PURCHASE AGREEMENT

Exhibit 10.1

PURCHASE AGREEMENT

This PURCHASE AGREEMENT, dated as of January 29, 2009 (together with the related exhibits, schedules and appendices, which are incorporated herein by this reference and comprise a part hereof, this “ Agreement ”), is by and among Crescent Banking Company, a Georgia corporation (the “ Company ”), and each of the purchasers set forth on Schedule A hereto (the “ Purchasers ,” and each a “ Purchaser ,” and, together with the Company, the “ Parties ,” and each a “ Party ”).

WHEREAS, the Company proposes to issue and sell (the “ Offering ”) to the Purchasers shares of the Company’s Series B Floating-Rate Cumulative Convertible Perpetual Preferred Stock, par value $1.00 per share, having the terms set forth in the Articles of Amendment to the Company’s Articles if Incorporation attached hereto as Exhibit A (the “ Charter Amendment ” and the Series B preferred stock described therein, the “ Series B Preferred Stock ”), at a price per share equal to One Thousand Dollars ($1,000);

WHEREAS, each of the Purchasers is an “accredited investor” as such term is defined under Rule 501(a) of Regulation D (“ Regulation D ”) promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”);

WHEREAS, pursuant to the terms and conditions of the Offering, as described in this Agreement, the Purchasers desire to subscribe for and purchase the amount of Series B Preferred Stock set forth opposite his name on Schedule A to this Agreement;

WHEREAS, the Purchasers and the Company intend to enter into with each Purchaser a Subscription Agreement, an Escrow Agreement and a Registration Rights Agreement substantially in the forms attached hereto as Exhibit B , Exhibit C and Exhibit D , respectively (the “ Related Agreements ”); and

WHEREAS, in making such subscription, the Purchasers are relying upon the representations, warranties, covenants and agreements of the Company set forth herein and in the Related Agreements, and, in considering and accepting the Purchasers’ subscription for the shares of Series B Preferred Stock offered hereunder (the “ Shares ”), the Company is relying upon the representations, warranties, covenants and agreements of the Purchasers set forth in this Agreement and in the Related Agreements.

NOW, THEREFORE, BE IT RESOLVED, that, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency hereby are acknowledged, the Parties hereto, intending to be legally bound hereby, do hereby agree as follows:

Section 1 . Subscription . On the terms and subject to the conditions set forth herein, the Purchasers will purchase from the Company, and the Company will sell to the Purchasers 27,249 shares of Series B Preferred Stock for a total aggregate purchase price of $27,249,000 (the “ Purchase Price ”). Upon the execution of this Agreement, each Purchaser shall deliver to the Company a Subscription Agreement and shall immediately pay to the Escrow Agent (as defined below) the purchase price set forth opposite his name on Schedule A .

Section 2 . Closing; Conditions to Closing; Escrow .

(a) Closing Date . The closing (the “ Closing ”) and settlement of the Purchasers’ purchase of the Shares shall occur upon such date (the “ Closing Date ”) on which each of the conditions to the

Closing set forth in this Agreement are satisfied (other than those conditions that by their nature are to be satisfied at the Closing, but subject to fulfillment or waiver of those conditions), at the offices of Alston & Bird LLP located at 1201 West Peachtree Street, Atlanta, Georgia 30309, or such other date or location as agreed by the Parties.

(b) Actions Taken at Closing . Subject to the satisfaction or waiver on the Closing Date of the applicable conditions to Closing in Section 2(c) of this Agreement, at the Closing, the Company shall (i) file with the Secretary of State of the State of Georgia an Amendment to the Company’s articles of incorporation (the “ Articles of Incorporation ”) (including the Charter Amendment relating to the Series B Preferred Stock), effective at and as of the Closing Date and (ii) confirm to the Purchasers that the Company’s transfer agent has reflected the Purchasers’ purchase and ownership of the Shares in the Company’s stock ledger maintained by such transfer agent against payment by the Purchasers of the Purchase Price in good and immediately available funds.

(c) Closing Conditions .

(1) The respective obligations of the Purchasers on the one hand, and the Company, on the other hand, to consummate the Closing are subject to the fulfillment or written waiver by the Purchasers and the Company prior to the Closing of the following conditions:

(i) No provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the Closing or shall prohibit or restrict the Purchasers from owning, voting, converting or exercising, the Series B Preferred Stock in accordance with the terms thereof and no lawsuit shall have been commenced by any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign, and any applicable industry self-regulatory organization (each a “ Governmental Entity ”) seeking to effect any of the foregoing;

(ii) No action, suit, or proceeding shall be pending or threatened before any Governmental Entity wherein an unfavorable order, judgment or decree would (i) prevent consummation of any of the transactions contemplated by this Agreement or the Related Agreements, or (ii) cause any of the transactions contemplated by this Agreement or the Related Agreements to be rescinded following consummation;

(iii) The Federal Reserve Bank of Atlanta shall have approved the Rebuttal of Control submitted by Mr. Gary Copeland authorizing him to acquire up to 24.9% of the voting securities of the Company;

(iv) All agreements, approvals, consents, licenses, orders, exemptions, waivers, authorizations or other actions by, or notices to, or filings with, Governmental Entities and other persons in respect of all Governmental Consents (as defined below) required to have been obtained at or prior to the Closing Date in connection with the execution, delivery or performance of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby shall have been obtained and be in full force and effect and all waiting periods in respect thereof shall have lapsed without extension or the imposition of any conditions or restrictions;

(v) The Company’s shareholders shall have approved the following actions at a duly called special meeting of such shareholders:

(A) Approval of the Offering pursuant to Nasdaq Marketplace Rule 4350 which requires stockholder approval prior to either (i) the sale, issuance or potential issuance by the issuer of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value which equals 20% or more of the issuer’s common stock or 20% or more of the voting power outstanding before the issuance; or (ii) the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the issuer’s common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock;

 

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(B) Approval of the sale of Series B Preferred Stock to Mr. Michael W. Lowe pursuant to Article VI of the Company’s Articles of Incorporation, which sets for the requirements with respect to “Business Combinations,” including the sale of securities by the Company to a shareholder who, prior to the proposed Business Combination, owns at least 15% of the voting securities of the Company; and

(C) Approval of the Charter Amendment increasing the number of authorized shares of the Company’s common stock, par value $1.00 per share (the “ Common Stock ”), from 10,000,000 shares to 50,000,000 shares and designating the rights, preferences and other terms of the Series B Preferred Stock;

(vi) The Company’s application to participate in the U.S. Treasury Department’s Capital Purchase Program administered under the Troubled Asset Relief Program shall have been approved; and

(vii) The trading in the Company’s Common Stock shall not have been restricted or suspended by the Securities and Exchange Commission (the “ Commission ”), the Nasdaq Capital Market (“ Nasdaq ”) or any other market or exchange where such Common Stock is traded (except for any suspension of trading of limited duration solely to permit dissemination of material information regarding the Company).

(2) The obligation of the Purchasers to consummate the purchase of the Series B Preferred Stock to be purchased by them at the Closing is also subject to the fulfillment or written waiver by the Purchasers prior to the Closing of each of the following conditions:

(i) The representations and warranties of the Company (i) contained in Section 3 hereof, without giving effect to any materiality or material adverse effect qualifications therein, shall be true and correct at and as of the Closing Date as though made at and as of the Closing Date (except for such representations and warranties that expressly speak as of an earlier date, which representations and warranties shall be true as of such specified date) except for such failures to be true and correct as do not constitute a material adverse effect, and (ii) contained in Sections 3(a), (b), (c), and (k), shall be true and correct in all respects at and as of the Closing Date as though made at and as of the Closing Date (except for such representations and warranties that expressly speak as of an earlier date, which representations and warranties shall be true as of such specified date);

 

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(ii) The Company shall have performed in all material respects all of the material agreements, covenants, obligations and conditions set forth herein that are required to be performed or complied with by the Company hereunder as of or prior to the Closing Date;

(iii) The Purchasers shall have received a certificate signed on behalf of the Company by a senior executive officer certifying to the effect that the conditions set forth in Section 2(c)(2)(i) and (ii) have been satisfied on and as of the Closing Date;

(iv) The Company and each of the other parties to the Related Agreements shall have executed and delivered the Related Agreements; and

(v) The Purchasers shall have received true, complete and correct copies of all certificates, instruments, and other documents of the Company required to effect the sale of the Series B Preferred Stock and the transactions contemplated hereby and in the Related Agreements, all in form and substance reasonably satisfactory to the Purchasers prior to the Closing;

(3) The obligation of the Company to consummate the Closing of the sale of the Series B Preferred Stock to the Purchasers is also subject to the fulfillment or written waiver by the Company prior to the Closing, as the case may be, of each of the following conditions:

(i) The representations and warranties of the Purchasers (i) contained in Section 4 hereof, without giving effect to any materiality or material adverse effect qualifications therein, shall be true and correct in all respects at and as of the Closing Date as though made at and as of the Closing Date (except for such representations and warranties that expressly speak as of an earlier date, which representations and warranties shall be true as of such specified date);

(ii) The Purchasers shall have performed in all material respects all of the material agreements, covenants, obligations and conditions set forth herein that are required to be performed by them hereunder as of or prior to the Closing Date;

(iii) The Purchasers and each of the other parties to the Related Agreements shall have executed and delivered the Related Agreements to which the Company is a party; and

(iv) The Company shall have received true, complete and correct copies of all certificates, instruments, and other documents of the Purchasers required to effect the sale of the Series B Preferred Stock and the transactions contemplated hereby and in the Related Agreements, all in form and substance reasonably satisfactory to the Company prior to the Closing.

(d) Escrow .

(1) In connection with the transactions contemplated hereby, the Parties shall enter into an Escrow Agreement pursuant to which Crescent Bank & Trust Company (the “ Escrow

 

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Agent ”) shall agree to hold and disburse the Purchase Price upon satisfaction or waiver of each of the closing conditions set forth in Section 2(c) of this Agreement, for the benefit of the Company and the Purchasers, in accordance with the terms and conditions of this Agreement and the Escrow Agreement.

(2) No later than two business days following the execution of this Agreement, the Purchasers shall deposit with the Escrow Agent cash representing the Purchase Price opposite their names as set forth on Schedule A to this Agreement. The Parties agree that the obligation to release the Purchase Price to the Company is subject only to the terms and conditions of this Agreement and the Escrow Agreement. In the event that this Agreement is terminated pursuant to Section 7 hereof, the Purchase Price shall be disbursed to the Purchasers by wire transfer of immediately available funds to such account or accounts of the Purchasers as specified in writing to the Escrow Agent in the manner set forth in the Escrow Agreement.

Section 3 . Representations and Warranties of the Company .

The Company represents and warrants to the Purchasers, as of the date of this Agreement and as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date), that:

(a) Organization .

(i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Georgia with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business, and to enter into and perform its obligations under this Agreement.

(ii) Each Subsidiary of the Company listed on Schedule B hereto (each a “ Subsidiary ” and together, the “ Subsidiaries ”) has been duly formed and is validly existing as a corporation, business trust, limited liability company or limited partnership, as the case may be, in good standing under the laws of the jurisdiction in which it is chartered or organized with full power and authority (corporate and other) to own or lease, as the case may be, and to operate its properties and conduct its business.

(b) Capitalization . The authorized capital stock of the Company, prior to the Charter Amendment, consists of 10,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, par value $1.00 per share (the “ Company Preferred Stock ”). As of the close of business on December 31, 2008, there were approximately 5,384,547 shares of Common Stock outstanding and no shares of Company Preferred Stock outstanding. The Company has reserved 996,000 shares of Common Stock for issuance, of which, 179,462 are available for issuance, pursuant to its stock option and stock purchase plans and existing outstanding warrants. The Company has applied to sell 26,482 shares of senior preferred stock (the “ Series A Preferred Stock ”) and a related warrant to purchase such number of shares of Common Stock equal to 15% of the Series A Preferred Stock to the U.S. Department of Treasury in connection with its Capital Purchase Program. Except as set forth above, there are no options, warrants or other rights (including conversion, pre-emptive or other rights) or agreements outstanding to purchase any of the Company’s authorized and unissued capital stock. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. All the outstanding shares of capital stock or other ownership interests of each Subsidiary of the Company have been duly authorized and validly issued and are fully paid and nonassessable, and all outstanding shares of capital

 

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stock or other ownership interests of the Subsidiaries are owned by the Company either directly or through wholly owned Subsidiaries free and clear of any perfected security interest or any other security interests, claims, mortgages, pledges, liens, encumbrances or other restrictions of any kind.

(c) Authorization . The Company has the corporate power and authority to enter into this Agreement and each of the Related Agreements and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and each of the Related Agreements by the Company and the consummation of the transactions contemplated hereby and thereby have been duly and unanimously approved and authorized by a properly acting and constituted Special Committee (the “ Special Committee ”) of the Company’s Board of Directors (the “ Board of Directors ”) and ratified by the Board of Directors. This Agreement and each of the Related Agreements have been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Purchasers and other parties thereto, constitute legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting creditors’ rights and general principles of equity, and except as to rights to indemnity and contribution thereunder may be limited by applicable law or policies underlying such law (the “ Bankruptcy and Equity Exceptions ”).

(d) Governmental Consents . Other than (i) the Rebuttal of Control submitted to the Federal Reserve Bank of Atlanta by Mr. Copeland, (ii) pursuant to the federal securities laws, the securities or blue sky laws of the various states, and (iii) the Company’s application to participate in the U.S. Treasury Department’s Capital Purchase Program, no material notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, nor expiration or termination of any statutory waiting periods, is necessary for the consummation by the Company of the transactions contemplated by this Agreement (each, a “ Governmental Consent ”).

(e) Financial Statements . The Company’s Annual Report on Form 10-K for the year ended December 31, 2007, the Company’s Quarterly Reports on Form 10-Q that have been filed for all quarters ended since December 31, 2007, the definitive proxy statement for the Company’s 2008 annual meeting of shareholders, and any Current Reports on Form 8-K filed since December 31, 2007 (as such documents have since the time of their filing been amended or supplemented) together with all reports, documents and information hereafter filed with the SEC, including all information incorporated therein by reference (collectively, the “ SEC Reports ”) (i) complied and will comply as to form in all material respects with the requirements of the Securities Act and Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and (ii) did not contain 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. The audited consolidated financial statements and unaudited interim consolidated financial statements (including, in each case, the notes, if any, thereto), if any, included in the SEC Reports complied and will comply as to form in all material respects with the SEC’s rules and regulations with respect thereto), were prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments not material and to the absence of footnotes) the financial position and shareholders’ equity of the Company as of the respective dates thereof and the consolidated earnings and cash flows for the respective periods then ended.

(f) Status of Securities . The shares of Series B Preferred Stock to be issued pursuant to this Agreement have been duly authorized by all necessary corporate action and, when issued and sold

 

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against receipt of the consideration therefor as provided in this Agreement and the related Subscription Agreement, such shares of Series B Preferred Stock will be validly issued, fully paid and nonassessable, will not subject the holders thereof to personal liability and will not be subject to preemptive rights of any other shareholder of the Company. The shares of Common Stock issuable upon the conversion of the Series B Preferred Stock will have been duly authorized by all necessary corporate action and when so issued upon such conversion will be validly issued, fully paid and nonassessable, will not subject the holders thereof to personal liability and will not be subject to preemptive rights of any other shareholder of the Company.

(g) No Integration . Neither the Company nor, to the Company’s knowledge, its “affiliates” (as defined in Rule 501(b) under the Securities Act) has, directly or through any agent, during the six month period ending on the date of this Agreement, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) in a manner that would cause the offer and sale of the Shares to fail to be entitled to the exemption afforded by Rule 506 of Regulation D, or otherwise under Section 4(2) of the Securities Act.

(h) Exemption from Registration; No Public Offering .

(i) Neither the offer for sale nor sale of the Shares has been or will be registered with the Commission, any state securities commission or any other regulatory authority, nor have any of the foregoing passed upon or endorsed the merits of the Offering. The Shares are to be offered for sale, and sold in reliance upon the exemptions from the registration requirements of Section 5 of the Securities Act provided by the provisions of Regulation D. The Company has conducted and will continue to conduct the Offering in compliance with the requirements of Regulation D, and the Company will file all appropriate notices of the Offering with the Commission.

(ii) Neither the Company nor, to the Company’s knowledge, its affiliates has engaged, in connection with the Offering, (i) in any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D, (ii) in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act, or (iii) in any action which would violate applicable state securities, or “blue sky,” laws.

(i) Litigation and Other Proceedings . There is no pending or, to the knowledge of the Company, threatened, claim, action, suit, investigation or proceeding, against the Company or any of its Subsidiaries or to which any of their assets are subject, nor is the Company or any of its Subsidiaries subject to any order, judgment or decree, in each case except as would not reasonably be expected to have a material adverse effect. Except as would not reasonably be expected to have a material adverse effect, there is no unresolved violation, criticism or exception by any Governmental Entity with respect to any report or relating to any examinations or inspections of the Company or any of its Subsidiaries.

(j) Compliance with Laws; Insurance .

(i) The Company and each of its Subsidiaries have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company or such Subsidiaries. The Company and each of its Subsidiaries has complied in all material respects and is not in default or violation in any respect of, and none of them is, to the knowledge of the Company, under investigation with respect to or,

 

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to the knowledge of the Company, has been threatened to be charged with or given notice of any material violation of, any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity, other than such noncompliance, defaults or violations that would not reasonably be expected to have a material adverse effect. Except for statutory or regulatory restrictions of general application, no Governmental Entity has placed any material restriction on the business or properties of the Company or any Company Subsidiary.

(ii) The Company and each of its Subsidiaries are presently insured, and during each of the past five calendar years (or during such lesser period of time as the Company has owned such Company Subsidiary) have been insured, for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.

(k) Anti-takeover Provisions Not Applicable . The Board of Directors and the Special Committee have taken all necessary action to ensure that the transactions contemplated by this Agreement and any of the transactions contemplated hereby will be deemed to be exceptions to the provisions of the Georgia Business Corporation Act, including Sections 14-2-1111 and 14-2-1132 thereunder, and that any other similar “moratorium,” “control share,” “fair price,” “takeover” or “interested shareholder” law does not and will not apply to this Agreement or to any of the transactions contemplated hereby.

(l) Brokers and Finders . Except as disclosed in Schedule 3(l) to this Agreement, neither the Company nor any of its Subsidiaries nor any of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company or any of its Subsidiaries, in connection with this Agreement or the transactions contemplated hereby.

Section 4 . Representations and Warranties of the Purchasers .

Each of the Purchasers hereby represents and warrants to the Company, as of the date of this Agreement and as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date), that:

(a) Reliance on Purchaser Representations and Warranties . The Purchaser acknowledges that the Company is making the Offering in reliance upon an exemption from the registration requirements of the Securities Act pursuant to Regulation D. The Purchaser also acknowledges that the Company is availing itself of this exemption in reliance, in part, upon the Purchaser’s representations, warranties and agreements contained in this Agreement and the related Subscription Agreement and that the basis for such exemptions may not be present if, notwithstanding the representations, the Purchaser intends to acquire the Shares for resale on the occurrence or non-occurrence of some predetermined event. The Purchaser is not aware of any fact or circumstance that would render any of the representations, warranties, covenants and agreements contained in this Agreement or the related Subscription Agreement to be incorrect or inaccurate, or to form a basis for the Company not to rely thereupon.

(b) Accredited Investor Status . The Purchaser is an “accredited investor,” as defined in Rule 502(c) of Regulation D.

 

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(c) Investment Intent . The Purchaser has no present intention of reselling the Shares, or any direct or indirect interest therein, or of effecting a “distribution” (as such term is defined in the Securities Act) of the Shares in violation of U.S. securities laws. The Shares are being acquired solely for the Purchaser’s own account, for investment.

(d) Confidential Access to Information . The Purchaser acknowledges that, prior to executing this Agreement, the Purchaser has had the opportunity to ask questions of and receive answers or obtain additional information from a representative of the Company concerning the financial and other affairs of the Company and the terms and conditions of the Offering, and, to the extent the Purchaser believes necessary in light of his knowledge of the Company’s affairs, has asked these questions and received satisfactory answers and/or additional requested information. The Purchaser has had access to all additional information necessary to verify the accuracy of the information set forth in this Purchase Agreement, the SEC Reports, and other documents and agreements related to an investment in the Shares, and has taken all the steps necessary to evaluate the merits and risks of an investment as proposed hereby. The Purchaser further acknowledges that he has been provided with such due diligence and other materials as the Purchaser has requested from the Company for purposes of making his or her investment decision. The Purchaser acknowledges that he has been provided access to material, non-public information and that the Purchaser will keep all such information confidential in accordance with Section 6(b) of this Agreement. Further, the Purchaser acknowledges and understands the fact that the Company is seeking to effect the private placement of the Shares is material non-public information and disclosure of such information or use of such information by the Purchaser or anyone receiving such information from the Purchaser in connection with the purchase, sale or trade of the Company’s securities (other than use by the Purchaser in acquiring the Shares), or any hedging, derivative or similar transactions or activities involving the Company’s securities, is a violation of securities laws. Neither such inquiries nor any other due diligence investigation conducted by such Purchaser or any of its advisors or representatives shall modify, amend or affect such Purchaser’s right to rely on the Company’s representations, warranties and covenants contained herein or in the other Related Agreements. The Purchaser has not distributed any information relating to the Offering to any person other than his professional advisers.

(e) Financial Projections . The Purchaser acknowledges that any financial projections previously provided to the Purchaser are based on numerous assumptions and estimates by management as to future events, and that the Company makes no representation or warranty as to the accuracy or correctness of such projections. The Purchaser has made an independent examination of, and judgment with respect to, the Company’s prospects and the Shares and has been advised by the Company that the Purchaser should consult with his own legal, financial and other third party professional advisors with respect to the purchase of the Shares. The Purchaser acknowledges that legal advice has been provided to the Company by Alston & Bird LLP, and that such law firm has neither provided advice to the Purchasers nor performed any due diligence on their behalf. The Purchaser also acknowledges that neither the Company, nor its directors, officers, agents or any other person has promised, represented, or guaranteed: (i) the safety of any investment in the Company or the Shares; (ii) that the Company will be profitable; (iii) that any particular investment return will be achieved; or (iv) the profitability of any investment return.

(f) Independent Investigation . The Purchaser is not acquiring the Shares based upon any representation, oral or written, by any person with respect to the Company, but rather upon an independent examination and judgment as to the prospects of the Company

(g) Access to Third Party Professionals and Advisors . In considering an investment in the Shares, the Purchaser has retained and consulted, or has had the opportunity to retain and consult, with

 

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his or her own legal counsel, accountants, tax advisors, investment advisors and other third party professionals, and is not relying upon the Company, its affiliates or their respective officers, directors or third party representatives in making an investment decision with respect to the purchase of the Shares.

(h) Financial Sophistication . The Purchaser is familiar with the business in which the Company is or will be engaged, and, based upon his knowledge and experience in financial and business matters, the Purchaser is familiar with the investments of the type that he is undertaking to purchase in this Agreement; the Purchaser is fully aware of the problems and risks involved in making an investment of this type; and the Purchaser is capable of evaluating the merits and risks of this investment.

(i) Investment Risk . The Purchaser can financially bear the economic risk of this investment, including the ability to hold the Shares for an indefinite period or to bear a complete loss of this investment. The Purchaser also has adequate means of providing for current financial and other needs and possible contingencies, and has no need for liquidity of this investment in the Shares. The Purchaser understands that the Shares, or any portion of the Shares, are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other government agency and are subject to loss of value.

(j) Tax Matters . The Purchaser is a person for purposes of U.S. income taxation, and the social security number and principal address set forth in the Subscription Agreement, including the Substitute Form W-9, are true and complete. The Purchaser has no present intention of becoming a resident of any state or jurisdiction other than as indicated in the Subscription Agreement. The Purchaser agrees to notify the Company within 60 days after the date on which he becomes a nonresident alien is not acquiring the Shares with a view to realizing any benefit under U.S. federal income tax laws and no representations have been made to the Purchaser that any such benefits will be available as a result of his acquisition, ownership, or disposition of the Shares. The Purchaser understands that this representation may be disclosed to the Internal Revenue Service by the Company and that any false statement contained herein could be punished by fine, imprisonment, or both.

(k) Restrictive Legend .

(i) The Purchaser understands that the certificates evidencing the Shares, will bear the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES, OR “BLUE SKY,” LAWS OF ANY STATE OR OTHER DOMESTIC OR FOREIGN JURISDICTION. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR A WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE FOR SUCH TRANSACTIONS UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS.

 

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IN ADDITION, THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE SECTIONS 10-5-9 AND 10-5-11, AS APPLICABLE, OF THE GEORGIA SECURITIES ACT OF 1973, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.”

(ii) In addition, the Purchasers acknowledge that each certificate for Shares shall bear any additional legend required by any other applicable domestic or foreign securities or blue sky laws.

(iii) The Company will direct its transfer agent and registrar to maintain stop transfer instructions on record for the Shares until it has been notified by the Company, upon the advice of counsel, that such instructions may be waived consistent with the Securities Act and applicable domestic and foreign securities laws. Such stop transfer instructions will limit the method of sale of the Shares, consistent with Rule 144 or other available exemptions from registration under the Securities Act. Any transfers other than pursuant to a registration statement under the Securities Act will require an opinion of counsel reasonably satisfactory to the Company and its counsel prior to such transfers.

(l) Restrictions on Transferability . The Purchaser is aware that (i) there are substantial restrictions on the transferability of the Shares and that the Shares cannot be resold unless they are registered under the Securities Act (and applicable state securities laws) or unless an exemption from registration is available; (ii) there will be no public market for the Shares until such time as they are (x) registered under the Securities Act and listed for quotation on the Nasdaq Capital Market or another stock exchange or (y) converted to shares of Common Stock which are then registered under the Securities Act and listed for quotation on the Nasdaq Capital Market or another stock exchange; and (iii) the Purchase will be an “affiliate” of the Company as defined in Rule 405 under the Securities Act and, pursuant to Rule 144 under the Securities Act, it will be subject to the volume and manner of sale limitations contained in Rule 144.

(m) Change in Control . The Purchaser understands that the Offering may result in a “Change in Control” under the Company’s 2001 Long-Term Incentive Plan, the Director Plans, the Supplemental Retirement Plan, and the Executive Change in Control Agreements, which could result in the immediate vesting of the awards under such plans.

 

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(n) No Governmental Review . The Purchaser understands that no United States federal or state agency or any other government or governmental agency or authority has passed upon or made any recommendation or endorsement whatsoever with respect to the Shares.

(o) Residency . The Purchaser is a resident of the jurisdiction set forth immediately below such Purchaser’s name on his Subscription Agreement.

(p) No Manipulation . Neither the Purchaser nor, to the Purchaser’s knowledge, any of its affiliates has taken, or presently plans to take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in, or which has constituted, under the Exchange Act, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

(q) Registration of Common Stock. The Purchaser acknowledges that, in connection with the resale of shares of Common Stock into which the Series B Preferred Stock is convertible pursuant to a registration statement called for under the Registration Rights Agreement, the Purchasers may be deemed to be statutory underwriters as defined in Section 11 of the Securities Act and subject to liability thereunder.

Section 5 . Covenants .

(a) Filings; Other Actions . The Purchasers, on the one hand, and the Company, on the other hand, will cooperate and consult with the other and use reasonable best efforts to prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain all necessary permits, consents, orders, approvals and authorizations of, or any exemption by, all third parties and Governmental Entities, and the expiration or termination of any applicable waiting periods, necessary or advisable to consummate the transactions contemplated by this Agreement, and to perform the covenants contemplated by this Agreement. Each Party shall execute and deliver both before and after the Closing such further certificates, agreements and other documents and take such other actions as the other parties may reasonably request to consummate or implement such transactions or to evidence such events or matters. Mr. Copeland shall file a Rebuttal of Control with the Federal Reserve Bank of Atlanta requesting approval to acquire up to 24.9% of the voting securities of the Company. The Purchasers shall use their reasonable best efforts to obtain approval and acceptance of such filings as promptly as possible, including without limitation responding fully to all requests for additional information from the Federal Reserve Bank of Atlanta, and providing such other information or commitments as the Federal Reserve Bank of Atlanta may require as a condition to approving and accepting such notices. The Purchasers and the Company will have the right to review in advance, and to the extent practicable each will consult with the other, in each case subject to applicable laws relating to the exchange of information, all the information relating to such other party, and any of their respective affiliates, which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions to which it will be party contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each party hereto agrees to keep the other party apprised of the status of matters referred to in this Section 5(a). Each of the Purchasers and the Company shall promptly furnish the other with copies of written communications received by it from, or delivered by any of the foregoing to, any Governmental Entity in respect of the transactions contemplated by this Agreement (other than any portions thereof that relate to confidential supervisory matters).

(b) Conduct of Business . Prior to the earlier of the Closing Date and the termination of this Agreement pursuant to Section 7(b) (the “ Pre-Closing Period ”), the Company shall, and shall cause each

 

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of its Subsidiaries to, use commercially reasonable efforts to carry on its business in the ordinary course of business and use reasonable best efforts to maintain and preserve its and such Subsidiary’s business (including its organization, assets, properties, goodwill and insurance coverage) and preserve its business relationships with customers, strategic partners, suppliers, distributors and others having business dealings with it; provided that nothing in this sentence shall limit or require any actions that the Company’s Board of Directors may, in good faith, determine to be inconsistent with their duties or the Company’s obligations under applicable law; provided further, that the Parties agree that any action taken by the Company at he direction of the regulators or in connection with the transactions contemplated by this Agreement are expressly permitted.

(c) Reasonable Best Efforts . Upon the terms and subject to the conditions herein provided, except as otherwise provided in this Agreement, each of the Parties hereto agrees to use its reasonable best efforts to take or cause to be taken all action, to do or cause to be done and to assist and cooperate with the other party hereto in doing all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated hereby, including but not limited to: (i) the satisfaction of the conditions precedent to the obligations of the parties hereto; (ii) the obtaining of applicable Government Consents, and consents, waivers and approvals of any third parties (including Governmental Entities); (iii) the defending of any claim, action, suit, investigation or proceeding, whether judicial or administrative, challenging this Agreement or the Related Agreements or the performance of the obligations hereunder and thereunder; and (iv) the execution and delivery of such instruments, and the taking of such other actions as the other parties hereto may reasonably request in order to carry out the intent of this Agreement and the Related Agreements. Notwithstanding the foregoing, neither the Company nor the Purchasers shall be obligated to make any payments or otherwise pay any consideration to any third party to obtain any applicable consent, waiver or approval (including the execution by any third party to the Related Agreements) other than any payment to a Governmental Entity necessary for the satisfaction of the conditions contained in Section 2 hereof.

Section 6 Additional Agreements .

(a) Reservation for Issuance . The Company will at all times reserve that number of shares of Common Stock sufficient for issuance upon conversion of Series B Preferred Stock owned at by the Purchasers without regard to any limitation on such conversion.

(b) Confidentiality . Except as may be required by law or regulatory authority, the Company and each of the Purchasers agrees to keep the terms of this Agreement or the Offering, any discussions or negotiations concerning the terms of this Agreement or the Offering, and any materials or information provided to any Party in connection herewith, strictly confidential and agrees not to disclose such information to any third party other than its attorneys and such advisors as are reasonably necessary in connection with the completion of the Offering; provided, however , that such attorneys and other advisors similarly agree to maintain such information in strict confidence. Notwithstanding the foregoing, this Agreement may be provided by the Company and/or Crescent Bank & Trust Company to their respective regulatory agencies on a confidential basis, including, without limitation, in connection with the Company’s application to participate in the U.S. Treasury Department’s Capital Purchase Program administered under the Troubled Asset Relief Program.

(c) Indemnification . The Purchasers recognize that the offer and sale of the Shares to the Purchasers is based upon the representations and warranties of the Purchasers contained in this Agreement and the Related Agreements, and such Purchasers hereby agree to indemnify the Company, its officers, directors, and affiliates and anyone acting on their behalf with respect to the offer and sale of

 

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the Shares, and to hold each of such persons harmless against all losses, damages, liabilities, costs or expenses (including reasonable attorney’s fees) arising by reason of or in connection with any misrepresentation or any breach of such warranties by the Purchaser, or rising as a result of the sale or distribution of the Shares by the Purchasers in violation of the Securities Act, applicable state securities laws, or any other applicable law. This indemnification obligation shall be several and not joint. The Purchasers acknowledge and agree that this Agreement and the Related Agreements and the representations and warranties contained herein and therein shall be binding upon the Purchasers’ heirs, legal representatives, successors and assigns.

Section 7 . Termination .

(a) This Agreement may be terminated prior to the Closing:

(i) by mutual written agreement of the Company and the Purchasers;

(ii) by any party, upon written notice to the other parties, in the event that the Closing does not occur on or before April 30, 2009; provided , however , that the right to terminate this Agreement pursuant to this Section 7(a) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date; or

(iii) by any party, upon written notice to the other parties, in the event that any Governmental Entity shall have issued any order, decree or injunction or taken any other action restraining, enjoining or prohibiting any of the transactions contemplated by this Agreement, and such order, decree, injunction or other action shall have become final and nonappealable.

(b) Effects of Termination . In the event of any termination of this Agreement as provided in Section 7(a), this Agreement (other than Section 6(b) and Section 8, which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect; provided that nothing herein shall relieve any party from liability for intentional breach of this Agreement.

Section 8. Miscellaneous .

(a) Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD FOR THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

(b) Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(c) Notice . All notices, requests and other communications under this Agreement must be in writing and will be deemed to have been duly given upon receipt to the Parties at the following addresses or facsimiles (or at such other address or facsimile for a party as shall be specified by the notice):

If to the Company:

Crescent Banking Company

7 Caring Way

Jasper, Georgia

Attention: Leland W. Brantley, Jr.

Facsimile: (678) 454-2282

 

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With a copy (which shall not constitute notice) to:

Alston & Bird LLP

One Atlantic Center

1201 W. Peachtree Street

Atlanta, Georgia 30309-3424

Attention: Mark C. Kanaly

Facsimile: 404-253-8390

If to the Purchasers:

See Schedule A to this Agreement for Purchaser contact information.

(d) Entire Agreement . This Agreement constitutes the sole and entire agreement among the Parties to this Agreement with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous agreements and understandings, written or oral, with respect to the subject matter hereof.

(e) Waiver . Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by law or otherwise afforded, will be cumulative and not alternative.

(f) Amendment; Modification . This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each Party to this Agreement.

(g) Specific Performance . The Parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity.

(h) Counterparts and Facsimile . This Agreement may be executed in any number of counterparts, by facsimile or otherwise, all of which will constitute one and the same instrument. Executed signature pages to this Agreement may be delivered by facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been delivered.

(i) Headings . The headings in this Agreement are for convenience of reference only, and they shall not limit or otherwise affect the interpretation of any term or provision hereof.

(j) Successors and Assigns; Assignment . This Agreement and the rights, powers and duties set forth herein shall, except as set forth herein, bind and inure of the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the Parties hereto. The Parties hereto may

 

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not assign any of their respective rights or interests in and under this Agreement without the prior express written consent of the other Party, and any attempted assignment without any such consent shall be void and without effect.

(k) No Third Party Beneficiaries . Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person or entity other than the parties hereto, any benefit right or remedies, except that the provisions of Section 6(c) shall inure to the benefit of the persons referred to in that Section.

(l) Severability . If any part of this Agreement is held by a court of competent jurisdiction to be unenforceable, illegal or invalid, the balance of this Agreement shall remain in full force and effect unaffected by such unenforceability, illegality or invalidity.

(m) Expenses . Each of the Parties will bear and pay all other costs and expenses incurred by it or on its behalf in connection with the transactions contemplated pursuant to this Agreement.

[Remainder of page intentionally left blank; signatures on following page(s).]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

 

[Signatures continued on the following page]

 

[Signature Page to Series B Preferred Stock Purchase Agreement]

 

[Signature Page to Series B Preferred Stock Purchase Agreement]

Schedule A

Purchasers

 

Schedule B

Subsidiaries

 

Schedule 3(l)

Brokers and Finders

On November 4, 2008, the Company entered into an engagement letter (the “ Engagement Letter ”) with FIG Partners, LLC (“ FIG ”) with respect to the Company’s consideration of any number of strategic transactions, including, without limitation, a securities offering such as the Offering contemplated by the Agreement, involving the Company and one or more third parties to be identified by FIG. Prior to Closing, the Company and FIG shall enter into a Letter Agreement (the “ Letter Agreement ”) amending the terms of the Engagement Letter. Pursuant to the proposed Letter Agreement, the Company shall agree to pay FIG a one time fee in consideration of its advisory services in connection with the consideration of various strategic alternatives. The Letter Agreement shall provide that FIG will not be entitled to any commission or other fee in connection with the sale of any securities by the Company to Mr. Gary Copeland or Mr. Richard Combs. No fees or commissions shall be due or payable to FIG in connection with the Offering.

Exhibit A

CRESECENT BANKING COMPANY

ARTICLES OF AMENDMENT

to the

ARTICLES OF INCORPORATION

Crescent Banking Company, a corporation organized and existing under the laws of the State of Georgia (the “ Corporation ”), in accordance with the provisions of Section 14-2-1006 of the Georgia Business Corporation Code, hereby amends the Corporation’s Articles of Incorporation (as amended, the “ Articles ”) as follows:

ARTICLE I

The name of the Corporation is “Crescent Banking Company.”

ARTICLE II

Section 2.1 of the Articles is hereby amended and restated in its entirety as follow:

“Section 2.1. The Corporation shall have the authority to be exercised by the Board of Directors, or a duly authorized committee thereof, to issue not more than 50,000,000 shares of common stock, par value $1.00 per share (the “ Common Stock ”), and 1,000,000 shares of preferred stock, par value $1.00 per share (the “ Preferred Stock ”).”

ARTICLE III

These Articles of Amendment hereby add the following Sections 2.4 and 2.5 to the Articles, to designate and set forth the designations, preferences, limitations and relative rights of a new series of Preferred Stock. Any terms used but not defined in this Article III shall have the meanings set forth in the Articles:

“Section 2.4. [Reserved]

Section 2.5. Series B Preferred Stock

(a) Designation . The distinctive designation of the series of Preferred Stock established hereby shall be the “Series B Floating-Rate Cumulative Convertible Perpetual Preferred Stock” (the “ Series B Preferred Stock ”).

(b) Number of Shares . The total number of shares of Series B Preferred Stock shall be 27,249 shares. The Series B Preferred Stock shall have a $1.00 par value per share and a liquidation preference of $1,000 per share.

(c) Definitions . Unless the context or use indicates another meaning or intent, the following terms shall have the following meanings, whether used in the singular or the plural:

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Applicable Conversion Price ” means the Conversion Price in effect at any given time.

 

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“ Board of Directors ” means the Board of Directors of the Corporation.

“ Business Day ” means any day, other than a Saturday or a Sunday, that is neither a legal Federal holiday nor a day on which banking institutions in New York, New York or Atlanta, Georgia are authorized or required by law, regulation or executive order to close.

“ Conversion at the Option of the Corporation Date ” has the meaning set forth in Section 2.5(i)(2).

“ Conversion Date ” has the meaning set forth in Section 2.5(i)(1).

“ Conversion Price ” means the Initial Conversion Price, subject to adjustment as set forth herein.

“ Dividend Period ” means each period from and including a Payment Date (or the Original Issue Date for the first Dividend Period) to but excluding the next Payment Date.

“ Dividend Rate ” has the meaning set forth in Section 2.5(d)(2)(i).

“ Exchange Property ” has the meaning set forth in Section 2.5(k)(1).

“ Ex-Date ”, when used with respect to any issuance or distribution, means the first date on which the Common Stock or other securities trade without the right to receive the issuance or distribution giving rise to an adjustment to the Conversion Price (after the declaration thereof) pursuant to Section 2.5(i).

“ Holder ” means the Person in whose name the shares of the Series B Preferred Stock are registered, which may be treated by the Corporation as the absolute owner of the shares of Series B Preferred Stock for the purpose of making payment and settling the related conversions and for all other purposes.

“ Initial Conversion Price ” means $4.22.

“ Junior Securities ” has the meaning set forth in Section 2.5(m).

“ Liquidation ” has the meaning set forth in Section 2.5(e)(1).

“ Liquidation Preference ” means, as to the Series B Preferred Stock, $1,000 per share (as adjusted for any split, subdivision, combination, consolidation, recapitalization or similar event with respect to the Series B Preferred Stock).

“ Notice of Conversion at the Option of the Corporation ” has the meaning set forth in Section 2.5(i)(2).

“ Original Issue Date ” means the date on which shares of the Series B Preferred Stock are first issued.

“ Payment Date ” has the meaning set forth in Section 2.5(d)(1).

“ Parity Securities ” has the meaning set forth in Section 2.5(m).

“ Person ” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company or trust.

“ Record Date ” has the meaning set forth in Section 2.5(d)(1).

“ Reorganization Event ” has the meaning set forth in Section 2.5(k)(1).

 

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“ Series A Preferred Stock ” means the Corporation’s Series A Fixed Rated Cumulative Perpetual Preferred Stock issued to the U.S. Department of the Treasury in connection with its Capital Purchase Program administered under the Troubled Asset Relief Program.

(d) Dividends .

(1) The Holders shall be entitled to receive, as, if and when declared by the Board of Directors, or a duly authorized committee thereof, out of assets of the Corporation legally available under Georgia law for the payment of dividends, cumulative cash dividends at the rate set forth below in this Section 2.5(d) applied to the $1,000 liquidation preference per share. Such dividends shall be payable quarterly, in arrears, as, if and when declared by the Board of Directors, or a duly authorized committee thereof, on March 31, June 30, September 30, and December 31 (the “ Payment Dates ”) commencing on June 30, 2009; provided that if any such Payment Date is not a Business Day, then the Payment Date will be the next succeeding day that is a Business Day, unless such day falls in the next calendar month, in which case the Payment Date will be the immediately preceding Business Day. No interest or additional dividends or other sums shall accrue or be payable on the amount so payable from the Payment Date to such next succeeding Business Day. Dividends will be payable to the Holders as they appear in the shareholder records of the Corporation at the close of business on the applicable record date, which shall be the 15 ^th day of the calendar month in which the Payment Date falls or on such other date designated by the Board of Directors, or a duly authorize committee thereof, for the payment of dividends that is not more than 45 nor less than 15 days prior to the applicable Payment Date (each, a “ Record Date ”).

(2) (i) The dividend rate on the shares of Series B Preferred Stock for each Dividend Period shall be a floating rate per annum (the “ Dividend Rate ”) equal to the prime rate as reported by the Wall Street Journal’s bank survey, plus 3.25%.

(ii) Dividends on the Series B Preferred Stock shall (if and when declared, as herein provided) be computed on the basis of a 360-day year and the actual number of days elapsed in each Dividend Period. Accordingly, the amount of dividends payable per share for each Dividend Period for the Series B Preferred Stock shall (if and when declared, as herein provided) be equal to the product of (x) the Dividend Rate, (y) $1,000 and (z) a fraction, the numerator of which will be the actual number of days elapsed in such Dividend Period, and the denominator of which will be 360. The amount of dividends payable on the Series B Preferred Stock shall be rounded to the nearest cent, with one-half cent being rounded upwards.

(3) Dividends on the Series B Preferred Stock shall be cumulative and shall accrue whether or not (i) the Corporation has earnings, (ii) there are funds legally available for the payment of such dividends, (iii) such dividends are declared by the Board of Directors, or a duly authorized committee thereof, or (iv) any agreements to which the Corporation is a party or regulations to which the Corporation is subject prohibit the payment of dividends. Any dividend payment made on the Series B Preferred Stock shall first be credited against the earliest accrued but unpaid dividends due with respect to such Series B Preferred Stock that remains payable. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payment or payments on the Series B Preferred Stock that may have been cumulated or accrued and is in arrears.

(4) Without limiting the rights set forth in Section 2.5(d)(2), no dividends on the Series B Preferred Stock shall be declared by the Board of Directors, or a duly authorized committee thereof, or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness and any related waiver or amendment thereto, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment is restricted or prohibited by law.

 

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(5) Whenever dividends on the Series B Preferred Stock are in arrears, the Corporation shall not declare or pay, or set apart for payment, dividends with respect to, or redeem, purchase or acquire any of, its Parity Securities or Junior Securities, other than (i) redemptions, purchases or other acquisitions of Junior Securities in connection with any benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants or in connection with a dividend reinvestment or shareholder stock purchase plan, (ii) any declaration of a dividend in connection with any shareholders’ rights plan, or the issuance of rights, stock or other property under any shareholders’ rights plan, or the redemption or repurchase of rights pursuant thereto, (iii) conversions into or exchanges for other Junior Securities and cash solely in lieu of fractional shares of the Junior Securities, and (iv) redemptions or purchases of or dividends on the Series A Preferred Stock, which shall continue to accrue and be payable in accordance with their terms. If dividends payable pursuant to Section this 2.5(d) for any Payment Date are not paid in full, and there are issued and outstanding shares of Parity Securities with the same Payment Date, then all dividends declared on shares of the Series B Preferred Stock and such Parity Securities on such date shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as full quarterly dividends per share payable on the shares of the Series B Preferred Stock pursuant to this Section 2.5(d) and all such Parity Securities otherwise payable on such Payment Date (subject to their having been declared by the Board of Directors out of legally available funds and including, in the case of any such Parity Securities that bear cumulative dividends, all accrued but unpaid dividends) bear to each other.

(6) No dividends may be declared or paid or set aside for payment on any shares of Series B Preferred Stock if at the same time any arrears exists in the payment of dividends on any outstanding class or series of stock of the Corporation ranking, as to the payment of dividends, prior to the Series B Preferred Stock.

(7) All dividends paid with respect to shares of the Series B Preferred Stock shall be paid pro rata to the holders of such shares entitled thereto. The Holders shall not be entitled to any dividend, whether payable in cash, property or shares of any class or series (including the Series B Preferred Stock), in excess of the full cumulative dividends on the Series B Preferred Stock as provided herein. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series B Preferred Stock which may be in arrears.

(e) Liquidation Preference .

(1) Upon any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation (each, a “ Liquidation ”), the Holders shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $1,000 per share of Series B Preferred Stock, plus an amount equal to any accrued or accumulated, but unpaid dividends through and including the date of payment to the Holders (whether or not such dividends have been declared by the Board of Directors or a duly authorized committee thereof), before any distribution or payment shall be made to holders of shares of Common Stock or any other class or series of capital stock of the Corporation ranking junior to the Series B Preferred Stock as to liquidation rights. In the event that, upon such Liquidation, the available assets of the Corporation are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series B Preferred Stock and the corresponding amounts payable on all Parity Securities having the same liquidation preference, then the Holders and all other such classes or series of Parity Securities shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled, and the Holders will not be entitled to any further participation in any distribution of assets by the Corporation.

 

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(2) Written notice of any Liquidation, stating the payment date or dates and the place or places on and at which the amounts distributable as a result thereof shall be payable, shall be given by first class mail, postage paid, not less than 30 nor more than 60 days prior to the first payment date stated therein, to each Holder of shares of Series B Preferred Stock at the respective addresses of such Holders as they appear on the Corporation’s stock transfer records.

(3) After payment to the Holders of the full liquidation amounts provided in this Section 2.5(e), the Holders, as such, will have no right or claim to any of the remaining assets of the Corporation.

(4) For purposes of this Section 2.5(e), the Corporation’s consolidation or merger with or into any other corporation or corporations, the sale or pledge of all or substantially all of the Corporation’s or its subsidiaries’ assets, or the sale of a controlling interest of the Corporation’s capital stock is not a Liquidation.

(f) Maturity . The Series B Preferred Stock shall be perpetual unless converted in accordance with these Articles.

(g) Redemption . The Series B Preferred Stock shall not be subject to mandatory redemption, sinking fund or other similar provisions.

(h) Conversion .

(1) Right to Convert . Shares of the Series B Preferred Stock shall be convertible, at the option of the a Holder or the Corporation, at any time on or after [•], 2011, into shares of Common Stock as set forth below. A Holder or the Corporation may elect to convert all or any portion of their respective shares of Series B Preferred Stock in accordance with Section 2.5(h)(3) below. The number of shares of Common Stock into which a share of Series B Preferred Stock shall be convertible shall be determined by dividing the Liquidation Preference by the Applicable Conversion Price (subject to the conversion procedures of Section 2.5(i) hereof).

(2) Accrued but Unpaid Dividends at Conversion . Upon conversion of any shares of Series B Preferred Stock, the Holders shall have the right to receive an additional number of fully paid and non-assessable shares of Common Stock equal to the amount of all accrued and unpaid dividends on such share of Series B Preferred Stock (other than previously declared dividends payable to a holder of record on a prior Record Date which dividends shall be paid by the Corporation to such holder on the next Payment Date) to the Conversion Date, whether or not declared, divided by the applicable Conversion Price.

(3) Partial Conversion .

(i) If the Corporation elects to cause less than all the shares of the Series B Preferred Stock to be converted pursuant to Section 2.5(h)(1), then the shares so converted shall be converted on a pro rata basis.

(ii) A Holder may elect to cause less than all of the shares of Series B Preferred Stock held by such Holder to be converted pursuant to Section 2.5(h)(1), regardless of whether any other Holders elect to convert their shares of Series B Preferred Stock.

 

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(i) Conversion Procedures .

(1) Holder Conversion Procedures . Before any Holder of shares Series B Preferred Stock shall be entitled to convert the same into shares of Common Stock, such Holder shall surrender the certificate or certificates therefore (to the extent that such shares were issued in certificate form), duly endorsed, at the office of the Corporation or of any transfer agent for such Series B Preferred Stock, and shall give written notice to the Corporation at its principal corporate office of the election to convert the same and shall state therein the name or names in which the shares of Common Stock are to be issued and the number of shares of Series B Preferred Stock that the Holder is converting. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such Holder, or to the nominee or nominees of such Holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid or, in the event such shares of Common Stock are not certificated, a notice of issuance of such shares executed by an authorized officer of the Corporation. Except as otherwise provided in Section 2.5(h), such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series B Preferred Stock to be converted, and the Person or Persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date (the “ Conversion Date ”). If the conversion is in connection with an underwritten registered offering of securities, the conversion may, at the option of any holder tendering shares of Series B Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the Persons entitled to receive the Common Stock upon conversion of shares of Series B Preferred Stock shall not be deemed to have converted such shares until immediately prior to the closing of such sale of securities.

(2) Corporation Conversion Procedures . In order for the Corporation to exercise the conversion right described in Section 2.5(h), the Corporation shall provide notice of such conversion to the applicable Holder (such notice, a “ Notice of Conversion at the Option of the Corporation ”). The Conversion Date shall be a date selected by the Corporation (the “ Conversion at the Option of the Corporation Date ”) and shall be no more than 20 days after the date on which the Corporation provides such Notice of Conversion at the Option of the Corporation. In addition to any information required by applicable law or regulation, the Notice of Conversion at the Option of the Corporation shall state, as appropriate:

(i) the Conversion at the Option of the Corporation Date;

(ii) the number of shares of Series B Preferred Stock to be converted; and

(iii) the number of shares of Common Stock into which the Series B Preferred Stock shall be converted; and

(3) Shares of Series B Preferred Stock duly converted in accordance with these Articles, or otherwise reacquired by the Corporation, will resume the status of authorized and unissued Preferred Stock, undesignated as to series and available for future issuance. The Corporation may from time-to-time take such appropriate action as may be necessary to reduce the authorized number of shares of Series B Preferred Stock; provided , however , that the Corporation shall not take any such action if such action would reduce the authorized number of shares of Series B Preferred Stock below the number of shares of Series B Preferred Stock then outstanding plus any shares of Series B Preferred Stock to be paid as dividends.

(4) The Person or Persons entitled to receive the Common Stock issuable upon conversion of Series B Preferred Stock shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of the close of business on the Conversion Date with respect thereto. In the event that a Holder shall not by written notice designate the name in which shares of

 

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Common Stock to be issued upon conversion of shares of Series B Preferred Stock should be registered or the manner in which such shares should be delivered, the Corporation shall be entitled to register and deliver such shares in the name of the Holder and in the manner shown on the records of the Corporation.

(5) On the Conversion Date, an appropriate entry shall be made to the stock ledger of the Corporation to reflect the number of shares of Common Stock into which the shares of Series B Preferred Stock are convertible and the remaining shares of Series B Preferred Stock, if any, and a notice of issuance of such shares executed by an authorized officer of the Corporation shall be delivered to each Holder whose shares have been converted.

(j) Anti-Dilution Adjustments .

(1) The Conversion Price shall be subject to the following adjustments.

(i) Stock Dividends and Distributions . If the Corporation pays dividends or other distributions on the Common Stock in shares of Common Stock, then the Conversion Price in effect immediately prior to the Ex-Date for such dividend or distribution will be multiplied by the following fraction:

 

Where,

 

For the purposes of this clause (i), the number of outstanding shares of Common Stock at the applicable time shall not include shares acquired or otherwise owned or held by the Corporation. If any dividend or distribution described in this clause (i) is declared but not so paid or made, then the Conversion Price shall be readjusted, effective as of the date the Board of Directors or a regulatory authority determines not to make or permit, as appropriate, such dividend or distribution, to such Conversion Price that would be in effect if such dividend or distribution had not been declared.

(ii) Subdivisions, Splits and Combination of the Common Stock . If the Corporation subdivides, splits or combines the shares of Common Stock, then the Conversion Price in effect immediately prior to the effective date of such share subdivision, split or combination will be multiplied by the following fraction:

 

Where,

 

 

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For the purposes of this clause (ii), the number of outstanding shares of Common Stock at the applicable time shall not include shares acquired or otherwise owned or held by the Corporation. If any subdivision, split or combination described in this clause (ii) is announced but the outstanding shares of Common Stock are not subdivided, split or combined, then the Conversion Price shall be readjusted, effective as of the date the Board of Directors not to subdivide, split or combine the outstanding shares of Common Stock, or a regulatory authority determines not to permit such actions, to such Conversion Price that would be in effect if such subdivision, split or combination had not been announced.

(2) (i) All adjustments to the Conversion Price shall be calculated to the nearest cent, with one-half cent being rounded upwards. No adjustment in the Conversion Price shall be required if such adjustment would be less than $0.01; provided , that any adjustments which by reason of this subparagraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment; provided further that, on the Conversion Date, adjustments to the Conversion Price will be made with respect to any such adjustment carried forward and which has not been taken into account before such date.

(ii) No adjustment to the Conversion Price shall be made if Holders participate in or receive the benefits of the transaction that would otherwise give rise to an adjustment, without having to convert the Series B Preferred Stock, as if they held the full number of shares of Common Stock into which a share of the Series B Preferred Stock may then be converted.

(iii) The Applicable Conversion Price shall not be adjusted:

(A) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Corporation’s securities and the investment of additional optional amounts in shares of Common Stock under any such plan;

(B) upon the issuance of any shares of Common Stock or options, rights or warrants to purchase those shares pursuant to any present or future employee, director or consultant benefit plan (or similar arrangement) or program of or assumed by the Corporation or any of its subsidiaries;

(C) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the Original Issue Date and not substantially amended thereafter;

(D) upon the issuance of Series A Fixed Rate Cumulative Perpetual Preferred Stock, or the related warrant convertible into shares of Common Stock, to the U.S. Department of Treasury in the event the Corporation’s application to participate in the Capital Purchase Program administered under the Troubled Asset Relief Program is approved;

(E) for a change in the par value or no par value of Common Stock; or

(F) for accrued and unpaid dividends on the Series B Preferred Stock.

 

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(3) Whenever the Conversion Price is to be adjusted in accordance with Section 2.5(j)(1) or Section 2.5(j)(2), the Corporation shall: (i) compute the Conversion Price in accordance with Section 2.5(j)(1) or Section 2.5(j)(2), taking into account the threshold set forth in Section 2.5(j)(3) hereof; (ii) as soon as practicable following the occurrence of an event that requires an adjustment to the Conversion Price pursuant to Section 2.5(j)(1) or Section 2.5(j)(2), taking into account the threshold set forth in Section 2.5(j)(3) hereof (or if the Corporation is not aware of such occurrence, as soon as practicable after becoming so aware), provide, or cause to be provided, a written notice to the Holders of the occurrence of such event; and (iii) as soon as practicable following the determination of the revised Conversion Price in accordance with Section 2.5(j)(1) or Section 2.5(j)(2) hereof, provide, or cause to be provided, a written notice to the Holders setting forth in reasonable detail the method by which the adjustment to the Conversion Price was determined and setting forth the revised Conversion Price.

(4) Without the approval of the Holders of a majority of the then outstanding shares of Series B Preferred Stock, the Corporation will not, by amendment of the Articles or through any recapitalization, reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the material terms to be observed or performed hereunder by the Corporation (including, without limitation, to affect the calculation of the Conversion Price in any way adverse to the Holders, but will at all times in good faith assist in the carrying out of all the provisions of Sections 2.5(i) and 2.5(j) hereof and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holders against undue impairment.

(k) Reorganization Events .

(1) In the event that, prior to any Conversion Date with respect to the shares of Series B Preferred Stock of any Holder, there occurs (any such event specified in the following clauses (i) through (iv), a “ Reorganization Event ”):

(i) any consolidation, merger or other similar business combination of the Corporation with or into another Person, in each case pursuant to which the Common Stock will be converted into cash, securities or other property of the Corporation or another Person;

(ii) any sale, transfer, lease or conveyance to another Person of all or substantially all of the property and assets of the Corporation, in each case pursuant to which the Common Stock will be converted into cash, securities or other property of the Corporation or another Person;

(iii) any reclassification of the Common Stock into securities including securities other than the Common Stock; or

(iv) any statutory exchange of the outstanding shares of Common Stock for securities of another Person (other than in connection with a merger or acquisition);

then each share of such Holder’s Series B Preferred Stock outstanding immediately prior to such Reorganization Event shall automatically convert, effective as of the consummation of the Reorganization Event, into the type and amount of securities, cash and other property receivable in such Reorganization Event by the holder (excluding the counterparty to the Reorganization Event or an affiliate of such counterparty) equal to the greater of (i) the number of shares of Common Stock into which one share of Series B Preferred Stock would then otherwise be convertible and (ii) the number of shares of Common Stock that, if one share of Series B Preferred Stock were converted into such number of shares, would result in the fair market value of the securities, cash

 

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and other property receivable in such Reorganization Event by a Holder of such number of shares equaling the Liquidation Preference (such securities, cash and other property, the “ Exchange Property ”). In the event that a Reorganization Event referenced in Section 2.5(k)(1) involves common stock of another person as all or part of the consideration being offered in a fixed exchange ratio transaction, the fair market value per share of such common stock shall be determined by reference to (i) the average of the closing prices of such common stock for the ten trading day period ending immediately prior to the consummation of such Reorganization Event if the stock is publicly traded, or (ii) an appraisal to be performed by an independent accounting firm acceptable to the Holder and the Corporation or its successor.

(2) In the event that holders of the shares of Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the consideration that the Holders are entitled to receive shall be deemed to be the types and amounts of consideration received by the majority of the holders of the shares of Common Stock that affirmatively make an election.

(3) The above provisions of this Section 2.5(k) shall similarly apply to successive Reorganization Events, and the provisions of Section 2.5(j) shall apply to any shares of capital stock of the Corporation (or any successor) received by the holders of the Common Stock in any such Reorganization Event.

(4) The Corporation (or any successor) shall, within seven days of the consummation of any Reorganization Event, provide written notice to the Holders of such consummation of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 2.5(k).

(5) The Corporation shall not enter into any agreement for a transaction constituting a Reorganization Event unless such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Series B Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect to this Section 2.5(k).

(l) Voting Rights .

(1) Holders shall vote together with the holders of Common Stock on an as-converted basis and not as a separate class, except as provided by applicable law and as set forth in this Section 2.5(l).

(2) The voting provisions of this Section 2.5(l) shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series B Preferred Stock shall have been converted by the Corporation upon proper notice.

(3) On each matter submitted to a vote of the Holders in accordance with this Section 2.5(l), or as otherwise required by law, each Share of Series B Preferred Stock shall be entitled to vote on an as-converted basis based on the Applicable Conversion Rate, except that when any other series of Preferred Stock of the Corporation shall have the right to vote with the Series B Preferred Stock as a single class on any matter, the Series B Preferred Stock and such other series shall have with respect to such matters, one vote per each $1,000 of stated liquidation preference. With respect to each share of Series B Preferred Stock, the holder thereof may designate a proxy, with each such proxy having the right to vote on behalf of the holder.

(m) Ranking . The Series B Preferred Stock will, with respect to dividend rights and rights upon Liquidation rank (i) on a parity with any other class or series of equity securities of the Corporation the terms of which do not expressly provide that such class or series will rank senior or junior to the Series

 

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B Preferred Stock as to dividend rights and rights upon Liquidation (collectively referred to as “ Parity Securities ”), and (ii) senior to the Common Stock and each other class or series of capital stock authorized, issued, outstanding or established after the Original Issue Date by the Corporation the terms of which do not expressly provide that it ranks on a parity with or senior to the Series B Preferred Stock as to dividend rights and rights upon Liquidation of the Corporation (collectively referred to as “ Junior Securities ”). The Series B Preferred Stock will rank junior to all of the Corporation’s indebtedness. For purposes of this Section 2.5(m), debt securities of the Corporation that are convertible into or exchangeable for shares of the Corporation’s capital stock or any other debt securities of the Corporation shall not constitute a class or series of shares of the Corporation’s capital stock.

(n) Headings, etc. The headings hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. The words “include,” “including” and derivatives thereof shall be without limitation by reason of enumeration or otherwise, the singular shall include the plural and vice versa.

(o) Severability of Provisions . If any preferences or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of the shares of Series B Preferred Stock set forth in these Articles are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other preferences or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or terms or conditions of redemption of the shares of Series B Preferred Stock set forth in these Articles that can be given effect without giving effect to the invalid, unlawful or unenforceable provision shall, nevertheless, remain in full force and effect and no preferences or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of the shares of Series B Preferred Stock herein set forth shall be deemed dependent upon any other provision hereof unless so expressed herein.

(p) No Preemptive Rights . No holder of Series B Preferred Stock shall be entitled to any preemptive rights to subscribe for or acquire any unissued shares of any class of series (whether now or hereafter authorized) or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of any class or series.

ARTICLE IV

These Articles of Amendment were duly adopted on March [•], 2009.

ARTICLE V

These Articles of Amendment were adopted by the Corporation’s shareholder, in accordance with the provisions of Sections 14-2-1003 of the Georgia Business Corporation Code.

[ Remainder of Page Intentionally Left Blank ]

 

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IN WITNESS WHEREOF, Crescent Banking Company has caused these Articles of Amendment to be signed by Leland W. Brantley, Jr., its Chief Financial Officer, this [•] day of March, 2009.