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EXHIBIT 10.5
THE WARRANTS EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED OR SOLD IN RELIANCE
ON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT AND STATE LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND STATE LAWS.
COASTAL BANKING COMPANY, INC.
STOCK WARRANT AGREEMENT
__________, 1999 __________ Shares
Warrants (the "Warrants") to purchase one share of common stock of
Coastal Banking Company, Inc., (the "Company") a South Carolina corporation and
the holding company for Lowcountry National Bank (proposed), (the "Bank"), for
each share of common stock purchased in the offering by __________________ (the
"Warrant Holder"), are hereby granted to the Warrant Holder in consideration of
the financial risk associated with Warrant Holder's investment in the Company
during its organizational stage and the time, expertise, and continuing
involvement of the Warrant Holder in the management of the Bank. Such Warrants
are granted on the following terms and conditions:
1. EXERCISE OF WARRANTS. One-third of the shares (the "Shares")
subject to the Warrants granted in this Agreement shall vest on each of the
first three anniversaries of the date of the Company's incorporation (the
"Incorporation Date"). Exercise of the Warrants is subject to the following:
(a) EXERCISE PRICE. The exercise price (the "Exercise Price")
shall be $10.00 per Share, subject to adjustment pursuant to
Section 2 below.
(b) EXPIRATION OF WARRANT TERM. The Warrants will expire at 5:00
p.m. Eastern Standard Time on the tenth anniversary of the
Incorporation Date, and may not be exercised thereafter (the
"Expiration Date").
(c) PAYMENT. The purchase price for Shares as to which the
Warrants are being exercised shall be paid in cash, by wire
transfer, by certified or bank cashier's check, or by
personal check drawn on funds on deposit with the Bank.
(d) METHOD OF EXERCISE. The Warrants shall be exercisable by a
written notice delivered to the President or Secretary of the
Company which shall:
(i) State the owner's election to exercise the Warrants,
the number of Shares with respect to which it is
being exercised, the person in whose name the stock
certificate for such Shares is to be registered, and
such person's address and tax identification number
(or, if more than one, the names, addresses and tax
identification numbers of such persons);
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(ii) Be signed by the person or persons entitled to
exercise the Warrants and, if the Warrants are being
exercised by any person or persons other than the
original holder thereof, be accompanied by proof
satisfactory to counsel for the Bank of the right of
such person or persons to exercise the Warrants; and
(iii) Be accompanied by the originally executed copy of
this Stock Warrant Agreement.
(e) PARTIAL EXERCISE. In the event of a partial exercise of the
Warrants, the Company shall either issue a new agreement for
the balance of the Shares subject to this Stock Warrant
Agreement after such partial exercise, or it shall
conspicuously note hereon the date and number of Shares
purchased pursuant to such exercise and the number of Shares
remaining covered by this Stock Warrant Agreement.
(f) RESTRICTIONS ON EXERCISE. The Warrants may not be exercised
(i) if the issuance of the Shares upon such exercise would
constitute a violation of any applicable federal or state
securities or banking laws or other law or regulation or (ii)
unless the Bank or the holder hereof, as applicable, obtains
any approval or other clearance which the Bank determines to
be necessary or advisable from the Federal Reserve Board, the
Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation or any other state or federal
banking regulatory agency with regulatory authority over the
operation of Company or the Bank (collectively the
"Regulatory Agencies"). The Company may require
representations and warranties from the Warranty Holder as
required to comply with applicable laws or regulations,
including the Securities Act of 1933 and state securities
laws.
2. ANTI-DILUTION; MERGER. If, prior to the exercise of Warrants
hereunder, the Company (i) declares, makes or issues, or fixes a record date
for the determination of holders of common stock entitled to receive, a
dividend or other distribution payable on the Shares in shares of its capital
stock, (ii) subdivides the outstanding Shares, (iii) combines the outstanding
Shares, (iv) issues any shares of its capital stock by reclassification of the
Shares, capital reorganization or otherwise (including any such
reclassification or reorganization in connection with a consolidation or merger
or and sale of all or substantially all of the Company's assets to any person),
then the Exercise Price, and the number and kind of shares receivable upon
exercise, in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any Warrant exercised after such
time shall be entitled to receive the aggregate number and kind of shares
which, if such Warrant had been exercised immediately prior to such time, he
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, distribution, subdivision, combination, reclassification,
reorganization, consideration, merger or sale.
3. VALID ISSUANCE OF COMMON STOCK. The Company possesses the full
authority and legal right to issue, sell, transfer, and assign this Warrant and
the Shares issuable pursuant to this Warrant. The issuance of this Warrant
vests in the holder the entire legal and beneficial interests in this Warrant,
free and clear of any liens, claims, and encumbrances and subject to no legal
or equitable restrictions of any kind except as described herein. The Shares
that are
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issuable upon exercise of this Warrant, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and non-assessable, and
will be free of restrictions on transfer other than restrictions under
applicable state and federal securities.
4. COMPLIANCE WITH SECURITIES LAWS. This Agreement and the Warrants
represented hereby were issued in reliance on an exemption from registration
under the Securities Act of 1933 (the "Act") for financial institutions, and
other applicable exemptions under state securities laws. The Company's reliance
on such exemption is predicated in part on the Warrant Holder's representations
set forth herein. Warrant Holder understands that the Warrants and the Shares
issuable upon exercise of the Warrants may not be sold, transferred or
otherwise disposed of without registration under the Securities Act of 1933, or
an exemption therefrom, and that in the absence of an effective registration
statement covering such shares or an available exemption from registration
under the Securities Act, such Shares must be held indefinitely.
1. RESTRICTIONS ON TRANSFERABILITY. This the Agreement and the
Warrants may not be assigned, transferred (except as provided above), pledged,
or hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of these
Warrants contrary to the provisions hereof shall be without legal effect. The
Shares issuable on exercise of the Warrants may not be assigned or transferred
by the Warrant Holder without the Company's prior written consent and, if so
requested by the Company, the delivery by the Warrant Holder to the Company of
an opinion of counsel in form and substance satisfactory to the Company stating
that such transfer or assignment is in compliance with the Securities Act of
1933 and applicable state securities laws.
6. RESTRICTIVE LEGEND. Each certificate for Shares issued upon
exercise of the Warrant shall bear a legend stating that they have not been
registered under the Securities Act of 1933 or any state securities laws and
referring to the restrictions on transferability and sale herein.
7. MANDATORY EXERCISE; TERMINATION.
(a) Warrant Holder shall exercise all of Warrant Holder's then
exercisable Warrants within 120 days of the date that Warrant
Holder ceases to serve the Company as an executive officer,
employee, or director. Warrant Holder agrees to exercise any
Warrants that are not exercisable on the date in which
Warrant Holder ceases to serve the Company within 120 days of
the date that those Warrants become exercisable.
(b) The Company may be required to increase its capital to meet
capital requirements imposed by statute, rule, regulation, or
guideline. In order to achieve such capital increase, the
Regulatory Agencies may direct the Company to require the
Warrant Holders to either (i) exercise all part of their
Warrants or (ii) allow the Warrants to be terminated. If the
Regulatory Agencies so direct the Company, then the Warrant
Holder must exercise or forfeit the Warrants as set forth
below.
(c) When the Company is required to increase its capital as
described in subsection (a) above, the Company shall send a
notice (the "Notice") to the Warrant Holder
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(i) specifying the number of Shares relating to the Warrants
for which the Warrants must be exercised (the "Number") (if
less than all shares relating to warrants held by all holders
of warrants of the Company under agreements substantially
similar to this one are required by the Company to be
exercised or cancelled, the Number for the Warrant Holder
shall reflect a proportionate allocation based on the number
of Shares subject to this Agreement as compared to the total
number of shares subject to warrants held by all such warrant
holders as a group); (ii) specifying the date prior to which
the Warrants must be totally or partially exercised, as the
case may be (the "Deadline"); (iii) specifying the Exercise
Price for the Shares to be purchased pursuant to the Warrants
(such Exercise Price not to be less than current book value
per share); and (iv) stating that the failure of the Warrant
holder to exercise the Warrants shall result in their
automatic termination.
(d) If the Warrant holder does not exercise the Warrants pursuant
to the terms of the Notice, this Agreement shall be
automatically terminated on the Deadline, without further act
or action by the Warrant Holder or the Company, and the
Warrant Holder shall deliver this Agreement to the Company
for cancellation. If the Number is less than the total number
of Shares that are then subject to exercise under this
Agreement, the Company shall issue a new Stock Warrant
Agreement in compliance with Section 1(e) hereof.
8. COVENANTS OF THE COMPANY. During the term of the Warrants, the
Company shall:
(a) at all times authorize, reserve and keep available, solely
for issuance upon exercise of this Warrant, sufficient shares
of common stock from time to time issuable upon exercise of
this Warrant;
(b) on receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft, or destruction, on delivery
of any indemnity agreement or bond reasonably satisfactory in
form and amount to the Company or, in the case of mutilation,
on surrender and cancellation of this Warrant, at its expense
execute and deliver, in lieu of this Warrant, a new Warrant
of like tenor; and
(c) on surrender for exchange of this Warrant or any Warrant
substituted therefor pursuant hereto, properly endorsed, to
the Company, at its expense, issue and deliver to or on the
order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (on
payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof
for the issuances of the number of shares of common stock
issuable pursuant to the terms of the Warrant or Warrants so
surrendered.
9. NO DILUTION OR IMPAIRMENT. The Company shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in
carrying out all
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such action as may be reasonably necessary in order to protect the exercise
rights of the holder against improper dilution or other impairment.
10. AMENDMENT. Neither this Agreement nor the rights granted hereunder
may be amended, changed or waived except in writing signed by each party
hereto.
IN WITNESS WHEREOF, the Company has executed and the holder has
accepted this Stock Warrant Agreement as of the date and year first above
written.
COASTAL BANKING COMPANY, INC.
By:
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President
(CORPORATE SEAL)
Attest:
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Secretary
WARRANT HOLDER:
By:
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Signature
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Print Name
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