EXHIBIT 10.5
WARRANT AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of
_____________, 1999, by and between CHEROKEE BANKING COMPANY, a Georgia
corporation (the "Company"), and _________________________ ("Warrant Holder").
W I T N E S S E T H
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WHEREAS, Warrant Holder has served as an organizer in the formation of the
Company and the formation and establishment of Cherokee Bank, NA (the "Bank"), a
wholly-owned subsidiary of the Company; and
WHEREAS, Warrant Holder has purchased ________ shares of the Company's
common stock, no par value (the "Common Stock"), at a price of $10.00 per share;
and
WHEREAS, Warrant Holder will provide services to the Company as a director
of the Company; and
WHEREAS, the Company, in recognition of the financial risk undertaken by
Warrant Holder in organizing the Company and the Bank, desires to provide
Warrant Holder with the right to acquire at least the same number of shares of
the Company's Common Stock as Warrant Holder purchased in the Company's initial
offering of Common Stock, including any additional shares purchased specifically
to attain the minimum subscription requirements of the initial offering.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Warrant. Subject to the terms, restrictions, limitations and
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conditions stated herein, the Company hereby grants to Warrant Holder a warrant
(the "Warrant") to purchase all or any part of an aggregate of _______________
(_____) shares of the Common Stock, subject to adjustment in accordance with
Section 7 hereof.
2. Term.
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(a) The term for the exercise of the Warrant begins at 9:00 a.m.,
Eastern Time, on the first anniversary of the date that the Company first
issues its common stock (the "Issue Date") and ends at 5:00 p.m., Eastern
Time, on the earlier of the tenth anniversary of the Issue Date or 90 days
after Warrant Holder ceases to serve as a director of the Company (the
"Expiration Time"). The Warrant will vest at the rate of 1/3 per year
beginning on the first anniversary of the Issue Date. On each subsequent
anniversary of
the Issue Date, an additional 1/3 of the Warrant shall vest. The vested
portion of the Warrant may be exercised in whole, or from time to time in
part, at any time prior to the Expiration Time.
(b) Notwithstanding any other provision of this Agreement, if the
Bank's capital falls below the minimum requirements as determined by the
primary federal regulator of the Company or the Bank (the "Regulator"), the
Regulator may direct the Company to require the Warrant Holder to exercise
or forfeit his or her Warrant. The Company will notify the Warrant Holder
within 45 days from the date the Regulator notifies the Company in writing
that the Warrant Holder must exercise or forfeit this Warrant. The Company
will cancel the Warrant if not exercised within 21 days of the Company's
notification to the Warrant Holder. The Company agrees to comply with any
Regulator request that the Company invoke its right to require the Warrant
Holder to exercise or forfeit his or her Warrant under the circumstances
stated above.
3. Purchase Price. The price per share to be paid by Warrant Holder for
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the shares of Common Stock subject to this Warrant shall be $10.00, subject to
adjustment as set forth in Section 6 hereof (such price, as adjusted,
hereinafter called the "Purchase Price").
4. Exercise of Warrant. The Warrant may be exercised by Warrant Holder by
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delivery to the Company, at the address of the Company set forth under Section
10(a) hereof or such other address as to which the Company advises Warrant
Holder pursuant to Section 10(a) hereof, of the following:
(a) Written notice of exercise specifying the number of shares of
Common Stock with respect to which the Warrant is being exercised; and
(b) A cashier's or certified check payable to the Company for the
full amount of the aggregate Purchase Price for the number of shares as to
which the Warrant is being exercised.
5. Issuance of Shares. Upon receipt of the items set forth in Section 4,
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and subject to the terms hereof, the Company shall cause to be delivered to
Warrant Holder stock certificates for the number of shares specified in the
notice to exercise, such share or shares to be registered under the name of
Warrant Holder. Notwithstanding the foregoing, the Company shall not be required
to issue or deliver any certificate for shares of the Common Stock purchased
upon exercise of the Warrant or any portion thereof prior to the fulfillment of
the following conditions:
(a) The admission of such shares for listing on all stock exchanges
on which the Common Stock is then listed;
(b) The completion of any registration or other qualification of such
shares which the Company shall deem necessary or advisable under any
federal or state law or under the rulings or regulations of the Securities
and Exchange Commission or any other governmental regulatory body;
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(c) The obtaining of any approval or other clearance from any federal
or state governmental agency or body, which the Company shall determine to
be necessary or advisable; or
(d) The lapse of such reasonable period of time following the
exercise of the Warrant as the Company from time to time may establish for
reasons of administrative convenience.
The Company shall have no obligation to obtain the fulfillment of these
conditions; provided, however, Warrant Holder shall have one full calendar year
after these conditions have been fulfilled to exercise his or her warrants
granted herein, notwithstanding any other provision herein.
6. Antidilution, Etc.
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(a) If, prior to the Expiration Time, the Company shall subdivide its
outstanding shares of Common Stock into a greater number of shares, or
declare and pay a dividend of its Common Stock payable in additional shares
of its Common Stock, the Purchase Price as then in effect shall be
proportionately reduced, and the number of shares of Common Stock then
subject to exercise under the Warrant (and not previously exercised) shall
be proportionately increased.
(b) If, prior to the Expiration Time, the Company shall combine its
outstanding shares of the Common Stock into a smaller number of shares, the
Purchase Price, as then in effect, shall be proportionately increased, and
the number of shares of Common Stock then subject to exercise under the
Warrant (and not previously exercised), shall be proportionately reduced.
7. Reorganization, Reclassification, Consolidation or Merger. If, prior
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to the Expiration Time, there shall be any reorganization or reclassification of
the Common Stock (other than a subdivision or combination of shares provided for
in Section 6 hereof), or any consolidation or merger of the Company with another
entity, Warrant Holder shall thereafter be entitled to receive, during the term
hereof and upon payment of the Purchase Price, the number of shares of stock or
other securities or property of the Company or of the successor entity (or its
parent company) resulting from such consolidation or merger, as the case may be,
to which a holder of the Common Stock, deliverable upon the exercise of this
Warrant, would have been entitled upon such reorganization, reclassification,
consolidation or merger; and in any case, appropriate adjustment (as determined
by the Board of Directors of the Company in its sole discretion) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of Warrant Holder to the end that the provisions set
forth herein (including the adjustment of the Purchase Price and the number of
shares issuable upon the exercise of this Warrant) shall thereafter be
applicable, as near as may reasonably be practicable, in relation to any shares
or other property thereafter deliverable upon the exercise hereof.
8. Notice of Adjustments. Upon any adjustment provided for in Section 6
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or Section 7 hereof, the Company, within thirty (30) days thereafter, shall give
written notice thereof to Warrant Holder at the address set forth under Section
10(a) hereof or such other address as
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Warrant Holder may advise the Company pursuant to Section 10(a) hereof, which
notice shall state the Warrant Price as adjusted and the increased or decreased
number of shares purchasable upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation of each.
9. Transfer and Assignment.
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(a) Neither this Warrant nor any rights hereunder are assignable or
transferable by Warrant Holder otherwise than by will or under the laws of
descent and distribution. During Warrant Holder's lifetime, this Warrant
is exercisable only by Warrant Holder (or by Warrant Holder's guardian or
legal representative, should one be appointed). More particularly, but
without limiting the generality of the foregoing, this Warrant may not be
assigned, transferred (except as aforesaid), 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 this Warrant shall
be null and void and without legal effect.
(b) Shares of Common Stock acquired by exercise of the Warrant
granted hereby may not be transferred or sold unless the transfer is exempt
from further regulatory approval or otherwise permissible under applicable
law, including state and federal securities laws, and will bear a legend to
this effect.
10. Miscellaneous.
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(a) All notices, requests, demands and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, telegram or facsimile transmission, or
if mailed, by postage prepaid first class mail, on the third business day
after mailing, to the following address (or at such other address as a
party may notify the other hereunder):
To the Company:
Cherokee Banking Company
P. O. Box 1314
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
To Warrant Holder:
________________________________________
________________________________________
________________________________________
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(b) The Company covenants that it has reserved and will keep
available, solely for the purpose of issue upon the exercise hereof, a
sufficient number of shares of Common Stock to permit the exercise hereof
in full.
(c) No holder of this Warrant, as such, shall be entitled to vote or
receive dividends with respect to the shares of Common Stock subject hereto
or be deemed to be a shareholder of the Company for any purpose until such
Common Stock has been issued.
(d) This Warrant may be amended only by an instrument in writing
executed by the party against whom enforcement of amendment is sought.
(e) This Warrant may be executed in counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
instrument.
(f) This Warrant shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officers and its corporate seal to be affixed hereto, and
Warrant Holder has executed this Warrant under seal, all as of the day and year
first above written.
CHEROKEE BANKING COMPANY
By:_______________________________________
Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
WARRANT HOLDER
____________________________________(SEAL)
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