Exhibit 10.4
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.
CNB BANCORP, INC.
STOCK WARRANT AGREEMENT
____________, 2001
Warrant Holder:_________________________________ No. of Shares:______________
CNB Bancorp, Inc. (the "Company"), a Virginia corporation and the holding
company for Citizens National Bank (proposed) (the "Bank"), hereby grants to the
person identified above as the Warrant Holder Warrants (the "Warrant") to
purchase the number of shares set forth above, representing one share of common
stock for every one share of common stock purchased by the Warrant Holder in the
Company's initial public offering, 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-fourth of the shares (the "Shares") subject to
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the Warrant granted in this Agreement shall vest on each of the first
four anniversaries of the date of completion of the Company's initial
public offering (the "Completion Date"). Exercise of the Warrant is
subject to the following:
a) Exercise Price. The exercise price (the "Exercise Price") shall be $10.00
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per Share, subject to adjustment pursuant to Section 2 below.
b) Expiration of Warrant Term. The Warrant will expire at 5:00 p.m.
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Eastern Standard Time on the tenth anniversary of the Completion Date,
and may not be exercised thereafter (the "Expiration Date").
c) Payment. The purchase price for Shares as to which the Warrant are being
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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 Warrant shall be exercisable by a written notice
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delivered to the President or Secretary of the Company which shall:
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(i) State the owner's election to exercise the Warrant, 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);
(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 that the original holder thereof, be accompanied by
proof satisfactory to counsel for the Company 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
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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
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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 Company or the holder hereof, as
applicable, obtains any approval or other clearance which the Company
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 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 Warrant 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,
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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 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
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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
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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 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
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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.
5. Restrictions on Transferability. This the Agreement and the Warrants may
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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
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Securities Act of 1933 or any state securities laws and referring to the
restrictions on transferability and sale herein.
7. Mandatory Exercise; Termination.
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(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 or 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 (b) above, the Company shall send a notice (the "Notice")
to the Warrant Holder (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.
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8. Covenants of the Company. During the term of the Warrants, the
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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, a new Warrant of like tenor; and
c) on surrender for exchange of this Warrant or any Warrant substituted
therefore 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 Articles of
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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 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
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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.
CNB Bancorp, Inc. WARRANT HOLDER:
By: ________________________ By:____________________________
President Signature
Attest:_______________________ _______________________________
Secretary Print Name
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