respective Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $50,000, (ii) any Contract relating to the borrowing of money by
Xxxxxxx or any Subsidiary or the guarantee by Xxxxxxx or any Subsidiary of any
such obligation (other than Contracts evidencing deposit liabilities, purchases
of federal funds, fully-secured repurchase agreements, trade payables, Federal
Home Loan Bank advances and Contracts relating to borrowings or guarantees made
in the ordinary course of business), and (iii) any other Contract or amendment
thereto would be required to be filed as an exhibit to a Form 10-K filed by
Xxxxxxx with the SEC as of the date of this Agreement that has not been filed by
Xxxxxxx with the SEC or incorporated by reference as an exhibit to Xxxxxxx'x
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (together
with all Contracts referred to in Sections 5.10 and 5.14(a) of this Agreement,
the "Xxxxxxx Contracts"). With respect to each Xxxxxxx Contract, (i) the
Contract is in full force and effect, (ii) neither Xxxxxxx nor Bank is in
Default thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Xxxxxxx, (iii)
neither Xxxxxxx nor its Subsidiaries has repudiated or waived any material
provision of any such Contract, and (iv) no other party to any such Contract is,
to the knowledge of Xxxxxxx, in Default in any respect, other than Defaults
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Xxxxxxx, or has repudiated or waived any Material
provision thereunder. Except as set forth on Schedule 5.15 attached hereto, all
of the indebtedness of Xxxxxxx or any Subsidiary for money borrowed is
prepayable at any time by Xxxxxxx or any Subsidiary without penalty or premium.
5.16 Legal Proceedings. There is no Litigation pending, or, to the
Knowledge of Xxxxxxx, threatened against either Xxxxxxx or any Subsidiary, or
against any of their Assets, employee benefit plans, interests or rights that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Xxxxxxx, nor are there any Orders of any Regulatory Authorities, other
governmental authorities or arbitrators outstanding against either Xxxxxxx or
any Subsidiary, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Xxxxxxx.
5.17 Reports. Except as set forth on Schedule 5.17 attached hereto, since
December 31, 1994, Xxxxxxx and its Subsidiaries have timely filed all reports
and statements, together with any amendments required to be made with respect
thereto, that they were required to file with Regulatory Authorities and any
applicable state securities or banking authorities, except failures to file
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Xxxxxxx or its Subsidiaries. As of their respective
dates, each of such reports and documents, including the financial statements,
exhibits and schedules thereto, complied in all material respects with all
applicable Laws. As of their respective dates, each such report and document
did not contain any untrue statement of a Material fact or omit to state a
Material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
18
5.18 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by Xxxxxxx or any Subsidiary or any
Affiliate thereof to CSBI pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of Material fact or will omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
Xxxxxxx or any Subsidiary or any Affiliate thereof for inclusion in the
Registration Statement to be filed by CSBI with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any Material fact, or omit to state any Material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by Xxxxxxx or any Subsidiary or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to Xxxxxxx'x shareholders in connection with
the Xxxxxxx Meeting, and any other documents to be filed by Xxxxxxx or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy Statement, when first mailed
to the shareholders of Xxxxxxx, be false or misleading with respect to any
Material fact, or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Xxxxxxx Meeting be false or misleading
with respect to any Material fact, or omit to state any Material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Xxxxxxx Meeting. All documents that Xxxxxxx or
any Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all Material respects with the provisions of applicable Law.
5.19 Tax and Regulatory Matters. Neither Xxxxxxx, nor any Subsidiary nor
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the second
sentence of such Section. To the Knowledge of Xxxxxxx, there exists no fact,
circumstance or reason why the requisite Consents referred to in Section 9.1(b)
of this Agreement cannot be received in a timely manner without the imposition
of any condition or restriction of the type described in the second sentence of
such Section 9.1(b) other than with respect to anti-trust or competitive effects
issues.
5.20 State Takeover Laws. Xxxxxxx has taken all necessary action to exempt
the transactions contemplated by this Agreement from any applicable
"moratorium," "control share," "fair price," "business combination" or other
state takeover Law.
5.21 Articles of Incorporation Provisions. Xxxxxxx has taken all actions so
that the entering into of this Agreement and the consummation of the Merger
contemplated hereby do not and will not result in the grant of any rights to any
Person under the Articles of Incorporation, Bylaws or other governing
instruments of Xxxxxxx (other than voting, dissenters' rights of appraisal or
other similar rights) or restrict or impair the ability of CSBI or any of its
Subsidiaries
19
to vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of Xxxxxxx Common Stock that may be acquired or controlled by it.
5.22 Derivatives. All interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management arrangements,
whether entered into for Xxxxxxx'x own account, or for the account of Bank or
its customers, were entered into (i) in accordance with prudent business
practices and all applicable Laws, and (ii) with counterparties believed to be
financially responsible.
5.23 Year 2000. To the Knowledge of Xxxxxxx, all computer software and
hardware necessary for the conduct of business by Xxxxxxx (the "Xxxxxxx
Software") is designed to be used before, on, and after January 1, 2000 and the
Xxxxxxx Software will operate during each such time period without error
relating to the year 2000, specifically including any error relating to, or the
product of, any date data representing or referring to any particular date. As
used in this Section 5.23, "operate" further includes, but is not limited to,
accepting input of dates without ambiguity, outputting all dates without
ambiguity, and performing calculations, comparisons, extractions, sorting and
any other processing or taking actions or making decisions using dates or time
periods without suffering any abends, aborts, invalid or incorrect results or
other interruptions, whether before, on, or after January 1, 2000. Xxxxxxx has
received all year 2000 examinations and certifications as required by applicable
Law and will, within ten business days of this Agreement, make available for
CSBI's review all (i) such examinations and certifications, (ii) contingency
plans in the event the Software fails to operate, and (iii) costs associated
with or related to the Xxxxxxx Software.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CSBI AND HAC
CSBI and HAC, jointly and severally, hereby represent and warrant to
Xxxxxxx as follows:
6.1 Organization, Standing and Power. CSBI is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Georgia and
is duly registered as a bank holding company under the BHC Act. HAC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina. CSBI has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its Assets.
CSBI is duly qualified or licensed to transact business as a foreign corporation
in good standing in the states of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on CSBI.
6.2 Authority, No Breach By Agreement.
(a) CSBI and HAC each have the corporate power and authority necessary to
execute, deliver and perform their respective obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the
20
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of CSBI and HAC. Subject to the Consents of
Regulatory Authorities, this Agreement represents a legal, valid, and binding
obligation of CSBI and HAC, enforceable against CSBI and HAC in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by either CSBI or
HAC, nor the consummation by either CSBI or HAC of the transactions contemplated
hereby, nor compliance by either CSBI or HAC with any of the provisions hereof,
will (i) conflict with or result in a breach of any provision of CSBI's or HAC's
Articles of Incorporation or Bylaws, or (ii) constitute or result in a Default
under, or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any CSBI Companies under, any Contract or Permit of any CSBI
Companies, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CSBI, or (iii) subject to receipt of the requisite approvals referred
to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any CSBI Companies or any of their respective Material Assets.
(c) No notice to, filing with or Consent of any public body or authority is
necessary for the consummation by either CSBI or HAC of the Merger and the other
transactions contemplated in this Agreement other than (i) in connection or
compliance with the provisions of the Securities Laws, applicable state
corporate and securities Laws and rules of the NASD, (ii) Consents required from
Regulatory Authorities, (iii) notices to or filings with the IRS or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, and
(iv) Consents, filings or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CSBI.
6.3 Capital Stock.
(a) The authorized capital stock of CSBI consists of 30,000,000 shares of
CSBI Common Stock. As of June 30, 1999, there were 11,754,156 shares of CSBI
Common Stock issued and outstanding. CSBI is authorized to issue one or more
series of preferred stock with such powers, preferences and rights as may be
established by CSBI's Board of Directors. As of the date of this Agreement, no
preferred stock has been issued. As of June 30, 1999, 500,000 shares of CSBI
Common Stock were reserved for issuance upon the exercise of issued and
outstanding stock options under the 1994 Incentive Stock Option Plan and 500,000
shares of CSBI Common Stock were reserved under the 1998 Century South Banks,
Inc. Executive Stock Plan (collectively, the "CSBI Option Plans"). All of the
issued and outstanding shares of CSBI Common Stock are, and all of the shares of
CSBI Common Stock to be issued in exchange for shares of Xxxxxxx Common Stock
upon consummation of the Merger, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and fully paid
and nonassessable under the GBCC. None of the outstanding shares of CSBI Common
Stock has been, and none of the shares of CSBI Common Stock to be issued in
21
exchange for shares of Xxxxxxx Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
shareholders of CSBI.
(b) Except as set forth in Section 6.3(a) of this Agreement, or as provided
pursuant to the CSBI Option Plans, or as Previously Disclosed, as of the date of
this Agreement, there are no shares of capital stock or other equity securities
of CSBI outstanding and no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of CSBI or contracts, commitments, understandings or arrangements by which
CSBI is or may be bound to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock.
(c) At the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the Xxxxxxx Meeting, the CSBI Common Stock
shall either be listed on a national securities exchange or held of record by at
least 2,000 shareholders.
6.4 SEC Filings; Financial Statements.
(a) CSBI has filed and made available to Xxxxxxx all forms, reports and
documents required to be filed by CSBI with the SEC since December 31, 1994
(collectively, the "CSBI SEC Reports"). The CSBI SEC Reports (i) at the time
filed, complied in all Material respects with the applicable requirements of the
1933 Act and the 1934 Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated in such
CSBI SEC Reports or necessary in order to make the statements in such CSBI SEC
Reports, in light of the circumstances under which they were made, not
misleading. Except for CSBI Subsidiaries that are registered as a broker, dealer
or investment advisor or filings due to fiduciary holdings of the CSBI
Subsidiaries, none of the CSBI Subsidiaries is required to file any forms,
reports or other documents with the SEC;
(b) CSBI has Previously Disclosed and delivered to Xxxxxxx prior to the
execution of this Agreement copies of all CSBI Financial Statements for periods
ended prior to the date hereof and will deliver to Xxxxxxx copies of all CSBI
Financial Statements prepared subsequent to the date hereof. The CSBI Financial
Statements (as of the dates thereof and the periods covered thereby) (i) are or,
if dated after the date of this Agreement, will be in accordance with the books
and records of the CSBI Companies, which are or will be, materially complete and
correct and which have been or will have been, maintained in accordance with
good business practices, and (ii) present or will present fairly the
consolidated financial position of the CSBI Companies as of the dates indicated
and the consolidated results of operations, changes in shareholders' equity and
cash flows of the CSBI Companies for the periods indicated, in accordance with
GAAP (subject to exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year end adjustments that are not Material).
22
6.5 Absence of Undisclosed Liabilities. None of the CSBI Companies have any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of CSBI as of
December 31, 1998 and June 30, 1999 included in the CSBI Financial Statements or
reflected in the notes thereto. No CSBI Company has incurred or paid any
Liability since March 31, 1999, except for (i) such Liabilities incurred or paid
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CSBI, or (ii) in connection with the transactions
contemplated by this Agreement.
6.6 Absence of Certain Changes or Events. Since June 30, 1999, except as
Previously Disclosed, (i) there have been no events, changes or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI, and (ii) the CSBI Companies have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a Material breach or violation of any of the
covenants and agreements of CSBI provided in Article 7 of this Agreement.
6.7 Compliance with Laws. CSBI is duly registered as a bank holding company
under the BHC Act. Each of the CSBI Companies has in effect all permits
necessary to own, lease or operate its Assets and to carry on its business as
now conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
CSBI, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI. None of the CSBI Companies:
(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on CSBI; and
(b) except as Previously Disclosed, has received any notification or
communication from any agency or department of federal, state or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any of the CSBI Companies are not in compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CSBI, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI, or (iii) requiring any CSBI
Companies to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts materially
the conduct of its business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management or the payment of dividends.
6.8 Legal Proceedings. There is no Litigation instituted or pending, or, to
the Knowledge of CSBI, threatened against any CSBI Companies, or against any
Asset, interest or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material
23
Adverse Effect on CSBI, nor are there any Orders of any Regulatory Authorities,
other governmental authorities or arbitrators outstanding against any CSBI
Companies, that are reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on CSBI.
6.9 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by any CSBI Companies or any
Affiliate thereof to Xxxxxxx pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of Material fact or will omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
CSBI Companies or any Affiliate thereof for inclusion in the Registration
Statement to be filed by CSBI with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any Material
fact, or omit to state any Material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
any CSBI Companies or any Affiliate thereof for inclusion in the Proxy Statement
to be mailed to Xxxxxxx shareholders in connection with the Xxxxxxx Meeting, and
any other documents to be filed by any CSBI Companies or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of Xxxxxxx, be false or misleading with respect to any Material
fact, or omit to state any Material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Xxxxxxx Meeting, be false or misleading
with respect to any Material fact, or omit to state any Material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Xxxxxxx Meeting. All documents that any CSBI
Companies or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form in all Material respects with the provisions of applicable Law.
6.10 Tax and Regulatory Matters. No CSBI Company or any Affiliate thereof
has taken any action or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the second sentence of such
Section 9.1(b). To the Knowledge of CSBI, there exists no fact, circumstance or
reason why the requisite Consents referred to in Section 9.1(b) of this
Agreement cannot be received in a timely manner without the imposition of any
condition or restriction of the type described in the second sentence of such
Section 9.1(b) other than with respect to anti-trust or competitive effects
issues.
6.11 Reports. Except as Previously Disclosed, since December 31, 1994, CSBI
and its Subsidiaries have timely filed all reports and statements, together with
any amendments required to be made with respect thereto (or have obtained
written waivers from the applicable Regulatory Authority waiving all
consequences from the failure to timely file), that they were required to file
with Regulatory Authorities and any applicable state securities or banking
authorities, except
24
failure to file which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CSBI or its Subsidiaries. As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits and schedules thereto, complied in all material respects
with all applicable Laws. As of their respective dates, each such report and
document did not contain any untrue statement of a Material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
6.12 Year 2000. To the Knowledge of CSBI, all computer software and
hardware necessary for the conduct of business by CSBI (the "CSBI Software") is
designed to be used before, on, and after January 1, 2000 and the CSBI Software
will operate during each such time period without error relating to the Year
2000, specifically including any error relating to, or the product of, any date
data representing or referring to any particular date. As used in this Section
6.12, "operate" further includes, but is not limited to, accepting input of
dates without ambiguity, outputting all dates without ambiguity, and performing
calculations, comparisons, extractions, sorting and any other processing or
taking actions or making decisions using dates or time periods without suffering
any abends, aborts, invalid or incorrect results or other interruptions, whether
before, on, or after January 1, 2000. CSBI has received all Year 2000
examinations and certifications as required by applicable Law and will, within
ten business days of this Agreement, make available for Xxxxxxx'x review all (i)
such examinations and certifications, (ii) contingency plans in the event the
software fails to operate, and (iii) costs associated with or related to the
CSBI Software.
6.13 Merger Consideration. CSBI has unissued shares of CSBI Common Stock
that are not reserved for any other purposes and are sufficient to provide the
aggregate number of shares of CSBI Common Stock to be issued in the Merger and
has available to it sources of funds sufficient to provide the aggregate Per
Share Cash Consideration. The shares of CSBI Common Stock to be issued in the
Merger have been duly authorized and when issued pursuant to the Merger will be
validly issued, fully paid and non-assessable with the same rights as each other
outstanding shares of CSBI Common Stock.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Xxxxxxx. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement unless
the prior written consent of CSBI shall have been obtained, and except as
otherwise contemplated herein, Xxxxxxx agrees: (i) to operate its business and
cause each Subsidiary to operate its business in the usual, regular and ordinary
course; (ii) to preserve intact its business organizations and Assets and
maintain its rights and franchises; (iii) to use its reasonable efforts to cause
its representations and warranties to be correct at all times; (iv) to use its
reasonable efforts to ensure, to the extent consistent with the Board of
Directors' exercise of its fiduciary duties, that the aggregate Merger-related
expenses it incurs are reasonable; (v) to take all steps necessary to terminate
the Xxxxxxx Benefit Plans (or obtain waivers of claims against Xxxxxxx from the
beneficiaries thereunder as approved by CSBI in its sole discretion) as of the
Effective Time; and (vi) to take no action which would (a) adversely affect the
ability of any Party to obtain any
25
Consents required for the transactions contemplated hereby without imposition of
a condition or restriction of the type referred to in the last sentence of
Section 9.1(b) of this Agreement or (b) adversely affect in any Material respect
the ability of either Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of Xxxxxxx. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Xxxxxxx
covenants and agrees that it and each Subsidiary will not do or agree or commit
to do, any of the following without the prior written consent of the Chief
Executive Officer of CSBI, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of Xxxxxxx or the Charter, Bylaws or other governing instruments of
each Subsidiary; or
(b) incur any additional debt obligation or other obligation for borrowed
money in excess of an aggregate of $50,000 except in the ordinary course of the
business of Xxxxxxx and each Subsidiary consistent with past practices (which
shall include creation of deposit liabilities, purchases of federal funds,
advances from the Federal Home Loan Bank and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any share of stock of each Subsidiary held by Xxxxxxx of any Lien
or permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers' acceptances, "treasury, tax and loan" accounts
established in the ordinary course of business and Liens in effect as of the
date hereof that are Previously Disclosed); or
(c) repurchase, redeem or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of Xxxxxxx, or declare or pay any dividend or make any other
distribution in respect of Xxxxxxx capital stock provided that Xxxxxxx may, in
its sole discretion (to the extent legally and contractually permitted to do
so), but shall not be obligated to, declare and pay quarterly cash dividends at
a rate not to exceed sixteen cents ($0.16) per share consistent with past
practices to its shareholders; or
(d) except for this Agreement or in connection with the exercise of any
option pursuant to the Stock Option Agreement, issue or sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of Xxxxxxx Common Stock, or any stock
appreciation rights, or any option, warrant, conversion or other right to
acquire any such stock; or
(e) adjust, split, combine or reclassify any capital stock of Xxxxxxx or
issue or authorize the issuance of any other securities in respect of or in
substitution for shares of either Xxxxxxx Common Stock or each Subsidiary's
common stock or buy, sell, lease, mortgage or otherwise dispose of or otherwise
encumber any Asset having a book value in excess of $10,000 or that exceed in
the aggregate the sum of $100,000 during the term of this Agreement (other than
in the ordinary course of business for reasonable and adequate consideration);
or
26
(f) acquire direct or indirect control over any real property, other than
in connection with (i) foreclosures in the ordinary course of business, or (ii)
acquisitions of control by Xxxxxxx in its fiduciary capacity; or
(g) except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of three years or less,
and purchases of investment grade bonds issued by municipalities located within
the State of North Carolina with a maturity of five years or less, purchase any
bonds or securities or make any Material investment, either by purchase of
stock, bonds or securities, contributions to capital, Asset transfers or
purchase of any Assets, in any Person other than Bank, or otherwise acquire
direct or indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of control by
a depository institution Subsidiary in its fiduciary capacity, or (iii) the
creation of new, wholly-owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(h) grant any increase in compensation or benefits to the employees or
officers of Xxxxxxx or any Subsidiary (including such discretionary increases as
may be contemplated by existing employment agreements), except in accordance
with past practice Previously Disclosed or as required by Law, pay any bonus,
enter into or amend any severance agreements with officers of either Xxxxxxx or
any Subsidiary, grant any increase in fees or other increases in compensation or
other benefits to directors of either Xxxxxxx or any Subsidiary except in
accordance with past practice Previously Disclosed; or
(i) enter into or amend any employment Contract between Xxxxxxx or any
Subsidiary and any Person (unless such amendment is required by Law) that
Xxxxxxx or any Subsidiary, as the case may be, does not have the unconditional
right to terminate without Liability (other than Liability for services already
rendered), at any time on or after the Effective Time; or
(j) adopt any new employee benefit plan of Xxxxxxx or any Subsidiary or
make any Material change in or to any existing employee benefit plans of Xxxxxxx
or any Subsidiary other than any such change that is required by Law or that, in
the opinion of counsel, is necessary or advisable to maintain the tax qualified
status of any such plan; or
(k) make any significant change in any Tax or accounting methods or systems
of internal accounting controls, except as may be appropriate to conform to
changes in regulatory accounting requirements or GAAP; or
(l) commence any Litigation other than in accordance with past practice,
settle any Litigation involving any Liability of Xxxxxxx or any Subsidiary for
money damages in excess of $25,000 or Material restrictions upon the operations
of Xxxxxxx or Subsidiary; or
(m) except in the ordinary course of business, modify, amend or terminate
any Material Contract or waive, release, compromise or assign any Material
rights or claims; or
27
(n) extend credit to any borrower which requires the approval of Xxxxxxx'x
Board of Directors.
7.3 Covenants of CSBI and HAC.
(a) From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, unless the prior written consent of
Xxxxxxx shall have been obtained, CSBI and HAC, jointly and severally, covenant
and agree that each of them shall (i) continue to conduct their respective
businesses and the business of its Subsidiaries in a manner designed in their
respective reasonable judgment to enhance the long term value of the CSBI Common
Stock and the business prospects of the CSBI Companies, (ii) to the extent
consistent therewith, use all reasonable efforts to preserve intact the CSBI
Companies' core businesses and goodwill with their respective employees and the
communities they serve, (iii) use their respective reasonable efforts to cause
their respective representations and warranties to be correct at all times, and
(iv) take no action which would (a) adversely affect the ability of any Party to
obtain any Consents required for the transaction contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement, or (b) adversely affect in any
Material respect the ability of any Party to perform its covenants and
agreements under this Agreement.
(b) CSBI shall take all action necessary to approve, in accordance with
Rule 16b-3 of the 1934 Act, the acquisition of shares of the common stock of
CSBI and CSBI stock options by Xxxxxxx shareholders who will become Section 16
insiders of CSBI upon consummation of the Merger.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) is reasonably likely to cause
or constitute a Material breach of any of its representations, warranties or
covenants contained herein and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year end adjustments that are not Material). As of their
respective dates, such reports filed with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
28
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Shareholder Approval. Xxxxxxx shall take, in accordance with applicable
Law and its Articles of Incorporation and Bylaws, all action necessary to
convene the Xxxxxxx Meeting to consider and vote upon the approval of this
Agreement and any other matters required to be approved by Xxxxxxx shareholders
for consummation of the Merger (including any adjournment or postponement
thereof), as promptly as practicable after the Registration Statement is
declared effective. The Board of Directors of Xxxxxxx shall (subject to
compliance with its fiduciary duties as advised by counsel and the receipt from
Trident of a letter dated not more than three days prior to the date of the
mailing of the Proxy Statement to the effect that the consideration to be
received in the merger by the holders of Xxxxxxx Common Stock is fair, from a
financial point of view, to such holders) recommend such approval, and Xxxxxxx
(subject to the direction of the Xxxxxxx Board acting in compliance with its
fiduciary duties as advised by counsel) shall take all reasonable lawful action
to solicit such approval by its shareholders. CSBI, as sole shareholder of HAC,
will vote its HAC Common Stock in favor of the Merger.
8.2 Registration Statement.
(a) Each of CSBI and Xxxxxxx agrees to cooperate in the preparation of a
Registration Statement to be filed by CSBI with the SEC in connection with the
issuance of CSBI Common Stock in the Merger (including the Proxy Statement and
all related documents). Provided Xxxxxxx has cooperated as required above, CSBI
agrees to file the Registration Statement with the SEC as promptly as
practicable, but in no event later than 90 days after the date of this
Agreement. Each of Xxxxxxx and CSBI agrees to use all reasonable efforts to
cause the Registration Statement to be declared effective under the 1933 Act as
promptly as reasonably practicable after filing thereof. CSBI also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Xxxxxxx agrees to furnish CSBI all information concerning
Xxxxxxx, Bank and their respective officers, directors and shareholders as may
be reasonably requested in connection with the foregoing.
(b) Each of Xxxxxxx and CSBI agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the 1933 Act, contain any untrue statement of a Material
fact or omit to state any Material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to Xxxxxxx shareholders and at the time of the Xxxxxxx Meeting, contain any
untrue statement of a Material fact or omit to state any Material fact required
to be stated therein or necessary to make the statements therein not misleading
with respect to any Material fact, or which will omit to state any Material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier statement in the Proxy
Statement or any amendment or supplement thereto. Each of Xxxxxxx and CSBI
further agrees that if it shall become aware prior to the
29
Effective Date of any information that would cause any of the statements in the
Proxy Statement to be false or misleading with respect to any Material fact, or
to omit to state any Material fact necessary to make the statements therein not
false or misleading, to promptly inform the other Party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) In the case of CSBI, CSBI will advise Xxxxxxx, promptly after CSBI
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, or of the issuance of
any stop order or the suspension of the qualification of the CSBI Common Stock
for offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
(d) Nothing in this Section 8.2 or elsewhere in this Agreement shall
prohibit accurate disclosure by Xxxxxxx of information that is required to be
disclosed in the Registration Statement of the Proxy Statement or in any other
document required to be filed with the SEC (including, without limitation, a
Solicitation/Recommendation Statement on Schedule 14D-9) or otherwise required
to be publicly disclosed by applicable Law or the regulations and rules of the
AMEX.
8.3 Applications. CSBI shall promptly prepare and file, Xxxxxxx and each
Subsidiary shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. CSBI
shall permit Xxxxxxx to review (and approve with respect to information relating
to Xxxxxxx) such applications prior to filing same.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, Xxxxxxx shall execute and file the Articles of
Merger with the Secretary of State of the State of North Carolina and the
Savings Institution Division of the State of North Carolina in connection with
the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use its reasonable efforts to
take all actions, and to do all things necessary, proper or advisable under
applicable Laws, as promptly as practicable so as to permit consummation of the
Merger at the earliest possible date and to otherwise enable consummation of the
transactions contemplated hereby and shall cooperate fully with the other Party
hereto to that end (it being understood that any amendments to the Registration
Statement filed by CSBI in connection with the CSBI Common Stock to be issued in
the Merger or a resolicitation of proxies as a consequence of an acquisition
agreement by CSBI or any of its Subsidiaries shall not violate this covenant
provided CSBI agrees to pay all direct expenses associated with any such
resolicitation), including, without limitation, using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its
30
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party will keep the other Party
advised of all Material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transaction contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to, maintain
the confidentiality of all confidential information furnished to it by any other
Party concerning its and its Subsidiaries' businesses, operations and financial
condition except in furtherance of the transactions contemplated by this
Agreement. In the event that a Party is required by applicable Law or valid
court process to disclose any such confidential information, then such Party
shall provide the other Party with prompt written notice of any such requirement
so that the other Party may seek a protective order or other appropriate remedy
and/or waive compliance with this Section 8.6. If in the absence of a
protective order or other remedy or the receipt of a waiver by the other Party,
a Party is nonetheless, in the written opinion of counsel, legally compelled to
disclose any such confidential information to any tribunal or else stand liable
for contempt or suffer other censure or penalty, a Party may, without liability
hereunder, disclose to such tribunal only that portion of the confidential
information which such counsel advises such Party is legally required to be
disclosed; provided that such disclosing Party use its best efforts to preserve
the confidentiality of such confidential information, including without
limitation, by cooperating with the other Party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded such confidential information by such tribunal. If this Agreement is
terminated prior to the Effective Time, each Party shall promptly return all
documents and copies thereof and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a Material breach of
any representation, warranty, covenant or agreement of the other Party or which
has had or is reasonably likely to have a Material Adverse Effect on the other
Party.
(d) Neither Party nor any of their respective Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of its customers, jeopardize
the attorney-client or similar privilege with respect to such information or
contravene any Law, rule, regulation, Order, judgment, decree, fiduciary duty or
agreement entered into prior to the date of this Agreement. The Parties will
use
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their reasonable efforts to make appropriate substitute disclosure arrangements,
to the extent practicable, in circumstances in which the restrictions of the
preceding sentence apply.
8.7 Press Releases. Prior to the Effective Time, Xxxxxxx and CSBI shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
-------- -------
8.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, neither Xxxxxxx nor any Affiliate thereof nor
any investment banker, attorney, accountant or other representative
(collectively, the "Representatives") retained by Xxxxxxx or Bank shall directly
or indirectly solicit any Acquisition Proposal by any Person. Except to the
extent necessary to comply with the fiduciary duties of Xxxxxxx Board of
Directors as determined by the Xxxxxxx Board of Directors after consulting with
and considering the advice of counsel, neither Xxxxxxx nor any Affiliate or
Representative thereof shall furnish any non public information that it is not
legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but Xxxxxxx may communicate
information about such an Acquisition Proposal to its shareholders if and to the
extent that it is required to do so in order to comply with its legal
obligations as advised by counsel; provided that Xxxxxxx shall promptly advise
CSBI verbally and in writing following the receipt of any Acquisition Proposal
and the Material details thereof. Xxxxxxx shall (i) immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
Persons conducted heretofore with respect to any of the foregoing and (ii)
subject to its fiduciary duties, direct and use its reasonable efforts to cause
all of its Representatives not to engage in any of the foregoing.
8.9 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not to qualify for treatment as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 State Takeover Laws. Xxxxxxx and each Subsidiary shall take all
reasonable steps to exempt the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable state
takeover Law.
8.11 Articles of Incorporation Provisions. Xxxxxxx and each Subsidiary
shall take all necessary action to ensure that the entering into of this
Agreement and the consummation of the Merger does not and will not result in the
grant of any rights to any Person under the Articles, Bylaws or other governing
instruments of Xxxxxxx or any Subsidiary (other than voting, dissenters' rights
of appraisal or other similar rights) or restrict or impair the ability of CSBI
or any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of Xxxxxxx or any Subsidiary that may be
acquired or controlled by it.
32
8.12 Agreement of Affiliates. Xxxxxxx has Previously Disclosed all Persons
whom it reasonably believes is an "affiliate" of Xxxxxxx for purposes of Rule
145 under the 1933 Act. Xxxxxxx shall use its reasonable efforts to cause each
such Person to deliver to CSBI not later than 30 days after the date of this
Agreement, a written agreement, substantially in the form of Exhibit C,
providing that such Person will not sell, pledge, transfer or otherwise dispose
of the shares of Xxxxxxx Common Stock held by such Person except as contemplated
by such agreement or by this Agreement and will not sell, pledge, transfer or
otherwise dispose of the shares of CSBI Common Stock to be received by such
Person upon consummation of the Merger except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder. CSBI shall
not be required to maintain the effectiveness of the Registration Statement
under the 1933 Act for the purposes of resale of CSBI Common Stock by such
affiliates.
8.13 Employee Benefits and Contract. Following the Effective Time, CSBI
shall provide generally to officers and employees of Xxxxxxx, who at or after
the Effective Time become employees of a CSBI Company, employee benefits under
employee benefit plans including severance plans set forth herein on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the CSBI Companies to their similarly situated officers
and employees. CSBI shall waive any pre-existing condition exclusion under any
employee health plan for which any employees and/or officers and dependents
covered by Xxxxxxx Benefit Plans as of Closing shall become eligible by virtue
of the preceding sentence, to the extent (i) such pre-existing condition was
covered under the Xxxxxxx Benefit Plans and (ii) the individual affected by the
pre-existing condition was covered by the Xxxxxxx Entity's corresponding plan on
the date which immediately precedes the Effective Time. For purposes of
participation, vesting and benefit accrual under all qualified benefit plans,
the service of the employees of Xxxxxxx or Bank prior to the Effective Time
shall be treated as service with the CSBI Companies participating in all
qualified benefit plans. Bank will enter into an employment contract acceptable
to CSBI with Xxxxx X. Xxxxxx as of the date of Closing to the extent he is
available and agrees to such employment.
8.14 Exchange Listing. CSBI shall use its reasonable efforts to list, prior
to the Effective Time, on the NASDAQ, subject to official notice of issuance,
the shares of CSBI Common Stock to be issued to the holders of Xxxxxxx Common
Stock pursuant to the Merger.
8.15 D&O Coverage. At the Effective Time, CSBI will provide directors and
officers insurance coverage for Xxxxxxx'x directors and officers either, at
CSBI's election, (i) by purchasing continuation coverage under Xxxxxxx'x current
policy for directors and officers for a period not less than three years after
the Effective Time, or (ii) obtain coverage under CSBI's current directors' and
officers' policy to provide coverage for Xxxxxxx'x directors and officers on a
prior acts basis for a period not less than three years prior to the Effective
Time.
8.16 Indemnification. CSBI shall cause Xxxxxxx to continue to, indemnify,
defend and hold harmless the present and former directors, officers, employees
and agents of the Xxxxxxx Companies (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions arising out of the Indemnified
Party's service or services as directors, officers, employees or agents of
Xxxxxxx or, at Xxxxxxx'x request, of another corporation, partnership,
33
joint venture, trust or other enterprise occurring at or prior to the Effective
Time (including the transactions contemplated by this Agreement) to the extent
currently provided by Xxxxxxx'x Articles of Incorporation and bylaws as in
effect as of the date hereof, including any provisions relating to advances of
expenses incurred in the defense of any Litigation.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and to consummate the Merger are subject to
the satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6 of this Agreement:
(a) Shareholder Approval. The shareholders of Xxxxxxx shall have
approved this Agreement and the consummation of the Merger as and to the extent
required by Law and by the provisions of any of its governing instruments and by
the rules of the AMEX.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including, without limitation, requirements relating to the raising of
additional capital or the disposition of Assets or deposits) which in the
reasonable judgment of the Board of Directors of CSBI would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement so as to render inadvisable the consummation of
the Merger.
(c) Consents and Approvals. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 9.1(b) of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
which in the reasonable judgment of the Board of Directors of CSBI would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(d) Legal Proceedings. No court or governmental or Regulatory Authority
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law or Order (whether temporary, preliminary or permanent) or taken
any other action which prohibits, restricts or makes illegal consummation of the
transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the
34
effectiveness thereof shall have been initiated and be continuing, and all
necessary approvals under state securities Laws or the 1933 Act or 1934 Act
relating to the issuance or trading of the shares of CSBI Common Stock issuable
pursuant to the Merger shall have been received.
(f) Tax Matters. Xxxxxxx and CSBI shall have received a written opinion
of counsel from Xxxxxxxx Xxxxxxx LLP in form reasonably satisfactory to each of
them (the "Tax Opinion"), substantially to the effect that for federal income
tax purposes (i) the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code, (ii) the exchange in the Merger
of Xxxxxxx Common Stock solely for CSBI Common Stock will not give rise to gain
or loss to the shareholders of Xxxxxxx with respect to such exchange (except to
the extent of any cash received), and (iii) neither of Xxxxxxx nor CSBI will
recognize gain or loss as a consequence of the Merger except for income and
deferred gain recognized pursuant to Treasury regulations issued under Section
1502 of the Internal Revenue Code. In rendering such Tax Opinion, Xxxxxxxx
Xxxxxxx LLP shall be entitled to rely upon representations of officers of
Xxxxxxx, CSBI and HAC reasonably satisfactory in form and substance to such
counsel.
(g) Employment Agreement. Xxxxxxx and Bank shall have offered Xxxxx X.
Xxxxxx the employment agreement in substantially the form set forth in Exhibit D
to this Agreement.
9.2 Conditions to Obligations of CSBI. The obligations of CSBI to perform
this Agreement and to consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by CSBI pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. The representations and warranties
of Xxxxxxx set forth or referred to in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.3 of this Agreement, which
shall be true and correct in all Material respects) the inaccuracies of which
relate to matters that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Xxxxxxx.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Xxxxxxx to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all Material
respects.
(c) Certificates. Xxxxxxx shall have delivered to CSBI (i) a certificate,
dated as of the Effective Time and signed on its behalf by its Chief Executive
Officer and Chief Financial Officer, to the effect that the conditions of its
obligations set forth in Section 9.2(a) and 9.2(b) of this Agreement have been
satisfied, and (ii) certified copies of resolutions duly adopted
35
by the Xxxxxxx Board of Directors and shareholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as CSBI and its counsel shall request.
(d) Opinion of Counsel. CSBI shall have received a written opinion from
Housley Kantarian & Xxxxxxxxx, P.C., counsel to Xxxxxxx, dated as of the
Closing, in form reasonably satisfactory to CSBI, as to the matters set forth in
Exhibit F hereto.
(e) Accountant's Letters. CSBI shall have received from KPMG LLP letters
dated not more than five (5) days prior to (i) the date of the Proxy Statement
and (ii) the Effective Time, with respect to certain financial information
regarding Xxxxxxx and Bank, in form and substance reasonably satisfactory to
CSBI, which letters shall be based upon customary specified procedures
undertaken by such firm.
(f) Affiliate Agreements. CSBI shall have received from each affiliate of
Xxxxxxx the affiliate agreement referred to in Section 8.12 hereof, in
substantially the form attached hereto as Exhibit C.
(g) Support Agreements. Each of the executive officers and directors of
Xxxxxxx listed in Exhibit E shall have executed and delivered to CSBI a Support
Agreement in substantially the form attached hereto as Exhibit B.
9.3 Conditions to Obligations of Xxxxxxx. The obligations of Xxxxxxx to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Xxxxxxx pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. The representations and warranties of
CSBI set forth or referred to in this Agreement shall be true and correct in all
Material respects as of the date of this Agreement and as of the Effective Time
with the same effect as though all such representations and warranties had been
made on and as of the Effective Time (provided that representations and
warranties which are confined to a specified date shall speak only as of such
date), except (i) as expressly contemplated by this Agreement, or (ii) for
representations and warranties (other than the representations and warranties
set forth in Section 6.3 of this Agreement, which shall be true and correct in
all Material respects) the inaccuracies of which relate to matters that are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on CSBI.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of CSBI to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all Material
respects.
(c) Certificates. CSBI shall have delivered to Xxxxxxx (i) a certificate,
dated as of the Effective Time and signed on its behalf by its Chief Executive
Officer and its Chief
36
Financial Officer, to the effect that the conditions of its obligations set
forth in Section 9.3(a) and 9.3(b) of this Agreement have been satisfied, and
(ii) certified copies of resolutions duly adopted by CSBI's Board of Directors
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, all in such reasonable detail as Xxxxxxx
and its counsel shall request.
(d) Opinion of Counsel. Xxxxxxx shall have received an opinion of
Xxxxxxxx Xxxxxxx LLP, counsel to CSBI, dated as of the Effective Time, in form
reasonably satisfactory to Xxxxxxx, as to matters set forth in Exhibit G hereto.
(e) Share Listing. The shares of CSBI Common Stock issuable pursuant to
the Merger shall have been approved for listing on NASDAQ.
(f) Fairness Opinion. Xxxxxxx shall have received from Trident a letter
dated not more than three days prior to the mailing of the Proxy Statement to
the effect that, in the opinion of such firm, the consideration to be received
by Xxxxxxx Shareholders in connection with the Merger is fair from a financial
point of view to such shareholders.
(g) Exchange Agent Certificate. The Exchange Agent shall have delivered
to Xxxxxxx a certificate, dated as of the Effective Time, to the effect that the
Exchange Agent has received from CSBI certificates for the required number of
whole shares of CSBI Common Stock to be issued in the Merger and cash to cover
fractional shares and the Cash Amount.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of
Xxxxxxx, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the respective Boards of Directors of CSBI and
Xxxxxxx; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
of a breach by the other Parties of any representation or warranty contained in
this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach and which breach
would provide the non breaching party the ability to refuse to consummate the
Merger under the standard set forth in Section 9.2(a) of this Agreement in the
case of CSBI and Section 9.3(a) of this Agreement in the case of Xxxxxxx; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
(i) any Consent of any Regulatory Authority required
37
for consummation of the Merger shall have been denied by final nonappealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal, or (ii) the shareholders of Xxxxxxx
fail to vote their approval of this Agreement and the transaction contemplated
hereby at the Xxxxxxx Meeting where the transaction was presented to such
shareholders for approval and voted upon; or
(d) By the Board of Directors of either Party in the event that the Merger
shall not have been consummated by March 31, 2000, but only if the failure to
consummate the transactions contemplated hereby on or before such date is not
caused by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 10.1(d); or
(e) By the Board of Directors of either Party (provided that the
terminating Party is not then in Material breach of any representation,
warranty, covenant or other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 10.1(d) of this Agreement; or
(f) By CSBI in the event that the Board of Directors of Xxxxxxx shall have
failed to reaffirm, following a written request by CSBI for such reaffirmation
after Xxxxxxx shall have received any inquiry or proposal with respect to an
Acquisition Proposal, its approval of the Merger (to the exclusion of any other
Acquisition Proposal), or shall have resolved not to reaffirm the Merger.
10.2 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 10.1 of this Agreement, this Agreement
shall become void and have no effect, except that (i) the provisions of this
Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall survive
any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b) or 10.1(e) of this Agreement shall not relieve the breaching
Party from Liability for an uncured willful breach of a representation,
warranty, covenant or agreement giving rise to such termination; provided that
such Liability shall be determined solely in accordance with the effect of
Section 11.2(b) of this Agreement.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants and agreements of the
Parties shall not survive the Effective Time except for this Section 10.3 and
Articles 2, 3, 4, and 11 and Section 8.12 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. Except as otherwise provided herein, the capitalized
terms set forth below (in their singular and plural forms as applicable) shall
have the following meanings:
"AMEX" shall mean the American Stock Exchange.
"Acquisition Proposal" with respect to a Party shall mean any tender offer
or exchange offer or any proposal for a merger, acquisition of all of the stock
or Assets of, or other business
38
combination involving such Party or any of its Subsidiaries or the acquisition
of a substantial equity interest in, or a substantial portion of the Assets of,
such Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person, (ii) any officer, director, partner,
employer or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"Allowance" shall mean the allowance for possible loan or credit losses for
the periods set forth in Section 5.9 of this Agreement.
"Articles of Merger" shall mean the Articles of Merger to be executed by
CSBI, HAC and Xxxxxxx and filed with the Secretary of State of the State of
North Carolina relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"Bank" shall have the meaning set forth in the Preamble of this Agreement.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Cash Amount" shall have the meaning set forth in Section 3.3 of this
Agreement.
"Cash Election Shares" shall have the meaning set forth in Section 3.2 of
this Agreement.
"Closing" shall mean the closing of the transaction contemplated hereby, as
described in Section 1.2 of this Agreement.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver or similar affirmation by any Person pursuant to any Contract,
Law, Order or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character or other document to which any Person is a party or that is binding on
any Person or its capital stock, Assets or business.
39
"CSBI Common Stock" shall mean the One Dollar ($1.00) par value per share
common stock of CSBI.
"CSBI Companies" shall mean, collectively, CSBI and all CSBI Subsidiaries.
"CSBI Financial Statements" shall mean (i) the consolidated statements of
condition (including related notes and schedules, if any) of CSBI as of June 30,
1999, and as of December 31, 1998, 1997, 1996 and 1995, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the three months ended June 30, 1999,
and for each of the four years ended December 31, 1998, 1997, 1996 and 1995, as
filed by CSBI in SEC Documents and (ii) the consolidated statements of condition
of CSBI (including related notes and schedules, if any) and related statements
of income, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1998.
"CSBI Option Plans" shall have the meaning set forth in Section 6.3 of this
Agreement.
"CSBI Subsidiaries" shall mean the subsidiaries of CSBI including HAC.
"Default" shall mean (i) any breach or violation of or default under any
Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of control or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase or impose any Liability
under, any Contract, Order or Permit.
"Effective Time" shall mean the date and time at which the Articles of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of North Carolina.
"Election Deadline" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Election Form" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Environmental Laws" shall mean all federal, state, municipal and local
laws, statutes, orders, regulations, decrees, resolutions, proclamations,
permits, licenses, approvals, authorizations, consents, judgments, judicial
decisions and other governmental requirements, limitations and standards
relating to the environment, health and safety issues, including, without
limitation, the manufacture, generation, use, processing, treatment, recycling,
storage, handling, "Release" (as hereinafter defined), investigation, removal,
remediation and cleanup of or other corrective action for "Hazardous Materials"
(as hereinafter defined), exposure to Hazardous Materials and personal injury,
natural resource damage, property damage and interference with the use of
property caused by or resulting from Hazardous Materials.
40
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning provided in Section 5.14 of this
Agreement.
"ERISA Plan" shall have the meaning provided in Section 5.14 of this
Agreement.
"Exchange Agent" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Exchange Ratio" shall mean the ratio formed by the number of shares of
CSBI Common Stock Xxxxxxx shareholders will receive for each share of Xxxxxxx
Common Stock as set forth herein to one.
"Exhibits" A through G, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"FICG" shall mean the Financial Institutions Code of Georgia.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Xxxxxxx Benefit Plans" shall have the meaning set forth in Section 5.14 of
this Agreement.
"Xxxxxxx Common Stock" shall mean the One Dollar ($1.00) par value per
share common stock of Xxxxxxx.
"Xxxxxxx Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Xxxxxxx as of June 30,
1999, and as of December 31, 1998, 1997, 1996 and 1995, and the related
statements of income, changes in shareholders' equity and cash flows (including
related notes and schedules, if any) for the three and six months ended June 30,
1999, and for each of the four fiscal years ended December 31, 1998, 1997, 1996
and 1995, and (ii) the consolidated balance sheets of Xxxxxxx (including related
notes and schedules, if any) and related statements of income, changes in
shareholders' equity and cash flows (including related notes and schedules, if
any) with respect to periods ended subsequent to June 30, 1999, with related
prior year comparable financial statements.
"Xxxxxxx Meeting" shall mean the special meeting of the shareholders of
Xxxxxxx or any adjournment or postponement thereof to vote on the matters set
forth in the Proxy Statement.
"Xxxxxxx Preferred Stock" shall mean the One Dollar ($1.00) par value per
share serial preferred stock of Xxxxxxx.
41
"Hazardous Materials" shall mean all hazardous, toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic and
volatile substances, materials, compounds, chemicals and waste, and all other
industrial waste, sanitary waste, pollutants and contaminants, and all
constituents thereof, including, without limitation, petroleum hydrocarbons,
asbestos-containing materials, lead-based paints and all substances, materials,
wastes, chemicals, compounds, contaminants and pollutants regulated or addressed
by Environmental Laws.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" as used with respect to a Person shall mean the knowledge,
after all appropriate due inquiry, of the Chairman, President, Chief Executive
Officer, Chief Financial Officer, Chief Accounting Officer, Chief Credit
Officer, General Counsel, or any Senior or Executive Vice President or Manager
of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule or statute and all Environmental Laws applicable to
a Person or its Assets, Liabilities or business, including, without limitation,
those promulgated, interpreted or enforced by any of the Regulatory Authorities.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due and
payable, (ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary course of the banking
business, (iii) Liens which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on a Party; and (iv) Liens which
have been Previously Disclosed.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, request for information, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any Person
alleging potential Liability or requesting information relating to or affecting
a Party, its business, its Assets (including, without limitation, Contracts
related to it) or the
42
transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"Loan Property" shall mean any property owned, leased or operated by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security or other interest (including an interest in a
fiduciary capacity), and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
"Mailing Date" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Material" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"Material Adverse Effect" on a Party shall mean an event, change, condition
or occurrence which has a Material adverse impact on (i) the financial position,
business or results of operations of such Party and its Subsidiaries, taken as a
whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement; provided that "Material Adverse Effect" shall not be deemed to
include the impact of (x) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(y) changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, and (z) actions and omissions of a Party (or
any of its Subsidiaries) taken with the prior written consent of the other
Parties to the Agreement and the direct effects of compliance with this
Agreement on the operating performance of the Party, including expenses incurred
by such Party in consummating the transactions contemplated by this Agreement.
"Merger" shall mean the merger of Xxxxxxx with and into CSBI referred to in
the Preamble of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"NCBCA" shall mean the North Carolina Business Corporation Act.
"No Election Shares" shall have the meaning set forth in Section 3.2 of
this Agreement.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling or writ of
any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
43
"Participation Facility" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
(including, but not limited to, any property or facility held in a joint
venture) and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility or
property.
"Party" shall mean either Xxxxxxx, HAC or CSBI, and "Parties" shall mean
Xxxxxxx, HAC and CSBI.
"Per Share Cash Consideration" shall have the same meaning set forth in
Section 3.2 of this Agreement.
"Per Share Stock Consideration" shall have the same meaning set forth in
Section 3.1(b) of this Agreement.
"Permit" shall mean any federal, state, local and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its capital stock, Assets,
Liabilities or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert or any person acting in a
representative capacity.
"Previously Disclosed" shall mean information delivered in writing prior to
the date specified in Section 10.1(h) of this Agreement in the manner and to the
Party or counsel or both described in Section 11.8 of this Agreement and
entitled "Previously Disclosed Information Delivered Pursuant to the Agreement
and Plan of Merger" describing in reasonable detail the matters contained
therein or identifying the information disclosed; provided that in the case of
-------- ----
Subsidiaries acquired after the date of this Agreement, such information may be
so delivered by the acquiring Party to the other Party prior to the date of such
acquisition.
"Proxy Statement" shall mean the proxy statement used by Xxxxxxx to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement and shall include the prospectus of CSBI relating to shares of CSBI
Common Stock to be issued to the shareholders of Xxxxxxx and other proxy
solicitation materials of Xxxxxxx consisting of a part thereof.
"Registration Statement" shall mean the Registration Statement on Form S-4,
or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by CSBI under the 1933 Act
in connection with the transactions contemplated by this Agreement.
44
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Department of Banking and Finance, the FDIC,
the NASD and the SEC, all state regulatory agencies having jurisdiction over the
Parties and their respective Subsidiaries.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, abandonment or
disposing into or migration within the environment.
"Representatives" shall have the meaning set forth in Section 8.8 of this
Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall mean all forms, proxy statements, reports,
registration statements, schedules and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Stock Designees" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Stock Option Agreement" shall have the meaning set forth in the Preamble
of this Agreement.
"Subsidiaries" shall mean all those corporations, banks, association, or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 5% or more of the outstanding equity securities
is owned directly or indirectly by its parent; provided, however, there shall
-------- -------
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean Xxxxxxx as the surviving corporation
resulting from the Merger.
"Tax" or "Taxes" shall mean all federal, state, county, local and foreign
taxes, charges, fees, levies, imposts, duties or other assessments, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
the United States or any state, local, or foreign government or subdivision or
agency thereof, including interest and penalties thereon or additions with
respect thereto.
45
"Taxable Period" shall mean any period prescribed by any governmental
authority, including the United States or any state, local or foreign government
or subdivision or agency thereof for which a Tax Return required to be filed or
Tax is required to be paid.
"Tax Return" shall mean any report, return or other information required to
be supplied to a taxing authority in connection with Taxes, including any return
of an affiliated or combined or unitary group that includes a Party or its
Subsidiaries.
"Total Merger Consideration" shall have the meaning set forth in Section
3.3 of this Agreement.
"Trident" shall mean Trident Securities, a division of McDonald Investments
Inc., Xxxxxxx'x investment banker.
"Valuation Period" shall have the meaning set forth in Section 3.2 of this
Agreement.
"Valuation Period Market Value" shall have the meaning set forth in Section
3.2 of this Agreement.
11.2 Expenses.
(a) General. Except as otherwise provided in this Section 11.2 of
-------
this Agreement, each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel except that CSBI shall bear and pay
the filing fees payable in connection with the Registration Statement and the
Proxy Statement and one-half of the printing costs incurred in connection with
the printing of the Registration Statement and the Proxy Statement.
(b) Breach by either Party. In addition to the foregoing, if prior to
----------------------
the Effective Time, this Agreement is terminated by either Party as a result of
the other Party's breach of such Party's representations, warranties or
agreements set forth herein of this Agreement, such Party shall pay to the non-
breaching Party as its sole and exclusive remedy resulting from such
termination, an amount in cash equal to the sum of:
(i) the reasonable direct costs and expenses incurred by or on
behalf of the non-breaching Party in connection with the transactions
contemplated by this Agreement, plus
----
(ii) the sum of $100,000,
which sum represents compensation for the non-breaching Party's loss as the
result of the transactions contemplated by this Agreement not being consummated.
46
11.3 Brokers and Finders. Xxxxxxx represents and warrants that neither it
nor any of its officers, directors, employees or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions or finders' fees in
connection with this Agreement or the transactions contemplated hereby except
Xxxxxxx has engaged Trident to render financial advisory services. In the event
of a claim by any broker or finder based upon his or its representing or being
retained by or allegedly representing or being retained by Xxxxxxx, Xxxxxxx
shall indemnify and hold CSBI harmless of and from any Liability in respect of
any such claim and reduce the Total Merger Consideration by an amount equal to
such claim as determined by CSBI.
11.4 Entire Agreement. Except as otherwise expressly provided herein or
as set forth in that certain letter agreement between the parties of even date
herewith, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transaction contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; whether before or after
shareholder approval of the Merger has been obtained provided, however, that
-------- -------
after any such approval by the holders of Xxxxxxx Common Stock, there shall be
made no amendment decreasing the consideration to be received by Xxxxxxx
shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, CSBI, acting through its Board
of Directors, Chief Executive Officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Xxxxxxx, to waive or extend the time for the compliance or fulfillment by
Xxxxxxx of any and all of its obligations under this Agreement and to waive any
or all of the conditions precedent to the obligations of CSBI under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of CSBI.
(b) Prior to or at the Effective Time, Xxxxxxx, shall have the right
to waive any Default in the performance of any term of this Agreement by CSBI,
to waive or extend the time for the compliance or fulfillment by CSBI of any and
all of its obligations under this Agreement and to waive any or all of the
conditions precedent to the obligations of Xxxxxxx under this Agreement, except
any condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly authorized
officer of Xxxxxxx.
47
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
CSBI and HAC: Century South Banks, Inc.
00 Xxxx Xxxxxx Xxxx - Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
706/000-0000 - FAX
Attn: Xxxxx X. Xxxxxxxx, Vice Chairman and Chief
Executive Officer
Copy to Counsel: Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
404/000-0000 - FAX
Attn: Xxxxxx X. Xxxxxx, Esquire
Xxxxxxx and Bank: Xxxxxxx Bancshares, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President and Chief
Executive Officer
Copy to Counsel: Housley Kantarian & Xxxxxxxxx, P.C.
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
202/000-0000 - FAX
Attn: Xxxxx X. Xxxxxxx, Esquire
48
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at Law or in equity.
11.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
11.14 Interpretation of Agreement. The Parties hereto acknowledge and
agree that each Party has participated in the drafting of this Agreement and
that this document has been reviewed, negotiated and accepted by all parties and
their respective counsel, and the normal rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
applied to the interpretation of this Agreement. No inference in favor, or
against, any party shall be drawn from the fact that one party has drafted any
portion hereof.
49
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
"XXXXXXX"
ATTEST:
XXXXXXX BANCSHARES, INC.
/s/ Xxxx X. Xxxxxxxx
--------------------------------- /s/ Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx, Secretary ------------------------------------
Xxxxx X. Xxxxxx, President and Chief
Executive Officer
(CORPORATE SEAL)
"CSBI"
ATTEST:
CENTURY SOUTH BANKS, INC.
/s/ Xxxxx X. Xxxxxxxx
--------------------------------- /s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, Secretary ------------------------------------
Xxxxx X. Xxxxxxxx, Vice-Chairman and
Chief Executive Officer
(CORPORATE SEAL)
"HAC"
ATTEST:
HBI ACQUISITION CORP.
/s/ Xxxxx X. Xxxxxxxx
--------------------------------- /s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, Secretary ------------------------------------
Xxxxx X. Xxxxxxxx, Vice-Chairman and
Chief Executive Officer
(CORPORATE SEAL)
50
