FORM OF
WARRANT AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of ___________,
200_ by and between NEIGHBOR'S BANCSHARES, INC., a Georgia corporation (the
"Corporation"), and _________________________ (the "Warrant Holder").
W I T N E S S E T H
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WHEREAS, the Warrant Holder has served as an organizer in the formation of
the Corporation and the formation and establishment of Neighbors Bank, Inc. (In
Organization) (the "Bank"), the wholly-owned subsidiary of the Corporation; and
WHEREAS, the Warrant Holder has purchased __________ shares of the
Corporation's common stock, $.50 par value per share (the "Common Stock"), at a
price of $10.00 per share; and
WHEREAS, the Warrant Holder will provide services to the Corporation as a
director of the Corporation and the Bank; and
WHEREAS, the Corporation, in recognition of the financial risk undertaken
by the Warrant Holder in organizing the Bank and the Corporation and in order to
encourage the Warrant Holder's continued involvement in the successful operation
of the Corporation and the Bank, desires to issue to the Warrant Holder the
right to acquire additional shares of the Corporation's Common Stock.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
1. Grant of Warrant. Subject to the terms, restrictions, limitations
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and conditions stated in this Agreement, the Corporation hereby grants to the
Warrant Holder the right (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 of this Agreement.
2. Term; Vesting; Exercise. The term for the exercise of the Warrant
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begins at 9:00 a.m., Eastern Time, on the first anniversary of the date that the
Corporation first issues its common stock (the "Issue Date") and ends at 5:00
p.m., Eastern Time, on the tenth anniversary of the issuance date (the
"Expiration Time"). The Warrant will vest in annual one-third (1/3) increments
over a period of three years, beginning on the first anniversary of the Issue
Date. 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.
3. Required Exercise. Notwithstanding any other provision of this
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Agreement, if the Bank's capital falls below the minimum requirements as
determined by the primary federal or state regulator of the Corporation or the
Bank (the "Regulator"), the Regulator may direct the Corporation to require the
Warrant Holder to exercise or forfeit his or her Warrant. The Corporation will
notify the Warrant Holder within 45 days from the date the Regulator notifies
the Corporation in writing that the Warrant Holder must exercise or forfeit his
or her Warrant. The Corporation will cancel the Warrant if it is not exercised
within 21 days of the Corporation's notification to the Warrant Holder. The
Corporation agrees to comply with any Regulator's request that the Corporation
invoke its right to require the Warrant Holder to exercise or forfeit his or her
Warrant under the circumstances stated above.
4. Purchase Price. The price per share to be paid by the Warrant
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Holder for the shares of Common Stock subject to the Warrant shall be $10.00,
subject to adjustment as set forth in Section 7 of this Agreement (the price, as
adjusted, is called the "Purchase Price").
5. Exercise of Warrant. The Warrant Holder may exercise the Warrant by
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delivering the following to the Corporation:
(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 Corporation for
the full amount of the aggregate Purchase Price for the number of shares as
to which the Warrant is being exercised.
The Warrant Holder must deliver the notice of exercise and the cashier's or
certified check to the address of the Corporation as set forth in Section 11(a)
of this Agreement or any other address that the Corporation requests.
6. Issuance of Shares. Upon receipt of the items set forth in Section
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5 of this Agreement, and subject to the terms of this Agreement, the Corporation
shall deliver to the Warrant Holder stock certificates for the number of shares
specified in the notice to exercise, and shall register the share or shares in
the name of the Warrant Holder. In no event shall the Corporation be required
to issue or deliver any certificate for shares of Common Stock purchased upon
the exercise of the Warrant or any portion of the Warrant 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 Corporation 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 Corporation 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 Corporation may from time to time establish
for reasons of administrative convenience.
The Corporation shall have no obligation to obtain the fulfillment of these
conditions; provided, however, that the Warrant Holder shall have one full
calendar year after these conditions have been fulfilled to exercise his or her
Warrant, notwithstanding any other provision in this Agreement.
7. Antidilution, Etc.
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(a) If, prior to the Expiration Time, the Corporation 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 Corporation shall
proportionately increase the number of shares of Common Stock then subject
to exercise under the Warrant (and not previously exercised).
(b) If, prior to the Expiration Time, the Corporation 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 Corporation shall proportionately reduce the number of
shares of Common Stock then subject to exercise under the Warrant (and not
previously exercised).
8. Reorganization, Reclassification, Consolidation or Merger. If,
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prior 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 7 of this Agreement), or any consolidation or
merger of the Corporation with another entity, the Warrant Holder shall be
entitled to receive, during the remainder of the term of this Agreement and upon
payment of the Purchase Price, the number of shares of stock or other securities
or property of the Corporation 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 the
Warrant, would have been entitled upon such reorganization, reclassification,
consolidation or merger; and in any case, the Corporation shall make appropriate
adjustments (as determined by the Board of Directors of the Corporation in its
sole discretion) in the application of these provisions with respect to the
rights and interests of the Warrant Holder so that the provisions set forth in
this Agreement (including the adjustment of the Purchase Price and the number
of shares issuable upon the exercise of the Warrant) shall be applicable, as
nearly as may reasonably be practicable, to any shares or other property
thereafter deliverable upon the exercise of the Warrant.
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9. Notice of Adjustments. Within thirty (30) days following any
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adjustment provided for in Section 7 or Section 8 of this Agreement, the
Corporation shall give written notice of the adjustment to the Warrant Holder at
the address set forth in Section 11(a) of this Agreement or such other address
as the Warrant Holder may request. The notice shall state the Warrant Purchase
Price as adjusted and the increased or decreased number of shares purchasable
upon the exercise of the Warrant and shall set forth in reasonable detail the
method of calculation of each.
10. Transfer and Assignment.
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(a) During the Warrant Holder's lifetime, the Warrant and any
rights under this Agreement shall be exercisable only by the Warrant Holder
(or by the Warrant Holder's guardian or legal representative, should one be
appointed). Except assignments or transfers made by will or under the laws
of descent and distribution, the Warrant or any rights under this Agreement
may not be assigned, transferred, 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 the Warrant except
as provided for in this Section 10 shall be null and void and without legal
effect.
(b) Shares of Common Stock acquired by exercise of the Warrant
granted in this Agreement 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.
11. 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 Corporation:
Neighbor's Bancshares, Inc.
[STREET]
[STATE, CITY, ZIP]
Attention: __________
To the Warrant Holder:
_____________________________________________
_____________________________________________
_____________________________________________
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(b) The Corporation covenants that it has reserved and will keep
available, solely for the purpose of issue upon the exercise of the
Warrant, a sufficient number of shares of Common Stock to permit the
exercise hereof in full.
(c) No holder of the Warrant, as such, shall be entitled to vote
or receive dividends with respect to the shares of Common Stock subject to
the Warrant or be deemed to be a shareholder of the Corporation for any
purpose until such Common Stock has been issued.
(d) This Agreement shall constitute the entire agreement
contemplated by the Corporation and the Warrant Holder and may be amended
only by an instrument in writing executed by the party against whom
enforcement of the amendment is sought.
(e) This Agreement 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 Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Georgia.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be signed
by its duly authorized officers and its corporate seal to be affixed hereto, and
the Warrant Holder has executed this Agreement under seal, all as of the day and
year first above written.
NEIGHBOR'S BANCSHARES, INC.
By: _______________________________________
Print Name: _______________________________
Title: ____________________________________
WARRANT HOLDER
____________________________________ (SEAL)
Print Name: ______________________________
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