Agreement made as
of
, 2009 between PAB Bankshare, Inc., a Georgia corporation
(“Company”), and [
], a [
] (“Warrant Agent”).
WHEREAS, the
Company is offering subscription rights (the “Rights”)
to its shareholders as of 5:00 p.m., Eastern Time, on [
], 2009, to purchase units consisting of one share of common stock,
no par value (“Common Stock”), of the Company and one
warrant to purchase .25 of a share of Common Stock at $[
] per whole share (“Warrant”) until the seventh
anniversary of its issuance, subject to adjustment as described
herein; and
WHEREAS, the
Company has filed with the Securities and Exchange Commission (the
“SEC”) a Registration Statement on Form S-1, as amended
(the “Registration Statement”) for the registration
under the Securities Act of 1933, as amended (the
“Act”) of the Rights, the Common Stock issuable upon
exercise of the Rights, the Warrants and the Common Stock issuable
upon exercise of each of the Warrants;
WHEREAS, following
the closing of the offering, the Warrants will trade separately
from the Common Stock; and
WHEREAS, the
Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and exercise of the
Warrants; and
WHEREAS, the
Company desires to provide for the form and provisions of the
Warrants, the terms upon which they shall be issued and exercised,
and the respective rights, limitation of rights, and immunities of
the Company, the Warrant Agent, and the holders of the Warrants;
and
WHEREAS, all acts
and things have been done and performed which are necessary to make
the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent, as provided
herein, the valid, binding and legal obligations of the Company,
and to authorize the execution and delivery of this
Agreement.
NOW, THEREFORE, in
consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
1.
Appointment of Warrant Agent . The Company hereby appoints
the Warrant Agent to act as agent for the Company for the Warrants,
and the Warrant Agent hereby accepts such appointment and agrees to
perform the same in accordance with the terms and conditions set
forth in this Agreement.
2.1
Form of Warrant . Each Warrant shall be issued in registered
form only, shall be in substantially the form of
Exhibit A hereto, the provisions of which are
incorporated herein and shall be signed by or bear the facsimile
signature of the Chief Executive Officer of the Company and the
Secretary or Treasurer of the Company. In the event the person
whose facsimile signature has been placed upon any Warrant shall
have ceased to serve in the capacity in which such person signed
the Warrant before such Warrant is issued, it may be issued with
the same effect as if he or she had not ceased to be such at the
date of issuance.
2.2
Effect of Countersignature . Unless and until countersigned
by the Warrant Agent pursuant to this Agreement, a Warrant shall be
invalid and of no effect and may not be exercised by the holder
thereof.
2.3.1
Warrant Register . The Warrant Agent shall maintain books
(“Warrant Register”), for the registration of original
issuance and the registration of transfer of the Warrants. Upon the
initial issuance of the
Warrants, the
Warrant Agent shall issue and register the Warrants in the names of
the respective holders thereof in such denominations and otherwise
in accordance with instructions delivered to the Warrant Agent by
the Company.
2.3.2
Registered Holder . Prior to due presentment for
registration of transfer of any Warrant, the Company and the
Warrant Agent may deem and treat the person in whose name such
Warrant shall be registered upon the Warrant Register
(“registered holder”), as the absolute owner of such
Warrant and of each Warrant represented thereby (notwithstanding
any notation of ownership or other writing on the Warrant
Certificate made by anyone other than the Company or the Warrant
Agent), for the purpose of any exercise thereof, and for all other
purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
3. Terms
and Exercise of Warrants
3.1
Warrant Price . Each Warrant shall, when countersigned by
the Warrant Agent, entitle the registered holder thereof, subject
to the provisions of such Warrant and of this Warrant Agreement, to
purchase from the Company the number of shares of Common Stock
stated therein, at the price of $[
] per whole share, subject to the adjustments provided in
Section 4 hereof and in the last sentence of this
Section 3.1. The term “Warrant Price” as used in
this Warrant Agreement refers to the price per share at which
Common Stock may be purchased at the time a Warrant is exercised.
The Company in its sole discretion may lower the Warrant Price at
any time prior to the Expiration Date for a period of no less than
10 business days; provided, however, that the Company will provide
notice to registered holders of the Warrants of such extension of
not less than 20 days.
3.2
Duration of Warrants . A Warrant may be exercised only
during the period (“Exercise Period”) commencing on
9:00 a.m., Eastern Time on [
] and terminating at 5:00 p.m., Eastern Time on [
] (“Expiration Date”). Each Warrant not exercised on or
before the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement
shall cease at the close of business on the Expiration Date. The
Company in its sole discretion may extend the duration of the
Warrants by delaying the Expiration Date; provided, however, that
the Company will provide notice to registered holders of the
Warrants of such extension of not less than
20 days.
3.3
Exercise of Warrants .
3.3.1
Requirements to Exercise . In order to exercise a Warrant,
the registered holder must be exercising Warrants to purchase
either (i) a minimum of twenty (20) shares of Common
Stock per exercise, or (ii) if registered holder owns Warrants
to purchase less than twenty (20) shares of Common Stock, then the
registered holder must exercise all Warrants owned.
3.3.2
Payment . Subject to the provisions of the Warrant and this
Warrant Agreement, a Warrant, when countersigned by the Warrant
Agent, may be exercised by the registered holder thereof by
surrendering it, at the office of the Warrant Agent, or at the
office of its successor as Warrant Agent, in [
], with the subscription form, as set forth in the Warrant, duly
executed, and by paying in full the Warrant Price for each full
share of Common Stock as to which the Warrant is exercised and any
and all applicable taxes due in connection with the exercise of the
Warrant by:
(a)
having the Warrant Agent withhold, from the shares of Common Stock
that would otherwise be delivered to the registered holder upon
such exercise, shares of Common Stock issuable upon exercise of the
Warrant equal in value to the aggregate Warrant Price as to which
the Warrant is so exercised based on the Market Price (as defined
below) of the Common Stock on the trading day on which the Warrant
is exercised and the notice of exercise is delivered to the Warrant
Agent, or
(b)
tendering in cash, by certified or cashier’s check payable to
the order of the Company (or as otherwise agreed to by the
Company).
For purposes of
this Agreement, “Market Price” means, with respect to a
particular security, on any given day, the last reported sale price
regular way or, in case no such reported sale takes place on such
day, the average of the last closing bid and ask prices regular
way, in either case on the principal national securities exchange
on which
the applicable
securities are listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, the
average of the closing bid and ask prices as furnished by two
members of the Financial Industry Regulatory Authority, Inc.
selected from time to time by the Company for that purpose.
“Market Price” shall be determined without reference to
after hours or extended hours trading. If such security is not
listed and traded in a manner that the quotations referred to above
are available for the period required hereunder, the Market Price
per share of Common Stock shall be deemed to be the fair market
value per share of such security as determined in good faith by the
board of directors of the Company in reliance on an opinion of a
nationally recognized independent investment banking corporation
retained by the Company for this purpose and certified in a
resolution to the registered holder. For the purposes of
determining the Market Price of the Common Stock on the
“trading day” preceding, on or following the occurrence
of an event, (i) that trading day shall be deemed to commence
immediately after the regular scheduled closing time of trading on
the NASDAQ Global Select Stock Market or such other national
securities exchange on which the Common Stock is listed or, if
trading is closed at an earlier time, such earlier time and
(ii) that trading day shall end at the next regular scheduled
closing time, or if trading is closed at an earlier time, such
earlier time (for the avoidance of doubt, and as an example, if the
Market Price is to be determined as of the last trading day
preceding a specified event and the closing time of trading on a
particular day is 4:00 p.m. and the specified event occurs at 5:00
p.m. on that day, the Market Price would be determined by reference
to such 4:00 p.m. closing price).
3.3.3
Issuance of Certificates . As soon as practicable after the
exercise of any Warrant and the clearance of the funds in payment
of the Warrant Price, the Company shall issue to the registered
holder of such Warrant a certificate or certificates for the number
of full shares of Common Stock to which such registered holder is
entitled, registered in such name or names as may be directed by
him, her or it, and if such Warrant shall not have been exercised
in full, a new countersigned Warrant for the number of shares as to
which such Warrant shall not have been exercised. The Company will
at all times reserve and keep available, out of its authorized but
unissued Common Stock, solely for the purpose of providing for the
exercise of the Warrant, the aggregate number of shares of Common
Stock then issuable upon exercise of the Warrant at any time. The
Company will (a) procure, at its sole expense, the listing of
the Shares issuable upon exercise of the Warrant at any time,
subject to issuance or notice of issuance, on all principal stock
exchanges on which the Common Stock is then listed or traded and
(b) maintain such listings of such Shares at all times after
issuance. The Company will use reasonable best efforts to ensure
that the Shares may be issued without violation of any applicable
law or regulation or of any requirement of any securities exchange
on which the Shares are listed or traded.
3.3.4
Valid Issuance . All shares of Common Stock issued upon the
proper exercise of a Warrant in conformity with this Agreement
shall be validly issued, fully paid and non-assessable.
3.3.5
Date of Issuance . Each person in whose name any such
certificate for shares of Common Stock is issued shall for all
purposes be deemed to have become the holder of record of such
shares on the date on which the Warrant was surrendered and payment
of the Warrant Price was made, irrespective of the date of delivery
of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are
closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on
which the stock transfer books are open.
4.
Adjustments . The Warrant Price and the number of shares of
Common Stock issuable upon exercise of any Warrant shall be subject
to adjustment from time to time as follows; provided, that if more
than one subsection of this Section 4 is applicable to a
single event, the subsection shall be applied that produces the
largest adjustment and no single event shall cause an adjustment
under more than one subsection of this Section 4 so as to
result in duplication:
4.1.
Stock Splits, Subdivisions, Reclassifications or
Combinations . If the Company shall (i) declare and pay a
dividend or make a distribution on its Common Stock in shares of
Common Stock, (ii) subdivide or reclassify the outstanding
shares of Common Stock into a greater number of shares, or
(iii) combine or reclassify the outstanding shares of Common
Stock into a smaller number of shares, the number of shares
issuable upon exercise of the Warrant at the time of the record
date for such dividend or distribution or the effective date of
such subdivision, combination or reclassification shall be
proportionately adjusted so that the registered holder after such
date shall be entitled to purchase the number of shares of Common
Stock which such holder would have owned or been entitled to
receive in respect of the shares of Common Stock subject to the
Warrant after such date had the
Warrant been
exercised immediately prior to such date. In such event, the
Warrant Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted to the number
obtained by dividing (x) the product of (1) the number of
shares issuable upon the exercise of the Warrant before such
adjustment and (2) the Warrant Price in effect immediately
prior to the record or effective date, as the case may be, for the
dividend, distribution, subdivision, combination or
reclassification giving rise to this adjustment by (y) the new
number of shares issuable upon exercise of the Warrant determined
pursuant to the immediately preceding sentence.
4.2.
Certain Issuances of Common Shares or Convertible Securities
. Until the third anniversary of the date of issuance, if the
Company shall issue shares of Common Stock (or rights or warrants
or other securities exercisable or convertible into or exchangeable
(collectively, a “conversion”) for shares of Common
Stock) (collectively, “convertible securities”) (other
than in Permitted Transactions (as defined below) or a transaction
to which Section 4.1 is applicable) without consideration or
at a consideration per share (or having a conversion price per
share) that is less than 90% of the Market Price on the last
trading day preceding the date of the agreement on pricing such
shares (or such convertible securities) then, in such
event:
(a)
the number of shares issuable upon the exercise of the Warrant
immediately prior to the date of the agreement on pricing of such
shares (or of such convertible securities) (the “Initial
Number”) shall be increased to the number obtained by
multiplying the Initial Number by a fraction (A) the numerator
of which shall be the sum of (x) the number of shares of
Common Stock of the Company outstanding on such date and
(y) the number of additional shares of Common Stock issued (or
into which convertible securities may be exercised or convert) and
(B) the denominator of which shall be the sum of (I) the
number of shares of Common Stock outstanding on such date and
(II) the number of shares of Common Stock which the aggregate
consideration receivable by the Company for the total number of
shares of Common Stock so issued (or into which convertible
securities may be exercised or convert) would purchase at the
Market Price on the last trading day preceding the date of the
agreement on pricing such shares (or such convertible securities);
and
(b)
the Warrant Price payable upon exercise of the Warrant shall be
adjusted by multiplying such Warrant Price in effect immediately
prior to the date of the agreement on pricing of such shares (or of
such convertible securities) by a fraction, the numerator of which
shall be the number of shares of Common Stock issuable upon
exercise of the Warrant prior to such date and the denominator of
which shall be the number of shares of Common Stock issuable upon
exercise of the Warrant immediately after the adjustment described
in clause (A) above.
For purposes of
the foregoing, the aggregate consideration receivable by the
Company in connection with the issuance of such shares of Common
Stock or convertible securities shall be deemed to be equal to the
sum of the net offering price (including the fair market value, as
determined by the board of directors of the Company, acting in good
faith (the “Fair Market Value”), of any non-cash
consideration and after deduction of any related expenses payable
to third parties) of all such securities plus the minimum aggregate
amount, if any, payable upon exercise or conversion of any such
convertible securities into shares of Common Stock; and
“Permitted Transactions” shall mean issuances
(i) as consideration for or to fund the acquisition of
businesses and/or related assets, (ii) in connection with
employee benefit plans and compensation related arrangements
approved by the board of directors of the Company, (iii) in
connection with a public or broadly marketed offering and sale of
Common Stock or convertible securities for cash conducted by the
Company or its affiliates pursuant to registration under the
Securities Act or Rule 144A thereunder on a basis consistent
with capital raising transactions by comparable financial
institutions and (iv) in connection with the exercise of preemptive
rights on terms existing as of the date of issuance. Any adjustment
made pursuant to this Section 4.2 shall become effective
immediately upon the date of such issuance.
4.3.
Other Distributions . In case the Company shall fix a record
date for the making of a distribution to all holders of shares of
its Common Stock of securities, evidences of indebtedness, assets,
cash, rights or warrants (excluding ordinary cash dividends,
dividends of its Common Stock and other dividends or distributions
referred to in Section 4.1), in each such case, the Warrant
Price in effect prior to such record date shall be reduced
immediately thereafter to the price determined by multiplying the
Warrant Price in effect immediately prior to the
reduction by
the quotient of (x) the Market Price of the Common Stock on
the last trading day preceding the first date on which the Common
Stock trades regular way on the principal national securities
exchange on which the Common Stock is listed or admitted to trading
without the right to receive such distribution, minus the amount of
cash and/or the Fair Market Value of the securities, evidences of
indebtedness, assets, rights or warrants to be so distributed in
respect of one share of Common Stock (such amount and/or Fair
Market Value, the “Per Share Fair Market Value”)
divided by (y) such Market Price on such date specified in
clause (x); such adjustment shall be made successively whenever
such a reco
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