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Large accelerated filer
☐
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Accelerated filer
☐
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Non-accelerated filer
☒
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Smaller reporting company
☒
Emerging growth company
☒
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Section
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Page
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| | | | | ii | | | |
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| | | | | 150 | | | |
| | | | | F-1 | | | |
| | | |
As of and for the
Six Months Ended June 30, |
| |
As of and for the
Year Ended December 31, |
| ||||||||||||||||||
|
(dollars in thousands, except per share amounts)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| | | |
(unaudited)
|
| | | | ||||||||||||||||||
| Income Statement Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest income
|
| | | $ | 84,691 | | | | | $ | 77,322 | | | | | $ | 164,872 | | | | | $ | 130,412 | | |
|
Interest expense
|
| | | | 28,768 | | | | | | 30,463 | | | | | | 62,494 | | | | | | 58,728 | | |
|
Net interest income
|
| | | $ | 55,923 | | | | | $ | 46,859 | | | | | $ | 102,378 | | | | | $ | 71,684 | | |
|
Provision for credit losses
|
| | | | 2,208 | | | | | | 3,171 | | | | | | 4,521 | | | | | | 8,321 | | |
|
Noninterest income
|
| | | | 6,437 | | | | | | 6,208 | | | | | | 10,339 | | | | | | 7,306 | | |
|
Noninterest expense
|
| | | | 42,180 | | | | | | 40,800 | | | | | | 78,357 | | | | | | 59,384 | | |
|
Income before tax expense
|
| | | $ | 17,972 | | | | | $ | 9,096 | | | | | $ | 29,839 | | | | | $ | 11,285 | | |
|
Income tax expense
|
| | | | 4,676 | | | | | | 2,365 | | | | | | 7,759 | | | | | | 2,829 | | |
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | | | | $ | 22,080 | | | | | $ | 8,456 | | |
|
Adjusted net income(1)
|
| | | | 15,903 | | | | | | 11,580 | | | | | | 27,062 | | | | | | 8,456 | | |
|
Pretax pre-provision net revenue (PPNR)(2)
|
| | | | 20,180 | | | | | | 12,267 | | | | | | 34,360 | | | | | | 19,606 | | |
|
Pretax pre-provision adjusted net revenue (Adj. PPNR)(2)
|
| | | | 23,703 | | | | | | 18,820 | | | | | | 41,092 | | | | | | 19,606 | | |
| Per Share Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Basic earnings per share
|
| | | $ | 1.51 | | | | | $ | 0.84 | | | | | $ | 2.68 | | | | | $ | 1.15 | | |
|
Adjusted basic earnings per share(3)
|
| | | $ | 1.80 | | | | | $ | 1.44 | | | | | $ | 3.28 | | | | | $ | 1.15 | | |
|
Diluted earnings per share
|
| | | $ | 1.45 | | | | | $ | 0.82 | | | | | $ | 2.62 | | | | | $ | 1.12 | | |
|
Adjusted diluted earnings per share(3)
|
| | | $ | 1.74 | | | | | $ | 1.40 | | | | | $ | 3.21 | | | | | $ | 1.12 | | |
|
Tangible book value per share(4)
|
| | | $ | 24.36 | | | | | $ | 21.01 | | | | | $ | 23.03 | | | | | $ | 21.14 | | |
|
Shares of common stock and non-voting common stock outstanding
|
| | | | 10,609,235 | | | | | | 8,439,081 | | | | | | 8,444,343 | | | | | | 7,358,356 | | |
|
Weighted average diluted shares
|
| | | | 9,155,163 | | | | | | 8,243,927 | | | | | | 8,442,809 | | | | | | 7,532,802 | | |
| | | |
As of and for the
Six Months Ended June 30, |
| |
As of and for the
Year Ended December 31, |
| ||||||||||||||||||
|
(dollars in thousands, except per share amounts)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| | | |
(unaudited)
|
| | | | ||||||||||||||||||
| Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Total assets
|
| | | $ | 3,262,344 | | | | | $ | 2,598,616 | | | | | $ | 2,702,332 | | | | | $ | 2,263,623 | | |
|
Securities available-for-sale, at fair value
|
| | | | 75,087 | | | | | | 54,677 | | | | | | 51,796 | | | | | | 69,708 | | |
|
Loans held for investment, net unearned fees
|
| | | | 2,089,860 | | | | | | 1,726,373 | | | | | | 1,724,934 | | | | | | 1,312,293 | | |
|
Loans held for sale
|
| | | | 500,560 | | | | | | 518,239 | | | | | | 505,360 | | | | | | 498,227 | | |
|
Allowance for credit losses
|
| | | | (28,955) | | | | | | (25,092) | | | | | | (25,574) | | | | | | (20,600) | | |
|
Goodwill
|
| | | | 9,732 | | | | | | 4,809 | | | | | | 4,809 | | | | | | — | | |
|
Other intangible assets
|
| | | | 10,477 | | | | | | 5,964 | | | | | | 5,656 | | | | | | — | | |
|
Deposits
|
| | | | 2,838,622 | | | | | | 2,071,890 | | | | | | 2,359,685 | | | | | | 1,828,625 | | |
|
Federal Home Loan Bank advances
|
| | | | — | | | | | | 200,000 | | | | | | — | | | | | | 150,000 | | |
|
Other borrowings(5)
|
| | | | 82,622 | | | | | | 71,015 | | | | | | 71,216 | | | | | | 61,888 | | |
|
Tangible common equity(6)
|
| | | | 258,450 | | | | | | 177,409 | | | | | | 194,449 | | | | | | 155,528 | | |
|
Total shareholders’ equity
|
| | | | 278,659 | | | | | | 188,182 | | | | | | 204,914 | | | | | | 155,528 | | |
| | | |
As of and for the
Six Months Ended June 30, |
| |
As of and for the
Year Ended December 31, |
| ||||||||||||||||||
| | | |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| Performance Ratios: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Return on average assets (ROAA)(7)
|
| | | | 1.00% | | | | | | 0.57% | | | | | | 0.88% | | | | | | 0.45% | | |
|
Adjusted return on average assets (Adj. ROAA)(7)(8)
|
| | | | 1.19 | | | | | | 0.99 | | | | | | 1.08 | | | | | | 0.45 | | |
|
Return on average common equity(7)
|
| | | | 12.23 | | | | | | 7.68 | | | | | | 11.96 | | | | | | 5.69 | | |
|
Adjusted return on average common equity(7)
|
| | | | 14.62 | | | | | | 13.22 | | | | | | 14.66 | | | | | | 5.69 | | |
|
Return on average tangible common equity (ROATCE)(7)(8)
|
| | | | 12.93 | | | | | | 8.02 | | | | | | 12.57 | | | | | | 5.69 | | |
|
Adjusted return on average tangible common equity
(Adj. ROATCE)(7)(8) |
| | | | 15.47 | | | | | | 13.79 | | | | | | 15.41 | | | | | | 5.69 | | |
| | | |
As of and for the
Six Months Ended June 30, |
| |
As of and for the
Year Ended December 31, |
| ||||||||||||||||||
| | | |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
|
Yield on total loans
|
| | | | 6.96 | | | | | | 7.23 | | | | | | 7.26 | | | | | | 7.65 | | |
|
Cost of total deposits(9)
|
| | | | 2.29 | | | | | | 2.72 | | | | | | 2.61 | | | | | | 3.33 | | |
|
Cost of interest-bearing deposits
|
| | | | 3.08 | | | | | | 3.52 | | | | | | 3.42 | | | | | | 4.00 | | |
|
Net interest spread(10)
|
| | | | 3.37 | | | | | | 3.19 | | | | | | 3.32 | | | | | | 3.10 | | |
|
Net interest margin(11)
|
| | | | 4.36 | | | | | | 4.17 | | | | | | 4.26 | | | | | | 3.97 | | |
|
Efficiency ratio(12)
|
| | | | 67.64 | | | | | | 76.88 | | | | | | 69.52 | | | | | | 75.18 | | |
|
Loans to deposits
|
| | | | 91.26 | | | | | | 108.33 | | | | | | 94.52 | | | | | | 99.01 | | |
|
LHFI to deposits
|
| | | | 73.62 | | | | | | 83.32 | | | | | | 73.10 | | | | | | 71.76 | | |
|
Noninterest bearing deposits to total deposits
|
| | | | 23.51 | | | | | | 22.89 | | | | | | 26.16 | | | | | | 21.53 | | |
| Asset Quality Data: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net charge-offs to average loans(7)(13)
|
| | | | 0.10% | | | | | | 0.00% | | | | | | 0.06% | | | | | | 0.43% | | |
|
Total allowance for credit losses to gross LHFI
|
| | | | 1.39 | | | | | | 1.45 | | | | | | 1.48 | | | | | | 1.56 | | |
|
Nonperforming loans to gross LHFI(14)
|
| | | | 0.83 | | | | | | 0.85 | | | | | | 0.85 | | | | | | 0.57 | | |
|
Nonperforming assets to total assets(15)
|
| | | | 0.53 | | | | | | 0.54 | | | | | | 0.54 | | | | | | 0.33 | | |
| Balance Sheet Ratios: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Loan-to-deposit ratio
|
| | | | 91.26% | | | | | | 108.33% | | | | | | 94.52% | | | | | | 99.01% | | |
|
Noninterest bearing deposits to total deposits
|
| | | | 23.51 | | | | | | 22.89 | | | | | | 26.16 | | | | | | 21.53 | | |
|
Tangible common equity to tangible assets(16)
|
| | | | 7.97 | | | | | | 6.86 | | | | | | 7.22 | | | | | | 6.87 | | |
| Capital Ratios:(17) | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Tier 1 leverage ratio
|
| | | | 10.78% | | | | | | 9.33% | | | | | | 9.37% | | | | | | 8.22% | | |
|
Common equity Tier 1 ratio
|
| | | | 11.83 | | | | | | 10.41 | | | | | | 11.52 | | | | | | 9.98 | | |
|
Tier 1 risk-based capital ratio
|
| | | | 11.83 | | | | | | 10.41 | | | | | | 11.52 | | | | | | 9.98 | | |
|
Total risk-based capital ratio
|
| | | | 13.05 | | | | | | 11.57 | | | | | | 12.74 | | | | | | 11.19 | | |
| Other: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Number of branches
|
| | | | 10 | | | | | | 9 | | | | | | 9 | | | | | | 7 | | |
|
Number of full-time equivalent employees
|
| | | | 275 | | | | | | 228 | | | | | | 229 | | | | | | 189 | | |
| | | |
As of and for the Six Months
Ended June 30, |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | | | | $ | 22,080 | | | | | $ | 8,456 | | |
|
Merger expenses, net of tax
|
| | | | 2,607 | | | | | | 4,849 | | | | | | 4,982 | | | | | | — | | |
|
Adjusted net income
|
| | | $ | 15,903 | | | | | $ | 11,580 | | | | | $ | 27,062 | | | | | $ | 8,456 | | |
| | | |
As of and for the Six Months
Ended June 30, |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| Pre-Tax, Pre-Provision Net Revenue: | | | | | | | | | | | | | | | | ||||||||||
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | | | | $ | 22,080 | | | | | $ | 8,456 | | |
|
Income tax expense
|
| | | | 4,676 | | | | | | 2,365 | | | | | | 7,759 | | | | | | 2,829 | | |
|
Income before tax expense
|
| | | $ | 17,972 | | | | | $ | 9,096 | | | | | $ | 29,839 | | | | | $ | 11,285 | | |
|
Provision for credit losses
|
| | | | 2,208 | | | | | | 3,171 | | | | | | 4,521 | | | | | | 8,321 | | |
|
Pre-tax, pre-provision net revenue
|
| | | $ | 20,180 | | | | | $ | 12,267 | | | | | $ | 34,360 | | | | | $ | 19,606 | | |
| Adjusted Pre-Tax, Pre-Provision Net Revenue: | | | | | | | | | | | | | | | | ||||||||||
|
Income before tax expense
|
| | | $ | 17,972 | | | | | $ | 9,096 | | | | | $ | 29,839 | | | | | $ | 11,285 | | |
|
Provision for credit losses
|
| | | | 2,208 | | | | | | 3,171 | | | | | | 4,521 | | | | | | 8,321 | | |
|
Merger expenses
|
| | | | 3,523 | | | | | | 6,553 | | | | | | 6,732 | | | | | | — | | |
|
Pre-tax, pre-provision adjusted net revenue
|
| | | $ | 23,703 | | | | | $ | 18,820 | | | | | $ | 41,092 | | | | | $ | 19,606 | | |
| | | |
As of and for the Six Months
Ended June 30, |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||||||||
|
(dollars in thousands, except share data)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | | | | $ | 22,080 | | | | | $ | 8,456 | | |
|
Adjusted net income
|
| | | | 15,903 | | | | | | 11,580 | | | | | | 27,062 | | | | | | 8,456 | | |
|
Weighted average common shares outstanding at end of period – basic
|
| | | | 8,819,729 | | | | | | 8,036,547 | | | | | | 8,238,252 | | | | | | 7,334,994 | | |
|
Basic earnings per share
|
| | | $ | 1.51 | | | | | $ | 0.84 | | | | | $ | 2.68 | | | | | $ | 1.15 | | |
|
Weighted average common shares outstanding at end of period – diluted
|
| | | | 9,155,163 | | | | | | 8,243,927 | | | | | | 8,442,809 | | | | | | 7,532,802 | | |
|
Diluted earnings per share
|
| | | $ | 1.45 | | | | | $ | 0.82 | | | | | $ | 2.62 | | | | | $ | 1.12 | | |
|
Adjusted basic earnings per share
|
| | | $ | 1.80 | | | | | $ | 1.44 | | | | | $ | 3.28 | | | | | $ | 1.15 | | |
|
Adjusted diluted earnings per share
|
| | | $ | 1.74 | | | | | $ | 1.40 | | | | | $ | 3.21 | | | | | $ | 1.12 | | |
| | | |
As of and for the Six Months Ended
June 30, |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||||||||
|
(dollars in thousands, except share data)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| Tangible Common Equity: | | | | | | | | | | | | | | | | ||||||||||
|
Total shareholders’ equity
|
| | | $ | 278,659 | | | | | $ | 188,182 | | | | | $ | 204,914 | | | | | $ | 155,528 | | |
|
Less: goodwill and intangibles
|
| | | | 20,209 | | | | | | 10,773 | | | | | | 10,465 | | | | | | — | | |
|
Tangible common equity
|
| | | $ | 258,450 | | | | | $ | 177,409 | | | | | $ | 194,449 | | | | | $ | 155,528 | | |
|
Common stock and non-voting common stock outstanding
|
| | | | 10,609,235 | | | | | | 8,443,220 | | | | | | 8,444,343 | | | | | | 7,358,356 | | |
|
Book value per common share
|
| | | | 26.27 | | | | | | 22.29 | | | | | | 24.27 | | | | | | 21.14 | | |
|
Tangible book value per common
share |
| | | | 24.36 | | | | | | 21.01 | | | | | | 23.03 | | | | | | 21.14 | | |
| Tangible Assets: | | | | | | | | | | | | | | | | ||||||||||
|
Total assets
|
| | | $ | 3,262,344 | | | | | $ | 2,598,616 | | | | | $ | 2,702,332 | | | | | $ | 2,263,623 | | |
|
Less: goodwill and intangibles
|
| | | | 20,209 | | | | | | 10,773 | | | | | | 10,465 | | | | | | — | | |
|
Tangible assets
|
| | | $ | 3,242,135 | | | | | $ | 2,587,843 | | | | | $ | 2,691,867 | | | | | $ | 2,263,623 | | |
|
Tangible common equity to tangible assets
|
| | | | 7.97% | | | | | | 6.86% | | | | | | 7.22% | | | | | | 6.87% | | |
| | | |
As of and for the Six Months Ended
June 30, |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| Return on Average Assets: | | | | | | | | | | | | | | | | ||||||||||
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | | | | $ | 22,080 | | | | | $ | 8,456 | | |
|
Average assets
|
| | | $ | 2,684,812 | | | | | $ | 2,365,169 | | | | | $ | 2,496,736 | | | | | $ | 1,886,868 | | |
|
Return on average assets
|
| | | | 1.00% | | | | | | 0.57% | | | | | | 0.88% | | | | | | 0.45% | | |
| Adjusted Return on Average Assets: | | | | | | | | | | | | | | | | ||||||||||
|
Adjusted net income
|
| | | $ | 15,903 | | | | | $ | 11,580 | | | | | $ | 27,062 | | | | | $ | 8,456 | | |
|
Average assets
|
| | | $ | 2,684,812 | | | | | $ | 2,365,169 | | | | | $ | 2,496,736 | | | | | $ | 1,886,868 | | |
|
Adjusted return on average assets
|
| | | | 1.19% | | | | | | 0.99% | | | | | | 1.08% | | | | | | 0.45% | | |
| | | |
As of and for the Six Months Ended
June 30, |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| Return on Average Common Equity: | | | | | | | | | | | | | | | | ||||||||||
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | | | | $ | 22,080 | | | | | $ | 8,456 | | |
|
Average common equity
|
| | | $ | 219,304 | | | | | $ | 176,643 | | | | | $ | 184,590 | | | | | $ | 148,656 | | |
|
Return on average common equity
|
| | | | 12.23% | | | | | | 7.68% | | | | | | 11.96% | | | | | | 5.69% | | |
| Adjusted Return on Average Common Equity: | | | | | | | | | | | | | | | | ||||||||||
|
Adjusted net income
|
| | | $ | 15,903 | | | | | $ | 11,580 | | | | | $ | 27,062 | | | | | $ | 8,456 | | |
|
Average common equity
|
| | | $ | 219,304 | | | | | $ | 176,643 | | | | | $ | 184,590 | | | | | $ | 148,656 | | |
|
Adjusted return on average common equity
|
| | | | 14.62% | | | | | | 13.22% | | | | | | 14.66% | | | | | | 5.69% | | |
| | | |
As of and for the Six Months Ended
June 30, |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
| Average Tangible Common Equity: | | | | | | | | | | | | | | | | ||||||||||
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | | | | $ | 22,080 | | | | | $ | 8,456 | | |
|
Average common equity
|
| | | | 219,304 | | | | | | 176,643 | | | | | | 184,590 | | | | | $ | 148,656 | | |
|
Less: Average goodwill and intangibles
|
| | | $ | 12,001 | | | | | $ | 7,296 | | | | | | 8,976 | | | | | | — | | |
|
Average tangible common equity
|
| | | | 207,303 | | | | | | 169,347 | | | | | $ | 175,614 | | | | | $ | 148,656 | | |
|
Return on average tangible common equity
|
| | | | 12.93% | | | | | | 8.02% | | | | | | 12.57% | | | | | | 5.69% | | |
| Adjusted Return on Average Tangible Common Equity: | | | | | | | | | | | | | | | | ||||||||||
|
Adjusted net income
|
| | | $ | 15,903 | | | | | $ | 11,580 | | | | | $ | 27,062 | | | | | $ | 8,456 | | |
|
Average tangible common equity
|
| | | $ | 207,303 | | | | | $ | 169,347 | | | | | $ | 175,614 | | | | | $ | 148,656 | | |
|
Adjusted return on average tangible common equity
|
| | | | 15.47% | | | | | | 13.79% | | | | | | 15.41% | | | | | | 5.69% | | |
|
Plan Category
|
| |
Number of Securities
to be Issued Upon Exercise of Outstanding Options and Rights (a) |
| |
Weighted Average
Exercise Price of Outstanding Options and Rights (b) |
| |
Number of Securities Remaining
available for Future Issuance Under Equity Compensation Plan (Excluding Securities Reflected in Column (a)) (c) |
| |||||||||
|
Equity compensation plans approved by security holders(1)
|
| | | | 132,787 | | | | | $ | 21.62(2) | | | | | | 526,304 | | |
|
Equity compensation plans not approved by security holders(3)(4)
|
| | | | 59,070 | | | | | | 14.09 | | | | | | 78,495 | | |
|
Total at December 31, 2025
|
| | | | 191,857 | | | | | $ | 15.33 | | | | | | 604,799 | | |
| | | |
For the Six Months Ended
June 30, |
| |
Change
|
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
$
|
| |
%
|
| ||||||||||||
| Interest Income: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Loans held for sale
|
| | | $ | 15,003 | | | | | $ | 14,389 | | | | | $ | 614 | | | | | | 4.27% | | |
|
Loans held for investment
|
| | | | 63,712 | | | | | | 56,094 | | | | | | 7,618 | | | | | | 13.58 | | |
|
Investment securities
|
| | | | 2,247 | | | | | | 2,018 | | | | | | 229 | | | | | | 11.35 | | |
|
Other interest income
|
| | | | 3,729 | | | | | | 4,821 | | | | | | (1,092) | | | | | | (22.65) | | |
|
Total interest income
|
| | | | 84,691 | | | | | | 77,322 | | | | | | 7,369 | | | | | | 9.53 | | |
| Interest Expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Deposits
|
| | | | 25,797 | | | | | | 26,383 | | | | | | (586) | | | | | | (2.22) | | |
|
FHLB advances
|
| | | | 1,223 | | | | | | 2,387 | | | | | | (1,164) | | | | | | (48.76) | | |
|
Other borrowings
|
| | | | 1,748 | | | | | | 1,693 | | | | | | 55 | | | | | | 3.25 | | |
|
Total interest expense
|
| | | | 28,768 | | | | | | 30,463 | | | | | | (1,695) | | | | | | (5.56) | | |
|
Net interest income before the provision for/ (recovery of) credit losses
|
| | | $ | 55,923 | | | | | $ | 46,859 | | | | | $ | 9,064 | | | | | | 19.34% | | |
| | | |
For the Six Months Ended
|
| |||||||||||||||||||||||||||||||||
| | | |
June 30, 2026
|
| |
June 30, 2025
|
| ||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Average
Balance |
| |
Interest and
Fees |
| |
Yield /
Rate |
| |
Average
Balance |
| |
Interest and
Fees |
| |
Yield /
Rate |
| ||||||||||||||||||
| Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest bearing deposits with banks
|
| | | $ | 161,578 | | | | | $ | 2,766 | | | | | | 3.45% | | | | | $ | 132,328 | | | | | | 2,932 | | | | | | 4.47% | | |
|
Federal funds sold and other investments
|
| | | | 47,683 | | | | | | 963 | | | | | | 4.07 | | | | | | 80,837 | | | | | | 1,889 | | | | | | 4.71 | | |
|
Securities
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury/agency securities
|
| | | | 14,926 | | | | | | 317 | | | | | | 4.25 | | | | | | 45,831 | | | | | | 1,011 | | | | | | 4.41 | | |
|
Mortgage backed securities
|
| | | | 85,663 | | | | | | 1,663 | | | | | | 3.88 | | | | | | 47,191 | | | | | | 799 | | | | | | 3.39 | | |
|
All other securities
|
| | | | 12,402 | | | | | | 267 | | | | | | 4.31 | | | | | | 10,222 | | | | | | 208 | | | | | | 4.07 | | |
|
Total securities (cost basis)
|
| | | $ | 112,991 | | | | | $ | 2,247 | | | | | | 3.98% | | | | | $ | 103,244 | | | | | $ | 2,018 | | | | | | 3.91% | | |
|
Loans
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Single family residential
|
| | | | 287,794 | | | | | | 7,835 | | | | | | 5.44% | | | | | | 249,990 | | | | | | 7,234 | | | | | | 5.79% | | |
|
Other real estate loans
|
| | | | 1,045,949 | | | | | | 38,885 | | | | | | 7.44 | | | | | | 798,982 | | | | | | 29,845 | | | | | | 7.47 | | |
|
Commercial & financial loans
|
| | | | 417,257 | | | | | | 15,298 | | | | | | 7.33 | | | | | | 465,609 | | | | | | 17,520 | | | | | | 7.53 | | |
|
Consumer loans
|
| | | | 51,428 | | | | | | 1,694 | | | | | | 6.59 | | | | | | 43,840 | | | | | | 1,495 | | | | | | 6.82 | | |
|
Loans held for sale
|
| | | | 460,994 | | | | | | 15,003 | | | | | | 6.51 | | | | | | 390,935 | | | | | | 14,389 | | | | | | 7.36 | | |
|
Total loans
|
| | | $ | 2,263,422 | | | | | $ | 78,716 | | | | | | 6.96% | | | | | $ | 1,949,356 | | | | | $ | 70,483 | | | | | | 7.23% | | |
|
Total earning assets
|
| | | $ | 2,585,674 | | | | | $ | 84,691 | | | | | | 6.55% | | | | | $ | 2,265,765 | | | | | $ | 77,322 | | | | | | 6.83% | | |
|
Noninterest-earning assets
|
| | | | 99,138 | | | | | | | | | | | | | | | | | | 99,404 | | | | | | | | | | | | | | |
|
Total assets
|
| | | $ | 2,684,812 | | | | | | | | | | | | | | | | | $ | 2,365,169 | | | | | | | | | | | | | | |
| Interest Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Demand deposits – interest bearing
|
| | | $ | 302,298 | | | | | $ | 2,478 | | | | | | 1.65% | | | | | $ | 264,032 | | | | | $ | 2,669 | | | | | | 2.04% | | |
|
Savings/Money market
|
| | | | 701,855 | | | | | | 10,035 | | | | | | 2.88 | | | | | | 603,881 | | | | | | 9,591 | | | | | | 3.20 | | |
|
Time deposits
|
| | | | 682,796 | | | | | | 13,284 | | | | | | 3.92 | | | | | | 645,471 | | | | | | 14,123 | | | | | | 4.41 | | |
|
Total interest-bearing deposits
|
| | | $ | 1,686,949 | | | | | $ | 25,797 | | | | | | 3.08 | | | | | $ | 1,513,384 | | | | | $ | 26,383 | | | | | | 3.52 | | |
|
FHLB advances
|
| | | | 63,323 | | | | | | 1,223 | | | | | | 3.87 | | | | | | 103,994 | | | | | | 2,387 | | | | | | 4.59 | | |
|
Other borrowed funds
|
| | | | 73,365 | | | | | | 1,748 | | | | | | 4.76 | | | | | | 68,461 | | | | | | 1,693 | | | | | | 4.95 | | |
|
Total interest-bearing liabilities
|
| | | $ | 1,823,637 | | | | | $ | 28,768 | | | | | | 3.18% | | | | | $ | 1,685,839 | | | | | $ | 30,463 | | | | | | 3.64% | | |
| Noninterest Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Noninterest bearing deposits
|
| | | $ | 582,641 | | | | | | | | | | | | | | | | | $ | 441,312 | | | | | | | | | | | | | | |
|
Other noninterest-bearing liabilities
|
| | | | 59,230 | | | | | | | | | | | | | | | | | | 61,375 | | | | | | | | | | | | | | |
|
Total noninterest-bearing liabilities
|
| | | $ | 641,871 | | | | | | | | | | | | | | | | | $ | 502,687 | | | | | | | | | | | | | | |
|
Shareholders’ equity
|
| | | | 219,304 | | | | | | | | | | | | | | | | | | 176,643 | | | | | | | | | | | | | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 2,684,812 | | | | | | | | | | | | | | | | | $ | 2,365,169 | | | | | | | | | | | | | | |
|
Net interest income
|
| | | | | | | | | $ | 55,923 | | | | | | | | | | | | | | | | | $ | 46,859 | | | | | | | | |
|
Net interest spread
|
| | | | | | | | | | | | | | | | 3.37% | | | | | | | | | | | | | | | | | | 3.19% | | |
|
Net interest margin
|
| | | | | | | | | | | | | | | | 4.36% | | | | | | | | | | | | | | | | | | 4.17% | | |
| | | |
For the Six Months Ended June 30, 2026
Compared to the Six Months Ended June 30, 2025 Increase (Decrease) Due to Change in: |
| |||||||||||||||
|
(dollars in thousands)
|
| |
Volume
|
| |
Yield/Rate
|
| |
Total
Change |
| |||||||||
| Earning Assets: | | | | | | | | | | | | | | | | | | | |
|
Interest bearing deposits with banks
|
| | | $ | 648 | | | | | $ | (815) | | | | | $ | (167) | | |
|
Federal funds sold and other investments
|
| | | | (775) | | | | | | (151) | | | | | | (926) | | |
|
Securities
|
| | | | 14 | | | | | | 215 | | | | | | 229 | | |
|
Loans
|
| | | | 11,244 | | | | | | (3,011) | | | | | | 8,233 | | |
|
Total earning assets
|
| | | $ | 11,131 | | | | | $ | (3,762) | | | | | $ | 7,369 | | |
| Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | |
|
Demand deposits
|
| | | $ | 387 | | | | | $ | (578) | | | | | $ | (191) | | |
|
Savings/Money market deposits
|
| | | | 1,556 | | | | | | (1,112) | | | | | | 444 | | |
|
Time deposits
|
| | | | 817 | | | | | | (1,656) | | | | | | (839) | | |
|
Total interest-bearing deposits
|
| | | $ | 2,760 | | | | | $ | (3,346) | | | | | $ | (586) | | |
|
Borrowings
|
| | | | (806) | | | | | | (303) | | | | | | (1,109) | | |
|
Total interest-bearing liabilities
|
| | | $ | 1,954 | | | | | $ | (3,649) | | | | | $ | (1,695) | | |
|
Net interest income
|
| | | $ | 9,177 | | | | | $ | (113) | | | | | $ | 9,064 | | |
| | | |
For the Six Months Ended
June 30, |
| |
Change
|
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
$
|
| |
%
|
| ||||||||||||
| Noninterest Income: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Service charges on deposit accounts
|
| | | $ | 1,419 | | | | | $ | 1,005 | | | | | $ | 414 | | | | | | 41.19% | | |
|
Mortgage banking activity
|
| | | | 2,360 | | | | | | 1,025 | | | | | | 1,335 | | | | | | 130.24 | | |
|
BOLI income
|
| | | | 462 | | | | | | 433 | | | | | | 29 | | | | | | 6.70 | | |
|
Gain on sale of loans
|
| | | | 908 | | | | | | 1,388 | | | | | | (480) | | | | | | (34.58) | | |
|
Other noninterest income
|
| | | | 1,288 | | | | | | 2,357 | | | | | | (1,069) | | | | | | (45.35) | | |
|
Total noninterest income
|
| | | $ | 6,437 | | | | | $ | 6,208 | | | | | $ | 229 | | | | | | 3.69% | | |
| | | |
For the Six Months Ended
June 30, |
| |
Change
|
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
$
|
| |
%
|
| ||||||||||||
| Noninterest Expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Salaries and employee benefits
|
| | | $ | 24,901 | | | | | $ | 22,058 | | | | | $ | 2,843 | | | | | | 12.89% | | |
|
Occupancy and equipment
|
| | | | 4,000 | | | | | | 4,186 | | | | | | (186) | | | | | | (4.44) | | |
|
FDIC insurance and regulatory assessment
|
| | | | 1,050 | | | | | | 1,099 | | | | | | (49) | | | | | | (4.46) | | |
|
Other professional services
|
| | | | 1,803 | | | | | | 1,516 | | | | | | 287 | | | | | | 18.93 | | |
|
Communications, data processing and equipment
|
| | | | 3,139 | | | | | | 2,979 | | | | | | 160 | | | | | | 5.37 | | |
|
Merger and conversion related expenses
|
| | | | 3,523 | | | | | | 6,553 | | | | | | (3,030) | | | | | | (46.24) | | |
|
Other noninterest expense
|
| | | | 3,764 | | | | | | 2,409 | | | | | | (1,355) | | | | | | 56.25 | | |
|
Total noninterest expense
|
| | | $ | 42,180 | | | | | $ | 40,800 | | | | | $ | 1,380 | | | | | | 3.38% | | |
| | | |
For the
Years Ended December 31, |
| |
Change
|
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2025
|
| |
2024
|
| |
$
|
| |
%
|
| ||||||||||||
| Interest Income: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Loans held for sale
|
| | | $ | 31,880 | | | | | $ | 26,024 | | | | | $ | 5,856 | | | | | | 22.5% | | |
|
Loans held for investment
|
| | | | 119,743 | | | | | | 92,049 | | | | | | 27,694 | | | | | | 30.1% | | |
|
Investment securities
|
| | | | 4,150 | | | | | | 3,505 | | | | | | 645 | | | | | | 18.4% | | |
|
Other interest income
|
| | | | 9,099 | | | | | | 8,834 | | | | | | 265 | | | | | | 3.0% | | |
|
Total interest income
|
| | | $ | 164,872 | | | | | $ | 130,412 | | | | | $ | 34,460 | | | | | | 26.4% | | |
| Interest Expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Deposits
|
| | | $ | 53,971 | | | | | $ | 50,981 | | | | | $ | 2,990 | | | | | | 5.9% | | |
|
FHLB advances
|
| | | | 5,078 | | | | | | 4,645 | | | | | | 433 | | | | | | 9.3% | | |
|
Other borrowings
|
| | | | 3,445 | | | | | | 3,102 | | | | | | 343 | | | | | | 11.1% | | |
|
Total interest expense
|
| | | $ | 62,494 | | | | | $ | 58,728 | | | | | $ | 3,766 | | | | | | 6.4% | | |
|
Net interest income before the provision for/(recovery of) credit losses
|
| | | $ | 102,378 | | | | | $ | 71,684 | | | | | $ | 30,694 | | | | | | 42.8% | | |
| | | |
For the Years Ended December 31,
|
| |||||||||||||||||||||||||||||||||
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Average
Balance |
| |
Interest and
Fees |
| |
Yield /
Rate |
| |
Average
Balance |
| |
Interest and
Fees |
| |
Yield /
Rate |
| ||||||||||||||||||
| Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest bearing deposits with
banks |
| | | $ | 143,171 | | | | | $ | 6,013 | | | | | | 4.20% | | | | | $ | 86,386 | | | | | | 4,590 | | | | | | 5.31% | | |
|
Federal funds sold and other investments
|
| | | | 66,248 | | | | | | 3,086 | | | | | | 4.66 | | | | | | 80,404 | | | | | | 4,244 | | | | | | 5.28 | | |
|
Securities
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury/agency securities
|
| | | | 38,764 | | | | | | 1,723 | | | | | | 4.44 | | | | | | 47,693 | | | | | | 2,000 | | | | | | 4.19 | | |
|
Mortgage backed securities
|
| | | | 52,600 | | | | | | 1,965 | | | | | | 3.74 | | | | | | 41,916 | | | | | | 1,321 | | | | | | 3.15 | | |
|
All other securities
|
| | | | 11,081 | | | | | | 462 | | | | | | 4.17 | | | | | | 4,641 | | | | | | 184 | | | | | | 3.96 | | |
|
Total securities (cost basis)
|
| | | $ | 102,445 | | | | | $ | 4,150 | | | | | | 4.05% | | | | | $ | 94,250 | | | | | $ | 3,505 | | | | | | 3.72% | | |
|
Loans
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Single family residential
|
| | | | 255,876 | | | | | | 14,767 | | | | | | 5.77% | | | | | | 197,692 | | | | | | 10,546 | | | | | | 5.33% | | |
|
Other real estate loans
|
| | | | 887,473 | | | | | | 67,118 | | | | | | 7.56 | | | | | | 641,034 | | | | | | 50,394 | | | | | | 7.86 | | |
|
Commercial & financial loans
|
| | | | 465,370 | | | | | | 34,876 | | | | | | 7.49 | | | | | | 354,313 | | | | | | 28,485 | | | | | | 8.04 | | |
|
Consumer loans
|
| | | | 44,966 | | | | | | 2,982 | | | | | | 6.63 | | | | | | 35,530 | | | | | | 2,624 | | | | | | 7.39 | | |
|
Loans held for sale
|
| | | | 435,242 | | | | | | 31,880 | | | | | | 7.32 | | | | | | 314,797 | | | | | | 26,024 | | | | | | 8.27 | | |
|
Total loans
|
| | | $ | 2,088,927 | | | | | $ | 151,623 | | | | | | 7.26% | | | | | $ | 1,546,366 | | | | | $ | 118,073 | | | | | | 7.65% | | |
|
Total earning assets
|
| | | $ | 2,400,791 | | | | | $ | 164,872 | | | | | | 6.87% | | | | | $ | 1,804,406 | | | | | $ | 130,412 | | | | | | 7.23% | | |
|
Noninterest-earning assets
|
| | | | 95,945 | | | | | | | | | | | | | | | | | | 82,462 | | | | | | | | | | | | | | |
|
Total assets
|
| | | $ | 2,496,736 | | | | | | | | | | | | | | | | | $ | 1,886,868 | | | | | | | | | | | | | | |
| Interest Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Demand deposits – interest
bearing |
| | | $ | 270,719 | | | | | $ | 5,251 | | | | | | 1.94% | | | | | $ | 179,804 | | | | | $ | 3,270 | | | | | | 1.82% | | |
|
Savings/Money market
|
| | | | 632,313 | | | | | | 19,795 | | | | | | 3.13 | | | | | | 544,009 | | | | | | 20,187 | | | | | | 3.71 | | |
|
Time deposits
|
| | | | 674,663 | | | | | | 28,925 | | | | | | 4.29 | | | | | | 551,863 | | | | | | 27,524 | | | | | | 4.99 | | |
|
Total interest-bearing deposits
|
| | | $ | 1,577,695 | | | | | $ | 53,971 | | | | | | 3.42 | | | | | $ | 1,275,676 | | | | | $ | 50,981 | | | | | | 4.00 | | |
|
FHLB advances
|
| | | | 111,638 | | | | | | 5,078 | | | | | | 4.55 | | | | | | 86,336 | | | | | | 4,645 | | | | | | 5.38 | | |
|
Other borrowed funds
|
| | | | 69,811 | | | | | | 3,445 | | | | | | 4.93 | | | | | | 62,565 | | | | | | 3,102 | | | | | | 4.96 | | |
|
Total interest-bearing
liabilities |
| | | $ | 1,759,144 | | | | | $ | 62,494 | | | | | | 3.55% | | | | | $ | 1,424,577 | | | | | $ | 58,728 | | | | | | 4.12% | | |
| Noninterest Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Noninterest bearing deposits
|
| | | $ | 491,343 | | | | | | | | | | | | | | | | | $ | 254,638 | | | | | | | | | | | | | | |
|
Other noninterest-bearing
liabilities |
| | | | 61,659 | | | | | | | | | | | | | | | | | | 58,997 | | | | | | | | | | | | | | |
|
Total noninterest-bearing
liabilities |
| | | $ | 553,002 | | | | | | | | | | | | | | | | | $ | 313,635 | | | | | | | | | | | | | | |
|
Shareholders’ equity
|
| | | | 184,590 | | | | | | | | | | | | | | | | | | 148,656 | | | | | | | | | | | | | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 2,496,736 | | | | | | | | | | | | | | | | | $ | 1,886,868 | | | | | | | | | | | | | | |
|
Net interest income
|
| | | | | | | | | $ | 102,378 | | | | | | | | | | | | | | | | | $ | 71,684 | | | | | | | | |
|
Net interest spread
|
| | | | | | | | | | | | | | | | 3.32% | | | | | | | | | | | | | | | | | | 3.10% | | |
|
Net interest margin
|
| | | | | | | | | | | | | | | | 4.26% | | | | | | | | | | | | | | | | | | 3.97% | | |
| | | |
For the Year Ended December 31, 2025,
Compared to the Year Ended December 31, 2024 Increase (Decrease) Due to Change in: |
| |||||||||||||||
|
(dollars in thousands)
|
| |
Volume
|
| |
Yield/Rate
|
| |
Total Change
|
| |||||||||
| Earning Assets: | | | | | | | | | | | | | | | | | | | |
|
Interest bearing deposits with banks
|
| | | $ | 3,017 | | | | | $ | (1,594) | | | | | $ | 1,423 | | |
|
Federal funds sold and other investments
|
| | | | (747) | | | | | | (411) | | | | | | (1,158) | | |
|
Securities
|
| | | | 218 | | | | | | 427 | | | | | | 645 | | |
|
Loans
|
| | | | 42,060 | | | | | | (8,510) | | | | | | 33,550 | | |
|
Total earning assets
|
| | | $ | 44,548 | | | | | $ | (10,088) | | | | | $ | 34,460 | | |
| Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | |
|
Demand deposits
|
| | | $ | 1,653 | | | | | $ | 328 | | | | | $ | 1,981 | | |
|
Savings/Money market deposits
|
| | | | 3,277 | | | | | | (3,669) | | | | | | (392) | | |
|
Time deposits
|
| | | | 6,125 | | | | | | (4,724) | | | | | | 1,401 | | |
|
Total interest-bearing deposits
|
| | | $ | 11,055 | | | | | $ | (8,065) | | | | | $ | 2,990 | | |
|
Borrowings
|
| | | | 1,721 | | | | | | (945) | | | | | | 776 | | |
|
Total interest-bearing liabilities
|
| | | $ | 12,776 | | | | | $ | (9,010) | | | | | $ | 3,766 | | |
|
Net interest income
|
| | | $ | 31,772 | | | | | $ | (1,078) | | | | | $ | 30,694 | | |
| | | |
For the Years Ended
December 31, |
| |
Change
|
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2025
|
| |
2024
|
| |
$
|
| |
%
|
| ||||||||||||
| Noninterest Income: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Service charges on deposit accounts
|
| | | $ | 2,141 | | | | | $ | 1,142 | | | | | $ | 999 | | | | | | 87.48% | | |
|
Mortgage banking activity
|
| | | | 2,750 | | | | | | 1,775 | | | | | | 975 | | | | | | 54.93 | | |
|
BOLI income
|
| | | | 901 | | | | | | 782 | | | | | | 119 | | | | | | 15.22 | | |
|
Gain on sale of loans
|
| | | | 1,564 | | | | | | 2,369 | | | | | | (805) | | | | | | (33.98) | | |
|
Other noninterest income
|
| | | | 2,983 | | | | | | 1,238 | | | | | | 1,745 | | | | | | 140.95 | | |
|
Total noninterest income
|
| | | $ | 10,339 | | | | | $ | 7,306 | | | | | $ | 3,033 | | | | | | 41.51% | | |
| | | |
For the Years Ended
December 31, |
| |
Change
|
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2025
|
| |
2024
|
| |
$
|
| |
%
|
| ||||||||||||
| Noninterest expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Salaries and employee benefits
|
| | | $ | 45,922 | | | | | $ | 37,779 | | | | | $ | 8,143 | | | | | | 21.55% | | |
|
Occupancy and equipment
|
| | | | 8,496 | | | | | | 8,572 | | | | | | (76) | | | | | | (0.89) | | |
|
FDIC insurance and regulatory assessment
|
| | | | 2,255 | | | | | | 1,881 | | | | | | 374 | | | | | | 19.88 | | |
|
Other professional services
|
| | | | 3,207 | | | | | | 2,882 | | | | | | 325 | | | | | | 11.28 | | |
|
Communications, data processing and equipment
|
| | | | 6,121 | | | | | | 4,402 | | | | | | 1,719 | | | | | | 39.05 | | |
|
Merger and conversion related expenses
|
| | | | 6,732 | | | | | | — | | | | | | 6,732 | | | | | | N/A | | |
|
Other noninterest expense
|
| | | | 5,624 | | | | | | 3,868 | | | | | | 1,756 | | | | | | 45.40 | | |
|
Total noninterest expense
|
| | | $ | 78,357 | | | | | $ | 59,384 | | | | | $ | 18,973 | | | | | | 31.95% | | |
| | | |
As of June 30,
|
| |
As of December 31,
|
| ||||||||||||||||||
|
(dollars in thousands)
|
| |
2026
|
| |
2025
|
| |
2025
|
| |
2024
|
| ||||||||||||
|
Total assets
|
| | | $ | 3,262,344 | | | | | $ | 2,598,616 | | | | | $ | 2,702,332 | | | | | $ | 2,263,623 | | |
|
Loans held for sale
|
| | | $ | 500,560 | | | | | $ | 518,239 | | | | | $ | 505,360 | | | | | $ | 498,227 | | |
|
Total loans, net of allowance for credit losses
|
| | | $ | 2,060,905 | | | | | $ | 1,701,281 | | | | | $ | 1,699,360 | | | | | $ | 1,291,693 | | |
|
Total investments
|
| | | $ | 127,343 | | | | | $ | 104,418 | | | | | $ | 94,483 | | | | | $ | 105,307 | | |
|
Total deposits
|
| | | $ | 2,838,622 | | | | | $ | 2,071,890 | | | | | $ | 2,359,685 | | | | | $ | 1,828,625 | | |
|
Total subordinated notes
|
| | | $ | 75,405 | | | | | $ | 63,798 | | | | | $ | 63,999 | | | | | $ | 54,671 | | |
|
Total equity
|
| | | $ | 278,659 | | | | | $ | 188,182 | | | | | $ | 204,914 | | | | | $ | 155,528 | | |
| | | | | | |
As of December 31,
|
| ||||||||||||||||||||||||||||||
| | | |
As of June 30, 2026
|
| |
2025
|
| |
2024
|
| |||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amount
|
| |
% of
Total |
| |
Amount
|
| |
% of
Total |
| |
Amount
|
| |
% of
Total |
| ||||||||||||||||||
|
Construction and land
development |
| | | $ | 269,655 | | | | | | 12.87% | | | | | $ | 236,851 | | | | | | 13.69% | | | | | $ | 152,455 | | | | | | 11.57% | | |
|
Single-family residential
|
| | | | 348,327 | | | | | | 16.62 | | | | | | 276,719 | | | | | | 15.99 | | | | | | 236,759 | | | | | | 17.98 | | |
|
Commercial
|
| | | | 892,007 | | | | | | 42.57 | | | | | | 679,103 | | | | | | 39.25 | | | | | | 483,735 | | | | | | 36.73 | | |
|
Multifamily
|
| | | | 70,412 | | | | | | 3.36 | | | | | | 66,341 | | | | | | 3.83 | | | | | | 56,291 | | | | | | 4.27 | | |
|
Total real estate loans
|
| | | $ | 1,580,401 | | | | | | 75.42% | | | | | $ | 1,259,014 | | | | | | 72.77% | | | | | $ | 929,240 | | | | | | 70.55% | | |
|
Commercial and financial
|
| | | | 460,268 | | | | | | 21.96 | | | | | | 428,006 | | | | | | 24.74 | | | | | | 353,203 | | | | | | 26.82 | | |
|
Consumer
|
| | | | 54,844 | | | | | | 2.62 | | | | | | 43,223 | | | | | | 2.50 | | | | | | 34,676 | | | | | | 2.63 | | |
|
Allowance for credit losses
|
| | | | (28,955) | | | | | | (1.39)% | | | | | | (25,574) | | | | | | (1.48)% | | | | | | (20,600) | | | | | | (1.56)% | | |
|
Total loans, net of allowance for credit losses on loans and leases(1)
|
| | | $ | 2,060,905 | | | | | | | | | | | $ | 1,699,360 | | | | | | | | | | | $ | 1,291,693 | | | | | | | | |
| | | |
As of June 30, 2026
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One
Year Through Five Years |
| |
Due after Five
Years Through Fifteen Years |
| |
Due after
Fifteen Years |
| | | | |||||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Total
|
| |||||||||||||||||||||||||||
| Real Estate Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 15,892 | | | | | $ | 146,952 | | | | | $ | 15,471 | | | | | $ | 77,005 | | | | | $ | 8,669 | | | | | $ | 3,811 | | | | | $ | 152 | | | | | $ | 1,703 | | | | | $ | 269,655 | | |
|
Single-family residential
|
| | | | 10,551 | | | | | | 4,352 | | | | | | 29,312 | | | | | | 3,241 | | | | | | 10,092 | | | | | | 8,013 | | | | | | 95,939 | | | | | | 186,827 | | | | | | 348,327 | | |
|
Commercial
|
| | | | 81,738 | | | | | | 158,962 | | | | | | 300,211 | | | | | | 246,206 | | | | | | 51,469 | | | | | | 26,337 | | | | | | 7,977 | | | | | | 14,967 | | | | | | 887,867 | | |
|
Farmland
|
| | | | 3,139 | | | | | | — | | | | | | — | | | | | | 226 | | | | | | 775 | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,140 | | |
|
Multifamily
|
| | | | 8,732 | | | | | | 16,964 | | | | | | 9,706 | | | | | | 20,260 | | | | | | 13,090 | | | | | | 1,660 | | | | | | — | | | | | | — | | | | | | 70,412 | | |
|
Total real estate loans
|
| | | $ | 120,052 | | | | | $ | 327,230 | | | | | $ | 354,700 | | | | | $ | 346,938 | | | | | $ | 84,095 | | | | | $ | 39,821 | | | | | $ | 104,068 | | | | | $ | 203,497 | | | | | $ | 1,580,401 | | |
| Commercial and Consumer Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Commercial and financial
|
| | | $ | 26,025 | | | | | $ | 130,380 | | | | | $ | 31,641 | | | | | $ | 234,829 | | | | | $ | 14,039 | | | | | $ | 21,326 | | | | | $ | 1,934 | | | | | $ | 94 | | | | | $ | 460,268 | | |
|
Consumer
|
| | | | 11,122 | | | | | | 29,870 | | | | | | 2,025 | | | | | | 11,827 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 54,844 | | |
|
Total commercial and consumer loans
|
| | | $ | 37,147 | | | | | $ | 160,250 | | | | | $ | 33,666 | | | | | $ | 246,656 | | | | | $ | 14,039 | | | | | $ | 21,326 | | | | | $ | 1,934 | | | | | $ | 94 | | | | | $ | 515,112 | | |
|
Gross loans held for investment
|
| | | $ | 157,199 | | | | | $ | 487,480 | | | | | $ | 388,366 | | | | | $ | 593,594 | | | | | $ | 98,134 | | | | | $ | 61,147 | | | | | $ | 106,002 | | | | | $ | 203,591 | | | | | $ | 2,095,513 | | |
| | | |
As of December 31, 2025
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One
Year Through Five Years |
| |
Due after Five
Years Through Fifteen Years |
| |
Due after
Fifteen Years |
| | | | |||||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Total
|
| |||||||||||||||||||||||||||
| Real Estate Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 4,331 | | | | | $ | 128,199 | | | | | $ | 14,287 | | | | | $ | 86,177 | | | | | $ | 722 | | | | | $ | 3,135 | | | | | $ | — | | | | | $ | — | | | | | $ | 236,851 | | |
|
Single-family residential
|
| | | | 6,005 | | | | | | 3,571 | | | | | | 16,960 | | | | | | 749 | | | | | | 6,101 | | | | | | 8,145 | | | | | | 133,270 | | | | | | 101,918 | | | | | | 276,719 | | |
|
Commercial
|
| | | | 107,668 | | | | | | 77,734 | | | | | | 213,580 | | | | | | 241,970 | | | | | | 26,543 | | | | | | 6,518 | | | | | | — | | | | | | 752 | | | | | | 674,765 | | |
|
Farmland
|
| | | | — | | | | | | — | | | | | | 4,039 | | | | | | 299 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,338 | | |
|
Multifamily
|
| | | | 4,549 | | | | | | 16,883 | | | | | | 31,714 | | | | | | 11,979 | | | | | | 1,216 | | | | | | — | | | | | | — | | | | | | — | | | | | | 66,341 | | |
|
Total real estate loans
|
| | | $ | 122,553 | | | | | $ | 226,387 | | | | | $ | 280,580 | | | | | $ | 341,174 | | | | | $ | 34,582 | | | | | $ | 17,798 | | | | | $ | 133,270 | | | | | $ | 102,670 | | | | | $ | 1,259,014 | | |
| Commercial and Consumer Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Commercial and financial
|
| | | $ | 11,989 | | | | | $ | 111,501 | | | | | $ | 26,469 | | | | | $ | 260,223 | | | | | $ | 5,609 | | | | | $ | 10,103 | | | | | $ | 2,112 | | | | | $ | — | | | | | $ | 428,006 | | |
|
Consumer
|
| | | | 10,451 | | | | | | 20,115 | | | | | | 2,673 | | | | | | 9,984 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 43,223 | | |
|
Total commercial and consumer
loans |
| | | $ | 22,440 | | | | | $ | 131,616 | | | | | $ | 29,142 | | | | | $ | 270,207 | | | | | $ | 5,609 | | | | | $ | 10,103 | | | | | $ | 2,112 | | | | | $ | — | | | | | $ | 471,229 | | |
|
Gross loans held for investment
|
| | | $ | 144,993 | | | | | $ | 358,003 | | | | | $ | 309,722 | | | | | $ | 611,381 | | | | | $ | 40,191 | | | | | $ | 27,901 | | | | | $ | 135,382 | | | | | $ | 102,670 | | | | | $ | 1,730,243 | | |
| | | |
As of December 31, 2024
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One
Year Through Five Years |
| |
Due after Five
Years Through Fifteen Years |
| |
Due after
Fifteen Years |
| | | | |||||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Fixed
Rate |
| |
Adjustable
Rate |
| |
Total
|
| |||||||||||||||||||||||||||
| Real Estate Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 387 | | | | | $ | 100,397 | | | | | $ | 6,914 | | | | | $ | 44,757 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 152,455 | | |
|
Single-family residential
|
| | | | 451 | | | | | | 837 | | | | | | 3,754 | | | | | | — | | | | | | 17,224 | | | | | | — | | | | | | 150,679 | | | | | | 63,814 | | | | | | 236,759 | | |
|
Commercial
|
| | | | 19,454 | | | | | | 75,861 | | | | | | 196,689 | | | | | | 171,976 | | | | | | 10,978 | | | | | | 4,853 | | | | | | — | | | | | | — | | | | | | 479,811 | | |
|
Farmland
|
| | | | — | | | | | | — | | | | | | 3,450 | | | | | | 474 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,924 | | |
|
Multifamily
|
| | | | 2,163 | | | | | | — | | | | | | 22,978 | | | | | | 19,950 | | | | | | 11,200 | | | | | | — | | | | | | — | | | | | | — | | | | | | 56,291 | | |
|
Total real estate loans
|
| | | $ | 22,455 | | | | | $ | 177,095 | | | | | $ | 233,785 | | | | | $ | 237,157 | | | | | $ | 39,402 | | | | | $ | 4,853 | | | | | $ | 150,679 | | | | | $ | 63,814 | | | | | $ | 929,240 | | |
| Commercial and Consumer Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Commercial and financial
|
| | | $ | 89 | | | | | $ | 107,685 | | | | | $ | 26,434 | | | | | $ | 214,740 | | | | | $ | 2,030 | | | | | $ | 67 | | | | | $ | 2,158 | | | | | $ | — | | | | | $ | 353,203 | | |
|
Consumer
|
| | | | 2,577 | | | | | | 19,351 | | | | | | 426 | | | | | | 4,717 | | | | | | 7,605 | | | | | | — | | | | | | — | | | | | | — | | | | | | 34,676 | | |
|
Total commercial and consumer
loans |
| | | $ | 2,666 | | | | | $ | 127,036 | | | | | $ | 26,859 | | | | | $ | 219,457 | | | | | $ | 9,635 | | | | | $ | 67 | | | | | $ | 2,158 | | | | | $ | — | | | | | $ | 387,879 | | |
|
Gross loans held for investment
|
| | | $ | 25,121 | | | | | $ | 304,131 | | | | | $ | 260,645 | | | | | $ | 456,614 | | | | | $ | 49,037 | | | | | $ | 4,920 | | | | | $ | 152,837 | | | | | $ | 63,814 | | | | | $ | 1,317,119 | | |
| | | |
Six Months Ended
June 30, |
| |
Increase (decrease)
|
| ||||||||||||||||||
|
(dollars in thousands except for originators’ data)
|
| |
2026
|
| |
2025
|
| |
Amount
|
| |
Percent
|
| ||||||||||||
|
Approved client originators at period end
|
| | | | 61 | | | | | | 64 | | | | | | (3) | | | | | | (4.69)% | | |
|
Client originators with loans outstanding at period end
|
| | | | 47 | | | | | | 50 | | | | | | (3) | | | | | | (6.00)% | | |
|
Aggregate purchase facility capacity
|
| | | $ | 1,142,000 | | | | | $ | 1,135,500 | | | | | $ | 6,500 | | | | | | 0.57% | | |
|
Average outstanding warehouse balance
|
| | | $ | 438,000 | | | | | $ | 355,000 | | | | | $ | 83,000 | | | | | | 23.38% | | |
|
Period-end outstanding warehouse balance (included in LHFS)
|
| | | $ | 486,000 | | | | | $ | 490,000 | | | | | $ | (4,000) | | | | | | (0.82)% | | |
| | | |
Year Ended
December 31, |
| |
Increase (decrease)
|
| ||||||||||||||||||
|
(dollars in thousands except for originators’ data)
|
| |
2025
|
| |
2024
|
| |
Amount
|
| |
Percent
|
| ||||||||||||
|
Approved client originators at period end
|
| | | | 62 | | | | | | 67 | | | | | | (5) | | | | | | (7.46)% | | |
|
Client originators with loans outstanding at period end
|
| | | | 49 | | | | | | 43 | | | | | | 6 | | | | | | 13.90% | | |
|
Aggregate purchase facility capacity
|
| | | $ | 1,189,000 | | | | | $ | 1,175,000 | | | | | $ | 14,000 | | | | | | 1.19% | | |
|
Average outstanding warehouse balance
|
| | | $ | 400,000 | | | | | $ | 283,000 | | | | | $ | 117,000 | | | | | | 41.34% | | |
|
Period-end outstanding warehouse balance (included in LHFS)
|
| | | $ | 484,000 | | | | | $ | 466,000 | | | | | $ | 18,000 | | | | | | 3.86% | | |
| | | |
As of June 30, 2026
|
| |||||||||||||||||||||
|
(dollars in thousands)
|
| |
Pass
|
| |
Special mention
|
| |
Substandard
|
| |
Total
|
| ||||||||||||
| Loans: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 269,655 | | | | | $ | — | | | | | $ | — | | | | | $ | 269,655 | | |
|
Single-family residential
|
| | | | 344,439 | | | | | | 323 | | | | | | 3,565 | | | | | | 348,327 | | |
|
Commercial real estate
|
| | | | 871,732 | | | | | | 19,641 | | | | | | 634 | | | | | | 892,007 | | |
|
Multifamily
|
| | | | 70,412 | | | | | | — | | | | | | — | | | | | | 70,412 | | |
|
Commercial and financial
|
| | | | 432,611 | | | | | | 6,736 | | | | | | 20,921 | | | | | | 460,268 | | |
|
Consumer
|
| | | | 54,844 | | | | | | — | | | | | | — | | | | | | 54,844 | | |
|
Total
|
| | | $ | 2,043,693 | | | | | $ | 26,700 | | | | | $ | 25,120 | | | | | $ | 2,095,513 | | |
| | | |
As of December 31, 2025
|
| |||||||||||||||||||||
|
(dollars in thousands)
|
| |
Pass
|
| |
Special mention
|
| |
Substandard
|
| |
Total
|
| ||||||||||||
| Loans: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 236,523 | | | | | $ | — | | | | | $ | 328 | | | | | $ | 236,851 | | |
|
Single-family residential
|
| | | | 272,841 | | | | | | 175 | | | | | | 3,703 | | | | | | 276,719 | | |
|
Commercial real estate
|
| | | | 670,376 | | | | | | 8,055 | | | | | | 672 | | | | | | 679,103 | | |
|
Multifamily
|
| | | | 66,341 | | | | | | — | | | | | | — | | | | | | 66,341 | | |
|
Commercial and financial
|
| | | | 403,864 | | | | | | 4,792 | | | | | | 19,350 | | | | | | 428,006 | | |
|
Consumer
|
| | | | 43,223 | | | | | | — | | | | | | — | | | | | | 43,223 | | |
|
Total
|
| | | $ | 1,693,168 | | | | | $ | 13,022 | | | | | $ | 24,053 | | | | | $ | 1,730,243 | | |
| | | |
As of December 31, 2024
|
| |||||||||||||||||||||
|
(dollars in thousands)
|
| |
Pass
|
| |
Special mention
|
| |
Substandard
|
| |
Total
|
| ||||||||||||
| Loans: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 152,068 | | | | | $ | — | | | | | $ | 387 | | | | | $ | 152,455 | | |
|
Single-family residential
|
| | | | 235,700 | | | | | | 272 | | | | | | 787 | | | | | | 236,759 | | |
|
Commercial real estate
|
| | | | 471,536 | | | | | | 11,098 | | | | | | 1,101 | | | | | | 483,735 | | |
|
Multifamily
|
| | | | 56,291 | | | | | | — | | | | | | — | | | | | | 56,291 | | |
|
Commercial and financial
|
| | | | 340,533 | | | | | | 8,010 | | | | | | 4,660 | | | | | | 353,203 | | |
|
Consumer
|
| | | | 33,781 | | | | | | 172 | | | | | | 723 | | | | | | 34,676 | | |
|
Total
|
| | | $ | 1,289,909 | | | | | $ | 19,552 | | | | | $ | 7,658 | | | | | $ | 1,317,119 | | |
| | | |
As of June 30,
2026 |
| |
As of December 31,
|
| ||||||||||||
|
(dollars in thousands)
|
| |
2025
|
| |
2024
|
| ||||||||||||
|
Nonaccrual loans(1)
|
| | | $ | 17,268 | | | | | $ | 14,674 | | | | | $ | 7,343 | | |
|
Past due loans 90 days and still accruing
|
| | | | 39 | | | | | | — | | | | | | 149 | | |
|
Total nonperforming loans
|
| | | $ | 17,307 | | | | | $ | 14,674 | | | | | $ | 7,492 | | |
|
Nonperforming loans to gross LHFI
|
| | | | 0.83% | | | | | | 0.85% | | | | | | 0.57% | | |
|
Nonperforming assets to total assets
|
| | | | 0.53% | | | | | | 0.54% | | | | | | 0.33% | | |
|
Allowance for credit losses to total LHFI
|
| | | | 1.39% | | | | | | 1.48% | | | | | | 1.56% | | |
| | | |
As of June 30,
2026 |
| |
As of December 31,
|
| ||||||||||||
|
(dollars in thousands)
|
| |
2025
|
| |
2024
|
| ||||||||||||
|
Construction and land development
|
| | | $ | — | | | | | $ | 328 | | | | | $ | 387 | | |
|
Single-family residential
|
| | | | 3,338 | | | | | | 2,359 | | | | | | 558 | | |
|
Commercial real estate
|
| | | | 539 | | | | | | 577 | | | | | | 1,073 | | |
|
Commercial and financial
|
| | | | 13,391 | | | | | | 11,410 | | | | | | 4,660 | | |
|
Consumer
|
| | | | — | | | | | | — | | | | | | 665 | | |
|
Total nonaccrual loans
|
| | | $ | 17,268 | | | | | $ | 14,674 | | | | | $ | 7,343 | | |
| | | |
As of June 30,
2026 |
| |
As of and for the Year Ended
December 31, |
| ||||||||||||
|
(dollars in thousands)
|
| |
2025
|
| |
2024
|
| ||||||||||||
|
Allowance for credit losses on loans at end of period(1)
|
| | | $ | 28,955 | | | | | $ | 25,574 | | | | | $ | 20,600 | | |
| Loans balances: | | | | | | | | | | | | | | | |||||
|
Total loans held for investment, end of period
|
| | | $ | 2,089,860 | | | | | $ | 1,724,934 | | | | | $ | 1,312,293 | | |
|
Average loans held for investment
|
| | | $ | 1,802,428 | | | | | $ | 1,653,685 | | | | | $ | 1,227,569 | | |
|
Net charge-offs to average LHFI
|
| | | | 0.05% | | | | | | 0.06% | | | | | | 0.43% | | |
|
Allowance for credit losses on loans to total LHFI(1)
|
| | | | 1.39% | | | | | | 1.48% | | | | | | 1.56% | | |
|
Nonaccrual loans as a percentage of end of period loans
|
| | | | 0.83% | | | | | | 0.85% | | | | | | 0.56% | | |
|
Allowance for credit losses on loans to nonaccrual loans at end of period(1)
|
| | | | 167.68% | | | | | | 174.28% | | | | | | 280.54% | | |
|
Allowance for credit losses on loans to total nonperforming loans at end of period(1)
|
| | | | 167.31% | | | | | | 174.28% | | | | | | 274.96% | | |
| | | |
As of June 30,
2026 |
| |
As of December 31,
|
| ||||||||||||||||||||||||||||||
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amount
|
| |
% of
Allowance |
| |
Amount
|
| |
% of
Allowance |
| |
Amount
|
| |
% of
Allowance |
| ||||||||||||||||||
| Real Estate Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
|
Construction and land development
|
| | | $ | 4,200 | | | | | | 14.51% | | | | | $ | 4,496 | | | | | | 17.58% | | | | | $ | 2,817 | | | | | | 13.67% | | |
|
Single-family residential
|
| | | | 8,313 | | | | | | 28.71 | | | | | | 7,048 | | | | | | 27.56 | | | | | | 6,854 | | | | | | 33.27 | | |
|
Commercial
|
| | | | 5,248 | | | | | | 18.12 | | | | | | 4,453 | | | | | | 17.41 | | | | | | 4,014 | | | | | | 19.49 | | |
|
Multifamily
|
| | | | 396 | | | | | | 1.37 | | | | | | 514 | | | | | | 2.01 | | | | | | 698 | | | | | | 3.39 | | |
|
Total real estate loans
|
| | | $ | 18,157 | | | | | | 62.71% | | | | | $ | 16,511 | | | | | | 64.56% | | | | | $ | 14,383 | | | | | | 69.82% | | |
| Commercial and Consumer Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
|
Commercial and financial
|
| | | $ | 10,565 | | | | | | 36.49% | | | | | $ | 8,607 | | | | | | 33.66% | | | | | $ | 5,456 | | | | | | 26.49% | | |
|
Consumer
|
| | | | 233 | | | | | | 0.80 | | | | | | 456 | | | | | | 1.78 | | | | | | 761 | | | | | | 3.69 | | |
|
Total commercial and consumer loans
|
| | | $ | 10,798 | | | | | | 37.29% | | | | | $ | 9,063 | | | | | | 35.44% | | | | | $ | 6,217 | | | | | | 30.18% | | |
|
Total allowance for credit losses on loans
|
| | | $ | 28,955 | | | | | | 100.0% | | | | | $ | 25,574 | | | | | | 100.0% | | | | | $ | 20,600 | | | | | | 100.00% | | |
| | | |
Six Months Ended June 30, 2026
|
| |
Year Ended December 31, 2025
|
| |
Year Ended December 31, 2024
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Average
Loans |
| |
Net Charge-
offs (Recoveries) |
| |
Annualized
Net Charge- offs to Average Loans |
| |
Average
Loans |
| |
Net Charge-
offs (Recoveries) |
| |
Net Charge-
offs to Average Loans |
| |
Average
Loans |
| |
Net Charge-
offs (Recoveries) |
| |
Net Charge-
offs to Average Loans |
| |||||||||||||||||||||||||||
| Real Estate Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land
development |
| | | $ | 234,281 | | | | | | (7) | | | | | | 0.01% | | | | | $ | 194,260 | | | | | $ | 59 | | | | | | 0.03% | | | | | $ | 162,190 | | | | | $ | — | | | | | | 0.00% | | |
|
Single-family residential
|
| | | | 287,794 | | | | | | — | | | | | | 0.00% | | | | | | 255,876 | | | | | | 97 | | | | | | 0.04% | | | | | | 197,692 | | | | | | — | | | | | | 0.00% | | |
|
Commercial
|
| | | | 745,080 | | | | | | — | | | | | | 0.00% | | | | | | 637,737 | | | | | | — | | | | | | 0.00% | | | | | | 438,620 | | | | | | (6) | | | | | | 0.00% | | |
|
Multifamily
|
| | | | 66,588 | | | | | | — | | | | | | 0.00% | | | | | | 55,476 | | | | | | — | | | | | | 0.00% | | | | | | 40,224 | | | | | | — | | | | | | 0.00% | | |
|
Commercial and Consumer Loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Commercial and financial
|
| | | $ | 417,257 | | | | | | 1,008 | | | | | | 0.49% | | | | | $ | 465,370 | | | | | $ | 744 | | | | | | 0.16% | | | | | $ | 354,313 | | | | | $ | 5,191 | | | | | | 1.47% | | |
|
Consumer
|
| | | | 51,428 | | | | | | (24) | | | | | | (0.09)% | | | | | | 44,966 | | | | | | 11 | | | | | | 0.02% | | | | | | 35,530 | | | | | | 39 | | | | | | 0.11% | | |
|
Total net
charge-offs |
| | | $ | 1,802,428 | | | | | | 977 | | | | | | 0.10% | | | | | $ | 1,653,685 | | | | | $ | 911 | | | | | | 0.06% | | | | | $ | 1,228,569 | | | | | $ | 5,224 | | | | | | 0.43% | | |
| | | |
As of June 30,
2026 |
| |
As of December 31,
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Fair
Value |
| |
Unrealized
Gain (Loss) |
| |
Amortized
Cost |
| |
Fair
Value |
| |
Unrealized
Gain (Loss) |
| |
Amortized
Cost |
| |
Fair
Value |
| |
Unrealized
Gain (Loss) |
| |||||||||||||||||||||||||||
|
U.S. Treasuries
|
| | | $ | 4,953 | | | | | $ | 4,952 | | | | | $ | (1) | | | | | $ | 21,863 | | | | | $ | 21,912 | | | | | $ | 49 | | | | | $ | 38,511 | | | | | $ | 38,564 | | | | | $ | 53 | | |
|
U.S. government sponsored agencies
|
| | | | 2,984 | | | | | | 2,978 | | | | | | (6) | | | | | | 2,978 | | | | | | 2,994 | | | | | | 16 | | | | | | 12,801 | | | | | | 12,809 | | | | | | 8 | | |
|
Mortgage-backed securities
|
| | | | 69,392 | | | | | | 65,892 | | | | | | (3,500) | | | | | | 28,740 | | | | | | 25,930 | | | | | | (2,810) | | | | | | 21,429 | | | | | | 17,420 | | | | | | (4,009) | | |
|
Corporate debt securities
|
| | | | 1,263 | | | | | | 1,265 | | | | | | 2 | | | | | | 1,000 | | | | | | 960 | | | | | | (40) | | | | | | 1,000 | | | | | | 915 | | | | | | (85) | | |
|
Total available for sale securities
|
| | | $ | 78,592 | | | | | $ | 75,087 | | | | | $ | (3,505) | | | | | $ | 54,581 | | | | | $ | 51,796 | | | | | $ | (2,785) | | | | | $ | 73,741 | | | | | $ | 69,708 | | | | | $ | (4,033) | | |
| | | |
As of June 30,
2026 |
| |
As of December 31,
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Fair
Value |
| |
Unrealized
Gain (Loss) |
| |
Amortized
Cost |
| |
Fair
Value |
| |
Unrealized
Gain (Loss) |
| |
Amortized
Cost |
| |
Fair
Value |
| |
Unrealized
Gain (Loss) |
| |||||||||||||||||||||||||||
|
Residential mortgage-backed securities
|
| | | $ | 14,846 | | | | | $ | 14,635 | | | | | $ | (211) | | | | | $ | 670 | | | | | $ | 652 | | | | | $ | (18) | | | | | $ | 4,539 | | | | | $ | 4,474 | | | | | $ | (65) | | |
|
Collateralized mortgage obligations
|
| | | | 23,537 | | | | | | 23,322 | | | | | | (215) | | | | | | 28,488 | | | | | | 28,747 | | | | | | 259 | | | | | | 18,559 | | | | | | 18,328 | | | | | | (231) | | |
|
State and political subdivisions
|
| | | | 10,977 | | | | | | 10,706 | | | | | | (271) | | | | | | 10,944 | | | | | | 10,729 | | | | | | (215) | | | | | | 3,642 | | | | | | 3,370 | | | | | | (272) | | |
|
Total held-to-maturity securities
|
| | | $ | 34,514 | | | | | $ | 48,663 | | | | | $ | (697) | | | | | $ | 40,102 | | | | | $ | 40,128 | | | | | $ | 26 | | | | | $ | 26,740 | | | | | $ | 26,172 | | | | | $ | (568) | | |
| | | |
As of June 30, 2026
|
| ||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One Year
Through Five Years |
| |
Due after Five Years
Through Ten Years |
| |
Due after Ten Years
|
| |||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |||||||||||||||||||||
|
U.S. Treasuries
|
| | | $ | 4,953 | | | | | | 3.97% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | |
—%
|
|
|
U.S. government sponsored agencies
|
| | | | — | | | | | | — | | | | | | 2,984 | | | | | | 4.03 | | | | | | — | | | | | | — | | | | | | — | | | |
—
|
|
|
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | 972 | | | | | | 1.29 | | | | | | 6,493 | | | | | | 4.34 | | | | | | 61,927 | | | |
3.99
|
|
|
Corporate debt securities
|
| | | | — | | | | | | — | | | | | | 1,263 | | | | | | 5.89 | | | | | | — | | | | | | — | | | | | | — | | | |
—
|
|
|
Total available-for-sale securities
|
| | | $ | 4,953 | | | | | | 3.97% | | | | | $ | 5,219 | | | | | | 3.97% | | | | | $ | 6,493 | | | | | | 4.34% | | | | | $ | 61,927 | | | |
3.99%
|
|
| | | |
As of December 31, 2025
|
| ||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One Year
Through Five Years |
| |
Due after Five Years
Through Ten Years |
| |
Due after
Ten Years |
| |||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |||||||||||||||||||||
|
U.S. Treasuries
|
| | | $ | 21,863 | | | | | | 4.60% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | |
—%
|
|
|
U.S. government sponsored agencies
|
| | | | — | | | | | | — | | | | | | 2,978 | | | | | | 4.00 | | | | | | — | | | | | | — | | | | | | — | | | |
—
|
|
|
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | 1,067 | | | | | | 1.30 | | | | | | 1,859 | | | | | | 4.30 | | | | | | 25,815 | | | |
2.80
|
|
|
Corporate debt securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,000 | | | | | | 5.40 | | | | | | — | | | |
—
|
|
|
Total available-for-sale securities
|
| | | $ | 21,863 | | | | | | 4.60% | | | | | $ | 4,046 | | | | | | 3.30% | | | | | $ | 2,859 | | | | | | 4.70% | | | | | $ | 25,815 | | | |
2.80%
|
|
| | | |
As of December 31, 2024
|
| ||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One Year
Through Five Years |
| |
Due after Five Years
Through Ten Years |
| |
Due after
Ten Years |
| |||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |||||||||||||||||||||
|
U.S. Treasuries
|
| | | $ | 16,903 | | | | | | 3.90% | | | | | $ | 21,608 | | | | | | 4.60% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | |
—%
|
|
|
U.S. government sponsored agencies
|
| | | | 9,834 | | | | | | 5.00 | | | | | | 2,967 | | | | | | 4.00 | | | | | | — | | | | | | — | | | | | | — | | | |
—
|
|
|
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | 1,117 | | | | | | 1.30 | | | | | | — | | | | | | — | | | | | | 20,311 | | | |
1.70
|
|
|
Corporate debt securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,000 | | | | | | 5.40 | | | | | | — | | | |
—
|
|
|
Total available-for-sale securities
|
| | | $ | 26,737 | | | | | | 4.30% | | | | | $ | 25,692 | | | | | | 4.40% | | | | | $ | 1,000 | | | | | | 5.40% | | | | | $ | 20,311 | | | |
1.70%
|
|
| | | |
As of June 30, 2026
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One Year
Through Five Years |
| |
Due after Five Years
Through Ten Years |
| |
Due after
Ten Years |
| ||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| ||||||||||||||||||||||||
|
Residential mortgage-backed securities
|
| | | $ | — | | | | | | 0.00% | | | | | $ | 7,241 | | | | | | 4.42% | | | | | $ | 7,345 | | | | | | 4.38% | | | | | $ | 260 | | | | | | 3.79% | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | 0.00 | | | | | | 15,374 | | | | | | 4.71 | | | | | | 4,137 | | | | | | 4.42 | | | | | | 4,026 | | | | | | 4.65 | | |
|
State and political subdivisions
|
| | | | — | | | | | | 0.00 | | | | | | 484 | | | | | | 4.22 | | | | | | 3,220 | | | | | | 4.64 | | | | | | 7,273 | | | | | | 3.94 | | |
|
Total held-to-maturity securities
|
| | | $ | — | | | | | | 0.00% | | | | | $ | 23,099 | | | | | | 4.61% | | | | | $ | 14,702 | | | | | | 4.44% | | | | | $ | 11,559 | | | | | | 4.18% | | |
| | | |
As of December 31, 2025
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One Year
Through Five Years |
| |
Due after Five Years
Through Ten Years |
| |
Due after
Ten Years |
| ||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| ||||||||||||||||||||||||
|
Residential mortgage-backed securities
|
| | | $ | — | | | | | | 0.00% | | | | | $ | — | | | | | | 0.00% | | | | | $ | 404 | | | | | | 4.74% | | | | | $ | 266 | | | | | | 3.78% | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | 0.00 | | | | | | 21,746 | | | | | | 4.74 | | | | | | 2,693 | | | | | | 4.39 | | | | | | 4,049 | | | | | | 4.67 | | |
|
State and political subdivisions
|
| | | | — | | | | | | 0.00 | | | | | | 481 | | | | | | 4.22 | | | | | | 3,195 | | | | | | 4.64 | | | | | | 7,268 | | | | | | 3.93 | | |
|
Total held-to-maturity securities
|
| | | $ | — | | | | | | 0.00% | | | | | $ | 22,227 | | | | | | 4.69% | | | | | $ | 6,292 | | | | | | 4.57% | | | | | $ | 11,583 | | | | | | 4.19% | | |
| | | |
As of December 31, 2024
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | | |
Due in One
Year or Less |
| |
Due after One Year
Through Five Years |
| |
Due after Five Years
Through Ten Years |
| |
Due after
Ten Years |
| ||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| |
Amortized
Cost |
| |
Weighted
Average Yield |
| ||||||||||||||||||||||||
|
Residential mortgage-backed securities
|
| | | $ | — | | | | | | 0.00% | | | | | $ | 2,628 | | | | | | 4.49% | | | | | $ | 1,633 | | | | | | 4.74% | | | | | $ | 278 | | | | | | 3.78% | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | 0.00 | | | | | | 14,259 | | | | | | 4.94 | | | | | | 1,949 | | | | | | 4.57 | | | | | | 2,351 | | | | | | 4.91 | | |
|
State and political subdivisions
|
| | | | — | | | | | | 0.00 | | | | | | — | | | | | | 0.00 | | | | | | — | | | | | | 0.00 | | | | | | 3,642 | | | | | | 3.56 | | |
|
Total held-to-maturity securities
|
| | | $ | — | | | | | | 0.00% | | | | | $ | 16,887 | | | | | | 4.87% | | | | | $ | 3,582 | | | | | | 4.65% | | | | | $ | 6,271 | | | | | | 4.08% | | |
| | | |
As of June 30,
2026 |
| |
As of December 31,
|
| ||||||||||||||||||||||||||||||
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Average
Balance |
| |
Weighted
Average Rate |
| |
Average
Balance |
| |
Weighted
Average Rate |
| |
Average
Balance |
| |
Weighted
Average Rate |
| ||||||||||||||||||
|
Noninterest-bearing demand deposits
|
| | | $ | 582,641 | | | | | | —% | | | | | $ | 491,343 | | | | | | —% | | | | | $ | 254,638 | | | | | | —% | | |
|
Interest-bearing demand deposits
|
| | | | 302,298 | | | | | | 1.65 | | | | | | 270,719 | | | | | | 1.94 | | | | | | 179,804 | | | | | | 1.82 | | |
|
Money market deposits and savings deposits
|
| | | | 701,855 | | | | | | 2.88 | | | | | | 632,313 | | | | | | 3.13 | | | | | | 544,009 | | | | | | 3.72 | | |
|
Certificates of deposits
|
| | | | 682,796 | | | | | | 3.92 | | | | | | 674,663 | | | | | | 4.29 | | | | | | 551,863 | | | | | | 4.99 | | |
|
Total interest-bearing
deposits |
| | | $ | 1,686,949 | | | | | | 3.08% | | | | | $ | 1,577,695 | | | | | | 3.42% | | | | | $ | 1,275,676 | | | | | | 4.00% | | |
|
Total deposits
|
| | | $ | 2,269,590 | | | | | | 2.29% | | | | | $ | 2,069,038 | | | | | | 2.61% | | | | | $ | 1,530,314 | | | | | | 3.33% | | |
| | | |
As of June 30, 2026 Maturity Within:
|
| |||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Three
Months |
| |
Three to Six
Months |
| |
Six to Twelve
Months |
| |
After Twelve
Months |
| |
Total
|
| |||||||||||||||
|
Time deposits (less than $250,000)
|
| | | $ | 60,055 | | | | | $ | 56,179 | | | | | $ | 108,918 | | | | | $ | 85,088 | | | | | $ | 310,240 | | |
|
Time deposits ($250,000 or more)
|
| | | | 84,795 | | | | | | 64,713 | | | | | | 84,403 | | | | | | 14,490 | | | | | | 248,401 | | |
|
Brokered CDs
|
| | | | 33,005 | | | | | | 28,546 | | | | | | 8,716 | | | | | | 61,044 | | | | | | 131,311 | | |
|
Total time deposits
|
| | | $ | 177,855 | | | | | $ | 149,438 | | | | | $ | 202,037 | | | | | $ | 160,622 | | | | | $ | 689,952 | | |
| | | |
As of December 31, 2025 Maturity Within:
|
| |||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Three
Months |
| |
Three to Six
Months |
| |
Six to Twelve
Months |
| |
After Twelve
Months |
| |
Total
|
| |||||||||||||||
|
Time deposits (less than $250,000)
|
| | | $ | 51,351 | | | | | $ | 50,669 | | | | | $ | 94,785 | | | | | $ | 82,811 | | | | | $ | 279,616 | | |
|
Time deposits ($250,000 or more)
|
| | | | 49,566 | | | | | | 40,857 | | | | | | 83,704 | | | | | | 13,249 | | | | | | 187,376 | | |
|
Brokered CDs
|
| | | | 98,309 | | | | | | 19,174 | | | | | | 31,980 | | | | | | 53,237 | | | | | | 202,700 | | |
|
Total time deposits
|
| | | $ | 199,226 | | | | | $ | 110,700 | | | | | $ | 210,469 | | | | | $ | 149,297 | | | | | $ | 669,692 | | |
| | | |
As of December 31, 2024 Maturity Within:
|
| |||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Three
Months |
| |
Three to Six
Months |
| |
Six to Twelve
Months |
| |
After Twelve
Months |
| |
Total
|
| |||||||||||||||
|
Time deposits (less than $250,000)
|
| | | $ | 22,793 | | | | | $ | 35,035 | | | | | $ | 58,371 | | | | | $ | 71,408 | | | | | $ | 187,607 | | |
|
Time deposits ($250,000 or more)
|
| | | | 22,163 | | | | | | 28,205 | | | | | | 65,882 | | | | | | 13,352 | | | | | | 129,602 | | |
|
Brokered CDs
|
| | | | 110,149 | | | | | | 3,778 | | | | | | 50,188 | | | | | | 89,523 | | | | | | 253,638 | | |
|
Total time deposits
|
| | | $ | 155,105 | | | | | $ | 67,018 | | | | | $ | 174,441 | | | | | $ | 174,283 | | | | | $ | 570,847 | | |
| | | |
Payments Due at June 30, 2026
|
| |||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Within One
Year |
| |
One to Three
Years |
| |
Three to Five
Years |
| |
After Five
Years |
| |
Total
|
| |||||||||||||||
|
Deposits without a stated maturity
|
| | | $ | 2,148,670 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 2,148,670 | | |
|
Time deposits
|
| | | | 529,329 | | | | | | 159,263 | | | | | | 1,360 | | | | | | — | | | | | | 689.952 | | |
|
Other borrowings
|
| | | | — | | | | | | — | | | | | | 63,472 | | | | | | 19,150 | | | | | | 82,622 | | |
|
Operating lease liabilities
|
| | | | 4,220 | | | | | | 8,603 | | | | | | 8,978 | | | | | | 27,778 | | | | | | 49,579 | | |
|
Total contractual obligations
|
| | | $ | 2,682,219 | | | | | $ | 167,866 | | | | | $ | 73,810 | | | | | $ | 46,928 | | | | | $ | 2,970,824 | | |
| | | |
Payments Due at December 31, 2025
|
| |||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Within One
Year |
| |
One to Three
Years |
| |
Three to Five
Years |
| |
After Five
Years |
| |
Total
|
| |||||||||||||||
|
Deposits without a stated maturity
|
| | | $ | 1,689,993 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 1,689,993 | | |
|
Time deposits
|
| | | | 520,394 | | | | | | 140,836 | | | | | | 8,462 | | | | | | — | | | | | | 669,692 | | |
|
Other borrowings
|
| | | | — | | | | | | — | | | | | | — | | | | | | 71,216 | | | | | | 71,216 | | |
|
Operating lease liabilities
|
| | | | 4,193 | | | | | | 8,542 | | | | | | 8,899 | | | | | | 29,684 | | | | | | 51,318 | | |
|
Total contractual obligations
|
| | | $ | 2,214,580 | | | | | $ | 149,378 | | | | | $ | 17,361 | | | | | $ | 100,900 | | | | | $ | 2,482,219 | | |
| | | |
Payments Due at December 31, 2024
|
| |||||||||||||||||||||||||||
|
(dollars in thousands)
|
| |
Within One
Year |
| |
One to Three
Years |
| |
Three to Five
Years |
| |
After Five
Years |
| |
Total
|
| |||||||||||||||
|
Deposits without a stated maturity
|
| | | $ | 1,257,778 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 1,257,778 | | |
|
Time deposits
|
| | | | 396,564 | | | | | | 140,982 | | | | | | 33,301 | | | | | | — | | | | | | 570,847 | | |
|
Other borrowings
|
| | | | 150,000 | | | | | | — | | | | | | — | | | | | | 61,888 | | | | | | 211,888 | | |
|
Operating lease liabilities
|
| | | | 4,106 | | | | | | 8,427 | | | | | | 8,710 | | | | | | 34,181 | | | | | | 55,424 | | |
|
Total contractual obligations
|
| | | $ | 1,808,448 | | | | | $ | 149,409 | | | | | $ | 42,011 | | | | | $ | 96,069 | | | | | $ | 2,095,937 | | |
| | | |
June 30,
2026 |
| |
December 31,
|
| ||||||||||||
|
(dollars in thousands)
|
| |
2025
|
| |
2024
|
| ||||||||||||
| Financial instruments whose contract amounts represent credit risk: | | | | | | | | | | | | | | | | | | | |
|
Commitments to extend credit
|
| | | $ | 481,518 | | | | | $ | 388,867 | | | | | $ | 373,504 | | |
|
Letters of credit
|
| | | | 5,558 | | | | | | 5,533 | | | | | | 4,748 | | |
|
Total
|
| | | $ | 487,076 | | | | | $ | 394,400 | | | | | $ | 378,252 | | |
| | | |
Ratio at
June 30, 2026 |
| |
Ratio at December 31,
|
| |
Regulatory
Capital Ratio Requirements |
| |
Regulatory
Capital Ratio Requirements including Capital Conservation Buffer |
| |
Minimum
Requirements for “Well Capitalized” Depository Institution |
| |||||||||||||||||||||
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||||||||||||||
|
Georgia Banking Company, Inc.
(Bank Holding Company) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
|
Total capital (to risk-weighted assets)
|
| | | | 14.32% | | | | | | 13.61% | | | | | | 13.76% | | | | | | 8.00% | | | | | | 10.50% | | | | | | 10.00% | | |
|
Tier 1 capital (to risk-weighted assets)
|
| | | | 10.58% | | | | | | 9.39% | | | | | | 9.41% | | | | | | 6.00% | | | | | | 8.50% | | | | | | 8.00% | | |
|
CET1 capital (to risk-weighted assets)
|
| | | | 10.29% | | | | | | 9.06% | | | | | | 9.00% | | | | | | 4.50% | | | | | | 7.00% | | | | | | 6.50% | | |
|
Tier 1 leverage
|
| | | | 9.43% | | | | | | 7.64% | | | | | | 7.76% | | | | | | 4.00% | | | | | | 4.00% | | | | | | 5.00% | | |
|
Georgia Banking Company
(Bank Subsidiary) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
|
Total capital (to risk-weighted assets)
|
| | | | 13.05% | | | | | | 12.74% | | | | | | 11.19% | | | | | | 8.00% | | | | | | 10.50% | | | | | | 10.00% | | |
|
Tier 1 capital (to risk-weighted assets)
|
| | | | 11.83% | | | | | | 11.52% | | | | | | 9.98% | | | | | | 6.00% | | | | | | 8.50% | | | | | | 8.00% | | |
|
CET1 capital (to risk-weighted assets)
|
| | | | 11.83% | | | | | | 11.52% | | | | | | 9.98% | | | | | | 4.50% | | | | | | 7.00% | | | | | | 6.50% | | |
|
Tier 1 leverage
|
| | | | 10.78% | | | | | | 9.37% | | | | | | 8.22% | | | | | | 4.00% | | | | | | 4.00% | | | | | | 5.00% | | |
| | | |
Net Interest Income Sensitivity
|
| |||||||||
| | | |
12 Month Projection
|
| |||||||||
|
(Shock in basis points)
|
| |
-200
|
| |
-100
|
| |
+100
|
| |
+200
|
|
|
June 30, 2026
|
| |
(11.46)%
|
| |
(5.65)%
|
| |
4.68%
|
| |
9.05%
|
|
|
December 31, 2025
|
| |
(14.82)%
|
| |
(7.35)%
|
| |
6.66%
|
| |
13.35%
|
|
|
December 31, 2024
|
| |
(11.14)%
|
| |
(5.88)%
|
| |
4.86%
|
| |
9.40%
|
|
|
December 31, 2023
|
| |
(13.38)%
|
| |
(7.12)%
|
| |
6.14%
|
| |
12.29%
|
|
| | | |
Economic Value of Equity
Sensitivity |
| |||||||||
|
(Shock in basis points)
|
| |
-200
|
| |
-100
|
| |
+100
|
| |
+200
|
|
|
June 30, 2026
|
| |
(8.41)%
|
| |
(3.45)%
|
| |
0.81%
|
| |
0.01%
|
|
|
December 31, 2025
|
| |
(14.43)%
|
| |
(6.15)%
|
| |
3.33%
|
| |
5.03%
|
|
|
December 31, 2024
|
| |
(10.41)%
|
| |
(4.21)%
|
| |
1.54%
|
| |
1.36%
|
|
|
December 31, 2023
|
| |
(9.83)%
|
| |
(4.21)%
|
| |
2.64%
|
| |
3.99%
|
|
|
Address
|
| |
Year First
Opened |
| |
Approximate
Square Footage |
| |
Owned or
Leased |
| |||||||||
|
3880 Roswell Rd NE
Atlanta, GA 30342 |
| | | | 2007 | | | | | | 10,248 | | | | | | Owned | | |
|
2356 Main Street
Tucker, GA 30084 |
| | | | 2019 | | | | | | 7,800 | | | | | | Leased | | |
|
5225 Windward Parkway
Alpharetta, GA 30004 |
| | | | 2022 | | | | | | 7,024 | | | | | | Leased | | |
|
1776 Peachtree Street NW, Suite 150
Atlanta, GA 30309 |
| | | | 2021 | | | | | | 6,348 | | | | | | Leased | | |
|
1624 North Expressway
Griffin, GA 30223 |
| | | | 2006 | | | | | | 5,660 | | | | | | Owned | | |
|
6080 Bethelview Rd
Cumming, GA 30040 |
| | | | 2021 | | | | | | 5,416 | | | | | | Owned | | |
|
690 Collins Hill Road
Lawrenceville, GA 30046 |
| | | | 2021 | | | | | | 4,743 | | | | | | Leased | | |
|
2827 Peachtree Road NE, Suite 100
Atlanta, GA 30305 |
| | | | 2023 | | | | | | 4,500 | | | | | | Leased | | |
|
4895 Lower Roswell Rd.
Marietta, GA 30068 |
| | | | 2022 | | | | | | 3,625 | | | | | | Leased | | |
|
6340 Sugarloaf Pkwy, Suite 100
Duluth, GA 30097 |
| | | | 2021 | | | | | | 2,500 | | | | | | Leased | | |
|
Address
|
| |
Year First
Opened |
| |
Approximate
Square Footage |
| |
Owned or
Leased |
| |||||||||
|
1776 Peachtree Street NW, Suite 300
Atlanta, GA 30309 |
| | | | 2021 | | | | | | 34,156 | | | | | | Leased | | |
|
2827 Peachtree Road NE, Suite 400
Atlanta, GA 30305 |
| | | | 2023 | | | | | | 27,850 | | | | | | Leased | | |
|
6340 Sugarloaf Pkwy, Suites 105, 110, 120 & 150
Duluth, GA 30097 |
| | | | 2021 | | | | | | 14,518 | | | | | | Leased | | |
|
120 N. Candler Street, Suites 10, 11 & 12
Decatur, GA 30030 |
| | | | 2021 | | | | | | 360 | | | | | | Leased | | |
|
107 Technology Pkwy, Suite 413
Peachtree Corners, GA 30092 |
| | | | 2020 | | | | | | 240 | | | | | | Leased | | |
|
61 Linton Street, Suite 2400
Woodstock, GA 30188 |
| | | | 2020 | | | | | | 110 | | | | | | Leased | | |
|
Name
|
| |
Position(s) with the Company
|
| |
Age
|
| |||
| Bartow Morgan, Jr. | | |
Chief Executive Officer
|
| | | | 53 | | |
| J. Craig Addison | | |
Chief Human Resources Officer
|
| | | | 59 | | |
| David F. Black | | |
Chief Commercial Officer
|
| | | | 51 | | |
| Charles M. DeWitt, III | | |
Chief Financial Officer
|
| | | | 59 | | |
| Richard Fairey | | |
President & Chief Operating Officer
|
| | | | 57 | | |
| Ryan D. Nemec | | |
Chief Accounting Officer
|
| | | | 39 | | |
| Wesley Reagan | | |
Chief Risk Officer & Chief Credit Officer
|
| | | | 45 | | |
| Margaret H. Whieldon | | |
Chief Experience Officer
|
| | | | 63 | | |
|
Name
|
| |
Position(s) with
the Company |
| |
Age
|
| |
Director
Since |
| |
Audit
Committee |
| |
ALCO
|
| |
Compensation
Committee |
| |
Nominating &
Corporate Governance Committee |
| |
Risk
Committee |
| ||||||
| Sarah R. Borders | | |
Chairperson
|
| | | | 64 | | | | | | 2021 | | | | | | | | | |
Member
|
| |
Chair
|
| | | |
| Arthur F. Anton | | |
Director
|
| | | | 69 | | | | | | 2021 | | | |
Chair
|
| |
Chair
|
| | | | | | | | | |
| James F. Deutsch | | |
Director
|
| | | | 71 | | | | | | 2021 | | | | | | | | | |
Member
|
| | | | | | |
| Henchy R. Enden | | |
Director
|
| | | | 53 | | | | | | 2026 | | | |
Member
|
| |
Member
|
| | | | | | | | | |
| Ryan Glover | | |
Director
|
| | | | 56 | | | | | | 2021 | | | | | | | | | | | | | | | |
Member
|
|
| Craig Heiser | | |
Director
|
| | | | 54 | | | | | | 2026 | | | | | | | | | | | | |
Member
|
| |
Member
|
|
| Bartow Morgan, Jr. | | |
CEO and Director
|
| | | | 53 | | | | | | 2021 | | | | | | | | | | | | | | | | | |
| Mark Scheinfeld | | |
Director
|
| | | | 71 | | | | | | 2025 | | | |
Member
|
| |
Member
|
| | | | | | | | | |
| R. Lee Tucker, Jr. | | |
Director
|
| | | | 54 | | | | | | 2021 | | | | | | | | | |
Chair
|
| |
Member
|
| |
Chair
|
|
|
Name and Principal Position
|
| |
Salary
|
| |
Bonus
|
| |
Stock Awards(1)
|
| |
All Other
Compensation(3) |
| |
Total
Compensation |
| |||||||||||||||
|
Bartow Morgan, Jr.
(Chief Executive Officer) |
| | | $ | 500,000 | | | | | $ | 650,000 | | | | | $ | 500,000 | | | | | $ | 16,825 | | | | | $ | 1,666,825 | | |
|
Richard Fairey
(President/Chief Operating Officer) |
| | | $ | 375,000 | | | | | $ | 1,300,000(2) | | | | | $ | 150,000 | | | | | $ | 27,287 | | | | | $ | 1,852,287 | | |
|
David Black
(Chief Commercial Officer) |
| | | $ | 375,000 | | | | | $ | 350,000 | | | | | $ | 225,000 | | | | | $ | 11,945 | | | | | $ | 961,945 | | |
|
Name
|
| |
Health and Welfare
Reimbursement |
| |
401(k) Matching
Contributions |
| |
Additional
Reimbursement |
| |||||||||
|
Bartow Morgan, Jr.
|
| | | $ | 2,836 | | | | | $ | 13,989 | | | | | $ | — | | |
|
Richard Fairey
|
| | | $ | — | | | | | $ | 13,992 | | | | | $ | 13,295 | | |
|
David Black
|
| | | $ | — | | | | | $ | 11,945 | | | | | $ | — | | |
| | | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||||||||||||||||||||
|
Name
|
| |
Grant
Date |
| |
Number of
Securities Underlying Unexercised Options(#) Exercisable(1) |
| |
Number of
Securities Underlying Unexercised Options(#) Unexercisable |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| |
Number of
shares or units of stock that have not vested(#)(2) |
| |
Market value of
shares or units of stock that have not vested ($)(3) |
| |||||||||||||||||||||
|
Bartow Morgan Jr.
|
| | | | 3/1/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,781 | | | | | | 173,430 | | |
| | | | | | 3/1/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 16,305 | | | | | | 489,150 | | |
| | | | | | 3/1/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,730 | | | | | | 651,900 | | |
|
Richard Fairey
|
| | | | 3/1/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,519 | | | | | | 195,570 | | |
|
David Black
|
| | | | 12/8/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,588 | | | | | | 47,640 | | |
| | | | | | 3/31/2022 | | | | | | 7,528 | | | | | | — | | | | | | 21.62 | | | | | | 3/31/2032 | | | | | | 2,601 | | | | | | 78,030 | | |
| | | | | | 5/15/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,891 | | | | | | 146,730 | | |
| | | | | | 3/1/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,338 | | | | | | 220,140 | | |
| | | | | | 3/1/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,778 | | | | | | 293,340 | | |
|
Name
|
| |
Fees earned or
paid in cash |
| |
Total
|
| ||||||
|
Arthur F. Anton
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
H. Ross Arnold, III(1)
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
Sarah R. Borders
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
Michael W. Clarke(1)
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
James F. Deutsch(2)
|
| | | $ | — | | | | | $ | — | | |
|
David Fisher(1)
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
J. Littleton Glover, Jr.(1)
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
Ryan Glover
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
James R. Lientz, Jr.(1)
|
| | | $ | 75,000 | | | | | $ | 75,000 | | |
|
R. Elliott Miller(1)
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
Sunny K. Park(1)
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
H. Boyd Pettit, III(1)(3)
|
| | | $ | 37,350 | | | | | $ | 37,350 | | |
|
Mark Scheinfeld(3)
|
| | | $ | 37,350 | | | | | $ | 37,350 | | |
|
R. Lee Tucker, Jr.
|
| | | $ | 45,000 | | | | | $ | 45,000 | | |
|
Shareholder
|
| |
Total
Purchase Price |
| |||
|
Commerce Street Financial Partners II, L.P.(1)
|
| | | $ | 12,499,994 | | |
|
Patriot Financial Partners III, LP(2)
|
| | | $ | 2,392,000 | | |
|
Bartow Morgan, Jr.(3)
|
| | | $ | 2,192,728 | | |
|
R. Lee Tucker, Jr.(4)
|
| | | $ | 500,020 | | |
|
AllianceBernstein LP(5)
|
| | | $ | 230,000 | | |
|
Arthur F. Anton(6)
|
| | | $ | 200,008 | | |
|
J. Littleton Glover, Jr.(7)
|
| | | $ | 200,008 | | |
|
Sunny K. Park(8)
|
| | | $ | 170,200 | | |
|
Sarah R. Borders(9)
|
| | | $ | 161,000 | | |
|
David Fisher(10)
|
| | | $ | 120,014 | | |
|
David F. Black(11)
|
| | | $ | 80,017 | | |
|
Richard Fairey
|
| | | $ | 75,003 | | |
|
Michael W. Clarke(12)
|
| | | $ | 57,500 | | |
|
James R. Lientz, Jr.(13)
|
| | | $ | 46,000 | | |
|
H. Ross Arnold III(14)
|
| | | $ | 34,500 | | |
|
R. Elliott Miller(15)
|
| | | $ | 23,000 | | |
|
J. Craig Addison(16)
|
| | | $ | 20,010 | | |
|
Shareholder
|
| |
Total
Purchase Price |
| |||
|
AllianceBernstein LP(1)
|
| | | $ | 18,000,000 | | |
|
Shareholder
|
| |
Total
Purchase Price |
| |||
|
Ryan Glover(1)
|
| | |
$
|
400,020
|
| |
|
Sunny K. Park(2)
|
| | | $ | 250,020 | | |
|
H. Ross Arnold III(3)
|
| | |
$
|
200,010
|
| |
|
James R. Lientz, Jr.(4)
|
| | |
$
|
100,020
|
| |
| | | |
Shares Beneficially Owned
as of September 30, 2026 |
| |
Shares to be
Registered in the Offering |
| ||||||||||||
|
Name and Address of Beneficial Owner
|
| |
Number of
Shares |
| |
Percentage of
Voting Power |
| ||||||||||||
| Named Executive Officers and Directors: | | | | | | | | | | | | | | | | | | | |
|
Sarah R. Borders(1)
|
| | | | 61,276 | | | | | | * | | | | | | 53,260 | | |
|
Arthur F. Anton(2)
|
| | | | 31,826 | | | | | | * | | | | | | 31,826 | | |
|
James F. Deutsch(3)
|
| | | | 1,642,278 | | | | | | 14.43%(4) | | | | | | 1,642,278 | | |
|
Henchy R. Enden
|
| | | | — | | | | | | — | | | | | | — | | |
|
Ryan Glover(5)
|
| | | | 15,647 | | | | | | * | | | | | | 15,647 | | |
|
Craig Heiser(6)
|
| | | | 25,920 | | | | | | * | | | | | | 25,920 | | |
|
Bartow Morgan, Jr.(7)
|
| | | | 780,802 | | | | | | 7.41% | | | | | | 737,667 | | |
|
Mark Scheinfeld(8)
|
| | | | 116,779 | | | | | | 1.13% | | | | | | 115,654 | | |
|
R. Lee Tucker, Jr.(9)
|
| | | | 78,495 | | | | | | * | | | | | | 68,000 | | |
|
Richard Fairey(10)
|
| | | | 54,871 | | | | | | * | | | | | | 54,871 | | |
|
David Black(11)
|
| | | | 55,769 | | | | | | * | | | | | | 52,741 | | |
|
All directors and executive officers as a group (15 persons total)(12)
|
| | | | 2,966,080 | | | | | | 26.48% | | | | | | 2,894,317 | | |
| 5% Shareholders and Registered Shareholders: | | | | | | | | | | | | | | | | | | | |
|
Patriot Financial Partners III, LP(13)
|
| | | | 1,642,278 | | | | | | 14.43% | | | | | | 1,642,278 | | |
|
Fortress Investment Group LLC(14)
|
| | |
|
833,334
|
| | | |
|
4.85%(15)
|
| | | |
|
833,334
|
| |
|
AllianceBernstein LP(16)
|
| | | | 656,260 | | | | | | 6.35% | | | | | | 656,260 | | |
|
Commerce Street Financial Partners II, L.P.(17)
|
| | | | 543,478 | | | | | | 5.26% | | | | | | 543,478 | | |
|
Angel Oak Capital Advisors, LLC(18)
|
| | | | 50,000 | | | | | | * | | | | | | 50,000 | | |
|
Banc Funds Company LLC(19)
|
| | | | 200,000 | | | | | | 1.93% | | | | | | 200,000 | | |
|
Black Maple Capital Management LP(20)
|
| | | | 10,000 | | | | | | * | | | | | | 10,000 | | |
|
Choral Financial Fund, LP(21)
|
| | | | 25,000 | | | | | | * | | | | | | 25,000 | | |
|
Cutler Capital Management, LLC(22)
|
| | | | 25,000 | | | | | | * | | | | | | 25,000 | | |
|
Down Range Capital Management, LLC(23)
|
| | | | 5,000 | | | | | | * | | | | | | 5,000 | | |
|
EJF Capital LP(24)
|
| | | | 120,000 | | | | | | 1.16% | | | | | | 120,000 | | |
|
Ledyard Capital, LLC(25)
|
| | | | 10,000 | | | | | | * | | | | | | 10,000 | | |
|
Maltese Capital Management, LLC(26)
|
| | | | 461,294 | | | | | | 4.46% | | | | | | 461,294 | | |
|
The Manufacturer’s Life Insurance Company(27)
|
| | | | 175,000 | | | | | | 1.69% | | | | | | 175,000 | | |
|
Siena Capital Partners GP, LLC(28)
|
| | | | 75,000 | | | | | | * | | | | | | 75,000 | | |
| All Other Registered Shareholders: | | | | | | | | | | | | | | | | | | | |
|
J. Bradford Smith(29)
|
| | | | 708,414 | | | | | | 6.75% | | | | | | 708,414 | | |
|
James R. Lientz, Jr.
|
| | | | 16,334 | | | | | | * | | | | | | 16,334 | | |
|
Michael W. Clarke(30)
|
| | | | 2,500 | | | | | | * | | | | | | 2,500 | | |
|
David Fisher(31)
|
| | | | 14,470 | | | | | | * | | | | | | 14,470 | | |
|
H. Ross Arnold III
|
| | | | 115,886 | | | | | | 1.12% | | | | | | 115,886 | | |
|
J. Littleton Glover, Jr.
|
| | | | 8,974 | | | | | | * | | | | | | 8,974 | | |
|
Sunny K. Park
|
| | | | 24,986 | | | | | | * | | | | | | 24,986 | | |
|
H. Boyd Pettit III(32)
|
| | | | 65,267 | | | | | | * | | | | | | 65,267 | | |
| | | |
Page
|
| |||
| For the six months ended June 30, 2026 and 2025 (unaudited) | | | |||||
| | | | | F-2 | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| For the years ended December 31, 2025 and 2024 (audited) | | | |||||
| | | | | F-37 | | | |
| | | | | F-38 | | | |
| | | | | F-39 | | | |
| | | | | F-40 | | | |
| | | | | F-41 | | | |
| | | | | F-42 | | | |
| | | | | F-43 | | | |
| | | |
June 30,
2026 |
| |
December 31,
2025 |
| ||||||
| Assets | | | | | | | | | | | | | |
|
Cash and due from banks
|
| | | $ | 11,649 | | | | | $ | 7,026 | | |
|
Interest-bearing deposits with banks
|
| | | | 393,825 | | | | | | 235,704 | | |
|
Federal funds sold
|
| | | | 27,853 | | | | | | 37,643 | | |
|
Cash and cash equivalents
|
| | | | 433,327 | | | | | | 280,373 | | |
|
Debt securities available for sale (amortized cost of $78,592 and $54,581)
|
| | | | 75,087 | | | | | | 51,796 | | |
|
Debt securities held to maturity (fair value $48,663 and $40,128)
|
| | | | 49,360 | | | | | | 40,102 | | |
|
Other investments
|
| | | | 2,896 | | | | | | 2,585 | | |
|
Loans held for sale
|
| | | | 500,560 | | | | | | 505,360 | | |
|
Loans, net of unearned income
|
| | | | 2,089,860 | | | | | | 1,724,934 | | |
|
Allowance for credit losses
|
| | | | (28,955) | | | | | | (25,574) | | |
|
Loans, net
|
| | | | 2,060,905 | | | | | | 1,699,360 | | |
|
Premises and equipment, net
|
| | | | 17,953 | | | | | | 18,550 | | |
|
Operating lease right of use assets
|
| | | | 36,808 | | | | | | 36,578 | | |
|
Goodwill
|
| | | | 9,732 | | | | | | 4,809 | | |
|
Core deposit intangible
|
| | | | 10,477 | | | | | | 5,656 | | |
|
Cash value of bank owned life insurance
|
| | | | 35,760 | | | | | | 30,996 | | |
|
Accrued interest and other assets
|
| | | | 29,479 | | | | | | 26,167 | | |
|
Total assets
|
| | | $ | 3,262,344 | | | | | $ | 2,702,332 | | |
| Liabilities and Shareholders’ Equity | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | |
|
Noninterest-bearing
|
| | | $ | 667,359 | | | | | $ | 617,388 | | |
|
Interest-bearing
|
| | | | 2,171,263 | | | | | | 1,742,297 | | |
|
Total deposits
|
| | | | 2,838,622 | | | | | | 2,359,685 | | |
|
Subordinated notes, net
|
| | | | 75,405 | | | | | | 63,999 | | |
|
Junior subordinated debentures
|
| | | | 7,217 | | | | | | 7,217 | | |
|
Operating lease liabilities
|
| | | | 38,470 | | | | | | 38,071 | | |
|
Accrued interest and other liabilities
|
| | | | 23,971 | | | | | | 28,446 | | |
|
Total liabilities
|
| | | | 2,983,685 | | | | | | 2,497,418 | | |
| Commitments and contingencies – Note 15 | | | | | | | | | | | | | |
|
Preferred stock, $.01 par value, 10,000,000 authorized; no shares issued or outstanding
|
| | | | — | | | | | | — | | |
|
Common stock, $.01 par value, 40,000,000 shares authorized; 10,277,894 and 8,444,343 shares of common stock and non-voting common stock issued and outstanding
|
| | | | 103 | | | | | | 84 | | |
|
Non-voting common stock, $.01 par value, 10,000,000 shares authorized; 331,341 shares of non-voting common stock issued and outstanding
|
| | | | 3 | | | | | | — | | |
|
Additional paid-in capital
|
| | | | 214,318 | | | | | | 152,302 | | |
|
Retained earnings
|
| | | | 67,990 | | | | | | 54,694 | | |
|
Accumulated other comprehensive loss
|
| | | | (3,755) | | | | | | (2,166) | | |
|
Total shareholders’ equity
|
| | | | 278,659 | | | | | | 204,914 | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 3,262,344 | | | | | $ | 2,702,332 | | |
| | | |
2026
|
| |
2025
|
| ||||||
| Interest income: | | | | | | | | | | | | | |
|
Loans held for sale
|
| | | $ | 15,003 | | | | | $ | 14,389 | | |
|
Loans, including fees
|
| | | | 63,712 | | | | | | 56,094 | | |
|
Investment securities, taxable
|
| | | | 2,019 | | | | | | 1,844 | | |
|
Investment securities, tax free
|
| | | | 228 | | | | | | 174 | | |
|
Federal funds sold, deposits in banks and other investments
|
| | | | 3,729 | | | | | | 4,821 | | |
|
Total interest income
|
| | | | 84,691 | | | | | | 77,322 | | |
| Interest expense: | | | | | | | | | | | | | |
|
Deposits
|
| | | | 25,797 | | | | | | 26,383 | | |
|
Federal Home Loan Bank advances
|
| | | | 1,223 | | | | | | 2,387 | | |
|
Other borrowed funds
|
| | | | 1,748 | | | | | | 1,693 | | |
|
Total interest expense
|
| | | | 28,768 | | | | | | 30,463 | | |
|
Net interest income
|
| | | | 55,923 | | | | | | 46,859 | | |
|
Provision for credit losses – loans
|
| | | | 1,104 | | | | | | 3,171 | | |
|
Provision for credit losses – unfunded commitments
|
| | | | 1,104 | | | | | | — | | |
|
Net interest income after provision for credit losses
|
| | | | 53,715 | | | | | | 43,688 | | |
| Noninterest income: | | | | | | | | | | | | | |
|
Service charges and fees
|
| | | | 1,419 | | | | | | 1,005 | | |
|
Mortgage banking activity
|
| | | | 2,360 | | | | | | 1,025 | | |
|
Bank owned life insurance income
|
| | | | 462 | | | | | | 433 | | |
|
Gain on sale of loans
|
| | | | 908 | | | | | | 1,388 | | |
|
Other
|
| | | | 1,288 | | | | | | 2,357 | | |
|
Total noninterest income
|
| | | | 6,437 | | | | | | 6,208 | | |
| Noninterest expenses: | | | | | | | | | | | | | |
|
Salaries and employee benefits
|
| | | | 24,901 | | | | | | 22,058 | | |
|
Occupancy
|
| | | | 4,000 | | | | | | 4,186 | | |
|
FDIC assessment and other regulatory charges
|
| | | | 1,050 | | | | | | 1,099 | | |
|
Professional fees
|
| | | | 1,803 | | | | | | 1,516 | | |
|
Communications, data processing and equipment
|
| | | | 3,139 | | | | | | 2,979 | | |
|
Merger and conversion expense
|
| | | | 3,523 | | | | | | 6,553 | | |
|
Other
|
| | | | 3,764 | | | | | | 2,409 | | |
|
Total other noninterest expense
|
| | | | 42,180 | | | | | | 40,800 | | |
|
Income before income tax expense
|
| | | | 17,972 | | | | | | 9,096 | | |
|
Income tax expense
|
| | | | 4,676 | | | | | | 2,365 | | |
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | |
|
Basic earnings per common share (common stock and non-voting common stock)
|
| | | $ | 1.51 | | | | | $ | 0.84 | | |
|
Diluted earnings per common share (common stock and non-voting common stock)
|
| | | $ | 1.45 | | | | | $ | 0.82 | | |
| Weighted average common shares outstanding (common stock and non-voting common stock): | | | | | | | | | | | | | |
|
Basic
|
| | | | 8,819,729 | | | | | | 8,036,547 | | |
|
Diluted
|
| | | | 9,155,163 | | | | | | 8,243,927 | | |
| | | |
2026
|
| |
2025
|
| ||||||
|
Net income
|
| | | $ | 13,296 | | | | | $ | 6,731 | | |
| Other comprehensive (loss) income, net of tax: | | | | | | | | | | | | | |
|
Net unrealized holding (losses) gains on available for sale securities, net of tax (benefit) expense of $(187) and $84
|
| | | | (533) | | | | | | 240 | | |
|
Net unrealized holding (losses) gains on cash flow hedges, net of tax (benefit) expense of $(371) and $61
|
| | | | (1,056) | | | | | | 173 | | |
|
Other comprehensive (loss) income, net of tax
|
| | | | (1,589) | | | | | | 413 | | |
|
Comprehensive income
|
| | | $ | 11,707 | | | | | $ | 7,144 | | |
| | | |
Common
Shares |
| |
Common
Stock |
| |
Additional
Paid-in Capital |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
|
| ||||||||||||||||||
|
Balance, December 31, 2024
|
| | | | 7,358,356 | | | | | $ | 74 | | | | | $ | 126,096 | | | | | $ | 32,614 | | | | | $ | (3,256) | | | | | $ | 155,528 | | |
|
Stock-based compensation
expense |
| | | | — | | | | | | — | | | | | | 122 | | | | | | — | | | | | | — | | | | | | 122 | | |
|
Restricted stock units
|
| | | | 49,173 | | | | | | — | | | | | | 21 | | | | | | — | | | | | | — | | | | | | 21 | | |
|
Stock issuances
|
| | | | 63,045 | | | | | | — | | | | | | 1,449 | | | | | | — | | | | | | — | | | | | | 1,449 | | |
|
Issuance of common stock – PBC acquisition
|
| | | | 873,794 | | | | | | 9 | | | | | | 22,900 | | | | | | — | | | | | | — | | | | | | 22,909 | | |
|
Issuance of common stock upon exercise of stock options
|
| | | | 98,852 | | | | | | 1 | | | | | | 1,008 | | | | | | — | | | | | | — | | | | | | 1,009 | | |
|
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 6,731 | | | | | | — | | | | | | 6,731 | | |
|
Change in accumulated other comprehensive loss, net of tax
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 413 | | | | | | 413 | | |
|
Balance, June 30, 2025
|
| | | | 8,443,220 | | | | | $ | 84 | | | | | $ | 151,596 | | | | | $ | 39,345 | | | | | $ | (2,843) | | | | | $ | 188,182 | | |
| | | |
Common
Shares and Non-Voting Common Shares |
| |
Common
Stock and Non-Voting Common Stock |
| |
Additional
Paid-in Capital |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
|
| ||||||||||||||||||
|
Balance, December 31, 2025
|
| | | | 8,444,343 | | | | | $ | 84 | | | | | $ | 152,302 | | | | | $ | 54,694 | | | | | $ | (2,166) | | | | | $ | 204,914 | | |
|
Stock-based compensation
expense |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Restricted stock units
|
| | | | 34,699 | | | | | | — | | | | | | 323 | | | | | | — | | | | | | — | | | | | | 323 | | |
|
Stock issuances
|
| | | | 1,310,539 | | | | | | 14 | | | | | | 36,598 | | | | | | — | | | | | | — | | | | | | 36,612 | | |
|
Issuance of common stock – Tandem acquisition
|
| | | | 802,407 | | | | | | 8 | | | | | | 24,955 | | | | | | — | | | | | | — | | | | | | 24,963 | | |
|
Issuance of common stock upon exercise of stock options
|
| | | | 17,247 | | | | | | — | | | | | | 140 | | | | | | — | | | | | | — | | | | | | 140 | | |
|
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 13,296 | | | | | | — | | | | | | 13,296 | | |
|
Change in accumulated other comprehensive loss, net of tax
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,589) | | | | | | (1,589) | | |
|
Balance, June 30, 2026
|
| | | | 10,609,235 | | | | | $ | 106 | | | | | $ | 214,318 | | | | | $ | 67,990 | | | | | $ | (3,755) | | | | | $ | 278,659 | | |
| | | |
2026
|
| |
2025
|
| ||||||
| Cash flows from operating activities: | | | | | | | | | | | | | |
|
Net income
|
| | | $ | 13,296 | | | | | | 6,731 | | |
|
Adjustments to reconcile net income to net cash from operating activities:
|
| | | | | | | | | | | | |
|
Depreciation, amortization and accretion
|
| | | | (1,803) | | | | | | (568) | | |
|
Provision for credit losses
|
| | | | 2,208 | | | | | | 3,171 | | |
|
Net (gain) on sale of loans held for sale
|
| | | | (908) | | | | | | (1,388) | | |
|
Stock-based compensation
|
| | | | 323 | | | | | | 143 | | |
|
Amortization of operating lease right of use assets
|
| | | | 1,578 | | | | | | 1,548 | | |
|
Bank owned life insurance income
|
| | | | (463) | | | | | | (433) | | |
|
Loans held for sale purchase/originated
|
| | | | (4,490,225) | | | | | | (3,859,279) | | |
|
Loans held for sale sold
|
| | | | 4,495,933 | | | | | | 3,840,655 | | |
|
Change in:
|
| | | | | | | | | | | | |
|
Accrued interest receivable and other assets
|
| | | | (2,996) | | | | | | (3,797) | | |
|
Accrued interest payable and other liabilities
|
| | | | (5,610) | | | | | | 4,068 | | |
|
Net cash from (used in) operating activities
|
| | | | 11,333 | | | | | | (9,149) | | |
| Cash flows from investing activities: | | | | | | | | | | | | | |
|
Debt securities available for sale:
|
| | | | | | | | | | | | |
|
Proceeds from sales, maturities and paydowns
|
| | | | 60,145 | | | | | | 51,758 | | |
|
Purchases
|
| | | | (43,795) | | | | | | - | | |
|
Debt securities held to maturity:
|
| | | | | | | | | | | | |
|
Proceeds from sales, maturities and paydowns
|
| | | | 823 | | | | | | 943 | | |
|
Purchases
|
| | | | (9,954) | | | | | | (4,524) | | |
|
Purchases of other investments
|
| | | | (15,434) | | | | | | (16,623) | | |
|
Proceeds from sale of other investments
|
| | | | 16,428 | | | | | | 14,110 | | |
|
Proceeds from surrender of life insurance policy
|
| | | | 516 | | | | | | 1,106 | | |
|
Net change in loans
|
| | | | (124,109) | | | | | | (158,758) | | |
|
Purchases of premises and equipment
|
| | | | (122) | | | | | | (547) | | |
|
Proceeds from disposals of premises and equipment
|
| | | | 365 | | | | | | 56 | | |
|
Net cash acquired in business combination, net of cash paid
|
| | | | 18,095 | | | | | | 16,276 | | |
|
Net cash used in investing activities
|
| | | | (97,042) | | | | | | (96,203) | | |
| Cash flows from financing activities: | | | | | | | | | | | | | |
|
Net change in deposits
|
| | | | 224,911 | | | | | | (58,346) | | |
|
Proceeds from FHLB advances
|
| | | | 367,500 | | | | | | 325,000 | | |
|
Repayments of FHLB advances
|
| | | | (390,500) | | | | | | (283,000) | | |
|
Issuance of common stock
|
| | | | 36,752 | | | | | | 2,458 | | |
|
Net cash from financing activities
|
| | | | 238,663 | | | | | | (13,888) | | |
|
Net change in cash and cash equivalents
|
| | | $ | 152,954 | | | | | | (119,240) | | |
|
Cash and cash equivalents at beginning of period
|
| | | | 280,373 | | | | | | 267,814 | | |
|
Cash and cash equivalents at end of period
|
| | | $ | 433,327 | | | | | | 148,574 | | |
| Supplemental cash flow information: | | | | | | | | | | | | | |
|
Interest paid
|
| | | $ | 28,343 | | | | | | 31,261 | | |
|
Income taxes
|
| | | | 7,805 | | | | | | 5,777 | | |
| Supplemental noncash disclosures: | | | | | | | | | | | | | |
| Business Combination: | | | | | | | | | | | | | |
|
Fair value of tangible assets acquired, net of cash acquired
|
| | | $ | 287,514 | | | | | | 314,466 | | |
|
Goodwill and other intangible assets
|
| | | | 10,095 | | | | | | 10,979 | | |
|
Fair value of liabilities assumed
|
| | | | 290,741 | | | | | | 318,812 | | |
|
Common stock and equity-based awards issued
|
| | | | 24,963 | | | | | | 22,909 | | |
| | | |
Fair Value
|
| |||
| Assets Acquired: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 20,436 | | |
|
Debt securities available for sale
|
| | | | 43,378 | | |
|
Other investments
|
| | | | 662 | | |
|
Loans
|
| | | | 254,821 | | |
|
Allowance for credit losses
|
| | | | (1,364) | | |
|
Net loans
|
| | | | 253,457 | | |
|
Premises and equipment
|
| | | | 9,283 | | |
|
Core deposit intangible
|
| | | | 6,170 | | |
|
Cash value of bank owned life insurance
|
| | | | 4,436 | | |
|
Other assets
|
| | | | 3,250 | | |
|
Total assets acquired
|
| | | $ | 341,072 | | |
| Liabilities Assumed: | | | | | | | |
|
Deposits
|
| | | $ | 301,402 | | |
|
Federal Home Loan Bank advances
|
| | | | 8,000 | | |
|
Subordinated notes
|
| | | | 8,952 | | |
|
Other liabilities
|
| | | | 458 | | |
|
Total liabilities assumed
|
| | | | 318,812 | | |
|
Net assets acquired
|
| | | $ | 22,260 | | |
| | | |
Fair Value
|
| |||
| Purchase Price: | | | | | | | |
|
GBC common stock issued (in shares)
|
| | | | 873,794 | | |
|
Value of GBC common stock and equity-based awards consideration
|
| | | $ | 22,909 | | |
|
Cash consideration paid
|
| | | | 4,160 | | |
|
Total purchase price
|
| | | $ | 27,069 | | |
|
Goodwill
|
| | | $ | 4,809 | | |
| | |||||||
| | | |
March 1, 2025
|
| |||
|
Purchase price of PCD loans at acquisition
|
| | | $ | 5,264 | | |
|
Allowance for credit losses on PCD loans at acquisition
|
| | | | 1,364 | | |
|
Par value of PCD acquired loans at acquisition
|
| | | $ | 6,628 | | |
|
(in thousands)
|
| |
Six Months Ended
June 30, 2025 |
| |||
|
Total revenue, net of interest expense
|
| | | $ | 54,647 | | |
|
Net income
|
| | | | 12,789 | | |
| | | |
Fair Value
|
| |||
| Assets Acquired: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 28,660 | | |
|
Debt securities available for sale
|
| | | | 40,962 | | |
|
Other investments
|
| | | | 1,305 | | |
|
Loans
|
| | | | 240,056 | | |
|
Allowance for credit losses
|
| | | | (3,254) | | |
|
Net loans
|
| | | | 236,802 | | |
|
Premises and equipment
|
| | | | 636 | | |
|
Core deposit intangible
|
| | | | 5,172 | | |
|
Cash value of bank owned life insurance
|
| | | | 4,817 | | |
|
Other assets
|
| | | | 2,992 | | |
|
Total assets acquired
|
| | | $ | 321,346 | | |
| Liabilities Assumed: | | | | | | | |
|
Deposits
|
| | | $ | 253,968 | | |
|
Federal Home Loan Bank advances
|
| | | | 23,000 | | |
|
Subordinated notes
|
| | | | 11,933 | | |
|
Other liabilities
|
| | | | 1,840 | | |
|
Total liabilities assumed
|
| | | | 290,741 | | |
|
Net assets acquired
|
| | | $ | 30,605 | | |
| Purchase Price: | | | | | | | |
|
GBC common stock issued (in shares)
|
| | | | 802,407 | | |
|
Value of GBC common stock and equity-based awards consideration
|
| | | $ | 24,963 | | |
|
Cash consideration paid
|
| | | | 10,565 | | |
|
Total purchase price
|
| | | $ | 35,528 | | |
|
Goodwill
|
| | | $ | 4,923 | | |
| | | |
June 1, 2026
|
| |||
|
Purchase price of PCD loans at acquisition
|
| | | $ | 830 | | |
|
Allowance for credit losses on PCD loans at acquisition
|
| | | | 1,857 | | |
|
Par value of PCD acquired loans at acquisition
|
| | | $ | 2,687 | | |
| | | |
Six Months Ended
|
| |||||||||
|
(in thousands)
|
| |
June 30, 2026
|
| |
June 30, 2025
|
| ||||||
|
Total revenue, net of interest expense
|
| | | $ | 67,574 | | | | | $ | 60,060 | | |
|
Net income
|
| | | | 16,423 | | | | | | 13,830 | | |
| | | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair Value
|
| ||||||||||||
| June 30, 2026: | | | | | | | | | | | | | | | | ||||||||||
|
U.S. Treasury securities
|
| | | $ | 4,953 | | | | | $ | — | | | | | $ | (1) | | | | | $ | 4,952 | | |
|
U.S. government sponsored agencies
|
| | | | 2,984 | | | | | | — | | | | | | (6) | | | | | | 2,978 | | |
|
Residential mortgage-backed securities
|
| | | | 63,523 | | | | | | 7 | | | | | | (3,333) | | | | | | 60,197 | | |
|
Collateralized mortgage obligations
|
| | | | 5,869 | | | | | | — | | | | | | (174) | | | | | | 5,695 | | |
|
Corporate debt securities
|
| | | | 1,263 | | | | | | 21 | | | | | | (19) | | | | | | 1,265 | | |
| | | | | $ | 78,592 | | | | | $ | 28 | | | | | $ | (3,533) | | | | | $ | 75,087 | | |
| December 31, 2025: | | | | | | | | | | | | | | | | ||||||||||
|
U.S. Treasury securities
|
| | | $ | 21,863 | | | | | $ | 49 | | | | | $ | — | | | | | $ | 21,912 | | |
|
U.S. government sponsored agencies
|
| | | | 2,978 | | | | | | 16 | | | | | | — | | | | | | 2,994 | | |
|
Residential mortgage-backed securities
|
| | | | 27,673 | | | | | | 135 | | | | | | (2,874) | | | | | | 24,934 | | |
|
Collateralized mortgage obligations
|
| | | | 1,067 | | | | | | — | | | | | | (71) | | | | | | 996 | | |
|
Corporate debt securities
|
| | | | 1,000 | | | | | | — | | | | | | (40) | | | | | | 960 | | |
| | | | | $ | 54,581 | | | | | $ | 200 | | | | | $ | (2,985) | | | | | $ | 51,796 | | |
| | | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair Value
|
| ||||||||||||
| June 30, 2026: | | | | | | | | | | | | | | | | ||||||||||
|
Residential mortgage-backed securities
|
| | | $ | 14,846 | | | | | $ | 11 | | | | | $ | (222) | | | | | $ | 14,635 | | |
|
Collateralized mortgage obligations
|
| | | | 23,537 | | | | | | 22 | | | | | | (237) | | | | | | 23,322 | | |
|
State and political subdivisions
|
| | | | 10,977 | | | | | | 24 | | | | | | (295) | | | | | | 10,706 | | |
| | | | | $ | 49,360 | | | | | $ | 57 | | | | | $ | (754) | | | | | $ | 48,663 | | |
| December 31, 2025: | | | | | | | | | | | | | | | | ||||||||||
|
Residential mortgage-backed securities
|
| | | $ | 670 | | | | | $ | — | | | | | $ | (18) | | | | | $ | 652 | | |
|
Collateralized mortgage obligations
|
| | | | 28,488 | | | | | | 318 | | | | | | (59) | | | | | | 28,747 | | |
|
State and political subdivisions
|
| | | | 10,944 | | | | | | 81 | | | | | | (296) | | | | | | 10,729 | | |
| | | | | $ | 40,102 | | | | | $ | 399 | | | | | $ | (373) | | | | | $ | 40,128 | | |
| | | |
Less than 12 Months
|
| |
More than 12 Months
|
| |
Total
|
| |||||||||||||||||||||||||||
| | | |
Fair Value
|
| |
Gross
Unrealized Losses |
| |
Fair Value
|
| |
Gross
Unrealized Losses |
| |
Fair Value
|
| |
Gross
Unrealized Losses |
| ||||||||||||||||||
| June 30, 2026: | | | | | | | | | | | | | |||||||||||||||||||||||||
|
U.S. Treasury securities
|
| | | $ | 4,952 | | | | | $ | (1) | | | | | $ | — | | | | | $ | — | | | | | $ | 4,952 | | | | | $ | (1) | | |
|
U.S. government sponsored agencies
|
| | | | 2,978 | | | | | | (6) | | | | | | — | | | | | | — | | | | | | 2,978 | | | | | | (6) | | |
|
Residential mortgage-backed securities
|
| | | | 23,569 | | | | | | (334) | | | | | | 14,791 | | | | | | (2,999) | | | | | | 38,360 | | | | | | (3,333) | | |
|
Collateralized mortgage obligations
|
| | | | 4,789 | | | | | | (109) | | | | | | 906 | | | | | | (65) | | | | | | 5,695 | | | | | | (174) | | |
|
Corporate debt securities
|
| | | | — | | | | | | — | | | | | | 981 | | | | | | (19) | | | | | | 981 | | | | | | (19) | | |
| | | | | $ | 36,288 | | | | | $ | (450) | | | | | $ | 16,678 | | | | | $ | (3,083) | | | | | $ | 52,966 | | | | | $ | (3,533) | | |
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury securities
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
|
U.S. government sponsored agencies
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Residential mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | 15,533 | | | | | | (2,874) | | | | | | 15,533 | | | | | | (2,874) | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | — | | | | | | 996 | | | | | | (71) | | | | | | 996 | | | | | | (71) | | |
|
Corporate debt securities
|
| | | | — | | | | | | — | | | | | | 960 | | | | | | (40) | | | | | | 960 | | | | | | (40) | | |
| | | | | $ | — | | | | | $ | — | | | | | $ | 17,489 | | | | | $ | (2,985) | | | | | $ | 17,489 | | | | | $ | (2,985) | | |
| | | |
Number of
Securities |
| |
Aggregate
Depreciation |
| |||
|
U.S. Treasury securities
|
| | | | 1 | | | |
0.0%
|
|
|
U.S. government sponsored agencies
|
| | | | 1 | | | |
0.2%
|
|
|
Residential mortgage-backed securities
|
| | | | 20 | | | |
8.0%
|
|
|
Collateralized mortgage obligations
|
| | | | 2 | | | |
3.0%
|
|
|
Corporate debt securities
|
| | | | 1 | | | |
1.9%
|
|
| | | | | | 25 | | | |
6.3%
|
|
| | | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
|
Less than 1 year
|
| | | $ | 4,953 | | | | | $ | 4,952 | | |
|
1 to 5 years
|
| | | | 4,247 | | | | | | 4,243 | | |
|
5 to 10 years
|
| | | | — | | | | | | — | | |
|
Mortgage-backed securities
|
| | | | 69,392 | | | | | | 65,892 | | |
| | | | | $ | 78,592 | | | | | $ | 75,087 | | |
| | | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
|
Less than 1 year
|
| | | $ | — | | | | | $ | — | | |
|
1 to 5 years
|
| | | | 484 | | | | | | 483 | | |
|
5 to 10 years
|
| | | | 3,220 | | | | | | 3,200 | | |
|
Over 10 Years
|
| | | | 7,273 | | | | | | 7,023 | | |
|
Mortgage-backed securities
|
| | | | 38,383 | | | | | | 37,957 | | |
| | | | | $ | 49,360 | | | | | $ | 48,663 | | |
| | | |
2026
|
| |
2025
|
| ||||||
| Real estate loans: | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 269,655 | | | | | $ | 236,851 | | |
|
Single-family residential
|
| | | | 348,327 | | | | | | 276,719 | | |
|
Commercial real estate
|
| | | | 892,007 | | | | | | 679,103 | | |
|
Multifamily
|
| | | | 70,412 | | | | | | 66,341 | | |
|
Total real estate loans
|
| | | | 1,580,401 | | | | | | 1,259,014 | | |
|
Commercial and financial
|
| | | | 460,268 | | | | | | 428,006 | | |
|
Consumer
|
| | | | 54,844 | | | | | | 43,223 | | |
|
Total gross loans
|
| | | | 2,095,513 | | | | | | 1,730,243 | | |
|
Less: unearned loan fees
|
| | | | 5,653 | | | | | | 5,309 | | |
|
Less: allowance for credit losses
|
| | | | 28,955 | | | | | | 25,574 | | |
|
Total loans, net
|
| | | $ | 2,060,905 | | | | | $ | 1,699,360 | | |
| | | |
30 – 59
Days Past Due |
| |
60 – 89 Days
Past Due |
| |
90 or
More Days Past Due |
| |
Total
Past Due |
| |
Total
Current |
| |
Total
Loans |
| ||||||||||||||||||
| June 30, 2026: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 667 | | | | | $ | — | | | | | $ | — | | | | | $ | 667 | | | | | $ | 268,988 | | | | | $ | 269,655 | | |
|
Single-family residential
|
| | | | — | | | | | | 2,872 | | | | | | 1,115 | | | | | | 3,987 | | | | | | 344,340 | | | | | | 348,327 | | |
|
Commercial real estate
|
| | | | 3,200 | | | | | | 127 | | | | | | 38 | | | | | | 3,365 | | | | | | 888,642 | | | | | | 892,007 | | |
|
Multifamily
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 70,412 | | | | | | 70,412 | | |
|
Commercial and
financial |
| | | | 822 | | | | | | — | | | | | | 5,145 | | | | | | 5,967 | | | | | | 454,301 | | | | | | 460,268 | | |
|
Consumer
|
| | | | 540 | | | | | | 417 | | | | | | 39 | | | | | | 996 | | | | | | 53,848 | | | | | | 54,844 | | |
|
Total
|
| | | $ | 5,229 | | | | | $ | 3,416 | | | | | $ | 6,337 | | | | | $ | 14,982 | | | | | $ | 2,080,531 | | | | | $ | 2,095,513 | | |
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | — | | | | | $ | — | | | | | $ | 328 | | | | | $ | 328 | | | | | $ | 236,523 | | | | | $ | 236,851 | | |
|
Single-family residential
|
| | | | 1,330 | | | | | | 124 | | | | | | 300 | | | | | | 1,754 | | | | | | 274,965 | | | | | | 276,719 | | |
|
Commercial real estate
|
| | | | 147 | | | | | | — | | | | | | 429 | | | | | | 576 | | | | | | 678,527 | | | | | | 679,103 | | |
|
Multifamily
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 66,341 | | | | | | 66,341 | | |
|
Commercial and
financial |
| | | | 720 | | | | | | 3,815 | | | | | | 3,447 | | | | | | 7,982 | | | | | | 420,024 | | | | | | 428,006 | | |
|
Consumer
|
| | | | — | | | | | | 9 | | | | | | — | | | | | | 9 | | | | | | 43,214 | | | | | | 43,223 | | |
|
Total
|
| | | $ | 2,197 | | | | | $ | 3,948 | | | | | $ | 4,504 | | | | | $ | 10,649 | | | | | $ | 1,719,594 | | | | | $ | 1,730,243 | | |
|
June 30, 2026:
|
| |
Nonaccrual
|
| |
Nonaccrual
Loans with no Allowance For Credit Losses |
| |
Loans Past Due
90 Days or More and Accruing |
| |||||||||
|
Construction and land development
|
| | | $ | — | | | | | | — | | | | | | — | | |
|
Single-family residential
|
| | | | 3,338 | | | | | | 1,470 | | | | | | — | | |
|
Commercial real estate
|
| | | | 539 | | | | | | 502 | | | | | | — | | |
|
Commercial and financial
|
| | | | 13,391 | | | | | | 1,065 | | | | | | — | | |
| Consumer | | | | | — | | | | | | — | | | | | | 39 | | |
|
Total loans
|
| | | $ | 17,268 | | | | | | 3,037 | | | | | | 39 | | |
|
December 31, 2025:
|
| |
Nonaccrual
|
| |
Nonaccrual
Loans with no Allowance For Credit Losses |
| |
Loans Past Due
90 Days or More and Accruing |
| |||||||||
|
Construction and land development
|
| | | $ | 328 | | | | | | 328 | | | | | | — | | |
|
Single-family residential
|
| | | | 2,359 | | | | | | 516 | | | | | | — | | |
|
Commercial real estate
|
| | | | 577 | | | | | | 565 | | | | | | — | | |
|
Commercial and financial
|
| | | | 11,410 | | | | | | 467 | | | | | | — | | |
|
Consumer
|
| | | | — | | | | | | — | | | | | | — | | |
|
Total loans
|
| | | $ | 14,674 | | | | | | 1,876 | | | | | | — | | |
|
June 30, 2026:
|
| |
Balance
|
| |
Allowance
for Credit Losses |
| ||||||
|
Construction and land development
|
| | | $ | — | | | | | $ | — | | |
|
Single-family residential
|
| | | | 1,891 | | | | | | 218 | | |
|
Commercial real estate
|
| | | | 1,562 | | | | | | — | | |
|
Commercial and financial
|
| | | | 17,429 | | | | | | 2,292 | | |
|
Total
|
| | | $ | 20,882 | | | | | $ | 2,510 | | |
|
December 31, 2025:
|
| |
Balance
|
| |
Allowance
for Credit Losses |
| ||||||
|
Construction and land development
|
| | | $ | 328 | | | | | $ | — | | |
|
Single-family residential
|
| | | | 1,827 | | | | | | — | | |
|
Commercial real estate
|
| | | | 660 | | | | | | — | | |
|
Commercial and financial
|
| | | | 15,112 | | | | | | 1,715 | | |
|
Total
|
| | | $ | 17,927 | | | | | $ | 1,715 | | |
|
Term Loans by Origination Year
As of June 30, 2026 |
| |
2026
|
| |
2025
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
Prior
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||
| Construction and land development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 79,085 | | | | | | 103,223 | | | | | | 45,810 | | | | | | 1,741 | | | | | | 1,761 | | | | | | 1,577 | | | | | | 36,458 | | | | | | 269,655 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Construction and land development
|
| | | | 79,085 | | | | | | 103,223 | | | | | | 45,810 | | | | | | 1,741 | | | | | | 1,761 | | | | | | 1,577 | | | | | | 36,458 | | | | | | 269,655 | | |
|
2026 gross charge-offs
|
| | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Single-family residential | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 51,267 | | | | | | 56,870 | | | | | | 81,732 | | | | | | 28,578 | | | | | | 34,848 | | | | | | 73,567 | | | | | | 17,577 | | | | | | 344,439 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | 44 | | | | | | 220 | | | | | | 59 | | | | | | — | | | | | | 323 | | |
|
Substandard
|
| | | | — | | | | | | 2,898 | | | | | | — | | | | | | — | | | | | | 342 | | | | | | 325 | | | | | | — | | | | | | 3,565 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Single-family residential
|
| | | | 51,267 | | | | | | 59,768 | | | | | | 81,732 | | | | | | 28,622 | | | | | | 35,410 | | | | | | 73,951 | | | | | | 17,577 | | | | | | 348,327 | | |
|
Gross Charge-Offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 238,604 | | | | | | 204,167 | | | | | | 131,323 | | | | | | 69,817 | | | | | | 95,688 | | | | | | 120,171 | | | | | | 11,962 | | | | | | 871,732 | | |
|
Special Mention
|
| | | | — | | | | | | 11,583 | | | | | | 8,058 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,641 | | |
|
Substandard
|
| | | | — | | | | | | 375 | | | | | | — | | | | | | — | | | | | | — | | | | | | 259 | | | | | | — | | | | | | 634 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial real estate
|
| | | | 238,604 | | | | | | 216,125 | | | | | | 139,381 | | | | | | 69,817 | | | | | | 95,688 | | | | | | 120,430 | | | | | | 11,962 | | | | | | 892,007 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 7,939 | | | | | | 6,277 | | | | | | 36,768 | | | | | | — | | | | | | 4,898 | | | | | | 14,530 | | | | | | — | | | | | | 70,412 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Multifamily
|
| | | | 7,939 | | | | | | 6,277 | | | | | | 36,768 | | | | | | — | | | | | | 4,898 | | | | | | 14,530 | | | | | | — | | | | | | 70,412 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Commercial and financial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 44,848 | | | | | | 112,023 | | | | | | 28,980 | | | | | | 23,787 | | | | | | 22,216 | | | | | | 11,213 | | | | | | 189,544 | | | | | | 432,611 | | |
|
Special Mention
|
| | | | 620 | | | | | | 3,760 | | | | | | 78 | | | | | | — | | | | | | — | | | | | | 228 | | | | | | 2,050 | | | | | | 6,736 | | |
|
Substandard
|
| | | | 2,501 | | | | | | 5,453 | | | | | | 1,669 | | | | | | 268 | | | | | | 925 | | | | | | 9,601 | | | | | | 504 | | | | | | 20,921 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial and financial
|
| | | | 47,969 | | | | | | 121,236 | | | | | | 30,727 | | | | | | 24,055 | | | | | | 23,141 | | | | | | 21,042 | | | | | | 192,098 | | | | | | 460,268 | | |
|
Term Loans by Origination Year
As of June 30, 2026 |
| |
2026
|
| |
2025
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
Prior
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||
|
Gross charge-offs
|
| | |
|
—
|
| | | | | 912 | | | | | | — | | | | | | — | | | | | | — | | | | | | 96 | | | | | | — | | | | | | 1,008 | | |
| Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 19,827 | | | | | | 14,235 | | | | | | 1,377 | | | | | | 107 | | | | | | 37 | | | | | | 18,986 | | | | | | 275 | | | | | | 54,844 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Consumer
|
| | | | 19,827 | | | | | | 14,235 | | | | | | 1,377 | | | | | | 107 | | | | | | 37 | | | | | | 18,986 | | | | | | 275 | | | | | | 54,844 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Term Loans by Origination Year
As of December 31, 2025 |
| |
2025
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
Prior
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||
| Construction and land development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 160,577 | | | | | | 64,593 | | | | | | 4,669 | | | | | | 269 | | | | | | 91 | | | | | | 87 | | | | | | 6,237 | | | | | | 236,523 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | 328 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 328 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Construction and land development
|
| | | | 160,577 | | | | | | 64,921 | | | | | | 4,669 | | | | | | 269 | | | | | | 91 | | | | | | 87 | | | | | | 6,237 | | | | | | 236,851 | | |
|
Gross charge-offs
|
| | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | 59 | | | | | | — | | | | | | — | | | | | | 59 | | |
| Single-family residential | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 52,712 | | | | | | 83,281 | | | | | | 29,243 | | | | | | 33,681 | | | | | | 67,126 | | | | | | 4,715 | | | | | | 2,083 | | | | | | 272,841 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | 29 | | | | | | 88 | | | | | | 58 | | | | | | — | | | | | | — | | | | | | 175 | | |
|
Substandard
|
| | | | 2,958 | | | | | | — | | | | | | — | | | | | | 399 | | | | | | 30 | | | | | | 316 | | | | | | — | | | | | | 3,703 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Single-family residential
|
| | | | 55,670 | | | | | | 83,281 | | | | | | 29,272 | | | | | | 34,168 | | | | | | 67,214 | | | | | | 5,031 | | | | | | 2,083 | | | | | | 276,719 | | |
|
Gross charge-offs
|
| | |
|
—
|
| | | | | — | | | | | | 75 | | | | | | 109 | | | | | | — | | | | | | — | | | | | | — | | | | | | 184 | | |
| Commercial Real Estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 220,125 | | | | | | 132,715 | | | | | | 78,279 | | | | | | 73,280 | | | | | | 137,526 | | | | | | 24,579 | | | | | | 3,872 | | | | | | 670,376 | | |
|
Special Mention
|
| | | | — | | | | | | 8,055 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,055 | | |
|
Substandard
|
| | | | 417 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 255 | | | | | | — | | | | | | 672 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial Real Estate
|
| | | | 220,542 | | | | | | 140,770 | | | | | | 78,279 | | | | | | 73,280 | | | | | | 137,526 | | | | | | 24,834 | | | | | | 3,872 | | | | | | 679,103 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Term Loans by Origination Year
As of December 31, 2025 |
| |
2025
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
Prior
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||
| Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 9,545 | | | | | | 29,332 | | | | | | — | | | | | | 14,279 | | | | | | 13,185 | | | | | | — | | | | | | — | | | | | | 66,341 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Multifamily
|
| | | | 9,545 | | | | | | 29,332 | | | | | | — | | | | | | 14,279 | | | | | | 13,185 | | | | | | — | | | | | | — | | | | | | 66,341 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Commercial and financial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 123,805 | | | | | | 34,517 | | | | | | 23,596 | | | | | | 23,667 | | | | | | 10,760 | | | | | | 1,775 | | | | | | 185,744 | | | | | | 403,864 | | |
|
Special Mention
|
| | | | 4,276 | | | | | | — | | | | | | 181 | | | | | | — | | | | | | — | | | | | | 335 | | | | | | — | | | | | | 4,792 | | |
|
Substandard
|
| | | | 1,894 | | | | | | — | | | | | | 321 | | | | | | 4,766 | | | | | | 7,041 | | | | | | 1,329 | | | | | | 3,999 | | | | | | 19,350 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial and financial
|
| | | | 129,975 | | | | | | 34,517 | | | | | | 24,098 | | | | | | 28,433 | | | | | | 17,801 | | | | | | 3,439 | | | | | | 189,743 | | | | | | 428,006 | | |
|
Gross charge-offs
|
| | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | 762 | | | | | | — | | | | | | — | | | | | | 762 | | |
| Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 21,755 | | | | | | 1,956 | | | | | | 131 | | | | | | 50 | | | | | | 19,324 | | | | | | 7 | | | | | | — | | | | | | 43,223 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Consumer
|
| | | | 21,755 | | | | | | 1,956 | | | | | | 131 | | | | | | 50 | | | | | | 19,324 | | | | | | 7 | | | | | | — | | | | | | 43,223 | | |
|
Gross charge-offs
|
| | | | — | | | | | | 12 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12 | | |
|
June 30, 2026:
|
| |
Construction
and Land Development |
| |
Single-
Family Residential |
| |
Commercial
Real Estate |
| |
Multifamily
|
| |
Commercial
and Financial |
| |
Consumer
|
| |
Total
|
| |||||||||||||||||||||
| Allowance for credit losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Beginning balance
|
| | | $ | 4,496 | | | | | $ | 7,048 | | | | | $ | 4,453 | | | | | $ | 514 | | | | | $ | 8,607 | | | | | $ | 456 | | | | | $ | 25,574 | | |
|
Provision for credit
losses |
| | | | (558) | | | | | | 642 | | | | | | 144 | | | | | | (123) | | | | | | 1,250 | | | | | | (251) | | | | | | 1,104 | | |
|
Initial ACL on seasoned loans
|
| | | | 183 | | | | | | 116 | | | | | | 591 | | | | | | 5 | | | | | | 498 | | | | | | 4 | | | | | | 1,397 | | |
|
Initial ACL on PCD
loans |
| | | | 73 | | | | | | 507 | | | | | | 60 | | | | | | — | | | | | | 1,217 | | | | | | — | | | | | | 1,857 | | |
|
Charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,008) | | | | | | — | | | | | | (1,008) | | |
|
Recoveries
|
| | | | 7 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 24 | | | | | | 31 | | |
|
Ending balance
|
| | | $ | 4,200 | | | | | $ | 8,313 | | | | | $ | 5,248 | | | | | $ | 396 | | | | | $ | 10,565 | | | | | $ | 233 | | | | | $ | 28,955 | | |
|
June 30, 2025:
|
| |
Construction
and Land Development |
| |
Single-
Family Residential |
| |
Commercial
Real Estate |
| |
Multifamily
|
| |
Commercial
and Financial |
| |
Consumer
|
| |
Total
|
| |||||||||||||||||||||
| Allowance for credit losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Beginning balance
|
| | | $ | 2,817 | | | | | $ | 6,854 | | | | | $ | 4,014 | | | | | $ | 698 | | | | | $ | 5,456 | | | | | $ | 761 | | | | | $ | 20,600 | | |
|
Provision for credit
losses |
| | | | 1,140 | | | | | | 99 | | | | | | 575 | | | | | | (279) | | | | | | 1,512 | | | | | | 124 | | | | | | 3,171 | | |
|
Initial ACL on PCD
loans |
| | | | — | | | | | | 135 | | | | | | 7 | | | | | | — | | | | | | 1,221 | | | | | | — | | | | | | 1,363 | | |
|
Charge-offs
|
| | | | (59) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (59) | | |
|
Recoveries
|
| | | | — | | | | | | 2 | | | | | | — | | | | | | — | | | | | | 14 | | | | | | 1 | | | | | | 17 | | |
|
Ending balance
|
| | | $ | 3,898 | | | | | $ | 7,090 | | | | | $ | 4,596 | | | | | $ | 419 | | | | | $ | 8,203 | | | | | $ | 886 | | | | | $ | 25,092 | | |
| | | |
2026
|
| |
2025
|
| ||||||
|
Land
|
| | | $ | 4,320 | | | | | $ | 4,320 | | |
|
Buildings
|
| | | | 6,204 | | | | | | 6,204 | | |
|
Furniture, fixtures and equipment
|
| | | | 8,657 | | | | | | 8,390 | | |
|
Leasehold improvements
|
| | | | 9,012 | | | | | | 8,886 | | |
| | | | | | 28,193 | | | | | | 27,800 | | |
|
Less: Accumulated depreciation
|
| | | | (10,240) | | | | | | (9,250) | | |
| | | | | $ | 17,953 | | | | | $ | 18,550 | | |
| | | |
2026
|
| |
2025
|
| ||||||
|
Operating lease right of use assets
|
| | | $ | 36,808 | | | | | $ | 36,578 | | |
|
Operating lease liabilities
|
| | | $ | 38,470 | | | | | $ | 38,071 | | |
|
Weighted average remaining lease term (years)
|
| | | | 12.72 | | | | | | 12.77 | | |
|
Weighted average discount rate
|
| | | | 4.13% | | | | | | 4.03% | | |
| | | |
2026
|
| |
2025
|
| ||||||
|
Core deposit intangible
|
| | | $ | 11,342 | | | | | $ | 6,170 | | |
|
Less: accumulated amortization
|
| | | | (865) | | | | | | (514) | | |
|
Net core deposit intangible
|
| | | | 10,477 | | | | | | 5,656 | | |
|
Goodwill
|
| | | | 9,732 | | | | | | 4,809 | | |
|
Total goodwill and other intangible assets, net
|
| | | $ | 20,209 | | | | | $ | 10,465 | | |
| | | |
2026
|
| |
2025
|
| ||||||
|
Noninterest-bearing demand deposits
|
| | | $ | 667,359 | | | | | $ | 617,388 | | |
|
Interest-bearing demand deposits
|
| | | | 402,874 | | | | | | 344,982 | | |
|
Money market and savings deposits
|
| | | | 1,078,437 | | | | | | 727,623 | | |
|
Time deposits
|
| | | | 689,952 | | | | | | 669,692 | | |
| | | | | $ | 2,838,622 | | | | | $ | 2,359,685 | | |
| | | |
2026
|
| |
2025
|
| ||||||
|
Balance at beginning of year
|
| | | $ | 1,839 | | | | | $ | 868 | | |
|
New loans and advances
|
| | | | 7 | | | | | | 508 | | |
|
Repayments
|
| | | | (320) | | | | | | (349) | | |
|
Effect of changes in composition of related parties
|
| | | | — | | | | | | 812 | | |
|
Balance at end of period
|
| | | $ | 1,526 | | | | | $ | 1,839 | | |
| | | |
Shares
|
| |
Weighted Average
Grant Date Fair Value |
| ||||||
|
Outstanding, December 31, 2025
|
| | | | 121,170 | | | | | $ | 22.40 | | |
|
Granted
|
| | | | 53,285 | | | | | $ | 30.00 | | |
|
Vested
|
| | | | (34,699) | | | | | $ | 24.12 | | |
|
Forfeited
|
| | | | (11,407) | | | | | $ | 24.16 | | |
|
Outstanding, June 30, 2026
|
| | | | 128,349 | | | | | $ | 25.81 | | |
| | | |
Shares
|
| |
Weighted Average
Exercise Price |
| |
Weighted
Average Remaining Life (Years) |
| |||||||||
|
Outstanding, December 31, 2025
|
| | | | 98,844 | | | | | $ | 12.70 | | | | | | 3.97 | | |
|
Granted
|
| | | | — | | | | | | — | | | | | | | | |
|
Exercise of stock options
|
| | | | (17,247) | | | | | | 8.09 | | | | | | | | |
|
Rollover options
|
| | | | 87,246 | | | | | | 20.95 | | | | | | | | |
|
Forfeited
|
| | | | — | | | | | | — | | | | | | | | |
|
Outstanding, June 30, 2026
|
| | | | 168,843 | | | | | $ | 18.55 | | | | | | 4.04 | | |
| | | |
2026
|
| |
2025
|
| ||||||
| Financial instruments whose contract amounts represent credit risk: | | | | | | | | | | | | | |
|
Commitments to extend credit
|
| | | $ | 481,518 | | | | | $ | 388,867 | | |
|
Financial and performance letters of credit
|
| | | | 5,558 | | | | | | 5,533 | | |
| | | | | $ | 487,076 | | | | | $ | 394,400 | | |
| | | |
2026
|
| |
2025
|
| ||||||
|
Net income available to common shareholders
|
| | | $ | 13,296 | | | | | $ | 6,731 | | |
|
Weighted average number of common shares outstanding
|
| | | | 8,819,729 | | | | | | 8,036,547 | | |
|
Effect of dilutive common stock awards
|
| | | | 335,434 | | | | | | 207,380 | | |
|
Diluted weighted average common shares outstanding
|
| | | | 9,155,163 | | | | | | 8,243,927 | | |
|
Basic earnings per common share
|
| | | $ | 1.51 | | | | | $ | 0.84 | | |
|
Diluted earnings per common share
|
| | | $ | 1.45 | | | | | $ | 0.82 | | |
| | | |
2026
|
| |
2025
|
| ||||||||||||||||||
| | | |
Notional
Amount |
| |
Fair Value
|
| |
Notional
Amount |
| |
Fair Value
|
| ||||||||||||
| Included in other assets: | | | | | | ||||||||||||||||||||
| Derivatives designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest rate hedges related to customer loans
|
| | | $ | 150,000 | | | | | $ | 439 | | | | | $ | 150,000 | | | | | $ | 1,001 | | |
|
Interest rate hedges related to customer deposits
|
| | | | 17,000 | | | | | | 146 | | | | | | 79,150 | | | | | | 761 | | |
|
Total included in other assets
|
| | | $ | 167,000 | | | | | $ | 585 | | | | | $ | 229,150 | | | | | $ | 1,762 | | |
| | | |
2026
|
| |
2025
|
| ||||||||||||||||||
| | | |
Notional
Amount |
| |
Fair Value
|
| |
Notional
Amount |
| |
Fair Value
|
| ||||||||||||
| Included in other liabilities: | | | | | | ||||||||||||||||||||
| Derivatives designated as hedging instruments: | | | | | | | | | | | | | | | | $ | | | | | | | | | |
|
Interest rate hedges related to customer loans
|
| | | $ | 100,000 | | | | | $ | (610) | | | | | $ | — | | | | | $ | — | | |
|
Interest rate hedges related to customer deposits
|
| | | | 59,322 | | | | | | (108) | | | | | | — | | | | | | — | | |
|
Total included in other liabilities
|
| | | $ | 159,322 | | | | | $ | (718) | | | | | $ | — | | | | | $ | — | | |
| | | |
Actual
|
| |
For Capital
Adequacy Purposes |
| |
To Be Well
Capitalized Under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||||
| June 30, 2026: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Total Capital to Risk-Weighted Assets
|
| | | $ | 364,873 | | | | | | 14.32% | | | | | $ | 203,803 | | | | | | 8.00% | | | | | $ | 254,754 | | | | | | 10.00% | | |
|
Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 269,422 | | | | | | 10.58% | | | | | $ | 152,852 | | | | | | 6.00% | | | | | $ | 203,803 | | | | | | 8.00% | | |
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 262,205 | | | | | | 10.29% | | | | | $ | 114,639 | | | | | | 4.50% | | | | | $ | 165,590 | | | | | | 6.50% | | |
|
Tier 1 Capital to Average Assets
|
| | | $ | 269,422 | | | | | | 9.43% | | | | | $ | 114,257 | | | | | | 4.00% | | | | | $ | 142,822 | | | | | | 5.00% | | |
| | | |
Actual
|
| |
For Capital
Adequacy Purposes |
| |
To Be Well
Capitalized Under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||||
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Total Capital to Risk-Weighted Assets
|
| | | $ | 295,392 | | | | | | 13.61% | | | | | $ | 173,647 | | | | | | 8.00% | | | | | $ | 217,059 | | | | | | 10.00% | | |
|
Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 203,832 | | | | | | 9.39% | | | | | $ | 130,235 | | | | | | 6.00% | | | | | $ | 173,647 | | | | | | 8.00% | | |
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 196,615 | | | | | | 9.06% | | | | | $ | 97,676 | | | | | | 4.50% | | | | | $ | 141,088 | | | | | | 6.50% | | |
|
Tier 1 Capital to Average Assets
|
| | | $ | 203,832 | | | | | | 7.64% | | | | | $ | 106,726 | | | | | | 4.00% | | | | | $ | 133,408 | | | | | | 5.00% | | |
| | | |
Actual
|
| |
For Capital
Adequacy Purposes |
| |
To Be Well
Capitalized Under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||||
| June 30, 2026: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Total Capital to Risk-Weighted Assets
|
| | | $ | 331,775 | | | | | | 13.05% | | | | | $ | 203,391 | | | | | | 8.00% | | | | | $ | 254,238 | | | | | | 10.00% | | |
|
Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 300,730 | | | | | | 11.83% | | | | | $ | 152,543 | | | | | | 6.00% | | | | | $ | 203,391 | | | | | | 8.00% | | |
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 300,730 | | | | | | 11.83% | | | | | $ | 114,407 | | | | | | 4.50% | | | | | $ | 165,255 | | | | | | 6.50% | | |
|
Tier 1 Capital to Average Assets
|
| | | $ | 300,730 | | | | | | 10.78% | | | | | $ | 111,587 | | | | | | 4.00% | | | | | $ | 139,484 | | | | | | 5.00% | | |
| | | |
Actual
|
| |
For Capital
Adequacy Purposes |
| |
To Be Well
Capitalized Under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||||
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Total Capital to Risk-Weighted Assets
|
| | | $ | 276,260 | | | | | | 12.74% | | | | | $ | 173,413 | | | | | | 8.00% | | | | | $ | 216,767 | | | | | | 10.00% | | |
|
Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 249,700 | | | | | | 11.52% | | | | | $ | 130,060 | | | | | | 6.00% | | | | | $ | 173,413 | | | | | | 8.00% | | |
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 249,700 | | | | | | 11.52% | | | | | $ | 97,545 | | | | | | 4.50% | | | | | $ | 140,898 | | | | | | 6.50% | | |
|
Tier 1 Capital to Average Assets
|
| | | $ | 249,700 | | | | | | 9.37% | | | | | $ | 106,983 | | | | | | 4.00% | | | | | $ | 133,729 | | | | | | 5.00% | | |
|
June 30, 2026:
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
| Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury securities
|
| | | $ | 4,952 | | | | | $ | — | | | | | $ | — | | | | | $ | 4,952 | | |
|
U.S. Government sponsored agencies
|
| | | | — | | | | | | 2,978 | | | | | | — | | | | | | 2,978 | | |
|
Residential mortgage-backed securities
|
| | | | — | | | | | | 60,197 | | | | | | — | | | | | | 60,197 | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | 5,695 | | | | | | — | | | | | | 5,695 | | |
|
Corporate debt securities
|
| | | | — | | | | | | 1,265 | | | | | | — | | | | | | 1,265 | | |
|
Derivative asset
|
| | | | — | | | | | | 585 | | | | | | — | | | | | | 585 | | |
|
Brokered time deposits
|
| | | | — | | | | | | 85,699 | | | | | | — | | | | | | 85,699 | | |
|
Derivative liability
|
| | | | — | | | | | | 718 | | | | | | — | | | | | | 718 | | |
|
December 31, 2025:
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
| Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury securities
|
| | | $ | 21,912 | | | | | $ | — | | | | | $ | — | | | | | $ | 21,912 | | |
|
U.S. Government sponsored agencies
|
| | | | — | | | | | | 2,994 | | | | | | — | | | | | | 2,994 | | |
|
Residential mortgage-backed securities
|
| | | | — | | | | | | 24,934 | | | | | | — | | | | | | 24,934 | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | 996 | | | | | | — | | | | | | 996 | | |
|
Corporate debt securities
|
| | | | — | | | | | | 960 | | | | | | — | | | | | | 960 | | |
|
Derivative asset
|
| | | | — | | | | | | 1,762 | | | | | | — | | | | | | 1,762 | | |
|
Brokered time deposits
|
| | | | — | | | | | | 90,743 | | | | | | — | | | | | | 90,743 | | |
| | | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
| June 30, 2026: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Collateral dependent loans
|
| | | $ | — | | | | | $ | — | | | | | $ | 18,372 | | | | | $ | 18,372 | | |
|
Total
|
| | | $ | — | | | | | $ | — | | | | | $ | 18,372 | | | | | $ | 18,372 | | |
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Collateral dependent loans
|
| | | $ | — | | | | | $ | — | | | | | $ | 16,212 | | | | | $ | 16,212 | | |
|
Total
|
| | | $ | — | | | | | $ | — | | | | | $ | 16,212 | | | | | $ | 16,212 | | |
|
June 30, 2026
|
| | ||||||||||||||||||||
| | | |
Fair Value
|
| |
Valuation Technique
|
| |
Unobservable Inputs
|
| |
Range of
Discounts |
| |
Weighted
Average Discount |
| | |||||
|
Collateral dependent loans
|
| | | $ | 18,372 | | | |
Third-party
appraisals |
| |
Collateral discounts and discount rates
|
| |
0% – 25%
|
| |
15%
|
| | | |
|
December 31, 2025
|
| ||||||||||||||||||
| | | |
Fair Value
|
| |
Valuation Technique
|
| |
Unobservable Inputs
|
| |
Range of
Discounts |
| |
Weighted
Average Discount |
| |||
|
Collateral dependent loans
|
| | | $ | 16,212 | | | |
Third-party appraisals
|
| |
Collateral discounts and discount rates
|
| |
0% – 15%
|
| |
5%
|
|
| | | |
Carrying
Amount |
| |
Estimated
Fair Value |
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||||||||
| June 30, 2026: | | | | | | | | | | | | ||||||||||||||||||||
| Financial Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 433,327 | | | | | $ | 433,327 | | | | | $ | 433,327 | | | | | $ | — | | | | | $ | — | | |
|
Debt securities held to maturity
|
| | | | 49,360 | | | | | | 48,663 | | | | | | — | | | | | | 48,663 | | | | | | — | | |
|
Other investments
|
| | | | 2,896 | | | | | | 2,896 | | | | | | — | | | | | | 2,896 | | | | | | — | | |
|
Loans held for sale
|
| | | | 500,560 | | | | | | 500,560 | | | | | | — | | | | | | 500,560 | | | | | | — | | |
|
Loans
|
| | | | 2,089,860 | | | | | | 2,074,942 | | | | | | — | | | | | | — | | | | | | 2,074,942 | | |
|
Accrued interest receivable
|
| | | | 11,199 | | | | | | 11,199 | | | | | | 11,199 | | | | | | — | | | | | | — | | |
| Financial Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Deposits
|
| | | $ | 2,752,923 | | | | | $ | 2,757,838 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,757,838 | | |
|
Borrowings
|
| | | | 82,622 | | | | | | 82,622 | | | | | | — | | | | | | — | | | | | | 82,622 | | |
|
Accrued interest payable
|
| | | | 3,296 | | | | | | 3,296 | | | | | | 3,296 | | | | | | — | | | | | | — | | |
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Financial Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 280,373 | | | | | | 280,373 | | | | | | 280,373 | | | | | | — | | | | | | — | | |
|
Debt securities held to maturity
|
| | | | 40,102 | | | | | | 40,128 | | | | | | — | | | | | | 40,128 | | | | | | — | | |
|
Other investments
|
| | | | 2,585 | | | | | | 2,585 | | | | | | — | | | | | | 2,585 | | | | | | — | | |
|
Loans held for sale
|
| | | | 505,360 | | | | | | 505,360 | | | | | | — | | | | | | 505,360 | | | | | | — | | |
|
Loans
|
| | | | 1,724,934 | | | | | | 1,705,306 | | | | | | — | | | | | | — | | | | | | 1,705,306 | | |
|
Accrued interest receivable
|
| | | | 10,829 | | | | | | 10,829 | | | | | | 10,829 | | | | | | — | | | | | | — | | |
| Financial Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Deposits
|
| | | $ | 2,268,942 | | | | | $ | 2,270,868 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,270,868 | | |
|
Borrowings
|
| | | | 71,216 | | | | | | 65,456 | | | | | | — | | | | | | — | | | | | | 65,456 | | |
|
Accrued interest payable
|
| | | | 2,741 | | | | | | 2,741 | | | | | | 2,741 | | | | | | — | | | | | | — | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Assets | | | | | | | | | | | | | |
|
Cash and due from banks
|
| | | $ | 7,026 | | | | | | 8,005 | | |
|
Interest-bearing deposits with banks
|
| | | | 235,704 | | | | | | 166,777 | | |
|
Federal funds sold
|
| | | | 37,643 | | | | | | 93,032 | | |
|
Cash and cash equivalents
|
| | | | 280,373 | | | | | | 267,814 | | |
|
Debt securities available for sale (amortized cost of $54,581 and $73,741)
|
| | | | 51,796 | | | | | | 69,708 | | |
|
Debt securities held to maturity (fair value $40,128 and $26,172)
|
| | | | 40,102 | | | | | | 26,740 | | |
|
Other investments
|
| | | | 2,585 | | | | | | 8,859 | | |
|
Loans held for sale
|
| | | | 505,360 | | | | | | 498,227 | | |
|
Loans, net of unearned income
|
| | | | 1,724,934 | | | | | | 1,312,293 | | |
|
Allowance for credit losses
|
| | | | (25,574) | | | | | | (20,600) | | |
|
Loans, net
|
| | | | 1,699,360 | | | | | | 1,291,693 | | |
|
Premises and equipment, net
|
| | | | 18,550 | | | | | | 10,729 | | |
|
Operating lease right of use assets
|
| | | | 36,578 | | | | | | 39,678 | | |
|
Goodwill
|
| | | | 4,809 | | | | | | — | | |
|
Core deposit intangible
|
| | | | 5,656 | | | | | | — | | |
|
Cash value of bank owned life insurance
|
| | | | 30,996 | | | | | | 26,765 | | |
|
Accrued interest and other assets
|
| | | | 26,167 | | | | | | 23,410 | | |
|
Total assets
|
| | | $ | 2,702,332 | | | | | | 2,263,623 | | |
| Liabilities and Shareholders’ Equity | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | |
|
Noninterest-bearing
|
| | | $ | 617,388 | | | | | | 393,720 | | |
|
Interest-bearing
|
| | | | 1,742,297 | | | | | | 1,434,905 | | |
|
Total deposits
|
| | | | 2,359,685 | | | | | | 1,828,625 | | |
|
Federal Home Loan Bank advances
|
| | | | — | | | | | | 150,000 | | |
|
Subordinated notes, net
|
| | | | 63,999 | | | | | | 54,671 | | |
|
Junior subordinated debentures
|
| | | | 7,217 | | | | | | 7,217 | | |
|
Operating lease liabilities
|
| | | | 38,071 | | | | | | 40,768 | | |
|
Accrued interest and other liabilities
|
| | | | 28,446 | | | | | | 26,814 | | |
|
Total liabilities
|
| | | | 2,497,418 | | | | | | 2,108,095 | | |
| Commitments and contingencies – Note 15 | | | | | | | | | | | | | |
|
Preferred stock, $.01 par value, 10,000,000 authorized; no shares issued or outstanding
|
| | | | — | | | | | | — | | |
|
Common stock, $.01 par value, 40,000,000 shares authorized; 8,444,343 and 7,358,356 shares issued and outstanding
|
| | | | 84 | | | | | | 74 | | |
|
Non-voting common stock, $.01 par value, 10,000,000 shares authorized; no shares of non-voting
common stock issued and outstanding |
| | | | — | | | | | | — | | |
|
Additional paid-in capital
|
| | | | 152,302 | | | | | | 126,096 | | |
|
Retained earnings
|
| | | | 54,694 | | | | | | 32,614 | | |
|
Accumulated other comprehensive loss
|
| | | | (2,166) | | | | | | (3,256) | | |
|
Total shareholders’ equity
|
| | | | 204,914 | | | | | | 155,528 | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 2,702,332 | | | | | | 2,263,623 | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Interest income: | | | | | | | | | | | | | |
|
Loans held for sale
|
| | | $ | 31,880 | | | | | | 26,024 | | |
|
Loans, including fees
|
| | | | 119,743 | | | | | | 92,049 | | |
|
Investment securities, taxable
|
| | | | 3,749 | | | | | | 3,375 | | |
|
Investment securities, tax free
|
| | | | 401 | | | | | | 130 | | |
|
Federal funds sold, deposits in banks and other investments
|
| | | | 9,099 | | | | | | 8,834 | | |
|
Total interest income
|
| | | | 164,872 | | | | | | 130,412 | | |
| Interest expense: | | | | | | | | | | | | | |
|
Deposits
|
| | | | 53,971 | | | | | | 50,981 | | |
|
Federal Home Loan Bank advances
|
| | | | 5,078 | | | | | | 4,645 | | |
|
Other borrowed funds
|
| | | | 3,445 | | | | | | 3,102 | | |
|
Total interest expense
|
| | | | 62,494 | | | | | | 58,728 | | |
|
Net interest income
|
| | | | 102,378 | | | | | | 71,684 | | |
|
Provision for credit losses – loans
|
| | | | 4,521 | | | | | | 8,120 | | |
|
Provision for credit losses – unfunded commitments
|
| | | | — | | | | | | 201 | | |
|
Net interest income after provision for credit losses
|
| | | | 97,857 | | | | | | 63,363 | | |
| Noninterest income: | | | | | | | | | | | | | |
|
Service charges and fees
|
| | | | 2,141 | | | | | | 1,142 | | |
|
Mortgage banking activity
|
| | | | 2,750 | | | | | | 1,775 | | |
|
Bank owned life insurance income
|
| | | | 901 | | | | | | 782 | | |
|
Gain on sale of loans
|
| | | | 1,564 | | | | | | 2,369 | | |
|
Other
|
| | | | 2,983 | | | | | | 1,238 | | |
|
Total noninterest income
|
| | | | 10,339 | | | | | | 7,306 | | |
| Noninterest expenses: | | | | | | | | | | | | | |
|
Salaries and employee benefits
|
| | | | 45,922 | | | | | | 37,779 | | |
|
Occupancy
|
| | | | 8,496 | | | | | | 8,572 | | |
|
FDIC assessment and other regulatory charges
|
| | | | 2,255 | | | | | | 1,881 | | |
|
Professional fees
|
| | | | 3,207 | | | | | | 2,882 | | |
|
Communications, data processing and equipment
|
| | | | 6,121 | | | | | | 4,402 | | |
|
Merger and conversion expense
|
| | | | 6,732 | | | | | | — | | |
|
Other
|
| | | | 5,624 | | | | | | 3,868 | | |
|
Total other noninterest expense
|
| | | | 78,357 | | | | | | 59,384 | | |
|
Income before income tax expense
|
| | | | 29,839 | | | | | | 11,285 | | |
|
Income tax expense
|
| | | | 7,759 | | | | | | 2,829 | | |
|
Net income
|
| | | $ | 22,080 | | | | | | 8,456 | | |
|
Basic earnings per common share
|
| | | $ | 2.68 | | | | | $ | 1.15 | | |
|
Diluted earnings per common share
|
| | | $ | 2.62 | | | | | $ | 1.12 | | |
| Weighted average common shares outstanding: | | | | | | | | | | | | | |
|
Basic
|
| | | | 8,238,252 | | | | | | 7,334,994 | | |
|
Diluted
|
| | | | 8,442,809 | | | | | | 7,532,802 | | |
| | | |
2025
|
| |
2024
|
| ||||||
|
Net income
|
| | | $ | 22,080 | | | | | | 8,456 | | |
| Other comprehensive income, net of tax: | | | | | | | | | | | | | |
|
Net unrealized holding gains on available for sale securities, net of tax expense of $325 and $27
|
| | | | 923 | | | | | | 78 | | |
|
Net unrealized holding gains on cash flow hedges, net of tax expense of $58 and $28
|
| | | | 167 | | | | | | 79 | | |
|
Other comprehensive income, net of tax
|
| | | | 1,090 | | | | | | 157 | | |
|
Comprehensive income
|
| | | $ | 23,170 | | | | | | 8,613 | | |
| | | |
Common
Shares |
| |
Common
Stock |
| |
Additional
Paid-in Capital |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
|
| ||||||||||||||||||
|
Balance, December 31, 2023
|
| | | | 7,307,687 | | | | | $ | 73 | | | | | | 124,871 | | | | | | 24,158 | | | | | | (3,413) | | | | | | 145,689 | | |
|
Stock-based compensation
expense |
| | | | — | | | | | | — | | | | | | 1,014 | | | | | | — | | | | | | — | | | | | | 1,014 | | |
|
Restricted stock units
|
| | | | 50,669 | | | | | | 1 | | | | | | 211 | | | | | | — | | | | | | — | | | | | | 212 | | |
|
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 8,456 | | | | | | — | | | | | | 8,456 | | |
|
Change in accumulated other comprehensive loss, net of tax
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 157 | | | | | | 157 | | |
|
Balance, December 31, 2024
|
| | | | 7,358,356 | | | | | | 74 | | | | | | 126,096 | | | | | | 32,614 | | | | | | (3,256) | | | | | | 155,528 | | |
|
Stock-based compensation
expense |
| | | | — | | | | | | — | | | | | | 688 | | | | | | — | | | | | | — | | | | | | 688 | | |
|
Restricted stock units
|
| | | | 50,296 | | | | | | — | | | | | | 161 | | | | | | — | | | | | | — | | | | | | 161 | | |
|
Stock issuances
|
| | | | 63,045 | | | | | | — | | | | | | 1,449 | | | | | | — | | | | | | — | | | | | | 1,449 | | |
|
Issuance of common stock – PBC acquisition
|
| | | | 873,794 | | | | | | 9 | | | | | | 22,900 | | | | | | — | | | | | | — | | | | | | 22,909 | | |
|
Issuance of common stock upon exercise of stock options
|
| | | | 98,852 | | | | | | 1 | | | | | | 1,008 | | | | | | — | | | | | | — | | | | | | 1,009 | | |
|
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 22,080 | | | | | | — | | | | | | 22,080 | | |
|
Change in accumulated other comprehensive loss, net of tax
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,090 | | | | | | 1,090 | | |
|
Balance, December 31, 2025
|
| | | | 8,444,343 | | | | | $ | 84 | | | | | | 152,302 | | | | | | 54,694 | | | | | | (2,166) | | | | | | 204,914 | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Cash flows from operating activities: | | | | | | | | | | | | | |
|
Net income
|
| | | $ | 22,080 | | | | | | 8,456 | | |
|
Adjustments to reconcile net income to net cash from operating activities:
|
| | | | | | | | | | | | |
|
Depreciation, amortization and accretion
|
| | | | (266) | | | | | | (633) | | |
|
Provision for credit losses
|
| | | | 4,521 | | | | | | 8,321 | | |
|
Deferred income tax benefit
|
| | | | (3,241) | | | | | | (1,562) | | |
|
Net (gain) on sale of loans held for sale
|
| | | | (1,564) | | | | | | (2,369) | | |
|
Stock-based compensation
|
| | | | 849 | | | | | | 1,225 | | |
|
Amortization of operating lease right of use assets
|
| | | | 3,100 | | | | | | 3,039 | | |
|
Bank owned life insurance income
|
| | | | (901) | | | | | | (782) | | |
|
Loans held for sale purchase/originated
|
| | | | (8,484,593) | | | | | | (5,694,263) | | |
|
Loans held for sale sold
|
| | | | 8,479,024 | | | | | | 5,411,437 | | |
|
Change in:
|
| | | | | | | | | | | | |
|
Accrued interest receivable and other assets
|
| | | | 333 | | | | | | 1,129 | | |
|
Accrued interest payable and other liabilities
|
| | | | 4,405 | | | | | | 8,015 | | |
|
Net cash from (used in) operating activities
|
| | | | 23,747 | | | | | | (257,987) | | |
| Cash flows from investing activities: | | | | | | | | | | | | | |
|
Debt securities available for sale:
|
| | | | | | | | | | | | |
|
Proceeds from sales, maturities and paydowns
|
| | | | 65,724 | | | | | | 13,236 | | |
|
Purchases
|
| | | | (9,941) | | | | | | (24,455) | | |
|
Debt securities held to maturity:
|
| | | | | | | | | | | | |
|
Proceeds from sales, maturities and paydowns
|
| | | | 2,544 | | | | | | 488 | | |
|
Purchases
|
| | | | (8,304) | | | | | | (8,102) | | |
|
Purchases of other investments
|
| | | | (34,571) | | | | | | (26,571) | | |
|
Proceeds from sale of other investments
|
| | | | 41,507 | | | | | | 21,800 | | |
|
Proceeds from surrender of life insurance policy
|
| | | | 1,106 | | | | | | — | | |
|
Net change in loans
|
| | | | (158,731) | | | | | | (214,793) | | |
|
Purchases of premises and equipment
|
| | | | (970) | | | | | | (220) | | |
|
Proceeds from disposals of premises and equipment
|
| | | | 56 | | | | | | — | | |
|
Net cash acquired in business combination, net of cash paid
|
| | | | 16,276 | | | | | | — | | |
|
Net cash used in investing activities
|
| | | | (85,304) | | | | | | (238,617) | | |
| Cash flows from financing activities: | | | | | | | | | | | | | |
|
Net change in deposits
|
| | | | 229,658 | | | | | | 392,425 | | |
|
Proceeds from FHLB advances
|
| | | | 850,000 | | | | | | 550,000 | | |
|
Repayments of FHLB advances
|
| | | | (1,008,000) | | | | | | (450,000) | | |
|
Issuance of common stock
|
| | | | 2,458 | | | | | | 1 | | |
|
Net cash from financing activities
|
| | | | 74,116 | | | | | | 492,426 | | |
|
Net change in cash and cash equivalents
|
| | | $ | 12,559 | | | | | | (4,178) | | |
|
Cash and cash equivalents at beginning of year
|
| | | | 267,814 | | | | | | 271,992 | | |
|
Cash and cash equivalents at end of year
|
| | | $ | 280,373 | | | | | | 267,814 | | |
| Supplemental cash flow information: | | | | | | | | | | | | | |
|
Interest paid
|
| | | $ | 63,541 | | | | | | 57,687 | | |
|
Income taxes
|
| | | | 9,679 | | | | | | 452 | | |
| Supplemental noncash disclosures: | | | | | | | | | | | | | |
| Business Combination: | | | | | | | | | | | | | |
|
Fair value of tangible assets acquired, net of cash acquired
|
| | | $ | 314,466 | | | | | | — | | |
|
Goodwill and other intangible assets
|
| | | | 10,979 | | | | | | — | | |
|
Fair value of liabilities assumed
|
| | | | 318,812 | | | | | | — | | |
|
Common stock and equity-based awards issued
|
| | | | 22,909 | | | | | | — | | |
| | | |
Fair Value
|
| |||
| Assets Acquired: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 20,436 | | |
|
Debt securities available for sale
|
| | | | 43,378 | | |
|
Other investments
|
| | | | 662 | | |
|
Loans
|
| | | | 254,821 | | |
|
Allowance for credit losses
|
| | | | (1,364) | | |
|
Net loans
|
| | | | 253,457 | | |
|
Premises and equipment
|
| | | | 9,283 | | |
|
Core deposit intangible
|
| | | | 6,170 | | |
|
Cash value of bank owned life insurance
|
| | | | 4,436 | | |
|
Other assets
|
| | | | 3,250 | | |
|
Total assets acquired
|
| | | $ | 341,072 | | |
| Liabilities Assumed: | | | | | | | |
|
Deposits
|
| | | $ | 301,402 | | |
|
Federal Home Loan Bank advances
|
| | | | 8,000 | | |
| | | |
Fair Value
|
| |||
|
Subordinated notes
|
| | | | 8,952 | | |
|
Other liabilities
|
| | | | 458 | | |
|
Total liabilities assumed
|
| | | | 318,812 | | |
|
Net assets acquired
|
| | | $ | 22,260 | | |
| Purchase Price: | | | | | | | |
|
GBC common stock issued (in shares)
|
| | | | 873,794 | | |
|
Value of GBC common stock and equity-based awards consideration
|
| | | $ | 22,909 | | |
|
Cash consideration paid
|
| | | | 4,160 | | |
|
Total purchase price
|
| | | $ | 27,069 | | |
|
Goodwill
|
| | | $ | 4,809 | | |
| | |||||||
| | | |
March 1, 2025
|
| |||
|
Purchase price of PCD loans at acquisition
|
| | | $ | 5,264 | | |
|
Allowance for credit losses on PCD loans at acquisition
|
| | | | 1,364 | | |
|
Par value of PCD acquired loans at acquisition
|
| | | $ | 6,628 | | |
|
(in thousands)
|
| |
2025
|
| |
2024
|
| ||||||
|
Total revenues, net of interest expense
|
| | | $ | 113,814 | | | | | $ | 93,191 | | |
|
Net income
|
| | | $ | 27,763 | | | | | $ | 10,273 | | |
| | | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair Value
|
| ||||||||||||
| December 31, 2025: | | | | | | ||||||||||||||||||||
|
U.S. Treasury securities
|
| | | $ | 21,863 | | | | | | 49 | | | | | | — | | | | | | 21,912 | | |
|
U.S. government sponsored agencies
|
| | | | 2,978 | | | | | | 16 | | | | | | — | | | | | | 2,994 | | |
|
Residential mortgage-backed securities
|
| | | | 27,673 | | | | | | 135 | | | | | | (2,874) | | | | | | 24,934 | | |
|
Collateralized mortgage obligations
|
| | | | 1,067 | | | | | | — | | | | | | (71) | | | | | | 996 | | |
|
Corporate debt securities
|
| | | | 1,000 | | | | | | — | | | | | | (40) | | | | | | 960 | | |
| | | | | $ | 54,581 | | | | | | 200 | | | | | | (2,985) | | | | | | 51,796 | | |
| December 31, 2024: | | | | | | ||||||||||||||||||||
|
U.S. Treasury securities
|
| | | $ | 38,511 | | | | | | 94 | | | | | | (41) | | | | | | 38,564 | | |
|
U.S. government sponsored agencies
|
| | | | 12,801 | | | | | | 40 | | | | | | (32) | | | | | | 12,809 | | |
|
Residential mortgage-backed securities
|
| | | | 20,312 | | | | | | — | | | | | | (3,890) | | | | | | 16,422 | | |
|
Collateralized mortgage obligations
|
| | | | 1,117 | | | | | | — | | | | | | (119) | | | | | | 998 | | |
|
Corporate debt securities
|
| | | | 1,000 | | | | | | — | | | | | | (85) | | | | | | 915 | | |
| | | | | $ | 73,741 | | | | | | 134 | | | | | | (4,167) | | | | | | 69,708 | | |
| | | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair Value
|
| ||||||||||||
| December 31, 2025: | | | | | | ||||||||||||||||||||
|
Residential mortgage-backed securities
|
| | | $ | 670 | | | | | | — | | | | | | (18) | | | | | | 652 | | |
|
Collateralized mortgage obligations
|
| | | | 28,488 | | | | | | 318 | | | | | | (59) | | | | | | 28,747 | | |
|
State and political subdivisions
|
| | | | 10,944 | | | | | | 81 | | | | | | (296) | | | | | | 10,729 | | |
| | | | | $ | 40,102 | | | | | | 399 | | | | | | (373) | | | | | | 40,128 | | |
| December 31, 2024: | | | | | | ||||||||||||||||||||
|
Residential mortgage-backed securities
|
| | | $ | 4,539 | | | | | | 15 | | | | | | (80) | | | | | | 4,474 | | |
|
Collateralized mortgage obligations
|
| | | | 18,559 | | | | | | 34 | | | | | | (265) | | | | | | 18,328 | | |
|
State and political subdivisions
|
| | | | 3,642 | | | | | | — | | | | | | (272) | | | | | | 3,370 | | |
| | | | | $ | 26,740 | | | | | | 49 | | | | | | (617) | | | | | | 26,172 | | |
| | | |
Less than 12 Months
|
| |
More than 12 Months
|
| |
Total
|
| |||||||||||||||||||||||||||
| | | |
Fair
Value |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| |
Gross
Unrealized Losses |
| ||||||||||||||||||
| December 31, 2025: | | | | | | | | ||||||||||||||||||||||||||||||
|
Residential mortgage-backed securities
|
| | | $ | — | | | | | | — | | | | | | 15,533 | | | | | | 2,874 | | | | | | 15,533 | | | | | | 2,874 | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | — | | | | | | 996 | | | | | | 71 | | | | | | 996 | | | | | | 71 | | |
|
Corporate debt securities
|
| | | | — | | | | | | — | | | | | | 960 | | | | | | 40 | | | | | | 960 | | | | | | 40 | | |
| | | | | $ | — | | | | | | — | | | | | | 17,489 | | | | | | 2,985 | | | | | | 17,489 | | | | | | 2,985 | | |
| December 31, 2024: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury securities
|
| | | $ | 14,645 | | | | | | 30 | | | | | | 6,969 | | | | | | 11 | | | | | | 21,614 | | | | | | 41 | | |
|
U.S. government sponsored agencies
|
| | | | 2,935 | | | | | | 32 | | | | | | — | | | | | | — | | | | | | 2,935 | | | | | | 32 | | |
|
Residential mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | 16,422 | | | | | | 3,890 | | | | | | 16,422 | | | | | | 3,890 | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | — | | | | | | 998 | | | | | | 119 | | | | | | 998 | | | | | | 119 | | |
|
Corporate debt securities
|
| | | | — | | | | | | — | | | | | | 915 | | | | | | 85 | | | | | | 915 | | | | | | 85 | | |
| | | | | $ | 17,580 | | | | | | 62 | | | | | | 25,304 | | | | | | 4,105 | | | | | | 42,884 | | | | | | 4,167 | | |
| | | |
Number of
Securities |
| |
Aggregate
Depreciation |
| |||
|
Residential mortgage-backed securities
|
| | | | 14 | | | |
15.6%
|
|
|
Collateralized mortgage obligations
|
| | | | 1 | | | |
6.6%
|
|
|
Corporate debt securities
|
| | | | 1 | | | |
4.0%
|
|
| | | | | | 16 | | | |
14.6%
|
|
| | | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
|
Less than 1 year
|
| | | $ | 21,863 | | | | | | 21,912 | | |
|
1 to 5 years
|
| | | | 2,978 | | | | | | 2,994 | | |
|
5 to 10 years
|
| | | | 1,000 | | | | | | 960 | | |
|
Mortgage-backed securities
|
| | | | 28,740 | | | | | | 25,930 | | |
| | | | | $ | 54,581 | | | | | | 51,796 | | |
| | | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
|
1 to 5 years
|
| | | $ | 481 | | | | | | 491 | | |
|
5 to 10 years
|
| | | | 3,194 | | | | | | 3,264 | | |
|
Over 10 Years
|
| | | | 7,269 | | | | | | 6,974 | | |
|
Mortgage-backed securities
|
| | | | 29,158 | | | | | | 29,399 | | |
| | | | | $ | 40,102 | | | | | | 40,128 | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Real estate loans: | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | 236,851 | | | | | | 152,455 | | |
|
Single-family residential
|
| | | | 276,719 | | | | | | 236,759 | | |
|
Commercial real estate
|
| | | | 679,103 | | | | | | 483,735 | | |
|
Multifamily
|
| | | | 66,341 | | | | | | 56,291 | | |
|
Total real estate loans
|
| | | | 1,259,014 | | | | | | 929,240 | | |
|
Commercial and financial
|
| | | | 428,006 | | | | | | 353,203 | | |
|
Consumer
|
| | | | 43,223 | | | | | | 34,676 | | |
|
Total gross loans
|
| | | | 1,730,243 | | | | | | 1,317,119 | | |
|
Less: unearned loan fees
|
| | | | 5,309 | | | | | | 4,826 | | |
|
Less: allowance for credit losses
|
| | | | 25,574 | | | | | | 20,600 | | |
|
Total loans, net
|
| | | $ | 1,699,360 | | | | | | 1,291,693 | | |
| | | |
30 – 59
Days Past Due |
| |
60 – 89
Days Past Due |
| |
90 or
More Days Past Due |
| |
Total
Past Due |
| |
Total
Current |
| |
Total
Loans |
| ||||||||||||||||||
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | — | | | | | | — | | | | | | 328 | | | | | | 328 | | | | | | 236,523 | | | | | | 236,851 | | |
|
Single-family residential
|
| | | | 1,330 | | | | | | 124 | | | | | | 300 | | | | | | 1,754 | | | | | | 274,965 | | | | | | 276,719 | | |
|
Commercial real estate
|
| | | | 147 | | | | | | — | | | | | | 429 | | | | | | 576 | | | | | | 678,527 | | | | | | 679,103 | | |
|
Multifamily
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 66,341 | | | | | | 66,341 | | |
|
Commercial and financial
|
| | | | 720 | | | | | | 3,815 | | | | | | 3,447 | | | | | | 7,982 | | | | | | 420,024 | | | | | | 428,006 | | |
|
Consumer
|
| | | | — | | | | | | 9 | | | | | | — | | | | | | 9 | | | | | | 43,214 | | | | | | 43,223 | | |
|
Total
|
| | | $ | 2,197 | | | | | | 3,948 | | | | | | 4,504 | | | | | | 10,649 | | | | | | 1,719,594 | | | | | | 1,730,243 | | |
| December 31, 2024: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Construction and land development
|
| | | $ | — | | | | | | — | | | | | | 387 | | | | | | 387 | | | | | | 152,068 | | | | | | 152,455 | | |
|
Single-family residential
|
| | | | 811 | | | | | | 40 | | | | | | 511 | | | | | | 1,362 | | | | | | 235,397 | | | | | | 236,759 | | |
|
Commercial real estate
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 483,735 | | | | | | 483,735 | | |
|
Multifamily
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 56,291 | | | | | | 56,291 | | |
|
Commercial and financial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 353,203 | | | | | | 353,203 | | |
|
Consumer
|
| | | | 691 | | | | | | 346 | | | | | | 212 | | | | | | 1,249 | | | | | | 33,427 | | | | | | 34,676 | | |
|
Total
|
| | | $ | 1,502 | | | | | | 386 | | | | | | 1,110 | | | | | | 2,998 | | | | | | 1,314,121 | | | | | | 1,317,119 | | |
| | | |
Nonaccrual
|
| |
Nonaccrual
Loans with no ACL |
| |
Loans Past Due
90 Days or More and Accruing |
| |||||||||
| December 31, 2025: | | | | | |||||||||||||||
|
Construction and land development
|
| | | $ | 328 | | | | | | 328 | | | | | | — | | |
|
Single-family residential
|
| | | | 2,359 | | | | | | 516 | | | | | | — | | |
|
Commercial real estate
|
| | | | 577 | | | | | | 565 | | | | | | — | | |
|
Commercial and financial
|
| | | | 11,410 | | | | | | 467 | | | | | | — | | |
|
Total loans
|
| | | $ | 14,674 | | | | | | 1,876 | | | | | | — | | |
| | | |
Nonaccrual
|
| |
Nonaccrual
Loans with no ACL |
| |
Loans Past Due
90 Days or More and Accruing |
| |||||||||
| December 31, 2024: | | | | | |||||||||||||||
|
Construction and land development
|
| | | $ | 387 | | | | | | 387 | | | | | | — | | |
|
Single-family residential
|
| | | | 558 | | | | | | 461 | | | | | | 149 | | |
|
Commercial real estate
|
| | | | 1,073 | | | | | | 1,073 | | | | | | — | | |
|
Commercial and financial
|
| | | | 4,660 | | | | | | — | | | | | | — | | |
|
Consumer
|
| | | | 665 | | | | | | 129 | | | | | | — | | |
|
Total loans
|
| | | $ | 7,343 | | | | | | 2,050 | | | | | | 149 | | |
| | | |
Balance
|
| |
Allowance for
Credit Losses |
| ||||||
| December 31, 2025: | | | | ||||||||||
|
Construction and land development
|
| | | $ | 328 | | | | | | — | | |
|
Single-family residential
|
| | | | 1,827 | | | | | | — | | |
|
Commercial real estate
|
| | | | 660 | | | | | | — | | |
|
Commercial and financial
|
| | | | 15,112 | | | | | | 1,715 | | |
|
Total
|
| | | $ | 17,927 | | | | | | 1,715 | | |
| | | |
Balance
|
| |
Allowance for
Credit Losses |
| ||||||
| December 31, 2024: | | | | ||||||||||
|
Single-family residential
|
| | | $ | 97 | | | | | | 6 | | |
|
Commercial real estate
|
| | | | 1,100 | | | | | | — | | |
|
Consumer
|
| | | | 576 | | | | | | 17 | | |
|
Total
|
| | | $ | 1,773 | | | | | | 23 | | |
|
Term Loans by Origination Year
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||||||||
|
As of December 31, 2025
|
| |
2025
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
Prior
|
| ||||||||||||||||||||||||||||||
| Construction and land development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 160,577 | | | | | | 64,593 | | | | | | 4,669 | | | | | | 269 | | | | | | 91 | | | | | | 87 | | | | | | 6,237 | | | | | | 236,523 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | 328 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 328 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Construction and land development
|
| | | | 160,577 | | | | | | 64,921 | | | | | | 4,669 | | | | | | 269 | | | | | | 91 | | | | | | 87 | | | | | | 6,237 | | | | | | 236,851 | | |
|
Gross charge-offs
|
| | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | 59 | | | | | | — | | | | | | — | | | | | | 59 | | |
| Single-family residential | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 52,712 | | | | | | 83,281 | | | | | | 29,243 | | | | | | 33,681 | | | | | | 67,126 | | | | | | 4,715 | | | | | | 2,083 | | | | | | 272,841 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | 29 | | | | | | 88 | | | | | | 58 | | | | | | — | | | | | | — | | | | | | 175 | | |
|
Substandard
|
| | | | 2,958 | | | | | | — | | | | | | — | | | | | | 399 | | | | | | 30 | | | | | | 316 | | | | | | — | | | | | | 3,703 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Single-family residential
|
| | | | 55,670 | | | | | | 83,281 | | | | | | 29,272 | | | | | | 34,168 | | | | | | 67,214 | | | | | | 5,031 | | | | | | 2,083 | | | | | | 276,719 | | |
|
Gross charge-offs
|
| | |
|
—
|
| | | | | — | | | | | | 75 | | | | | | 109 | | | | | | — | | | | | | — | | | | | | — | | | | | | 184 | | |
| Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 220,125 | | | | | | 132,715 | | | | | | 78,279 | | | | | | 73,280 | | | | | | 137,526 | | | | | | 24,579 | | | | | | 3,872 | | | | | | 670,376 | | |
|
Special Mention
|
| | | | — | | | | | | 8,055 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,055 | | |
|
Substandard
|
| | | | 417 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 255 | | | | | | — | | | | | | 672 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial real estate
|
| | | | 220,542 | | | | | | 140,770 | | | | | | 78,279 | | | | | | 73,280 | | | | | | 137,526 | | | | | | 24,834 | | | | | | 3,872 | | | | | | 679,103 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 9,545 | | | | | | 29,332 | | | | | | — | | | | | | 14,279 | | | | | | 13,185 | | | | | | — | | | | | | — | | | | | | 66,341 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Multifamily
|
| | | | 9,545 | | | | | | 29,332 | | | | | | — | | | | | | 14,279 | | | | | | 13,185 | | | | | | — | | | | | | — | | | | | | 66,341 | | |
|
Term Loans by Origination Year
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||||||||
|
As of December 31, 2025
|
| |
2025
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
Prior
|
| ||||||||||||||||||||||||||||||
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Commercial and financial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 123,805 | | | | | | 34,517 | | | | | | 23,596 | | | | | | 23,667 | | | | | | 10,760 | | | | | | 1,775 | | | | | | 185,744 | | | | | | 403,864 | | |
|
Special Mention
|
| | | | 4,276 | | | | | | — | | | | | | 181 | | | | | | — | | | | | | — | | | | | | 335 | | | | | | — | | | | | | 4,792 | | |
|
Substandard
|
| | | | 1,894 | | | | | | — | | | | | | 321 | | | | | | 4,766 | | | | | | 7,041 | | | | | | 1,329 | | | | | | 3,999 | | | | | | 19,350 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial and financial
|
| | | | 129,975 | | | | | | 34,517 | | | | | | 24,098 | | | | | | 28,433 | | | | | | 17,801 | | | | | | 3,439 | | | | | | 189,743 | | | | | | 428,006 | | |
|
Gross charge-offs
|
| | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | 762 | | | | | | — | | | | | | — | | | | | | 762 | | |
| Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 21,755 | | | | | | 1,956 | | | | | | 131 | | | | | | 50 | | | | | | 19,324 | | | | | | 7 | | | | | | — | | | | | | 43,223 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Consumer
|
| | | | 21,755 | | | | | | 1,956 | | | | | | 131 | | | | | | 50 | | | | | | 19,324 | | | | | | 7 | | | | | | — | | | | | | 43,223 | | |
|
Gross charge-offs
|
| | | | — | | | | | | 12 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12 | | |
|
Term Loans by Origination Year
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||||||||
|
As of December 31, 2024
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
2020
|
| |
Prior
|
| ||||||||||||||||||||||||||||||
| Construction and land development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 127,596 | | | | | | 16,883 | | | | | | 7,589 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 152,068 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | 387 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 387 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Construction and land development
|
| | | | 127,983 | | | | | | 16,883 | | | | | | 7,589 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 152,455 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Single-family residential | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 92,812 | | | | | | 22,518 | | | | | | 37,051 | | | | | | 62,839 | | | | | | 551 | | | | | | 3,051 | | | | | | 16,878 | | | | | | 235,700 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | 90 | | | | | | 60 | | | | | | — | | | | | | — | | | | | | 122 | | | | | | 272 | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | 147 | | | | | | 215 | | | | | | — | | | | | | 196 | | | | | | 229 | | | | | | 787 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Single-family residential
|
| | | | 92,812 | | | | | | 22,518 | | | | | | 37,288 | | | | | | 63,114 | | | | | | 551 | | | | | | 3,247 | | | | | | 17,229 | | | | | | 236,759 | | |
|
Term Loans by Origination Year
|
| |
Revolving
Loans Amortized Cost Basis |
| |
Total
|
| ||||||||||||||||||||||||||||||||||||||||||
|
As of December 31, 2024
|
| |
2024
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
2020
|
| |
Prior
|
| ||||||||||||||||||||||||||||||
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 119,789 | | | | | | 86,300 | | | | | | 121,255 | | | | | | 135,960 | | | | | | 2,164 | | | | | | 4,052 | | | | | | 2,016 | | | | | | 471,536 | | |
|
Special Mention
|
| | | | 11,098 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,098 | | |
|
Substandard
|
| | | | 497 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 604 | | | | | | — | | | | | | 1,101 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial real estate
|
| | | | 131,384 | | | | | | 86,300 | | | | | | 121,255 | | | | | | 135,960 | | | | | | 2,164 | | | | | | 4,656 | | | | | | 2,016 | | | | | | 483,735 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 15,743 | | | | | | 7,650 | | | | | | 14,531 | | | | | | 13,867 | | | | | | — | | | | | | — | | | | | | 4,500 | | | | | | 56,291 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Multifamily
|
| | | | 15,743 | | | | | | 7,650 | | | | | | 14,531 | | | | | | 13,867 | | | | | | — | | | | | | — | | | | | | 4,500 | | | | | | 56,291 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Commercial and financial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 69,027 | | | | | | 44,427 | | | | | | 28,416 | | | | | | 14,539 | | | | | | 31 | | | | | | 1,316 | | | | | | 182,777 | | | | | | 340,533 | | |
|
Special Mention
|
| | | | 241 | | | | | | — | | | | | | 645 | | | | | | 7,124 | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,010 | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | 4,369 | | | | | | — | | | | | | — | | | | | | — | | | | | | 291 | | | | | | 4,660 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Commercial and financial
|
| | | | 69,268 | | | | | | 44,427 | | | | | | 33,430 | | | | | | 21,663 | | | | | | 31 | | | | | | 1,316 | | | | | | 183,068 | | | | | | 353,203 | | |
|
Gross charge-offs
|
| | |
|
—
|
| | | | | 546 | | | | | | 4,806 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,352 | | |
| Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Pass
|
| | | | 7,452 | | | | | | 117 | | | | | | — | | | | | | 19,351 | | | | | | — | | | | | | 6,861 | | | | | | — | | | | | | 33,781 | | |
|
Special Mention
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 172 | | | | | | — | | | | | | 172 | | |
|
Substandard
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 723 | | | | | | — | | | | | | 723 | | |
|
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total Consumer
|
| | | | 7,452 | | | | | | 117 | | | | | | — | | | | | | 19,351 | | | | | | — | | | | | | 7,756 | | | | | | — | | | | | | 34,676 | | |
|
Gross charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 55 | | | | | | — | | | | | | 55 | | |
| | | |
Construction
and Land Development |
| |
Single-
Family Residential |
| |
Commercial
Real Estate |
| |
Multifamily
|
| |
Commercial
and Financial |
| |
Consumer
|
| |
Total
|
| |||||||||||||||||||||
| December 31, 2025: | | | | | | | | | |||||||||||||||||||||||||||||||||||
| Allowance for credit losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Beginning balance
|
| | | $ | 2,817 | | | | | | 6,854 | | | | | | 4,014 | | | | | | 698 | | | | | | 5,456 | | | | | | 761 | | | | | | 20,600 | | |
|
Provision for credit
losses |
| | | | 1,738 | | | | | | 156 | | | | | | 432 | | | | | | (184) | | | | | | 2,673 | | | | | | (294) | | | | | | 4,521 | | |
|
Initial ACL on PCD
loans |
| | | | — | | | | | | 135 | | | | | | 7 | | | | | | — | | | | | | 1,222 | | | | | | — | | | | | | 1,364 | | |
|
Charge-offs
|
| | | | (59) | | | | | | (184) | | | | | | — | | | | | | — | | | | | | (762) | | | | | | (12) | | | | | | (1,017) | | |
|
Recoveries
|
| | | | — | | | | | | 87 | | | | | | — | | | | | | — | | | | | | 18 | | | | | | 1 | | | | | | 106 | | |
|
Ending balance
|
| | | $ | 4,496 | | | | | | 7,048 | | | | | | 4,453 | | | | | | 514 | | | | | | 8,607 | | | | | | 456 | | | | | | 25,574 | | |
| | | |
Construction
and Land Development |
| |
Single-
Family Residential |
| |
Commercial
Real Estate |
| |
Multifamily
|
| |
Commercial
and Financial |
| |
Consumer
|
| |
Total
|
| |||||||||||||||||||||
| December 31, 2024: | | | | | | | | | |||||||||||||||||||||||||||||||||||
| Allowance for credit losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Beginning balance
|
| | | $ | 2,761 | | | | | | 3,506 | | | | | | 4,004 | | | | | | 344 | | | | | | 6,509 | | | | | | 580 | | | | | | 17,704 | | |
|
Provision for credit
losses |
| | | | 56 | | | | | | 3,348 | | | | | | 4 | | | | | | 354 | | | | | | 4,138 | | | | | | 220 | | | | | | 8,120 | | |
|
Charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,352) | | | | | | (55) | | | | | | (5,407) | | |
|
Recoveries
|
| | | | — | | | | | | — | | | | | | 6 | | | | | | — | | | | | | 161 | | | | | | 16 | | | | | | 183 | | |
|
Ending balance
|
| | | $ | 2,817 | | | | | | 6,854 | | | | | | 4,014 | | | | | | 698 | | | | | | 5,456 | | | | | | 761 | | | | | | 20,600 | | |
| | | |
2025
|
| |
2024
|
| ||||||
|
Land
|
| | | $ | 4,320 | | | | | | 738 | | |
|
Buildings
|
| | | | 6,204 | | | | | | 927 | | |
|
Furniture, fixtures and equipment
|
| | | | 8,390 | | | | | | 7,529 | | |
|
Leasehold improvements
|
| | | | 8,886 | | | | | | 8,448 | | |
| | | | | | 27,800 | | | | | | 17,642 | | |
|
Less: Accumulated depreciation
|
| | | | (9,250) | | | | | | (6,913) | | |
| | | | | $ | 18,550 | | | | | | 10,729 | | |
| | | |
2025
|
| |
2024
|
| ||||||
|
Operating lease right of use assets
|
| | | $ | 36,578 | | | | | | 39,678 | | |
|
Operating lease liabilities
|
| | | | 38,071 | | | | | | 40,768 | | |
|
Weighted average remaining lease term (years)
|
| | | | 12.77 | | | | | | 13.46 | | |
|
Weighted average discount rate
|
| | | | 4.03% | | | | | | 3.96% | | |
| |
2026
|
| | | $ | 4,193 | | |
| |
2027
|
| | | | 4,234 | | |
| |
2028
|
| | | | 4,308 | | |
| |
2029
|
| | | | 4,402 | | |
| |
2030
|
| | | | 4,497 | | |
| |
Thereafter
|
| | | | 29,684 | | |
| |
Total lease payments
|
| | | | 51,318 | | |
| |
Less: Imputed interest
|
| | | | 13,247 | | |
| |
Present value of lease liability
|
| | | $ | 38,071 | | |
| | | |
2025
|
| |||
|
Core deposit intangible
|
| | | $ | 6,170 | | |
|
Less: accumulated amortization
|
| | | | (514) | | |
|
Net core deposit intangible
|
| | | | 5,656 | | |
|
Goodwill
|
| | | | 4,809 | | |
|
Total goodwill and other intangible assets, net
|
| | | $ | 10,465 | | |
|
Amortization during the period
|
| | | $ | 514 | | |
| | | |
Core Deposit
Intangible |
| |||
|
2026
|
| | | $ | 617 | | |
|
2027
|
| | | | 617 | | |
|
2028
|
| | | | 617 | | |
|
2029
|
| | | | 617 | | |
|
2030
|
| | | | 617 | | |
|
Thereafter
|
| | | | 2,571 | | |
| | | | | $ | 5,656 | | |
| | | |
2025
|
| |
2024
|
| ||||||
|
Noninterest-bearing demand deposits
|
| | | $ | 617,388 | | | | | | 393,720 | | |
|
Interest-bearing demand deposits
|
| | | | 344,982 | | | | | | 290,933 | | |
|
Money market and savings deposits
|
| | | | 727,623 | | | | | | 573,125 | | |
|
Time deposits
|
| | | | 669,692 | | | | | | 570,847 | | |
| | | | | $ | 2,359,685 | | | | | | 1,828,625 | | |
| |
2026
|
| | | $ | 520,395 | | |
| |
2027
|
| | | | 91,844 | | |
| |
2028
|
| | | | 48,991 | | |
| |
2029
|
| | | | 6,399 | | |
| |
2030
|
| | | | 2,063 | | |
| | | | | | $ | 669,692 | | |
| | | |
2025
|
| |
2024
|
| ||||||
|
Balance at beginning of year
|
| | | $ | 868 | | | | | | 1,256 | | |
|
New loans and advances
|
| | | | 508 | | | | | | 276 | | |
|
Repayments
|
| | | | (349) | | | | | | (664) | | |
|
Effect of changes in composition of related parties
|
| | | | 812 | | | | | | — | | |
|
Balance at end of year
|
| | | $ | 1,839 | | | | | | 868 | | |
| | | |
Shares
|
| |
Weighted Average
Grant Date Fair Value |
| ||||||
|
Outstanding, December 31, 2023
|
| | | | 171,223 | | | | | $ | 21.06 | | |
|
Granted
|
| | | | 45,215 | | | | | $ | 23.00 | | |
|
Vested
|
| | | | (50,669) | | | | | $ | 21.10 | | |
|
Forfeited
|
| | | | (24,242) | | | | | $ | 21.37 | | |
|
Outstanding, December 31, 2024
|
| | | | 141,527 | | | | | $ | 21.61 | | |
|
Granted
|
| | | | 56,279 | | | | | $ | 23.01 | | |
|
Vested
|
| | | | (50,296) | | | | | $ | 21.40 | | |
|
Forfeited
|
| | | | (26,340) | | | | | $ | 21.38 | | |
|
Outstanding, December 31, 2025
|
| | | | 121,170 | | | | | $ | 22.40 | | |
| | | |
Shares
|
| |
Weighted Average
Exercise Price |
| |
Weighted
Average Remaining Life (Years) |
| |||||||||
|
Outstanding, December 31, 2023
|
| | | | 12,797 | | | | | $ | 21.62 | | | | | | | | |
|
Granted
|
| | | | — | | | | | | — | | | | | | | | |
|
Exercise of stock options
|
| | | | — | | | | | | — | | | | | | | | |
|
Forfeited
|
| | | | — | | | | | | — | | | | | | | | |
|
Outstanding, December 31, 2024
|
| | | | 12,797 | | | | | $ | 21.62 | | | | | | 2.25 | | |
|
Granted
|
| | | | — | | | | | | — | | | | | | | | |
|
Exercise of stock options
|
| | | | (98,852) | | | | | $ | 10.21 | | | | | | | | |
|
Rollover options
|
| | | | 200,044 | | | | | $ | 11.51 | | | | | | | | |
|
Forfeited
|
| | | | (12,797) | | | | | $ | 20.74 | | | | | | | | |
|
Outstanding, December 31, 2025
|
| | | | 98,844 | | | | | $ | 12.70 | | | | | | 3.97 | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Financial instruments whose contract amounts represent credit risk: | | | | | | | | | | | | | |
|
Commitments to extend credit
|
| | | $ | 388,867 | | | | | | 373,504 | | |
|
Financial and performance letters of credit
|
| | | | 5,533 | | | | | | 4,748 | | |
| | | | | $ | 394,400 | | | | | | 378,252 | | |
| | | |
2025
|
| |
2024
|
| ||||||
|
Net income available to common shareholders
|
| | | $ | 22,080 | | | | | | 8,456 | | |
|
Weighted average number of common shares outstanding
|
| | | | 8,238,252 | | | | | | 7,334,994 | | |
|
Effect of dilutive common stock awards
|
| | | | 204,557 | | | | | | 197,808 | | |
|
Diluted weighted average common shares outstanding
|
| | | | 8,442,809 | | | | | | 7,532,802 | | |
|
Basic earnings per common share
|
| | | $ | 2.68 | | | | | | 1.15 | | |
|
Diluted earnings per common share
|
| | | $ | 2.62 | | | | | | 1.12 | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Current expense: | | | | | | | | | | | | | |
|
Federal
|
| | | $ | 9,358 | | | | | | 3,776 | | |
|
State
|
| | | | 1,642 | | | | | | 615 | | |
|
Total current income tax expense
|
| | | | 11,000 | | | | | | 4,391 | | |
| Deferred expense (benefit): | | | | | | | | | | | | | |
|
Federal
|
| | | | (3,163) | | | | | | (1,562) | | |
|
State
|
| | | | (78) | | | | | | — | | |
|
Total deferred income tax expense (benefit)
|
| | | | (3,241) | | | | | | (1,562) | | |
|
Total income tax expense
|
| | | $ | 7,759 | | | | | | 2,829 | | |
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||||||
| | | |
Amount
|
| |
%
|
| |
Amount
|
| |
%
|
| ||||||||||||||||
|
Tax on pretax income, at statutory rates
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
State income taxes, net of federal effect
|
| | | | 1,194 | | | | | | | 4.0 | % | | | | | | 615 | | | | | | | 5.4 | % | | |
|
BOLI income
|
| | | | (391) | | | | | | | (1.3) | % | | | | | | (164) | | | | | | | (1.4) | % | | |
|
Transaction costs
|
| | | | 1,414 | | | | | | | 4.7 | % | | | | | | — | | | | | | | — | | | |
|
Federal net operating loss carryforward from business combination
|
| | | | (652) | | | | | | | (2.2) | % | | | | | | — | | | | | | | — | | | |
|
Other, net
|
| | | | (72) | | | | | | | (0.2) | % | | | | | | 8 | | | | | | | 0.0 | % | | |
|
Total income tax expense
|
| | | | | | | | | | | 26.0 | % | | | | | | 2,829 | | | | | | | 25.1 | % | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Deferred tax assets: | | | | | | | | | | | | | |
|
Deferred loan fees
|
| | | $ | 1,273 | | | | | | 1,221 | | |
|
Unrealized loss on securities available for sale
|
| | | | 130 | | | | | | 1,049 | | |
|
Purchase accounting adjustments
|
| | | | 1,486 | | | | | | — | | |
|
Allowance for credit losses for loans
|
| | | | 6,137 | | | | | | 5,182 | | |
|
Allowance for credit losses for unfunded commitments
|
| | | | 237 | | | | | | — | | |
|
Lease liability
|
| | | | 358 | | | | | | 275 | | |
|
Deferred compensation
|
| | | | 1,952 | | | | | | 754 | | |
|
Other
|
| | | | 721 | | | | | | 246 | | |
|
Total deferred tax assets
|
| | | | 12,294 | | | | | | 8,727 | | |
| Deferred tax liabilities: | | | | | | | | | | | | | |
|
Premises and equipment
|
| | | | 1,844 | | | | | | 1,449 | | |
|
Subordinated debentures
|
| | | | 202 | | | | | | — | | |
|
Other
|
| | | | 2,067 | | | | | | — | | |
|
Total deferred tax liabilities
|
| | | | 4,113 | | | | | | 1,449 | | |
|
Net deferred tax asset
|
| | | $ | 8,181 | | | | | | 7,278 | | |
| | | |
2025
|
| |||
|
Federal
|
| | | $ | 7,423 | | |
|
State
|
| | | | 2,256 | | |
|
Total income taxes paid
|
| | | $ | 9,679 | | |
| State income taxes paid in excess of 5% of total income taxes paid: | | | | | | | |
|
Georgia
|
| | | $ | 1,895 | | |
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||
| | | |
Notional
Amount |
| |
Fair Value
|
| |
Notional
Amount |
| |
Fair Value
|
| ||||||||||||
| Included in other assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivatives designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest rate hedges related to customer loans
|
| | | $ | 150,000 | | | | | | 1,001 | | | | | | 100,000 | | | | | | 274 | | |
|
Interest rate hedges related to customer deposits
|
| | | | 79,150 | | | | | | 761 | | | | | | 67,000 | | | | | | 413 | | |
|
Total included in other assets
|
| | | $ | 229,150 | | | | | | 1,762 | | | | | | 167,000 | | | | | | 687 | | |
| | | |
2025
|
| |
2024
|
| ||||||||||||||||||
| | | |
Notional
Amount |
| |
Fair Value
|
| |
Notional
Amount |
| |
Fair Value
|
| ||||||||||||
| Included in other liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivatives designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest rate hedges related to customer deposits
|
| | | $ | — | | | | | | — | | | | | | 55,150 | | | | | | 359 | | |
|
Total included in other liabilities
|
| | | $ | — | | | | | | — | | | | | | 55,150 | | | | | | 359 | | |
| | | |
Actual
|
| |
For Capital
Adequacy Purposes |
| |
To Be Well
Capitalized Under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| | | |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Total Capital to Risk-Weighted Assets
|
| | | $ | 276,260 | | | | | | 12.74% | | | | | $ | 173,413 | | | | | | 8.00% | | | | | $ | 216,767 | | | | | | 10.00% | | |
|
Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 249,700 | | | | | | 11.52% | | | | | $ | 130,060 | | | | | | 6.00% | | | | | $ | 173,413 | | | | | | 8.00% | | |
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 249,700 | | | | | | 11.52% | | | | | $ | 97,545 | | | | | | 4.50% | | | | | $ | 140,898 | | | | | | 6.50% | | |
|
Tier 1 Capital to Average Assets
|
| | | $ | 249,700 | | | | | | 9.37% | | | | | $ | 106,983 | | | | | | 4.00% | | | | | $ | 133,729 | | | | | | 5.00% | | |
| | | |
Actual
|
| |
For Capital
Adequacy Purposes |
| |
To Be Well
Capitalized Under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| | | |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||
| December 31, 2024: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Total Capital to Risk-Weighted Assets
|
| | | $ | 197,074 | | | | | | 11.19% | | | | | $ | 140,836 | | | | | | 8.00% | | | | | $ | 176,045 | | | | | | 10.00% | | |
|
Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 175,606 | | | | | | 9.98% | | | | | $ | 105,627 | | | | | | 6.00% | | | | | $ | 140,836 | | | | | | 8.00% | | |
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
| | | $ | 175,606 | | | | | | 9.98% | | | | | $ | 79,220 | | | | | | 4.50% | | | | | $ | 114,429 | | | | | | 6.50% | | |
|
Tier 1 Capital to Average Assets
|
| | | $ | 175,606 | | | | | | 8.22% | | | | | $ | 85,470 | | | | | | 4.00% | | | | | $ | 106,838 | | | | | | 5.00% | | |
| | | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
| December 31, 2025: | | | | | | ||||||||||||||||||||
| Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury securities
|
| | | $ | 21,912 | | | | | | — | | | | | | — | | | | | | 21,912 | | |
|
U.S. Government sponsored agencies
|
| | | | — | | | | | | 2,994 | | | | | | — | | | | | | 2,994 | | |
|
Residential mortgage-backed securities
|
| | | | — | | | | | | 24,934 | | | | | | — | | | | | | 24,934 | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | 996 | | | | | | — | | | | | | 996 | | |
|
Corporate debt securities
|
| | | | — | | | | | | 960 | | | | | | — | | | | | | 960 | | |
|
Derivative asset
|
| | | | — | | | | | | 1,762 | | | | | | — | | | | | | 1,762 | | |
|
Brokered time deposits
|
| | | | — | | | | | | 90,743 | | | | | | — | | | | | | 90,743 | | |
| | | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
| December 31, 2024: | | | | | | ||||||||||||||||||||
| Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
U.S. Treasury securities
|
| | | $ | 38,564 | | | | | | — | | | | | | — | | | | | | 38,564 | | |
|
U.S. Government sponsored agencies
|
| | | | — | | | | | | 12,809 | | | | | | — | | | | | | 12,809 | | |
|
Residential mortgage-backed securities
|
| | | | — | | | | | | 16,422 | | | | | | — | | | | | | 16,422 | | |
|
Collateralized mortgage obligations
|
| | | | — | | | | | | 998 | | | | | | — | | | | | | 998 | | |
|
Corporate debt securities
|
| | | | — | | | | | | 915 | | | | | | — | | | | | | 915 | | |
|
Derivative asset
|
| | | | — | | | | | | 687 | | | | | | — | | | | | | 687 | | |
|
Derivative liability
|
| | | | — | | | | | | 359 | | | | | | — | | | | | | 359 | | |
|
Brokered time deposits
|
| | | | — | | | | | | 122,231 | | | | | | — | | | | | | 122,231 | | |
| | | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
| December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Collateral dependent loans
|
| | | $ | — | | | | | | — | | | | | | 16,212 | | | | | | 16,212 | | |
|
Total
|
| | | $ | — | | | | | | — | | | | | | 16,212 | | | | | | 16,212 | | |
| December 31, 2024: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Collateral dependent loans
|
| | | $ | — | | | | | | — | | | | | | 1,750 | | | | | | 1,750 | | |
|
Total
|
| | | $ | — | | | | | | — | | | | | | 1,750 | | | | | | 1,750 | | |
|
2025
|
| ||||||||||||||||||
| | | |
Fair Value
|
| |
Valuation Technique
|
| |
Unobservable Inputs
|
| |
Range of
Discounts |
| |
Weighted
Average Discount |
| |||
|
Collateral dependent loans
|
| | | $ | 16,212 | | | |
Third-party appraisals
|
| |
Collateral discounts and discount rates
|
| |
0% – 15%
|
| |
5%
|
|
|
2024
|
| ||||||||||||||||||
| | | |
Fair Value
|
| |
Valuation Technique
|
| |
Unobservable Inputs
|
| |
Range of
Discounts |
| |
Weighted
Average Discount |
| |||
|
Collateral dependent loans
|
| | | $ | 1,750 | | | |
Third-party appraisals
|
| |
Collateral discounts and discount rates
|
| |
0% – 15%
|
| |
7%
|
|
| | | |
Carrying
Amount |
| |
Estimated
Fair Value |
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||||||||
| December 31, 2025: | | | | | | | |||||||||||||||||||||||||
| Financial Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 280,373 | | | | | | 280,373 | | | | | | 280,373 | | | | | | — | | | | | | — | | |
|
Debt securities held to maturity
|
| | | | 40,102 | | | | | | 40,128 | | | | | | — | | | | | | 40,128 | | | | | | — | | |
|
Other investments
|
| | | | 2,585 | | | | | | 2,585 | | | | | | — | | | | | | 2,585 | | | | | | — | | |
|
Loans held for sale
|
| | | | 505,360 | | | | | | 505,360 | | | | | | — | | | | | | 505,360 | | | | | | — | | |
|
Loans
|
| | | | 1,724,934 | | | | | | 1,705,306 | | | | | | — | | | | | | — | | | | | | 1,705,306 | | |
|
Accrued interest receivable
|
| | | | 10,829 | | | | | | 10,829 | | | | | | 10,829 | | | | | | — | | | | | | — | | |
| | | |
Carrying
Amount |
| |
Estimated
Fair Value |
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||||||||
| Financial Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Deposits
|
| | | | 2,268,942 | | | | | | 2,270,868 | | | | | | — | | | | | | — | | | | | | 2,270,868 | | |
|
Borrowings
|
| | | | 71,216 | | | | | | 65,456 | | | | | | — | | | | | | — | | | | | | 65,456 | | |
|
Accrued interest payable
|
| | | | 2,741 | | | | | | 2,741 | | | | | | 2,741 | | | | | | — | | | | | | — | | |
| December 31, 2024: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Financial Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 267,814 | | | | | | 267,814 | | | | | | 267,814 | | | | | | — | | | | | | — | | |
|
Debt securities held to maturity
|
| | | | 26,740 | | | | | | 26,172 | | | | | | — | | | | | | 26,172 | | | | | | — | | |
|
Other investments
|
| | | | 8,859 | | | | | | 8,859 | | | | | | — | | | | | | 8,859 | | | | | | — | | |
|
Loans held for sale
|
| | | | 498,227 | | | | | | 498,227 | | | | | | — | | | | | | 498,227 | | | | | | — | | |
|
Loans
|
| | | | 1,312,293 | | | | | | 1,262,374 | | | | | | — | | | | | | — | | | | | | 1,262,374 | | |
|
Accrued interest receivable
|
| | | | 9,511 | | | | | | 9,511 | | | | | | 9,511 | | | | | | — | | | | | | — | | |
| Financial Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Deposits
|
| | | | 1,706,394 | | | | | | 1,735,583 | | | | | | — | | | | | | — | | | | | | 1,735,583 | | |
|
Borrowings
|
| | | | 211,888 | | | | | | 204,324 | | | | | | — | | | | | | 150,090 | | | | | | 54,234 | | |
|
Accrued interest payable
|
| | | | 3,918 | | | | | | 3,918 | | | | | | 3,918 | | | | | | — | | | | | | — | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Assets | | | | | | | | | | | | | |
|
Cash and due from banks
|
| | | $ | 14,398 | | | | | | 40,281 | | |
|
Investment in subsidiaries
|
| | | | 257,999 | | | | | | 172,971 | | |
|
Other assets
|
| | | | 4,016 | | | | | | 4,405 | | |
|
Total assets
|
| | | $ | 276,413 | | | | | | 217,657 | | |
| Liabilities and Shareholders’ Equity | | | | | | | | | | | | | |
|
Subordinated notes, net
|
| | | | 63,999 | | | | | | 54,671 | | |
|
Junior subordinated debentures
|
| | | | 7,217 | | | | | | 7,217 | | |
|
Other liabilities
|
| | | | 283 | | | | | | 241 | | |
|
Shareholders’ equity
|
| | | | 204,914 | | | | | | 155,528 | | |
|
Total liabilities and shareholders’ equity
|
| | | $ | 276,413 | | | | | | 217,657 | | |
| | | |
2025
|
| |
2024
|
| ||||||
|
Interest income
|
| | | $ | 50 | | | | | | 17 | | |
|
Interest expense
|
| | | | 3,434 | | | | | | 3,057 | | |
|
Net interest expense
|
| | | | (3,384) | | | | | | (3,040) | | |
|
Operating expense
|
| | | | (899) | | | | | | (453) | | |
|
Income tax benefit
|
| | | | 1,083 | | | | | | 908 | | |
|
Earnings before equity in undistributed income of subsidiaries
|
| | | | (3,200) | | | | | | (2,585) | | |
|
Equity in undistributed income of subsidiaries
|
| | | | 25,280 | | | | | | 11,041 | | |
|
Net income
|
| | | $ | 22,080 | | | | | | 8,456 | | |
| | | |
2025
|
| |
2024
|
| ||||||
| Cash flows from operating activities: | | | | | | | | | | | | | |
|
Net income
|
| | | $ | 22,080 | | | | | | 8,456 | | |
|
Adjustments to reconcile net income to net cash from operating activities:
|
| | | | | | | | | | | | |
|
Undistributed earnings of subsidiaries
|
| | | | (25,280) | | | | | | (11,041) | | |
|
Amortization
|
| | | | 376 | | | | | | 246 | | |
|
Change in other assets and liabilities, net
|
| | | | 304 | | | | | | (895) | | |
|
Net cash used in operating activities
|
| | | | (2,520) | | | | | | (3,234) | | |
| Cash flows from investing activities: | | | | | | | | | | | | | |
|
Net cash paid in business combinations, net of cash acquired
|
| | | | (3,878) | | | | | | — | | |
|
Investments in subsidiary
|
| | | | (21,943) | | | | | | (5,000) | | |
|
Net cash used in investing activities
|
| | | | (25,821) | | | | | | (5,000) | | |
| Cash flows from financing activities: | | | | | | | | | | | | | |
|
Exercise of stock options
|
| | | | 1,009 | | | | | | — | | |
|
Issuance of common stock
|
| | | | 1,449 | | | | | | 1 | | |
|
Net cash from financing activities
|
| | | | 2,458 | | | | | | 1 | | |
|
Net change in cash and cash equivalents
|
| | | | (25,883) | | | | | | (8,233) | | |
|
Cash and cash equivalents at beginning of year
|
| | | | 40,281 | | | | | | 48,514 | | |
|
Cash and cash equivalents at end of year
|
| | | $ | 14,398 | | | | | | 40,281 | | |
|
Expense Category
|
| |
Amounts
|
| |||
|
SEC registration fee
|
| | | $ | 18,376 | | |
|
Nasdaq listing fee
|
| | | | 50,000 | | |
|
FINRA filing fee
|
| | | | 30,000 | | |
|
Legal fees and expenses
|
| | | | 1,030,000 | | |
|
Financial advisor legal fees and expenses
|
| | | | 150,000 | | |
|
Accounting fees and expenses
|
| | | | 459,000 | | |
|
Printing fees and expenses
|
| | | | 145,000 | | |
|
Transfer agent and registrar fees and expenses
|
| | | | 20,000 | | |
|
Miscellaneous expenses
|
| | | | 150,000 | | |
|
Total
|
| | | $ | 2,052,376 | | |
|
Exhibit
Number |
| |
Exhibit Description
|
|
| 2.1† | | | | |
| 2.2† | | | Agreement and Plan of Merger, dated as of February 26, 2026, by and between Georgia Banking Company, Inc. and Tandem Bancorp, Inc. | |
| 3.1 | | | Articles of Incorporation of Georgia Banking Company, Inc. dated March 24, 1998, as amended by Articles of Amendment to Articles of Incorporation of Georgia Banking Company, Inc. dated February 18, 2021 and by Second Articles of Amendment to Articles of Incorporation of Georgia Banking Company, Inc. dated June 15, 2026 | |
| 3.2 | | | | |
| 4.1 | | | | |
| 4.2† | | | | |
| 4.3 | | | | |
| 4.4 | | | | |
| 4.5 | | | | |
| 4.6† | | | | |
| 4.7 | | | | |
| 4.8 | | | Form of Warrant by and among Georgia Banking Company, Inc. and the holders named therein | |
| 4.9 | | | | |
| | | | The other instruments defining the rights of the long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Registrant hereby agrees to furnish copies of these instruments to the SEC upon request. | |
| 5.1 | | | | |
| 10.1† | | | | |
| 10.2^† | | | | |
| 10.3† | | | | |
| 10.4 | | | | |
| 10.5† | | | | |
| 10.6 | | | | |
| 10.7 | | | |
|
Exhibit
Number |
| |
Exhibit Description
|
|
| 10.8 | | | | |
| 10.9 | | | | |
|
10.10^†
|
| | Amended and Restated Employment Agreement, dated as of September 30, 2026, by and among Georgia Banking Company, Inc., Georgia Banking Company, and Bartow Morgan, Jr. | |
| 10.11^ | | | Form of Amended and Restated Change in Control Agreement, by and between Georgia Banking Company, Inc. and each of its other named executive officers | |
| 10.12^ | | | | |
| 10.13^ | | | | |
| 10.14^ | | | | |
| 10.15^ | | | | |
| 10.16^ | | | | |
| 10.17^ | | | | |
| 10.18^ | | | | |
| 10.19^ | | | | |
| 10.20^ | | | Georgia Primary Bank 2017 Long-Term Incentive Plan (formerly known as the Primary Bancshares, Inc. 2017 Long-Term Incentive Plan) | |
| 10.21^ | | | | |
| 10.22^ | | | Second Amendment to the Georgia Primary Bank 2017 Long-Term Incentive Plan, dated March 1, 2025 | |
| 10.23^ | | | | |
| 10.24 | | | | |
| 10.25 | | | | |
| 10.26† | | | | |
| 10.27† | | | | |
| 10.28 | | | | |
| 21.1 | | | | |
| 23.1 | | | | |
| 23.2 | | | | |
| 24.1 | | | | |
| 107 | | | |
| |
Signature
|
| |
Title
|
| |
Date
|
|
| |
/s/ Bartow Morgan, Jr.
Bartow Morgan, Jr.
|
| |
Chief Executive Officer and Director
(Principal Executive Officer) |
| |
October 2, 2026
|
|
| |
/s/ Charles M. DeWitt, III
Charles M. DeWitt, III
|
| |
Chief Financial Officer
(Principal Financial Officer) |
| |
October 2, 2026
|
|
| |
/s/ Ryan D. Nemec
Ryan D. Nemec
|
| |
Chief Accounting Officer
(Principal Accounting Officer) |
| |
October 2, 2026
|
|
| |
/s/ Sarah R. Borders
Sarah R. Borders
|
| |
Chairperson
|
| |
October 2, 2026
|
|
| |
/s/ Arthur F. Anton
Arthur F. Anton
|
| |
Director
|
| |
October 2, 2026
|
|
| |
/s/ James F. Deutsch
James F. Deutsch
|
| |
Director
|
| |
October 2, 2026
|
|
| |
Signature
|
| |
Title
|
| |
Date
|
|
| |
/s/ Henchy R. Enden
Henchy R. Enden
|
| |
Director
|
| |
October 2, 2026
|
|
| |
/s/ Ryan Glover
Ryan Glover
|
| |
Director
|
| |
October 2, 2026
|
|
| |
/s/ Craig Heiser
Craig Heiser
|
| |
Director
|
| |
October 2, 2026
|
|
| |
/s/ Mark Scheinfeld
Mark Scheinfeld
|
| |
Director
|
| |
October 2, 2026
|
|
| |
/s/ R. Lee Tucker, Jr.
R. Lee Tucker, Jr.
|
| |
Director
|
| |
October 2, 2026
|
|
Exhibit 2.1
CERTAIN CONFIDENTIAL INFORMATION (MARKED BY BRACKETS AS “[***]”) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
AGREEMENT AND PLAN OF MERGER
between
GEORGIA BANKING COMPANY, INC.
and
Primary Bancshares corporation
Dated October 9, 2024
TABLE OF CONTENTS
| Article I | ||
| THE MERGER | ||
| 1.1 | The Merger and Bank Merger | 1 |
| 1.2 | Closing | 2 |
| 1.3 | Effective Time | 2 |
| 1.4 | Effects of the Merger | 2 |
| 1.5 | Charter of Surviving Entity | 2 |
| 1.6 | Bylaws of Surviving Entity | 2 |
| 1.7 | Tax Consequences | 2 |
| Article II | ||
| EFFECT ON CAPITAL STOCK; EXCHANGE OF SHARES | ||
| 2.1 | Conversion of Capital Stock | 3 |
| 2.2 | Treatment of Primary Options | 3 |
| 2.3 | Election and Allocation Procedures | 5 |
| 2.4 | Dissenting Shareholders | 7 |
| 2.5 | Payment Procedures | 7 |
| 2.6 | Rights of Former Primary Shareholders | 9 |
| Article III | ||
| REPRESENTATIONS AND WARRANTIES OF PRIMARY | ||
| 3.1 | Corporate Organization | 9 |
| 3.2 | Capitalization | 10 |
| 3.3 | Authority; No Violation | 11 |
| 3.4 | Consents and Approvals | 12 |
| 3.5 | Reports | 12 |
| 3.6 | Financial Statements | 13 |
| 3.7 | Broker’s Fees | 14 |
| 3.8 | Absence of Certain Changes or Events | 14 |
| 3.9 | Legal and Regulatory Proceedings | 14 |
| 3.10 | Taxes and Tax Returns | 15 |
| 3.11 | Employees | 16 |
| 3.12 | Compliance with Applicable Law | 20 |
| 3.13 | Certain Contracts | 21 |
| 3.14 | Agreements with Regulatory Agencies | 23 |
| 3.15 | Risk Management Instruments | 23 |
| 3.16 | Environmental Matters | 24 |
| 3.17 | Investment Securities and Commodities | 24 |
| 3.18 | Real Property | 24 |
| 3.19 | Intellectual Property | 25 |
| 3.20 | Related Party Transactions | 25 |
| 3.21 | State Takeover Laws | 26 |
| i |
| 3.22 | Reorganization | 26 |
| 3.23 | Opinion | 26 |
| 3.24 | Primary Information | 26 |
| 3.25 | Loan Portfolio | 26 |
| 3.26 | Insurance | 27 |
| 3.27 | No Other Representations or Warranties | 28 |
| Article IV | ||
| REPRESENTATIONS AND WARRANTIES OF GBC | ||
| 4.1 | Corporate Organization | 28 |
| 4.2 | Capitalization | 29 |
| 4.3 | Authority; No Violation | 30 |
| 4.4 | Consents and Approvals | 31 |
| 4.5 | Reports | 31 |
| 4.6 | Financial Statements | 31 |
| 4.7 | Broker’s Fees | 33 |
| 4.8 | Absence of Certain Changes or Events | 33 |
| 4.9 | Legal and Regulatory Proceedings | 33 |
| 4.10 | Taxes and Tax Returns | 33 |
| 4.11 | Compliance with Applicable Law | 34 |
| 4.12 | Agreements with Regulatory Agencies | 35 |
| 4.13 | Related Party Transactions | 36 |
| 4.14 | State Takeover Laws | 36 |
| 4.15 | Reorganization | 36 |
| 4.16 | GBC Information | 36 |
| 4.17 | No Other Representations or Warranties | 36 |
| Article V | ||
| COVENANTS RELATING TO CONDUCT OF BUSINESS | ||
| 5.1 | Conduct of Businesses Prior to the Effective Time | 37 |
| 5.2 | Forbearances of Primary | 37 |
| 5.3 | Forbearances of GBC | 41 |
| Article VI | ||
| ADDITIONAL AGREEMENTS | ||
| 6.1 | Regulatory Matters | 42 |
| 6.2 | Access to Information; Confidentiality | 43 |
| 6.3 | Non-Control | 43 |
| 6.4 | Fairness Determination; Securities Act Compliance | 43 |
| 6.5 | Proxy Statement; Shareholders’ Approvals | 44 |
| 6.6 | Legal Conditions to Merger | 46 |
| 6.7 | Employee Matters | 46 |
| 6.8 | Indemnification; Directors’ and Officers’ Insurance | 48 |
| 6.9 | Additional Agreements | 49 |
| 6.10 | Advice of Changes | 49 |
| ii |
| 6.11 | Shareholder Litigation | 50 |
| 6.12 | Corporate Governance | 50 |
| 6.13 | Acquisition Proposals | 50 |
| 6.14 | Public Announcements | 51 |
| 6.15 | Takeover Statutes | 51 |
| 6.16 | Certain Tax Matters | 51 |
| Article VII | ||
| CONDITIONS PRECEDENT | ||
| 7.1 | Conditions to Each Party’s Obligation to Effect the Merger | 52 |
| 7.2 | Conditions to Obligations of GBC | 52 |
| 7.3 | Conditions to Obligations of Primary | 53 |
| Article VIII | ||
| TERMINATION AND AMENDMENT | ||
| 8.1 | Termination | 54 |
| 8.2 | Effect of Termination | 55 |
| Article IX | ||
| GENERAL PROVISIONS | ||
| 9.1 | Definitions | 56 |
| 9.2 | Amendment | 58 |
| 9.3 | Extension; Waiver | 58 |
| 9.4 | Nonsurvival of Representations, Warranties and Agreements | 58 |
| 9.5 | Expenses | 59 |
| 9.6 | Notices | 59 |
| 9.7 | Interpretation | 60 |
| 9.8 | Counterparts | 60 |
| 9.9 | Entire Agreement | 60 |
| 9.10 | Governing Law; Jurisdiction | 60 |
| 9.11 | Waiver of Jury Trial | 61 |
| 9.12 | Assignment; Third-Party Beneficiaries | 61 |
| 9.13 | Specific Performance | 61 |
| 9.14 | Severability | 61 |
| 9.15 | Confidential Supervisory Information | 62 |
| 9.16 | Delivery by Facsimile or Electronic Transmission | 62 |
| iii |
INDEX OF DEFINED TERMS
| Term | Section |
| ACA | 3.11(k) |
| Acceptable Confidentiality Agreement | 6.13 |
| Acquisition Proposal | 9.1 |
| Affiliate | 9.7 |
| Agreement | Preamble |
| ACL | 3.6(c) |
| ALLL | 3.6(c) |
| Alternative Acquisition Agreement | 6.5(b) |
| Applicable Agencies | 3.4 |
| Bank Merger | Recitals |
| Bank Merger Agreement | Recitals |
| Bank Merger Certificates | 1.1(b) |
| Bank Merger Effective Time | 1.1(b) |
| BHC Act | 3.1(a) |
| Business Day | 9.7 |
| Call Reports | 3.6(c) |
| Cancelled Shares | 2.1(c) |
| Cash Election | 2.3(a) |
| Cash Election Shares | 2.3(a) |
| Cash Election Threshold | 9.1 |
| Certificate of Merger | 1.3 |
| Chosen Courts | 9.10(b) |
| Closing | 1.2 |
| Closing Date | 1.2 |
| Code | Recitals |
| Continuing Employees | 6.7(a) |
| Conversion Fund | 2.5(a) |
| DBF | 3.4 |
| Dissenters’ Shares | 2.1(b) |
| Effective Time | 1.3 |
| Election Deadline | 9.1 |
| Election Form | 2.3(a) |
| Enforceability Exceptions | 3.3(a) |
| Environmental Laws | 3.16 |
| ERISA | 3.11(a) |
| Evercore | 4.7 |
| Exchange Act | 3.20 |
| Exchange Agent | 2.3(a) |
| Exchange Ratio | 2.2(a) |
| Fairness Determination | 6.4(a) |
| Fairness Hearing | 6.4(b) |
| Fairness Order | 6.4(b) |
| FDI Act | 3.1(b) |
| FDIC | 3.1(b) |
| Federal Reserve | 3.4 |
| iv |
| Fractional Share Cash-in-Lieu Amounts | 2.3(c) |
| Fraud | 8.2(a) |
| GAAP | 3.1(a) |
| GBC | Preamble |
| GBC Bank | Recitals |
| GBC Bylaws | 4.1(a) |
| GBCC | 1.1(a) |
| GBC Charter | 4.1(a) |
| GBC Common Stock | 4.2(a) |
| GBC Disclosure Schedule | Article IV |
| GBC 401(k) Plan | 6.7(c) |
| GBC Financial Statements | 4.6(a) |
| GBC Non-Voting Common Stock | 4.2(a) |
| GBC Subsidiary | 4.1(b) |
| GBC Voting Common Stock | 4.2(a) |
| Georgia Secretary | 1.3 |
| Governmental Entity | 3.4 |
| Holder | 2.3(a) |
| Ineligible Shares | 2.3(d) |
| Intellectual Property | 3.19 |
| IRS | 2.5(g) |
| Knowledge | 9.7 |
| Liens | 3.2(b) |
| Loans | 3.25(a) |
| Mailing Date | 2.3(a) |
| Material Adverse Effect | 9.1 |
| Materially Burdensome Regulatory Condition | 6.1(b) |
| Merger | Recitals |
| Merger Consideration | 2.3(a) |
| Non-Disclosure Agreement | 6.2(b) |
| Non-Election Shares | 2.3(a) |
| Option Cancellation Payment | 2.2(a)(1) |
| Option Consideration | 2.2(a)(3) |
| Option Election Notice | 2.2(a) |
| Option Holder Release Agreements | 2.2(a) |
| Option Shares | 2.2(a)(3) |
| Primary | Preamble |
| Primary 401(k) Plan | 6.7(c) |
| Primary Articles | 3.1(a) |
| Primary Bank | Recitals |
| Primary Benefit Plans | 3.11(a) |
| Primary Board Recommendation | 6.5(b) |
| Primary Bylaws | 3.1(a) |
| Primary Common Stock | 3.2(a) |
| Primary Continuing Director | 6.12(a) |
| Primary Contract | 3.13(a) |
| Primary Disclosure Schedule | Article III |
| Primary ERISA Affiliate | 3.11(a) |
| Primary Financial Statements | 3.6(a) |
| v |
| Primary Indemnified Parties | 6.8(a) |
| Primary Meeting | 6.5(b) |
| Primary Options | 2.2(a) |
| Primary Qualified Plans | 3.11(c) |
| Primary Regulatory Agreement | 3.14 |
| Primary Securities | 3.2(a) |
| Primary Stock Certificate | 2.3(a) |
| Primary Subsidiary | 3.1(b) |
| Per Share Cash Consideration | 9.1 |
| Per Share Merger Consideration | 9.1 |
| Per Share Stock Consideration | 9.1 |
| Permitted Encumbrance | 3.18 |
| Personal Data | 3.12(b) |
| Premium Cap | 6.8(b) |
| Primary Owned Property | 3.18 |
| Primary Real Property | 3.18 |
| Proxy Statement | 9.1 |
| Recommendation Change | 6.5(b) |
| Regulatory Agencies | 3.5 |
| Representatives | 6.13 |
| Requisite Regulatory Approvals | 9.1 |
| Requisite Primary Vote | 3.3(a) |
| Rollover Option | 2.2(a)(2) |
| Sarbanes-Oxley Act | 3.12(b) |
| SBA Loan | 3.25(g) |
| Securities Act | 6.4(a) |
| Security Breach | 3.12(d) |
| SRO | 3.5 |
| Stock Election | 2.3(a) |
| Stock Election Shares | 2.3(a) |
| Subsidiary | 3.1(a) |
| Superior Proposal | 9.1 |
| Surviving Entity | Recitals |
| Takeover Statutes | 3.21 |
| Tax | 9.1 |
| Tax Return | 9.1 |
| Termination Date | 8.1(c) |
| Termination Fee | 8.2(b) |
| Willful and Material Breach | 8.2(a) |
| vi |
AGREEMENT AND PLAN OF MERGER, dated October 9, 2024 (this “Agreement”), between Georgia Banking Company, Inc., a Georgia corporation (“GBC”), and Primary Bancshares Corporation, a Georgia corporation (“Primary”).
RECITALS
A. The Boards of Directors of GBC and Primary have unanimously determined that it is in the best interests of their respective companies and shareholders to consummate the strategic business combination transaction provided for in this Agreement, pursuant to which Primary will, subject to the terms and conditions set forth herein, merge with and into GBC (the “Merger”), so that GBC is the surviving entity (in such capacity, the “Surviving Entity”) in the Merger.
B. In furtherance thereof, the respective Boards of Directors of GBC and Primary have unanimously approved the Merger and declared advisable and adopted this Agreement, approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and, with respect to the Board of Directors of Primary, has resolved to submit this Agreement to its shareholders for approval and to recommend that its shareholders approve this Agreement.
C. For federal income tax purposes, it is intended that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement is intended to be and is adopted as a plan of reorganization for purposes of Sections 354 and 361 of the Code.
D. Concurrently with the execution and delivery of this Agreement, Georgia Primary Bank, a Georgia bank and wholly-owned subsidiary of Primary (“Primary Bank”), and Georgia Banking Company, a Georgia bank and wholly-owned subsidiary of GBC (“GBC Bank”), entered into an agreement and plan of merger (the “Bank Merger Agreement”) in the form attached hereto as Exhibit A, pursuant to which, immediately following the Merger, and subject to it occurring, Primary Bank will merge (the “Bank Merger”) with and into GBC Bank so that GBC Bank is the surviving entity in the Bank Merger.
E. Concurrently with the execution and delivery of this Agreement, as a condition and inducement for GBC to enter into this Agreement, each member of the Board of Directors of Primary and each member of the Board of Directors of Primary Bank entered into a director support agreement, in the form attached hereto as Exhibit B.
F. In this Agreement, the parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows:
Article I
THE MERGER
1.1 The Merger and Bank Merger.
(a) Subject to the terms and conditions of this Agreement, in accordance with the Georgia Business Corporation Code (the “GBCC”), Primary shall merge with and into GBC pursuant to this Agreement. GBC shall be the Surviving Entity, and shall continue its corporate existence under the laws of the State of Georgia. Upon consummation of the Merger, the separate corporate existence of Primary shall terminate.
| 1 |
(b) At the Bank Merger Effective Time, Primary Bank will merge with and into GBC Bank. GBC Bank shall be the surviving entity in the Bank Merger and, following the Bank Merger, the separate corporate existence of Primary Bank shall cease. The Bank Merger shall be implemented pursuant to the Bank Merger Agreement. GBC and Primary shall, and shall respectively cause GBC Bank and Primary Bank to, execute certificates or articles of merger and such other agreements, documents and certificates as are necessary to make the Bank Merger effective (“Bank Merger Certificates”) at the Bank Merger Effective Time. The Bank Merger shall become effective immediately following the Effective Time or at such later time and date as specified in the Bank Merger Agreement in accordance with applicable law (the “Bank Merger Effective Time”).
1.2 Closing. Subject to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) will take place by electronic exchange of documents at 10:00 a.m., Eastern time, on a date which shall be no later than three (3) business days after the satisfaction or waiver (subject to applicable law) of all of the conditions set forth in Article VII hereof (other than those conditions that by their nature can only be satisfied at the Closing, but subject to the satisfaction or waiver thereof), unless another date, time or place is agreed to in writing by Primary and GBC. The date on which the Closing occurs is referred to as the “Closing Date.”
1.3 Effective Time. On or (if agreed by GBC and Primary) prior to the Closing Date, GBC and Primary shall cause to be filed a certificate of merger with the Secretary of State of the State of Georgia (the “Georgia Secretary”) in accordance with the GBCC (the “Certificate of Merger”). The Merger shall become effective at such time as specified in the Certificate of Merger in accordance with the relevant provisions of the GBCC, or at such other time as shall be provided by applicable law (such time hereinafter referred to as the “Effective Time”).
1.4 Effects of the Merger. At and after the Effective Time, the Merger shall have the effects set forth in the applicable provisions of the GBCC and this Agreement.
1.5 Charter of Surviving Entity. At the Effective Time, the articles of incorporation of GBC, as in effect immediately prior to the Effective Time, shall be the articles of incorporation of the Surviving Entity until thereafter amended in accordance with applicable law.
1.6 Bylaws of Surviving Entity. At the Effective Time, the bylaws of GBC, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Entity until thereafter amended in accordance with applicable law.
1.7 Tax Consequences. It is intended that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement is intended to be and is adopted as a plan of reorganization for the purposes of Sections 354 and 361 of the Code.
| 2 |
Article II
EFFECT ON CAPITAL STOCK; EXCHANGE OF SHARES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of GBC, Primary, or the Subsidiaries or shareholders of any of the foregoing, the shares of the constituent corporations to the Merger shall be converted as follows:
(a) Each share of capital stock of GBC issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding from and after the Effective Time and shall not be affected by the Merger.
(b) Each share of Primary Common Stock issued and outstanding immediately prior to the Effective Time, except for the Cancelled Shares (as defined below) and shares with respect to which the holder has properly exercised dissenters’ rights pursuant to Article 13 of the GBCC (the “Dissenters’ Shares”), shall be converted into the right to receive the Per Share Merger Consideration, which shall be payable to the holder thereof, in the manner provided in this Article II.
(c) Any shares of Primary Common Stock that are owned immediately prior to the Effective Time by Primary, GBC or their respective Subsidiaries (in each case, other than (i) shares of Primary Common Stock held in a fiduciary capacity that are beneficially owned by third parties and (ii) shares of Primary Common Stock held, directly or indirectly, in respect of a debt contracted) shall be cancelled and shall cease to exist and no Per Share Merger Consideration shall be payable or delivered in exchange therefor (the “Cancelled Shares”).
2.2 Treatment of Primary Options.
(a) Each unexpired, outstanding, and unexercised option to acquire shares of Primary Common Stock (collectively, the “Primary Options”), whether vested or unvested, shall, automatically and without any further action on the part of any holder thereof, be cancelled at the Effective Time and converted automatically into the right to receive, at the election of the holder, as provided by written notice of Primary to GBC not less than thirty (30) days prior to Closing (the “Option Election Notice”), and conditioned upon the holder thereof executing and delivering to Primary and GBC an option holder settlement and release agreement in the form attached hereto as Exhibit C (collectively, the “Option Holder Release Agreements”), either of the three following forms of consideration:
(1) An amount in cash, without interest, equal to the product of (x) the number of shares of Primary Common Stock subject to such Primary Option immediately prior to the Effective Time times (y) the excess, if any, of the Per Share Cash Consideration over the exercise price of such Primary Option (the “Option Cancellation Payment”); provided that if the exercise price is equal to or greater than the Per Share Cash Consideration, such Primary Option shall be canceled without the payment of any cash or other consideration. GBC shall deliver, or cause to be delivered, the Option Cancellation Payment to each such holder of a Primary Option no later than the fifth (5th) Business Day following the Effective Time. Option Cancellation Payments to the holders of the Primary Options shall be subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the making of such payment; or
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(2) An option (each a “Rollover Option”) to purchase a number of shares of GBC Common Stock equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Primary Common Stock subject to such Primary Option immediately prior to the Effective Time times (y) 0.5870 (the “Exchange Ratio”), at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of the Primary Common Stock of such Primary Option immediately prior to the Effective Time divided by (B) the Exchange Ratio; provided, however, that the exercise price and the number of shares of GBC Common Stock purchasable pursuant to the Rollover Options shall be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that in the case of any Primary Option to which Section 422 of the Code applies, the exercise price and the number of shares of GBC Common Stock purchasable pursuant to such Rollover Option shall be subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code provided that GBC makes no assurances that such Rollover Options will satisfy the requirements of Section 422 of the Code. Except as specifically provided above and/or as necessary to effect the foregoing, following the Effective Time, each Rollover Option shall continue to have the same terms, including vesting, as were applicable to such Primary Option immediately prior to the Effective Time (substituting GBC and its subsidiaries for references to Primary and its subsidiaries as applicable), which Rollover Option will be assumed by GBC in connection with GBC’s adoption and assumption of the plans under which the Primary Options were issued following the Effective Time; or
(3) A number of shares of GBC Common Stock (the “Options Shares”, together with the Rollover Options and the Option Cancellation Payment, the “Option Consideration”) equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Primary Common Stock subject to such Primary Option immediately prior to the Effective Time times (y) the Exchange Ratio less the number of shares of GBC Common Stock equal to the aggregate exercise price for such Primary Options, assuming a value of $23.00 per share of GBC Common Stock. GBC shall deliver, or cause to be delivered, the Options Shares to each such holder of a Primary Option no later than the fifth (5th) Business Day following the Effective Time. The Options Shares to be issued to such holders of the Primary Options shall be subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the issuance of such shares, and GBC will withhold, or cause to be withheld, from such issuance that number of Options Shares (rounded up to the nearest whole number) that equals the applicable withholdings, assuming a value of $23.00 per share of GBC Common Stock.
(b) All rounding described in this Section 2.2 shall be done on an aggregate basis per Primary Option and any holder of a Primary Option, the adjustment of which results in fractional shares, shall be entitled to a cash payment under this Agreement in respect of such fractional share equal to the Fractional Share Cash-in-Lieu Amounts, subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the making of such payment.
(c) Prior to the Effective Time, conditioned upon the Closing, Primary and the Board of Directors of Primary shall adopt any resolutions and take any actions that are necessary to effect the treatment of the Primary Options pursuant to this Section 2.2, including the vesting of any Primary Option that is unvested immediately prior to the Effective Time to fully vest and receipt from the holders of the Primary Options of the executed Option Holder Release Agreements, no later than thirty (30) days prior to the Closing Date.
(d) Prior to the Effective Time, conditioned upon the Closing, GBC and the Board of Directors of GBC shall adopt any resolutions and take any actions that are necessary to effect the issuance of the Rollover Options at the Effective Time and cause the issuance of the Rollover Options and any securities to be issued upon exercise of a Rollover Option to be issued in compliance with applicable federal and state securities laws.
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(e) In the event that any holder of Primary Options does not make an election or if his or her election is not timely delivered or properly completed, such holder will be treated as electing to receive Option Shares pursuant to Section 2.2(a)(3).
2.3 Election and Allocation Procedures.
(a) Election.
(i) No later than ninety (90) days following the date of this Agreement, GBC shall appoint an exchange agent (the “Exchange Agent”), which is acceptable to Primary in its reasonable discretion, for the payment and exchange of the Merger Consideration.
(ii) Holders of record of Primary Common Stock may elect to receive either shares of GBC Common Stock, cash, or a combination thereof in exchange for their shares of Primary Common Stock; provided, however, that the aggregate number of shares of Primary Common Stock to be converted into the right to receive the Per Share Cash Consideration pursuant to this Section 2.3(a) shall not exceed the Cash Election Threshold.
(iii) An election form (“Election Form”), together with a letter of transmittal as described in Section 2.5(b), shall be mailed no less than thirty (30) days prior to the Election Deadline (such date of mailing, the “Mailing Date”), to each holder of record of one or more shares of Primary Common Stock (each, a “Holder”) as of five (5) Business Days prior to the Mailing Date, permitting such Holder, subject to the allocation and election procedures set forth in this Section 2.3, (1) to specify the number of shares of Primary Common Stock owned by such Holder with respect to which such Holder desires to receive the Per Share Cash Consideration (a “Cash Election” and such shares subject to a Cash Election, the “Cash Election Shares”), (2) to specify the number of shares of Primary Common Stock owned by such Holder with respect to which such Holder desires to receive the Per Share Stock Consideration (a “Stock Election” and such shares subject to a Stock Election, the “Stock Election Shares”), or (3) to indicate that such record Holder has no preference as to the receipt of the Per Share Cash Consideration or the Per Share Stock Consideration for their shares of Primary Common Stock held by such Holder. Holders of record of shares of Primary Common Stock who hold such shares as nominees, trustees or in other representative capacities may submit multiple Election Forms, provided that each such Election Form covers all the shares of Primary Common Stock held by each representative for a particular beneficial owner. Any shares of Primary Common Stock with respect to which the Holder thereof shall not, as of the Election Deadline, have made an election by submission to the Exchange Agent of an effective, properly completed Election Form or for which the Holder has indicated no preference as to the receipt of the Per Share Cash Consideration or Per Share Stock Consideration shall be deemed “Non-Election Shares.” GBC shall make available one or more Election Forms as may reasonably be requested in writing from time to time by all persons who become holders (or beneficial owners) of Primary Common Stock between the record date for the initial mailing of Election Forms and the close of business on the business day prior to the Election Deadline, and GBC shall provide to the Exchange Agent all information reasonably necessary for it to perform as specified herein.
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(iv) An election shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form by the Election Deadline accompanied by one or more certificates that immediately prior to the Effective Time represented shares of Primary Common Stock (or Primary Bank capital stock, to the extent the holder failed to exchange his, her or its certificate in connection with reorganization of Primary Bank into a holding company structure) (each, a “Primary Stock Certificate”) (or customary affidavits and indemnification regarding the loss or destruction of such Primary Stock Certificates or the guaranteed delivery of such Primary Stock Certificates) representing all the shares of Primary Common Stock covered by such Election Form. Any Election Form may be revoked or changed by the person submitting such Election Form to the Exchange Agent by written notice to the Exchange Agent only if such notice of revocation or change is actually received by the Exchange Agent at or prior to the Election Deadline. The Primary Stock Certificate(s) relating to any revoked Election Form shall be promptly returned without charge to the person submitting the Election Form to the Exchange Agent. In addition, if a Holder either (1) does not submit a properly completed Election Form in a timely fashion or (2) revokes its Election Form prior to the Election Deadline and fails to file a new properly completed Election Form before the Election Deadline, such shares shall be designated Non-Election Shares. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election, revocation, or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any good faith decisions of the Exchange Agent regarding such matters shall be binding and conclusive.
(b) Allocation. No later than five (5) Business Days after the Effective Time, GBC shall cause the Exchange Agent to effect the allocation among the Holders of rights to receive the Per Share Cash Consideration and/or the Per Share Stock Consideration, which shall be effected by the Exchange Agent in accordance with the terms of this Section 2.3(b). In order to ensure that the Cash Election Threshold is not exceeded, the parties hereby agree that the Exchange Agent, in applying the allocation rules set forth herein, shall have reasonable discretion to round calculations in order to accomplish such purpose and each good faith determination made by the Exchange Agent regarding such matters shall be binding and conclusive. For all purposes under this Section 2.3(b), in making the determination with respect to the allocation of the Merger Consideration, shares of Primary Common Stock that are subject to the Fractional Share Cash-in-Lieu Amounts provision of Section 2.3(c), that are Ineligible Shares (as defined below), that are Dissenters’ Shares subject to the provisions of Section 2.4, shall be treated as Cash Election Shares.
(i) Oversubscription of Cash Election Shares. If the aggregate number of Cash Election Shares (the “Cash Election Number”) is greater than the Cash Election Threshold, then, at the Effective Time: (1) each Stock Election Share and Non-Election Share shall be converted into the right to receive (subject to Sections 2.3(c)) the Per Share Stock Consideration; and (2) each Cash Election Share shall be converted into the right to receive (A) the Per Share Cash Consideration in respect of that number of Cash Election Shares equal to the product obtained by multiplying (x) the number of Cash Election Shares held by such Holder by (y) the fraction, the numerator of which is the Cash Election Threshold and the denominator of which is the Cash Election Number, and (B) the Per Share Stock Consideration in respect of the remainder of such Holder’s Cash Election Shares that were not converted into the right to receive the Per Share Cash Consideration pursuant to clause (A) above.
(ii) No Oversubscription of Cash Election Shares. If the Cash Election Number is less than or equal to the Cash Election Threshold, then at the Effective Time: (1) all Stock Election Shares and Non-Election Shares shall be converted into the right to receive the Per Share Stock Consideration (subject to Sections 2.3(c)) and (2) all Cash Election Shares shall be converted into the right to receive the Per Share Cash Consideration.
(c) Notwithstanding any other provisions of this Agreement, each Primary shareholder who would otherwise have been entitled under this Agreement to receive a fraction of a share of GBC Common Stock (after taking into account all Primary Stock Certificates delivered by such Primary shareholder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of GBC Common Stock multiplied by $23.00 (the “Fractional Share Cash-in-Lieu Amounts”). No Primary shareholder receiving Fractional Share Cash-in-Lieu Amounts for any Primary Common Stock will be entitled to any dividends declared by GBC in respect of such shares, nor will such holder be entitled to voting rights, or any other rights as a shareholder of GBC in respect of any such shares.
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(d) Notwithstanding any other provisions of this Agreement, if and to the extent that GBC determines that it is necessary or advisable in order to prevent a violation of the laws and regulations of any such state in which the necessary state securities law or “blue sky” permits and approvals, if any, required to carry out the contemplated transactions are not timely obtained, Primary Common Stock held by Primary shareholders residing in such states (“Ineligible Shares”) shall be ineligible to receive the Per Share Stock Consideration and shall instead receive the Per Share Cash Consideration. The Exchange Agent shall convert any Ineligible Shares for which the Holder of such shares has made a Stock Election to a Cash Election Share and shall not have any obligation to provide notice of such conversion to the Holder of such Ineligible Shares.
2.4 Dissenting Shareholders. Any holder of Dissenters’ Shares shall not be entitled to any Merger Consideration in respect of such shares, but instead shall be entitled to receive from the Surviving Entity or its successor the value of such shares in cash as determined pursuant to applicable law; provided, that no such payment shall be made to any such dissenting shareholder unless and until such dissenting shareholder has complied with the applicable provisions of the GBCC and surrendered to Primary or the Surviving Entity the Primary Stock Certificate(s) representing the shares for which payment is being made. In the event that after the Effective Time a dissenting shareholder of Primary fails to perfect, or effectively withdraws or loses, such holder’s right to appraisal of and payment for such holder’s Dissenter Shares, GBC or the Surviving Entity shall issue and deliver to such holder of shares of Primary Common Stock, upon surrender by such holder of such holder’s Primary Stock Certificate(s), an amount of cash (without interest) equal to the Per Share Cash Consideration multiplied by the number of shares represented by such surrendered Primary Stock Certificate(s).
2.5 Payment Procedures.
(a) At or prior to the Effective Time, GBC shall authorize the issuance of and shall deposit, or shall cause to be deposited with the Exchange Agent, for the benefit of the Primary shareholders for exchange in accordance with this Article II a sufficient number of shares of GBC Common Stock and cash for payment of the Merger Consideration pursuant to this Article II (such amount of cash and shares of GBC Common Stock, together with any dividends or distributions with respect thereto paid after the Effective Time, are referred to in this Article II as the “Conversion Fund”).
(b) As provided in Section 2.3(a)(iii) and, within five (5) business days after the Closing Date for each Primary shareholder that did not tender its Primary Stock Certificate on or before the Election Deadline pursuant to Section 2.3(a), GBC shall cause the Exchange Agent to mail to each holder of record of one or more Primary Stock Certificates the letter of transmittal and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the Primary Stock Certificates shall pass, only upon proper delivery of such Primary Stock Certificates to the Exchange Agent) for use in effecting the surrender of Primary Stock Certificates pursuant to this Agreement. GBC or its Exchange Agent will maintain a book entry list of GBC Common Stock to which each former holder of Primary Common Stock is entitled. Certificates evidencing GBC Common Stock into which Primary Common Stock has been converted will not be issued.
(c) No interest will be paid or accrued on any portion of the Merger Consideration deliverable upon surrender of a Primary Stock Certificate.
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(d) Any portion of the Conversion Fund that remains unclaimed by the former Primary shareholders twelve (12) months after the Effective Time shall be paid to the Surviving Entity, or its successors in interest. Any former Primary shareholders who have not theretofore complied with this Section 2.5 shall thereafter look only to the Surviving Entity, or its successors in interest, for the Merger Consideration, as well as any accrued and unpaid dividends or distributions on shares of GBC Common Stock deliverable in respect of each former share of Primary Common Stock such holder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Notwithstanding the foregoing, none of the Surviving Entity, the Exchange Agent or any other person shall be liable to any former Primary shareholder for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws. Any amounts remaining unclaimed by former holders of shares of Primary Common Stock immediately prior to the time at which such amounts would otherwise escheat to, or become property of, any Governmental Entity shall, to the extent permitted by applicable law, become the property of the Surviving Entity, free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto.
(e) In the event any Primary Stock Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Primary Stock Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting by such person of a bond in such amount as the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Primary Stock Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Primary Stock Certificate, and in accordance with this Section 2.5, shares of GBC Common Stock and/or cash constituting the Merger Consideration deliverable in respect thereof pursuant to this Agreement.
(f) If, between the date of this Agreement and the Effective Time, the outstanding shares of GBC Common Stock shall have been changed into a different number of shares or into a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the conversion price in the GBC Common Stock shall be adjusted appropriately to provide the holders of Primary Common Stock the same economic effect as contemplated by this Agreement prior to such event.
(g) Each of Primary, GBC and the Exchange Agent shall be entitled to deduct and withhold from the Per Share Merger Consideration otherwise payable pursuant to this Agreement to any Primary shareholder such amounts, if any, as it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Tax law. To the extent that any amounts are so withheld by Primary, GBC or the Exchange Agent, as the case may be, and timely remitted to the appropriate Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Primary shareholder on whose behalf such deduction and withholding was made by Primary, GBC or the Exchange Agent, as the case may be. At least three (3) business days in advance of the Closing Date, GBC shall provide written notice to Primary of any such intended withholding (other than any withholding on amounts properly treated as wages for U.S. federal income tax purposes); provided, further, GBC shall use commercially reasonable efforts to cooperate with Primary in its efforts to obtain reduction of or relief from any such withholding obligation to the extent permitted under applicable law. Additionally, at or immediately prior to the Closing, Primary shall provide to GBC (i) a notice to the Internal Revenue Service (the “IRS”), in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2) dated as of the Closing Date, together with written authorization for GBC to deliver such notice to the IRS on behalf of Primary after the Closing, and (ii) a certificate, stating interests in Primary are not “United States real property interests” as defined in Section 897(c) of the Code for the applicable period described in Section 897(c)(1)(A)(ii) of the Code, prepared in accordance with the Treasury Regulations under Sections 897 and 1445 of the Code, each in form and substance reasonably satisfactory to GBC and validly executed by a duly authorized officer of Primary.
(h) The Exchange Agent may establish such other reasonable and customary rules and procedures in connection with its duties as it may deem appropriate. GBC shall pay all charges and expenses, including those of the Exchange Agent, in connection with the distribution of the consideration provided in this Article II.
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2.6 Rights of Former Primary Shareholders. After the Effective Time, there shall be no transfers of Primary Common Stock on the stock transfer books of Primary, and no transfer of Primary Common Stock by any such holder shall thereafter be made or recognized. No dividends or other distributions declared with respect to GBC Common Stock and payable to the holders of record thereof after the Effective Time shall be paid to the holder of any unsurrendered Primary Stock Certificate until the holder thereof shall surrender such Primary Stock Certificate in accordance with this Article II. Promptly after the surrender of a Primary Stock Certificate in accordance with this Article II, the record holder thereof shall be entitled to receive any such dividends or other distributions, without interest thereon, which theretofore had become payable with respect to shares of GBC Common Stock into which the Primary Common Stock represented by such Primary Stock Certificate were converted at the Effective Time pursuant to Section 2.1. No holder of an unsurrendered Primary Stock Certificate shall be entitled, until surrender of such Primary Stock Certificate, to vote the shares of GBC Common Stock into which such holder’s Primary Common Stock shall have been converted until the holder thereof shall surrender such Primary Stock Certificate in accordance with this Article II. Until surrendered for exchange in accordance with the provisions of Article II, each Primary Stock Certificate theretofore representing Primary Common Stock (other than Cancelled Shares and Dissenters’ Shares) shall from and after the Effective Time represent for all purposes only the right to receive the Per Share Merger Consideration provided in this Article II in exchange therefor, subject, however, to the Surviving Entity’s obligation to pay any dividends or make any other distributions with a record date prior to the Effective Time which have been declared or made by Primary in respect of such Primary Common Stock in accordance with the terms of this Agreement and which remain unpaid at the Effective Time.
Article III
REPRESENTATIONS AND WARRANTIES OF PRIMARY
Except as disclosed in the disclosure schedule delivered by Primary to GBC concurrently herewith (the “Primary Disclosure Schedule”) (it being understood that (i) no item is required to be set forth as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect, (ii) the mere inclusion of an item in the Primary Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by Primary that such item represents a material exception or fact, event or circumstance or that such item would reasonably be expected to have a Material Adverse Effect, and (iii) any disclosures made with respect to a section of this Article III shall be deemed to qualify (1) any other section of this Article III specifically referenced or cross-referenced, and (2) other sections of this Article III to the extent it is reasonably apparent on its face (notwithstanding the absence of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections), Primary hereby represents and warrants to GBC as follows:
3.1 Corporate Organization.
(a) Primary is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia, is a bank holding company duly registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”) and has not elected to be treated as a financial holding company under the BHC Act. Primary has the corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted in all material respects. Primary is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing, qualification or standing necessary, except where the failure to be so licensed or qualified or to be in good standing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Primary. True and complete copies of the articles of incorporation of Primary (the “Primary Articles”), and the amended and restated bylaws of Primary (the “Primary Bylaws”), in each case, as in effect as of the date of this Agreement, have previously been made available by Primary to GBC.
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(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Primary, each Subsidiary of Primary (a “Primary Subsidiary”) (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership, leasing or operation of property or the conduct of its business requires it to be so licensed or qualified or in good standing, and (iii) has all requisite corporate power and authority to own, lease or operate its properties and assets and to carry on its business as now conducted. There are no restrictions on the ability of Primary or any Subsidiary of Primary to pay dividends or distributions except, in the case of Primary or a Subsidiary that is a regulated entity, for restrictions on dividends or distributions generally applicable to all similarly regulated entities. Primary Bank is the only depository institution Subsidiary of Primary, and the deposit accounts of Primary Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund (as defined in Section 3(y) of the Federal Deposit Insurance Act of 1950 (the “FDI Act”)) to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or threatened. Section 3.1(b) of the Primary Disclosure Schedule sets forth a true, correct and complete list of all Subsidiaries of Primary as of the date hereof. No Subsidiary of Primary is in violation of any of the provisions of its articles or certificate of incorporation or bylaws (or comparable organizational documents). True and complete copies of the organizational documents of Primary Bank as in effect as of the date of this Agreement have previously been made available by Primary to GBC. There is no person whose results of operations, cash flows, changes in shareholders’ equity or financial position are consolidated in the financial statements of Primary other than the Primary Subsidiaries.
3.2 Capitalization.
(a) The authorized capital stock of Primary consists of 100,000,000 shares of common stock, par value $5.00 per share (“Primary Common Stock”), and 10,000,000 shares of preferred stock, par value $5.00 per share. As of October 4, 2024, there were: (i) 1,788,797 shares of Primary Common Stock issued and outstanding, (ii) no shares of preferred stock of Primary and (iii) Primary Options to purchase 503,779 shares of Primary Common Stock. All the issued and outstanding shares of Primary 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. There are no bonds, debentures, notes or other indebtedness that have the right to vote on any matters on which shareholders of Primary may vote. Except for the Primary Options there are no outstanding subscriptions, options, warrants, stock appreciation rights, phantom units, scrip, rights to subscribe to or purchase, preemptive rights, anti-dilutive rights, rights of first refusal or similar rights, puts, calls, commitments or agreements of any character relating to, or securities or rights convertible or exchangeable into or exercisable for, shares of capital stock or other voting or equity securities of or ownership interest in Primary, or contracts, commitments, understandings or arrangements by which Primary may become bound to issue additional shares of its capital stock or other equity or voting securities of or ownership interests in Primary, or that otherwise obligate Primary to issue, transfer, sell, purchase, redeem or otherwise acquire, any of the foregoing (collectively, “Primary Securities”). Except for the Primary Options, no equity-based awards (including any cash awards where the amount of payment is determined, in whole or in part, based on the price of any capital stock of Primary or any of its Subsidiaries) are outstanding. No Primary Subsidiary owns any capital stock of Primary. There are no voting trusts, shareholder agreements, proxies or other agreements in effect to which Primary or any of its Subsidiaries is a party with respect to the voting or transfer of Primary Common Stock, capital stock or other voting or equity securities or ownership interests of Primary or granting any shareholder or other person any registration rights.
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(b) Except as would not, either individually or in the aggregate, reasonably be expected to be material to Primary, Primary owns, directly or indirectly, all the issued and outstanding shares of capital stock or other equity ownership interests of each of the Primary Subsidiaries, free and clear of any liens, claims, title defects, mortgages, pledges, charges, and security interests whatsoever, and any other encumbrances securing a payment or the performance of an obligation (collectively, “Liens”), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. Other than the shares of capital stock or other equity ownership interests described in the previous sentence, there are no outstanding subscriptions, options, warrants, stock appreciation rights, phantom units, scrip, rights to subscribe to, preemptive rights, anti-dilutive rights, rights of first refusal or similar rights, puts, calls, commitments or agreements of any character relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock or other voting or equity securities of or ownership interests in any Primary Subsidiary, or contracts, commitments, understandings or arrangements by which any Primary Subsidiary may become bound to issue additional shares of its capital stock or other equity or voting securities or ownership interests in such Primary Subsidiary, or otherwise obligating any Primary Subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire any of the foregoing.
3.3 Authority; No Violation.
(a) Primary has full corporate power and authority to execute and deliver this Agreement and, subject to the shareholder and other actions described below, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Merger and the Bank Merger have been duly and validly approved by the Board of Directors of Primary. The Board of Directors of Primary has determined that the Merger, on the terms and conditions set forth in this Agreement, is advisable and in the best interests of Primary and its shareholders, has adopted and approved this Agreement and the transactions contemplated hereby (including the Merger and the Bank Merger), and has directed that this Agreement be submitted to Primary’s shareholders for approval at a meeting of such shareholders and has adopted a resolution to the foregoing effect. The execution and delivery of the Bank Merger Agreement has been duly and validly approved by the Board of Directors of Primary and the Board of Directors of Primary Bank. Both the Board of Directors of Primary and the Board of Directors of Primary Bank have determined that the Bank Merger, on the terms and conditions set forth in the Bank Merger Agreement, is advisable and in the best interests of Primary Bank and Primary as its sole shareholder. Except for the approval of this Agreement by the affirmative vote of a majority of all the votes entitled to be cast on such matter by the holders of Primary Common Stock (the “Requisite Primary Vote”), and the approval of the Bank Merger Agreement by Primary as Primary Bank’s sole shareholder, no other corporate proceedings on the part of Primary are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Primary and (assuming due authorization, execution and delivery by GBC) constitutes a valid and binding obligation of Primary, enforceable against Primary in accordance with its terms (except in all cases as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, forbearance, moratorium, reorganization or similar laws of general applicability affecting the rights of creditors generally and the availability of equitable remedies (the “Enforceability Exceptions”)).
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(b) Neither the execution and delivery of this Agreement by Primary nor the consummation by Primary of the transactions contemplated hereby (including the Merger and the Bank Merger), nor compliance by Primary with any of the terms or provisions hereof, will (i) violate any provision of the Primary Articles, the Primary Bylaws or the organizational documents of any Primary Subsidiary, or (ii) assuming that the consents and approvals referred to in Section 3.4 are duly obtained, (x) violate any law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Primary or any of its Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Primary or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Primary or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound, except (in the case of clauses (x) and (y) above) for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations that, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Primary.
3.4 Consents and Approvals. Except for (a) the Fairness Determination, (b) the filing of any required applications, filings, waiver requests and notices, as applicable, with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) under the BHC Act and approval or waiver of such applications, filings, waiver requests and notices, (c) the filing of any required applications, filings and notices, as applicable, with the FDIC under the Bank Merger Act of 1960 and approval or waiver of such applications, filings and notices, (d) the filing of any required applications, filings and notices, as applicable, with the Georgia Department of Banking and Finance (the “DBF”) and approval or waiver of such applications, filings and notices, (e) the filing of any required applications, filings and notices, as applicable, with each Applicable Agency (as defined below) and the receipt of any required consents or approvals from each Applicable Agency, (f) those additional applications, filings and notices, if any, listed on Section 3.4 of the Primary Disclosure Schedule or Section 4.4 of the GBC Disclosure Schedule and approval of such applications, filings and notices, (g) the filing of the Certificate of Merger with the Georgia Secretary pursuant to the GBCC, (h) the filing of the Bank Merger Certificate with the applicable Governmental Entity as required by applicable law, and (i) such filings and approvals as are required to be made or obtained under the securities or “blue sky” laws of various states in connection with the issuance of the shares of GBC Common Stock pursuant to this Agreement, no consents or approvals of or filings or registrations with any court, administrative agency or commission, Regulatory Agency or other governmental or regulatory authority or instrumentality or SRO (each a “Governmental Entity”) are necessary in connection with (i) the execution and delivery by Primary of this Agreement or (ii) the consummation by Primary of the Merger and the other transactions contemplated hereby (including the Bank Merger). As of the date hereof, Primary has no knowledge of any reason why the necessary regulatory approvals and consents will not be received by Primary to permit consummation of the Merger and the Bank Merger on a timely basis. As used herein, “Applicable Agencies” means the United States Department of Agriculture and the Small Business Administration.
3.5 Reports. Primary and each of its Subsidiaries have timely filed (or furnished, as applicable) all reports, forms, correspondence, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file (or furnish, as applicable) since January 1, 2022 with (i) any state regulatory authority, (ii) the Federal Reserve, (iii) the DBF, (iv) the FDIC, (v) any foreign regulatory authority, and (vi) any self-regulatory organization (an “SRO”) (clauses (i) – (vi), collectively “Regulatory Agencies”), including any report, form, correspondence, registration or statement required to be filed (or furnished, as applicable) pursuant to the laws, rules or regulations of the United States, any state, any foreign entity or any Regulatory Agency, and have paid all fees and assessments due and payable in connection therewith, except where the failure to file (or furnish, as applicable) such report, form, correspondence, registration or statement or to pay such fees and assessments, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Primary. Subject to Section 9.15, except for normal examinations conducted by a Regulatory Agency in the ordinary course of business of Primary and its Subsidiaries, no Regulatory Agency or governmental agency or authority has initiated or has pending any proceeding or, to the knowledge of Primary, investigation into the business or operations of Primary or any of its Subsidiaries since January 1, 2022, except where such proceedings or investigations would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary. Subject to Section 9.15, there (i) is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations or inspections of Primary or any of its Subsidiaries, and (ii) has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with respect to the business, operations, policies or procedures of Primary or any of its Subsidiaries since January 1, 2022, in each case, which would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary.
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3.6 Financial Statements.
(a) Primary has furnished to GBC true and complete copies of (i) the consolidated balance sheet of Primary and Primary Bank as of December 31, 2021, December 31, 2022 and December 31, 2023, and the related consolidated statements of operations, shareholders’ equity, and cash flows of Primary and Primary Bank, together with all related notes and schedules thereto, accompanied by the reports thereon of Primary’ independent auditors for the years ended as of such dates, and (ii) the unaudited financial statements of Primary and Primary Bank for the six months ended June 30, 2024 (collectively, the “Primary Financial Statements”). The Primary Financial Statements (including the related notes) complied as to form, as of their respective dates, in all material respects with applicable accounting requirements, have been prepared according to GAAP applied on a consistent basis during the periods and at the dates involved (except as may be indicated in the notes thereto), fairly present, in all material respects, the financial condition of Primary and its Subsidiaries, as applicable, at the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to notes and normal year-end adjustments that were not material in amount or effect).
(b) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary, neither Primary nor any of its Subsidiaries has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved against on the consolidated balance sheet of Primary for the fiscal quarter ended June 30, 2024 included in the Primary Financial Statements or liabilities incurred in the ordinary course of business consistent with past practice since June 30, 2024 or in connection with this Agreement and the transactions contemplated hereby.
(c) Primary or Primary Bank has filed all required Reports of Condition and Income (“Call Reports”) since January 1, 2022 for Primary Bank. The Call Reports fairly present, in all material respects, the financial position of Primary Bank and the results of its operations at the date and for the period indicated in that Call Report in conformity with the instructions to the Call Report. Since January 1, 2022, Primary Bank has calculated its allowance for credit losses (“ACL”) (or allowance for loan and lease losses (“ALLL”) prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) in accordance with (i) GAAP (ii) the Interagency Policy Statement on the Allowance for Credit Losses (or the Interagency Policy Statement on the Allowance of Loan and Lease Losses prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) and (iii) all applicable rules and regulations, and, in the reasonable opinion of management, the ACL is reasonably likely to be to be adequate in all material respects.
(d) Since January 1, 2022, (i) neither Primary, Primary Bank, or their respective Subsidiaries nor, to the knowledge of Primary, any director, officer, employee, auditor, accountant or representative of Primary or its Subsidiaries has received or otherwise obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Primary or its Subsidiaries or their respective internal accounting controls relating to periods after January 1, 2022, including any material complaint, allegation, assertion or claim that Primary or its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) to the knowledge of Primary, no attorney representing Primary or its Subsidiaries, whether or not employed by Primary or its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation, relating to periods after January 1, 2022, by Primary or its Subsidiaries or any of their officers, directors, employees or agents to the Board of Directors of Primary or the Board of Directors of Primary Bank (or any committee thereof) or to any director or officer of Primary, Primary Bank, or their respective Subsidiaries.
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(e) Neither Primary nor its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement (including any contract or arrangement relating to any transaction or relationship between or among Primary and its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangement”), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, Primary or its Subsidiaries in Primary’ or its Subsidiaries’ financial statements.
3.7 Broker’s Fees. With the exception of the engagement of Performance Trust Capital Partners, neither Primary nor any Primary Subsidiary nor any of their respective officers or directors has employed any broker, finder or financial advisor or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or related transactions contemplated by this Agreement. Primary has disclosed to GBC as of the date hereof the material terms, including the payment of fees, of Primary’s engagement of Performance Trust Capital Partners related to the Merger and the other transactions contemplated hereunder.
3.8 Absence of Certain Changes or Events.
(a) Since December 31, 2023, there has not been any effect, change, event, circumstance, condition, occurrence or development that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary.
(b) Since December 31, 2023 through the date of this Agreement, Primary and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary course.
3.9 Legal and Regulatory Proceedings.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on Primary, neither Primary nor any of its Subsidiaries is a party to any, and there are no outstanding or pending or, to the knowledge of Primary, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against Primary or any of its Subsidiaries or any of their current or former directors or executive officers or challenging the validity or propriety of the transactions contemplated by this Agreement.
(b) Except as would not reasonably be expected to, either individually or in the aggregate, be material to Primary, there is no injunction, order, judgment, decree, or regulatory restriction imposed upon Primary, any of its Subsidiaries or the assets of Primary or any of its Subsidiaries (or that, upon consummation of the Merger, would apply to the Surviving Entity or any of its affiliates).
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3.10 Taxes and Tax Returns.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on Primary: each of Primary and its Subsidiaries has duly and timely filed (including all applicable extensions) all Tax Returns in all jurisdictions in which Tax Returns are required to be filed by it, and all such Tax Returns are true, correct and complete; neither Primary nor any of its Subsidiaries is the beneficiary of any extension of time within which to file any Tax Return (other than extensions to file Tax Returns obtained in the ordinary course); all Taxes of Primary and its Subsidiaries (whether or not shown on any Tax Returns) that are due have been fully and timely paid; each of Primary and its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, shareholder, independent contractor or other third party; each of Primary and its Subsidiaries have withheld and timely paid all Taxes required to have been withheld and paid with respect to, and have complied with, all information reporting, backup withholding, and nonresident withholding requirements; neither Primary nor any of its Subsidiaries has granted any extension or waiver of the limitation period applicable to any Tax that remains in effect (other than extension or waiver granted in the ordinary course of business); neither Primary nor any of its Subsidiaries has received written notice of assessment or proposed assessment in connection with any amount of Taxes, and there are no threatened in writing or pending disputes, claims, audits, examinations or other proceedings regarding any Tax of Primary and its Subsidiaries or the assets of Primary and its Subsidiaries; neither Primary nor any of its Subsidiaries in the last three (3) years has requested or become bound by any private letter ruling requests, closing agreements or gain recognition agreements with respect to Taxes; neither Primary nor any of its Subsidiaries is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement (other than such an agreement or arrangement exclusively between or among Primary and its Subsidiaries); neither Primary nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return for which the statute of limitations is open (other than a group the common parent of which was Primary), or (B) has any liability for the Taxes of any person (other than Primary or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) or otherwise as a transferee or successor.
(b) No written claim has ever been made by a Governmental Entity in a jurisdiction where Primary and its Subsidiaries do not file Tax Returns that it is or may be subject to taxation by, or required to file a Tax Return in, that jurisdiction. There are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any assets of Primary or any of its Subsidiaries.
(c) Neither Primary nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Primary and each of its Subsidiaries have disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.
(d) Neither Primary nor any of its Subsidiaries will be required to include any material item in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (iv) installment sale or open transaction disposition made on or prior to the Closing date; or (v) prepaid amount received on or prior to the Closing Date.
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(e) Neither Primary nor any of its Subsidiaries has been, within the past five (5) years or otherwise as part of a “plan (or series of related transactions)” within the meaning of Section 355(e) of the Code of which the Merger is also a part, a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intending to qualify for tax-free treatment under Section 355 of the Code. Neither Primary nor any of its Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(f) Neither Primary nor any of its Subsidiaries has deferred the payment of any Tax or claimed or received any Tax refund or credit pursuant to the Coronavirus Aid, Relief, and Economic Security Act, any similar statutory relief, or any other Tax legislation related to the COVID-19 pandemic or pursuant to any written agreement with a Governmental Entity that remains unpaid.
3.11 Employees.
(a) Each Primary Benefit Plan (as defined below) has been established, maintained, funded, operated and administered in all material respects in accordance with its terms and the requirements of all applicable laws, including ERISA and the Code. Neither Primary nor any of its Subsidiaries has taken any corrective action or made any filing under any voluntary correction program of the IRS, Department of Labor or any other Governmental Entity with respect to any Primary Benefit Plan in respect of any documentary or operational failure that has not been properly and fully corrected in accordance with the applicable correction program. Neither Primary, any of its Subsidiaries nor any Primary ERISA Affiliate has incurred, and, to the knowledge of Primary, no facts exist which reasonably could be expected to result in, any liability (direct or indirect, contingent or otherwise) to Primary or any Subsidiary with respect to any Primary Benefit Plan including without limitation, any liability, tax, penalty or fee under ERISA, the Code or any other applicable laws (other than to pay premiums, contributions or benefits in the ordinary course consistent with the terms of such plans). For purposes of this Agreement, the term “Primary Benefit Plans” means all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), whether or not subject to ERISA, and all equity, bonus or incentive, deferred compensation, retiree medical or life insurance, retirement, supplemental retirement, severance, termination, change in control, retention, employment, welfare, medical, disability, fringe or other benefit plans, programs, agreements, contracts, policies, arrangements or remuneration of any kind with respect to which Primary or any Subsidiary or any other entity, trade or business, whether or not incorporated, which together with Primary or any Subsidiary would, at any relevant time, be deemed a “single employer” within the meaning of Section 414 of the Code or Section 4001 of ERISA (a “Primary ERISA Affiliate”), is a party or has any current or future obligation or liability, contingent or otherwise, or that are maintained, contributed to (or required to be contributed to) or sponsored by Primary, any of its Subsidiaries or any Primary ERISA Affiliate for the benefit of any current or former employee, officer, director or independent contractor of Primary, any of its Subsidiaries or any Primary ERISA Affiliate or the spouses, dependents and/or beneficiaries of any of the foregoing.
(b) Section 3.11(b) of the Primary Disclosure Schedule sets forth a true, correct and complete list of all material Primary Benefit Plans. Primary has made available to GBC true, correct and complete copies of each material Primary Benefit Plan and any related trust or other funding vehicle or insurance policy, and the following related documents, to the extent applicable: (i) all summary plan descriptions, amendments, modifications or supplements, (ii) the most recent annual report (Form 5500) filed with the IRS, (iii) the most recently received IRS determination letter from the IRS or the opinion letter issued to the prototype sponsor with respect to each such Primary Benefit Plan intended to qualify under Section 401 of the Code, (iv) the most recently prepared actuarial report, (v) all contracts with any parties providing services or insurance to such plan, (vi) copies of material correspondence relating to any Primary Benefit Plan in the last three (3) years with all Governmental Entities, (vii) the IRS Forms 1094-C and 1095-C filed with the IRS and provided to employees for the past three years, and (viii) such other documentation with respect to any such Primary Benefit Plan as is reasonably requested by GBC. None of the Primary Benefit Plans are subject to or governed by the Laws of any jurisdiction other than the United States. No “employer” within the meaning of Section 3(5) of ERISA that is not a Primary ERISA Affiliate, other than Primary and its Subsidiaries, participates in any Primary Benefit Plan
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(c) The IRS has issued a favorable determination letter or opinion with respect to each Primary Benefit Plan that is intended to be qualified under Section 401(a) of the Code (the “Primary Qualified Plans”), and the related trust, which letter or opinion has not been revoked (nor, to the knowledge of Primary, has revocation been threatened), and each such Primary Qualified Plan is so qualified and the trusts maintained thereunder that are intended to be exempt from taxation under Section 501(a) of the Code are so exempt, and, to the knowledge of Primary, there are no existing circumstances and no events have occurred or are threatened that would reasonably be expected to adversely affect the qualified status of any Primary Qualified Plan or the tax-exempt status of the related trust.
(d) Neither Primary, any of its Subsidiaries nor any Primary ERISA Affiliate maintains, sponsors, contributes to or is obligated to contribute to, or within the prior ten (10) years, or has any obligation or liability, contingent or otherwise, to contribute to, or has or has ever had any liability, contingent or otherwise, under or with respect to (i) a “defined benefit plan,” as defined in Section 3(35) of ERISA, (ii) a pension plan within the meaning of Section 3(2) of ERISA that is covered by Title IV of ERISA and/or subject to the minimum funding standards of Section 302 of ERISA, Title IV of ERISA or Section 412, 430 or 4971 of the Code, (iii) a “multiple employer welfare arrangement” as defined in Section 3(40) of ERISA, or (iv) a trust that is intended to meet the requirements of Section 501(c)(9) of the Code.
(e) Except as set forth in Section 3.11(e) of the Primary Disclosure Schedule, neither Primary, any of its Subsidiaries nor any Primary ERISA Affiliate maintains, sponsors, contributes to or is obligated to contribute to, or has any obligation or liability, contingent or otherwise, to contribute to, or has or has ever had any liability, contingent or otherwise, under or with respect to (i) a “multiemployer plan,” as defined in Section 3(37) or 4001(a)(3) of ERISA or (ii) a “multiple employer plan” within the meaning of Section 413(c) of the Code or Section 4063, 4064 or 4066 of ERISA.
(f) Except as set forth in Section 3.11(f) of the Primary Disclosure Schedule, no Primary Benefit Plan provides for any post-employment or post-retirement health or medical or life insurance benefits for retired, former or current employees or spouses, beneficiaries or dependents thereof, except as required by Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA or similar provisions of any state laws for which the recipient pays the full premium therefor on an after-tax basis. The aggregate liabilities of Primary and its Subsidiaries for such post-employment or post-retirement health or medical or life insurance benefits has been reported properly in the Primary Financial Statements, and Primary has the authority and legal right to terminate such post-employment or post-retirement coverage on a prospective basis, without incurring any further liabilities or obligations, except with respect to any benefits required under Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA or similar provisions of any state laws for which the recipient pays the full premium therefor on an after-tax basis.
(g) All payments, premiums, contributions, remittances and reimbursements required to be made with respect to any Primary Benefit Plan by applicable law or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any Primary Benefit Plan, for any period through the date hereof, have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the books and records of Primary. There are no outstanding defaults or violations by any party to any Primary Benefit Plan, and no taxes, penalties or fees are owing under any Primary Benefit Plan. All reports and information relating to each Primary Benefit Plan required to be filed with any Governmental Entity have been timely filed, all reports and information relating to each Primary Benefit Plan required to be disclosed or provided to participants or their dependents or beneficiaries have been timely disclosed or provided, and, in each case, all information and disclosures contained therein were true, correct and complete in all material respects when disclosed.
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(h) Each Primary Benefit Plan that is a “nonqualified deferred compensation plan” within the meaning of Code Section 409A and not otherwise exempt from Section 409A of the Code has been maintained in writing, and operated and administered, in compliance with the requirements of Code Section 409A to the extent applicable.
(i) There are no pending or threatened claims (other than claims for benefits in the ordinary course consistent with the terms of the plan), lawsuits, audits, investigations or arbitrations which have been asserted or instituted, and, to Primary’ knowledge, no set of circumstances exists which may reasonably be expected to give rise to a claim, lawsuit, audit, investigation or arbitration against any Primary Benefit Plan, any trustees or fiduciaries thereof with respect to their duties to any Primary Benefit Plan, any of Primary, any Subsidiary or Primary ERISA Affiliate or any director, officer, or employee thereof, or the assets of any Primary Benefit Plan (in trust or otherwise), in respect of any Primary Benefit Plan which would have a Material Adverse Effect.
(j) None of Primary, any of its Subsidiaries, any Primary ERISA Affiliate, nor, to the knowledge of Primary, any director, officer of employee thereof, or any other party in interest or disqualified person (as defined in Section 4975 of the Code or Section 406 of ERISA), has engaged in any nonexempt “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) in respect of any Primary Benefit Plan.
(k) Primary and its Subsidiaries have complied, in all material respects, with the applicable provisions of the Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) including all provisions of the ACA applicable to their employees, including the employer shared responsibility provisions relating to the offer of “minimum essential coverage” to “full-time” employees that is “affordable” and provides “minimum value” (as defined in Code Section 4980H and related regulations) and the applicable employer information reporting provisions under Code Sections 6055 and 6056 (and all related regulations), and, to the knowledge of Primary, has not incurred, nor, does any condition exist that could reasonably be expected to subject Primary or any of its Subsidiaries, to any liability under Section 4980H of the Code and its governing regulations. Primary, each of its Subsidiaries and each Primary ERISA Affiliate have complied in all material respects with the notice and continuation coverage requirements of Section 4980B of the Code and the regulations thereunder and similar laws.
(l) Except as set forth in Section 3.11(l) of the Primary Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in conjunction with any other event) result in the acceleration of vesting, exercisability, funding or delivery of, or increase in the amount or value of, any payment, right or other benefit to any employee, officer, director or other service provider of Primary or any of its Subsidiaries, or result in any limitation on the right of Primary or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Primary Benefit Plan or related trust on or after the Effective Time. Without limiting the generality of the foregoing, no amount paid or payable (whether in cash, in property, or in the form of benefits) to any employee, officer, director or other service provider of Primary or any of its Subsidiaries in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with, related to or associated with any other event) will be an “excess parachute payment” within the meaning of Section 280G of the Code.
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(m) No Primary Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code, or otherwise.
(n) The transactions contemplated by this Agreement will not cause or require Primary or any of its affiliates to establish or make any contribution to a rabbi trust or similar funding vehicle.
(o) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary, there are no pending or, to Primary’ knowledge, threatened labor grievances or unfair labor practice claims or charges against Primary or any of its Subsidiaries, or any strikes or other labor disputes against Primary or any of its Subsidiaries. Neither Primary nor any of its Subsidiaries is party to or bound by any collective bargaining or similar agreement with any labor organization, or work rules or practices agreed to with any labor organization or employee association applicable to employees of Primary or any of its Subsidiaries and, there are no pending or, to the knowledge of Primary, threatened organizing efforts by any union or other group seeking to represent any employees of Primary or any of its Subsidiaries.
(p) Primary and its Subsidiaries are, and have been since January 1, 2022, in compliance with all applicable laws relating to labor and employment, including those relating to labor relations, wages, hours, overtime, employee and contractor classification, discrimination, harassment, retaliation, reasonable accommodation, leaves of absence, employee compensation and benefits, plant closures or layoffs, background checks, drug and alcohol testing, civil rights, affirmative action, work authorization, immigration, safety and health, information privacy and security, unemployment insurance, workers compensation, continuation coverage under group health plans, wage payment and the related payment and withholding of Taxes, except for failures to comply that have not had and would not reasonably be expected to result in any material liability to Primary and its Subsidiaries, taken as a whole.
(q) In the past five (5) years, neither Primary nor any of the Primary Subsidiaries has entered into a settlement agreement with a current or former officer, an employee or an independent contractor of the Primary or its Subsidiaries that substantially involves allegations relating to sexual harassment by either (i) an executive officer of Primary or its Subsidiaries or (ii) a senior employee of Primary or its Subsidiaries. In the past five (5) years, to the knowledge of Primary, no allegations of sexual harassment have been made against (x) an executive officer of Primary or its Subsidiaries or (y) an employee at the level of Senior Vice President (or any similarly-leveled employee) or above of Primary or its Subsidiaries.
(r) Each Primary Benefit Plan that is a “pension plan” within the meaning of Section 3(2) of ERISA but is not qualified under Code Section 401(a) is exempt from Parts 2, 3 and 4 of Title I of ERISA as an unfunded plan that is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, pursuant to Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and Primary has made the one-time filing with the Department of Labor with respect to each such plan. No assets of any Primary Benefit Plan are allocated to or held in a “rabbi trust” or similar funding vehicle.
(s) Each individual who is or has ever been characterized as an employee or independent contractor by Primary or any of its Subsidiaries has been properly classified as such for all purposes, including participation and benefit accrual under each Primary Benefit Plan. All employees of Primary and its Subsidiaries are and have been correctly classified as exempt or nonexempt under the Fair Labor Standards Act and similar state laws, and Primary and its Subsidiaries have not received any notice from any individual or Governmental Entity disputing such classification.
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(t) The Primary Benefit Plans have been administered in accordance with the Joint Notification of Extensions of Certain Timeframes for Employee Benefit Plans, Participants and Beneficiaries Affected by the COVID-19 Outbreak, Disaster Relief Notice 2021-01 and the COBRA premium assistance provisions under the American Rescue Plan Act of 2021, including proper recovery of premium credits through the FICA Tax Returns of the Company and/or the Subsidiary, if applicable.
3.12 Compliance with Applicable Law.
(a) Primary and each of its Subsidiaries hold, and have at all times since January 1, 2022, held, all licenses, registrations, franchises, certificates, variances, permits, charters and authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all fees and assessments due and payable in connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding such license, registration, franchise, certificate, variance, permit, charter or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Primary, and, to the knowledge of Primary, no suspension or cancellation of any such necessary license, registration, franchise, certificate, variance, permit, charter or authorization is threatened.
(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Primary, Primary and each of its Subsidiaries, since January 1, 2022, have complied with and are not in default or violation under any applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to Primary or any of its Subsidiaries, including all laws related to data protection or privacy (including laws relating to the privacy and security of data or information that could reasonably be used to identify any person, or that otherwise constitutes personal data or personal information under applicable law (“Personal Data”)), the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, Section 5 of the Federal Trade Commission Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the Interagency Guidance on Third-Party Relationships: Risk Management. the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, Title V of the Gramm-Leach-Bliley Act, any and all sanctions or regulations enforced by the Office of Foreign Assets Control of the United States Department of Treasury and any other law, policy or guideline relating to bank secrecy, discriminatory lending, financing or leasing practices, consumer protection, money laundering prevention, foreign assets control, U.S. sanctions laws and regulations, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and all agency requirements relating to the origination, sale and servicing of mortgage and consumer loans. Primary and its Subsidiaries have established and maintain a system of internal controls designed to ensure compliance in all material respects by Primary and its Subsidiaries with applicable financial recordkeeping and reporting requirements of applicable money laundering prevention laws in jurisdictions where Primary and its Subsidiaries conduct business.
(c) Primary Bank has received an Institution Community Reinvestment Act rating of “satisfactory” or better in its most recently completed Community Reinvestment Act examination and, to the knowledge of Primary, there are no existing facts or circumstances that would negatively affect such rating.
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(d) Primary maintains a written information privacy and security program that maintains reasonable measures to protect the privacy, confidentiality and security of all Personal Data and any other material confidential information against any (i) loss or misuse, (ii) unauthorized or unlawful operations performed thereon, or (iii) other act or omission that compromises the security or confidentiality thereof (clauses (i) through (iii), a “Security Breach”). To the knowledge of Primary, Primary has not experienced any Security Breach that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Primary. To the knowledge of Primary, there are no data security or other technological vulnerabilities with respect to its information technology systems or networks that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Primary.
(e) Without limitation, none of Primary or any of its Subsidiaries, or to the knowledge of Primary, any director, officer, employee, agent or other person acting on behalf of Primary or any of its Subsidiaries has, directly or indirectly, (i) used any funds of Primary or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from funds of Primary or any of its Subsidiaries, (iii) violated any provision that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar law, (iv) established or maintained any unlawful fund of monies or other assets of Primary or any of its Subsidiaries, (v) made any fraudulent entry on the books or records of Primary or any of its Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business, to obtain special concessions for Primary or any of its Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for Primary or any of its Subsidiaries, or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department, except, in each case, as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Primary.
(f) As of the date hereof, each of Primary and Primary Bank is “well-capitalized” (as such term is defined in the relevant regulation of the institution’s primary federal regulator).
(g) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Primary, (i) Primary and each of its Subsidiaries have properly administered all accounts for which it acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable state, federal and foreign law; and (ii) none of Primary, any of its Subsidiaries, or any of its or its Subsidiaries’ directors, officers or employees, has committed any breach of trust or fiduciary duty with respect to any such fiduciary account, and the accountings for each such fiduciary account are true, correct and complete and accurately reflect the assets and results of such fiduciary account.
3.13 Certain Contracts.
(a) Except as set forth in Section 3.13(a) of the Primary Disclosure Schedule, as of the date hereof, neither Primary nor any of its Subsidiaries is a party to or bound by any contract, arrangement, commitment or understanding (whether written or oral):
(i) which contains a provision that materially restricts the conduct of any line of business by Primary or any of its Subsidiaries or upon consummation of the Merger will materially restrict the ability of the Surviving Entity or any of its affiliates to engage or compete in any line of business or in any geographic region (including any non-compete or client or customer non-solicitation requirement);
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(ii) which is a collective bargaining agreement or similar agreement with any labor organization;
(iii) any of the benefits of or obligations under which will arise or be increased or accelerated by the occurrence of the execution and delivery of this Agreement, receipt of the Requisite Primary Vote or the announcement or consummation of any of the transactions contemplated by this Agreement, or under which a right of cancellation or termination will arise as a result thereof, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;
(iv) that grants any right of first refusal, right of first offer or similar right with respect to any material assets, rights or properties of Primary or its Subsidiaries, taken as a whole;
(v) (A) that relates to the incurrence of indebtedness by Primary or any Primary Subsidiary other than (x) those entered into in the ordinary course of business and (y) deposit liabilities, trade payables, federal funds purchased, advances and loans from the Federal Home Loan Bank and securities sold under agreements to repurchase, in each case, incurred in the ordinary course of business consistent with past practice, and (B) any guaranty of any obligation for the incurrence of indebtedness, excluding endorsements made for collection, repurchase or resell agreements, letters of credit and guaranties made in the ordinary course of business, in the case of each of clauses (A) and (B), in the principal amount of $250,000 or more;
(vi) relating to the lease of real property or personal property having a value in excess of $50,000 in the aggregate;
(vii) that is a policy of insurance, including fidelity and bond insurance, relating to the Primary;
(viii) relating to any joint venture, partnership, limited liability company agreement or other similar agreement or arrangement;
(ix) which relates to capital expenditures and involves future payments in excess of $50,000 in the aggregate;
(x) which is not terminable on ninety (90) days or less notice and involves the payment of more than $50,000 per annum;
(xi) that is a settlement, consent or similar agreement and contains any material continuing obligations of Primary or any of its Subsidiaries;
(xii) that relates to the acquisition or disposition of any person, business or asset and under which Primary or its Subsidiaries have or may have a material obligation or liability;
(xiii) that relates to the employment or service of any current or former employee, director, officer or other service provider, which is not terminable by Primary or any Subsidiary without penalty or other costs on thirty (30) calendar days’ or less notice, including without limitation employment, consulting, incentive, rendition, change in control, severance, termination pay and similar agreements; or
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(xiv) that provides for bonuses, incentives, retention, options, pensions, deferred compensation, retirement, profit sharing, equity, fringe benefits or similar compensatory or benefit arrangements with any current or former employees, directors, officers or other service providers.
Each contract, arrangement, commitment or understanding of the type described in this Section 3.13(a), whether or not set forth in the Primary Disclosure Schedule, is referred to herein as a “Primary Contract.” Primary has made available to GBC true, correct and complete copies of each Primary Contract in effect as of the date hereof.
(b) (1) Each Primary Contract is valid and binding on Primary or one of its Subsidiaries, as applicable, and in full force and effect, except as, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Primary, (2) Primary and each of its Subsidiaries have in all material respects complied with and performed all obligations required to be complied with or performed by any of them to date under each Primary Contract, except where such noncompliance or nonperformance, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Primary, (3) to the knowledge of Primary, each third-party counterparty to each Primary Contract has in all material respects complied with and performed all obligations required to be complied with and performed by it to date under such Primary Contract, except where such noncompliance or nonperformance, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Primary, (4) neither Primary nor any of its Subsidiaries has knowledge of, or has received notice of, any violation of any Primary Contract by any of the other parties thereto which would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary and (5) no event or condition exists which constitutes or, after notice or lapse of time or both, will constitute, a material breach or default on the part of Primary or any of its Subsidiaries, or to the knowledge of Primary, any other party thereto, of or under any such Primary Contract, except where such breach or default, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Primary.
3.14 Agreements with Regulatory Agencies. Subject to Section 9.15, neither Primary nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since January 1, 2022, a recipient of any supervisory letter from, or since January 1, 2022, has adopted any policies, procedures or board resolutions at the request or suggestion of, any Regulatory Agency or other Governmental Entity that currently restricts in any material respect or would reasonably be expected to restrict in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the Primary Disclosure Schedule, a “Primary Regulatory Agreement”), nor has Primary or any of its Subsidiaries been advised in writing, or to Primary’ knowledge, orally, since January 1, 2022, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Primary Regulatory Agreement.
3.15 Risk Management Instruments. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary, all interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar derivative transactions and risk management arrangements, whether entered into for the account of Primary or any of its Subsidiaries or for the account of a customer of Primary or one of its Subsidiaries, were entered into in the ordinary course of business and in accordance with applicable rules, regulations and policies of any Regulatory Agency and with counterparties reasonably believed to be financially responsible at the time and are legal, valid and binding obligations of Primary or one of its Subsidiaries enforceable in accordance with their terms (except as may be limited by the Enforceability Exceptions). Primary and each of its Subsidiaries have duly performed in all material respects all of their material obligations thereunder to the extent that such obligations to perform have accrued, and, to Primary’ knowledge, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereto.
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3.16 Environmental Matters. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary, Primary and its Subsidiaries are in compliance, and have complied since January 1, 2022, with any federal, state or local law, regulation, order, decree, permit, authorization, common law or agency requirement relating to: (a) the protection or restoration of the environment, health and safety as it relates to hazardous substance exposure or natural resource damages, (b) the handling, use, presence, disposal, release or threatened release of, or exposure to, any hazardous substance, or (c) noise, odor, wetlands, indoor air, pollution, contamination or any injury to persons or property from exposure to any hazardous substance (collectively, “Environmental Laws”). There are no legal, administrative, arbitral or other proceedings, claims or actions, or to the knowledge of Primary, any private environmental investigations or remediation activities or governmental investigations of any nature seeking to impose, or that could reasonably be expected to result in the imposition, on Primary or any of its Subsidiaries of any liability or obligation arising under any Environmental Law pending or threatened against Primary, which liability or obligation would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary. To the knowledge of Primary, there is no reasonable basis for any such proceeding, claim, action or governmental investigation that would impose any liability or obligation that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary. Primary is not subject to any agreement, order, judgment, decree, letter agreement or memorandum of agreement by or with any court, Governmental Entity, Regulatory Agency or other third party imposing any liability or obligation with respect to the foregoing that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary.
3.17 Investment Securities and Commodities. Each of Primary and its Subsidiaries has good title in all material respects to all securities and commodities owned by it (except those sold under repurchase agreements) which are material to Primary’ business on a consolidated basis, free and clear of any Lien, except to the extent such securities or commodities are pledged in the ordinary course of business to secure obligations of Primary or its Subsidiaries. Such securities and commodities are valued on the books of Primary in accordance with GAAP in all material respects. Primary and each of its Subsidiaries employ, to the extent applicable, investment, securities, risk management and other policies, practices and procedures that Primary believes are prudent and reasonable in the context of their respective businesses, and Primary and each of its Subsidiaries have, since January 1, 2022, been in compliance with such policies, practices and procedures in all material respects.
3.18 Real Property. Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect on Primary, Primary or its Subsidiary (a) has good and marketable title to all the real property listed on Section 3.18 of the Primary Disclosure Schedule (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business) (the “Primary Owned Property”), free and clear of all Liens, except (i) statutory Liens securing payments not yet due, (ii) Liens for real property Taxes not yet due and payable, (iii) easements, rights of way, and other similar encumbrances that do not materially affect the value or use of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, and (iv) such imperfections or irregularities of title or Liens as do not materially affect the value or use of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties (collectively, “Permitted Encumbrances”), and (b) is the lessee of all leasehold estates listed on Section 3.18 of the Primary Disclosure Schedule (such leasehold estates, collectively with the Primary Owned Property, the “Primary Real Property”), free and clear of all Liens, except for Permitted Encumbrances, and is in possession of the properties purported to be leased thereunder, and each such lease is valid without default thereunder by the lessee or, to the knowledge of Primary, the lessor. There are no contractual obligations, agreements in principle or present plans for Primary to enter into new leases of real property or to renew or amend existing leases prior to the Closing Date. There are no pending or, to the knowledge of Primary, threatened condemnation proceedings or other actions, suits or proceedings against the Primary Real Property.The use and operations of, and improvements upon, the Primary Real Property, are in compliance with all applicable building, fire, zoning and other applicable laws, ordinances and regulations. The buildings and structures owned, leased or used by Primary and its Subsidiary are, taken as a whole, in good operating order (except for ordinary wear and tear), usable in the ordinary course of business, and are sufficient and adequate to carry on the business and affairs of Primary and its Subsidiary. Except as listed on Section 3.18 of the Primary Disclosure Schedule, Primary and its Subsidiary do not own, lease or use any real property in the conduct of Primary’s or its Subsidiary’s business.
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3.19 Intellectual Property. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary: (a)(i) to the knowledge of Primary, Primary and each of its Subsidiaries owns, or is licensed to use (in each case, free and clear of any material Liens), all Intellectual Property necessary for the conduct of its business as currently conducted, (ii) to the knowledge of Primary, neither Primary nor any of its Subsidiaries have, within the past two (2) years, infringed, misappropriated or otherwise violated any other person’s rights in Intellectual Property, or violated or breached any applicable license pursuant to which Primary or any Primary Subsidiary acquired the right to use any Intellectual Property, and (iii) no person has asserted in writing to Primary or any of its Subsidiaries within the past two (2) years that Primary or any of its Subsidiaries has infringed, misappropriated or otherwise violated the Intellectual Property rights of any person; (b) to the knowledge of Primary, no person is challenging, infringing on or otherwise violating, any right of Primary or any of its Subsidiaries with respect to any Intellectual Property owned by Primary or its Subsidiaries; (c) neither Primary nor any Primary Subsidiary has received any written notice of any pending claim challenging any Intellectual Property owned by Primary or any Primary Subsidiary (including with respect to the ownership, abandonment, cancellation or enforceability thereof); and (d) Primary and its Subsidiaries have taken commercially reasonable actions to safeguard its and their material trade secrets and other confidential information, and avoid the abandonment, cancellation or unenforceability of all Intellectual Property owned by Primary and its Subsidiaries. For purposes of this Agreement, “Intellectual Property” means any intellectual property or proprietary rights of any kind arising in any jurisdiction, including in or with respect to any: trademarks, service marks, brand names, internet domain names, logos, symbols, certification marks, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; inventions, discoveries and ideas, whether patentable or not, in any jurisdiction; patents, applications for patents (including divisions, continuations, continuations in part and renewal applications), all improvements thereto, and any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic information, trade secrets and know-how, including processes, technologies, protocols, formulae, prototypes and confidential information and rights in any jurisdiction to limit the use or disclosure thereof by any person; data and database rights; writings and other works, whether copyrightable or not and whether in published or unpublished works, in any jurisdiction.
3.20 Related Party Transactions. Except for the transactions set forth in Section 3.25(e) of the Primary Disclosure Schedules and the Primary Benefit Plans listed in Section 3.11(b) of the Primary Disclosure Schedule, there are no transactions or series of related transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions or series of related transactions, between Primary or any of its Subsidiaries, on the one hand, and any current or former director or “executive officer” (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Primary or any of its Subsidiaries or any person who beneficially owns (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) five percent (5%) or more of the outstanding Primary Common Stock (or any of such person’s immediate family members or affiliates) (other than Subsidiaries of Primary) on the other hand, of the type required by the Exchange Act and the rules and regulations thereunder.
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3.21 State Takeover Laws. The Board of Directors of Primary has approved this Agreement and the transactions contemplated hereby and has taken all such other necessary actions as required to render inapplicable to such agreements and transactions the provisions of any potentially applicable takeover laws of any state, including any “moratorium,” “control share,” “fair price,” “takeover” or “interested shareholder” law or any similar provisions of the Primary Articles or Primary Bylaws (collectively, with any similar provisions of the GBC Charter or GBC Bylaws, “Takeover Statutes”).
3.22 Reorganization. Primary has not taken any action and has no knowledge of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
3.23 Opinion. Prior to the execution of this Agreement, the Board of Directors of Primary has received an opinion (which if initially rendered orally, has been or will be confirmed by written opinion of the same date) from Performance Trust Capital Partners to the effect that as of the date thereof and based upon and subject to the various assumptions made, procedures followed, the matters considered, and the terms, qualifications and limitations set forth in its written opinion, the Merger Consideration is fair from a financial point of view to the holders (other than GBC and its affiliates) of Primary Common Stock. Such opinion has not been amended or rescinded as of the date of this Agreement.
3.24 Primary Information. The information relating to Primary and its Subsidiaries that is provided in writing by Primary or its Subsidiaries or their respective representatives specifically for inclusion in the Proxy Statement or in any other document filed with any other Regulatory Agency or Governmental Entity in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. The portion of the Proxy Statement relating to Primary or any of its Subsidiaries will comply in all material respects with applicable law.
3.25 Loan Portfolio.
(a) As of the date hereof, except as set forth in Section 3.25(a) of the Primary Disclosure Schedule, neither Primary nor any of its Subsidiaries is a party to any written or oral loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, commitments, guarantees and interest-bearing assets) (collectively, “Loans”) in which Primary or any Subsidiary of Primary is a creditor that, as of September 30, 2024, under the terms of which the obligor was, as of September 30, 2024 over ninety (90) days or more delinquent in payment of principal or interest. Set forth in Section 3.25(a) of the Primary Disclosure Schedule is a true, correct and complete list of (A) all of the Loans of Primary and its Subsidiaries that, as of September 30, 2024, were classified by Primary as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import, together with the principal amount of each such Loan and the identity of the borrower thereunder and (B) each asset of Primary or any of its Subsidiaries that, as of September 30, 2024, is classified as “Other Real Estate Owned” and the book value thereof.
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(b) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary, each Loan of Primary or any of its Subsidiaries (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent carried on the books and records of Primary and its Subsidiaries as secured Loans, has been secured by valid charges, mortgages, pledges, security interests, restrictions, claims, liens or encumbrances, as applicable, which have been perfected, (iii) is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, subject to the Enforceability Exceptions; and (iv) to the extent secured by a pledge of consumer loans, none of such loans are subject to any right of offset, recission, set-off or any counterclaim or defense for which there is a reasonable possibility of an adverse determination to Primary, including the defense of usury or lack of legal capacity of any guarantor or borrower.
(c) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary, each outstanding Loan of Primary or any of its Subsidiaries (including Loans held for resale to investors) was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are being maintained, in all material respects in accordance with the relevant notes or other credit or security documents, the written underwriting standards of Primary and its Subsidiaries (and, in the case of Loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and with all applicable federal, state and local laws, regulations and rules.
(d) None of the agreements pursuant to which Primary or any of its Subsidiaries has sold Loans or pools of Loans or participations in Loans or pools of Loans contain any obligation to repurchase such Loans or interests therein solely on account of a payment default (other than early payment defaults) by the obligor on any such Loan.
(e) Except as set forth in Section 3.25(e) of the Primary Disclosure Schedule, there are no outstanding Loans made by Primary or any of its Subsidiaries to any “executive officer” or other “insider” (as each such term is defined in Regulation O promulgated by the Federal Reserve) of Primary or its Subsidiaries.
(f) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Primary, neither Primary nor any of its Subsidiaries is now nor has it ever been since January 1, 2022 subject to any fine, suspension, settlement or other administrative agreement or sanction by any Governmental Entity or Regulatory Agency relating to the origination, sale or servicing of mortgage or consumer Loans.
(g) As to each Loan that is secured whether in whole or in part, by a guaranty of the United States Small Business Administration or any other Governmental Entity (collectively, “SBA Loans”), such guaranty is in full force and effect, and to Primary’ knowledge, will remain in full force and effect following the Effective Time, in each case, without any further action by Primary or any of its Subsidiaries subject to the fulfillment of their obligations under the agreement with the Small Business Administration that arise after the date hereof. There have been no oral or written communications with or notices from the United States Small Business Administration or any other Governmental Entity indicating that the guaranty of any such SBA Loan requires repair or otherwise indicating that the guaranty of any such SBA Loan is or may be at risk.
3.26 Insurance. Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect on Primary and except for insurance policies underlying Primary Benefit Plans, (a) Primary and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Primary and Primary Bank reasonably have determined to be prudent and consistent with industry practice, and Primary and its Subsidiaries are in compliance in all material respects with their insurance policies and are not in default under any of the terms thereof, (b) each such policy is outstanding and in full force and effect and, except for policies insuring against potential liabilities of current or former officers, directors and employees of Primary and its Subsidiaries, Primary or the relevant Subsidiary thereof is the sole beneficiary of such policies, (c) all premiums and other payments due under any such policy have been paid, and all claims thereunder have been filed in due and timely fashion, (d) there is no claim for coverage by Primary or any of its Subsidiaries pending under any insurance policy as to which coverage has been questioned, denied or disputed by the underwriters of such insurance policy, and (e) neither Primary nor any of its Subsidiaries has received notice of any threatened termination of, material premium increase with respect to, or material alteration of coverage under, any insurance policies.
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3.27 No Other Representations or Warranties.
(a) Except for the representations and warranties made by Primary in this Article III, neither Primary nor any other person makes any express or implied representation or warranty with respect to Primary, its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and Primary hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither Primary nor any other person makes or has made any representation or warranty to GBC or any of its affiliates or representatives with respect to (i) any financial projection, forecast, estimate, budget or prospective information relating to Primary, any of its Subsidiaries or their respective businesses, or (ii) any oral or written information presented to GBC or any of its affiliates or representatives in the course of their due diligence investigation of Primary, the negotiation of this Agreement or in the course of the transactions contemplated hereby, except in each case, for the representations and warranties made by Primary in this Article III.
(b) Primary acknowledges and agrees that neither GBC nor any other person on behalf of GBC has made or is making, and Primary has not relied upon, any express or implied representation or warranty other than those contained in Article IV.
Article IV
REPRESENTATIONS AND WARRANTIES OF GBC
Except as disclosed in the disclosure schedule delivered by GBC to Primary concurrently herewith (the “GBC Disclosure Schedule”) (it being understood that (i) no item is required to be set forth as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect, (ii) the mere inclusion of an item in the GBC Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by GBC that such item represents a material exception or fact, event or circumstance or that such item would reasonably be expected to have a Material Adverse Effect, and (iii) any disclosures made with respect to a section of this Article IV shall be deemed to qualify (1) any other section of this Article IV specifically referenced or cross-referenced, and (2) other sections of this Article IV to the extent it is reasonably apparent on its face (notwithstanding the absence of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections), GBC hereby represents and warrants to Primary as follows:
4.1 Corporate Organization.
(a) GBC is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia, is a bank holding company duly registered under the BHC Act and has elected to be treated as a financial holding company under the BHC Act. GBC has the corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted in all material respects. GBC is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing, qualification or standing necessary, except where the failure to be so licensed or qualified or to be in good standing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC. True and complete copies of the amended and restated articles of incorporation of GBC, as amended (the “GBC Charter”) and the amended and restated bylaws of GBC, as amended (the “GBC Bylaws”), in each case, as in effect as of the date of this Agreement, have previously been made available by GBC to Primary.
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(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, each Subsidiary of GBC (a “GBC Subsidiary”) (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership, leasing or operation of property or the conduct of its business requires it to be so licensed or qualified or in good standing, and (iii) has all requisite corporate power and authority to own, lease or operate its properties and assets and to carry on its business as now conducted. There are no restrictions on the ability of GBC or any Subsidiary of GBC to pay dividends or distributions except, in the case of GBC or a Subsidiary that is a regulated entity, for restrictions on dividends or distributions generally applicable to all similarly regulated entities. GBC Bank is the only depository institution Subsidiary of GBC, and the deposit accounts of GBC Bank are insured by the FDIC through the Deposit Insurance Fund (as defined in Section 3(y) of the FDI Act) to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or threatened. Section 4.1(b) of the GBC Disclosure Schedule sets forth a true, correct and complete list of all Subsidiaries of GBC as of the date hereof. True and complete copies of the organizational documents of GBC Bank as in effect as of the date of this Agreement have previously been made available by GBC to Primary. There is no person whose results of operations, cash flows, changes in shareholders’ equity or financial position are consolidated in the financial statements of GBC other than the GBC Subsidiaries.
4.2 Capitalization.
(a) The authorized capital stock of GBC consists of 40,000,000 shares of voting common stock, par value $0.01 per share (the “GBC Voting Common Stock”), 10,000,000 shares of non-voting common stock, par value $0.01 per share (the “GBC Non-Voting Common Stock”, together with the GBC Voting Common Stock, the “GBC Common Stock”), and 10,000,000 shares of preferred stock, par value $0.01 per share. As of October 4, 2024 there were (i) 7,346,586 shares of GBC Voting Common Stock issued and outstanding; (ii) no shares of GBC Non-Voting Common Stock issued and outstanding; and (iii) no shares of GBC preferred stock issued and outstanding. All the issued and outstanding shares of GBC 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. There are no bonds, debentures, notes or other indebtedness that have the right to vote on any matters on which shareholders of GBC may vote. Except as set forth in Section 4.2(a) of the GBC Disclosure Schedules, there are no outstanding subscriptions, options, warrants, stock appreciation rights, deferral units, scrip, rights to subscribe to or purchase, preemptive rights, anti-dilutive rights, rights of first refusal or similar rights, puts, calls, commitments or agreements of any character relating to, or securities or rights convertible or exchangeable into or exercisable for, shares of capital stock or other voting or equity securities of or ownership interest in GBC, or contracts, commitments, understandings or arrangements by which GBC may become bound to issue additional shares of its capital stock or other equity or voting securities of or ownership interests in GBC or that otherwise obligate GBC to issue, transfer, sell, purchase, redeem or otherwise acquire, any of the foregoing. Except as set forth in Section 4.2(a) of the GBC Disclosure Schedules, no equity-based awards (including any cash awards where the amount of payment is determined in whole or in part based on the price of any capital stock of GBC or any of its Subsidiaries) are outstanding. Except as set forth in Section 4.2(a) of the GBC Disclosure Schedules, there are no voting trusts, shareholder agreements, proxies or other agreements in effect to which GBC or any of its Subsidiaries is a party with respect to the voting or transfer of GBC Common Stock, capital stock or other voting or equity securities or ownership interests of GBC or granting any shareholder or other person any registration rights.
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(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, GBC owns, directly or indirectly, all the issued and outstanding shares of capital stock or other equity ownership interests of each of the GBC Subsidiaries, free and clear of any Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.
4.3 Authority; No Violation.
(a) GBC has full corporate power and authority to execute and deliver this Agreement and, subject to the shareholder and other actions described below, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Merger and the Bank Merger have been duly and validly approved by the Board of Directors of GBC. The Board of Directors of GBC has determined that the Merger, on the terms and conditions set forth in this Agreement, is advisable and in the best interests of GBC and its shareholders, has adopted and approved this Agreement and the transactions contemplated hereby (including the Merger and the Bank Merger) and has adopted a resolution to the foregoing effect. The execution and delivery of the Bank Merger Agreement has been duly and validly approved by the Board of Directors of GBC and the Board of Directors of GBC Bank. Both the Board of Directors of GBC and the Board of Directors of GBC Bank have determined that the Bank Merger, on the terms and conditions set forth in the Bank Merger Agreement, is advisable and in the best interests of GBC Bank and GBC as its sole shareholder. Except for the approval of the Bank Merger Agreement by GBC as GBC Bank’s sole shareholder, no other corporate proceedings on the part of GBC are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by GBC and (assuming due authorization, execution and delivery by Primary) constitutes a valid and binding obligation of GBC, enforceable against GBC in accordance with its terms (except in all cases as such enforceability may be limited by the Enforceability Exceptions). The shares of GBC Common Stock to be issued in the Merger have been validly authorized, and when issued, will be validly issued, fully paid and nonassessable, and no current or past shareholder of GBC will have any preemptive right or similar rights in respect thereof.
(b) Neither the execution and delivery of this Agreement by GBC, nor the consummation by GBC of the transactions contemplated hereby (including the Merger and the Bank Merger), nor compliance by GBC with any of the terms or provisions hereof, will (i) violate any provision of the GBC Charter, the GBC Bylaws or the organizational documents of GBC Bank, or (ii) assuming that the consents and approvals referred to in Section 4.4 are duly obtained, (x) violate any law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to GBC or any of its Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of GBC or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which GBC or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound, except (in the case of clauses (x) and (y) above) for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations that, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on GBC.
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4.4 Consents and Approvals. Except for (a) the Fairness Determination, (b) the filing of any required applications, filings, waiver requests and notices, as applicable, with the Federal Reserve under the BHC Act and approval or waiver of such applications, filings, waiver requests and notices, (c) the filing of any required applications, filings and notices, as applicable, with the FDIC under the Bank Merger Act of 1960, and approval or waiver of such applications, filings and notices, (d) the filing of any required applications, filings, waiver requests and notices, as applicable, with the DBF and approval or waiver of such applications, filings, waiver requests and notices, (e) the filing of any required applications, filings and notices, as applicable, with each Applicable Agency and the receipt of any required consents or approvals from each Applicable Agency, (f) those additional applications, filings and notices, if any, listed on Section 3.4 of the Primary Disclosure Schedule or Section 4.4 of the GBC Disclosure Schedule and approval of such applications, filings and notices, (g) the filing of the Certificate of Merger with the Georgia Secretary pursuant to the GBCC, (h) the filing of the Bank Merger Certificate with the applicable Governmental Entity as required by applicable law, and (i) such filings and approvals as are required to be made or obtained under the securities or “blue sky” laws of various states in connection with the issuance of the shares of GBC Common Stock pursuant to this Agreement, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (i) the execution and delivery by GBC of this Agreement or (ii) the consummation by GBC of the Merger and the other transactions contemplated hereby (including the Bank Merger). As of the date hereof, GBC has no knowledge of any reason why the necessary regulatory approvals and consents will not be received by GBC to permit consummation of the Merger and the Bank Merger on a timely basis.
4.5 Reports. GBC and each of its Subsidiaries have timely filed (or furnished, as applicable) all reports, forms, correspondence, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file (or furnish, as applicable) since January 1, 2022 with Regulatory Agencies, including any report, form, correspondence, registration or statement required to be filed (or furnished, as applicable) pursuant to the laws, rules or regulations of the United States, any state, any foreign entity or any Regulatory Agency, and have paid all fees and assessments due and payable in connection therewith, except where the failure to file (or furnish, as applicable) such report, form, correspondence, registration or statement or to pay such fees and assessments, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on GBC. Subject to Section 9.15, except for normal examinations conducted by a Regulatory Agency in the ordinary course of business of GBC and its Subsidiaries, no Regulatory Agency or governmental agency or authority has initiated or has pending any proceeding or, to the knowledge of GBC, investigation into the business or operations of GBC or any of its Subsidiaries since January 1, 2022, except where such proceedings or investigations would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC. Subject to Section 9.15, there (i) is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations or inspections of GBC or any of its Subsidiaries, and (ii) has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with respect to the business, operations, policies or procedures of GBC or any of its Subsidiaries since January 1, 2022, in each case, which would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC.
4.6 Financial Statements.
(a) GBC has furnished to Primary true and complete copies of (i) the consolidated balance sheet of GBC and GBC Bank as of December 31, 2021, December 31, 2022 and December 31, 2023, and the related consolidated statements of operations, shareholders’ equity, and cash flows of GBC and GBC Bank, together with all related notes and schedules thereto, accompanied by the reports thereon of GBC’s independent auditors for the years ended as of such dates, and (ii) the unaudited financial statements of GBC and GBC Bank for the six months ended June 30, 2024 (collectively, the “GBC Financial Statements”). The GBC Financial Statements (including the related notes) complied as to form, as of their respective dates, in all material respects with applicable accounting requirements, have been prepared according to GAAP applied on a consistent basis during the periods and at the dates involved (except as may be indicated in the notes thereto), fairly present, in all material respects, the financial condition of GBC and its Subsidiaries, as applicable, at the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to notes and normal year-end adjustments that were not material in amount or effect).
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(b) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC, neither GBC nor any of its Subsidiaries has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved against on the consolidated balance sheet of GBC for the fiscal quarter ended September 30, 2024 included in the GBC Financial Statements or liabilities incurred in the ordinary course of business consistent with past practice since September 30, 2024 or in connection with this Agreement and the transactions contemplated hereby.
(c) GBC has filed all required Call Reports since January 1, 2022 for GBC Bank. The Call Reports fairly present, in all material respects, the financial position of GBC Bank and the results of its operations at the date and for the period indicated in that Call Report in conformity with the instructions to the Call Report. Since January 1, 2022, GBC Bank has calculated its ACL (or ALLL prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) in accordance with (i) GAAP (ii) the Interagency Policy Statement on the Allowance for Credit Losses (or the Interagency Policy Statement on the Allowance of Loan and Lease Losses prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) and (iii) all applicable rules and regulations, and, in the reasonable opinion of management, the ACL is reasonably likely to be to be adequate in all material respects.
(d) Since January 1, 2022, (i) neither GBC, GBC Bank, or their respective Subsidiaries nor, to the knowledge of GBC, any director, officer, employee, auditor, accountant or representative of GBC or its Subsidiaries has received or otherwise obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of GBC or its Subsidiaries or their respective internal accounting controls relating to periods after January 1, 2022, including any material complaint, allegation, assertion or claim that GBC or its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) to the knowledge of GBC, no attorney representing GBC or its Subsidiaries, whether or not employed by GBC or its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation, relating to periods after January 1, 2022, by GBC or its Subsidiaries or any of their officers, directors, employees or agents to the Board of Directors of GBC or the Board of Directors of GBC Bank (or any committee thereof) or to any director or officer of GBC, GBC Bank, or their respective Subsidiaries.
(e) Neither GBC nor its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement (including any contract or arrangement relating to any transaction or relationship between or among GBC and its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangement”), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, GBC or its Subsidiaries in GBC’ or its Subsidiaries’ financial statements.
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4.7 Broker’s Fees. With the exception of the engagement of Evercore Inc. (“Evercore”), neither GBC nor any GBC Subsidiary nor any of their respective officers or directors has employed any broker, finder or financial advisor or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or related transactions contemplated by this Agreement. GBC has disclosed to Primary as of the date hereof the aggregate fees provided for in connection with the engagement by GBC of Evercore related to the Merger and the other transactions contemplated hereunder.
4.8 Absence of Certain Changes or Events.
(a) Since December 31, 2023, there has not been any effect, change, event, circumstance, condition, occurrence or development that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC.
(b) Since December 31, 2023 through the date of this Agreement, GBC and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary course.
4.9 Legal and Regulatory Proceedings.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on GBC, neither GBC nor any of its Subsidiaries is a party to any, and there are no outstanding or pending or, to the knowledge of GBC, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against GBC or any of its Subsidiaries or any of their current or former directors or executive officers or challenging the validity or propriety of the transactions contemplated by this Agreement.
(b) Except as would not reasonably be expected to, either individually or in the aggregate, be material to GBC, there is no injunction, order, judgment, decree, or regulatory restriction imposed upon GBC, any of its Subsidiaries or the assets of GBC or any of its Subsidiaries (or that, upon consummation of the Merger, would apply to the Surviving Entity or any of its affiliates).
4.10 Taxes and Tax Returns.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on GBC: each of GBC and its Subsidiaries has duly and timely filed (including all applicable extensions) all Tax Returns in all jurisdictions in which Tax Returns are required to be filed by it, and all such Tax Returns are true, correct and complete; all Taxes of GBC and its Subsidiaries (whether or not shown on any Tax Returns) that are due have been fully and timely paid; each of GBC and its Subsidiaries has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, shareholder, independent contractor or other third party; each of GBC and its Subsidiaries have withheld and timely paid all material Taxes required to have been withheld and paid with respect to, and have complied with, all information reporting, backup withholding, and nonresident withholding requirements; neither GBC nor any of its Subsidiaries has granted any extension or waiver of the limitation period applicable to any Tax that remains in effect (other than extension or waiver granted in the ordinary course of business); neither GBC nor any of its Subsidiaries has received written notice of assessment or proposed assessment in connection with any amount of Taxes, and there are no threatened in writing or pending disputes, claims, audits, examinations or other proceedings regarding any Tax of GBC and its Subsidiaries or the assets of GBC and its Subsidiaries; neither GBC nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return for which the statute of limitations is open (other than a group the common parent of which was GBC)), or (B) has any liability for the Taxes of any person (other than GBC or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) or otherwise as a transferee or successor.
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(b) No written claim has ever been made by a Governmental Entity in a jurisdiction where GBC and its Subsidiaries do not file Tax Returns that it is or may be subject to taxation by, or required to file a Tax Return in, that jurisdiction. There are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any assets of GBC or any of its Subsidiaries.
(c) GBC and each of its Subsidiaries have disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.
(d) Neither GBC nor any of its Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
4.11 Compliance with Applicable Law.
(a) GBC and each of its Subsidiaries hold, and have at all times since January 1, 2019, held, all licenses, registrations, franchises, certificates, variances, permits charters and authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all fees and assessments due and payable in connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding such license, registration, franchise, certificate, variance, permit, charter or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, and to the knowledge of GBC, no suspension or cancellation of any such necessary license, registration, franchise, certificate, variance, permit, charter or authorization is threatened.
(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, GBC and each of its Subsidiaries, since January 1, 2022, have complied with and are not in default or violation under any applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to GBC or any of its Subsidiaries, including all laws related to data protection or privacy (including laws relating to the privacy and security of Personal Data), the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, Title V of the Gramm-Leach-Bliley Act, any and all sanctions or regulations enforced by the Office of Foreign Assets Control of the United States Department of Treasury and any other law, policy or guideline relating to bank secrecy, discriminatory lending, financing or leasing practices, consumer protection, money laundering prevention, foreign assets control, U.S. sanctions laws and regulations, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act, and all agency requirements relating to the origination, sale and servicing of mortgage and consumer loans. GBC and its Subsidiaries have established and maintain a system of internal controls designed to ensure compliance in all material respects by GBC and its Subsidiaries with applicable financial recordkeeping and reporting requirements of applicable money laundering prevention laws in jurisdictions where GBC and its Subsidiaries conduct business.
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(c) GBC Bank has received an Institution Community Reinvestment Act rating of “satisfactory” or better in its most recently completed Community Reinvestment Act examination.
(d) GBC maintains a written information privacy and security program that maintains reasonable measures to protect the privacy, confidentiality and security of all Personal Data and any other material confidential information against any Security Breach. To the knowledge of GBC, GBC has not experienced any Security Breach that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC. To the knowledge of GBC, there are no data security or other technological vulnerabilities with respect to its information technology systems or networks that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on GBC.
(e) As of the date hereof, each of GBC and GBC Bank is “well-capitalized” (as such term is defined in the relevant regulation of the institution’s primary federal regulator).
(f) Without limitation, none of GBC or any of its Subsidiaries, or to the knowledge of GBC, any director, officer, employee, agent or other person acting on behalf of GBC or any of its Subsidiaries has, directly or indirectly, (i) used any funds of GBC or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from funds of GBC or any of its Subsidiaries, (iii) violated any provision that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar law, (iv) established or maintained any unlawful fund of monies or other assets of GBC or any of its Subsidiaries, (v) made any fraudulent entry on the books or records of GBC or any of its Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business, to obtain special concessions for GBC or any of its Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for GBC or any of its Subsidiaries, or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department, except, in each case, as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC.
(g) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, (i) GBC and each of its Subsidiaries have properly administered all accounts for which it acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable state, federal and foreign law; and (ii) none of GBC, any of its Subsidiaries, or any of its or its Subsidiaries’ directors, officers or employees, has committed any breach of trust or fiduciary duty with respect to any such fiduciary account, and the accountings for each such fiduciary account are true, correct and complete and accurately reflect the assets and results of such fiduciary account.
4.12 Agreements with Regulatory Agencies. Subject to Section 9.15, neither GBC nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since January 1, 2022, a recipient of any supervisory letter from, or since January 1, 2022, has adopted any policies, procedures or board resolutions at the request or suggestion of, any Regulatory Agency or other Governmental Entity that currently restricts in any material respect or would reasonably be expected to restrict in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the GBC Disclosure Schedule, an “GBC Regulatory Agreement”), nor has GBC or any of its Subsidiaries been advised in writing, or to GBC’s knowledge, orally, since January 1, 2022, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating, ordering or requesting any such GBC Regulatory Agreement.
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4.13 Related Party Transactions. Except for the transactions set forth in Section 4.13(e) of the GBC Disclosure Schedules, there are no transactions or series of related transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions or series of related transactions, between GBC or any of its Subsidiaries, on the one hand, and any current or former director or “executive officer” (as defined in the Exchange Act) of GBC or any of its Subsidiaries or any person who beneficially owns (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) five percent (5%) or more of the outstanding GBC Common Stock (or any of such person’s immediate family members or affiliates) (other than Subsidiaries of GBC) on the other hand, of the type required by the Exchange Act and the rules and regulations thereunder.
4.14 State Takeover Laws. The Board of Directors of GBC has approved this Agreement and the transactions contemplated hereby and has taken all such other necessary actions as required to render inapplicable to such agreements and transactions the provisions of any Takeover Statutes.
4.15 Reorganization. GBC has not taken any action and has no knowledge of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
4.16 GBC Information. The information relating to GBC and its Subsidiaries that is provided in writing by GBC or its Subsidiaries or their respective representatives specifically for inclusion in the Proxy Statement or in any other document filed with any other Regulatory Agency or Governmental Entity in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. The portion of the Proxy Statement relating to GBC or any of its Subsidiaries will comply in all material respects with applicable law.
4.17 No Other Representations or Warranties.
(a) Except for the representations and warranties made by GBC in this Article IV, neither GBC nor any other person makes any express or implied representation or warranty with respect to GBC, its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and GBC hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither GBC nor any other person makes or has made any representation or warranty to Primary or any of its affiliates or representatives with respect to (i) any financial projection, forecast, estimate, budget or prospective information relating to GBC, any of its Subsidiaries or their respective businesses, or (ii) any oral or written information presented to Primary or any of its affiliates or representatives in the course of their due diligence investigation of GBC, the negotiation of this Agreement or in the course of the transactions contemplated hereby, except in each case for the representations and warranties made by GBC in this Article IV.
(b) GBC acknowledges and agrees that neither Primary nor any other person on behalf of Primary has made or is making, and GBC has not relied upon, any express or implied representation or warranty other than those contained in Article III.
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Article V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as expressly contemplated or permitted by this Agreement (including as set forth in Section 5.1 of the Primary Disclosure Schedule or GBC Disclosure Schedule), required by law or as consented to in writing by the other party (such consent not to be unreasonably withheld, conditioned or delayed), each of GBC and Primary shall, and shall cause each of its Subsidiaries to, (i) conduct its business in the ordinary course consistent with past practices or pursuant to a party’s strategic plan, and (ii) use reasonable best efforts to maintain and preserve intact its business organization, employees and advantageous business relationships, and (iii) take no action that would reasonably be expected to adversely affect or delay the ability of either GBC or Primary to obtain any necessary approvals of any Regulatory Agency or other Governmental Entity required for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby on a timely basis. Notwithstanding anything to the contrary set forth in this Section 5.1, no action or failure to take action by Primary or any of its Subsidiaries or GBC or any of its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.2 (in the case of Primary or its Subsidiaries) or Section 5.3 (in the case of GBC or its Subsidiaries) shall constitute a breach of this Section 5.1 unless such action or failure to take action would constitute a breach of such provision of Section 5.2 (in the case of Primary or its Subsidiaries) or Section 5.3 (in the case of GBC or its Subsidiaries).
5.2 Forbearances of Primary. During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as set forth in Section 5.2 of the Primary Disclosure Schedule, as expressly contemplated or permitted by this Agreement or a Primary Benefit Plan as in effect as of the date hereof or as required by law or regulation, Primary shall not, and Primary shall not permit any of its Subsidiaries to, without the prior written consent of GBC (such consent not to be unreasonably withheld, conditioned or delayed):
(a) other than (1) federal funds borrowings and borrowings from the Federal Home Loan Bank, in each case, with a maturity not in excess of six (6) months, and (2) the creation of deposit liabilities or other customary banking products, issuances of letters of credit, sales of certificates of deposits, and entry into repurchase agreements, in each case (1) and (2), in the ordinary course of business on terms and in amounts consistent with past practice, incur any indebtedness for borrowed money (other than indebtedness of Primary or any of its wholly-owned Subsidiaries, on the one hand, to Primary or any of its wholly-owned Subsidiaries, on the other hand), or directly or indirectly, incur, assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations or liabilities of any other individual, corporation or other entity;
(b) (1) adjust, split, combine or reclassify any capital stock of Primary (or shares thereof);
(2) make, declare, pay, set aside for payment or set a record date for any dividend, or any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or other equity or voting securities or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) or exchangeable into or exercisable for any shares of its capital stock or other equity or voting securities, including any Primary Securities or any securities of any Primary Subsidiary except cash dividends paid by any of the Subsidiaries of Primary to Primary or any of its wholly-owned Subsidiaries.
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(3) grant any stock options, warrants, restricted stock units, performance stock units, phantom stock units, restricted shares or other equity-based awards or interests, or grant any person any right to acquire any Primary Securities or any securities of any Primary Subsidiary; or
(4) issue, sell, transfer, encumber, or authorize the issuance, sale or transfer, or otherwise permit to become outstanding any shares of capital stock or voting securities or equity interests or securities convertible (whether currently convertible or convertible only after the passage of time of the occurrence of certain events) or exchangeable into, or exercisable for, any shares of its capital stock or other equity or voting securities, including any Primary Securities or any securities of any Primary Subsidiary, or any options, warrants, or other rights of any kind to acquire any shares of capital stock or other equity or voting securities, including any Primary Securities or any securities of any Primary Subsidiary;
(c) sell, license, lease, transfer, mortgage, pledge, encumber or otherwise dispose of, or discontinue, any of its material properties (other than other real estate owned disposed of for an amount not less than 85% of its recorded investment value as of the date hereof), assets or any business to any individual, corporation or other entity other than a wholly-owned Subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case, other than (x) in the ordinary course of business or (y) pursuant to contracts or agreements in force at the date of this Agreement;
(d) except for foreclosure or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case, in the ordinary course of business, make any material investment in or acquire (whether by purchase of stock or securities, contributions to capital, property transfers, merger or consolidation, or formation of a joint venture or otherwise) any other person or all or any portion of the property, assets, debt, business, deposits or properties of any other person, in each case, other than a wholly-owned Subsidiary of Primary;
(e) in each case, except for transactions in the ordinary course of business, (i) terminate, materially amend, extend or waive any material provision of, any Primary Contract or (ii) enter into any contract that would constitute an Primary Contract if in effect on the date of this Agreement, or make any change in any instrument or agreement governing the terms of any of its securities, other than normal renewals of contracts without material adverse changes of terms with respect to Primary or any of its Subsidiaries (or the Surviving Entity); provided that this clause (ii) shall not apply to the entry into of any contract in connection with any action otherwise permitted by this Section 5.2;
(f) except as required pursuant to the terms of any Primary Benefit Plan as in effect as of the date of this Agreement, (A) increase in any manner the compensation, salaries, wages, commissions or consulting fees, bonus, incentives, pension, welfare, fringe or other benefits, severance or termination pay of any current or former employee, officer, director or independent contractor of Primary or any of its Subsidiaries, other than (i) increases in base compensation in the ordinary course, consistent with past practices, that do not exceed 5% individually or 3% in the aggregate after consultation with the Chief Human Resources Officer of GBC (or other increases with the written consent of the Chief Human Resources Officer of GBC), (ii) the payment of annual bonuses for completed performance periods based upon actual corporate performance, the performance of such employee and, if applicable, such employee’s business, consistent with the terms of the applicable Primary Benefit Plan as in effect as of the date hereof or as expressly contemplated under this Agreement (or other bonuses with the written consent of the Chief Human Resources Officer of GBC), or (iii) increases, retention payments, or severance determined necessary by Primary for retention purposes after consultation with, and with the written consent of, the Chief Human Resources Officer of GBC, which in the aggregate shall not exceed the amount disclosed in Section 5.2(f) of the Primary Disclosure Schedule, (B) become a party to, establish, adopt, amend, commence participation in or terminate any Primary Benefit Plan or any arrangement that would have been a Primary Benefit Plan had it been entered into prior to this Agreement, (C) grant any new awards, or amend or modify the terms of any outstanding awards, under any Primary Benefit Plan, (D) other than as contemplated by this Agreement, take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Primary Benefit Plan, or (E) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Primary Benefit Plan that is required by applicable law to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or (F) subject to Section 5.2(s), except for loans or extensions of credit consistent with existing policies and practices and applicable law, make or increase any loan or other extension of credit, or commit to make or increase any such loan or extension of credit, to any director or executive officer of Primary or Primary Bank, or any entity controlled, directly or indirectly, by any of the foregoing, other than renewals of existing loans or commitments to loan;
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(g) (i) settle, or enter into any settlement or similar agreement with respect to, any claim, suit, action or proceeding or (ii) waive or release any material rights or claims, or agree or consent to the issuance of any injunction, decree, order or judgment restricting or otherwise affecting its business or operations or the Surviving Entity after consummation of the Merger;
(h) take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(i) amend its charter, its bylaws or comparable governing documents of its Subsidiaries;
(j) (i) materially restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported, or (ii) acquire (other than (A) by way of foreclosure or acquisitions in a bona fide fiduciary capacity or (B) in satisfaction of debts previously contracted in good faith) any debt security or equity investment or any certificates of deposit issued by other banks, other than securities rated “AA” or higher by either Standard and Poor’s Ratings Services or Moody’s Investor Service;
(k) implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP;
(l) (i) enter into any new line of business, introduce any material new products or services, or introduce any material marketing campaigns or any material new sales compensation or incentive programs or arrangements, in each case, except as required by applicable law, regulation or policies imposed by any Governmental Entity; (ii) other than in the ordinary course of business consistent with past practice, change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio or any segment thereof), except as required by applicable law, regulation or policies imposed by any Governmental Entity; or (iii) incur any material liability or obligation relating to retail banking and branch merchandising, marketing and advertising activities and initiatives except in the ordinary course of business;
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(m) abandon or allow to lapse any material Intellectual Property, other than in the ordinary course of business consistent with past practice;
(n) make, change or revoke any Tax election, change an annual Tax accounting period, adopt or change any Tax accounting method, file any amended Tax Return, enter into any closing agreement with respect to Taxes, or settle any Tax claim, audit, assessment or dispute or surrender any right to claim a refund of Taxes;
(o) merge or consolidate itself or any of its Subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its Subsidiaries;
(p) incur any capital expenditures or any obligations or liabilities in respect thereof, except for any capital expenditures not to exceed $50,000 individually or $250,000 in the aggregate;
(q) make any changes to deposit pricing other than such changes that may be made in the ordinary course of business or consistent with safe and sound banking practices;
(r) (i) make any new investment or new commitment to invest in real estate or in any real estate development project other than by way of foreclosure or deed in lieu thereof, (ii) make any new investment or new commitment to develop, or otherwise take any actions to develop any real estate owned by Primary or any of its Subsidiaries, or (iii) file any application or make any contract or commitment for the opening, relocation or closing of any, or open, relocate or close any, branch office.
(s) sell, transfer or lease any properties or assets (real, personal or mixed, tangible or intangible) to, or enter into any agreement or arrangement with, any of its officers or directors or any of their immediate family members or any affiliates or associates of any of its officers or directors other than in the ordinary course of business;
(t) except for loans or extensions of credit approved and/or committed as of the date of this Agreement, (i) make or renew any loan greater than $2,500,000 if secured or $500,000 if unsecured, (ii) purchase a participation in any loan or pool of loans greater than $500,000, or (iii) renew for more than 12 months any loans greater than $500,000 rated “watch” or worse without giving notice of such action within 24 hours after any loan committee meeting at which such action is approved. For purposes of this Section 5.2(t), notice shall be given by email to the Chief Risk Officer;
(u) other than interest rate swaps entered into for the account of customers of Primary or any Primary Subsidiaries (i.e. “back-to-back” agreements) in the ordinary course of business, enter into any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or any indexes, or any other similar transaction (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to any such transaction or transactions;
(v) take any action that is intended or would reasonably be expected to (i) result in any of the conditions to the Merger set forth in Section 7.1 or Section 7.2 not being satisfied by the Termination Date, except as may be required by applicable law or (ii) prevent, delay or impair in any material respect its ability to consummate the transactions contemplated by this Agreement; or
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(w) agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of, any of the actions prohibited by this Section 5.2.
5.3 Forbearances of GBC. During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as set forth in Section 5.3 of the GBC Disclosure Schedule, as expressly contemplated by this Agreement, as required by law or as consented to in writing by Primary (such consent not to be unreasonably withheld, conditioned or delayed), GBC shall not, and shall not permit any of its Subsidiaries to:
(a) adjust, split, combine or reclassify any capital stock of GBC (or shares thereof);
(b) make, declare, or pay any dividend on any capital stock of GBC;
(c) amend the GBC Charter or the GBC Bylaws in a manner that would materially and adversely affect the holders of Primary Common Stock, or adversely affect the holders of Primary Common Stock relative to other holders of GBC Common Stock;
(d) incur any indebtedness for borrowed money (other than indebtedness of GBC or any of its wholly owned Subsidiaries to GBC or any of its Subsidiaries) that would reasonably be expected to prevent GBC or its Subsidiaries from assuming Primary’s or its Subsidiaries’ outstanding indebtedness;
(e) take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(f) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Section 7.1 or Section 7.3 not being satisfied by the Termination Date, except as may be required by applicable law;
(g) take any action that is intended or would reasonably be expected to result in a material delay in the ability of GBC or Primary to perform any of their obligations under this Agreement on a timely basis or a material delay in the ability of GBC to obtain any necessary approvals of any Governmental Entity required for the transactions contemplated hereby by the Termination Date; or
(h) agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of, any of the actions prohibited by this Section 5.3.
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Article VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
(a) The parties hereto shall cooperate with each other and use their reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (and in the case of the applications, notices, petitions and filings in respect of the Requisite Regulatory Approvals, use their reasonable best efforts to make such filings within thirty (30) days of the date of this Agreement), to obtain as promptly as practicable all permits, consents, waivers, approvals and authorizations of all third parties, Regulatory Agencies and Governmental Entities which are necessary or advisable to consummate the transactions contemplated by this Agreement (including the Merger and the Bank Merger), and to comply with the terms and conditions of all such permits, consents, waivers, approvals and authorizations of all such Regulatory Agencies and Governmental Entities. Primary and GBC shall each use, and shall each cause their applicable Subsidiaries to use, reasonable best efforts to obtain each such Requisite Regulatory Approval as promptly as reasonably practicable. GBC and Primary shall have the right to review in advance, and each will consult the other on, in each case, subject to applicable laws relating to the exchange of information, all the information relating to Primary or GBC, as the case may be, and any of their respective Subsidiaries, which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. The parties hereto agree that they will consult with each other with respect to obtaining all permits, consents, waivers, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other apprised of the status of matters relating to completion of the transactions contemplated in this Agreement, and each party shall consult with the other in advance of any meeting or conference with any Governmental Entity in connection with the transactions contemplated by this Agreement and, to the extent permitted by such Governmental Entity, give the other party and/or its counsel the opportunity to attend and participate in such meetings and conferences, in each case subject to applicable law; and provided, that each party shall promptly advise the other party with respect to substantive matters that are addressed in any meeting or conference with any Governmental Entity which the other party does not attend or participate in connection with or affecting the transactions contemplated by this Agreement, to the extent permitted by such Governmental Entity and subject to applicable law and Section 9.15.
(b) In furtherance and not in limitation of the foregoing, each party shall use its reasonable best efforts to avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the Closing. Notwithstanding the foregoing, nothing contained in this Agreement shall be deemed to require GBC or Primary or any of their respective Subsidiaries, and neither Primary nor any of its Subsidiaries shall be permitted (without the prior written consent of GBC), to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the foregoing permits, consents, waivers, approvals and authorizations of Governmental Entities that would reasonably be expected to have a Material Adverse Effect on the Surviving Entity and its Subsidiaries, taken as a whole, after giving effect to the Merger (a “Materially Burdensome Regulatory Condition”).
(c) GBC and Primary shall, upon request, furnish each other with all information concerning themselves, their Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection any filing, notice or application made by or on behalf of GBC, Primary or any of their respective Subsidiaries to any Governmental Entity in connection with the Merger, the Bank Merger and the other transactions contemplated by this Agreement.
(d) GBC and Primary shall promptly advise each other upon receiving any communication from any Governmental Entity whose permit, consent, waiver, approval or authorization is required for consummation of the transactions contemplated by this Agreement that causes such party to believe that there is a reasonable likelihood that any Requisite Regulatory Approval will not be obtained, or that the receipt of any such permit, consent, waiver, approval or authorization will be materially delayed.
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6.2 Access to Information; Confidentiality.
(a) Upon reasonable notice and subject to applicable laws, each of GBC and Primary, for the purposes of verifying the representations and warranties of the other and preparing for the Merger and the other matters contemplated by this Agreement, shall, and shall cause its Subsidiaries to, afford to the officers, employees, accountants, counsel, advisors and other representatives of the other party, access, during normal business hours during the period prior to the Effective Time upon prior written notice from the accessing party, to all its properties, books, contracts, commitments, personnel, information technology systems, and records, and both Primary and GBC shall reasonably cooperate with the other party in preparing to execute after the Effective Time the conversion or consolidation of systems and business operations generally, and, during such period, each of GBC and Primary shall, and shall cause its Subsidiaries to, make available to the other party (i) a copy of each report, schedule, registration statement or proxy statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws or federal or state banking laws (other than reports or documents that GBC or Primary, is not permitted to disclose in accordance with Section 9.15 or otherwise under applicable law), and (ii) all other information concerning its business, properties and personnel as such party may reasonably request. Neither GBC nor Primary nor any of their respective Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of GBC’s or Primary’, as the case may be, customers, jeopardize the attorney-client privilege of the institution in possession or control of such information (after giving due consideration to the existence of any common interest, joint defense or similar agreement between the parties) or contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The parties hereto will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.
(b) Each of GBC and Primary shall hold all information furnished by or on behalf of the other party or any of such party’s Subsidiaries or representatives pursuant to Section 6.2(a) in confidence to the extent required by, and in accordance with, the provisions of the non-disclosure agreement, dated August 1, 2024, between GBC and Primary (the “Non-Disclosure Agreement”).
(c) No investigation by either of the parties or their respective representatives shall affect or be deemed to modify or waive the representations and warranties of the other set forth in this Agreement.
6.3 Non-Control. Nothing contained in this Agreement shall give either party, directly or indirectly, the right to control or direct the operations of the other party prior to the Effective Time. Prior to the Effective Time, each party shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
6.4 Fairness Determination; Securities Act Compliance.
(a) The shares of GBC Common Stock issuable in the Merger are intended be issued in reliance upon the exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) set forth in Section 3(a)(10) thereof and Article 3 and Section 10-5-53 of Chapter 5 of Title 10 of the O.C.G.A., assuming receipt of the Fairness Determination and the issuance of the Fairness Order (as hereinafter defined). For purposes of this Agreement, “Fairness Determination” means the approval by the Securities Commissioner pursuant to O.C.G.A. §10-5-11(9) (and the rules and regulations thereunder) of the terms and conditions of the contemplated transactions and the fairness thereof such that the issuance of the Per Share Stock Consideration issuable to the Primary shareholders as contemplated by this Agreement shall qualify for the exemptions from registration available under O.C.G.A. §10-5-11(9) and Section 3(a)(10) of the Securities Act.
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(b) The parties hereto shall cooperate with each other and use their reasonable best efforts to promptly prepare and cause to be filed (and use their reasonable best efforts to make such filings within sixty (60) days of the date of this Agreement) with the Securities Commissioner an application for the Fairness Determination under O.C.G.A. §10-5-11(9), including a request for hearing (the “Fairness Hearing”) and a request for the issuance of an order containing the Fairness Determination (the “Fairness Order”). GBC and Primary shall have the right to review in advance, and each will consult the other on, in each case, subject to applicable laws relating to the exchange of information, all the information relating to Primary or GBC, as the case may be, and any of their respective Subsidiaries, which appears in any filing made with, or written materials submitted to, the Securities Commissioner in connection with the application for the Fairness Determination. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. The parties shall use their reasonable best efforts to cause the Securities Commissioner to issue the Fairness Order, including, but not limited to, mailing a timely notice of hearing to Primary shareholders providing them with the opportunity to attend and participate in the Fairness Hearing; provided, however, that the parties shall not be required to materially and adversely modify any of the terms of this Agreement or the contemplated transactions in order to cause the Securities Commissioner to make the Fairness Determination and issue the Fairness Order.
(c) In the event that (i) the Fairness Hearing is not available to the parties for reasons beyond their reasonable control, (ii) the Fairness Hearing is held but the Securities Commissioner affirmatively declines to issue the Fairness Order or does not issue the Fairness Order within a reasonable time after such Fairness Hearing (after taking into account any requests for additional information by the Securities Commissioner following such Fairness Hearing), or (iii) the exemption from registration under Section 3(a)(10) of the Securities Act is otherwise not available in connection with the contemplated transactions, then GBC and Primary shall work in good faith to amend this Agreement to provide for an alternative exemption from federal registration for the issuance of GBC Common Stock pursuant to this Agreement.
(d) GBC and Primary shall use their reasonable best efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the contemplated transactions, and each of GBC and Primary shall prepare and furnish such information relating to the GBC and GBC Subsidiaries or Primary and Primary Subsidiaries, as appropriate, and their respective affiliates, directors, officers, and shareholders as may be reasonably required in connection with any such action; provided that neither GBC nor Primary shall be required to register, or to register the issuance of GBC Common Stock, with any state or the securities regulators of any state (other than making notice filings, as applicable).
6.5 Proxy Statement; Shareholders’ Approvals.
(a) As promptly as reasonably practicable following the date hereof, GBC and Primary shall prepare and Primary shall mail the Proxy Statement to the Primary shareholders. GBC will furnish to Primary the information required to be included in the Proxy Statement with respect to its business and affairs and shall have the right to review and consult with Primary on the form of, and any characterizations of such information included in, the Proxy Statement prior to its being mailed to the Primary shareholders. If at any time prior to the Effective Time any information relating to GBC or Primary, or any of their respective affiliates, officers or directors, should be discovered by GBC or Primary which should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other party hereto and, to the extent required by law, rules or regulations, an appropriate amendment or supplement describing such information shall be promptly disseminated by the parties to the Primary shareholders.
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(b) Subject to the parties’ compliance with Section 6.5(a), Primary shall cause a meeting of its shareholders (the “Primary Meeting”) to be duly called and held as soon as reasonably practicable following receipt of the Fairness Order (but in no event later than one hundred and fifty (150) days of the date of this Agreement), for the purpose of obtaining (a) the Requisite Primary Vote required in connection with this Agreement and the Merger and (b) if so desired and agreed by GBC, a vote upon other matters of the type customarily brought before a meeting of shareholders in connection with the approval of a merger agreement or the transactions contemplated thereby. Subject to Section 6.5(c), Primary and its Board of Directors shall use its reasonable best efforts to obtain from the shareholders of Primary the Requisite Primary Vote, including by communicating to the shareholders of Primary its recommendation (and including such recommendation in the Proxy Statement) that the shareholders of Primary approve this Agreement and the transactions contemplated hereby (the “Primary Board Recommendation”), and Primary and its Board of Directors shall not (i) withhold, withdraw, modify or qualify in a manner adverse to GBC the Primary Board Recommendation, (ii) fail to make the Primary Board Recommendation in the Proxy Statement, (iii) adopt, approve, recommend or endorse an Acquisition Proposal, or publicly announce an intention to adopt, approve, recommend or endorse an Acquisition Proposal, (any of the foregoing actions described in clauses (i) through (iii) a “Recommendation Change”) or (iv) execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement (other than an Acceptable Confidentiality Agreement) providing for an Acquisition Proposal (an “Alternative Acquisition Agreement”).
(c) Subject to Section 8.1 and Section 8.2, prior to the receipt of the Requisite Primary Vote, the Board of Directors of Primary may submit this Agreement to its shareholders without recommendation (which, for the avoidance of doubt, shall constitute a Recommendation Change), in which event the Board of Directors of Primary may communicate the basis for its lack of recommendation to its shareholders in the Proxy Statement or an appropriate amendment or supplement thereto to the extent required by law (although the resolutions approving this Agreement as of the date hereof may not be rescinded or amended), if (i) the Board of Directors of Primary has received after the date hereof a bona fide Acquisition Proposal which did not result from a breach of Section 6.13 (other than any breach that is unintentional or immaterial), which it believes in good faith, after receiving the advice of its outside counsel and its financial advisors, constitutes a Superior Proposal (in which event, subject to compliance with this Section 6.5(c) and prior to the receipt of the Requisite Primary Vote, the Board of Directors of Primary may cause Primary to terminate this Agreement pursuant to Section 8.1(h) in order to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal), and (ii) the Board of Directors of Primary, after receiving the advice of its outside counsel and its financial advisors, determines in good faith that failure to take such actions would be inconsistent with its fiduciary duties under applicable law, in each case, if, but only if, (1) Primary has complied in all material respects with Section 6.13, (2) Primary delivers to GBC at least three (3) business days’ prior written notice of its intention to take such action, and specifies the material terms and conditions of the Superior Proposal, (3) prior to taking such action, Primary negotiates in good faith with GBC, during the three (3) business day period following Primary’ delivery of the notice referred to in such sub-clause (2) above (to the extent GBC desires to so negotiate) any revision to the terms of this Agreement that GBC desires to propose, and (4) after the conclusion of such three (3) business day period, the Board of Directors of Primary determines in good faith, after giving effect to all of the adjustments or revisions (if any) which may be offered by GBC pursuant to sub-clause (3) above, that, such Acquisition Proposal continues to constitute a Superior Proposal and it would be inconsistent with its fiduciary duties under applicable law to make or continue to make the Primary Board Recommendation (it being agreed that, in the event that, following delivery of the notice referred to in sub-clause (2) above, there is any material revision to the terms of such Acquisition Proposal, including any revision in price or other improvement in economic terms, the three (3) business day period during which the parties agree to negotiate in good faith shall be extended, if applicable, to ensure that at least two (2) business days remain to negotiate subsequent to the time Primary notifies GBC of any such material revision (it being understood that there may be multiple extensions)).
(d) Notwithstanding any Recommendation Change, unless this Agreement has been terminated, the Primary Meeting shall be convened and this Agreement shall be submitted to the shareholders of Primary at such meeting for the purpose of the shareholders of Primary considering and voting on approval of this Agreement and any other matters required to be approved by the shareholders of Primary in order to consummate the transactions contemplated by this Agreement. Additionally, unless this Agreement has been terminated, Primary shall not submit to or for a vote of its shareholders any Acquisition Proposal.
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(e) Primary shall adjourn or postpone the Primary Meeting if (i) as of the date of such meeting there are insufficient shares of Primary Common Stock, as applicable, represented (either in person or by proxy) to constitute the quorum necessary to conduct the business of such meeting, (ii) as of the date of such meeting Primary has not received proxies representing a sufficient number of shares necessary for the approval of this Agreement by the shareholders of Primary, or (iii) required by applicable law in order to ensure that any required supplement or amendment to the Proxy Statement Primary was required to provide to its shareholders by applicable law is provided to the shareholders of Primary a reasonable amount of time prior to such meeting; provided that, the foregoing shall not restrict in any way each of the Board of Directors of Primary from making a Recommendation Change permitted by this Section 6.5 and disclosing such Recommendation Change and the basis and reasons therefor.
6.6 Legal Conditions to Merger. Subject in all respects to Section 6.1 and Section 6.5(c) of this Agreement, each of GBC and Primary shall, and shall cause its Subsidiaries to, use their reasonable best efforts (a) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements that may be imposed on such party or its Subsidiaries with respect to the Merger and the Bank Merger and, subject to the conditions set forth in Article VII hereof, to consummate the transactions contemplated by this Agreement and (b) to obtain (and to cooperate with the other party to obtain) any material consent, authorization, order or approval of, or any exemption by, any Governmental Entity and any other third party that is required to be obtained by Primary or GBC or any of their respective Subsidiaries in connection with the Merger, the Bank Merger and the other transactions contemplated by this Agreement.
6.7 Employee Matters.
(a) From the Effective Time through the twelve (12) month anniversary of the Effective Time, or, if earlier, their termination of employment or other service, GBC shall provide to employees of Primary and its Subsidiaries who at the Effective Time become employees of the Surviving Entity or its Subsidiaries (the “Continuing Employees”) the base salary or base wage that is no less favorable than that paid to similarly situated employees of GBC and its Subsidiaries and employee benefits that are no less favorable in the aggregate than those generally made available to similarly situated employees of GBC and its Subsidiaries; provided that for purposes of this Section 6.7(a), “employee benefits” shall exclude equity and equity-based compensation, long-term incentives, change in control or retention bonuses or benefits, defined benefit pension benefits, nonqualified deferred compensation, retiree medical benefits and severance benefits (it being understood that the Surviving Entity shall honor contractual obligations in effect as of the date hereof with respect to (x) the “employee benefits” referred to in this Section 6.7(a) pursuant to Primary Benefit Plans listed on Section 6.7(a) of the Primary Disclosure Schedule, subject to prospective changes permitted by the terms of the applicable Primary Benefit Plan and applicable law, (y) for senior officers subject to a change of control agreement as of the date of this Agreement, the severance benefits provided under such agreement; provided that the severance benefits shall be subject to 280G of the Code and any cut-backs required to avoid characterizing any such severance benefits as “excess parachute payments” within the meaning of Section 280G of the Code, to the extent applicable, and (z) for employees not subject to a change of control agreement or other severance arrangement or plan, severance benefits equal to two (2) weeks’ pay per year of service, with a minimum of four (4) weeks and a maximum of twenty-six (26) weeks, payable in normal payroll installments (no less frequently than monthly) beginning with the payroll period immediately following any termination of employment).
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(b) For purposes of GBC employee benefit plans eligibility, participation, vesting and, solely for purposes of paid time off or vacation benefits, benefit accrual (except not for any other purpose or under any defined benefit pension plan, nonqualified deferred compensation plan, retiree medical plan or any frozen plan or to the extent that such credit would result in a duplication of benefits) under the GBC employee benefit plans in which the Continuing Employee is eligible to participate, service with or credited by Primary or any of its Subsidiaries for such Continuing Employees shall be treated as service with the Surviving Entity to the same extent that such service was taken into account under the analogous Primary Benefit Plan prior to the Effective Time. With respect to any GBC employee benefit plan that constitutes a “group health plan” within the meaning of Section 5000(b)(1) of the Code and in which any Continuing Employees first become eligible to participate in the calendar year which includes the Effective Time, and in which such Continuing Employees did not participate prior to the Effective Time, GBC shall use commercially reasonable efforts to (or to cause its Subsidiary to): (A) waive all preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to such employees and their eligible dependents, to the extent such pre-existing conditions, exclusions or waiting periods did not apply under the analogous Primary Benefit Plan, as the case may be, and (B) provide each Continuing Employee and his or her eligible dependents with credit for any co-payments and deductibles paid prior to the Effective Time under the analogous Primary Benefit Plan (to the same extent that such credit was given under the analogous Primary Benefit Plan) in satisfying any applicable deductible or out-of-pocket requirements under any such GBC employee benefit plan in which such Continuing Employee first becomes eligible to participate in the calendar year which includes the Effective Time, in each case, subject to any requirements or limitation imposed by the administrative service providers and insurers with respect to the applicable GBC employee benefit plan and GBC receiving all applicable information as reasonably requested by GBC, including information regarding pre-Closing co-payments and deductibles from Primary or the applicable Continuing Employee or dependent.
(c) If requested by GBC in writing delivered to Primary not less than twenty (20) business days before the Closing Date, the Board of Directors of Primary (or the appropriate committee or officers thereof) shall adopt resolutions and take such corporate action as is necessary or appropriate to terminate the Primary 401(k) Plan (the “Primary 401(k) Plan”), effective as of the day prior to the Closing Date and contingent upon the occurrence of the Effective Time. If GBC requests that the Primary 401(k) Plan be terminated, (i) Primary shall provide GBC with evidence that such plan has been terminated (the form and substance of which shall be subject to reasonable review and comment by GBC in advance of any such action) not later than two (2) days immediately preceding the Closing Date, and (ii) the Continuing Employees shall be eligible to participate, effective as of the Effective Time, in a 401(k) plan sponsored or maintained by GBC, the Surviving Entity or one of their Subsidiaries (the “GBC 401(k) Plan”) in accordance with the terms of such plan, it being agreed that there shall be no gap in participation in a tax-qualified defined contribution plan. GBC and Primary shall take any and all actions as may be reasonably required, including amendments to the Primary 401(k) Plan and/or the GBC 401(k) Plan, to permit the Continuing Employees to make rollover contributions to the GBC 401(k) Plan of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code) in the form of cash, notes (in the case of loans), GBC Common Stock or a combination thereof in an amount equal to the full account balance distributed to such employee from the Primary 401(k) Plan. Notwithstanding the foregoing, Primary may continue to accrue its employer contributions to such 401(k) plan on an ongoing basis consistent with ordinary business practices, and shall make the employer contributions provided by the plan for the 2024 plan year at the close of the 2024 plan year and shall make the employer contributions provided by the plan for the portion of the 2025 plan year through the plan’s termination prior to Closing based on year-to-date deferrals and compensation, and any service requirements required for allocation of such contribution shall be adjusted accordingly to reflect the partial plan year prior to Closing.
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(d) On or by the Closing Date, each Primary officer identified on Section 6.7(d) of the Primary Disclosure Schedule shall enter into a settlement agreement in the form attached hereto as Exhibit D.
(e) Nothing in this Agreement shall confer upon any employee, officer, director or consultant of GBC or Primary or any of their Subsidiaries or affiliates any right to continue in the employ or service of the Surviving Entity, Primary, GBC or any Subsidiary or affiliate thereof, or shall interfere with or restrict in any way the rights of the Surviving Entity, Primary, GBC or any Subsidiary or affiliate thereof to discharge or terminate the services of any employee, officer, director or consultant of GBC or Primary or any of their Subsidiaries or affiliates at any time for any reason whatsoever, with or without cause. Nothing in this Agreement shall be deemed to (i) establish, amend, or modify any Primary Benefit Plan or GBC employee benefit plan or any other benefit or employment plan, program, agreement or arrangement, or (ii) alter or limit the ability of the Surviving Entity or any of its Subsidiaries or affiliates to amend, modify or terminate any particular Primary Benefit Plan or GBC employee benefit plan or any other benefit or employment plan, program, agreement or arrangement after the Effective Time. Without limiting the generality of Section 9.12, nothing in this Agreement, express or implied, is intended to or shall confer upon any person, including any current or former employee, officer, director or consultant of GBC or Primary or any of their Subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
6.8 Indemnification; Directors’ and Officers’ Insurance.
(a) From and after the Effective Time, the Surviving Entity shall indemnify and hold harmless and shall advance expenses as incurred, in each case, to the fullest extent permitted by applicable law, the Primary Articles, the Primary Bylaws and the governing or organizational documents of any Primary Subsidiary, each present and former director, officer or employee of Primary and its Subsidiaries (in each case, when acting in such capacity) (collectively, the “Primary Indemnified Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, damages or liabilities incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, whether arising before or after the Effective Time, arising out of, or pertaining to, the fact that such person is or was a director, officer or employee of Primary or any of its Subsidiaries and pertaining to matters, acts or omissions existing or occurring at or prior to the Effective Time, including matters, acts or omissions occurring in connection with the approval of this Agreement and the transactions contemplated by this Agreement; provided, that in the case of advancement of expenses, any Primary Indemnified Party to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such Primary Indemnified Party is not entitled to indemnification. The Surviving Entity shall reasonably cooperate with the Primary Indemnified Parties, and the Primary Indemnified Parties shall reasonably cooperate with the Surviving Entity, in the defense of any such claim, action, suit, proceeding or investigation. Without limiting the indemnification and other rights provided in this clause (a), all rights to indemnification and all limitations on liability existing in favor of the Primary Indemnified Parties as provided in any indemnification agreement in existence on the date of this Agreement and set forth on Section 6.8 of the Primary Disclosure Schedule shall survive the Merger and shall continue in full force and effect to the fullest extent permitted by law, and shall be honored by the Surviving Entity and its Subsidiaries or their respective successors as if they were the indemnifying party thereunder, without any amendment thereto.
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(b) For a period of six (6) years after the Effective Time, the Surviving Entity shall cause to be maintained in effect the current policies of directors’ and officers’ liability insurance maintained by Primary (provided, that the Surviving Entity may substitute therefor policies with a substantially comparable insurer of at least the same coverage and amounts containing terms and conditions that are no less advantageous to the insured) with respect to claims against the present and former officers and directors of Primary or any of its Subsidiaries arising from facts or events which occurred at or before the Effective Time (including the approval of this Agreement and the transactions contemplated by this Agreement); provided, however, that the Surviving Entity shall not be obligated to expend, on an annual basis, an amount in excess of 300% of the current annual premium paid as of the date hereof by Primary for such insurance (the “Premium Cap”), and if such premiums for such insurance would at any time exceed the Premium Cap, then the Surviving Entity shall cause to be maintained policies of insurance which, in the Surviving Entity’s good faith determination, provide the maximum coverage available at an annual premium equal to the Premium Cap. In lieu of the foregoing, GBC or Primary, in consultation with, but only upon the consent, of GBC, may (and at the request of GBC, Primary shall use its reasonable best efforts to) obtain at or prior to the Effective Time a six (6)-year “tail” policy under Primary’ existing directors’ and officers’ insurance policy providing equivalent coverage to that described in the preceding sentence if and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the Premium Cap.
(c) The obligations of the Surviving Entity, GBC or Primary under this Section 6.8 shall not be terminated or modified after the Effective Time in a manner so as to adversely affect any Primary Indemnified Party or any other person entitled to the benefit of this Section 6.8 without the prior written consent of the affected Primary Indemnified Party or affected person.
(d) The provisions of this Section 6.8 shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Primary Indemnified Party and his or her heirs and representatives. If the Surviving Entity or any of its successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving entity of such consolidation or merger, or (ii) transfers all or substantially all of its assets or deposits to any other person or engages in any similar transaction, then in each such case, the Surviving Entity will cause proper provision to be made so that the successors and assigns of the Surviving Entity will expressly assume the obligations set forth in this Section 6.8.
6.9 Additional Agreements. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement (including any merger between a Subsidiary of GBC, on the one hand, and a Subsidiary of Primary, on the other hand) or to vest the Surviving Entity with full title to all properties, assets, rights, approvals, immunities and franchises of any of the parties to the Merger or the Bank Merger, the proper officers and directors of each party to this Agreement and their respective Subsidiaries shall take all such necessary action as may be reasonably requested by GBC.
6.10 Advice of Changes. GBC and Primary shall each promptly advise the other party of any effect, change, event, circumstance, condition, occurrence or development (i) that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on such first party, or (ii) that such first party believes would or would reasonably be expected to cause or constitute a material breach of any of its representations, warranties, obligations, covenants or agreements contained in this Agreement that reasonably could be expected to give rise, individually or in the aggregate, to the failure of a condition in Article VII; provided, that any failure to give notice in accordance with the foregoing with respect to any breach shall not be deemed to constitute a violation of this Section 6.10 or the failure of any condition set forth in Section 7.2 or 7.3 to be satisfied, or otherwise constitute a breach of this Agreement by the party failing to give such notice, in each case, unless the underlying breach would independently result in a failure of the conditions set forth in Section 7.2 or 7.3 to be satisfied; and provided, further, that the delivery of any notice pursuant to this Section 6.10 shall not cure any breach of, or noncompliance with, any other provision of this Agreement or limit the remedies available to the party receiving such notice.
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6.11 Shareholder Litigation. Each party shall give the other party prompt notice of any shareholder litigation against such party or its directors or officers relating to the transactions contemplated by this Agreement. Primary shall (i) give GBC the opportunity to participate (at GBC’s expense) in the defense or settlement of any such litigation, (ii) give GBC a reasonable opportunity to review and comment on all filings or responses to be made by Primary in connection with any such litigation, and will in good faith take such comments into account and (iii) not agree to settle any such litigation without GBC’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that the other party shall not be obligated to consent to any settlement which does not include a full release of such other party and its affiliates or which imposes an injunction or other equitable relief after the Effective Time upon the Surviving Entity or any of its affiliates.
6.12 Corporate Governance. Prior to the Effective Time, the Board of Directors of GBC shall take all actions necessary so that H. Boyd Pettit III and Mark Scheinfeld, each a director of Primary, immediately prior to the Effective Time shall be appointed to the Board of Directors of GBC as of the Effective Time; provided that, if either H. Boyd Pettit III and Mark Scheinfeld fails for any reason to qualify, elects not to serve, or otherwise is not appointed as a director of GBC, GBC shall, in consultation with Primary, however, in its sole discretion, appoint another member of the Board of Directors of Primary to the Board of Directors of GBC (the Primary directors being appointed hereunder, collectively, the “Primary Continuing Directors”). The Board of Directors of the Surviving Entity (or the appropriate committee thereof) shall cause the Primary Continuing Directors to be nominated for election at the 2025 annual meeting of shareholders of the Surviving Entity.
6.13 Acquisition Proposals. Primary will, and will use reasonable best efforts to cause its Representatives to, immediately cease and cause to be terminated any activities, discussions or negotiations conducted before the date of this Agreement with any person other than GBC with respect to any Acquisition Proposal. Primary agrees that it will not, and will cause each of its Subsidiaries not to, and use its reasonable best efforts to cause its and their respective officers, directors, employees, agents, advisors and representatives (collectively, “Representatives”) not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or knowingly facilitate any inquiries or proposals with respect to any Acquisition Proposal, (ii) engage or participate in any negotiations with any person concerning any Acquisition Proposal, (iii) provide any confidential or nonpublic information or data to, or have or participate in any discussions with, any person relating to any Acquisition Proposal (except to (x) notify a person that has made or, to the knowledge of such party, is making any inquiries with respect to, or is considering making, an Acquisition Proposal, of the existence of the provisions of this Section 6.13, and (y) to seek and obtain legal or financial advice from Primary’ outside counsel and outside financial advisors), or (iv) unless this Agreement has been terminated in accordance with its terms, approve or enter into any term sheet, letter of intent, commitment, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other similar agreement (whether written or oral, binding or nonbinding) (other than an Acceptable Confidentiality Agreement entered into in accordance with this Section 6.13) in connection with or relating to any Acquisition Proposal. Notwithstanding the foregoing, in the event that after the date of this Agreement and prior to the receipt of the Requisite Primary Vote, Primary receives an unsolicited bona fide written Acquisition Proposal, Primary may, and may permit its Subsidiaries and its and its Subsidiaries’ Representatives to, furnish or cause to be furnished confidential or nonpublic information or data and participate in such negotiations or discussions with the person making the Acquisition Proposal if the Board of Directors of Primary concludes in good faith (after receiving the advice of outside counsel and, with respect to financial matters, its outside financial advisors) that failure to take such actions would be more likely than not to be inconsistent with its fiduciary duties under applicable law; provided, that, prior to furnishing any confidential or nonpublic information permitted to be provided pursuant to this sentence, Primary shall have provided such information to GBC and shall have entered into a confidentiality agreement with the person making such Acquisition Proposal on terms no less favorable to Primary than the Non-Disclosure Agreement (“Acceptable Confidentiality Agreement”), which confidentiality agreement shall not provide such person with any exclusive right to negotiate with Primary. Primary will promptly (and, in any event, within one business day after receipt) advise GBC following receipt of any Acquisition Proposal or any inquiry which could reasonably be expected to lead to an Acquisition Proposal and the substance thereof (including the material terms and conditions of and the identity of the person making such inquiry or Acquisition Proposal), and will keep GBC apprised of any related developments, discussions and negotiations on a current basis, including any amendments to or revisions of the terms of such inquiry or Acquisition Proposal. Primary shall use its reasonable best efforts to enforce any existing confidentiality or standstill agreements to which it or any of its Subsidiaries is a party in accordance with the terms thereof. It is agreed that any violation of the restrictions on Primary set forth in this Section 6.13 (other than any violation that is unintentional or immaterial) by any officer, director, employee, consultant, advisor or other representative of Primary or any of its Subsidiaries, in each case acting on behalf of Primary or any of its Subsidiaries, shall be a breach of this Section 6.13 by Primary.
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6.14 Public Announcements. Primary and GBC agree that the initial press release with respect to the execution and delivery of this Agreement shall be a release mutually agreed to by the parties. Thereafter and prior to the Effective Time, each of the parties agrees that no public release concerning this Agreement or the transactions contemplated hereby shall be issued by any party without the prior written consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), except (i) as required by applicable law or the rules or regulations of any applicable Governmental Entity or stock exchange to which the relevant party is subject, in which case the party required to make the release or announcement shall consult with the other party about, and allow the other party reasonable time to comment on, such release or announcement in advance of such issuance, or (ii) for such releases or announcements that are consistent with other such releases or announcement made after the date of this Agreement in compliance with this Section 6.14. It is understood that GBC shall assume primary responsibility for the preparation of joint press releases relating to this Agreement, the Merger and the other transactions contemplated hereby.
6.15 Takeover Statutes. Neither Primary nor its Board of Directors shall take any action that would cause any Takeover Statute to become applicable to this Agreement, the Merger, or any of the other transactions contemplated hereby, and each shall take all necessary steps to exempt (or ensure the continued exemption of) the Merger and the other transactions contemplated hereby from any applicable Takeover Statute now or hereafter in effect. If any Takeover Statute may become, or may purport to be, applicable to the transactions contemplated hereby, each party and the members of their respective Boards of Directors will grant such approvals and take such actions as are necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the transactions contemplated by this Agreement, including, if necessary, challenging the validity or applicability of any such Takeover Statute.
6.16 Certain Tax Matters. Each of Primary and GBC shall use its reasonable best efforts to cause the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Each of Primary and GBC will, and will cause their respective Affiliates to, maintain all books and records and file all federal, state, and local income Tax Returns and schedules thereto in a manner consistent with the Merger’s qualification as a reorganization under Section 368(a)(1)(A) of the Code (and comparable provisions of any applicable state or local law).
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Article VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligations of the parties to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. The Requisite Primary Vote shall have been obtained.
(b) Regulatory Approvals. (i) All Requisite Regulatory Approvals shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated and (ii) no such Requisite Regulatory Approval shall have resulted in the imposition of any Materially Burdensome Regulatory Condition.
(c) No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger, the Bank Merger or any of the other transactions contemplated by this Agreement shall be in effect. No law, statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits or makes illegal consummation of the Merger, the Bank Merger or any of the other transactions contemplated by this Agreement.
(d) Fairness Order. The Fairness Order shall have been obtained and shall remain in full force and effect.
7.2 Conditions to Obligations of GBC. The obligation of GBC to effect the Merger is also subject to the satisfaction, or waiver by GBC, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and warranties of Primary set forth in Section 3.2(a) and Section 3.8(a) (in each case, after giving effect to the lead-in to Article III) shall be true and correct (other than, in the case of Section 3.2(a), such failures to be true and correct as are de minimis), in each case, as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), and the representations and warranties of Primary set forth in Section 3.1(a), Section 3.1(b) (but only with respect to Primary Bank), Section 3.3(a), Section 3.3(b)(i) and Section 3.7 (read, in each case, without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article III) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date). All other representations and warranties of Primary set forth in this Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article III) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date); provided, however, that for purposes of this sentence, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, either individually or in the aggregate, and without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, has had or would reasonably be expected to have a Material Adverse Effect on Primary or the Surviving Entity. GBC shall have received a certificate dated as of the Closing Date and signed on behalf of Primary by the Chief Executive Officer or the Chief Financial Officer of Primary to the foregoing effect.
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(b) Performance of Obligations of Primary. Primary shall have performed in all material respects the obligations, covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, and GBC shall have received a certificate dated as of the Closing Date and signed on behalf of Primary by the Chief Executive Officer or the Chief Financial Officer of Primary to such effect.
(c) Material Adverse Effect. There shall not have been any Material Adverse Effect with respect to Primary between the date hereof and the Closing Date.
7.3 Conditions to Obligations of Primary. The obligation of Primary to effect the Merger is also subject to the satisfaction, or waiver by Primary, at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of GBC set forth in Section 4.2(a) (in each case, after giving effect to the lead-in to Article IV) shall be true and correct (other than, in the case of Section 4.2(a), such failures to be true and correct as are de minimis), in each case, as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), and the representations and warranties of GBC set forth in Section 4.1(a), Section 4.1(b) (but only with respect to GBC Bank), Section 4.2(b) (but only with respect to GBC Bank), Section 4.3(a); Section 4.3(b)(i) and Section 4.7 (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article IV) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date). All other representations and warranties of GBC set forth in this Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article IV) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), provided, however, that for purposes of this sentence, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, either individually or in the aggregate, and without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, has had or would reasonably be expected to have a Material Adverse Effect on GBC. Primary shall have received a certificate dated as of the Closing Date and signed on behalf of GBC by the Chief Executive Officer or the Chief Financial Officer of GBC to the foregoing effect.
(b) Performance of Obligations of GBC. GBC shall have performed in all material respects the obligations, covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, and Primary shall have received a certificate dated as of the Closing Date and signed on behalf of GBC by the Chief Executive Officer or the Chief Financial Officer of GBC to such effect.
(c) Material Adverse Effect. There shall not have been any Material Adverse Effect with respect to GBC between the date hereof and the Closing Date.
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Article VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of the Requisite Primary Vote (except in the case of Section 8.1(e) and Section 8.1(f)):
(a) by mutual written consent of GBC and Primary;
(b) by either GBC or Primary if any Governmental Entity that must grant a Requisite Regulatory Approval has denied approval of the Merger or the Bank Merger and such denial has become final and nonappealable or any Governmental Entity of competent jurisdiction shall have issued a final and nonappealable order, injunction, decree or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the consummation of the Merger or the Bank Merger, unless the failure to obtain a Requisite Regulatory Approval shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the obligations, covenants and agreements of such party set forth herein;
(c) by either GBC or Primary if the Merger shall not have been consummated on or before the twelve (12) month anniversary of the date of this Agreement (the “Termination Date”), unless the failure of the Closing to occur by such date shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the obligations, covenants and agreements of such party set forth herein;
(d) by either GBC or Primary (provided, that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained herein) if there shall have been a breach of any of the obligations, covenants or agreements or any of the representations or warranties (or any such representation or warranty shall cease to be true) set forth in this Agreement on the part of Primary, in the case of a termination by GBC, or GBC, in the case of a termination by Primary, which breach or failure to be true, either individually or in the aggregate with all other breaches by such party (or failures of such representations or warranties to be true), would constitute, if occurring or continuing on the Closing Date, the failure of a condition set forth in Section 7.2, in the case of a termination by GBC, or Section 7.3, in the case of a termination by Primary, and which is not cured within thirty (30) days following written notice to Primary, in the case of a termination by GBC, or GBC, in the case of a termination by Primary, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the Termination Date);
(e) by either GBC or Primary, at any time prior to or on the Closing Date, if, after the date hereof, there shall have occurred and be continuing any events or occurrences that, individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect on Primary, in the case of a termination by GBC, or on GBC, in the case of a termination by Primary;
(f) by GBC, prior to such time that the Requisite Primary Vote is obtained, if (i) Primary or the Board of Directors of Primary shall have made a Recommendation Change, or (ii) Primary or the Board of Directors of Primary shall have committed a Willful and Material Breach (as defined below) of its obligations under Section 6.5 or 6.13;
(g) by either Primary or GBC, if the Requisite Primary Vote shall not have been obtained upon a vote thereon taken at the Primary Meeting (including any adjournment or postponement thereof); or
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(h) by Primary in order to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal if, prior to the time the Requisite Primary Vote is obtained, the Board of Directors of Primary authorizes Primary to enter into an Alternative Acquisition Agreement in response to a Superior Proposal, to the extent permitted by and in accordance with Section 6.5(c); provided that concurrently with such termination, Primary pays, or causes to be paid, to GBC, in immediately available funds the Termination Fee pursuant to Section 8.2.
8.2 Effect of Termination.
(a) In the event of termination of this Agreement by either GBC or Primary as provided in Section 8.1, this Agreement shall forthwith become void and have no effect, and none of GBC, Primary, any of their respective Subsidiaries or any of the officers or directors of any of them shall have any liability of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except that (i) Section 6.2(b) (Access to Information; Confidentiality), Section 6.14 (Public Announcements), this Section 8.2 and Article IX (other than Section 9.13) shall survive any termination of this Agreement, and (ii) notwithstanding anything to the contrary contained in this Agreement, neither GBC nor Primary shall be relieved or released from any liabilities or damages arising out of its actual and intentional common law fraud in such party’s making of its representations and warranties set forth in this Agreement (“Fraud”) or its willful and material breach of any provision of this Agreement.
(b) In the event that after the date of this Agreement and prior to the termination of this Agreement, a bona fide Acquisition Proposal shall have been communicated to or otherwise made known to the Board of Directors or senior management of Primary or shall have been made directly to the shareholders of Primary or any person shall have publicly announced (and not withdrawn at least two (2) business days prior to the Primary Meeting) an Acquisition Proposal, in each case, with respect to Primary, and (A)(x) thereafter this Agreement is terminated by either GBC or Primary pursuant to Section 8.1(c) without the Requisite Primary Vote having been obtained (and all other conditions set forth in Section 7.1 and Section 7.3 were satisfied or were capable of being satisfied prior to such termination), (y) thereafter this Agreement is terminated by GBC pursuant to Section 8.1(d) as a result of a Willful and Material Breach or (z) thereafter this Agreement is terminated by GBC or Primary pursuant to Section 8.1(g) and (B) prior to the date that is twelve (12) months after the date of such termination, Primary enters into a definitive agreement or consummates a transaction with respect to an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred to above), then Primary shall, on the earlier of the date it enters into such definitive agreement and the date of consummation of such transaction, pay GBC, by wire transfer of same-day funds, a fee equal to $1,100,000 (the “Termination Fee”); provided, that for purposes of this Section 8.2(b), all references in the definition of Acquisition Proposal to “twenty-five percent (25%)” shall instead refer to “fifty percent (50%).”
(c) In the event that this Agreement is terminated by GBC pursuant to Section 8.1(f) then Primary shall pay GBC, by wire transfer of same-day funds, the Termination Fee within two (2) business days of the date of termination.
(d) In the event that this Agreement is terminated by Primary pursuant to Section 8.1(h), then Primary shall pay GBC, by wire transfer of same-day funds, the Termination Fee concurrently with such termination.
(e) Notwithstanding anything to the contrary in this Agreement, but without limiting the right of any party to recover liabilities or damages arising out of the other party’s Fraud or Willful and Material Breach (as defined above) of any provision of this Agreement, in no event shall either party be required to pay the Termination Fee more than once.
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(f) Each of GBC and Primary acknowledges that the agreements contained in this Section 8.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the other party would not enter into this Agreement; accordingly, if Primary or GBC fails promptly to pay the amount due pursuant to this Section 8.2, and, in order to obtain such payment, the other party commences a suit which results in a judgment against the non-paying party for the Termination Fee or any portion thereof, such non-paying party shall pay the costs and expenses of the other party (including attorneys’ fees and expenses) in connection with such suit. In addition, if Primary or GBC fails to pay the amounts payable pursuant to this Section 8.2, then such party shall pay interest on such overdue amounts at a rate per annum equal to the “prime rate” published in the Wall Street Journal on the date on which such payment was required to be made for the period commencing as of the date that such overdue amount was originally required to be paid and ending on the date that such overdue amount is actually paid in full. The amounts payable by Primary pursuant to Section 8.1(g), Section 8.2(b) and Section 8.2(c), respectively, and this Section 8.2(f), constitute liquidated damages and not a penalty, and, except in the case of Fraud or Willful and Material Breach (as defined above), shall be the sole monetary remedy of GBC in the event of a termination of this Agreement specified in such applicable section.
Article IX
GENERAL PROVISIONS
9.1 Definitions. Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:
“Acquisition Proposal” shall mean, other than the transactions contemplated by this Agreement, any offer, proposal or inquiry relating to, or any third-party indication of interest in, (i) any acquisition or purchase, direct or indirect, of twenty-five percent (25%) or more of the consolidated assets of Primary and its Subsidiaries or twenty-five percent (25%) or more of any class of equity or voting securities of Primary or its Subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of Primary, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such third party beneficially owning twenty-five percent (25%) or more of any class of equity or voting securities of Primary or its Subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of Primary, or (iii) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving Primary or its Subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of Primary.
“Cash Election Threshold” means a number of shares of Primary Common Stock equal to the product of (i) the total number of shares of Primary Common Stock issued and outstanding as of the Election Deadline and (ii) 0.20, rounded down to the nearest whole number.
“Election Deadline” shall mean 5:00 p.m., Eastern time, on the later of (i) the date of the Primary Meeting and (ii) the date that GBC and Primary shall agree is as near as practicable to three (3) Business Days prior to the expected Closing Date.
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“Material Adverse Effect” means, with respect to GBC, Primary or the Surviving Entity, as the case may be, any effect, change, event, circumstance, condition, occurrence or development that, either individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (i) the business, properties, assets, liabilities, results of operations or financial condition of such party and its Subsidiaries taken as a whole (provided, however, that, with respect to this clause (i), Material Adverse Effect shall not be deemed to include the impact of (A) changes, after the date hereof, in U.S. generally accepted accounting principles (“GAAP”) or applicable regulatory accounting requirements), (B) changes, after the date hereof, in laws, rules or regulations of general applicability to companies in the industries in which such party and its Subsidiaries operate, or interpretations thereof by courts or Governmental Entities (as defined below), (C) changes, after the date hereof, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to such party or its Subsidiaries, (D) changes, after the date hereof, resulting from hurricanes, earthquakes, tornados, naturally-occurring floods or other natural disasters or from any outbreak of any disease or other public health event (including epidemics or pandemics), or (E) public disclosure of the execution of this Agreement, public disclosure or consummation of the transactions contemplated hereby (including any effect on a party’s relationships with its customers or employees) (it being understood that the foregoing shall not apply for purposes of the representations and warranties in Sections 3.3(b), 3.4, 4.3(b) or 4.4) or actions expressly required by this Agreement or that are taken with the prior written consent of the other party in contemplation of the transactions contemplated hereby (it being understood that this Clause (E) shall not apply to a breach of any representation or warranty related to the announcement, pendency or consummation of the transactions contemplated hereby); except, (i) with respect to subclauses (A), (B), (C), or (D) to the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of such party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its Subsidiaries operate, or (ii) the ability of such party to timely consummate the transactions contemplated hereby.
“Merger Consideration” means the sum of (i) the aggregate Per Share Merger Consideration and (ii) the aggregate Fractional Share Cash-in-Lieu Amounts.
“Per Share Cash Consideration” means cash in the amount of $13.50.
“Per Share Merger Consideration” means either the Per Share Cash Consideration or the Per Share Stock Consideration that a share of Primary Common Stock is entitled to receive pursuant to the terms and subject to the conditions of this Agreement.
“Per Share Stock Consideration” means 0.5870 fully paid and nonassessable share of GBC Common Stock.
“Proxy Statement” means the proxy statement and prospectus and other proxy solicitation materials of Primary relating to the Primary Meeting.
“Requisite Regulatory Approvals” shall mean all regulatory authorizations, consents, waivers, orders and approvals (and the expiration or termination of all statutory waiting periods in respect thereof) (i) from the FDIC, the DBF and the Federal Reserve (in respect of the Merger or the Bank Merger) or (ii) referred to in Section 3.4 or Section 4.4 that are necessary to consummate the transactions contemplated by this Agreement (including the Merger and the Bank Merger), except, in the case of this clause (ii), for the Fairness Determination and any such authorizations, consents, waivers, orders or approvals the failure of which to be obtained would not be material to the Surviving Entity.
“Subsidiary” means any subsidiary of such person as defined in the BHC Act.
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“Superior Proposal” shall mean any bona fide written Acquisition Proposal which the board of directors of Primary determines, in good faith, after taking into account all legal, financial, regulatory, and other aspects of such proposal (including the amount, form, and timing of payment of consideration, the financing thereof, any associated break-up or termination fees, including those provided for in this Agreement, expense reimbursement provisions, and all conditions to consummation) and the person making the proposal, and after consulting with its outside financial advisor and outside legal counsel, is (i) more favorable from a financial point of view to Primary’ shareholders than the transactions contemplated by this Agreement (taking into account any proposal by GBC to amend the terms of this Agreement pursuant to Section 6.5(c)) and (ii) reasonably likely to be timely consummated on the terms set forth; provided, however, that for purposes of this definition of Superior Proposal, references to “twenty-five percent (25%)” in the definition of Acquisition Proposal shall be deemed to be references to “fifty percent (50%).”
“Tax” or “Taxes” means all federal, state, local, and foreign income, excise, gross receipts, ad valorem, profits, gains, property, capital, sales, transfer, use, license, payroll, employment, social security, severance, unemployment, withholding, duties, windfall profits, intangibles, franchise, backup withholding, value added, alternative or add-on minimum, escheat, unclaimed property, estimated and other taxes, charges, levies or like assessments, in each case, in the nature of a Tax and imposed by a Governmental Entity with jurisdiction over Taxes, together with all penalties and additions to tax and interest thereon.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, supplied or required to be supplied to a Governmental Entity.
“Willful and Material Breach” shall mean a material breach of, or material failure to perform any of the covenants or other agreements contained in, this Agreement that is a consequence of an act or failure to act by the breaching or non-performing party with actual knowledge that such party’s act or failure to act would, or would reasonably be expected to, result in or constitute such breach of or such failure of performance under this Agreement.
9.2 Amendment. Subject to compliance with applicable law, this Agreement may be amended by the parties hereto at any time before or after the receipt of the Requisite Primary Vote; provided, however, that after the receipt of the Requisite Primary Vote, there may not be, without further approval of the shareholders of Primary any amendment of this Agreement that requires such further approval under applicable law. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed on behalf of each of the parties hereto.
9.3 Extension; Waiver. At any time prior to the Effective Time, each of the parties hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained in this Agreement or in any document delivered by such other party pursuant hereto, and (c) waive compliance with any of the agreements or satisfaction of any conditions for its benefit contained in this Agreement; provided, however, that after the receipt of the Requisite Primary Vote, there may not be, without further approval of the shareholders of Primary any extension or waiver of this Agreement or any portion thereof that requires such further approval under applicable law. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
9.4 Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties, obligations, covenants and agreements in this Agreement (or in any certificate delivered pursuant to this Agreement) shall survive the Effective Time, except for Sections 6.8 and 6.12 and for those other obligations, covenants and agreements contained in this Agreement which by their terms apply in whole or in part after the Effective Time.
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9.5 Expenses. Except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense.
9.6 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by e-mail transmission (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
(a) if to Primary, to:
Primary Bancshares Corporation
3880 Roswell Road
Atlanta, GA 30342
Attention: Mr. David Coxon
Email: [***]
With a copy (which shall not constitute notice) to:
Nelson Mullins Riley & Scarborough LLP
201 17th Street NW, Suite 1700
Atlanta, GA 30363
Attention: Robert Klingler
Email: [***]
and
(b) if to GBC, to:
Georgia Banking Company, Inc.
1776 Peachtree Street NW, Suite 300
Atlanta, Georgia 30309
Attention: Bartow Morgan, Jr., Chief Executive Officer
Email: [***]
With a copy (which shall not constitute notice) to each of:
Troutman Pepper
600 Peachtree Street, N.E., Suite 3000
Atlanta, Georgia 30308
Attention: James W. Stevens
Email: [***]
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9.7 Interpretation. The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The word “or” shall not be exclusive. References to “the date hereof” shall mean the date of this Agreement. As used in this Agreement, the “knowledge” of Primary means the actual knowledge of any of the officers of Primary listed on Section 9.7 of the Primary Disclosure Schedule, and the “knowledge” of GBC means the actual knowledge of any of the officers of GBC listed on Section 9.7 of the GBC Disclosure Schedule. As used in this Agreement, (i) the term “person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature, (ii) an “affiliate” of a specified person is any person that directly or indirectly controls, is controlled by, or is under common control with, such specified person, (iii) the term “made available” means any document or other information that was (a) provided by one party or its representatives to the other party and its representatives by 5:00 p.m., Eastern time, on the day prior to the date hereof or (b) included in the virtual data room of a party by 5:00 p.m., Eastern time, on the day prior to the date hereof, (iv) “business day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized by law or executive order to be closed and (v) the “transactions contemplated hereby” and “transactions contemplated by this Agreement” shall include the Merger and the Bank Merger. The Primary Disclosure Schedule and the GBC Disclosure Schedule, as well as all other schedules and all exhibits hereto, shall be deemed part of this Agreement and included in any reference to this Agreement. Nothing contained in this Agreement shall require any party or person to take any action in violation of applicable law.
9.8 Counterparts. This Agreement may be executed in counterparts (including by pdf), all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
9.9 Entire Agreement. This Agreement (including the documents and instruments referred to herein) together with the Non-Disclosure Agreement constitutes the entire agreement among the parties and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
9.10 Governing Law; Jurisdiction.
(a) This Agreement shall be governed by and construed in accordance with the internal, substantive laws of the State of Georgia applicable to agreements entered into and to be performed solely within such state, without regard to any applicable conflicts of law principles.
(b) Each party agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby exclusively in any federal or state court of competent jurisdiction located in the State of Georgia (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party, and (iv) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 9.6.
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9.11 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY LAW AT THE TIME OF INSTITUTION OF THE APPLICABLE LITIGATION, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
9.12 Assignment; Third-Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Except as otherwise specifically provided in Section 6.8, which is intended to benefit each Primary Indemnified Party, this Agreement (including the documents and instruments referred to herein) is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth in this Agreement. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance herewith without notice or liability to any other person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
9.13 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and, accordingly, that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate the Merger), in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate, and (b) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
9.14 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction such that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
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9.15 Confidential Supervisory Information. Notwithstanding any other provision of this Agreement, no disclosure, representation or warranty shall be made (or other action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information (including confidential supervisory information as defined in 12 C.F.R. § 261.2(c) and as identified in 12 C.F.R. § 309.5(g)(8)) of a Governmental Entity by any party to this Agreement to the extent prohibited by applicable law. To the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of the preceding sentence apply.
9.16 Delivery by Facsimile or Electronic Transmission. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation of a contract and each party hereto forever waives any such defense.
[Signature Page Follows]
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IN WITNESS WHEREOF, Georgia Banking Company, Inc. and Primary Bancshares Corporation have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.
| Georgia banking company, Inc. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Name: Bartow Morgan, Jr. | ||
| Title: Chief Executive Officer | ||
| Primary Bancshares Corporation | ||
| By: | /s/ David R. Coxon | |
| Name: David R. Coxon | ||
| Title: Chief Executive Officer and President | ||
[Signature Page to Agreement and Plan of Merger]
Exhibit A
Form of Bank Merger Agreement
[***]
Exhibit B
Form of Support Agreement
[***]
Exhibit C
Form of Option Holder Release Agreement
[***]
Exhibit D
Form of Settlement Agreement
[***]
Exhibit 2.2
CERTAIN CONFIDENTIAL INFORMATION (MARKED
BY BRACKETS AS “[***]”) HAS
BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) IS
THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR
CONFIDENTIAL.
AGREEMENT AND PLAN OF MERGER
between
GEORGIA BANKING COMPANY, INC.
and
TANDEM BANCORP, INC.
Dated February 24, 2026
TABLE OF CONTENTS
| ARTICLE I | |||
| THE MERGER | |||
| 1.1 | The Merger and Bank Merger | 1 | |
| 1.2 | Closing | 2 | |
| 1.3 | Effective Time | 2 | |
| 1.4 | Effects of the Merger | 2 | |
| 1.5 | Charter of Surviving Entity | 2 | |
| 1.6 | Bylaws of Surviving Entity | 2 | |
| 1.7 | Tax Consequences | 2 | |
| Article II | |||
| EFFECT ON CAPITAL STOCK; EXCHANGE OF SHARES | |||
| 2.1 | Conversion of Capital Stock | 2 | |
| 2.2 | Treatment of Restricted Stock Awards | 3 | |
| 2.3 | Treatment of Tandem Options | 3 | |
| 2.4 | Treatment of Tandem Warrants | 5 | |
| 2.5 | Election and Allocation Procedures | 6 | |
| 2.6 | Dissenting Shareholders | 8 | |
| 2.7 | Payment Procedures | 9 | |
| 2.8 | Rights of Former Tandem Shareholders | 10 | |
| Article III | |||
| REPRESENTATIONS AND WARRANTIES OF TANDEM | |||
| 3.1 | Corporate Organization | 11 | |
| 3.2 | Capitalization | 12 | |
| 3.3 | Authority; No Violation | 13 | |
| 3.4 | Consents and Approvals | 14 | |
| 3.5 | Reports | 14 | |
| 3.6 | Financial Statements | 15 | |
| 3.7 | Broker’s Fees | 16 | |
| 3.8 | Absence of Certain Changes or Events | 16 | |
| 3.9 | Legal and Regulatory Proceedings | 16 | |
| 3.10 | Taxes and Tax Returns | 16 | |
| 3.11 | Employees | 18 | |
| 3.12 | Compliance with Applicable Law | 21 | |
| 3.13 | Certain Contracts | 23 | |
| 3.14 | Agreements with Regulatory Agencies | 25 | |
| 3.15 | Risk Management Instruments | 25 | |
| 3.16 | Environmental Matters | 25 | |
| 3.17 | Investment Securities and Commodities | 26 | |
| 3.18 | Real Property | 26 | |
| 3.19 | Intellectual Property | 26 | |
i
| 3.20 | Related Party Transactions | 27 | |
| 3.21 | State Takeover Laws | 27 | |
| 3.22 | Reorganization | 27 | |
| 3.23 | Opinion | 27 | |
| 3.24 | Tandem Information | 27 | |
| 3.25 | Loan Portfolio | 28 | |
| 3.26 | Insurance | 29 | |
| 3.27 | No Other Representations or Warranties | 29 | |
| Article IV | |||
| REPRESENTATIONS AND WARRANTIES OF GBC | |||
| 4.1 | Corporate Organization | 30 | |
| 4.2 | Capitalization | 31 | |
| 4.3 | Authority; No Violation | 31 | |
| 4.4 | Consents and Approvals | 32 | |
| 4.5 | Reports | 32 | |
| 4.6 | Financial Statements | 33 | |
| 4.7 | Broker’s Fees | 34 | |
| 4.8 | Absence of Certain Changes or Events | 34 | |
| 4.9 | Legal and Regulatory Proceedings | 34 | |
| 4.10 | Taxes and Tax Returns | 35 | |
| 4.11 | Compliance with Applicable Law | 35 | |
| 4.12 | Agreements with Regulatory Agencies | 37 | |
| 4.13 | Related Party Transactions | 37 | |
| 4.14 | State Takeover Laws | 37 | |
| 4.15 | Reorganization | 37 | |
| 4.16 | GBC Information | 37 | |
| 4.17 | No Other Representations or Warranties | 38 | |
| Article V | |||
| COVENANTS RELATING TO CONDUCT OF BUSINESS | |||
| 5.1 | Conduct of Businesses Prior to the Effective Time | 38 | |
| 5.2 | Forbearances of Tandem | 38 | |
| 5.3 | Forbearances of GBC | 42 | |
| Article VI | |||
| ADDITIONAL AGREEMENTS | |||
| 6.1 | Regulatory Matters | 43 | |
| 6.2 | Access to Information; Confidentiality | 44 | |
| 6.3 | Non-Control | 45 | |
| 6.4 | Fairness Determination; Securities Act Compliance | 45 | |
| 6.5 | Proxy Statement; Shareholders’ Approvals | 46 | |
| 6.6 | Legal Conditions to Merger | 47 | |
| 6.7 | Employee Matters | 48 | |
| 6.8 | Indemnification; Directors’ and Officers’ Insurance | 49 | |
ii
| 6.9 | Additional Agreements | 51 | |
| 6.10 | Advice of Changes | 51 | |
| 6.11 | Shareholder Litigation | 51 | |
| 6.12 | Corporate Governance | 51 | |
| 6.13 | Acquisition Proposals | 52 | |
| 6.14 | Public Announcements | 52 | |
| 6.15 | Takeover Statutes | 53 | |
| 6.16 | Certain Tax Matters | 53 | |
| Article VII | |||
| CONDITIONS PRECEDENT | |||
| 7.1 | Conditions to Each Party’s Obligation to Effect the Merger | 53 | |
| 7.2 | Conditions to Obligations of GBC | 54 | |
| 7.3 | Conditions to Obligations of Tandem | 55 | |
| Article VIII | |||
| TERMINATION AND AMENDMENT | |||
| 8.1 | Termination | 56 | |
| 8.2 | Effect of Termination | 57 | |
| Article IX | |||
| GENERAL PROVISIONS | |||
| 9.1 | Definitions | 58 | |
| 9.2 | Amendment | 60 | |
| 9.3 | Extension; Waiver | 60 | |
| 9.4 | Nonsurvival of Representations, Warranties and Agreements | 60 | |
| 9.5 | Expenses | 61 | |
| 9.6 | Notices | 61 | |
| 9.7 | Interpretation | 61 | |
| 9.8 | Counterparts | 62 | |
| 9.9 | Entire Agreement | 62 | |
| 9.10 | Governing Law; Jurisdiction | 62 | |
| 9.11 | Waiver of Jury Trial | 63 | |
| 9.12 | Assignment; Third-Party Beneficiaries | 63 | |
| 9.13 | Specific Performance | 63 | |
| 9.14 | Severability | 63 | |
| 9.15 | Confidential Supervisory Information | 64 | |
| 9.16 | Delivery by Electronic Transmission | 64 | |
iii
INDEX OF DEFINED TERMS
| Term | Section |
| ACA | 3.11(k) |
| Acceptable Confidentiality Agreement | 6.13 |
| Acquisition Proposal | 9.1 |
| Affiliate | 9.7 |
| Agreement | Preamble |
| ACL | 3.6(c) |
| ALLL | 3.6(c) |
| Alternative Acquisition Agreement | 6.5(b) |
| Applicable Agencies | 3.4 |
| Bank Merger | Recitals |
| Bank Merger Agreement | Recitals |
| Bank Merger Certificates | 1.1(b) |
| Bank Merger Effective Time | 1.1(b) |
| BHC Act | 3.1(a) |
| Business Day | 9.7 |
| Call Reports | 3.6(c) |
| Cancelled Shares | 2.1(c) |
| Cash Election | 2.4(a) |
| Cash Election Shares | 2.4(a) |
| Cash Election Threshold | 9.1 |
| Certificate of Merger | 1.3 |
| Chosen Courts | 9.10(b) |
| Closing | 1.2 |
| Closing Date | 1.2 |
| Code | Recitals |
| Continuing Employees | 6.7(a) |
| Conversion Fund | 2.6(a) |
| DBF | 3.4 |
| Dissenters’ Shares | 2.1(b) |
| Distribution Date | 2.4(a) |
| Effective Time | 1.3 |
| Election Deadline | 9.1 |
| Election Form | 2.4(a) |
| Enforceability Exceptions | 3.3(a) |
| Environmental Laws | 3.16 |
| ERISA | 3.11(a) |
| Exchange Act | 3.20 |
| Exchange Agent | 2.4(a) |
| Exchange Ratio | 2.2(a) |
| Fairness Determination | 6.4(a) |
| Fairness Hearing | 6.4(b) |
| Fairness Order | 6.4(b) |
| FDI Act | 3.1(b) |
| FDIC | 3.1(b) |
| Federal Reserve | 3.4 |
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| Fractional Share Cash-in-Lieu Amounts | 2.4(c) |
| Fraud | 8.2(a) |
| GAAP | 3.1(a) |
| GBC | Preamble |
| GBC Bank | Recitals |
| GBC Bylaws | 1.6 |
| GBCC | 1.1(a) |
| GBC Charter | 1.5 |
| GBC Common Stock | 4.2(a) |
| GBC Disclosure Schedule | Article IV |
| GBC 401(k) Plan | 6.7(c) |
| GBC Financial Statements | 4.6(a) |
| GBC Non-Voting Common Stock | 4.2(a) |
| GBC Subsidiary | 4.1(b) |
| GBC Voting Common Stock | 4.2(a) |
| Georgia Secretary | 1.3 |
| Governmental Entity | 3.4 |
| Holder | 2.4(a) |
| Ineligible Shares | 2.4(d) |
| Intellectual Property | 3.19 |
| IRS | 2.6(g) |
| Knowledge | 9.7 |
| Liens | 3.2(b) |
| Loans | 3.25(a) |
| Material Adverse Effect | 9.1 |
| Materially Burdensome Regulatory Condition | 6.1(b) |
| Merger | Recitals |
| Merger Consideration | 2.4(a) |
| Non-Disclosure Agreement | 6.2(b) |
| Non-Election Shares | 2.4(a) |
| Option Cancellation Payment | 2.2(a)(1) |
| Option Consideration | 2.2(a)(3) |
| Option Election Notice | 2.2(a) |
| Option Holder Release Agreements | 2.2(a) |
| Option Shares | 2.2(a)(3) |
| Per Share Cash Consideration | 9.1 |
| Per Share Merger Consideration | 9.1 |
| Per Share Stock Consideration | 9.1 |
| Permitted Encumbrance | 3.18 |
| Personal Data | 3.12(b) |
| Premium Cap | 6.8(b) |
| Proxy Statement | 9.1 |
| Recommendation Change | 6.5(b) |
| Regulatory Agencies | 3.5 |
| Representatives | 6.13 |
| Requisite Regulatory Approvals | 9.1 |
| Requisite Tandem Vote | 3.3(a) |
| Rollover Option | 2.2(a)(2) |
| Rollover Warrant | 2.3(a)(2) |
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| SBA Loan | 3.25(g) |
| Securities Act | 6.4(a) |
| Security Breach | 3.12(d) |
| Solomon | 4.7 |
| SRO | 3.5 |
| Stock Election | 2.4(a) |
| Stock Election Shares | 2.4(a) |
| Subsidiary | 3.1(a) |
| Superior Proposal | 9.1 |
| Surviving Entity | Recitals |
| Takeover Statutes | 3.21 |
| Tandem | Preamble |
| Tandem 401(k) Plan | 6.7(c) |
| Tandem Articles | 3.1(a) |
| Tandem Bank | Recitals |
| Tandem Benefit Plans | 3.11(a) |
| Tandem Board Recommendation | 6.5(b) |
| Tandem Bylaws | 3.1(a) |
| Tandem Certificate | 2.5(a) |
| Tandem Common Stock | 3.2(a) |
| Tandem Continuing Director | 6.12(a) |
| Tandem Contract | 3.13(a) |
| Tandem Disclosure Schedule | Article III |
| Tandem ERISA Affiliate | 3.11(a) |
| Tandem Financial Statements | 3.6(a) |
| Tandem Indemnified Parties | 6.8(a) |
| Tandem Meeting | 6.5(b) |
| Tandem Options | 2.2(a) |
| Tandem Qualified Plans | 3.11(c) |
| Tandem Real Property | 3.18 |
| Tandem Regulatory Agreement | 3.14 |
| Tandem Restricted Stock Award | 2.2 |
| Tandem Securities | 3.2(a) |
| Tandem Subsidiary | 3.1(b) |
| Tandem Warrants | 2.3(a) |
| Tax | 9.1 |
| Tax Return | 9.1 |
| Termination Date | 8.1(c) |
| Termination Fee | 8.2(b) |
| Warrant Cancellation Payment | 2.3(a)(1) |
| Warrant Consideration | 2.3(a)(3) |
| Warrant Election Notice | 2.3(a) |
| Warrant Holder Release Agreements | 2.3(a) |
| Warrant Shares | 2.3(a)(3) |
| Willful and Material Breach | 8.2(a) |
vi
AGREEMENT AND PLAN OF MERGER, dated February 24, 2026 (this “Agreement”), between Georgia Banking Company, Inc., a Georgia corporation (“GBC”), and Tandem Bancorp, Inc., a Georgia corporation (“Tandem”);
WHEREAS, the Boards of Directors of GBC and Tandem have unanimously determined that it is in the best interests of their respective companies and shareholders to consummate the strategic business combination transaction provided for in this Agreement, pursuant to which Tandem will, subject to the terms and conditions set forth herein, merge with and into GBC (the “Merger”), so that GBC is the surviving entity (in such capacity, the “Surviving Entity”) in the Merger;
WHEREAS, in furtherance thereof, the respective Boards of Directors of GBC and Tandem have unanimously approved the Merger and declared advisable and adopted this Agreement, approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and, with respect to the Board of Directors of Tandem, has resolved to submit this Agreement to its shareholders for approval and to recommend that its shareholders approve this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement is intended to be and is adopted as a plan of reorganization for purposes of Sections 354 and 361 of the Code;
WHEREAS, concurrently with the execution and delivery of this Agreement, Tandem Bank, a Georgia bank and wholly-owned subsidiary of Tandem (“Tandem Bank”), and Georgia Banking Company, a Georgia bank and wholly-owned subsidiary of GBC (“GBC Bank”), entered into an agreement and plan of merger (the “Bank Merger Agreement”), pursuant to which, immediately following the Merger, and subject to it occurring, Tandem Bank will merge (the “Bank Merger”) with and into GBC Bank so that GBC Bank is the surviving entity in the Bank Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement, as a condition and inducement for GBC to enter into this Agreement, each member of the Board of Directors of Tandem and each member of the Board of Directors of Tandem Bank entered into a director support agreement; and
WHEREAS, in this Agreement, the parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows:
Article I
THE MERGER
1.1 The Merger and Bank Merger.
(a) Subject to the terms and conditions of this Agreement, in accordance with the Georgia Business Corporation Code (the “GBCC”), Tandem shall merge with and into GBC pursuant to this Agreement. GBC shall be the Surviving Entity, and shall continue its corporate existence under the laws of the State of Georgia. Upon consummation of the Merger, the separate corporate existence of Tandem shall terminate.
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(b) At the Bank Merger Effective Time, Tandem Bank will merge with and into GBC Bank. GBC Bank shall be the surviving entity in the Bank Merger and, following the Bank Merger, the separate corporate existence of Tandem Bank shall cease. The Bank Merger shall be implemented pursuant to the Bank Merger Agreement.
1.2 Closing. Subject to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) will take place by electronic exchange of documents at 10:00 a.m., Eastern time, on a date which shall be no later than three (3) business days after the satisfaction or waiver (subject to applicable law) of all of the conditions set forth in Article VII hereof (other than those conditions that by their nature can only be satisfied at the Closing, but subject to the satisfaction or waiver thereof), unless another date, time or place is agreed to in writing by Tandem and GBC. The date on which the Closing occurs is referred to as the “Closing Date.”
1.3 Effective Time. On or (if agreed by GBC and Tandem) prior to the Closing Date, GBC and Tandem shall cause to be filed a certificate of merger with the Secretary of State of the State of Georgia (the “Georgia Secretary”) in accordance with the GBCC (the “Certificate of Merger”). The Merger shall become effective at such time as specified in the Certificate of Merger in accordance with the relevant provisions of the GBCC, or at such other time as shall be provided by applicable law (such time hereinafter referred to as the “Effective Time”). GBC and Tandem shall, and shall respectively cause GBC Bank and Tandem Bank to, execute certificates or articles of merger and such other agreements, documents and certificates as are necessary to make the Bank Merger effective (“Bank Merger Certificates”) at the Bank Merger Effective Time. The Bank Merger shall become effective immediately following the Effective Time or at such later time and date as specified in the Bank Merger Agreement in accordance with applicable law (the “Bank Merger Effective Time”).
1.4 Effects of the Merger. At and after the Effective Time, the Merger shall have the effects set forth in the applicable provisions of the GBCC and this Agreement.
1.5 Charter of Surviving Entity. At the Effective Time, amended and restated articles of incorporation of GBC, as amended (the “GBC Charter”), as in effect immediately prior to the Effective Time, shall be the articles of incorporation of the Surviving Entity until thereafter amended in accordance with applicable law.
1.6 Bylaws of Surviving Entity. At the Effective Time, the amended and restated bylaws of GBC, as amended (the “GBC Bylaws”), as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Entity until thereafter amended in accordance with applicable law.
1.7 Tax Consequences. It is intended that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement is intended to be and is adopted as a plan of reorganization for the purposes of Sections 354 and 361 of the Code.
Article II
EFFECT ON CAPITAL STOCK; EXCHANGE OF SHARES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of GBC, Tandem, or the Subsidiaries or shareholders of any of the foregoing, the shares of the constituent corporations to the Merger shall be converted as follows:
(a) Each share of capital stock of GBC issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding from and after the Effective Time and shall not be affected by the Merger.
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(b) Each share of Tandem Common Stock issued and outstanding immediately prior to the Effective Time, except for the Cancelled Shares (as defined below) and shares with respect to which the holder has properly exercised dissenters’ rights pursuant to Article 13 of the GBCC (the “Dissenters’ Shares”), shall be converted into the right to receive the Per Share Merger Consideration, which shall be payable to the holder thereof, in the manner provided in this Article II.
(c) Any shares of Tandem Common Stock that are owned immediately prior to the Effective Time by Tandem, GBC or their respective Subsidiaries (in each case, other than (i) shares of Tandem Common Stock held in a fiduciary capacity that are beneficially owned by third parties and (ii) shares of Tandem Common Stock held, directly or indirectly, in respect of a debt contracted) shall be cancelled and shall cease to exist and no Per Share Merger Consideration shall be payable or delivered in exchange therefor (the “Cancelled Shares”).
2.2 Treatment of Restricted Stock Awards. At the Effective Time, each award of a share of Tandem Common Stock subject solely to service-based vesting, repurchase, or other lapse restriction that is outstanding immediately prior to the Effective Time (a “Tandem Restricted Stock Award”) shall fully vest per the terms of their applicable agreements and be cancelled and converted automatically to the right to receive (without interest) the Per Share Merger Consideration, which shall be payable to the holder thereof, in the manner provided in this Article II.
2.3 Treatment of Tandem Options.
(a) Each unexpired, outstanding, and unexercised option to acquire shares of Tandem Common Stock (collectively, the “Tandem Options”), whether vested or unvested, shall, automatically and without any further action on the part of any holder thereof, be cancelled at the Effective Time and converted automatically into the right to receive, at the election of the holder, as provided by written notice of Tandem to GBC not less than thirty (30) days prior to Closing (the “Option Election Notice”), and conditioned upon the holder thereof executing and delivering to Tandem and GBC an option holder settlement and release agreement in the form attached hereto as Exhibit A (collectively, the “Option Holder Release Agreements”), either of the three following forms of consideration:
(1) An amount in cash, without interest, equal to the product of (x) the number of shares of Tandem Common Stock subject to such Tandem Option immediately prior to the Effective Time times (y) the excess, if any, of the Per Share Cash Consideration over the exercise price of such Tandem Option (the “Option Cancellation Payment”); provided that if the exercise price is equal to or greater than the Per Share Cash Consideration, such Tandem Option shall be canceled without the payment of any cash or other consideration. GBC shall deliver, or cause to be delivered, the Option Cancellation Payment to each such holder of a Tandem Option no later than the fifth (5th) Business Day following the Effective Time. Option Cancellation Payments to the holders of the Tandem Options shall be subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the making of such payment; or
(2) An option (each a “Rollover Option”) to purchase a number of shares of GBC Common Stock equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Tandem Common Stock subject to such Tandem Option immediately prior to the Effective Time times (y) 0.4800 (the “Exchange Ratio”), at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of the Tandem Common Stock of such Tandem Option immediately prior to the Effective Time divided by (B) the Exchange Ratio; provided, however, that the exercise price and the number of shares of GBC Common Stock purchasable pursuant to the Rollover Options shall be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that in the case of any Tandem Option to which Section 422 of the Code applies, the exercise price and the number of shares of GBC Common Stock purchasable pursuant to such Rollover Option shall be subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code provided that GBC makes no assurances that such Rollover Options will satisfy the requirements of Section 422 of the Code. Except as specifically provided above and/or as necessary to effect the foregoing, following the Effective Time, each Rollover Option shall continue to have the same terms as were applicable to such Tandem Option immediately prior to the Effective Time (substituting GBC and its subsidiaries for references to Tandem and its subsidiaries as applicable), which Rollover Option will be assumed by GBC in connection with GBC’s adoption and assumption of the plans under which the Tandem Options were issued following the Effective Time; or
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(3) A number of shares of GBC Common Stock (the “Options Shares”, together with the Rollover Options and the Option Cancellation Payment, the “Option Consideration”) equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Tandem Common Stock subject to such Tandem Option immediately prior to the Effective Time times (y) the Exchange Ratio less the number of shares of GBC Common Stock equal to the aggregate exercise price for such Tandem Options, assuming a value of $30.00 per share of GBC Common Stock. GBC shall deliver, or cause to be delivered, the Options Shares to each such holder of a Tandem Option no later than the fifth (5th) Business Day following the Effective Time. The Options Shares to be issued to such holders of the Tandem Options shall be subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the issuance of such shares, and GBC will withhold, or cause to be withheld, from such issuance that number of Options Shares (rounded up to the nearest whole number) that equals the applicable withholdings, assuming a value of $30.00 per share of GBC Common Stock.
(b) All rounding described in this Section 2.3 shall be done on an aggregate basis per Tandem Option and any holder of a Tandem Option, the adjustment of which results in fractional shares, shall be entitled to a cash payment under this Agreement in respect of such fractional share equal to the Fractional Share Cash-in-Lieu Amounts, subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the making of such payment; provided that such Fractional Share Cash-in-Lieu Amount shall only be paid to the extent consistent with the requirements of Section 409A of the Code and, with respect to any Tandem Option to which Section 422 of the Code applies, Section 424(a) of the Code.
(c) Prior to the Effective Time, conditioned upon the Closing, Tandem and the Board of Directors of Tandem shall adopt any resolutions and take any actions that are necessary to effect the treatment of the Tandem Options pursuant to this Section 2.3, no later than thirty (30) days prior to the Closing Date.
(d) Prior to the Effective Time, conditioned upon the Closing, GBC and the Board of Directors of GBC shall adopt any resolutions and take any actions that are necessary to effect the issuance of the Rollover Options at the Effective Time and cause the issuance of the Rollover Options and any securities to be issued upon exercise of a Rollover Option to be issued in compliance with applicable federal and state securities laws.
(e) In the event that any holder of Tandem Options does not make an election or if his or her election is not timely delivered or properly completed, such holder will be treated as electing to receive Option Shares pursuant to Section 2.3(a)(3).
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2.4 Treatment of Tandem Warrants.
(a) Each unexpired, outstanding, and unexercised warrant to acquire shares of Tandem Common Stock (collectively, the “Tandem Warrants”), whether vested or unvested, shall, automatically and without any further action on the part of any holder thereof, be cancelled at the Effective Time and converted automatically into the right to receive, at the election of the holder, as provided by written notice of Tandem to GBC not less than thirty (30) days prior to Closing (the “Warrant Election Notice”), and conditioned upon the holder thereof executing and delivering to Tandem and GBC a warrant holder settlement and release agreement in the form attached hereto as Exhibit B (collectively, the “Warrant Holder Release Agreements”), either of the three following forms of consideration:
(1) An amount in cash, without interest, equal to the product of (x) the number of shares of Tandem Common Stock subject to such Tandem Warrant immediately prior to the Effective Time times (y) the excess, if any, of the Per Share Cash Consideration over the exercise price of such Tandem Warrant (the “Warrant Cancellation Payment”); provided that if the exercise price is equal to or greater than the Per Share Cash Consideration, such Tandem Warrant shall be canceled without the payment of any cash or other consideration. GBC shall deliver, or cause to be delivered, the Warrant Cancellation Payment to each such holder of a Tandem Warrant no later than the fifth (5th) Business Day following the Effective Time. Warrant Cancellation Payments to the holders of the Tandem Warrants shall be subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the making of such payment; or
(2) A warrant (each a “Rollover Warrant”) to purchase a number of shares of GBC Common Stock equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Tandem Common Stock subject to such Tandem Warrant immediately prior to the Effective Time times (y) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of the Tandem Common Stock of such Tandem Warrant immediately prior to the Effective Time divided by (B) the Exchange Ratio; provided, however, that the exercise price and the number of shares of GBC Common Stock purchasable pursuant to the Rollover Warrants shall be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that in the case of any Tandem Warrant to which Section 422 of the Code applies, the exercise price and the number of shares of GBC Common Stock purchasable pursuant to such Rollover Warrant shall be subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code provided that GBC makes no assurances that such Rollover Warrants will satisfy the requirements of Section 422 of the Code. Except as specifically provided above and/or as necessary to effect the foregoing, following the Effective Time, each Rollover Warrant shall continue to have the same terms, including vesting, as were applicable to such Tandem Warrant immediately prior to the Effective Time (substituting GBC and its subsidiaries for references to Tandem and its subsidiaries as applicable), which Rollover Warrant will be assumed by GBC in connection with GBC’s adoption and assumption of the plans under which the Tandem Warrants were issued following the Effective Time; or
(3) A number of shares of GBC Common Stock (the “Warrants Shares”, together with the Rollover Warrant and the Warrant Cancellation Payment, the “Warrant Consideration”) equal to the product (rounded down to the nearest whole number) of (x) the number of shares of Tandem Common Stock subject to such Tandem Warrant immediately prior to the Effective Time times (y) the Exchange Ratio less the number of shares of GBC Common Stock equal to the aggregate exercise price for such Tandem Warrants, assuming a value of $30.00 per share of GBC Common Stock. GBC shall deliver, or cause to be delivered, the Warrants Shares to each such holder of a Tandem Warrant no later than the fifth (5th) Business Day following the Effective Time. The Warrants Shares to be issued to such holders of the Tandem Warrants shall be subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the issuance of such shares, and GBC will withhold, or cause to be withheld, from such issuance that number of Warrants Shares (rounded up to the nearest whole number) that equals the applicable withholdings, assuming a value of $30.00 per share of GBC Common Stock.
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(b) All rounding described in this Section 2.4 shall be done on an aggregate basis per Tandem Warrant and any holder of a Tandem Warrant, the adjustment of which results in fractional shares, shall be entitled to a cash payment under this Agreement in respect of such fractional share equal to the Fractional Share Cash-in-Lieu Amounts, subject to applicable withholding under the Code, or any provision of state, local or foreign Tax Law, with respect to the making of such payment; provided that such Fractional Share Cash-in-Lieu Amounts shall only be paid to the extent consistent with the requirements of Section 409A of the Code.
(c) Prior to the Effective Time, conditioned upon the Closing, Tandem and the Board of Directors of Tandem shall adopt any resolutions and take any actions that are necessary to effect the treatment of the Tandem Warrants pursuant to this Section 2.4, including the vesting of any Tandem Warrant that is unvested immediately prior to the Effective Time to fully vest and receipt from the holders of the Tandem Warrants of the executed Warrant Holder Release Agreements, no later than thirty (30) days prior to the Closing Date.
(d) Prior to the Effective Time, conditioned upon the Closing, GBC and the Board of Directors of GBC shall adopt any resolutions and take any actions that are necessary to effect the issuance of the Rollover Warrants at the Effective Time and cause the issuance of the Rollover Warrants and any securities to be issued upon exercise of a Rollover Warrant to be issued in compliance with applicable federal and state securities laws.
(e) In the event that any holder of Tandem Warrants does not make an election or if his or her election is not timely delivered or properly completed, such holder will be treated as electing to receive Warrant Shares pursuant to Section 2.4(a)(3).
2.5 Election and Allocation Procedures.
(a) Election.
(i) No later than thirty (30) days following the date of this Agreement, GBC shall appoint an exchange agent (the “Exchange Agent”), which is acceptable to Tandem in its reasonable discretion, for the payment and exchange of the Merger Consideration.
(ii) Holders of record of Tandem Common Stock may elect to receive either shares of GBC Common Stock, cash, or a combination thereof in exchange for their shares of Tandem Common Stock; provided, however, that the aggregate number of shares of Tandem Common Stock to be converted into the right to receive the Per Share Cash Consideration pursuant to this Section 2.5(a) shall not exceed the Cash Election Threshold.
(iii) An election form (“Election Form”), together with a letter of transmittal as described in Section 2.7(b), shall be distributed no less than thirty (30) days prior to the Election Deadline (such date of distribution, the “Distribution Date”), to each holder of record of one or more shares of Tandem Common Stock (each, a “Holder”) as of five (5) Business Days prior to the Distribution Date, permitting such Holder, subject to the allocation and election procedures set forth in this Section 2.5, (1) to specify the number of shares of Tandem Common Stock owned by such Holder with respect to which such Holder desires to receive the Per Share Cash Consideration (a “Cash Election” and such shares subject to a Cash Election, the “Cash Election Shares”), (2) to specify the number of shares of Tandem Common Stock owned by such Holder with respect to which such Holder desires to receive the Per Share Stock Consideration (a “Stock Election” and such shares subject to a Stock Election, the “Stock Election Shares”), or (3) to indicate that such record Holder has no preference as to the receipt of the Per Share Cash Consideration or the Per Share Stock Consideration for their shares of Tandem Common Stock held by such Holder. Holders of record of shares of Tandem Common Stock who hold such shares as nominees, trustees or in other representative capacities may submit multiple Election Forms, provided that each such Election Form covers all the shares of Tandem Common Stock held by each representative for a particular beneficial owner. Any shares of Tandem Common Stock with respect to which the Holder thereof shall not, as of the Election Deadline, have made an election by submission to the Exchange Agent of an effective, properly completed Election Form or for which the Holder has indicated no preference as to the receipt of the Per Share Cash Consideration or Per Share Stock Consideration shall be deemed “Non-Election Shares.” GBC shall make available one or more Election Forms as may reasonably be requested in writing from time to time by all persons who become holders (or beneficial owners) of Tandem Common Stock between the record date for the initial distribution of Election Forms and the close of business on the business day prior to the Election Deadline, and GBC shall provide to the Exchange Agent all information reasonably necessary for it to perform as specified herein.
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(iv) An election shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form by the Election Deadline accompanied by all materials and other information reasonably requested by the Exchange Agent to surrender one or more shares of Tandem Common Stock issued and outstanding immediately prior to the Effective Time, including, if applicable, one or more certificates that immediately prior to the Effective Time represented shares of Tandem Common Stock (or Tandem Bank capital stock, to the extent the holder failed to exchange his, her, or its certificate in connection with the reorganization of Tandem Bank into a holding company structure) (each, a “Tandem Certificate,” it being understood that any reference herein to a “Tandem Certificate” shall be deemed to include reference to book-entry account statements relating to the ownership of shares of Tandem Common Stock) (or customary affidavits and indemnification regarding the loss or destruction of such Tandem Certificates or the guaranteed delivery of such Tandem Certificate) covered by such Election Form. Any Election Form may be revoked or changed by the person submitting such Election Form to the Exchange Agent by written notice to the Exchange Agent only if such notice of revocation or change is actually received by the Exchange Agent at or prior to the Election Deadline. Any Tandem Certificate(s) relating to any revoked Election Form shall be promptly returned without charge to the person submitting the Election Form to the Exchange Agent. In addition, if a Holder either (1) does not submit a properly completed Election Form in a timely fashion or (2) revokes its Election Form prior to the Election Deadline and fails to file a new properly completed Election Form before the Election Deadline, such shares shall be designated Non-Election Shares. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election, revocation, or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any good faith decisions of the Exchange Agent regarding such matters shall be binding and conclusive.
(b) Allocation. No later than five (5) Business Days after the Effective Time, GBC shall cause the Exchange Agent to effect the allocation among the Holders of rights to receive the Per Share Cash Consideration and/or the Per Share Stock Consideration, which shall be effected by the Exchange Agent in accordance with the terms of this Section 2.5(b). In order to ensure that the Cash Election Threshold is not exceeded, the parties hereby agree that the Exchange Agent, in applying the allocation rules set forth herein, shall have reasonable discretion to round calculations in order to accomplish such purpose and each good faith determination made by the Exchange Agent regarding such matters shall be binding and conclusive. For all purposes under this Section 2.5(b), in making the determination with respect to the allocation of the Merger Consideration, shares of Tandem Common Stock that are subject to the Fractional Share Cash-in-Lieu Amounts provision of Section 2.5(c), that are Ineligible Shares (as defined below), that are Dissenters’ Shares subject to the provisions of Section 2.6, shall be treated as Cash Election Shares.
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(i) Oversubscription of Cash Election Shares. If the aggregate number of Cash Election Shares (the “Cash Election Number”) is greater than the Cash Election Threshold, then, at the Effective Time: (1) each Stock Election Share and Non-Election Share shall be converted into the right to receive (subject to Section 2.5(c)) the Per Share Stock Consideration; and (2) each Cash Election Share shall be converted into the right to receive (A) the Per Share Cash Consideration in respect of that number of Cash Election Shares equal to the product obtained by multiplying (x) the number of Cash Election Shares held by such Holder by (y) the fraction, the numerator of which is the Cash Election Threshold and the denominator of which is the Cash Election Number, and (B) the Per Share Stock Consideration in respect of the remainder of such Holder’s Cash Election Shares that were not converted into the right to receive the Per Share Cash Consideration pursuant to clause (A) above.
(ii) No Oversubscription of Cash Election Shares. If the Cash Election Number is less than or equal to the Cash Election Threshold, then at the Effective Time: (1) all Stock Election Shares and Non-Election Shares shall be converted into the right to receive the Per Share Stock Consideration (subject to Section 2.5(c)) and (2) all Cash Election Shares shall be converted into the right to receive the Per Share Cash Consideration.
(c) Notwithstanding any other provisions of this Agreement, each Tandem shareholder who would otherwise have been entitled under this Agreement to receive a fraction of a share of GBC Common Stock (after taking into account all Tandem Certificates surrendered by such Tandem shareholder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of GBC Common Stock multiplied by $30.00 (the “Fractional Share Cash-in-Lieu Amounts”). No Tandem shareholder receiving Fractional Share Cash-in-Lieu Amounts for any Tandem Common Stock will be entitled to any dividends declared by GBC in respect of such shares, nor will such holder be entitled to voting rights, or any other rights as a shareholder of GBC in respect of any such shares.
(d) Notwithstanding any other provisions of this Agreement, if and to the extent that GBC determines that it is necessary or advisable in order to prevent a violation of the laws and regulations of any such state in which the necessary state securities law or “blue sky” permits and approvals, if any, required to carry out the contemplated transactions are not timely obtained, Tandem Common Stock held by Tandem shareholders residing in such states (“Ineligible Shares”) shall be ineligible to receive the Per Share Stock Consideration and shall instead receive the Per Share Cash Consideration. The Exchange Agent shall convert any Ineligible Shares for which the Holder of such shares has made a Stock Election to a Cash Election Share and shall not have any obligation to provide notice of such conversion to the Holder of such Ineligible Shares.
2.6 Dissenting Shareholders. Any holder of Dissenters’ Shares shall not be entitled to any Merger Consideration in respect of such shares, but instead shall be entitled to receive from the Surviving Entity or its successor the value of such shares in cash as determined pursuant to applicable law; provided, that no such payment shall be made to any such dissenting shareholder unless and until such dissenting shareholder has complied with the applicable provisions of the GBCC and surrendered to Tandem or the Surviving Entity the Tandem Certificate(s) for which payment is being made. In the event that after the Effective Time a dissenting shareholder of Tandem fails to perfect, or effectively withdraws or loses, such holder’s right to appraisal of and payment for such holder’s Dissenter Shares, GBC or the Surviving Entity shall issue and deliver to such holder of shares of Tandem Common Stock, upon surrender by such holder of such holder’s Tandem Certificate(s), an amount of cash (without interest) equal to the Per Share Cash Consideration multiplied by the number of shares represented by such surrendered Tandem Certificate(s).
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2.7 Payment Procedures.
(a) At or prior to the Effective Time, GBC shall authorize the issuance of and shall deposit, or shall cause to be deposited with the Exchange Agent, for the benefit of the Tandem shareholders for exchange in accordance with this Article II a sufficient number of shares of GBC Common Stock and cash for payment of the Merger Consideration pursuant to this Article II (such amount of cash and shares of GBC Common Stock, together with any dividends or distributions with respect thereto paid after the Effective Time, are referred to in this Article II as the “Conversion Fund”).
(b) As provided in Section 2.5(a)(iii) and, within five (5) business days after the Closing Date for each Tandem shareholder that did not tender the materials reasonably requested by the Exchange Agent to surrender such Holder’s Tandem Certificate(s) on or before the Election Deadline pursuant to Section 2.5(a), GBC shall cause the Exchange Agent to distribute to each holder of record of one or more Tandem Certificate(s) the letter of transmittal and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the Tandem Certificate(s) shall pass, only upon proper delivery of such Tandem Certificate(s) to the Exchange Agent and include customary provisions with respect to delivery of an “agent’s message with respect to shares of Tandem Common Stock held in book-entry form and to be in such form and have such provisions as GBC and Tandem may reasonably agree) for use in effecting the surrender of Tandem Certificate(s) pursuant to this Agreement. GBC or its Exchange Agent will maintain a book entry list of GBC Common Stock to which each former holder of Tandem Common Stock is entitled. Certificates evidencing GBC Common Stock into which Tandem Common Stock has been converted will not be issued.
(c) No interest will be paid or accrued on any portion of the Merger Consideration deliverable upon surrender of a Tandem Certificate.
(d) Any portion of the Conversion Fund that remains unclaimed by the former Tandem shareholders twelve (12) months after the Effective Time shall be paid to the Surviving Entity, or its successors in interest. Any former Tandem shareholders who have not theretofore complied with this Section 2.5 shall thereafter look only to the Surviving Entity, or its successors in interest, for the Merger Consideration, as well as any accrued and unpaid dividends or distributions on shares of GBC Common Stock deliverable in respect of each former share of Tandem Common Stock such holder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Notwithstanding the foregoing, none of the Surviving Entity, the Exchange Agent or any other person shall be liable to any former Tandem shareholder for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws. Any amounts remaining unclaimed by former holders of shares of Tandem Common Stock immediately prior to the time at which such amounts would otherwise escheat to, or become property of, any Governmental Entity shall, to the extent permitted by applicable law, become the property of the Surviving Entity, free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto.
(e) In the event any Tandem Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Tandem Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting by such person of a bond in such amount as the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Tandem Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Tandem Certificate, and in accordance with this Section 2.7, shares of GBC Common Stock and/or cash constituting the Merger Consideration deliverable in respect thereof pursuant to this Agreement.
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(f) If, between the date of this Agreement and the Effective Time, the outstanding shares of GBC Common Stock shall have been changed into a different number of shares or into a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the conversion price in the GBC Common Stock shall be adjusted appropriately to provide the holders of Tandem Common Stock the same economic effect as contemplated by this Agreement prior to such event.
(g) Each of Tandem, GBC and the Exchange Agent shall be entitled to deduct and withhold from the Per Share Merger Consideration otherwise payable pursuant to this Agreement to any Tandem shareholder such amounts, if any, as it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Tax law. To the extent that any amounts are so withheld by Tandem, GBC or the Exchange Agent, as the case may be, and timely remitted to the appropriate Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Tandem shareholder on whose behalf such deduction and withholding was made by Tandem, GBC or the Exchange Agent, as the case may be. At least three (3) business days in advance of the Closing Date, GBC shall provide written notice to Tandem of any such intended withholding (other than any withholding on amounts properly treated as wages for U.S. federal income tax purposes); provided, further, GBC shall use commercially reasonable efforts to cooperate with Tandem in its efforts to obtain reduction of or relief from any such withholding obligation to the extent permitted under applicable law. Additionally, at or immediately prior to the Closing, Tandem shall provide to GBC (i) a notice to the Internal Revenue Service (the “IRS”), in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2) dated as of the Closing Date, together with written authorization for GBC to deliver such notice to the IRS on behalf of Tandem after the Closing, and (ii) a certificate, stating interests in Tandem are not “United States real property interests” as defined in Section 897(c) of the Code for the applicable period described in Section 897(c)(1)(A)(ii) of the Code, prepared in accordance with the Treasury Regulations under Sections 897 and 1445 of the Code, each in form and substance reasonably satisfactory to GBC and validly executed by a duly authorized officer of Tandem.
(h) The Exchange Agent may establish such other reasonable and customary rules and procedures in connection with its duties as it may deem appropriate. GBC shall pay all charges and expenses, including those of the Exchange Agent, in connection with the distribution of the consideration provided in this Article II.
2.8 Rights of Former Tandem Shareholders. After the Effective Time, there shall be no transfers of Tandem Common Stock on the stock transfer books of Tandem, and no transfer of Tandem Common Stock by any such holder shall thereafter be made or recognized. No dividends or other distributions declared with respect to GBC Common Stock and payable to the holders of record thereof after the Effective Time shall be paid to the holder of any unsurrendered Tandem Certificate until the holder thereof shall surrender such Tandem Certificate in accordance with this Article II. Promptly after the surrender of a Tandem Certificate in accordance with this Article II, the record holder thereof shall be entitled to receive any such dividends or other distributions, without interest thereon, which theretofore had become payable with respect to shares of GBC Common Stock into which the Tandem Common Stock were converted at the Effective Time pursuant to Section 2.1. No holder of an unsurrendered Tandem Certificate shall be entitled, until surrender of such Tandem Certificate, to vote the shares of GBC Common Stock into which such holder’s Tandem Common Stock shall have been converted until the holder thereof shall surrender such Tandem Certificate in accordance with this Article II. Until surrendered for exchange in accordance with the provisions of Article II, each Tandem Certificate theretofore representing Tandem Common Stock (other than Cancelled Shares and Dissenters’ Shares) shall from and after the Effective Time represent for all purposes only the right to receive the Per Share Merger Consideration provided in this Article II in exchange therefor, subject, however, to the Surviving Entity’s obligation to pay any dividends or make any other distributions with a record date prior to the Effective Time which have been declared or made by Tandem in respect of such Tandem Common Stock in accordance with the terms of this Agreement and which remain unpaid at the Effective Time.
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Article III
REPRESENTATIONS AND WARRANTIES OF TANDEM
Except as disclosed in the disclosure schedule delivered by Tandem to GBC concurrently herewith (the “Tandem Disclosure Schedule”) (it being understood that (i) no item is required to be set forth as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect, (ii) the mere inclusion of an item in the Tandem Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by Tandem that such item represents a material exception or fact, event or circumstance or that such item would reasonably be expected to have a Material Adverse Effect, and (iii) any disclosures made with respect to a section of this Article III shall be deemed to qualify (1) any other section of this Article III specifically referenced or cross-referenced, and (2) other sections of this Article III to the extent it is reasonably apparent on its face (notwithstanding the absence of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections), Tandem hereby represents and warrants to GBC as follows:
3.1 Corporate Organization.
(a) Tandem is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia, is a bank holding company duly registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”) and has not elected to be treated as a financial holding company under the BHC Act. Tandem has the corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted in all material respects. Tandem is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing, qualification or standing necessary, except where the failure to be so licensed or qualified or to be in good standing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Tandem. True and complete copies of the articles of incorporation of Tandem (the “Tandem Articles”), and the bylaws of Tandem (the “Tandem Bylaws”), in each case, as in effect as of the date of this Agreement, have previously been made available by Tandem to GBC.
(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Tandem, each Subsidiary of Tandem (a “Tandem Subsidiary”) (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership, leasing or operation of property or the conduct of its business requires it to be so licensed or qualified or in good standing, and (iii) has all requisite corporate power and authority to own, lease or operate its properties and assets and to carry on its business as now conducted. There are no restrictions on the ability of Tandem or any Subsidiary of Tandem to pay dividends or distributions except, in the case of Tandem or a Subsidiary that is a regulated entity, for restrictions on dividends or distributions generally applicable to all similarly regulated entities. Tandem Bank is the only depository institution Subsidiary of Tandem, and the deposit accounts of Tandem Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund (as defined in Section 3(y) of the Federal Deposit Insurance Act of 1950 (the “FDI Act”)) to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or threatened. No Subsidiary of Tandem is in violation of any of the provisions of its articles or certificate of incorporation or bylaws (or comparable organizational documents). True and complete copies of the organizational documents of Tandem Bank as in effect as of the date of this Agreement have previously been made available by Tandem to GBC. There is no person whose results of operations, cash flows, changes in shareholders’ equity or financial position are consolidated in the financial statements of Tandem other than the Tandem Subsidiaries.
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3.2 Capitalization.
(a) The authorized capital stock of Tandem consists of 20,000,000 shares of common stock, par value $1.00 per share (“Tandem Common Stock”), and 1,000,000 shares of preferred stock, par value $1.00 per share. As of February 20, 2026, there were: (i) 2,390,334 shares of Tandem Common Stock issued and outstanding (excluding shares of Tandem Common Stock issued pursuant to Restricted Stock Awards), (ii) outstanding Restricted Stock Awards pursuant to which 11,400 shares of Tandem Common Stock were issued and outstanding, (iii) no shares of preferred stock of Tandem, (iv) Tandem Options to purchase 157,104 shares of Tandem Common Stock, and (v) Tandem Warrants to purchase 173,000 shares of Tandem Common Stock. All the issued and outstanding shares of Tandem 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. There are no bonds, debentures, notes or other indebtedness that have the right to vote on any matters on which shareholders of Tandem may vote. Except for the Tandem Options, Tandem Warrants, and the Tandem Restricted Stock Awards, there are no outstanding subscriptions, options, warrants, stock appreciation rights, phantom units, scrip, rights to subscribe to or purchase, preemptive rights, anti-dilutive rights, rights of first refusal or similar rights, puts, calls, commitments or agreements of any character relating to, or securities or rights convertible or exchangeable into or exercisable for, shares of capital stock or other voting or equity securities of or ownership interest in Tandem, or contracts, commitments, understandings or arrangements by which Tandem may become bound to issue additional shares of its capital stock or other equity or voting securities of or ownership interests in Tandem, or that otherwise obligate Tandem to issue, transfer, sell, purchase, redeem or otherwise acquire, any of the foregoing (collectively, “Tandem Securities”). Except for the Tandem Options, Tandem Warrants, and Tandem Restricted Stock Awards, no equity-based awards (including any cash awards where the amount of payment is determined, in whole or in part, based on the price of any capital stock of Tandem or any of its Subsidiaries) are outstanding. No Tandem Subsidiary owns any capital stock of Tandem. There are no voting trusts, shareholder agreements, proxies or other agreements in effect to which Tandem or any of its Subsidiaries is a party with respect to the voting or transfer of Tandem Common Stock, capital stock or other voting or equity securities or ownership interests of Tandem or granting any shareholder or other person any registration rights.
(b) Except as would not, either individually or in the aggregate, reasonably be expected to be material to Tandem, Tandem owns, directly or indirectly, all the issued and outstanding shares of capital stock or other equity ownership interests of each of the Tandem Subsidiaries, free and clear of any liens, claims, title defects, mortgages, pledges, charges, and security interests whatsoever, and any other encumbrances securing a payment or the performance of an obligation (collectively, “Liens”), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. Other than the shares of capital stock or other equity ownership interests described in the previous sentence, there are no outstanding subscriptions, options, warrants, stock appreciation rights, phantom units, scrip, rights to subscribe to, preemptive rights, anti-dilutive rights, rights of first refusal or similar rights, puts, calls, commitments or agreements of any character relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock or other voting or equity securities of or ownership interests in any Tandem Subsidiary, or contracts, commitments, understandings or arrangements by which any Tandem Subsidiary may become bound to issue additional shares of its capital stock or other equity or voting securities or ownership interests in such Tandem Subsidiary, or otherwise obligating any Tandem Subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire any of the foregoing.
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3.3 Authority; No Violation.
(a) Tandem has full corporate power and authority to execute and deliver this Agreement and, subject to the shareholder and other actions described below, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Merger and the Bank Merger have been duly and validly approved by the Board of Directors of Tandem. The Board of Directors of Tandem has determined that the Merger, on the terms and conditions set forth in this Agreement, is advisable and in the best interests of Tandem and its shareholders, has adopted and approved this Agreement and the transactions contemplated hereby (including the Merger and the Bank Merger), and has directed that this Agreement be submitted to Tandem’s shareholders for approval at a meeting of such shareholders and has adopted a resolution to the foregoing effect. The execution and delivery of the Bank Merger Agreement have been duly and validly approved by the Board of Directors of Tandem and the Board of Directors of Tandem Bank. Both the Board of Directors of Tandem and the Board of Directors of Tandem Bank have determined that the Bank Merger, on the terms and conditions set forth in the Bank Merger Agreement, is advisable and in the best interests of Tandem Bank and Tandem as its sole shareholder. Except for the approval of this Agreement by the affirmative vote of a majority of all the votes entitled to be cast on such matter by the holders of Tandem Common Stock (the “Requisite Tandem Vote”), and the approval of the Bank Merger Agreement by Tandem as Tandem Bank’s sole shareholder, no other corporate proceedings on the part of Tandem are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Tandem and (assuming due authorization, execution and delivery by GBC) constitutes a valid and binding obligation of Tandem, enforceable against Tandem in accordance with its terms (except in all cases as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, forbearance, moratorium, reorganization or similar laws of general applicability affecting the rights of creditors generally and the availability of equitable remedies (the “Enforceability Exceptions”)).
(b) Except as set forth on Section 3.3(b) on the Tandem Disclosure Schedule, neither the execution and delivery of this Agreement by Tandem nor the consummation by Tandem of the transactions contemplated hereby (including the Merger and the Bank Merger), nor compliance by Tandem with any of the terms or provisions hereof, will (i) violate any provision of the Tandem Articles, the Tandem Bylaws or the organizational documents of any Tandem Subsidiary, or (ii) assuming that the consents and approvals referred to in Section 3.4 are duly obtained, (x) violate any law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Tandem or any of its Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Tandem or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Tandem or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound, except (in the case of clauses (x) and (y) above) for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations that, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Tandem.
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3.4 Consents and Approvals. Except for (a) the Fairness Determination, (b) the filing of any required applications, filings, waiver requests and notices, as applicable, with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) under the BHC Act and approval or waiver of such applications, filings, waiver requests and notices, (c) the filing of any required applications, filings and notices, as applicable, with the FDIC under the Bank Merger Act of 1960 and approval or waiver of such applications, filings and notices, (d) the filing of any required applications, filings and notices, as applicable, with the Georgia Department of Banking and Finance (the “DBF”) and approval or waiver of such applications, filings and notices, (e) the filing of any required applications, filings and notices, as applicable, with each Applicable Agency (as defined below) and the receipt of any required consents or approvals from each Applicable Agency, (f) those additional applications, filings and notices, if any, listed on Section 3.4 of the Tandem Disclosure Schedule and approval of such applications, filings and notices, (g) the filing of the Certificate of Merger with the Georgia Secretary pursuant to the GBCC, (h) the filing of the Bank Merger Certificate with the applicable Governmental Entity as required by applicable law, and (i) such filings and approvals as are required to be made or obtained under the securities or “blue sky” laws of various states in connection with the issuance of the shares of GBC Common Stock pursuant to this Agreement, no consents or approvals of or filings or registrations with any court, administrative agency or commission, Regulatory Agency or other governmental or regulatory authority or instrumentality or SRO (each a “Governmental Entity”) are necessary in connection with (i) the execution and delivery by Tandem of this Agreement or (ii) the consummation by Tandem of the Merger and the other transactions contemplated hereby (including the Bank Merger). As of the date hereof, Tandem has no knowledge of any reason why the necessary regulatory approvals and consents will not be received by Tandem to permit consummation of the Merger and the Bank Merger on a timely basis. As used herein, “Applicable Agencies” means the United States Department of Agriculture and the Small Business Administration.
3.5 Reports. Tandem and each of its Subsidiaries have timely filed (or furnished, as applicable) all reports, forms, correspondence, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file (or furnish, as applicable) since January 1, 2024 with (i) any state regulatory authority, (ii) the Federal Reserve, (iii) the DBF, (iv) the FDIC, (v) any foreign regulatory authority, and (vi) any self-regulatory organization (an “SRO”) (clauses (i) – (vi), collectively “Regulatory Agencies”), including any report, form, correspondence, registration or statement required to be filed (or furnished, as applicable) pursuant to the laws, rules or regulations of the United States, any state, any foreign entity or any Regulatory Agency, and have paid all fees and assessments due and payable in connection therewith, except where the failure to file (or furnish, as applicable) such report, form, correspondence, registration or statement or to pay such fees and assessments, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Tandem. Subject to Section 9.15, except for normal examinations conducted by a Regulatory Agency in the ordinary course of business of Tandem and its Subsidiaries, no Regulatory Agency or governmental agency or authority has initiated or has pending any proceeding or, to the knowledge of Tandem, investigation into the business or operations of Tandem or any of its Subsidiaries since January 1, 2024, except where such proceedings or investigations would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem. Subject to Section 9.15, there (i) is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations or inspections of Tandem or any of its Subsidiaries, and (ii) has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with respect to the business, operations, policies or procedures of Tandem or any of its Subsidiaries since January 1, 2024, in each case, which would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem.
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3.6 Financial Statements.
(a) Tandem has furnished to GBC true and complete copies of (i) the consolidated balance sheet of Tandem and Tandem Bank as of December 31, 2022, December 31, 2023 and December 31, 2024, and the related consolidated statements of operations, shareholders’ equity, and cash flows of Tandem and Tandem Bank, together with all related notes and schedules thereto, accompanied by the reports thereon of Tandem’ independent auditors for the years ended as of such dates, and (ii) the unaudited financial statements of Tandem and Tandem Bank for the twelve months ended December 31, 2025 (collectively, the “Tandem Financial Statements”). The Tandem Financial Statements (including the related notes) complied as to form, as of their respective dates, in all material respects with applicable accounting requirements, have been prepared according to GAAP applied on a consistent basis during the periods and at the dates involved (except as may be indicated in the notes thereto), fairly present, in all material respects, the financial condition of Tandem and its Subsidiaries, as applicable, at the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to notes and normal year-end adjustments that were not material in amount or effect).
(b) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem, neither Tandem nor any of its Subsidiaries has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved against on the consolidated balance sheet of Tandem for the month ended December 31, 2025 included in the Tandem Financial Statements or liabilities incurred in the ordinary course of business consistent with past practice since December 31, 2025 or in connection with this Agreement and the transactions contemplated hereby.
(c) Tandem or Tandem Bank has filed all required Reports of Condition and Income (“Call Reports”) since January 1, 2024 for Tandem Bank. The Call Reports fairly present, in all material respects, the financial position of Tandem Bank and the results of its operations at the date and for the period indicated in that Call Report in conformity with the instructions to the Call Report. Since January 1, 2024, Tandem Bank has calculated its allowance for credit losses (“ACL”) (or allowance for loan and lease losses (“ALLL”) prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) in accordance with (i) GAAP (ii) the Interagency Policy Statement on the Allowance for Credit Losses (or the Interagency Policy Statement on the Allowance of Loan and Lease Losses prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) and (iii) all applicable rules and regulations, and, in the reasonable opinion of management, the ACL is reasonably likely to be to be adequate in all material respects.
(d) Since January 1, 2024, (i) neither Tandem, Tandem Bank, or their respective Subsidiaries nor, to the knowledge of Tandem, any director, officer, employee, auditor, accountant or representative of Tandem or its Subsidiaries has received or otherwise obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Tandem or its Subsidiaries or their respective internal accounting controls relating to periods after January 1, 2024, including any material complaint, allegation, assertion or claim that Tandem or its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) to the knowledge of Tandem, no attorney representing Tandem or its Subsidiaries, whether or not employed by Tandem or its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation, relating to periods after January 1, 2024, by Tandem or its Subsidiaries or any of their officers, directors, employees or agents to the Board of Directors of Tandem or the Board of Directors of Tandem Bank (or any committee thereof) or to any director or officer of Tandem, Tandem Bank, or their respective Subsidiaries.
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(e) Neither Tandem nor its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement (including any contract or arrangement relating to any transaction or relationship between or among Tandem and its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangement”), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, Tandem or its Subsidiaries in Tandem’ or its Subsidiaries’ financial statements.
3.7 Broker’s Fees. With the exception of the engagement of Performance Trust Capital Partners, neither Tandem nor any Tandem Subsidiary nor any of their respective officers or directors has employed any broker, finder or financial advisor or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or related transactions contemplated by this Agreement. Tandem has disclosed to GBC as of the date hereof the material terms, including the payment of fees, of Tandem’s engagement of Performance Trust Capital Partners related to the Merger and the other transactions contemplated hereunder.
3.8 Absence of Certain Changes or Events.
(a) Since December 31, 2024, there has not been any effect, change, event, circumstance, condition, occurrence or development that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem.
(b) Since December 31, 2024 through the date of this Agreement, Tandem and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary course.
3.9 Legal and Regulatory Proceedings.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on Tandem, neither Tandem nor any of its Subsidiaries is a party to any, and there are no outstanding or pending or, to the knowledge of Tandem, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against Tandem or any of its Subsidiaries or any of their current or former directors or executive officers or challenging the validity or propriety of the transactions contemplated by this Agreement.
(b) Except as would not reasonably be expected to, either individually or in the aggregate, be material to Tandem, there is no injunction, order, judgment, decree, or regulatory restriction imposed upon Tandem, any of its Subsidiaries or the assets of Tandem or any of its Subsidiaries (or that, upon consummation of the Merger, would apply to the Surviving Entity or any of its affiliates).
3.10 Taxes and Tax Returns.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on Tandem: each of Tandem and its Subsidiaries has duly and timely filed (including all applicable extensions) all Tax Returns in all jurisdictions in which Tax Returns are required to be filed by it, and all such Tax Returns are true, correct and complete; neither Tandem nor any of its Subsidiaries is the beneficiary of any extension of time within which to file any Tax Return (other than extensions to file Tax Returns obtained in the ordinary course); all Taxes of Tandem and its Subsidiaries (whether or not shown on any Tax Returns) that are due have been fully and timely paid; each of Tandem and its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, shareholder, independent contractor or other third party; each of Tandem and its Subsidiaries have withheld and timely paid all Taxes required to have been withheld and paid with respect to, and have complied with, all information reporting, backup withholding, and nonresident withholding requirements; neither Tandem nor any of its Subsidiaries has granted any extension or waiver of the limitation period applicable to any Tax that remains in effect (other than extension or waiver granted in the ordinary course of business); neither Tandem nor any of its Subsidiaries has received written notice of assessment or proposed assessment in connection with any amount of Taxes, and there are no threatened in writing or pending disputes, claims, audits, examinations or other proceedings regarding any Tax of Tandem and its Subsidiaries or the assets of Tandem and its Subsidiaries; neither Tandem nor any of its Subsidiaries in the last three (3) years has requested or become bound by any private letter ruling requests, closing agreements or gain recognition agreements with respect to Taxes; neither Tandem nor any of its Subsidiaries is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement (other than such an agreement or arrangement exclusively between or among Tandem and its Subsidiaries); neither Tandem nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return for which the statute of limitations is open (other than a group the common parent of which was Tandem), or (B) has any liability for the Taxes of any person (other than Tandem or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) or otherwise as a transferee or successor.
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(b) No written claim has ever been made by a Governmental Entity in a jurisdiction where Tandem and its Subsidiaries do not file Tax Returns that it is or may be subject to taxation by, or required to file a Tax Return in, that jurisdiction. There are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any assets of Tandem or any of its Subsidiaries.
(c) Neither Tandem nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Tandem and each of its Subsidiaries have disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.
(d) Neither Tandem nor any of its Subsidiaries will be required to include any material item in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) intercompany transactions or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (iv) installment sale or open transaction disposition made on or prior to the Closing date; or (v) prepaid amount received on or prior to the Closing Date.
(e) Neither Tandem nor any of its Subsidiaries has been, within the past five (5) years or otherwise as part of a “plan (or series of related transactions)” within the meaning of Section 355(e) of the Code of which the Merger is also a part, a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intending to qualify for tax-free treatment under Section 355 of the Code. Neither Tandem nor any of its Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(f) Neither Tandem nor any of its Subsidiaries has deferred the payment of any Tax or claimed or received any Tax refund or credit pursuant to the Coronavirus Aid, Relief, and Economic Security Act, any similar statutory relief, or any other Tax legislation related to the COVID-19 pandemic or pursuant to any written agreement with a Governmental Entity that remains unpaid.
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3.11 Employees.
(a) Each Tandem Benefit Plan (as defined below) has been established, maintained, funded, operated and administered in all material respects in accordance with its terms and the requirements of all applicable laws, including ERISA and the Code. Neither Tandem nor any of its Subsidiaries has taken any corrective action or made any filing under any voluntary correction program of the IRS, Department of Labor or any other Governmental Entity with respect to any Tandem Benefit Plan in respect of any documentary or operational failure that has not been properly and fully corrected in accordance with the applicable correction program. Neither Tandem, any of its Subsidiaries nor any Tandem ERISA Affiliate has incurred, and, to the knowledge of Tandem, no facts exist which reasonably could be expected to result in, any liability (direct or indirect, contingent or otherwise) to Tandem or any Subsidiary with respect to any Tandem Benefit Plan including without limitation, any liability, tax, penalty or fee under ERISA, the Code or any other applicable laws (other than to pay premiums, contributions or benefits in the ordinary course consistent with the terms of such plans). For purposes of this Agreement, the term “Tandem Benefit Plans” means all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), whether or not subject to ERISA, and all equity, bonus or incentive, deferred compensation, retiree medical or life insurance, retirement, supplemental retirement, severance, termination, change in control, retention, employment, welfare, medical, disability, fringe or other benefit plans, programs, agreements, contracts, policies, arrangements or remuneration of any kind with respect to which Tandem or any Subsidiary or any other entity, trade or business, whether or not incorporated, which together with Tandem or any Subsidiary would, at any relevant time, be deemed a “single employer” within the meaning of Section 414 of the Code or Section 4001 of ERISA (a “Tandem ERISA Affiliate”), is a party or has any current or future obligation or liability, contingent or otherwise, or that are maintained, contributed to (or required to be contributed to) or sponsored by Tandem, any of its Subsidiaries or any Tandem ERISA Affiliate for the benefit of any current or former employee, officer, director or independent contractor of Tandem, any of its Subsidiaries or any Tandem ERISA Affiliate or the spouses, dependents and/or beneficiaries of any of the foregoing.
(b) Section 3.11(b) of the Tandem Disclosure Schedule sets forth a true, correct and complete list of all material Tandem Benefit Plans. Tandem has made available to GBC true, correct and complete copies of each material Tandem Benefit Plan and any related trust or other funding vehicle or insurance policy, and the following related documents, to the extent applicable: (i) all summary plan descriptions, amendments, modifications or supplements, (ii) the most recent annual report (Form 5500) filed with the IRS, (iii) the most recently received IRS determination letter from the IRS or the opinion letter issued to the prototype sponsor with respect to each such Tandem Benefit Plan intended to qualify under Section 401 of the Code, (iv) the most recently prepared actuarial report, (v) all contracts with any parties providing services or insurance to such plan, (vi) copies of material correspondence relating to any Tandem Benefit Plan in the last three (3) years with all Governmental Entities, (vii) the IRS Forms 1094-C and 1095-C filed with the IRS and provided to employees for the past three years, and (viii) such other documentation with respect to any such Tandem Benefit Plan as is reasonably requested by GBC. None of the Tandem Benefit Plans are subject to or governed by the Laws of any jurisdiction other than the United States. No “employer” within the meaning of Section 3(5) of ERISA that is not a Tandem ERISA Affiliate, other than Tandem and its Subsidiaries, participates in any Tandem Benefit Plan
(c) The IRS has issued a favorable determination letter or opinion with respect to each Tandem Benefit Plan that is intended to be qualified under Section 401(a) of the Code (the “Tandem Qualified Plans”), and the related trust, which letter or, to the knowledge of Tandem, opinion has not been revoked (nor, to the knowledge of Tandem, has revocation been threatened), and, to the knowledge of Tandem, there are no existing circumstances and no events have occurred or are threatened that would reasonably be expected to adversely affect the qualified status of any Tandem Qualified Plan or the tax-exempt status of the related trust.
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(d) Neither Tandem, any of its Subsidiaries nor any Tandem ERISA Affiliate maintains, sponsors, contributes to or is obligated to contribute to, or within the prior ten (10) years has had any obligation to contribute to, or liability under or respect to, contingent or otherwise, (i) a “defined benefit plan,” as defined in Section 3(35) of ERISA, (ii) a pension plan within the meaning of Section 3(2) of ERISA that is covered by Title IV of ERISA and/or subject to the minimum funding standards of Section 302 of ERISA, Title IV of ERISA or Section 412, 430 or 4971 of the Code, (iii) a “multiple employer welfare arrangement” as defined in Section 3(40) of ERISA, or (iv) a trust that is intended to meet the requirements of Section 501(c)(9) of the Code.
(e) Neither Tandem, any of its Subsidiaries nor any Tandem ERISA Affiliate maintains, sponsors, contributes to or is obligated to contribute to, or has ever had any obligation or liability, contingent or otherwise, under or with respect to (i) a “multiemployer plan,” as defined in Section 3(37) or 4001(a)(3) of ERISA or (ii) a “multiple employer plan” within the meaning of Section 413(c) of the Code or Section 4063, 4064 or 4066 of ERISA.
(f) Except as set forth on Section 3.11(f) on the Tandem Disclosure Schedule, no Tandem Benefit Plan provides for any post-employment or post-retirement health or medical or life insurance benefits for retired, former or current employees or spouses, beneficiaries or dependents thereof, except as required by Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA or similar provisions of any state laws for which the recipient pays the full premium therefor on an after-tax basis.
(g) All payments, premiums, contributions, remittances and reimbursements required to be made with respect to any Tandem Benefit Plan by applicable law or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any Tandem Benefit Plan, for any period through the date hereof, have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the books and records of Tandem. There are no outstanding defaults or material violations by any party to any Tandem Benefit Plan, and no material taxes, penalties or fees are owing under any Tandem Benefit Plan. All reports and information relating to each Tandem Benefit Plan required to be filed with any Governmental Entity have been timely filed, all reports and information relating to each Tandem Benefit Plan required to be disclosed or provided to participants or their dependents or beneficiaries have been timely disclosed or provided, and, in each case, all information and disclosures contained therein were true, correct and complete in all material respects when disclosed.
(h) Each Tandem Benefit Plan that is a “nonqualified deferred compensation plan” within the meaning of Code Section 409A and not otherwise exempt from Section 409A of the Code has been maintained in writing, and operated and administered, in compliance with the requirements of Code Section 409A to the extent applicable.
(i) There are no pending or threatened claims (other than claims for benefits in the ordinary course consistent with the terms of the plan), lawsuits, audits, investigations or arbitrations which have been asserted or instituted, and, to Tandem’ knowledge, no set of circumstances exists which may reasonably be expected to give rise to a claim, lawsuit, audit, investigation or arbitration against any Tandem Benefit Plan, any trustees or fiduciaries thereof with respect to their duties to any Tandem Benefit Plan, any of Tandem, any Subsidiary or Tandem ERISA Affiliate or any director, officer, or employee thereof, or the assets of any Tandem Benefit Plan (in trust or otherwise), in respect of any Tandem Benefit Plan which would have a Material Adverse Effect.
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(j) None of Tandem, any of its Subsidiaries, any Tandem ERISA Affiliate, nor, to the knowledge of Tandem, any director, officer of employee thereof, or any other party in interest or disqualified person (as defined in Section 4975 of the Code or Section 406 of ERISA), has engaged in any nonexempt “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) in respect of any Tandem Benefit Plan.
(k) Tandem and its Subsidiaries have complied, in all material respects, with the applicable provisions of the Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) including all provisions of the ACA applicable to their employees, including the employer shared responsibility provisions relating to the offer of “minimum essential coverage” to “full-time” employees that is “affordable” and provides “minimum value” (as defined in Code Section 4980H and related regulations) and the applicable employer information reporting provisions under Code Sections 6055 and 6056 (and all related regulations), and, to the knowledge of Tandem, have not incurred, nor does any condition exist that could reasonably be expected to subject Tandem or any of its Subsidiaries to, any liability under Section 4980H of the Code and its governing regulations. Tandem, each of its Subsidiaries and each Tandem ERISA Affiliate have complied in all material respects with the notice and continuation coverage requirements of Section 4980B of the Code and the regulations thereunder and similar laws.
(l) Except as set forth in Section 3.11(l) of the Tandem Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in conjunction with any other event) result in the acceleration of vesting, exercisability, funding or delivery of, or increase in the amount or value of, any payment, right or other benefit to any employee, officer, director or other service provider of Tandem or any of its Subsidiaries, or result in any limitation on the right of Tandem or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Tandem Benefit Plan or related trust on or after the Effective Time. Without limiting the generality of the foregoing, no amount paid or payable (whether in cash, in property, or in the form of benefits) to any employee, officer, director or other service provider of Tandem or any of its Subsidiaries in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with, related to or associated with any other event) will be an “excess parachute payment” within the meaning of Section 280G of the Code.
(m) No Tandem Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code, or otherwise.
(n) The transactions contemplated by this Agreement will not cause or require Tandem or any of its affiliates to establish or make any contribution to a rabbi trust or similar funding vehicle.
(o) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem, there are no pending or, to Tandem’ knowledge, threatened labor grievances or unfair labor practice claims or charges against Tandem or any of its Subsidiaries, or any strikes or other labor disputes against Tandem or any of its Subsidiaries. Neither Tandem nor any of its Subsidiaries is party to or bound by any collective bargaining or similar agreement with any labor organization, or work rules or practices agreed to with any labor organization or employee association applicable to employees of Tandem or any of its Subsidiaries and, there are no pending or, to the knowledge of Tandem, threatened organizing efforts by any union or other group seeking to represent any employees of Tandem or any of its Subsidiaries.
(p) Tandem and its Subsidiaries are, and have been since January 1, 2024, in compliance with all applicable laws relating to labor and employment, including those relating to labor relations, wages, hours, overtime, employee and contractor classification, discrimination, harassment, retaliation, reasonable accommodation, leaves of absence, employee compensation and benefits, plant closures or layoffs, background checks, drug and alcohol testing, civil rights, affirmative action, work authorization, immigration, safety and health, information privacy and security, unemployment insurance, workers compensation, continuation coverage under group health plans, wage payment and the related payment and withholding of Taxes, except for failures to comply that have not had and would not reasonably be expected to result in any material liability to Tandem and its Subsidiaries, taken as a whole.
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(q) In the past five (5) years, neither Tandem nor any of the Tandem Subsidiaries has entered into a settlement agreement with a current or former officer, an employee or an independent contractor of the Tandem or its Subsidiaries that substantially involves allegations relating to sexual harassment by either (i) an executive officer of Tandem or its Subsidiaries or (ii) a senior employee of Tandem or its Subsidiaries. In the past five (5) years, to the knowledge of Tandem, no allegations of sexual harassment have been made against (x) an executive officer of Tandem or its Subsidiaries or (y) an employee at the level of Senior Vice President (or any similarly-leveled employee) or above of Tandem or its Subsidiaries.
(r) Each Tandem Benefit Plan that is a “pension plan” within the meaning of Section 3(2) of ERISA but is not qualified under Code Section 401(a) is exempt from Parts 2, 3 and 4 of Title I of ERISA as an unfunded plan that is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, pursuant to Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and Tandem has made the one-time filing with the Department of Labor with respect to each such plan. No assets of any Tandem Benefit Plan are allocated to or held in a “rabbi trust” or similar funding vehicle.
(s) Each individual who is or has ever been characterized as an employee or independent contractor by Tandem or any of its Subsidiaries has been properly classified as such for all purposes, including participation and benefit accrual under each Tandem Benefit Plan. All employees of Tandem and its Subsidiaries are and have been correctly classified as exempt or nonexempt under the Fair Labor Standards Act and similar state laws, and Tandem and its Subsidiaries have not received any notice from any individual or Governmental Entity disputing such classification.
(t) The Tandem Benefit Plans have been administered in accordance with the Joint Notification of Extensions of Certain Timeframes for Employee Benefit Plans, Participants and Beneficiaries Affected by the COVID-19 Outbreak, Disaster Relief Notice 2021-01 and the COBRA premium assistance provisions under the American Rescue Plan Act of 2021, including proper recovery of premium credits through the FICA Tax Returns of the Company and/or the Subsidiary, if applicable.
3.12 Compliance with Applicable Law.
(a) Tandem and each of its Subsidiaries hold, and have at all times since January 1, 2024, held, all licenses, registrations, franchises, certificates, variances, permits, charters and authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all fees and assessments due and payable in connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding such license, registration, franchise, certificate, variance, permit, charter or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Tandem, and, to the knowledge of Tandem, no suspension or cancellation of any such necessary license, registration, franchise, certificate, variance, permit, charter or authorization is threatened.
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(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Tandem, Tandem and each of its Subsidiaries, since January 1, 2024, have complied with and are not in default or violation under any applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to Tandem or any of its Subsidiaries, including all laws related to data protection or privacy (including laws relating to the privacy and security of data or information that could reasonably be used to identify any person, or that otherwise constitutes personal data or personal information under applicable law (“Personal Data”)), the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, Section 5 of the Federal Trade Commission Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the Interagency Guidance on Third-Party Relationships: Risk Management. the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, Title V of the Gramm-Leach-Bliley Act, any and all sanctions or regulations enforced by the Office of Foreign Assets Control of the United States Department of Treasury and any other law, policy or guideline relating to bank secrecy, discriminatory lending, financing or leasing practices, consumer protection, money laundering prevention, foreign assets control, U.S. sanctions laws and regulations, Sections 23A and 23B of the Federal Reserve Act, and all agency requirements relating to the origination, sale and servicing of mortgage and consumer loans. Tandem and its Subsidiaries have established and maintain a system of internal controls designed to ensure compliance in all material respects by Tandem and its Subsidiaries with applicable financial recordkeeping and reporting requirements of applicable money laundering prevention laws in jurisdictions where Tandem and its Subsidiaries conduct business.
(c) Tandem Bank has received an Institution Community Reinvestment Act rating of “satisfactory” or better in its most recently completed Community Reinvestment Act examination and, to the knowledge of Tandem, there are no existing facts or circumstances that would negatively affect such rating.
(d) Tandem maintains a written information privacy and security program that maintains reasonable measures to protect the privacy, confidentiality and security of all Personal Data and any other material confidential information against any (i) loss or misuse, (ii) unauthorized or unlawful operations performed thereon, or (iii) other act or omission that compromises the security or confidentiality thereof (clauses (i) through (iii), a “Security Breach”). To the knowledge of Tandem, Tandem has not experienced any Security Breach that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Tandem. To the knowledge of Tandem, there are no data security or other technological vulnerabilities with respect to its information technology systems or networks that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Tandem.
(e) Without limitation, none of Tandem or any of its Subsidiaries, or to the knowledge of Tandem, any director, officer, employee, agent or other person acting on behalf of Tandem or any of its Subsidiaries has, directly or indirectly, (i) used any funds of Tandem or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from funds of Tandem or any of its Subsidiaries, (iii) violated any provision that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar law, (iv) established or maintained any unlawful fund of monies or other assets of Tandem or any of its Subsidiaries, (v) made any fraudulent entry on the books or records of Tandem or any of its Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business, to obtain special concessions for Tandem or any of its Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for Tandem or any of its Subsidiaries, or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department, except, in each case, as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Tandem.
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(f) As of the date hereof, each of Tandem and Tandem Bank is “well-capitalized” (as such term is defined in the relevant regulation of the institution’s Tandem federal regulator).
(g) Tandem Bank has not offered or engaged in providing any individual or corporate trust services or administers any accounts for which it acts as a fiduciary, including, but not limited to, any accounts in which it serves as a trustee, agent, custodian, personal representative, guardian, conservator, or investment advisor.
3.13 Certain Contracts.
(a) Except as set forth in Section 3.13(a) of the Tandem Disclosure Schedule, as of the date hereof, neither Tandem nor any of its Subsidiaries is a party to or bound by any contract, arrangement, commitment or understanding (whether written or oral):
(i) which contains a provision that materially restricts the conduct of any line of business by Tandem or any of its Subsidiaries or upon consummation of the Merger will materially restrict the ability of the Surviving Entity or any of its affiliates to engage or compete in any line of business or in any geographic region (including any non-compete or client or customer non-solicitation requirement);
(ii) which is a collective bargaining agreement or similar agreement with any labor organization;
(iii) any of the benefits of or obligations under which will arise or be increased or accelerated by the occurrence of the execution and delivery of this Agreement, receipt of the Requisite Tandem Vote or the announcement or consummation of any of the transactions contemplated by this Agreement, or under which a right of cancellation or termination will arise as a result thereof, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;
(iv) that grants any right of first refusal, right of first offer or similar right with respect to any material assets, rights or properties of Tandem or its Subsidiaries, taken as a whole;
(v) (A) that relates to the incurrence of indebtedness by Tandem or any Tandem Subsidiary other than (x) those entered into in the ordinary course of business and (y) deposit liabilities, trade payables, federal funds purchased, advances and loans from the Federal Home Loan Bank and securities sold under agreements to repurchase, in each case, incurred in the ordinary course of business consistent with past practice, and (B) any guaranty of any obligation for the incurrence of indebtedness, excluding endorsements made for collection, repurchase or resell agreements, letters of credit and guaranties made in the ordinary course of business, in the case of each of clauses (A) and (B), in the principal amount of $250,000 or more;
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(vi) relating to the lease of real property or personal property having a value in excess of $75,000 in the aggregate;
(vii) that is a policy of insurance, including fidelity and bond insurance, relating to the Tandem;
(viii) relating to any joint venture, partnership, limited liability company agreement or other similar agreement or arrangement;
(ix) which relates to capital expenditures and involves future payments in excess of $75,000 in the aggregate;
(x) which is not terminable on ninety (90) days or less notice and involves the payment of more than $75,000 per annum;
(xi) that is a settlement, consent or similar agreement and contains any material continuing obligations of Tandem or any of its Subsidiaries;
(xii) that relates to the acquisition or disposition of any person, business or asset and under which Tandem or its Subsidiaries have or may have a material obligation or liability;
(xiii) that relates to the employment or service of any current or former employee, director, officer or other service provider, which is not terminable by Tandem or any Subsidiary without penalty or other costs on thirty (30) calendar days’ or less notice, including without limitation employment, consulting, incentive, rendition, change in control, severance, termination pay and similar agreements; or
(xiv) that provides for bonuses, incentives, retention, options, pensions, deferred compensation, retirement, profit sharing, equity, fringe benefits or similar compensatory or benefit arrangements with any current or former employees, directors, officers or other service providers.
Each contract, arrangement, commitment or understanding of the type described in this Section 3.13(a), whether or not set forth in the Tandem Disclosure Schedule, is referred to herein as a “Tandem Contract.” Tandem has made available to GBC true, correct and complete copies of each Tandem Contract in effect as of the date hereof.
(b) (1) Each Tandem Contract is valid and binding on Tandem or one of its Subsidiaries, as applicable, and in full force and effect, except as, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Tandem, (1) Tandem and each of its Subsidiaries have in all material respects complied with and performed all obligations required to be complied with or performed by any of them to date under each Tandem Contract, except where such noncompliance or nonperformance, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Tandem, (2) to the knowledge of Tandem, each third-party counterparty to each Tandem Contract has in all material respects complied with and performed all obligations required to be complied with and performed by it to date under such Tandem Contract, except where such noncompliance or nonperformance, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Tandem, (4) neither Tandem nor any of its Subsidiaries has knowledge of, or has received notice of, any violation of any Tandem Contract by any of the other parties thereto which would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem and (5) no event or condition exists which constitutes or, after notice or lapse of time or both, will constitute, a material breach or default on the part of Tandem or any of its Subsidiaries, or to the knowledge of Tandem, any other party thereto, of or under any such Tandem Contract, except where such breach or default, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Tandem.
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3.14 Agreements with Regulatory Agencies. Subject to Section 9.15, neither Tandem nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since January 1, 2024, a recipient of any supervisory letter from, or since January 1, 2024, has adopted any policies, procedures or board resolutions at the request or suggestion of, any Regulatory Agency or other Governmental Entity that currently restricts in any material respect or would reasonably be expected to restrict in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the Tandem Disclosure Schedule, a “Tandem Regulatory Agreement”), nor has Tandem or any of its Subsidiaries been advised in writing, or to Tandem’ knowledge, orally, since January 1, 2024, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Tandem Regulatory Agreement.
3.15 Risk Management Instruments. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem, all interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar derivative transactions and risk management arrangements, whether entered into for the account of Tandem or any of its Subsidiaries or for the account of a customer of Tandem or one of its Subsidiaries, were entered into in the ordinary course of business and in accordance with applicable rules, regulations and policies of any Regulatory Agency and with counterparties reasonably believed to be financially responsible at the time and are legal, valid and binding obligations of Tandem or one of its Subsidiaries enforceable in accordance with their terms (except as may be limited by the Enforceability Exceptions). Tandem and each of its Subsidiaries have duly performed in all material respects all of their material obligations thereunder to the extent that such obligations to perform have accrued, and, to Tandem’ knowledge, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereto.
3.16 Environmental Matters. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem, Tandem and its Subsidiaries are in compliance, and have complied since January 1, 2024, with any federal, state or local law, regulation, order, decree, permit, authorization, common law or agency requirement relating to: (a) the protection or restoration of the environment, health and safety as it relates to hazardous substance exposure or natural resource damages, (b) the handling, use, presence, disposal, release or threatened release of, or exposure to, any hazardous substance, or (c) noise, odor, wetlands, indoor air, pollution, contamination or any injury to persons or property from exposure to any hazardous substance (collectively, “Environmental Laws”). There are no legal, administrative, arbitral or other proceedings, claims or actions, or to the knowledge of Tandem, any private environmental investigations or remediation activities or governmental investigations of any nature seeking to impose, or that could reasonably be expected to result in the imposition, on Tandem or any of its Subsidiaries of any liability or obligation arising under any Environmental Law pending or threatened against Tandem, which liability or obligation would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem. To the knowledge of Tandem, there is no reasonable basis for any such proceeding, claim, action or governmental investigation that would impose any liability or obligation that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem. Tandem is not subject to any agreement, order, judgment, decree, letter agreement or memorandum of agreement by or with any court, Governmental Entity, Regulatory Agency or other third party imposing any liability or obligation with respect to the foregoing that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem.
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3.17 Investment Securities and Commodities. Each of Tandem and its Subsidiaries has good title in all material respects to all securities and commodities owned by it (except those sold under repurchase agreements) which are material to Tandem’ business on a consolidated basis, free and clear of any Lien, except to the extent such securities or commodities are pledged in the ordinary course of business to secure obligations of Tandem or its Subsidiaries. Such securities and commodities are valued on the books of Tandem in accordance with GAAP in all material respects. Tandem and each of its Subsidiaries employ, to the extent applicable, investment, securities, risk management and other policies, practices and procedures that Tandem believes are prudent and reasonable in the context of their respective businesses, and Tandem and each of its Subsidiaries have, since January 1, 2024, been in compliance with such policies, practices and procedures in all material respects.
3.18 Real Property. Neither Tandem nor any Subsidiary owns or holds legal or equitable title to any real property. Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect on Tandem, Tandem or its Subsidiary is the lessee of all leasehold estates listed on Section 3.18 of the Tandem Disclosure Schedule (such leasehold estates, collectively, the “Tandem Real Property”), free and clear of all Liens, except for such imperfections or irregularities of title or Liens as do not materially affect the value or use of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, and is in possession of the properties purported to be leased thereunder, and each such lease is valid without default thereunder by the lessee or, to the knowledge of Tandem, the lessor. There are no contractual obligations, agreements in principle or present plans for Tandem to enter into new leases of real property or to renew or amend existing leases prior to the Closing Date. There are no pending or, to the knowledge of Tandem, threatened condemnation proceedings or other actions, suits or proceedings against the Tandem Real Property. To the knowledge of Tandem, the use and operations of, and improvements upon, the Tandem Real Property, are in compliance with all applicable building, fire, zoning and other applicable laws, ordinances and regulations. The buildings and structures leased or used by Tandem and its Subsidiary are, taken as a whole, in good operating order (except for ordinary wear and tear), usable in the ordinary course of business, and are sufficient and adequate to carry on the business and affairs of Tandem and its Subsidiary. Except as listed on Section 3.18 of the Tandem Disclosure Schedule, Tandem and its Subsidiary do not own, lease or use any real property in the conduct of Tandem’s or its Subsidiary’s business.
3.19 Intellectual Property. Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem: (a)(i) to the knowledge of Tandem, Tandem and each of its Subsidiaries owns, or is licensed to use (in each case, free and clear of any material Liens), all Intellectual Property necessary for the conduct of its business as currently conducted, (ii) to the knowledge of Tandem, neither Tandem nor any of its Subsidiaries have, within the past two (2) years, infringed, misappropriated or otherwise violated any other person’s rights in Intellectual Property, or violated or breached any applicable license pursuant to which Tandem or any Tandem Subsidiary acquired the right to use any Intellectual Property, and (iii) no person has asserted in writing to Tandem or any of its Subsidiaries within the past two (2) years that Tandem or any of its Subsidiaries has infringed, misappropriated or otherwise violated the Intellectual Property rights of any person; (b) to the knowledge of Tandem, no person is challenging, infringing on or otherwise violating, any right of Tandem or any of its Subsidiaries with respect to any Intellectual Property owned by Tandem or its Subsidiaries; (c) neither Tandem nor any Tandem Subsidiary has received any written notice of any pending claim challenging any Intellectual Property owned by Tandem or any Tandem Subsidiary (including with respect to the ownership, abandonment, cancellation or enforceability thereof); and (d) Tandem and its Subsidiaries have taken commercially reasonable actions to safeguard its and their material trade secrets and other confidential information, and avoid the abandonment, cancellation or unenforceability of all Intellectual Property owned by Tandem and its Subsidiaries. For purposes of this Agreement, “Intellectual Property” means any intellectual property or proprietary rights of any kind arising in any jurisdiction, including in or with respect to any: trademarks, service marks, brand names, internet domain names, logos, symbols, certification marks, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; inventions, discoveries and ideas, whether patentable or not, in any jurisdiction; patents, applications for patents (including divisions, continuations, continuations in part and renewal applications), all improvements thereto, and any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic information, trade secrets and know-how, including processes, technologies, protocols, formulae, prototypes and confidential information and rights in any jurisdiction to limit the use or disclosure thereof by any person; data and database rights; writings and other works, whether copyrightable or not and whether in published or unpublished works, in any jurisdiction.
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3.20 Related Party Transactions. Except for the transactions set forth in Section 3.25(e) of the Tandem Disclosure Schedules and the Tandem Benefit Plans listed in Section 3.11(b) of the Tandem Disclosure Schedule, there are no transactions or series of related transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions or series of related transactions, between Tandem or any of its Subsidiaries, on the one hand, and any current or former director or “executive officer” (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Tandem or any of its Subsidiaries or any person who beneficially owns (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) five percent (5%) or more of the outstanding Tandem Common Stock (or any of such person’s immediate family members or affiliates) (other than Subsidiaries of Tandem) on the other hand, of the type required by the Exchange Act and the rules and regulations thereunder.
3.21 State Takeover Laws. The Board of Directors of Tandem has approved this Agreement and the transactions contemplated hereby and has taken all such other necessary actions as required to render inapplicable to such agreements and transactions the provisions of any potentially applicable takeover laws of any state, including any “moratorium,” “control share,” “fair price,” “takeover” or “interested shareholder” law or any similar provisions of the Tandem Articles or Tandem Bylaws (collectively, with any similar provisions of the GBC Charter or GBC Bylaws, “Takeover Statutes”).
3.22 Reorganization. Tandem has not taken any action and has no knowledge of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
3.23 Opinion. Prior to the execution of this Agreement, the Board of Directors of Tandem has received an opinion (which if initially rendered orally, has been or will be confirmed by written opinion of the same date) from Performance Trust Capital Partners to the effect that as of the date thereof and based upon and subject to the various assumptions made, procedures followed, the matters considered, and the terms, qualifications and limitations set forth in its written opinion, the Merger Consideration is fair from a financial point of view to the holders (other than GBC and its affiliates) of Tandem Common Stock. Such opinion has not been amended or rescinded as of the date of this Agreement.
3.24 Tandem Information. The information relating to Tandem and its Subsidiaries that is provided in writing by Tandem or its Subsidiaries or their respective representatives specifically for inclusion in the Proxy Statement or in any other document filed with any other Regulatory Agency or Governmental Entity in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. The portion of the Proxy Statement relating to Tandem or any of its Subsidiaries will comply in all material respects with applicable law.
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3.25 Loan Portfolio.
(a) As of the date hereof, neither Tandem nor any of its Subsidiaries is a party to any written or oral loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, commitments, guarantees and interest-bearing assets) (collectively, “Loans”) in which Tandem or any Subsidiary of Tandem is a creditor that, as of December 31, 2025, under the terms of which the obligor was, as of December 31, 2025 over ninety (90) days or more delinquent in payment of principal or interest. Set forth in Section 3.25(a) of the Tandem Disclosure Schedule is a true, correct and complete list of (A) all of the Loans of Tandem and its Subsidiaries that, as of December 31, 2025, were classified by Tandem as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or words of similar import, together with the principal amount of each such Loan and the identity of the borrower thereunder and (B) each asset of Tandem or any of its Subsidiaries that, as of December 31, 2025, is classified as “Other Real Estate Owned” and the book value thereof.
(b) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem, each Loan of Tandem or any of its Subsidiaries (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent carried on the books and records of Tandem and its Subsidiaries as secured Loans, has been secured by valid charges, mortgages, pledges, security interests, restrictions, claims, liens or encumbrances, as applicable, which have been perfected, (iii) is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, subject to the Enforceability Exceptions; and (iv) to the extent secured by a pledge of consumer loans, none of such loans are subject to any right of offset, recission, set-off or any counterclaim or defense for which there is a reasonable possibility of an adverse determination to Tandem, including the defense of usury or lack of legal capacity of any guarantor or borrower.
(c) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem, each outstanding Loan of Tandem or any of its Subsidiaries (including Loans held for resale to investors) was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are being maintained, in all material respects in accordance with the relevant notes or other credit or security documents, the written underwriting standards of Tandem and its Subsidiaries (and, in the case of Loans held for resale to investors, the underwriting standards, if any, of the applicable investors) and with all applicable federal, state and local laws, regulations and rules.
(d) None of the agreements pursuant to which Tandem or any of its Subsidiaries has sold Loans or pools of Loans or participations in Loans or pools of Loans contain any obligation to repurchase such Loans or interests therein solely on account of a payment default (other than early payment defaults) by the obligor on any such Loan.
(e) Except as set forth in Section 3.25(e) of the Tandem Disclosure Schedule, there are no outstanding Loans made by Tandem or any of its Subsidiaries to any “executive officer” or other “insider” (as each such term is defined in Regulation O promulgated by the Federal Reserve) of Tandem or its Subsidiaries.
(f) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Tandem, neither Tandem nor any of its Subsidiaries is now nor has it ever been since January 1, 2024 subject to any fine, suspension, settlement or other administrative agreement or sanction by any Governmental Entity or Regulatory Agency relating to the origination, sale or servicing of mortgage or consumer Loans.
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(g) As to each Loan that is secured whether in whole or in part, by a guaranty of the United States Small Business Administration or any other Governmental Entity (collectively, “SBA Loans”), such guaranty is in full force and effect, and to Tandem’s knowledge, will remain in full force and effect following the Effective Time, in each case, without any further action by Tandem or any of its Subsidiaries subject to the fulfillment of their obligations under the agreement with the United States Small Business Administration that arise after the date hereof. There have been no oral or written communications with or notices from the United States Small Business Administration or any other Governmental Entity indicating that the guaranty of any such SBA Loan requires repair or otherwise indicating that the guaranty of any such SBA Loan is or may be at risk.
3.26 Insurance. Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect on Tandem and except for insurance policies underlying Tandem Benefit Plans, (a) Tandem and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Tandem and Tandem Bank reasonably have determined to be prudent and consistent with industry practice, and Tandem and its Subsidiaries are in compliance in all material respects with their insurance policies and are not in default under any of the terms thereof, (b) each such policy is outstanding and in full force and effect and, except for policies insuring against potential liabilities of current or former officers, directors and employees of Tandem and its Subsidiaries, Tandem or the relevant Subsidiary thereof is the sole beneficiary of such policies, (c) all premiums and other payments due under any such policy have been paid, and all claims thereunder have been filed in due and timely fashion, (d) there is no claim for coverage by Tandem or any of its Subsidiaries pending under any insurance policy as to which coverage has been questioned, denied or disputed by the underwriters of such insurance policy, and (e) neither Tandem nor any of its Subsidiaries has received notice of any threatened termination of, material premium increase with respect to, or material alteration of coverage under, any insurance policies.
3.27 No Other Representations or Warranties.
(a) Except for the representations and warranties made by Tandem in this Article III, neither Tandem nor any other person makes any express or implied representation or warranty with respect to Tandem, its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and Tandem hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither Tandem nor any other person makes or has made any representation or warranty to GBC or any of its affiliates or representatives with respect to (i) any financial projection, forecast, estimate, budget or prospective information relating to Tandem, any of its Subsidiaries or their respective businesses, or (ii) any oral or written information presented to GBC or any of its affiliates or representatives in the course of their due diligence investigation of Tandem, the negotiation of this Agreement or in the course of the transactions contemplated hereby, except in each case, for the representations and warranties made by Tandem in this Article III.
(b) Tandem acknowledges and agrees that neither GBC nor any other person on behalf of GBC has made or is making, and Tandem has not relied upon, any express or implied representation or warranty other than those contained in Article IV.
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Article IV
REPRESENTATIONS AND WARRANTIES OF GBC
Except as disclosed in the disclosure schedule delivered by GBC to Tandem concurrently herewith (the “GBC Disclosure Schedule”) (it being understood that (i) no item is required to be set forth as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect, (ii) the mere inclusion of an item in the GBC Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by GBC that such item represents a material exception or fact, event or circumstance or that such item would reasonably be expected to have a Material Adverse Effect, and (iii) any disclosures made with respect to a section of this Article IV shall be deemed to qualify (1) any other section of this Article IV specifically referenced or cross-referenced, and (2) other sections of this Article IV to the extent it is reasonably apparent on its face (notwithstanding the absence of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections), GBC hereby represents and warrants to Tandem as follows:
4.1 Corporate Organization.
(a) GBC is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia, is a bank holding company duly registered under the BHC Act and has elected to be treated as a financial holding company under the BHC Act. GBC has the corporate power and authority to own, lease or operate all of its properties and assets and to carry on its business as it is now being conducted in all material respects. GBC is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing, qualification or standing necessary, except where the failure to be so licensed or qualified or to be in good standing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC. True and complete copies of the GBC Charter and the GBC Bylaws, in each case, as in effect as of the date of this Agreement, have previously been made available by GBC to Tandem.
(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, each Subsidiary of GBC (a “GBC Subsidiary”) (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly licensed or qualified to do business and, where such concept is recognized under applicable law, in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership, leasing or operation of property or the conduct of its business requires it to be so licensed or qualified or in good standing, and (iii) has all requisite corporate power and authority to own, lease or operate its properties and assets and to carry on its business as now conducted. There are no restrictions on the ability of GBC or any Subsidiary of GBC to pay dividends or distributions except, in the case of GBC or a Subsidiary that is a regulated entity, for restrictions on dividends or distributions generally applicable to all similarly regulated entities. GBC Bank is the only depository institution Subsidiary of GBC, and the deposit accounts of GBC Bank are insured by the FDIC through the Deposit Insurance Fund (as defined in Section 3(y) of the FDI Act) to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or threatened. True and complete copies of the organizational documents of GBC Bank as in effect as of the date of this Agreement have previously been made available by GBC to Tandem. There is no person whose results of operations, cash flows, changes in shareholders’ equity or financial position are consolidated in the financial statements of GBC other than the GBC Subsidiaries.
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4.2 Capitalization.
(a) The authorized capital stock of GBC consists of 40,000,000 shares of voting common stock, par value $0.01 per share (the “GBC Voting Common Stock”), 10,000,000 shares of non-voting common stock, par value $0.01 per share (the “GBC Non-Voting Common Stock”, together with the GBC Voting Common Stock, the “GBC Common Stock”), and 10,000,000 shares of preferred stock, par value $0.01 per share. As of February 19, 2026 there were (i) 8,444,343 shares of GBC Voting Common Stock issued and outstanding; (ii) no shares of GBC Non-Voting Common Stock issued and outstanding; and (iii) no shares of GBC preferred stock issued and outstanding. All the issued and outstanding shares of GBC 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. There are no bonds, debentures, notes or other indebtedness that have the right to vote on any matters on which shareholders of GBC may vote. Except as set forth in Section 4.2(a) of the GBC Disclosure Schedules, there are no outstanding subscriptions, options, warrants, stock appreciation rights, deferral units, scrip, rights to subscribe to or purchase, preemptive rights, anti-dilutive rights, rights of first refusal or similar rights, puts, calls, commitments or agreements of any character relating to, or securities or rights convertible or exchangeable into or exercisable for, shares of capital stock or other voting or equity securities of or ownership interest in GBC, or contracts, commitments, understandings or arrangements by which GBC may become bound to issue additional shares of its capital stock or other equity or voting securities of or ownership interests in GBC or that otherwise obligate GBC to issue, transfer, sell, purchase, redeem or otherwise acquire, any of the foregoing. Except as set forth in Section 4.2(a) of the GBC Disclosure Schedules, no equity-based awards (including any cash awards where the amount of payment is determined in whole or in part based on the price of any capital stock of GBC or any of its Subsidiaries) are outstanding. Except as set forth in Section 4.2(a) of the GBC Disclosure Schedules, there are no voting trusts, shareholder agreements, proxies or other agreements in effect to which GBC or any of its Subsidiaries is a party with respect to the voting or transfer of GBC Common Stock, capital stock or other voting or equity securities or ownership interests of GBC or granting any shareholder or other person any registration rights.
(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, GBC owns, directly or indirectly, all the issued and outstanding shares of capital stock or other equity ownership interests of each of the GBC Subsidiaries, free and clear of any Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.
4.3 Authority; No Violation.
(a) GBC has full corporate power and authority to execute and deliver this Agreement and, subject to the shareholder and other actions described below, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Merger and the Bank Merger have been duly and validly approved by the Board of Directors of GBC. The Board of Directors of GBC has determined that the Merger, on the terms and conditions set forth in this Agreement, is advisable and in the best interests of GBC and its shareholders, has adopted and approved this Agreement and the transactions contemplated hereby (including the Merger and the Bank Merger) and has adopted a resolution to the foregoing effect. The execution and delivery of the Bank Merger Agreement have been duly and validly approved by the Board of Directors of GBC and the Board of Directors of GBC Bank. Both the Board of Directors of GBC and the Board of Directors of GBC Bank have determined that the Bank Merger, on the terms and conditions set forth in the Bank Merger Agreement, is advisable and in the best interests of GBC Bank and GBC as its sole shareholder. Except for the approval of the Bank Merger Agreement by GBC as GBC Bank’s sole shareholder, no other corporate proceedings on the part of GBC are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by GBC and (assuming due authorization, execution and delivery by Tandem) constitutes a valid and binding obligation of GBC, enforceable against GBC in accordance with its terms (except in all cases as such enforceability may be limited by the Enforceability Exceptions). The shares of GBC Common Stock to be issued in the Merger have been validly authorized, and when issued, will be validly issued, fully paid and nonassessable, and no current or past shareholder of GBC will have any preemptive right or similar rights in respect thereof.
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(b) Neither the execution and delivery of this Agreement by GBC, nor the consummation by GBC of the transactions contemplated hereby (including the Merger and the Bank Merger), nor compliance by GBC with any of the terms or provisions hereof, will (i) violate any provision of the GBC Charter, the GBC Bylaws or the organizational documents of GBC Bank, or (ii) assuming that the consents and approvals referred to in Section 4.4 are duly obtained, (x) violate any law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to GBC or any of its Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of GBC or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which GBC or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound, except (in the case of clauses (x) and (y) above) for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations that, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on GBC.
4.4 Consents and Approvals. Except for (a) the Fairness Determination, (b) the filing of any required applications, filings, waiver requests and notices, as applicable, with the Federal Reserve under the BHC Act and approval or waiver of such applications, filings, waiver requests and notices, (c) the filing of any required applications, filings and notices, as applicable, with the FDIC under the Bank Merger Act of 1960, and approval or waiver of such applications, filings and notices, (d) the filing of any required applications, filings, waiver requests and notices, as applicable, with the DBF and approval or waiver of such applications, filings, waiver requests and notices, (e) the filing of any required applications, filings and notices, as applicable, with each Applicable Agency and the receipt of any required consents or approvals from each Applicable Agency, (f) those additional applications, filings and notices, if any, listed on Section 3.4 of the Tandem Disclosure Schedule and approval of such applications, filings and notices, (g) the filing of the Certificate of Merger with the Georgia Secretary pursuant to the GBCC, (h) the filing of the Bank Merger Certificate with the applicable Governmental Entity as required by applicable law, and (i) such filings and approvals as are required to be made or obtained under the securities or “blue sky” laws of various states in connection with the issuance of the shares of GBC Common Stock pursuant to this Agreement, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (i) the execution and delivery by GBC of this Agreement or (ii) the consummation by GBC of the Merger and the other transactions contemplated hereby (including the Bank Merger). As of the date hereof, GBC has no knowledge of any reason why the necessary regulatory approvals and consents will not be received by GBC to permit consummation of the Merger and the Bank Merger on a timely basis.
4.5 Reports. GBC and each of its Subsidiaries have timely filed (or furnished, as applicable) all reports, forms, correspondence, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file (or furnish, as applicable) since January 1, 2024 with Regulatory Agencies, including any report, form, correspondence, registration or statement required to be filed (or furnished, as applicable) pursuant to the laws, rules or regulations of the United States, any state, any foreign entity or any Regulatory Agency, and have paid all fees and assessments due and payable in connection therewith, except where the failure to file (or furnish, as applicable) such report, form, correspondence, registration or statement or to pay such fees and assessments, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on GBC. Subject to Section 9.15, except for normal examinations conducted by a Regulatory Agency in the ordinary course of business of GBC and its Subsidiaries, no Regulatory Agency or governmental agency or authority has initiated or has pending any proceeding or, to the knowledge of GBC, investigation into the business or operations of GBC or any of its Subsidiaries since January 1, 2024, except where such proceedings or investigations would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC. Subject to Section 9.15, there (i) is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations or inspections of GBC or any of its Subsidiaries, and (ii) has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Agency with respect to the business, operations, policies or procedures of GBC or any of its Subsidiaries since January 1, 2024, in each case, which would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC.
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4.6 Financial Statements.
(a) GBC has furnished to Tandem true and complete copies of (i) the consolidated balance sheet of GBC and GBC Bank as of December 31, 2022, December 31, 2023 and December 31, 2024, and the related consolidated statements of operations, shareholders’ equity, and cash flows of GBC and GBC Bank, together with all related notes and schedules thereto, accompanied by the reports thereon of GBC’s independent auditors for the years ended as of such dates, and (ii) the unaudited financial statements of GBC and GBC Bank for the twelve months ended December 31, 2025 (collectively, the “GBC Financial Statements”). The GBC Financial Statements (including the related notes) complied as to form, as of their respective dates, in all material respects with applicable accounting requirements, have been prepared according to GAAP applied on a consistent basis during the periods and at the dates involved (except as may be indicated in the notes thereto), fairly present, in all material respects, the financial condition of GBC and its Subsidiaries, as applicable, at the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to notes and normal year-end adjustments that were not material in amount or effect).
(b) Except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC, neither GBC nor any of its Subsidiaries has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved against on the consolidated balance sheet of GBC for the fiscal quarter ended December 31, 2025 included in the GBC Financial Statements or liabilities incurred in the ordinary course of business consistent with past practice since December 31, 2025 or in connection with this Agreement and the transactions contemplated hereby.
(c) GBC has filed all required Call Reports since January 1, 2024 for GBC Bank. The Call Reports fairly present, in all material respects, the financial position of GBC Bank and the results of its operations at the date and for the period indicated in that Call Report in conformity with the instructions to the Call Report. Since January 1, 2024, GBC Bank has calculated its ACL (or ALLL prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) in accordance with (i) GAAP (ii) the Interagency Policy Statement on the Allowance for Credit Losses (or the Interagency Policy Statement on the Allowance of Loan and Lease Losses prior to the promulgation of the Interagency Policy Statement on the Allowance of Credit Losses) and (iii) all applicable rules and regulations, and, in the reasonable opinion of management, the ACL is reasonably likely to be to be adequate in all material respects.
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(d) Since January 1, 2024, (i) neither GBC, GBC Bank, or their respective Subsidiaries nor, to the knowledge of GBC, any director, officer, employee, auditor, accountant or representative of GBC or its Subsidiaries has received or otherwise obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of GBC or its Subsidiaries or their respective internal accounting controls relating to periods after January 1, 2024, including any material complaint, allegation, assertion or claim that GBC or its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) to the knowledge of GBC, no attorney representing GBC or its Subsidiaries, whether or not employed by GBC or its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation, relating to periods after January 1, 2024, by GBC or its Subsidiaries or any of their officers, directors, employees or agents to the Board of Directors of GBC or the Board of Directors of GBC Bank (or any committee thereof) or to any director or officer of GBC, GBC Bank, or their respective Subsidiaries.
(e) Neither GBC nor its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement (including any contract or arrangement relating to any transaction or relationship between or among GBC and its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangement”), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, GBC or its Subsidiaries in GBC’ or its Subsidiaries’ financial statements.
4.7 Broker’s Fees. With the exception of the engagement of Solomon Partners, L.P. (“Solomon”), neither GBC nor any GBC Subsidiary nor any of their respective officers or directors has employed any broker, finder or financial advisor or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or related transactions contemplated by this Agreement. GBC has disclosed to Tandem as of the date hereof the aggregate fees provided for in connection with the engagement by GBC of Solomon related to the Merger and the other transactions contemplated hereunder.
4.8 Absence of Certain Changes or Events.
(a) Since December 31, 2024, there has not been any effect, change, event, circumstance, condition, occurrence or development that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on GBC.
(b) Since December 31, 2024 through the date of this Agreement, GBC and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary course.
4.9 Legal and Regulatory Proceedings.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on GBC, neither GBC nor any of its Subsidiaries is a party to any, and there are no outstanding or pending or, to the knowledge of GBC, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against GBC or any of its Subsidiaries or any of their current or former directors or executive officers or challenging the validity or propriety of the transactions contemplated by this Agreement.
(b) Except as would not reasonably be expected to, either individually or in the aggregate, be material to GBC, there is no injunction, order, judgment, decree, or regulatory restriction imposed upon GBC, any of its Subsidiaries or the assets of GBC or any of its Subsidiaries (or that, upon consummation of the Merger, would apply to the Surviving Entity or any of its affiliates).
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4.10 Taxes and Tax Returns.
(a) Except as would not reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect on GBC: each of GBC and its Subsidiaries has duly and timely filed (including all applicable extensions) all Tax Returns in all jurisdictions in which Tax Returns are required to be filed by it, and all such Tax Returns are true, correct and complete; all Taxes of GBC and its Subsidiaries (whether or not shown on any Tax Returns) that are due have been fully and timely paid; each of GBC and its Subsidiaries has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, shareholder, independent contractor or other third party; each of GBC and its Subsidiaries have withheld and timely paid all material Taxes required to have been withheld and paid with respect to, and have complied with, all information reporting, backup withholding, and nonresident withholding requirements; neither GBC nor any of its Subsidiaries has granted any extension or waiver of the limitation period applicable to any Tax that remains in effect (other than extension or waiver granted in the ordinary course of business); neither GBC nor any of its Subsidiaries has received written notice of assessment or proposed assessment in connection with any amount of Taxes, and there are no threatened in writing or pending disputes, claims, audits, examinations or other proceedings regarding any Tax of GBC and its Subsidiaries or the assets of GBC and its Subsidiaries; neither GBC nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return for which the statute of limitations is open (other than a group the common parent of which was GBC)), or (B) has any liability for the Taxes of any person (other than GBC or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) or otherwise as a transferee or successor.
(b) No written claim has ever been made by a Governmental Entity in a jurisdiction where GBC and its Subsidiaries do not file Tax Returns that it is or may be subject to taxation by, or required to file a Tax Return in, that jurisdiction. There are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any assets of GBC or any of its Subsidiaries.
(c) GBC and each of its Subsidiaries have disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.
(d) Neither GBC nor any of its Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
4.11 Compliance with Applicable Law.
(a) GBC and each of its Subsidiaries hold, and have at all times since January 1, 2021, held, all licenses, registrations, franchises, certificates, variances, permits charters and authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all fees and assessments due and payable in connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding such license, registration, franchise, certificate, variance, permit, charter or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, and to the knowledge of GBC, no suspension or cancellation of any such necessary license, registration, franchise, certificate, variance, permit, charter or authorization is threatened.
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(b) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, GBC and each of its Subsidiaries, since January 1, 2024, have complied with and are not in default or violation under any applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to GBC or any of its Subsidiaries, including all laws related to data protection or privacy (including laws relating to the privacy and security of Personal Data), the USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, Title V of the Gramm-Leach-Bliley Act, any and all sanctions or regulations enforced by the Office of Foreign Assets Control of the United States Department of Treasury and any other law, policy or guideline relating to bank secrecy, discriminatory lending, financing or leasing practices, consumer protection, money laundering prevention, foreign assets control, U.S. sanctions laws and regulations, Sections 23A and 23B of the Federal Reserve Act, and all agency requirements relating to the origination, sale and servicing of mortgage and consumer loans. GBC and its Subsidiaries have established and maintain a system of internal controls designed to ensure compliance in all material respects by GBC and its Subsidiaries with applicable financial recordkeeping and reporting requirements of applicable money laundering prevention laws in jurisdictions where GBC and its Subsidiaries conduct business.
(c) GBC Bank has received an Institution Community Reinvestment Act rating of “satisfactory” or better in its most recently completed Community Reinvestment Act examination.
(d) GBC maintains a written information privacy and security program that maintains reasonable measures to protect the privacy, confidentiality and security of all Personal Data and any other material confidential information against any Security Breach. To the knowledge of GBC, GBC has not experienced any Security Breach that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC. To the knowledge of GBC, there are no data security or other technological vulnerabilities with respect to its information technology systems or networks that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on GBC.
(e) As of the date hereof, each of GBC and GBC Bank is “well-capitalized” (as such term is defined in the relevant regulation of the institution’s federal regulator).
(f) Without limitation, none of GBC or any of its Subsidiaries, or to the knowledge of GBC, any director, officer, employee, agent or other person acting on behalf of GBC or any of its Subsidiaries has, directly or indirectly, (i) used any funds of GBC or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from funds of GBC or any of its Subsidiaries, (iii) violated any provision that would result in the violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar law, (iv) established or maintained any unlawful fund of monies or other assets of GBC or any of its Subsidiaries, (v) made any fraudulent entry on the books or records of GBC or any of its Subsidiaries, or (vi) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business, to obtain special concessions for GBC or any of its Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for GBC or any of its Subsidiaries, or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department, except, in each case, as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC.
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(g) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on GBC, (i) GBC and each of its Subsidiaries have properly administered all accounts for which it acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable state, federal and foreign law; and (ii) none of GBC, any of its Subsidiaries, or any of its or its Subsidiaries’ directors, officers or employees, has committed any breach of trust or fiduciary duty with respect to any such fiduciary account, and the accountings for each such fiduciary account are true, correct and complete and accurately reflect the assets and results of such fiduciary account.
4.12 Agreements with Regulatory Agencies. Subject to Section 9.15, neither GBC nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since January 1, 2024, a recipient of any supervisory letter from, or since January 1, 2024, has adopted any policies, procedures or board resolutions at the request or suggestion of, any Regulatory Agency or other Governmental Entity that currently restricts in any material respect or would reasonably be expected to restrict in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the GBC Disclosure Schedule, an “GBC Regulatory Agreement”), nor has GBC or any of its Subsidiaries been advised in writing, or to GBC’s knowledge, orally, since January 1, 2024, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating, ordering or requesting any such GBC Regulatory Agreement.
4.13 Related Party Transactions. Except for the transactions set forth in Section 4.13 of the GBC Disclosure Schedules, there are no transactions or series of related transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions or series of related transactions, between GBC or any of its Subsidiaries, on the one hand, and any current or former director or “executive officer” (as defined in the Exchange Act) of GBC or any of its Subsidiaries or any person who beneficially owns (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) five percent (5%) or more of the outstanding GBC Common Stock (or any of such person’s immediate family members or affiliates) (other than Subsidiaries of GBC) on the other hand, of the type required by the Exchange Act and the rules and regulations thereunder.
4.14 State Takeover Laws. The Board of Directors of GBC has approved this Agreement and the transactions contemplated hereby and has taken all such other necessary actions as required to render inapplicable to such agreements and transactions the provisions of any Takeover Statutes.
4.15 Reorganization. GBC has not taken any action and has no knowledge of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
4.16 GBC Information. The information relating to GBC and its Subsidiaries that is provided in writing by GBC or its Subsidiaries or their respective representatives specifically for inclusion in the Proxy Statement or in any other document filed with any other Regulatory Agency or Governmental Entity in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. The portion of the Proxy Statement relating to GBC or any of its Subsidiaries will comply in all material respects with applicable law.
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4.17 No Other Representations or Warranties.
(a) Except for the representations and warranties made by GBC in this Article IV, neither GBC nor any other person makes any express or implied representation or warranty with respect to GBC, its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and GBC hereby disclaims any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither GBC nor any other person makes or has made any representation or warranty to Tandem or any of its affiliates or representatives with respect to (i) any financial projection, forecast, estimate, budget or prospective information relating to GBC, any of its Subsidiaries or their respective businesses, or (ii) any oral or written information presented to Tandem or any of its affiliates or representatives in the course of their due diligence investigation of GBC, the negotiation of this Agreement or in the course of the transactions contemplated hereby, except in each case for the representations and warranties made by GBC in this Article IV.
(b) GBC acknowledges and agrees that neither Tandem nor any other person on behalf of Tandem has made or is making, and GBC has not relied upon, any express or implied representation or warranty other than those contained in Article III.
Article V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as expressly contemplated or permitted by this Agreement (including as set forth in Section 5.1 of the Tandem Disclosure Schedule or GBC Disclosure Schedule), required by law or as consented to in writing by the other party (such consent not to be unreasonably withheld, conditioned or delayed), each of GBC and Tandem shall, and shall cause each of its Subsidiaries to, (i) conduct its business in the ordinary course consistent with past practices or pursuant to a party’s strategic plan, and (ii) use reasonable best efforts to maintain and preserve intact its business organization, employees and advantageous business relationships, and (iii) take no action that would reasonably be expected to adversely affect or delay the ability of either GBC or Tandem to obtain any necessary approvals of any Regulatory Agency or other Governmental Entity required for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby on a timely basis. Notwithstanding anything to the contrary set forth in this Section 5.1, no action or failure to take action by Tandem or any of its Subsidiaries or GBC or any of its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.2 (in the case of Tandem or its Subsidiaries) or Section 5.3 (in the case of GBC or its Subsidiaries) shall constitute a breach of this Section 5.1 unless such action or failure to take action would constitute a breach of such provision of Section 5.2 (in the case of Tandem or its Subsidiaries) or Section 5.3 (in the case of GBC or its Subsidiaries).
5.2 Forbearances of Tandem. During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as set forth in Section 5.2 of the Tandem Disclosure Schedule, as expressly contemplated or permitted by this Agreement or a Tandem Benefit Plan as in effect as of the date hereof or as required by law or regulation, Tandem shall not, and Tandem shall not permit any of its Subsidiaries to, without the prior written consent of GBC (such consent not to be unreasonably withheld, conditioned or delayed):
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(a) other than (1) federal funds borrowings and borrowings from the Federal Home Loan Bank, in each case, with a maturity not in excess of six (6) months, and (2) the creation of deposit liabilities or other customary banking products, issuances of letters of credit, sales of certificates of deposits, and entry into repurchase agreements, in each case (1) and (2), in the ordinary course of business on terms and in amounts consistent with past practice, incur any indebtedness for borrowed money (other than indebtedness of Tandem or any of its wholly-owned Subsidiaries, on the one hand, to Tandem or any of its wholly-owned Subsidiaries, on the other hand), or directly or indirectly, incur, assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations or liabilities of any other individual, corporation or other entity;
(b)
(1) adjust, split, combine or reclassify any capital stock of Tandem (or shares thereof);
(2) make, declare, pay, set aside for payment or set a record date for any dividend, or any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or other equity or voting securities or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) or exchangeable into or exercisable for any shares of its capital stock or other equity or voting securities, including any Tandem Securities or any securities of any Tandem Subsidiary except cash dividends paid by any of the Subsidiaries of Tandem to Tandem or any of its wholly-owned Subsidiaries.
(3) grant any stock options, warrants, restricted stock units, performance stock units, phantom stock units, restricted shares or other equity-based awards or interests, or grant any person any right to acquire any Tandem Securities or any securities of any Tandem Subsidiary; or
(4) issue, sell, transfer, encumber, or authorize the issuance, sale or transfer, or otherwise permit to become outstanding any shares of capital stock or voting securities or equity interests or securities convertible (whether currently convertible or convertible only after the passage of time of the occurrence of certain events) or exchangeable into, or exercisable for, any shares of its capital stock or other equity or voting securities, including any Tandem Securities or any securities of any Tandem Subsidiary, or any options, warrants, or other rights of any kind to acquire any shares of capital stock or other equity or voting securities, including any Tandem Securities or any securities of any Tandem Subsidiary;
(c) sell, license, lease, transfer, mortgage, pledge, encumber or otherwise dispose of, or discontinue, any of its material properties (other than other real estate owned disposed of for an amount not less than 85% of its recorded investment value as of the date hereof), assets or any business to any individual, corporation or other entity other than a wholly-owned Subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case, other than (x) in the ordinary course of business or (y) pursuant to contracts or agreements in force at the date of this Agreement;
(d) except for foreclosure or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case, in the ordinary course of business, make any material investment in or acquire (whether by purchase of stock or securities, contributions to capital, property transfers, merger or consolidation, or formation of a joint venture or otherwise) any other person or all or any portion of the property, assets, debt, business, deposits or properties of any other person, in each case, other than a wholly-owned Subsidiary of Tandem;
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(e) in each case, except for transactions in the ordinary course of business, (i) terminate, materially amend, extend or waive any material provision of, any Tandem Contract or (ii) enter into any contract that would constitute an Tandem Contract if in effect on the date of this Agreement, or make any change in any instrument or agreement governing the terms of any of its securities, other than normal renewals of contracts without material adverse changes of terms with respect to Tandem or any of its Subsidiaries (or the Surviving Entity); provided that this clause (ii) shall not apply to the entry into of any contract in connection with any action otherwise permitted by this Section 5.2;
(f) except as required pursuant to the terms of any Tandem Benefit Plan as in effect as of the date of this Agreement, (A) increase in any manner the compensation, salaries, wages, commissions or consulting fees, bonus, incentives, pension, welfare, fringe or other benefits, severance or termination pay of any current or former employee, officer, director or independent contractor of Tandem or any of its Subsidiaries, other than (i) increases in base compensation in the ordinary course, consistent with past practices, that do not exceed 5% individually or 3% in the aggregate after consultation with the Chief Human Resources Officer of GBC (or other increases with the written consent of the Chief Human Resources Officer of GBC), (ii) the payment of annual bonuses for completed performance periods based upon actual corporate performance, the performance of such employee and, if applicable, such employee’s business, consistent with the terms of the applicable Tandem Benefit Plan as in effect as of the date hereof or as expressly contemplated under this Agreement (or other bonuses with the written consent of the Chief Human Resources Officer of GBC), or (iii) increases, retention payments, or severance determined necessary by Tandem for retention purposes after consultation with, and with the written consent of, the Chief Human Resources Officer of GBC, which in the aggregate shall not exceed the amount disclosed in Section 5.2(f) of the Tandem Disclosure Schedule, (B) other than as contemplated by this Agreement, become a party to, establish, adopt, amend, commence participation in or terminate any Tandem Benefit Plan or any arrangement that would have been a Tandem Benefit Plan had it been entered into prior to this Agreement, (C) grant any new awards, or amend or modify the terms of any outstanding awards, under any Tandem Benefit Plan, (D) other than as contemplated by this Agreement, take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Tandem Benefit Plan, or (E) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Tandem Benefit Plan that is required by applicable law to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or (F) subject to Section 5.2(s), except for loans or extensions of credit consistent with existing policies and practices and applicable law, make or increase any loan or other extension of credit, or commit to make or increase any such loan or extension of credit, to any director or executive officer of Tandem or Tandem Bank, or any entity controlled, directly or indirectly, by any of the foregoing, other than renewals of existing loans or commitments to loan;
(g) (i) settle, or enter into any settlement or similar agreement with respect to, any claim, suit, action or proceeding or (ii) waive or release any material rights or claims, or agree or consent to the issuance of any injunction, decree, order or judgment restricting or otherwise affecting its business or operations or the Surviving Entity after consummation of the Merger;
(h) take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(i) amend its charter, its bylaws or comparable governing documents of its Subsidiaries;
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(j) (i) materially restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported, or (ii) acquire (other than (A) by way of foreclosure or acquisitions in a bona fide fiduciary capacity or (B) in satisfaction of debts previously contracted in good faith) any debt security or equity investment or any certificates of deposit issued by other banks, other than securities rated “AA” or higher by either Standard and Poor’s Ratings Services or Moody’s Investor Service;
(k) implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP;
(l) (i) enter into any new line of business, introduce any material new products or services, or introduce any material marketing campaigns or any material new sales compensation or incentive programs or arrangements, in each case, except as required by applicable law, regulation or policies imposed by any Governmental Entity; (ii) other than in the ordinary course of business consistent with past practice, change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio or any segment thereof), except as required by applicable law, regulation or policies imposed by any Governmental Entity; or (iii) incur any material liability or obligation relating to retail banking and branch merchandising, marketing and advertising activities and initiatives except in the ordinary course of business;
(m) abandon or allow to lapse any material Intellectual Property, other than in the ordinary course of business consistent with past practice;
(n) make, change or revoke any Tax election, change an annual Tax accounting period, adopt or change any Tax accounting method, file any amended Tax Return, enter into any closing agreement with respect to Taxes, or settle any Tax claim, audit, assessment or dispute or surrender any right to claim a refund of Taxes;
(o) merge or consolidate itself or any of its Subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its Subsidiaries;
(p) incur any capital expenditures or any obligations or liabilities in respect thereof, except for any capital expenditures not to exceed $50,000 individually or $250,000 in the aggregate;
(q) make any changes to deposit pricing other than such changes that may be made in the ordinary course of business or consistent with safe and sound banking practices;
(r) (i) make any new investment or new commitment to invest in real estate or in any real estate development project other than by way of foreclosure or deed in lieu thereof, (ii) make any new investment or new commitment to develop, or otherwise take any actions to develop any real estate owned by Tandem or any of its Subsidiaries, or (iii) file any application or make any contract or commitment for the opening, relocation or closing of any, or open, relocate or close any, branch office.
(s) sell, transfer or lease any properties or assets (real, personal or mixed, tangible or intangible) to, or enter into any agreement or arrangement with, any of its officers or directors or any of their immediate family members or any affiliates or associates of any of its officers or directors other than in the ordinary course of business;
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(t) except for loans or extensions of credit approved and/or committed as of the date of this Agreement, (i) make or renew any loan greater than $3,000,000 if secured or $500,000 if unsecured, (ii) purchase a participation in any loan or pool of loans greater than $500,000, or (iii) renew for more than 12 months any loans greater than $500,000 rated “watch” or worse without giving notice of such action within 24 hours after any loan committee meeting at which such action is approved. For purposes of this Section 5.2(t), notice shall be given by email to the Chief Risk Officer of GBC;
(u) other than interest rate swaps entered into for the account of customers of Tandem or any Tandem Subsidiaries (i.e. “back-to-back” agreements) in the ordinary course of business, enter into any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or any indexes, or any other similar transaction (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to any such transaction or transactions;
(v) take any action that is intended or would reasonably be expected to (i) result in any of the conditions to the Merger set forth in Section 7.1 or Section 7.2 not being satisfied by the Termination Date, except as may be required by applicable law or (ii) prevent, delay or impair in any material respect its ability to consummate the transactions contemplated by this Agreement; or
(w) agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of, any of the actions prohibited by this Section 5.2.
5.3 Forbearances of GBC. During the period from the date of this Agreement to the Effective Time or earlier termination of this Agreement, except as set forth in Section 5.3 of the GBC Disclosure Schedule, as expressly contemplated by this Agreement, as required by law or as consented to in writing by Tandem (such consent not to be unreasonably withheld, conditioned or delayed), GBC shall not, and shall not permit any of its Subsidiaries to:
(a) adjust, split, combine or reclassify any capital stock of GBC (or shares thereof);
(b) make, declare, or pay any dividend on any capital stock of GBC;
(c) amend the GBC Charter or the GBC Bylaws in a manner that would materially and adversely affect the holders of Tandem Common Stock, or adversely affect the holders of Tandem Common Stock relative to other holders of GBC Common Stock;
(d) incur any indebtedness for borrowed money (other than indebtedness of GBC or any of its wholly owned Subsidiaries to GBC or any of its Subsidiaries) that would reasonably be expected to prevent GBC or its Subsidiaries from assuming Tandem’s or its Subsidiaries’ outstanding indebtedness;
(e) take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(f) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Section 7.1 or Section 7.3 not being satisfied by the Termination Date, except as may be required by applicable law;
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(g) take any action that is intended or would reasonably be expected to result in a material delay in the ability of GBC or Tandem to perform any of their obligations under this Agreement on a timely basis or a material delay in the ability of GBC to obtain any necessary approvals of any Governmental Entity required for the transactions contemplated hereby by the Termination Date; or
(h) agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of, any of the actions prohibited by this Section 5.3.
Article VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
(a) The parties hereto shall cooperate with each other and use their reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (and in the case of the applications, notices, petitions and filings in respect of the Requisite Regulatory Approvals, use their reasonable best efforts to make such filings within thirty (30) days of the date of this Agreement), to obtain as promptly as practicable all permits, consents, waivers, approvals and authorizations of all third parties, Regulatory Agencies and Governmental Entities which are necessary or advisable to consummate the transactions contemplated by this Agreement (including the Merger and the Bank Merger), and to comply with the terms and conditions of all such permits, consents, waivers, approvals and authorizations of all such Regulatory Agencies and Governmental Entities. Tandem and GBC shall each use, and shall each cause their applicable Subsidiaries to use, reasonable best efforts to obtain each such Requisite Regulatory Approval as promptly as reasonably practicable. GBC and Tandem shall have the right to review in advance, and each will consult the other on, in each case, subject to applicable laws relating to the exchange of information, all the information relating to Tandem or GBC, as the case may be, and any of their respective Subsidiaries, which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. The parties hereto agree that they will consult with each other with respect to obtaining all permits, consents, waivers, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other apprised of the status of matters relating to completion of the transactions contemplated in this Agreement, and each party shall consult with the other in advance of any meeting or conference with any Governmental Entity in connection with the transactions contemplated by this Agreement and, to the extent permitted by such Governmental Entity, give the other party and/or its counsel the opportunity to attend and participate in such meetings and conferences, in each case subject to applicable law; and provided, that each party shall promptly advise the other party with respect to substantive matters that are addressed in any meeting or conference with any Governmental Entity which the other party does not attend or participate in connection with or affecting the transactions contemplated by this Agreement, to the extent permitted by such Governmental Entity and subject to applicable law and Section 9.15.
(b) In furtherance and not in limitation of the foregoing, each party shall use its reasonable best efforts to avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the Closing. Notwithstanding the foregoing, nothing contained in this Agreement shall be deemed to require GBC or Tandem or any of their respective Subsidiaries, and neither Tandem nor any of its Subsidiaries shall be permitted (without the prior written consent of GBC), to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the foregoing permits, consents, waivers, approvals and authorizations of Governmental Entities that would reasonably be expected to have a Material Adverse Effect on the Surviving Entity and its Subsidiaries, taken as a whole, after giving effect to the Merger (a “Materially Burdensome Regulatory Condition”).
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(c) GBC and Tandem shall, upon request, furnish each other with all information concerning themselves, their Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection any filing, notice or application made by or on behalf of GBC, Tandem or any of their respective Subsidiaries to any Governmental Entity in connection with the Merger, the Bank Merger and the other transactions contemplated by this Agreement.
(d) GBC and Tandem shall promptly advise each other upon receiving any communication from any Governmental Entity whose permit, consent, waiver, approval or authorization is required for consummation of the transactions contemplated by this Agreement that causes such party to believe that there is a reasonable likelihood that any Requisite Regulatory Approval will not be obtained, or that the receipt of any such permit, consent, waiver, approval or authorization will be materially delayed.
6.2 Access to Information; Confidentiality.
(a) Upon reasonable notice and subject to applicable laws, each of GBC and Tandem, for the purposes of verifying the representations and warranties of the other and preparing for the Merger and the other matters contemplated by this Agreement, shall, and shall cause its Subsidiaries to, afford to the officers, employees, accountants, counsel, advisors and other representatives of the other party, access, during normal business hours during the period prior to the Effective Time upon prior written notice from the accessing party, to all its properties, books, contracts, commitments, personnel, information technology systems, and records, and both Tandem and GBC shall reasonably cooperate with the other party in preparing to execute after the Effective Time the conversion or consolidation of systems and business operations generally, and, during such period, each of GBC and Tandem shall, and shall cause its Subsidiaries to, make available to the other party (i) a copy of each report, schedule, registration statement or proxy statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws or federal or state banking laws (other than reports or documents that GBC or Tandem, is not permitted to disclose in accordance with Section 9.15 or otherwise under applicable law), and (ii) all other information concerning its business, properties and personnel as such party may reasonably request. Neither GBC nor Tandem nor any of their respective Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of GBC’s or Tandem’, as the case may be, customers, jeopardize the attorney-client privilege of the institution in possession or control of such information (after giving due consideration to the existence of any common interest, joint defense or similar agreement between the parties) or contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The parties hereto will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.
(b) Each of GBC and Tandem shall hold all information furnished by or on behalf of the other party or any of such party’s Subsidiaries or representatives pursuant to Section 6.2(a) in confidence to the extent required by, and in accordance with, the provisions of the non-disclosure agreement, dated February 19, 2026 between GBC and Tandem (the “Non-Disclosure Agreement”).
(c) No investigation by either of the parties or their respective representatives shall affect or be deemed to modify or waive the representations and warranties of the other set forth in this Agreement.
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6.3 Non-Control. Nothing contained in this Agreement shall give either party, directly or indirectly, the right to control or direct the operations of the other party prior to the Effective Time. Prior to the Effective Time, each party shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
6.4 Fairness Determination; Securities Act Compliance.
(a) The shares of GBC Common Stock issuable in the Merger are intended be issued in reliance upon the exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) set forth in Section 3(a)(10) thereof and Article 3 and Section 10-5-53 of Chapter 5 of Title 10 of the O.C.G.A., assuming receipt of the Fairness Determination and the issuance of the Fairness Order (as hereinafter defined). For purposes of this Agreement, “Fairness Determination” means the approval by the Securities Commissioner pursuant to O.C.G.A. §10-5-11(9) (and the rules and regulations thereunder) of the terms and conditions of the contemplated transactions and the fairness thereof such that the issuance of the Per Share Stock Consideration issuable to the Tandem shareholders as contemplated by this Agreement shall qualify for the exemptions from registration available under O.C.G.A. §10-5-11(9) and Section 3(a)(10) of the Securities Act.
(b) The parties hereto shall cooperate with each other and use their reasonable best efforts to promptly prepare and cause to be filed (and use their reasonable best efforts to make such filings within forty-five (45) days of the date of this Agreement) with the Securities Commissioner an application for the Fairness Determination under O.C.G.A. §10-5-11(9), including a request for hearing (the “Fairness Hearing”) and a request for the issuance of an order containing the Fairness Determination (the “Fairness Order”). GBC and Tandem shall have the right to review in advance, and each will consult the other on, in each case, subject to applicable laws relating to the exchange of information, all the information relating to Tandem or GBC, as the case may be, and any of their respective Subsidiaries, which appears in any filing made with, or written materials submitted to, the Securities Commissioner in connection with the application for the Fairness Determination. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. The parties shall use their reasonable best efforts to cause the Securities Commissioner to issue the Fairness Order, including, but not limited to, mailing a timely notice of hearing to Tandem shareholders providing them with the opportunity to attend and participate in the Fairness Hearing; provided, however, that the parties shall not be required to materially and adversely modify any of the terms of this Agreement or the contemplated transactions in order to cause the Securities Commissioner to make the Fairness Determination and issue the Fairness Order.
(c) In the event that (i) the Fairness Hearing is not available to the parties for reasons beyond their reasonable control, (ii) the Fairness Hearing is held but the Securities Commissioner affirmatively declines to issue the Fairness Order or does not issue the Fairness Order within a reasonable time after such Fairness Hearing (after taking into account any requests for additional information by the Securities Commissioner following such Fairness Hearing), or (iii) the exemption from registration under Section 3(a)(10) of the Securities Act is otherwise not available in connection with the contemplated transactions, then GBC and Tandem shall work in good faith to amend this Agreement to provide for an alternative exemption from federal registration for the issuance of GBC Common Stock pursuant to this Agreement.
(d) GBC and Tandem shall use their reasonable best efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the contemplated transactions, and each of GBC and Tandem shall prepare and furnish such information relating to the GBC and GBC Subsidiaries or Tandem and Tandem Subsidiaries, as appropriate, and their respective affiliates, directors, officers, and shareholders as may be reasonably required in connection with any such action; provided that neither GBC nor Tandem shall be required to register, or to register the issuance of GBC Common Stock, with any state or the securities regulators of any state (other than making notice filings, as applicable).
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6.5 Proxy Statement; Shareholders’ Approvals.
(a) As promptly as reasonably practicable following the date hereof, GBC and Tandem shall prepare and Tandem shall distribute the Proxy Statement to the Tandem shareholders. GBC will furnish to Tandem the information required to be included in the Proxy Statement with respect to its business and affairs and shall have the right to review and consult with Tandem on the form of, and any characterizations of such information included in, the Proxy Statement prior to its being distributed to the Tandem shareholders. If at any time prior to the Effective Time any information relating to GBC or Tandem, or any of their respective affiliates, officers or directors, should be discovered by GBC or Tandem which should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other party hereto and, to the extent required by law, rules or regulations, an appropriate amendment or supplement describing such information shall be promptly disseminated by the parties to the Tandem shareholders.
(b) Subject to the parties’ compliance with Section 6.5(a), Tandem shall cause a meeting of its shareholders (the “Tandem Meeting”) to be duly called and held as soon as reasonably practicable following receipt of the Fairness Order (but in no event later than ninety (90) days following the date of this Agreement), for the purpose of obtaining (a) the Requisite Tandem Vote required in connection with this Agreement and the Merger and (b) if so desired and agreed by GBC, a vote upon other matters of the type customarily brought before a meeting of shareholders in connection with the approval of a merger agreement or the transactions contemplated thereby. Subject to Section 6.5(c), Tandem and its Board of Directors shall use its reasonable best efforts to obtain from the shareholders of Tandem the Requisite Tandem Vote, including by communicating to the shareholders of Tandem its recommendation (and including such recommendation in the Proxy Statement) that the shareholders of Tandem approve this Agreement and the transactions contemplated hereby (the “Tandem Board Recommendation”), and Tandem and its Board of Directors shall not (i) withhold, withdraw, modify or qualify in a manner adverse to GBC the Tandem Board Recommendation, (ii) fail to make the Tandem Board Recommendation in the Proxy Statement, (iii) adopt, approve, recommend or endorse an Acquisition Proposal, or publicly announce an intention to adopt, approve, recommend or endorse an Acquisition Proposal, (any of the foregoing actions described in clauses (i) through (iii) a “Recommendation Change”) or (iv) execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement (other than an Acceptable Confidentiality Agreement) providing for an Acquisition Proposal (an “Alternative Acquisition Agreement”).
(c) Subject to Section 8.1 and Section 8.2, prior to the receipt of the Requisite Tandem Vote, the Board of Directors of Tandem may submit this Agreement to its shareholders without recommendation (which, for the avoidance of doubt, shall constitute a Recommendation Change), in which event the Board of Directors of Tandem may communicate the basis for its lack of recommendation to its shareholders in the Proxy Statement or an appropriate amendment or supplement thereto to the extent required by law (although the resolutions approving this Agreement as of the date hereof may not be rescinded or amended), if (i) the Board of Directors of Tandem has received after the date hereof a bona fide Acquisition Proposal which did not result from a breach of Section 6.13 (other than any breach that is unintentional or immaterial), which it believes in good faith, after receiving the advice of its outside counsel and its financial advisors, constitutes a Superior Proposal (in which event, subject to compliance with this Section 6.5(c) and prior to the receipt of the Requisite Tandem Vote, the Board of Directors of Tandem may cause Tandem to terminate this Agreement pursuant to Section 8.1(h) in order to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal), and (ii) the Board of Directors of Tandem, after receiving the advice of its outside counsel and its financial advisors, determines in good faith that failure to take such actions would be inconsistent with its fiduciary duties under applicable law, in each case, if, but only if, (1) Tandem has complied in all material respects with Section 6.13, (2) Tandem delivers to GBC at least three (3) business days’ prior written notice of its intention to take such action, and specifies the material terms and conditions of the Superior Proposal, (3) prior to taking such action, Tandem negotiates in good faith with GBC, during the three (3) business day period following Tandem’ delivery of the notice referred to in such sub-clause (2) above (to the extent GBC desires to so negotiate) any revision to the terms of this Agreement that GBC desires to propose, and (4) after the conclusion of such three (3) business day period, the Board of Directors of Tandem determines in good faith, after giving effect to all of the adjustments or revisions (if any) which may be offered by GBC pursuant to sub-clause (3) above, that, such Acquisition Proposal continues to constitute a Superior Proposal and it would be inconsistent with its fiduciary duties under applicable law to make or continue to make the Tandem Board Recommendation (it being agreed that, in the event that, following delivery of the notice referred to in sub-clause (2) above, there is any material revision to the terms of such Acquisition Proposal, including any revision in price or other improvement in economic terms, the three (3) business day period during which the parties agree to negotiate in good faith shall be extended, if applicable, to ensure that at least two (2) business days remain to negotiate subsequent to the time Tandem notifies GBC of any such material revision (it being understood that there may be multiple extensions)).
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(d) Notwithstanding any Recommendation Change, unless this Agreement has been terminated, the Tandem Meeting shall be convened and this Agreement shall be submitted to the shareholders of Tandem at such meeting for the purpose of the shareholders of Tandem considering and voting on approval of this Agreement and any other matters required to be approved by the shareholders of Tandem in order to consummate the transactions contemplated by this Agreement. Additionally, unless this Agreement has been terminated, Tandem shall not submit to or for a vote of its shareholders any Acquisition Proposal.
(e) Tandem shall adjourn or postpone the Tandem Meeting if (i) as of the date of such meeting there are insufficient shares of Tandem Common Stock, as applicable, represented (either in person or by proxy) to constitute the quorum necessary to conduct the business of such meeting, (ii) as of the date of such meeting Tandem has not received proxies representing a sufficient number of shares necessary for the approval of this Agreement by the shareholders of Tandem, or (iii) required by applicable law in order to ensure that any required supplement or amendment to the Proxy Statement Tandem was required to provide to its shareholders by applicable law is provided to the shareholders of Tandem a reasonable amount of time prior to such meeting; provided that, the foregoing shall not restrict in any way each of the Board of Directors of Tandem from making a Recommendation Change permitted by this Section 6.5 and disclosing such Recommendation Change and the basis and reasons therefor.
6.6 Legal Conditions to Merger. Subject in all respects to Section 6.1 and Section 6.5(c) of this Agreement, each of GBC and Tandem shall, and shall cause its Subsidiaries to, use their reasonable best efforts (a) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements that may be imposed on such party or its Subsidiaries with respect to the Merger and the Bank Merger and, subject to the conditions set forth in Article VII hereof, to consummate the transactions contemplated by this Agreement and (b) to obtain (and to cooperate with the other party to obtain) any material consent, authorization, order or approval of, or any exemption by, any Governmental Entity and any other third party that is required to be obtained by Tandem or GBC or any of their respective Subsidiaries in connection with the Merger, the Bank Merger and the other transactions contemplated by this Agreement.
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6.7 Employee Matters.
(a) From the Effective Time through the twelve (12) month anniversary of the Effective Time, or, if earlier, their termination of employment or other service, GBC shall provide to employees of Tandem and its Subsidiaries who at the Effective Time become employees of the Surviving Entity or its Subsidiaries (the “Continuing Employees”) the base salary or base wage that is no less favorable than that paid to similarly situated employees of GBC and its Subsidiaries and employee benefits that are no less favorable in the aggregate than those generally made available to similarly situated employees of GBC and its Subsidiaries; provided that for purposes of this Section 6.7(a), “employee benefits” shall exclude equity and equity-based compensation, long-term incentives, change in control or retention bonuses or benefits, defined benefit pension benefits, nonqualified deferred compensation, retiree medical benefits and severance benefits (it being understood that the Surviving Entity shall honor contractual obligations in effect as of the date hereof with respect to (x) the “employee benefits” referred to in this Section 6.7(a) pursuant to Tandem Benefit Plans listed on Section 6.7(a) of the Tandem Disclosure Schedule, subject to prospective changes permitted by the terms of the applicable Tandem Benefit Plan and applicable law, (y) for senior officers subject to a change of control agreement as of the date of this Agreement, the severance benefits provided under such agreement; provided that the severance benefits shall be subject to 280G of the Code and any cut-backs set forth in any such agreement required to avoid characterizing any such severance benefits as “excess parachute payments” within the meaning of Section 280G of the Code, to the extent applicable, and (z) for employees not subject to a change of control agreement or other severance arrangement or plan, severance benefits equal to two (2) weeks’ pay per year of service, with a minimum of four (4) weeks and a maximum of twenty-six (26) weeks, payable in normal payroll installments (no less frequently than monthly) beginning with the payroll period immediately following any termination of employment).
(b) For purposes of GBC employee benefit plans eligibility, participation, vesting and, solely for purposes of paid time off or vacation benefits, benefit accrual (except not for any other purpose or under any defined benefit pension plan, nonqualified deferred compensation plan, retiree medical plan or any frozen plan or to the extent that such credit would result in a duplication of benefits) under the GBC employee benefit plans in which the Continuing Employee is eligible to participate, service with or credited by Tandem or any of its Subsidiaries for such Continuing Employees shall be treated as service with the Surviving Entity to the same extent that such service was taken into account under the analogous Tandem Benefit Plan prior to the Effective Time. With respect to any GBC employee benefit plan that constitutes a “group health plan” within the meaning of Section 5000(b)(1) of the Code and in which any Continuing Employees first become eligible to participate at or following the Effective Time, and in which such Continuing Employees did not participate prior to the Effective Time, GBC shall use commercially reasonable efforts to (or to cause its Subsidiary to): (A) waive all preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to such employees and their eligible dependents, to the extent such pre-existing conditions, exclusions or waiting periods did not apply under the analogous Tandem Benefit Plan, as the case may be, and (B) provide each Continuing Employee and his or her eligible dependents with credit for any co-payments and deductibles paid prior to the Effective Time under the analogous Tandem Benefit Plan (to the same extent that such credit was given under the analogous Tandem Benefit Plan) and during the applicable plan year for the GBC employee benefit plan in satisfying any applicable deductible or out-of-pocket requirements under any such GBC employee benefit plan in which such Continuing Employee first becomes eligible to participate at or following the Effective Time, in each case, subject to any requirements or limitation imposed by the administrative service providers and insurers with respect to the applicable GBC employee benefit plan and GBC receiving all applicable information as reasonably requested by GBC, including information regarding pre-Closing co-payments and deductibles from Tandem or the applicable Continuing Employee or dependent.
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(c) If requested by GBC in writing delivered to Tandem not less than twenty (20) business days before the Closing Date, the Board of Directors of Tandem (or the appropriate committee or officers thereof) shall adopt resolutions and take such corporate action as is necessary or appropriate to terminate the Tandem 401(k) Plan (the “Tandem 401(k) Plan”), effective as of the day prior to the Closing Date and contingent upon the occurrence of the Effective Time. If GBC requests that the Tandem 401(k) Plan be terminated, (i) Tandem shall provide GBC with evidence that such plan has been terminated (the form and substance of which shall be subject to reasonable review and comment by GBC in advance of any such action) not later than two (2) days immediately preceding the Closing Date, and (ii) the Continuing Employees shall be eligible to participate, effective as of the Effective Time, in a 401(k) plan sponsored or maintained by GBC, the Surviving Entity or one of their Subsidiaries (the “GBC 401(k) Plan”) in accordance with the terms of such plan, it being agreed that there shall be no gap in participation in a tax-qualified defined contribution plan. GBC and Tandem shall take any and all actions as may be reasonably required, including amendments to the Tandem 401(k) Plan and/or the GBC 401(k) Plan, to permit the Continuing Employees to make rollover contributions to the GBC 401(k) Plan of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code) in the form of cash, notes (in the case of loans) or a combination thereof in an amount equal to the full account balance distributed to such employee from the Tandem 401(k) Plan. Notwithstanding the foregoing, Tandem may continue to accrue its employer contributions to such 401(k) plan on an ongoing basis consistent with ordinary business practices, shall make the employer contributions provided by the plan for the portion of the 2026 plan year through the plan’s termination prior to Closing based on year-to-date deferrals and compensation, and any service requirements required for allocation of such contribution shall be adjusted accordingly to reflect the partial plan year prior to Closing.
(d) GBC shall take such actions as are reasonably necessary to assume the plans under which the Tandem Options were issued as of the Effective Time and to issue Rollover Options and Rollover Warrants as described in Sections 2.3 and 2.4.
(e) Nothing in this Agreement shall confer upon any employee, officer, director or consultant of GBC or Tandem or any of their Subsidiaries or affiliates any right to continue in the employ or service of the Surviving Entity, Tandem, GBC or any Subsidiary or affiliate thereof, or shall interfere with or restrict in any way the rights of the Surviving Entity, Tandem, GBC or any Subsidiary or affiliate thereof to discharge or terminate the services of any employee, officer, director or consultant of GBC or Tandem or any of their Subsidiaries or affiliates at any time for any reason whatsoever, with or without cause. Nothing in this Agreement shall be deemed to (i) establish, amend, or modify any Tandem Benefit Plan or GBC employee benefit plan or any other benefit or employment plan, program, agreement or arrangement, or (ii) alter or limit the ability of the Surviving Entity or any of its Subsidiaries or affiliates to amend, modify or terminate any particular Tandem Benefit Plan or GBC employee benefit plan or any other benefit or employment plan, program, agreement or arrangement after the Effective Time. Without limiting the generality of Section 9.12, nothing in this Agreement, express or implied, is intended to or shall confer upon any person, including any current or former employee, officer, director or consultant of GBC or Tandem or any of their Subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
6.8 Indemnification; Directors’ and Officers’ Insurance.
(a) From and after the Effective Time, the Surviving Entity shall indemnify and hold harmless and shall advance expenses as incurred, in each case, to the fullest extent permitted by applicable law, the Tandem Articles, the Tandem Bylaws and the governing or organizational documents of any Tandem Subsidiary, each present and former director, officer or employee of Tandem and its Subsidiaries (in each case, when acting in such capacity) (collectively, the “Tandem Indemnified Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, damages or liabilities incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, whether arising before or after the Effective Time, arising out of, or pertaining to, the fact that such person is or was a director, officer or employee of Tandem or any of its Subsidiaries and pertaining to matters, acts or omissions existing or occurring at or prior to the Effective Time, including matters, acts or omissions occurring in connection with the approval of this Agreement and the transactions contemplated by this Agreement; provided, that in the case of advancement of expenses, any Tandem Indemnified Party to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such Tandem Indemnified Party is not entitled to indemnification. The Surviving Entity shall reasonably cooperate with the Tandem Indemnified Parties, and the Tandem Indemnified Parties shall reasonably cooperate with the Surviving Entity, in the defense of any such claim, action, suit, proceeding or investigation. Without limiting the indemnification and other rights provided in this clause (a), all rights to indemnification and all limitations on liability existing in favor of the Tandem Indemnified Parties as provided in any indemnification agreement in existence on the date of this Agreement and set forth on Section 6.8 of the Tandem Disclosure Schedule shall survive the Merger and shall continue in full force and effect to the fullest extent permitted by law, and shall be honored by the Surviving Entity and its Subsidiaries or their respective successors as if they were the indemnifying party thereunder, without any amendment thereto.
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(b) For a period of six (6) years after the Effective Time, the Surviving Entity shall cause to be maintained in effect the current policies of directors’ and officers’ liability insurance maintained by Tandem (provided, that the Surviving Entity may substitute therefor policies with a substantially comparable insurer of at least the same coverage and amounts containing terms and conditions that are no less advantageous to the insured) with respect to claims against the present and former officers and directors of Tandem or any of its Subsidiaries arising from facts or events which occurred at or before the Effective Time (including the approval of this Agreement and the transactions contemplated by this Agreement); provided, however, that the Surviving Entity shall not be obligated to expend, on an annual basis, an amount in excess of 300% of the current annual premium paid as of the date hereof by Tandem for such insurance (the “Premium Cap”), and if such premiums for such insurance would at any time exceed the Premium Cap, then the Surviving Entity shall cause to be maintained policies of insurance which, in the Surviving Entity’s good faith determination, provide the maximum coverage available at an annual premium equal to the Premium Cap. In lieu of the foregoing, GBC or Tandem, in consultation with, but only upon the consent, of GBC, may (and at the request of GBC, Tandem shall use its reasonable best efforts to) obtain at or prior to the Effective Time a six (6)-year “tail” policy under Tandem’ existing directors’ and officers’ insurance policy providing equivalent coverage to that described in the preceding sentence if and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the Premium Cap.
(c) The obligations of the Surviving Entity, GBC or Tandem under this Section 6.8 shall not be terminated or modified after the Effective Time in a manner so as to adversely affect any Tandem Indemnified Party or any other person entitled to the benefit of this Section 6.8 without the prior written consent of the affected Tandem Indemnified Party or affected person.
(d) The provisions of this Section 6.8 shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Tandem Indemnified Party and his or her heirs and representatives. If the Surviving Entity or any of its successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving entity of such consolidation or merger, or (ii) transfers all or substantially all of its assets or deposits to any other person or engages in any similar transaction, then in each such case, the Surviving Entity will cause proper provision to be made so that the successors and assigns of the Surviving Entity will expressly assume the obligations set forth in this Section 6.8.
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6.9 Additional Agreements. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement (including any merger between a Subsidiary of GBC, on the one hand, and a Subsidiary of Tandem, on the other hand) or to vest the Surviving Entity with full title to all properties, assets, rights, approvals, immunities and franchises of any of the parties to the Merger or the Bank Merger, the proper officers and directors of each party to this Agreement and their respective Subsidiaries shall take all such necessary action as may be reasonably requested by GBC.
6.10 Advice of Changes. GBC and Tandem shall each promptly advise the other party of any effect, change, event, circumstance, condition, occurrence or development (i) that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on such first party, or (ii) that such first party believes would or would reasonably be expected to cause or constitute a material breach of any of its representations, warranties, obligations, covenants or agreements contained in this Agreement that reasonably could be expected to give rise, individually or in the aggregate, to the failure of a condition in Article VII; provided, that any failure to give notice in accordance with the foregoing with respect to any breach shall not be deemed to constitute a violation of this Section 6.10 or the failure of any condition set forth in Section 7.2 or 7.3 to be satisfied, or otherwise constitute a breach of this Agreement by the party failing to give such notice, in each case, unless the underlying breach would independently result in a failure of the conditions set forth in Section 7.2 or 7.3 to be satisfied; and provided, further, that the delivery of any notice pursuant to this Section 6.10 shall not cure any breach of, or noncompliance with, any other provision of this Agreement or limit the remedies available to the party receiving such notice.
6.11 Shareholder Litigation. Each party shall give the other party prompt notice of any shareholder litigation against such party or its directors or officers relating to the transactions contemplated by this Agreement. Tandem shall (i) give GBC the opportunity to participate (at GBC’s expense) in the defense or settlement of any such litigation, (ii) give GBC a reasonable opportunity to review and comment on all filings or responses to be made by Tandem in connection with any such litigation, and will in good faith take such comments into account and (iii) not agree to settle any such litigation without GBC’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that the other party shall not be obligated to consent to any settlement which does not include a full release of such other party and its affiliates or which imposes an injunction or other equitable relief after the Effective Time upon the Surviving Entity or any of its affiliates.
6.12 Corporate Governance. Prior to the Effective Time, the Board of Directors of GBC shall take all actions necessary to cause the Board of Directors of GBC to be increased by one and shall appoint one individual from the Tandem board of directors immediately prior to the Effective Time designated by Tandem and reasonably acceptable to the GBC Board of Directors to serve as a director of the Surviving Entity as of the Effective Time (the Tandem director being appointed hereunder, the “Tandem Continuing Director”). The Board of Directors of the Surviving Entity (or the appropriate committee thereof) shall cause the Tandem Continuing Director to be nominated for election at (a) the 2026 annual meeting of shareholders of the Surviving Entity, if such meeting occurs subsequent to the Effective Time, and (b) the 2027 annual meeting of shareholders of the Surviving Entity.
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6.13 Acquisition Proposals. Tandem will, and will use reasonable best efforts to cause its Representatives to, immediately cease and cause to be terminated any activities, discussions or negotiations conducted before the date of this Agreement with any person other than GBC with respect to any Acquisition Proposal. Tandem agrees that it will not, and will cause each of its Subsidiaries not to, and use its reasonable best efforts to cause its and their respective officers, directors, employees, agents, advisors and representatives (collectively, “Representatives”) not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or knowingly facilitate any inquiries or proposals with respect to any Acquisition Proposal, (ii) engage or participate in any negotiations with any person concerning any Acquisition Proposal, (iii) provide any confidential or nonpublic information or data to, or have or participate in any discussions with, any person relating to any Acquisition Proposal (except to (x) notify a person that has made or, to the knowledge of such party, is making any inquiries with respect to, or is considering making, an Acquisition Proposal, of the existence of the provisions of this Section 6.13, and (y) to seek and obtain legal or financial advice from Tandem’ outside counsel and outside financial advisors), or (iv) unless this Agreement has been terminated in accordance with its terms, approve or enter into any term sheet, letter of intent, commitment, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other similar agreement (whether written or oral, binding or nonbinding) (other than an Acceptable Confidentiality Agreement entered into in accordance with this Section 6.13) in connection with or relating to any Acquisition Proposal. Notwithstanding the foregoing, in the event that after the date of this Agreement and prior to the receipt of the Requisite Tandem Vote, Tandem receives an unsolicited bona fide written Acquisition Proposal, Tandem may, and may permit its Subsidiaries and its and its Subsidiaries’ Representatives to, furnish or cause to be furnished confidential or nonpublic information or data and participate in such negotiations or discussions with the person making the Acquisition Proposal if the Board of Directors of Tandem concludes in good faith (after receiving the advice of outside counsel and, with respect to financial matters, its outside financial advisors) that failure to take such actions would be more likely than not to be inconsistent with its fiduciary duties under applicable law; provided, that, prior to furnishing any confidential or nonpublic information permitted to be provided pursuant to this sentence, Tandem shall have provided such information to GBC and shall have entered into a confidentiality agreement with the person making such Acquisition Proposal on terms no less favorable to Tandem than the Non-Disclosure Agreement (“Acceptable Confidentiality Agreement”), which confidentiality agreement shall not provide such person with any exclusive right to negotiate with Tandem. Tandem will promptly (and, in any event, within one business day after receipt) advise GBC following receipt of any Acquisition Proposal or any inquiry which could reasonably be expected to lead to an Acquisition Proposal and the substance thereof (including the material terms and conditions of and the identity of the person making such inquiry or Acquisition Proposal), and will keep GBC apprised of any related developments, discussions and negotiations on a current basis, including any amendments to or revisions of the terms of such inquiry or Acquisition Proposal. Tandem shall use its reasonable best efforts to enforce any existing confidentiality or standstill agreements to which it or any of its Subsidiaries is a party in accordance with the terms thereof. It is agreed that any violation of the restrictions on Tandem set forth in this Section 6.13 (other than any violation that is unintentional or immaterial) by any officer, director, employee, consultant, advisor or other representative of Tandem or any of its Subsidiaries, in each case acting on behalf of Tandem or any of its Subsidiaries, shall be a breach of this Section 6.13 by Tandem.
6.14 Public Announcements. Tandem and GBC agree that the initial press release with respect to the execution and delivery of this Agreement shall be a release mutually agreed to by the parties. Thereafter and prior to the Effective Time, each of the parties agrees that no public release concerning this Agreement or the transactions contemplated hereby shall be issued by any party without the prior written consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), except (i) as required by applicable law or the rules or regulations of any applicable Governmental Entity or stock exchange to which the relevant party is subject, in which case the party required to make the release or announcement shall consult with the other party about, and allow the other party reasonable time to comment on, such release or announcement in advance of such issuance, or (ii) for such releases or announcements that are consistent with other such releases or announcement made after the date of this Agreement in compliance with this Section 6.14. It is understood that GBC shall assume Tandem responsibility for the preparation of joint press releases relating to this Agreement, the Merger and the other transactions contemplated hereby.
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6.15 Takeover Statutes. Neither Tandem nor its Board of Directors shall take any action that would cause any Takeover Statute to become applicable to this Agreement, the Merger, or any of the other transactions contemplated hereby, and each shall take all necessary steps to exempt (or ensure the continued exemption of) the Merger and the other transactions contemplated hereby from any applicable Takeover Statute now or hereafter in effect. If any Takeover Statute may become, or may purport to be, applicable to the transactions contemplated hereby, each party and the members of their respective Boards of Directors will grant such approvals and take such actions as are necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the transactions contemplated by this Agreement, including, if necessary, challenging the validity or applicability of any such Takeover Statute.
6.16 Certain Tax Matters. Each of Tandem and GBC shall use its reasonable best efforts to cause the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Each of Tandem and GBC will, and will cause their respective Affiliates to, maintain all books and records and file all federal, state, and local income Tax Returns and schedules thereto in a manner consistent with the Merger’s qualification as a reorganization under Section 368(a)(1)(A) of the Code (and comparable provisions of any applicable state or local law). Each of Tandem and GBC shall use its reasonable best efforts and shall cooperate with one another to obtain the opinion of counsel referred to in Section 7.2(d) and Section 7.3(d). In connection with the foregoing, (a) Tandem shall deliver to the counsel that is delivering the opinion referred to in Section 7.2(d) and Section 7.3(d) a duly executed letter of representations customary for transactions of this type and reasonably satisfactory to either such counsel (the “Tandem Tax Certificate”), and (b) GBC shall deliver to the counsel that is delivering the opinion referred to in Section 7.2(d) and Section 7.3(d) a duly executed letter of representations customary for transactions of this type and reasonably satisfactory to either such counsel (the “GBC Tax Certificate”), in the case of each of clauses (a) and (b), at such times as either such counsel shall reasonably request.
Article VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligations of the parties to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. The Requisite Tandem Vote shall have been obtained.
(b) Regulatory Approvals. (i) All Requisite Regulatory Approvals shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated and (ii) no such Requisite Regulatory Approval shall have resulted in the imposition of any Materially Burdensome Regulatory Condition.
(c) No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger, the Bank Merger or any of the other transactions contemplated by this Agreement shall be in effect. No law, statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits or makes illegal consummation of the Merger, the Bank Merger or any of the other transactions contemplated by this Agreement.
(d) Fairness Order. The Fairness Order shall have been obtained and shall remain in full force and effect.
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(e) Employee Arrangements. GBC shall have entered into the employee arrangements described in Section 7.1(e) of the Tandem Disclosure Schedule and such arrangements shall become effective as of the Effective Time.
7.2 Conditions to Obligations of GBC. The obligation of GBC to effect the Merger is also subject to the satisfaction, or waiver by GBC, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and warranties of Tandem set forth in Section 3.2(a) and Section 3.8(a) (in each case, after giving effect to the lead-in to Article III) shall be true and correct (other than, in the case of Section 3.2(a), such failures to be true and correct as are de minimis), in each case, as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), and the representations and warranties of Tandem set forth in Section 3.1(a), Section 3.1(b) (but only with respect to Tandem Bank), Section 3.3(a), Section 3.3(b)(i) and Section 3.7 (read, in each case, without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article III) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date). All other representations and warranties of Tandem set forth in this Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article III) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date); provided, however, that for purposes of this sentence, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, either individually or in the aggregate, and without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, has had or would reasonably be expected to have a Material Adverse Effect on Tandem or the Surviving Entity. GBC shall have received a certificate dated as of the Closing Date and signed on behalf of Tandem by the Chief Executive Officer or the Chief Financial Officer of Tandem to the foregoing effect.
(b) Performance of Obligations of Tandem. Tandem shall have performed in all material respects the obligations, covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, and GBC shall have received a certificate dated as of the Closing Date and signed on behalf of Tandem by the Chief Executive Officer or the Chief Financial Officer of Tandem to such effect.
(c) Material Adverse Effect. There shall not have been any Material Adverse Effect with respect to Tandem between the date hereof and the Closing Date.
(d) Tangible Book Value. Tandem’s tangible book value, excluding any one-time costs and expenses incurred in connection with this Agreement and the transactions contemplated by it, as of the Measurement Date shall be at least $25,000,000. For purposes of this Section 7.2(d), “Measurement Date” means (i) if the Closing Date occurs after the 15th day of a month, the close of business for the month which immediately precedes the month in which the Closing Date occurs, or (ii) if the Closing Date occurs on or before the 15th day of a month, the close of business for the month which is two months prior to the month in which the Closing Date occurs.
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(e) Federal Tax Opinion. GBC shall have received the opinion from Troutman Pepper Locke LLP, in form and substance reasonably satisfactory to GBC, dated as of the Closing Date, to the effect that, on the basis of facts, representations, and assumptions set froth or referred to in such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon representations contained in the GBC Tax Certificate and the Tandem Tax Certificate.
7.3 Conditions to Obligations of Tandem. The obligation of Tandem to effect the Merger is also subject to the satisfaction, or waiver by Tandem, at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of GBC set forth in Section 4.2(a) (in each case, after giving effect to the lead-in to Article IV) shall be true and correct (other than, in the case of Section 4.2(a), such failures to be true and correct as are de minimis), in each case, as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), and the representations and warranties of GBC set forth in Section 4.1(a), Section 4.1(b) (but only with respect to GBC Bank), Section 4.2(b) (but only with respect to GBC Bank), Section 4.3(a); Section 4.3(b)(i) and Section 4.7 (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article IV) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date). All other representations and warranties of GBC set forth in this Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the lead-in to Article IV) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case as of such earlier date), provided, however, that for purposes of this sentence, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, either individually or in the aggregate, and without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, has had or would reasonably be expected to have a Material Adverse Effect on GBC. Tandem shall have received a certificate dated as of the Closing Date and signed on behalf of GBC by the Chief Executive Officer or the Chief Financial Officer of GBC to the foregoing effect.
(b) Performance of Obligations of GBC. GBC shall have performed in all material respects the obligations, covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, and Tandem shall have received a certificate dated as of the Closing Date and signed on behalf of GBC by the Chief Executive Officer or the Chief Financial Officer of GBC to such effect.
(c) Material Adverse Effect. There shall not have been any Material Adverse Effect with respect to GBC between the date hereof and the Closing Date.
(d) Federal Tax Opinion. Tandem shall have received the opinion from Nelson Mullins Riley & Scarborough LLP, in form and substance reasonably satisfactory to Tandem, dated as of the Closing Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon representations contained in the GBC Tax Certificate and the Tandem Tax Certificate.
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Article VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of the Requisite Tandem Vote (except in the case of Section 8.1(e) and Section 8.1(f)):
(a) by mutual written consent of GBC and Tandem;
(b) by either GBC or Tandem if any Governmental Entity that must grant a Requisite Regulatory Approval has denied approval of the Merger or the Bank Merger and such denial has become final and nonappealable or any Governmental Entity of competent jurisdiction shall have issued a final and nonappealable order, injunction, decree or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the consummation of the Merger or the Bank Merger, unless the failure to obtain a Requisite Regulatory Approval shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the obligations, covenants and agreements of such party set forth herein;
(c) by either GBC or Tandem if the Merger shall not have been consummated on or before the twelve (12) month anniversary of the date of this Agreement (the “Termination Date”), unless the failure of the Closing to occur by such date shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the obligations, covenants and agreements of such party set forth herein;
(d) by either GBC or Tandem (provided, that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained herein) if there shall have been a breach of any of the obligations, covenants or agreements or any of the representations or warranties (or any such representation or warranty shall cease to be true) set forth in this Agreement on the part of Tandem, in the case of a termination by GBC, or GBC, in the case of a termination by Tandem, which breach or failure to be true, either individually or in the aggregate with all other breaches by such party (or failures of such representations or warranties to be true), would constitute, if occurring or continuing on the Closing Date, the failure of a condition set forth in Section 7.2, in the case of a termination by GBC, or Section 7.3, in the case of a termination by Tandem, and which is not cured within thirty (30) days following written notice to Tandem, in the case of a termination by GBC, or GBC, in the case of a termination by Tandem, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the Termination Date);
(e) by either GBC or Tandem, at any time prior to or on the Closing Date, if, after the date hereof, there shall have occurred and be continuing any events or occurrences that, individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect on Tandem, in the case of a termination by GBC, or on GBC, in the case of a termination by Tandem;
(f) by GBC, prior to such time that the Requisite Tandem Vote is obtained, if (i) Tandem or the Board of Directors of Tandem shall have made a Recommendation Change, or (ii) Tandem or the Board of Directors of Tandem shall have committed a Willful and Material Breach (as defined below) of its obligations under Section 6.5 or 6.13;
(g) by either Tandem or GBC, if the Requisite Tandem Vote shall not have been obtained upon a vote thereon taken at the Tandem Meeting (including any adjournment or postponement thereof); or
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(h) by Tandem in order to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal if, prior to the time the Requisite Tandem Vote is obtained, the Board of Directors of Tandem authorizes Tandem to enter into an Alternative Acquisition Agreement in response to a Superior Proposal, to the extent permitted by and in accordance with Section 6.5(c); provided that concurrently with such termination, Tandem pays, or causes to be paid, to GBC, in immediately available funds the Termination Fee pursuant to Section 8.2.
8.2 Effect of Termination.
(a) In the event of termination of this Agreement by either GBC or Tandem as provided in Section 8.1, this Agreement shall forthwith become void and have no effect, and none of GBC, Tandem, any of their respective Subsidiaries or any of the officers or directors of any of them shall have any liability of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except that (i) Section 6.2(b) (Access to Information; Confidentiality), Section 6.14 (Public Announcements), this Section 8.2 and Article IX (other than Section 9.13) shall survive any termination of this Agreement, and (ii) notwithstanding anything to the contrary contained in this Agreement, neither GBC nor Tandem shall be relieved or released from any liabilities or damages arising out of its actual and intentional common law fraud in such party’s making of its representations and warranties set forth in this Agreement (“Fraud”) or its willful and material breach of any provision of this Agreement.
(b) In the event that after the date of this Agreement and prior to the termination of this Agreement, a bona fide Acquisition Proposal shall have been communicated to or otherwise made known to the Board of Directors or senior management of Tandem or shall have been made directly to the shareholders of Tandem or any person shall have publicly announced (and not withdrawn at least two (2) business days prior to the Tandem Meeting) an Acquisition Proposal, in each case, with respect to Tandem, and (A)(x) thereafter this Agreement is terminated by either GBC or Tandem pursuant to Section 8.1(c) without the Requisite Tandem Vote having been obtained (and all other conditions set forth in Section 7.1 and Section 7.3 were satisfied or were capable of being satisfied prior to such termination), (y) thereafter this Agreement is terminated by GBC pursuant to Section 8.1(d) as a result of a Willful and Material Breach or (z) thereafter this Agreement is terminated by GBC or Tandem pursuant to Section 8.1(g) and (B) prior to the date that is twelve (12) months after the date of such termination, Tandem enters into a definitive agreement or consummates a transaction with respect to an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred to above), then Tandem shall, on the earlier of the date it enters into such definitive agreement and the date of consummation of such transaction, pay GBC, by wire transfer of same-day funds, a fee equal to $1,600,000 (the “Termination Fee”); provided, that for purposes of this Section 8.2(b), all references in the definition of Acquisition Proposal to “twenty-five percent (25%)” shall instead refer to “fifty percent (50%).”
(c) In the event that this Agreement is terminated by GBC pursuant to Section 8.1(f) then Tandem shall pay GBC, by wire transfer of same-day funds, the Termination Fee within two (2) business days of the date of termination.
(d) In the event that this Agreement is terminated by Tandem pursuant to Section 8.1(h), then Tandem shall pay GBC, by wire transfer of same-day funds, the Termination Fee concurrently with such termination.
(e) Notwithstanding anything to the contrary in this Agreement, but without limiting the right of any party to recover liabilities or damages arising out of the other party’s Fraud or Willful and Material Breach (as defined above) of any provision of this Agreement, in no event shall either party be required to pay the Termination Fee more than once.
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(f) Each of GBC and Tandem acknowledges that the agreements contained in this Section 8.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the other party would not enter into this Agreement; accordingly, if Tandem or GBC fails promptly to pay the amount due pursuant to this Section 8.2, and, in order to obtain such payment, the other party commences a suit which results in a judgment against the non-paying party for the Termination Fee or any portion thereof, such non-paying party shall pay the costs and expenses of the other party (including attorneys’ fees and expenses) in connection with such suit. In addition, if Tandem or GBC fails to pay the amounts payable pursuant to this Section 8.2, then such party shall pay interest on such overdue amounts at a rate per annum equal to the “prime rate” published in the Wall Street Journal on the date on which such payment was required to be made for the period commencing as of the date that such overdue amount was originally required to be paid and ending on the date that such overdue amount is actually paid in full. The amounts payable by Tandem pursuant to Section 8.1(g), Section 8.2(b) and Section 8.2(c), respectively, and this Section 8.2(f), constitute liquidated damages and not a penalty, and, except in the case of Fraud or Willful and Material Breach (as defined above), shall be the sole monetary remedy of GBC in the event of a termination of this Agreement specified in such applicable section.
Article IX
GENERAL PROVISIONS
9.1 Definitions. Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:
“Acquisition Proposal” shall mean, other than the transactions contemplated by this Agreement, any offer, proposal or inquiry relating to, or any third-party indication of interest in, (i) any acquisition or purchase, direct or indirect, of twenty-five percent (25%) or more of the consolidated assets of Tandem and its Subsidiaries or twenty-five percent (25%) or more of any class of equity or voting securities of Tandem or its Subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of Tandem, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such third party beneficially owning twenty-five percent (25%) or more of any class of equity or voting securities of Tandem or its Subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of Tandem, or (iii) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving Tandem or its Subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of Tandem.
“Cash Election Threshold” means a number of shares of Tandem Common Stock equal to the product of (i) the total number of shares of Tandem Common Stock issued and outstanding as of the Election Deadline and (ii) 0.25, rounded down to the nearest whole number.
“Election Deadline” shall mean 5:00 p.m., Eastern time, on the later of (i) the date of the Tandem Meeting and (ii) the date that GBC and Tandem shall agree is as near as practicable to three (3) Business Days prior to the expected Closing Date.
“Material Adverse Effect” means, with respect to GBC, Tandem or the Surviving Entity, as the case may be, any effect, change, event, circumstance, condition, occurrence or development that, either individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (i) the business, properties, assets, liabilities, results of operations or financial condition of such party and its Subsidiaries taken as a whole (provided, however, that, with respect to this clause (i), Material Adverse Effect shall not be deemed to include the impact of (A) changes, after the date hereof, in U.S. generally accepted accounting principles (“GAAP”) or applicable regulatory accounting requirements), (B) changes, after the date hereof, in laws, rules or regulations of general applicability to companies in the industries in which such party and its Subsidiaries operate, or interpretations thereof by courts or Governmental Entities (as defined below), (C) changes, after the date hereof, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to such party or its Subsidiaries, (D) changes, after the date hereof, resulting from hurricanes, earthquakes, tornados, naturally-occurring floods or other natural disasters or from any outbreak of any disease or other public health event (including epidemics or pandemics), or (E) public disclosure of the execution of this Agreement, public disclosure or consummation of the transactions contemplated hereby (including any effect on a party’s relationships with its customers or employees) (it being understood that the foregoing shall not apply for purposes of the representations and warranties in Sections 3.3(b), 3.4, 4.3(b) or 4.4) or actions expressly required by this Agreement or that are taken with the prior written consent of the other party in contemplation of the transactions contemplated hereby (it being understood that this Clause (E) shall not apply to a breach of any representation or warranty related to the announcement, pendency or consummation of the transactions contemplated hereby); except, (i) with respect to subclauses (A), (B), (C), or (D) to the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of such party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its Subsidiaries operate, or (ii) the ability of such party to timely consummate the transactions contemplated hereby.
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“Merger Consideration” means the sum of (i) the aggregate Per Share Merger Consideration and (ii) the aggregate Fractional Share Cash-in-Lieu Amounts.
“Per Share Cash Consideration” means cash in the amount of $14.40.
“Per Share Merger Consideration” means either the Per Share Cash Consideration or the Per Share Stock Consideration that a share of Tandem Common Stock is entitled to receive pursuant to the terms and subject to the conditions of this Agreement.
“Per Share Stock Consideration” means 0.4800 fully paid and nonassessable share of GBC Common Stock.
“Proxy Statement” means the proxy statement and prospectus and other proxy solicitation materials of Tandem relating to the Tandem Meeting.
“Requisite Regulatory Approvals” shall mean all regulatory authorizations, consents, waivers, orders and approvals (and the expiration or termination of all statutory waiting periods in respect thereof) (i) from the FDIC, the DBF and the Federal Reserve (in respect of the Merger or the Bank Merger) or (ii) referred to in Section 3.4 or Section 4.4 that are necessary to consummate the transactions contemplated by this Agreement (including the Merger and the Bank Merger), except, in the case of this clause (ii), for the Fairness Determination and any such authorizations, consents, waivers, orders or approvals the failure of which to be obtained would not be material to the Surviving Entity.
“Subsidiary” means any subsidiary of such person as defined in the BHC Act.
“Superior Proposal” shall mean any bona fide written Acquisition Proposal which the board of directors of Tandem determines, in good faith, after taking into account all legal, financial, regulatory, and other aspects of such proposal (including the amount, form, and timing of payment of consideration, the financing thereof, any associated break-up or termination fees, including those provided for in this Agreement, expense reimbursement provisions, and all conditions to consummation) and the person making the proposal, and after consulting with its outside financial advisor and outside legal counsel, is (i) more favorable from a financial point of view to Tandem’ shareholders than the transactions contemplated by this Agreement (taking into account any proposal by GBC to amend the terms of this Agreement pursuant to Section 6.5(c)) and (ii) reasonably likely to be timely consummated on the terms set forth; provided, however, that for purposes of this definition of Superior Proposal, references to “twenty-five percent (25%)” in the definition of Acquisition Proposal shall be deemed to be references to “fifty percent (50%).”
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“Tax” or “Taxes” means all federal, state, local, and foreign income, excise, gross receipts, ad valorem, profits, gains, property, capital, sales, transfer, use, license, payroll, employment, social security, severance, unemployment, withholding, duties, windfall profits, intangibles, franchise, backup withholding, value added, alternative or add-on minimum, escheat, unclaimed property, estimated and other taxes, charges, levies or like assessments, in each case, in the nature of a Tax and imposed by a Governmental Entity with jurisdiction over Taxes, together with all penalties and additions to tax and interest thereon.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, supplied or required to be supplied to a Governmental Entity.
“Willful and Material Breach” shall mean a material breach of, or material failure to perform any of the covenants or other agreements contained in, this Agreement that is a consequence of an act or failure to act by the breaching or non-performing party with actual knowledge that such party’s act or failure to act would, or would reasonably be expected to, result in or constitute such breach of or such failure of performance under this Agreement.
9.2 Amendment. Subject to compliance with applicable law, this Agreement may be amended by the parties hereto at any time before or after the receipt of the Requisite Tandem Vote; provided, however, that after the receipt of the Requisite Tandem Vote, there may not be, without further approval of the shareholders of Tandem any amendment of this Agreement that requires such further approval under applicable law. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed on behalf of each of the parties hereto.
9.3 Extension; Waiver. At any time prior to the Effective Time, each of the parties hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained in this Agreement or in any document delivered by such other party pursuant hereto, and (c) waive compliance with any of the agreements or satisfaction of any conditions for its benefit contained in this Agreement; provided, however, that after the receipt of the Requisite Tandem Vote, there may not be, without further approval of the shareholders of Tandem any extension or waiver of this Agreement or any portion thereof that requires such further approval under applicable law. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
9.4 Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties, obligations, covenants and agreements in this Agreement (or in any certificate delivered pursuant to this Agreement) shall survive the Effective Time, except for Sections 6.8 and 6.12 and for those other obligations, covenants and agreements contained in this Agreement which by their terms apply in whole or in part after the Effective Time.
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9.5 Expenses. Except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense.
9.6 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by e-mail transmission (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
(a) if to Tandem, to:
Tandem Bancorp, Inc.
2356 Main St
Tucker, GA 30084
Attention: Charles DeWitt
Email: [***]
With a copy (which shall not constitute notice) to:
Nelson Mullins Riley & Scarborough LLP
201 17th Street NW, Suite 1700
Atlanta, GA 30363
Attention: Brennan Ryan
Email: [***]
and
(b) if to GBC, to:
Georgia Banking Company, Inc.
1776 Peachtree Street NW, Suite 300
Atlanta, Georgia 30309
Attention: Bartow Morgan, Jr., Chief Executive Officer
Email: [***]
With a copy (which shall not constitute notice) to each of:
Troutman Pepper Locke LLP
600 Peachtree Street, N.E., Suite 3000
Atlanta, Georgia 30308
Attention: James W. Stevens
Email: [***]
9.7 Interpretation. The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The word “or” shall not be exclusive. References to “the date hereof” shall mean the date of this Agreement. As used in this Agreement, the “knowledge” of Tandem means the actual knowledge of any of the officers of Tandem listed on Section 9.7 of the Tandem Disclosure Schedule, and the “knowledge” of GBC means the actual knowledge of any of the officers of GBC listed on Section 9.7 of the GBC Disclosure Schedule. As used in this Agreement, (i) the term “person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature, (ii) an “affiliate” of a specified person is any person that directly or indirectly controls, is controlled by, or is under common control with, such specified person, (iii) the term “made available” means any document or other information that was (a) provided by one party or its representatives to the other party and its representatives by 5:00 p.m., Eastern time, on the day prior to the date hereof or (b) included in the virtual data room of a party by 5:00 p.m., Eastern time, on the day prior to the date hereof, (iv) “business day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized by law or executive order to be closed and (v) the “transactions contemplated hereby” and “transactions contemplated by this Agreement” shall include the Merger and the Bank Merger. The Tandem Disclosure Schedule and the GBC Disclosure Schedule, as well as all other schedules and all exhibits hereto, shall be deemed part of this Agreement and included in any reference to this Agreement. Nothing contained in this Agreement shall require any party or person to take any action in violation of applicable law.
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9.8 Counterparts. This Agreement may be executed in counterparts (including by pdf), all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
9.9 Entire Agreement. This Agreement (including the documents and instruments referred to herein) together with the Non-Disclosure Agreement constitutes the entire agreement among the parties and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
9.10 Governing Law; Jurisdiction.
(a) This Agreement shall be governed by and construed in accordance with the internal, substantive laws of the State of Georgia applicable to agreements entered into and to be performed solely within such state, without regard to any applicable conflicts of law principles.
(b) Each party agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby exclusively in any federal or state court of competent jurisdiction located in the State of Georgia (the “Chosen Courts”), and, solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party, and (iv) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 9.6.
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9.11 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY LAW AT THE TIME OF INSTITUTION OF THE APPLICABLE LITIGATION, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
9.12 Assignment; Third-Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Except as otherwise specifically provided in Section 6.8, which is intended to benefit each Tandem Indemnified Party, this Agreement (including the documents and instruments referred to herein) is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth in this Agreement. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance herewith without notice or liability to any other person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
9.13 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and, accordingly, that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate the Merger), in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate, and (b) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
9.14 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction such that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
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9.15 Confidential Supervisory Information. Notwithstanding any other provision of this Agreement, no disclosure, representation or warranty shall be made (or other action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information (including confidential supervisory information as defined in 12 C.F.R. § 261.2(c) and as identified in 12 C.F.R. § 309.5(g)(8)) of a Governmental Entity by any party to this Agreement to the extent prohibited by applicable law. To the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of the preceding sentence apply.
9.16 Delivery by Electronic Transmission. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by e-mail delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto or to any such agreement or instrument shall raise the use of e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of e-mail delivery of a “.pdf” format data file as a defense to the formation of a contract and each party hereto forever waives any such defense.
[Signature Page Follows]
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IN WITNESS WHEREOF, Georgia Banking Company, Inc. and Tandem Bancorp, Inc. have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.
| Georgia banking company, Inc. | |||
| By: | /s/ Bartow Morgan, Jr. | ||
| Bartow Morgan, Jr. | |||
| Chief Executive Officer | |||
| Tandem BANCORP, Inc. | |||
| By: | /s/ Charles M. DeWitt III | ||
| Charles M. DeWitt III | |||
| Chairman and Chief Executive Officer | |||
[Signature Page to Agreement and Plan of Merger]
Exhibit A
Form of Option Holder Release Agreement
[***]
Exhibit B
Form of Warrant Holder Release Agreement
[***]
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
GEORGIA BANKING COMPANY, INC.
ARTICLE ONE
NAME
The name of the corporation is Georgia Banking Company, Inc. (the "Corporation").
ARTICLE TWO
INITIAL REGISTERED OFFICE AND AGENT
The street address and county of the initial registered office of the corporation shall be at 999 Peachtree Street, N.E., Suite 1400, Atlanta, Georgia 30309. The initial registered agent of the corporation at such address shall be Neil E. Grayson.
ARTICLE THREE
CAPITALIZATION
The Corporation shall have the authority, exercisable by its board of directors (the "Board of Directors"), to issue up to 10,000,000 shares of voting common stock, par value $.01 per share (the "Common Stock").
The Corporation shall have the authority, exercisable by its Board of Directors, to issue up to 10,000,000 shares of preferred stock, par value $.01 per share (the "Preferred Stock"), any part or all of which shares of Preferred Stock may be established and designated from time to time by the Board of Directors by filing an amendment to these Articles of Incorporation (a "Preferred Stock Designation"), which is effective without shareholder action, in accordance with the appropriate provisions of the Georgia Business Corporation Code (the "Code") in such series and with such preferences, limitations, and relative rights as may be determined by the Board of Directors. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of the majority of the shares of Common Stock, without a vote of the holders of the shares of Preferred Stock, or of any series thereof, unless a vote of any such holders is required by law or pursuant to the Preferred Stock Designation or Preferred Stock Designations establishing the series of Preferred Stock.
ARTICLE FOUR
MAILING ADDRESS OF PRINCIPAL OFFICE
The mailing address of the initial principal office of the corporation is as follows:
999 Peachtree Street, N.E.
First Union Plaza, Suite 1400
Atlanta, Georgia 30309
ARTICLE FIVE
LIMITATION ON DIRECTOR LIABILITY
No director of the corporation shall be personally liable to the corporation or its shareholders for monetary damages for breach of the duty of care or any other duty as a director, except that such liability shall not be eliminated for:
(i) any appropriation, in violation of the director's duties, of any business opportunity of the corporation;
(ii) acts or omissions that involve intentional misconduct or a knowing violation of law;
(iii) liability under Section 14-2-832 (or any successor provision or redesignation thereof) of the Code; and
(iv) any transaction from which the director received an improper personal benefit.
If at any time the Code shall have been amended to authorize the further elimination or limitation of the liability of a director, then the liability of each director of the corporation shall be eliminated or limited to the fullest extent permitted by the Code, as so amended, without further action by the shareholders, unless the provisions of the Code, as amended, require further action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article Six shall not adversely affect the elimination or limitation of liability or alleged liability pursuant hereto of any director of the corporation for or with respect to any alleged act or omission of the director occurring prior to such a repeal or modification.
ARTICLE SIX
INITIAL DIRECTORS
The name and address of the initial director of the corporation is:
R. Elliott Miller
12180 Mountain Laurel Drive
Roswell, Georgia 30075
ARTICLE SEVEN
CONSIDERATION OF OTHER CONSTITUENCIES
In discharging the duties of their respective positions and in determining what is in the best interests of the Corporation, the Board of Directors, committees of the Board of Directors, and individual directors, in addition to considering the effects of any actions on the Corporation and its shareholders, may consider the interests of the employees, customers, suppliers, creditors, and other constituencies of the Corporation and its subsidiaries, the communities and geographical areas in which the Corporation and its subsidiaries operate or are located, and all other factors such directors consider pertinent. This provision solely grants discretionary authority to the directors and shall not be deemed to provide to any other constituency any right to be considered.
ARTICLE EIGHT
NAME AND ADDRESS OF THE SOLE INCORPORATOR
The sole incorporator is Neil E. Grayson, whose address is 999 Peachtree Street, N.E., Suite 1400, First Union Plaza, Atlanta, Georgia 30309.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Incorporation as of the date indicated below.
| /s/ Neil E. Grayson | ||
| Neil E. Grayson | ||
| Sole Incorporator | ||
| Date: | March 24, 1998 | |
ARTICLES OF AMENDMENT
OF
Georgia banking company, INC.
Pursuant to Section 14-2-1006 of the Georgia Business Corporation Code (the “BCC”), Georgia Banking Company, Inc., a Georgia corporation, hereby submits the following Articles of Amendment:
1. The name of the corporation is Georgia Banking Company, Inc. (the “Corporation”).
2. The Articles of Incorporation of the Corporation are amended as follows:
(a) Amendment to Article Three. Article Three of the Articles of Incorporation of the Corporation is amended by deleting the first paragraph of Article Three and replacing it with the following in lieu thereof.
“The Corporation shall have the authority, exercisable by its board of directors (the “Board of Directors”), to issue a total of 50,000,000 shares of common stock, consisting of 40,000,000 shares of voting common stock, par value $0.01 per share (the “Common Stock”), and 10,000,000 shares of non-voting common stock, par value $0.01 per share (the “Non-Voting Common Stock”), having the powers, rights, and preferences, and the qualifications, limitations and restrictions thereof, as set forth in Exhibit A attached hereto. Subject to the provisions of any applicable law or the Bylaws of the Corporation (as from time to time amended) with respect to fixing the record date for the determination of shareholders entitled to vote, and except as otherwise provided by any applicable law or the by the resolution or resolutions of the Board of Directors providing for the issue of any series of Preferred Stock, the holders of the Common Stock shall have and possess exclusive voting power and rights for the election of directors and for all other purposes, with each share being entitled to one vote.”
(b) Non-Voting Common Stock. The Articles of Incorporation of the Corporation are amended by adding the powers, rights, and preferences, and the qualifications, limitations, and restrictions thereof, of the Non-Voting Common Stock as set forth in Exhibit A attached hereto.
[Remainder of Page Intentionally Left Blank]
CERTIFICATE OF DESIGNATIONS
OF
NON-VOTING COMMON STOCK
OF
Georgia banking company, INC.
The shares of Non-Voting Common Stock of the Corporation shall have the following terms and provisions:
| 1. | Definitions. |
| a. | “Affiliate” has the meaning set forth in 12 C.F.R. Section 225.2(a) or any successor provision. |
| b. | “Articles of Incorporation” means the Articles of Incorporation of the Corporation, as amended and in effect from time and time. |
| c. | “Board of Directors” means the board of directors of the Corporation. |
| d. | A “business day” means any day other than a Saturday or a Sunday or a day on which banks in Georgia are authorized or required by law, executive order or regulation to close. |
| e. | “Certificate” means a certificate representing one (1) or more shares of Non-Voting Common Stock. |
| f. | “Common Stock” means the voting common stock of the Corporation, par value 0.01 per share. |
| g. | “Conversion” has the meaning set forth in Section 5. |
| h. | “Conversion Date” means the date that a share of Non-Voting Common Stock is converted into Common Stock in accordance with Section 5. |
| i. | “Corporation” means Georgia Banking Company, Inc., a Georgia corporation. |
| j. | “Dividends” has the meaning set forth in Section 3. |
| k. | “Liquidation Distribution” has the meaning set forth in Section 4. |
| l. | “Non-Voting Common Stock” has the meaning set forth in Section 2. |
| m. | “Permissible Transfer” means a transfer by the holder of Non-Voting Common Stock (i) to the Corporation; (ii) in a widespread public distribution of Common Stock or Non-Voting Common Stock; (iii) that is part of an offering that is not a widespread public distribution of Common Stock or Non-Voting Common Stock but is one in which no one transferee (or group of associated transferees) acquires the rights to receive two percent (2%) or more of any class of the Voting Securities of the Corporation then outstanding (including pursuant to a related series of transfers); (iv) that is part of a transfer of Common Stock or Non-Voting Common Stock to an underwriter for the purpose of conducting a widespread public distribution; (v) to a transferee that controls more than fifty percent (50%) of the Voting Securities of the Corporation without giving effect to such transfer; or (vi) that is part of a transaction approved by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). |
| n. | “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, or any other form of entity not specifically listed herein. |
| o. | “Voting Security” has the meaning set forth in 12 C.F.R. Section 225.2(q) or any successor provision. |
| 2. | Designation; Number of Shares. The class of shares of capital stock hereby authorized shall be designated as “Non-Voting Common Stock”. The number of authorized shares of the Non-Voting Common Stock shall be 10,000,000 shares. The Non-Voting Common Stock shall have a par value of $0.01 per share. Each share of Non-Voting Common Stock has the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption as described herein. Each share of Non-Voting Common Stock is identical in all respects to every other share of Non-Voting Common Stock. |
| 3. | Dividends. The Non-Voting Common Stock will rank pari passu with the Common Stock with respect to the payment of dividends or distributions, whether payable in cash, securities, options or other property, and with respect to issuance, grant or sale of any rights to purchase stock, warrants, securities or other property (collectively, the “Dividends”). Accordingly, the holders of record of Non-Voting Common Stock will be entitled to receive as, when, and if declared by the Board of Directors, Dividends in the same per share amount as paid on the Common Stock, and no Dividends will be payable on the Common Stock or any other class or series of capital stock ranking with respect to Dividends pari passu with the Common Stock unless a Dividend identical to that paid on the Common Stock is payable at the same time on the Non-Voting Common Stock in an amount per share of Non-Voting Common Stock equal to the product of (a) the per share Dividend declared and paid in respect of each share of Common Stock and (b) the number of shares of Common Stock into which such share of Non-Voting Common Stock is then convertible (without regard to any limitations on conversion of the Non-Voting Common Stock); provided, however, that if a stock Dividend is declared on Common Stock payable solely in Common Stock, the holders of Non-Voting Common Stock will be entitled to a stock Dividend payable solely in shares of Non-Voting Common Stock. Dividends that are payable on Non-Voting Common Stock will be payable to the holders of record of Non-Voting Common Stock as they appear on the stock register of the Corporation on the applicable record date, as determined by the Board of Directors, which record date will be the same as the record date for the equivalent Dividend of the Common Stock. In the event that the Board of Directors does not declare or pay any Dividends with respect to shares of Common Stock, then the holders of Non-Voting Common Stock will have no right to receive any Dividends. |
| 4. | Liquidation. |
| a. | Rank. The Non-Voting Common Stock will, with respect to rights upon liquidation, winding up and dissolution, rank (i) subordinate and junior in right of payment to all other securities of the Corporation which, by their respective terms, are senior to the Non-Voting Common Stock or the Common Stock, and (ii) pari passu with the Common Stock. Not in limitation of anything contained herein, and for purposes of clarity, the Non-Voting Common Stock is subordinated to the general creditors and subordinated debt holders of the Corporation, and the depositors of the Corporation’s bank subsidiaries, in any receivership, insolvency, liquidation or similar proceeding. |
| b. | Liquidation Distributions. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Non-Voting Common Stock will be entitled to receive, for each share of Non-Voting Common Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, subject to the rights of any Persons to whom the Non-Voting Common Stock is subordinate, a distribution (“Liquidation Distribution”) equal to (i) any authorized and declared, but unpaid, Dividends with respect to such share of Non-Voting Common Stock at the time of such liquidation, dissolution or winding up, and (ii) the amount the holder of such share of Non-Voting Common Stock would receive in respect of such share if such share had been converted into shares of Common Stock at the then applicable conversion rate at the time of such liquidation, dissolution or winding up (assuming the conversion of all shares of Non-Voting Common Stock at such time, without regard to any limitations on conversion of the Non-Voting Common Stock). All Liquidating Distributions to the holders of the Non-Voting Common Stock and Common Stock set forth in clause (ii) above will be made pro rata to the holders thereof. |
| c. | Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 4, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Non-Voting Common Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or property) of all or substantially all of the assets of the Corporation, will not constitute a liquidation, dissolution or winding up of the Corporation. |
| 5. | Conversion. |
| a. | General. |
| i. | A holder of Non-Voting Common Stock shall be permitted to convert shares of Non-Voting Common Stock into shares of Common Stock at any time or from time to time, provided that upon such conversion the holder, together with all Affiliates of the holder, will not own or control in the aggregate more than nine point nine (9.9%) of the Common Stock (or of any class of Voting Securities issued by the Corporation), excluding for the purpose of this calculation any reduction in ownership resulting from transfers by such holder of Voting Securities of the Corporation (which, for the avoidance of doubt, does not include Non-Voting Common Stock). In any such conversion, each share of Non-Voting Common Stock will convert initially into one (1) share of Common Stock, subject to adjustment as provided in Section 6 below. |
| ii. | Each share of Non-Voting Common Stock will automatically convert into one (1) share of Common Stock, without any further action on the part of any holder, subject to adjustment as provided in Section 6 below, on the date a holder of Non-Voting Common Stock transfers any shares of Non-Voting Common Stock to a non-Affiliate of the holder in a Permissible Transfer. |
| iii. | To effect any permitted conversion under Section 5(a)(i) or Section 5(a)(ii), the holder shall surrender the certificate or certificates evidencing such shares of Non-Voting Common Stock, duly endorsed, at the registered office of the Corporation, and provide written instructions to the Corporation as to the number of shares for which such conversion shall be effected, together with any appropriate documentation that may be reasonably required by the Corporation. Upon the surrender of such certificate(s), the Corporation will issue and deliver to such holder (in the case of a conversion under Section 5(a)(i)) or such holder’s transferee (in the case of a conversion under Section 5(a)(ii)) a certificate or certificates for the number of shares of Common Stock into which the Non-Voting Common Stock has been converted and, in the event that such conversion is with respect to some, but not all, of the holder’s shares of Non-Voting Common Stock, the Corporation shall deliver to such holder a certificate or certificate(s) representing the number of shares of Non-Voting Common Stock that were not converted to Common Stock. |
| iv. | All shares of Common Stock delivered upon conversion of the Non-Voting Common Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests, charges and other encumbrances. |
| b. | Reservation of Shares Issuable Upon Conversion. The Corporation will at all times reserve and keep available out of its authorized but unissued Common Stock solely for the purpose of effecting the conversion of the Non-Voting Common Stock such number of shares of Common Stock as will from time to time be sufficient to effect the conversion of all outstanding Non-Voting Common Stock; and if at any time the number of shares of authorized but unissued Common Stock will not be sufficient to effect the conversion of all then outstanding Non-Voting Common Stock, the Corporation will take such action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Common Stock to such number of shares as will be sufficient for such purpose. |
| c. | No Impairment. The Corporation will not, by amendment of its Articles of Incorporation or through any 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 terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such actions as may be necessary or appropriate in order to protect the conversion rights of the holders of the Non-Voting Common Stock against impairment. |
| 6. | Adjustments. |
| a. | Combinations or Divisions of Common Stock. In the event that the Corporation at any time or from time to time will effect a division of the Common Stock into a greater number of shares (by stock split, reclassification or otherwise other than by payment of a Dividend in Common Stock or in any right to acquire the Common Stock), or in the event the outstanding Common Stock will be combined or consolidated, by reclassification, reverse stock split or otherwise, into a lesser number of shares of the Common Stock, then the dividend, liquidation, and conversion rights of each share of Non-Voting Common Stock in effect immediately prior to such event will, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. |
| b. | Reclassification, Exchange or Substitution. If the Common Stock is changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a division or combination of shares provided for in Section 6(a) above), (1) the conversion ratio then in effect will, concurrently with the effectiveness of such transaction, be adjusted so that each share of the Non-Voting Common Stock will be convertible into, in lieu of the number of shares of Common Stock which the holders of the Non-Voting Common Stock would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equal to the product of (i) the number of shares of such other class or classes of stock that a holder of a share of Common Stock would be entitled to receive in such transaction and (ii) the number of shares of Common Stock into which such share of Non-Voting Common Stock is then convertible (without regard to any limitations on conversion of the Non-Voting Common Stock) immediately before that transaction and (2) the Dividend and Liquidation Distribution rights then in effect will, concurrently with the effectiveness of such transaction, be adjusted so that each share of Non-Voting Common Stock will be entitled to a Dividend and Liquidation Distribution right, in lieu of with respect to the number of shares of Common Stock which the holders of the Non-Voting Common Stock would otherwise have been entitled to receive, with respect to a number of shares of such other class or classes of stock equal to the product of (i) the number of shares of such other class or classes of stock that a holder of a share of Common Stock would be entitled to receive in such transaction and (ii) the number of shares of Common Stock into which such share of Non-Voting Common Stock is then convertible (without regard to any limitations on conversion of the Non-Voting Common Stock) immediately before that transaction. |
| c. | Certificates as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 6, the Corporation at its expense will promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Non-Voting Common Stock a certificate executed by the Corporation’s President (or other appropriate officer) setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation will, upon the written request at any time of any holder of Non-Voting Common Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, and (ii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the Non-Voting Common Stock. |
| 7. | Reorganization, Mergers, Consolidations or Sales of Assets. If at any time or from time to time there will be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares otherwise provided for in Section 6) or a merger or consolidation of the Corporation with or into another corporation, or the sale of all or substantially all the Corporation’s properties and assets to any other Person, then, as a part of such reorganization, merger, consolidation or sale, provision will be made so that the holders of the Non-Voting Common Stock will thereafter be entitled to receive upon conversion of the Non-Voting Common Stock, the number of shares of stock or other securities or property of the Corporation, or of the successor company resulting from such merger or consolidation or sale, to which a holder of that number of shares of Common Stock deliverable upon conversion of the Non-Voting Common Stock would have been entitled to receive on such capital reorganization, merger, consolidation or sale (without regard to any limitations on conversion of the Non-Voting Common Stock). |
| 8. | Redemption. Except to the extent a liquidation under Section 4 may be deemed to be a redemption, the Non-Voting Common Stock will not be redeemable at the option of the Corporation or any holder of Non-Voting Common Stock at any time. Notwithstanding the foregoing, the Corporation will not be prohibited from repurchasing or otherwise acquiring shares of Non-Voting Common Stock in voluntary transactions with the holders thereof, subject to compliance with any applicable legal or regulatory requirements, including applicable regulatory capital requirements. Any shares of Non-Voting Common Stock repurchased or otherwise acquired may be reissued as additional shares of Non-Voting Common Stock. |
| 9. | Voting Rights. The holders of Non-Voting Common Stock will not have any voting rights, except as provided for herein and as may otherwise from time to time be required by law. |
| 10. | Protective Provisions. So long as any shares of Non-Voting Common Stock are issued and outstanding, the Corporation will not (including by means of merger, consolidation or otherwise), without obtaining the approval (by vote or written consent) of the holders of a majority of the issued and outstanding shares of Non-Voting Common Stock, (a) alter or change the rights, preferences, privileges or restrictions provided for the benefit of the holders of the Non-Voting Common Stock, (b) increase or decrease the authorized number of shares of Non-Voting Common Stock or (c) enter into any agreement, merger or business consolidation, or engage in any other transaction, or take any action that would, in any of such instances, have the effect of changing any preference or any relative or other right provided for the benefit of the holders of the Non-Voting Common Stock. In the event that the Corporation offers to repurchase shares of Common Stock, the Corporation shall offer to repurchase shares of Non-Voting Common Stock pro rata based upon the number of shares of Common Stock such holders would be entitled to receive if such shares were converted into shares of Common Stock immediately prior to such repurchase. |
| 11. | Notices. All notices required or permitted to be given by the Corporation with respect to the Non-Voting Common Stock shall be in writing, and if delivered by first class United States mail, postage prepaid, to the holders of the Non-Voting Common Stock at their last addresses as they shall appear upon the books of the Corporation, shall be conclusively presumed to have been duly given, whether or not the holder actually receives such notice; provided, however, that failure to duly give such notice by mail, or any defect in such notice, to the holders of any stock designated for repurchase, shall not affect the validity of the proceedings for the repurchase of any other shares of Non-Voting Common Stock, or of any other matter required to be presented for the approval of the holders of the Non-Voting Common Stock. |
| 12. | Record Holders. To the fullest extent permitted by law, the Corporation will be entitled to recognize the record holder of any share of Non-Voting Common Stock as the true and lawful owner thereof for all purposes and will not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other Person, whether or not it will have express or other notice thereof. |
| 13. | Term. The Non-Voting Common Stock shall have perpetual term unless converted in accordance with Section 5. |
| 14. | No Preemptive Rights. The holders of Non-Voting Common Stock are not entitled to any preemptive or preferential right to purchase or subscribe for any capital stock, obligations, warrants or other securities or rights of the Corporation, except for any such rights that may be granted by way of separate contract or agreement to one or more holders of Non-Voting Common Stock. |
| 15. | Replacement Certificates. In the event that any Certificate will have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Corporation, the posting by such Person of a bond in such amount as the Corporation may determine is necessary as indemnity against any claim that may be made against it with respect to such Certificate, the Corporation will deliver in exchange for such lost, stolen or destroyed Certificate a replacement Certificate. |
| 16. | Other Rights. The shares of Non-Voting Common Stock have no preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or rights, other than as set forth herein or as provided by applicable law. |
SECOND ARTICLES OF AMENDMENT
OF
Georgia banking company, INC.
Pursuant to Section 14-2-1006 of the Georgia Business Corporation Code (the “GBCC”), Georgia Banking Company, Inc., a Georgia corporation, hereby submits the following Articles of Amendment:
1. The name of the corporation is Georgia Banking Company, Inc. (the “Corporation”).
2. The Articles of Incorporation of the Corporation are amended as follows:
(a) The Articles of Incorporation, as amended, are further amended by the deletion of Section 1(m) of Exhibit A in its entirety and replacement with the new Section 1(m) of Exhibit A as follows:
“m. “Permissible Transfer” means a transfer or assignment by a holder or other transferee or assignee of such initial or any subsequent holder of Non-Voting Common Stock (i) to the Corporation, (ii) in a widespread public distribution of Common Stock or Non-Voting Common Stock, (iii) to a transferee or assignee that would control more than fifty percent (50%) of every class of the Corporation’s outstanding Voting Securities without any transfer from the transferor, (iv) in a transaction in which no transferee or assignee (or group of associated transferees or assignees) would receive two percent (2%) or more of any class of Voting Securities of the Corporation outstanding (including pursuant to a related series of transfers) at such time or (v) that is part of a transfer of Common Stock or Non-Voting Common Stock to an underwriter for the purpose of conducting a widespread public distribution.”
(b) The Articles of Incorporation, as amended, are further amended by the deletion of Section 2 of Exhibit A in its entirety and replacement with the new Section 2 of Exhibit A as follows:
“2. Designation; Number of Shares. The class of shares of capital stock hereby authorized shall be designated as “Non-Voting Common Stock.” The number of authorized shares of the Non-Voting Common Stock shall be 10,000,000 shares. The Non-Voting Common Stock shall have a par value of $0.01 per share. Each share of Non-Voting Common Stock has the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption as described herein. Each share of Non-Voting Common Stock is identical in all respects to every other share of Non-Voting Common Stock.”
(c) The Articles of Incorporation, as amended, are further amended by the deletion of Section 5(a) of Exhibit A in its entirety and replacement with the new Section 5(a) of Exhibit A as follows:
“5. Conversion.
| a. | General. |
| i. | Each share of Non-Voting Common Stock shall remain Non-Voting Common Stock for as long as it is owned or controlled by the initial holder or any other transferee or assignee of such initial or any subsequent holder; provided, that any such share of Non-Voting Common Stock may convert into an equal number of shares of Common Stock (A) in the hands of the initial holder or any transferee or assignee upon an issuance of Common Stock by the Corporation (including, without limitation, the issuance of Common Stock in respect of equity based compensation granted to directors or employees of the Corporation) or other event having a dilutive effect on such holder’s ownership of Common Stock (each, a “Triggering Event”); provided that no such conversion shall cause the holder, together with all Affiliates of the holder, to own or control a greater percentage of the Common Stock (or of any class of Voting Securities issued by the Corporation) than such holder, together with all Affiliates of the holder, owned or controlled immediately prior to such Triggering Event or (B) pursuant to a Permissible Transfer. In any such conversion, each share of Non-Voting Common Stock will convert into one (1) share of Common Stock, subject to adjustment as provided in Section 6 below. |
| ii. | Upon any permitted conversion under Section 5(a)(i), the holder shall surrender the certificate or certificates (if any) evidencing such shares of Non-Voting Common Stock, duly endorsed, at the registered office of the Corporation, and upon the surrender of such certificate(s), and if the Corporation elects to issue physical certificates, in the event that such conversion is with respect to some, but not all, of the holder’s shares of Non-Voting Common Stock, the Corporation shall deliver to such holder a certificate or certificate(s) representing the number of shares of Non-Voting Common Stock that were not converted to Common Stock. In any conversion that is permitted pursuant to Section 5(a)(i), the conversion of the applicable shares of Non-Voting Common Stock into an equal number of shares of Common Stock shall be deemed to have been effected as of the effectiveness of such conversion (in the case of Section 5(a)(i)(A)) or Permissible Transfer (in the case of Section 5(a)(i)(B)), all rights of the holder or transferor, as the case maybe, shall cease with respect to such shares of Non-Voting Common Stock at such time and the holder or transferee, as the case may be, shall receive shares of Common Stock in such conversion or transfer which shall be issued in such holder’s or transferee’s name on the stock transfer books of the Corporation. |
| iii. | All shares of Common Stock delivered upon conversion of the Non-Voting Common Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests, charges and other encumbrances. |
(d) The Articles of Incorporation, as amended, are further amended by the deletion of Section 7 of Exhibit A in its entirety and replacement with the new Section 7 of Exhibit A as follows:
“7. Reorganization, Mergers, Consolidations or Sales of Assets. If at any time or from time to time there will be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares otherwise provided for in Section 6) or a merger or consolidation of the Corporation with or into another corporation, or the sale of all or substantially all the Corporation’s properties and assets to any other Person, then, as a part of such reorganization, merger, consolidation or sale, provision will be made so that the holders of the Non-Voting Common Stock will thereafter be entitled to receive upon conversion of the Non-Voting Common Stock, the number of shares of stock or other securities or property of the Corporation, or of the successor company resulting from such merger or consolidation or sale, to which a holder of that number of shares of Common Stock deliverable upon conversion of the Non-Voting Common Stock would have been entitled to receive on such capital reorganization, merger, consolidation or sale (without regard to any limitations on conversion of the Non-Voting Common Stock). Notwithstanding any other provision hereof, if a conversion of Non-Voting Common Stock is to be made in connection with a merger, reorganization, consolidation, reclassification or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property or in any dissolution or liquidation, the conversion of any shares of Non-Voting Common Stock may, at the election of the holder thereof, be conditioned upon the consummation of such event or transaction, in which case such conversion shall not be deemed to be effective until such event or transaction has been consummated.”
(e) The Articles of Incorporation, as amended, are further amended by the deletion of Section 10 of Exhibit A in its entirety and replacement with the new Section 10 of Exhibit A as follows:
“10. Protective Provisions. So long as any shares of Non-Voting Common Stock are issued and outstanding, the Corporation will not (including by means of merger, consolidation or otherwise), without obtaining the approval (by vote or written consent) of the holders of a majority of the issued and outstanding shares of Non-Voting Common Stock, (a) alter or change the rights, preferences, privileges or restrictions provided for the benefit of the holders of the Non-Voting Common Stock, or (b) increase or decrease the authorized number of shares of Non-Voting Common Stock. In the event that the Corporation offers to repurchase shares of Common Stock, the Corporation shall offer to repurchase shares of Non-Voting Common Stock pro rata based upon the number of shares of Common Stock such holders would be entitled to receive if such shares were converted into shares of Common Stock immediately prior to such repurchase.”
3. This amendment was adopted by the Board of Directors of the Corporation at a meeting duly convened and held on June 14, 2026. Shareholder approval was not required in accordance with the provisions of Section 14-2-1105 of the GBCC.
4. These Articles of Amendment shall be effective at the time and on the date they are filed with the Georgia Secretary of State.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment on this 15th day of June, 2026.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
Exhibit 3.2
GEORGIA BANKING COMPANY, INC.
AMENDED AND RESTATED
BYLAWS
TABLE OF CONTENTS
| Page | ||
| ARTICLE I | OFFICES | 1 |
| Section 1. | Registered Office | 1 |
| Section 2. | Other Offices | 1 |
| ARTICLE II | SHAREHOLDERS’ MEETINGS | 1 |
| Section 1. | Annual Meetings | 1 |
| Section 2. | Special Meetings | 1 |
| Section 3. | Notice of Meetings | 1 |
| Section 4. | Quorum | 1 |
| Section 5. | Voting | 2 |
| Section 6. | Consent of Shareholders | 2 |
| Section 7. | List of Shareholders | 2 |
| Section 8. | Notice of Business | 3 |
| ARTICLE III DIRECTORS | 5 | |
| Section 1. | Powers | 5 |
| Section 2. | Number, Election and Term | 5 |
| Section 3. | Vacancies | 5 |
| Section 4. | Meetings and Notice | 5 |
| Section 5. | Quorum | 6 |
| Section 6. | Consent of Directors | 6 |
| Section 7. | Committees | 6 |
| Section 8. | Removal of Directors | 6 |
| Section 9. | Compensation of Directors | 6 |
| ARTICLE IV OFFICERS | 7 | |
| Section 1. | Number | 7 |
| Section 2. | Compensation | 7 |
| Section 3. | Term of Office | 7 |
| Section 4. | Removal | 7 |
| Section 5. | Vacancies | 7 |
| Section 6. | Powers and Duties | 7 |
| Section 7. | Voting Securities of Any Business Organization | 9 |
| ARTICLE V | CERTIFICATES FOR SHARES | 9 |
| Section 1. | Share Certificates | 9 |
| Section 2. | Lost Certificates | 9 |
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| Section 3. | Transfer | 10 |
| Section 4. | Record Date | 10 |
| Section 5. | Transfer Agent and Registrar | 10 |
| ARTICLE VI INDEMNIFICATION | 10 | |
| Section 1. | Authority to Indemnify | 10 |
| Section 2. | Mandatory Indemnification | 11 |
| Section 3. | Advance for Expenses | 11 |
| Section 4. | Court-ordered Indemnification and Advances for Expenses | 11 |
| Section 5. | Determination of Indemnification | 11 |
| Section 6. | Authorization of Indemnification | 12 |
| Section 7. | Other Rights | 12 |
| Section 8. | Insurance | 12 |
| Section 9. | Continuation of Expenses | 12 |
| Section 10. | Severability | 12 |
| ARTICLE VII GENERAL PROVISIONS | 13 | |
| Section 1. | Dividends | 13 |
| Section 2. | Fiscal Year | 13 |
| Section 3. | Seal | 13 |
| Section 4. | Annual Statements | 13 |
| Section 5. | Notice | 13 |
| ARTICLE VIII AMENDMENTS | 14 | |
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ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of Georgia Banking Company, Inc. (the “Corporation”) shall be in the State of Georgia, County of Fulton.
Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Georgia as the Board of Directors of the Corporation (the “Board of Directors”) may from time to time determine and the business of the Corporation may require or make desirable.
ARTICLE II
SHAREHOLDERS’ MEETINGS
Section 1. Annual Meetings. The annual meeting of shareholders shall be held at the principal office of the Corporation or at such other place in the United States as may be determined by the Board of Directors, at such time and on such date following the close of the fiscal year as shall be determined by the Board of Directors, for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.
Section 2. Special Meetings. Special meetings of shareholders shall be held at the principal office of the Corporation or at such other place in the United States as may be designated in the notice of said meetings, upon call of the Chief Executive Officer or the Board of Directors, and shall be called by the Secretary when so directed by the Board of Directors. Special meetings of shareholders may also be called at the request in writing of shareholders owning at least fifteen percent of the issued and outstanding capital stock of the Corporation entitled to vote in an election of directors. Any such request by the shareholders shall state the purposes for which the meeting is to be called.
Section 3. Notice of Meetings. Written notice of every meeting of shareholders, stating the place, date and hour of the meeting, and in the case of a special meeting, the purposes of the meeting, shall be given personally or by mail to each shareholder of record entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with first class postage thereon prepaid addressed to the shareholder at his or her address as it appears on the Corporation’s record of shareholders. Attendance of a shareholder at a meeting of shareholders shall constitute a waiver of notice of such meeting and of all objections to the place or time of the meeting, or the manner in which it has been called or convened, except when a shareholder attends a meeting solely for the purpose of stating, at the beginning of the meeting, any such objection to the transaction of any business. Notice need not be given to any shareholder who signs a waiver of notice, in person or by proxy, either before or after the meeting.
Section 4. Quorum. The holders of a majority of the Corporation’s issued and outstanding stock and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the shareholders except as otherwise provided by statute, by the Corporation’s Articles of Incorporation, as amended, or by these Amended and Restated Bylaws. The shareholders at a meeting at which a quorum was present may continue to transact business at the meeting or at any adjournment thereof, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, except as otherwise provided by statute, by the Corporation’s Articles of Incorporation, as amended, or by these Amended and Restated Bylaws. If a quorum is not present or represented at any meeting of the shareholders, then the holders of a majority of the shares entitled to vote thereat, present in person or represented by proxy, may adjourn the meeting from time to time, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting complying with Section 3 of this Article II shall be given to each shareholder of record entitled to vote at the meeting.
| 1 |
Section 5. Voting. When a quorum is present at any meeting, the vote of the holders of a majority of the shares entitled to vote thereat, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or of the Articles of Incorporation, as amended, a different vote is required, in which case such express provision shall govern and control the decision of the question. Each outstanding share having voting rights on any question or matter brought before a meeting shall be entitled to one vote in person, by proxy, or by electronic proxy on any such question or matter, with each share to be voted in person, by proxy, or by electronic proxy by the person registered on the books of the Corporation, but no proxy shall be voted or acted upon after eleven months from its date, unless otherwise provided in the proxy.
Section 6. Consent of Shareholders. Any action required or permitted to be taken at a shareholders’ meeting may be taken without a meeting if the action is taken by persons who would be entitled to vote at a meeting shares having voting power to cast not less than the minimum number (or numbers, in the case of voting by groups) of votes that would be necessary to authorize or take the action at a meeting at which all shareholders entitled to vote were present and voted. The action must be evidenced by one or more written consents bearing the date of signature and describing the action taken, signed by shareholders entitled to take action without a meeting and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. If the action is taken by less than all of the shareholders entitled to vote on the action, all voting shareholders on the record date who did not participate in taking the action shall be given written notice of the action taken, and shall be furnished with the same material that would have been required to be sent to shareholders in a notice of a meeting at which the proposed action would have been submitted to the shareholders for action, including notice of any applicable dissenters’ rights, not more than ten days after taking the action without a meeting.
Section 7. List of Shareholders. The Corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving their names and addresses and the number, class and series, if any, of the shares held by each. The officer who has charge of the stock transfer books of the Corporation shall prepare and make, before every meeting of shareholders or any adjournment thereof, a complete list of the shareholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number and class and series, if any, of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder during the whole time of the meeting for the purposes thereof. The said list may be the Corporation’s regular record of shareholders if it is arranged in alphabetical order or contains an alphabetical index.
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Section 8. Notice of Business. No business may be transacted at an annual meeting of shareholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the annual meeting by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in this Section 8 of Article II and on the record date for the determination of shareholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 8 of Article II. The nomination by a shareholder of any person for election as a director, other than the persons nominated by the Board of Directors or any duly authorized committee thereof, shall be considered business other than business specified in clauses (a) and (b) above and shall be permitted only upon compliance with the requirements of this Section 8 of Article II.
In addition to any other applicable requirements for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one hundred twenty (120) days nor more than one hundred fifty (150) days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within sixty (60) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.
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To be in proper written form, a shareholder’s notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the annual meeting (a) a description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, containing all material information related thereto, including: (i) the text of any proposal to be submitted for a shareholder vote (“Shareholder Proposal”) (including the text of any resolution proposed for consideration and in the event that such Shareholder Proposal includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment); (ii) the reasons for submission of such Shareholder Proposal at the meeting and (iii) any material interest in such Shareholder Proposal of each natural person, corporation, partnership, trust or any other type of legal entity or recognized ownership vehicle submitting the Shareholder Proposal, acting in concert with the shareholder who is submitting the Shareholder Proposal or on whose behalf the Shareholder Proposal is being submitted (individually, “Proponent”, collectively, “Proponents”), (b) the name and business address of the Proponent(s), (c) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the Proponent(s), (d) a description of all arrangements or understandings (including any derivative or short positions, profits interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that have been entered into as of the date of such written notice by, between or on behalf of the Proponent(s), on whose behalf the Shareholder Proposal is being made, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Corporation, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of any Proponent(s) with respect to the securities of the Corporation, (e) a representation that the Proponent(s) intend(s) to appear in person or by proxy at the annual meeting to bring such business before the meeting, (f) in the case of the nomination of a person as a director, a brief description of the background and credentials of such person including (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Corporation which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), and (g) a representation whether the Proponent(s) intend(s) or is part of a group which intend(s) (i) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the Shareholder Proposal or (ii) to otherwise solicit proxies from shareholders in support of such Shareholder Proposal.
No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 8 of Article II; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 8 of Article II shall be deemed to preclude discussion by any shareholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the meeting in accordance with the foregoing procedures, the chairman of such annual meeting shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
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ARTICLE III
DIRECTORS
Section 1. Powers. Except as otherwise provided by any legal agreement among shareholders, the property, affairs and business of the Corporation shall be managed and directed by its Board of Directors, which may exercise all powers of the Corporation and do all lawful acts and things which are not by law, by the Articles of Incorporation, as amended, by these Amended and Restated Bylaws, by any agreement among shareholders, or by any agreement between shareholders and the Corporation, directed or required to be exercised or done by the shareholders.
Section 2. Number, Election and Term. The number of directors which shall constitute the whole Board of Directors shall consist of five to twenty-five members, and the number of directors shall be increased or decreased from time to time, within the minimum and maximum, by the shareholders by the affirmative vote of a majority of all the shares entitled to vote in an election of directors; or by the Board of Directors by the affirmative vote of a majority of the directors then in office. The directors shall be elected by plurality vote at the annual meeting of shareholders, and each director shall hold office until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Directors shall be natural persons who have attained the age of 18 years, but need not be residents of the State of Georgia.
Section 3. Vacancies. Vacancies, including vacancies resulting from any increase in the number of directors, may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and a director so chosen shall hold office until the next annual election and until his or her successor is duly elected and qualified unless sooner displaced. If there are no directors in office, then vacancies shall be filled through election by the shareholders.
Section 4. Meetings and Notice. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Georgia. Members of the Board of Directors, or any committee thereof, and observers appointed in accordance with any agreement among shareholders or any agreement between shareholders and the Corporation may participate in or attend a meeting of such Board of Directors or committee by means of a conference telephone, video conference or similar communications equipment by means of which all persons participating in the meeting can hear each other simultaneously. Participation by such means shall constitute presence in person at such meeting. Meetings of the Board of Directors may be called by any director. Notice shall be given to each director in person, or by written notice mailed, or sent by facsimile or electronic mail, to his or her business address at least five business days prior to such meeting. Notice need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and waiver of all objections to the place and time of the meeting, or the manner in which it has been called or convened, except when the director states, at the beginning of the meeting, any such objection or objections to the transaction of business.
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Section 5. Quorum. Except as otherwise required by law, the presence of at least a majority of the number of directors in office immediately prior to such meeting shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law, by the Articles of Incorporation, as amended, or by these Amended and Restated Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 6. Consent of Directors. Unless otherwise restricted by the Articles of Incorporation, as amended, or these Amended and Restated Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, setting forth the action so taken, and the writing or writings are filed with the minutes of the proceedings of the Board of Directors or committee. Such consent shall have the same force and effect as a unanimous vote of the Board of Directors.
Section 7. Committees. The Board of Directors may designate from among its members an executive committee or one or more other standing or ad hoc committees, each consisting of one or more directors, who serve at the pleasure of the Board of Directors. Subject to the limitations imposed by the Georgia Business Corporation Code (“GBCC”), each committee shall have the authority set forth in the resolution establishing the committee or in any other resolution of the Board of Directors specifying, enlarging, or limiting the authority of the committee.
A majority of each committee may determine its action and may fix the time and places of its meetings, unless otherwise provided by the Board of Directors.
Section 8. Removal of Directors. At any shareholders’ meeting with respect to which notice of such purpose has been given, any director may be removed from office, with or without cause, by the vote of shareholders representing a majority of the issued and outstanding capital stock entitled to vote for the election of directors, and his or her successor may be elected at the same or at any subsequent meeting of shareholders; provided that to the extent any vacancy created by such removal is not filled by such an election within sixty days after such removal, the remaining directors shall, by majority vote, fill any such vacancy.
Section 9. Compensation of Directors. Directors shall be entitled to such reasonable compensation for their services as directors or members of any committee of the Board of Directors as shall be fixed from time to time by resolution adopted by the Board of Directors, and shall also be entitled to reimbursement for any reasonable expenses incurred in attending any meeting of the Board of Directors or of any committee.
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ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer, a Secretary and a Treasurer. The Board of Directors may also choose as officers of the Corporation a President and one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers and may elect or appoint, or authorize specific senior officers to appoint, the person who shall hold such other offices. Any number of offices, except the offices of the Chief Executive Officer and Secretary, may he held by the same person. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.
Section 2. Compensation. Any compensation committee designated by the Board of Directors in accordance with Article III, Section 7 may review and make recommendations to the Board of Directors with respect to all salary, bonus and long-term incentive awards for officers and directors of the Corporation, including recommending performance goals and certifying that performance goals have been attained. No officer shall be prevented by these Amended and Restated Bylaws from receiving such salary by reason of the fact that he or she is also a director of the Corporation or a member of any committee of the Board of Directors.
Section 3. Term of Office. Unless otherwise provided by resolution of the Board of Directors, the principal officers shall be chosen annually by the Board of Directors at the first meeting of the Board of Directors following the annual meeting of shareholders of the Corporation, or as soon thereafter as is possible and convenient. Subordinate officers may be elected from time to time. Each officer shall serve until his or her successor shall have been chosen and qualified, or until his or her earlier death, resignation or removal.
Section 4. Removal. Any officer (regardless of how elected or appointed) may be removed from office at any time, with or without cause, by the Board of Directors whenever in its judgment the best interest of the Corporation will be served thereby and any officer appointed by the Chief Executive Officer or another senior officer may also be removed, with or without cause, by the Chief Executive Officer or by any senior officer authorized to have appointed the officer to be removed whenever in his or her judgment the best interest of the Corporation will be served thereby.
Section 5. Vacancies. Any vacancy in an office resulting from any cause may be filled by the Board of Directors for the unexpired portion of the officer’s term.
Section 6. Powers and Duties. Except as hereinafter provided, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors. The officers of the Corporation shall include, but not be limited to:
(a) Chief Executive Officer. The Chief Executive Officer shall have general supervision of the business of the Corporation, shall see that all orders and resolutions of the Board of Directors are carried into effect, and shall report to the Board of Directors. The Chief Executive Officer also shall have the authority to execute bonds, mortgages, and other contracts and instruments requiring a seal, under the seal of the Corporation. The Chief Executive Officer shall have the power to endorse, when sold, assigned, transferred or otherwise disposed of by the Corporation, all certificates or shares of stock, bonds, or other securities issued by other corporations, associations, trusts, whether public or private, or by any government agency thereof, and owned or held by the Corporation, and to make, execute and deliver all instruments.
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(b) President or Vice Presidents. The President or Vice Presidents (in order of the Senior Executive Vice Presidents, Executive Vice Presidents, Senior Vice Presidents and other Vice Presidents, each class in order of the seniority of its respective members or as designated by resolution of the Board of Directors) shall, in the absence or disability of the Chief Executive Officer, perform the duties and exercise the powers of said officers, and shall perform such other duties and exercise such other powers as the Board of Directors or the Chief Executive Officer may prescribe. One or more Vice Presidents may be designated by the Board of Directors as “Senior Executive Vice President,” “Executive Vice President” or “Senior Vice President.”
(c) Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision he shall be. The Secretary shall have custody of the corporate seal of the Corporation and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The Secretary shall perform whatever additional duties and have whatever additional powers that the Board of Directors may from time to time assign to the Secretary.
(d) Assistant Secretary. The Assistant Secretary, or, if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
(e) Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his or her transactions as treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation.
(f) Assistant Treasurer. The Assistant Treasurer, or, if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
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Section 7. Voting Securities of Any Business Organization. Unless otherwise ordered by the Board of Directors, the Chief Executive Officer, President or any Executive Vice President shall have full power and authority on behalf of the Corporation to attend and to act and vote at any meetings of security holders of any business organization in which the Corporation may hold securities, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities which the Corporation might have possessed and exercised if it had been present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.
ARTICLE V
CERTIFICATES FOR SHARES
Section 1. Share Certificates. The interest of each shareholder in the Corporation may be certificated or uncertificated, and may be evidenced by registration in the holder’s name in uncertificated, book-entry form on the books of the Corporation in accordance with a direct registration system. Within reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice that shall set forth the name of the Corporation, that the Corporation is organized under the laws of the State of Georgia, the name of the shareholder, the number and class (and designation of the series, if any) of the shares represented, and any restrictions on the transfer or registration of such shares of stock imposed by the Articles of Incorporation, as amended, or by these Amended and Restated Bylaws, any agreement among shareholders or any agreement between shareholders and the Corporation. Every holder of fully-paid stock in the Corporation shall be entitled, upon request, to have a certificate in such form as the Board of Directors may from time to time prescribe. The certificates representing shares of stock of the Corporation shall be in such form as may be approved by the Board of Directors, which certificates representing shares shall be issued to the shareholder of the Corporation in numerical order from the stock book of the Corporation, and each of which shall bear the name of the Corporation, the name of the shareholder, and the number and class of shares and designation of the series, if any, represented by the certificate, and which shall be signed by the Chief Executive Officer, or any President or Vice President and may be signed by the Secretary or an Assistant Secretary; and which shall be sealed with the seal of the Corporation.
Section 2. Lost Certificates. The Board of Directors may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his or her legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
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Section 3. Transfer. Shares of the Corporation shall be transferable in the manner prescribed by GBCC, the Articles of Incorporation, as amended, and these Amended and Restated Bylaws or as otherwise determined by the Board of Directors from time to time and not inconsistent with the GBCC, the Articles of Incorporation, as amended, or these Amended and Restated Bylaws. Transfers of shares shall be made on the books of the Corporation only by the holder of record thereof, by such person's attorney lawfully constituted in writing and, in the case of certificated shares, upon the surrender of the certificate thereof, which shall be cancelled before a new certificate or uncertificated shares shall be issued. No transfer of shares shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.
Section 4. Record Date. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights with respect to any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than seventy days and, in case of a meeting of shareholders, not less than ten days, prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of and to vote at any meeting of shareholders, the record date shall be at the close of business on the day next preceding the day on which the notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If no record date is fixed for other purposes, the record date shall be at the close of business on the day next preceding the day on which the Board of Directors adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors shall fix a new record date for the adjourned meeting.
Section 5. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or one or more transfer clerks and one or more registrars, and may require all certificates of stock to bear the signature or signatures of any of them.
ARTICLE VI
INDEMNIFICATION
Section 1. Authority to Indemnify. The Corporation shall indemnify or obligate itself to indemnify an individual made a party to a proceeding because he or she is or was a director, officer, employee, or agent of the Corporation (or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust. or other enterprise) for reasonable expenses, judgments, fines, penalties, and amounts paid in settlement (including attorneys’ fees), incurred in connection with the proceeding if the individual conducted himself or herself in good faith and reasonably believed that such conduct was (a) in the case of conduct in his or her official capacity, in the best interests of the Corporation, (b) in all other cases. at least not opposed to the best interests of the Corporation, and (c) in the case of any criminal proceeding, he or she had no reasonable cause to believe such conduct was unlawful. The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent is not, of itself. determinative that the director, officer, employee, or agent did not meet the standard of conduct set forth above. Indemnification permitted under this Section in connection with a proceeding by, or in the right of, the Corporation is limited to reasonable expenses incurred in connection with the proceeding if it is determined that the director, officer, employee, or agent has met the relevant standard of conduct under this Section.
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Section 2. Mandatory Indemnification. To the extent that a director, officer, employee, or agent of the Corporation has been wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party, or in defense of any claim, issue, or matter therein, because he or she is or was a director, officer, employee, or agent of the Corporation, the Corporation shall indemnify the director, employee, or agent against reasonable expenses incurred by him or her in connection therewith.
Section 3. Advance for Expenses. The Corporation shall pay for or reimburse the reasonable expenses incurred by a director, officer, employee, or agent of the Corporation who is a party to a proceeding in advance of final disposition of the proceeding if (a) he or she furnishes the Corporation written affirmation of his or her good faith belief that he or she has met the standard of conduct set forth in Section 1 of this Article, and (b) he or she furnishes the Corporation a written undertaking, executed personally or on his or her behalf, to repay any advance if it is ultimately determined that he or she is not entitled to indemnification. The undertaking required by this Section must be an unlimited general obligation, but need not be secured and may he accepted without reference to financial ability to make repayment.
Section 4. Court-ordered Indemnification and Advances for Expenses. A director, officer, employee, or agent of the Corporation who is a party to a proceeding may apply for indemnification or advances for expenses to the court conducting the proceeding or to another court of competent jurisdiction.
Section 5. Determination of Indemnification. Except as provided in Section 2 and except as may be ordered by the court, the Corporation may not indemnify a director, officer, employee, or agent under Section 1 unless authorized thereunder and a determination has been made in the specific case that indemnification of the director, officer, employee, or agent is permissible in the circumstances because he or she has met the standard of conduct set forth in Section 1. The determination shall be made:
(a) If there are two or more disinterested directors, by the Board of Directors by a majority vote of all the disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote;
(b) By special legal counsel:
(i) selected in the manner prescribed in paragraph (a) of this Section 6; or
(ii) if there are fewer than two disinterested directors, selected by the Board of Directors (in which selection directors who do not qualify as disinterested directors may participate); or
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(c) By the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the determination.
Section 6. Authorization of Indemnification. Authorization of indemnification or an obligation to indemnify and evaluation as to the reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under paragraph (b) of Section 5 to select counsel.
Section 7. Other Rights. The indemnification and advancement of expenses provided by or granted pursuant to this Article VI shall not be deemed exclusive of any other rights, in respect of indemnification or otherwise, to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, resolution, agreement, or contract, either specifically or in general terms, approved by the affirmative vote of the holders of a majority of the shares entitled to vote thereon, taken at a meeting the notice of which specified that such bylaw, resolution, or agreement would be placed before the shareholders, both as to action by a director, trustee, officer, employee, or agent in his or her official capacity and as to action in another capacity while holding such office or position; except that no such other rights, in respect to indemnification or otherwise, may be provided or granted to a director, trustee, officer, employee, or agent pursuant to this Section 7 by the Corporation for liability for (a) any appropriation, in violation of his or her duties, of any business opportunity of the Corporation; (b) acts or omissions which involve intentional misconduct or a knowing violation of law; (c) the types of liability set forth in GBCC Section 14-2-832, or any successor provision, dealing with illegal or unauthorized distributions of corporate assets, whether as dividends or in liquidation of the Corporation or otherwise; or (d) any transaction from which he or she received an improper material tangible personal benefit. Neither the amendment or repeal of this Article VI nor the adoption of any provision to these Amended and Restated Bylaws inconsistent with this Article VI shall eliminate or adversely affect any right or protection of any director, officer, employee, or agent of the Corporation existing immediately prior to such amendment or repeal or adoption.
Section 8. Insurance. The Corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the Corporation or who, while a director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership joint venture, trust, employee benefit plan, or other entity against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, or agent whether or not the Corporation would have power to indemnify him or her against the same liability under this Article VI.
Section 9. Continuation of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VI shall continue as to a person who has ceased to be a director, trustee, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
Section 10. Severability. Each of the Sections of this Article VI, and each of the clauses set forth herein, shall be deemed separate and independent, and should any part of any such Section or clause be declared invalid or unenforceable by any court of competent jurisdiction, such invalidity or unenforceability shall in no way render invalid or unenforceable any other part thereof or any separate Section or clause of this Article VI that is not declared invalid or unenforceable.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, as amended, if any, may be declared by the Board of Directors at any regular or special meetings, pursuant to law. Dividends may be paid in cash, in property, or in shares of the Corporation’s capital stock, subject to the provisions of the Articles of Incorporation, as amended. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.
Section 2. Fiscal Year. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation shall end on December 31 of each year.
Section 3. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal” and “Georgia”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. In the event it is inconvenient to use such seal at any time, the signature of the Corporation followed by the word “Seal” enclosed in parentheses shall be deemed the seal of the Corporation.
Section 4. Annual Statements. Not later than four months after the close of each fiscal year, and in any case prior to the next annual meeting of shareholders, the Corporation shall prepare:
(1) a balance sheet showing in reasonable detail the financial condition of the Corporation as of the close of its fiscal year; and
(2) a profit and loss statement showing the results of its operations during its fiscal year.
Upon written request, the Corporation promptly shall mail to any shareholder of record a copy of the most recent such balance sheet and profit and loss statement.
Section 5. Notice.
(a) Whenever these Amended and Restated Bylaws require notice to be given to any shareholder or to any director, the notice may be given by mail, in person, by courier delivery, by telephone, or by email, telegram, cablegram, or similar electronic means. Whenever notice is given to a shareholder or director by mail, the notice shall be sent by depositing the notice in a post office or letter box in a postage-prepaid, sealed envelope addressed to the shareholder or director at his or her address as it appears on the books of the Corporation. Any such written notice given by mail shall be effective: (i) if given to shareholders, as such, at the time the same is deposited in the United States mail; and (ii) in all other cases, at the earliest of (x) when delivered, properly addressed, to the addressee's last known principal place of business or residence, (y) three days after its deposit in the mail, as evidenced by the postmark, if mailed with first-class postage prepaid and correctly addressed, or (z) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee. Whenever notice is given to a shareholder or director by any means other than mail, the notice shall be deemed given when received.
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(b) In calculating time periods for notice, when a period of time measured in days, weeks, months, years, or other measurement of time is prescribed for the exercise of any privilege or the discharge of any duty, the first day shall not be counted but the last day shall be counted.
ARTICLE VIII
AMENDMENTS
The Board of Directors shall have power to alter, amend or repeal the Amended and Restated Bylaws or adopt new Bylaws by majority vote of all of the directors, except Article III, Section 9, except with respect to the Board of Directors’ authority to fill vacancies; provided, however, any Bylaws adopted by the Board of Directors may be altered, amended or repealed and new Bylaws adopted, by the majority vote of all the shareholders entitled to vote thereon.
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Exhibit 4.2
CERTAIN CONFIDENTIAL INFORMATION (MARKED BY BRACKETS AS “[***]”) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is dated as of December 31, 2020 by and between Wingshooter Acquisition Corp., a Georgia corporation (the “Company”), and Patriot Financial Partners III, L.P., a Delaware limited partnership (the “Purchaser”).
WHEREAS, this Agreement is made pursuant to the Stock Purchase Agreement, dated as of December 31, 2020, by and between the Company and the Purchaser (the “Purchase Agreement”);
WHEREAS, the Company and Georgia Banking Company, Inc. (“Georgia Banking Company”) entered into that certain Amended and Restated Agreement and Plan of Merger, dated November 11, 2020 (the “Merger Agreement”), pursuant to which the Company will merge with and into Georgia Banking Company, with Georgia Banking Company being the surviving entity (the “Acquisition”);
WHEREAS, references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company; and
WHEREAS, in order to induce the Purchaser to enter into the Purchase Agreement, the Company has agreed to grant the Purchaser the rights set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person.
“Agreement” shall have the meaning set forth in the Preamble.
“Allowable Grace Period” has the meaning set forth in Section 6.
“Business Day” means a day other than a Saturday or Sunday or other day on which banks located in New York City are authorized or required by law to close.
“Capital Stock” means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, securities convertible into or exchangeable or exercisable for any of its shares, interests, participations or other equivalents, partnership interests (whether general or limited), limited liability company interests, or equivalent ownership interests in or issued by such Person.
“Closing Date” has the meaning set forth in the Purchase Agreement.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the voting common stock of the Company, par value $0.01 per share, and any securities into which such shares of voting common stock may hereinafter be reclassified including, but without limitation, the shares of Georgia Banking Company common stock, par value $0.01 per share, converted after the effective time of the Acquisition (the “Converted Shares”).
“Company” shall have the meaning set forth in the Preamble.
“Company Securities” shall mean (i) the Common Stock and (ii) all shares existing or hereafter authorized of any class of preferred stock of the Company which has the right (subject always to the rights of any class or series of preferred stock of the Company ranking senior to or pari passu with such preferred stock) to participate in the distribution of the assets and earnings of the Company, including (without duplication) any shares of capital stock into which Company Securities may be converted (as a result of recapitalization, share exchange or similar event) or are issued with respect to Company Securities, including, without limitation, with respect to any stock split or stock dividend, or a successor security.
“Effective Date” means the date that the Registration Statement, filed pursuant to Section 2(a), is first declared effective by the Commission.
“Effectiveness Deadline” means, with respect to the Initial Registration Statement or the New Registration Statement, the fifth (5th) Trading Day after the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review; provided that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the Commission is open for business.
“Effectiveness Period” shall have the meaning set forth in Section 2(b).
“Event” shall have the meaning set forth in Section 2(c).
“Event Date” shall have the meaning set forth in Section 2(c).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Filing Deadline” means, with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a), the date that is the fourth (4th) anniversary of the Closing Date; provided that if the Filing Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Filing Deadline shall be extended to the next Business Day on which the Commission is open for business.
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“FINRA” shall have the meaning set forth in Section 5.
“Georgia Courts” means the courts of the State of Georgia and the United States District Courts located in the City of Atlanta.
“Grace Period” shall have the meaning set forth in Section 6.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Holders Counsel” shall have the meaning set forth in Section 6(a). “Indemnified Party” shall have the meaning set forth in Section 8(c). “Indemnifying Party” shall have the meaning set forth in Section 8(c). “Initial Registration Statement” shall have the meaning set forth in Section 2(a).
“Investor Rights Agreement” shall mean that certain Investor Rights Agreement by and the between the Company and the Purchaser, dated as of the date hereof.
“Liquidated Damages” shall have the meaning set forth in Section 2(c).
“Losses” shall have the meaning set forth in Section 8(a).
“New Registration Statement” shall have the meaning set forth in Section 2(a).
“New Securities” shall mean any equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component (such as an “equity kicker”) (including any hybrid security) of the Company.
“Non-Responsive Holder” shall have the meaning set forth in Section 9(d).
“OTC Pink” means the marketplace for trading over-the-counter stocks provided and operated by OTC Markets Group, Inc.
“Other Securities” means shares of Common Stock or shares of other Capital Stock of the Company that are contractually entitled to registration rights or Capital Stock that the Company is registering pursuant to a Registration Statement.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Piggyback Registration” shall have the meaning set forth in Section 3(a).
“Principal Market” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading.
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“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Purchase Agreement” shall have the meaning set forth in the Recitals.
“Purchaser” shall have the meaning set forth in the Preamble.
“Registrable Securities” means all of the Shares, Underlying Shares issued upon exercise of warrants, options and other rights to acquire Underlying Shares, any New Securities acquired pursuant to the Investor Rights Agreement and any Shares or Underlying Shares issued or issuable in respect of the Shares or the Underlying Shares by way of conversion, exchange, stock dividend, split or combination, recapitalization, merger, consolidation, other reorganization or otherwise, provided that the Shares or the Underlying Shares shall cease to be Registrable Securities upon the earliest to occur of the following: (A) a sale pursuant to a Registration Statement or Rule 144 under the Securities Act (in which case, only such security sold shall cease to be a Registrable Security); (B) becoming eligible for sale without time, volume or manner of sale restrictions by the Holders under Rule 144; (C) if such Shares or Underlying Shares have ceased to be outstanding; (D) the date a Registration Statement becomes effective including such Shares or Underlying Shares; or (E) if such Shares or Underlying Shares have been sold in a private transaction in which the Holder’s rights under this Agreement have not been assigned to the transferee.
“Registration Statements” means any one or more registration statements of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement (including without limitation the Prospectus, the Initial Registration Statement, the New Registration Statement and any Remainder Registration Statements), amendments and supplements to such Registration Statements, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statements.
“Requested Information” shall have the meaning set forth in Section 9(d).
“Required Registration Statement” means any Initial Registration Statement, New Registration Statement, or Remainder Registration Statement.
“Remainder Registration Statement” shall have the meaning set forth in Section 2(a).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
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“Rule 144A” means Rule 144A promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“SEC Guidance” means (i) any publicly available written guidance, comments, requirements or requests of the Commission staff and (ii) the Securities Act.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares” means the shares of Common Stock issued or issuable to the Purchaser pursuant to the Purchase Agreement and, following the Acquisition, the Converted Shares.
“Shelf Offering” shall have the meaning set forth in Section 4(a).
“Take-Down Notice” shall have the meaning set forth in Section 4(a).
“Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported in the OTC Pink; provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.
“Underlying Shares” means the shares of Common Stock.
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2. Mandatory Registration.
(a) On or prior to the Filing Deadline, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 or, if Rule 415 is not available for offers and sales of the Registrable Securities, by such other means of distribution of Registrable Securities as the Company may reasonably determine (the “Initial Registration Statement”). Notwithstanding the registration obligations set forth in this Section 2, in the event that the Commission informs the Company that all such Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof and, as applicable, file the Initial Registration Statement, or use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission and/or (ii) withdraw the Initial Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the Commission, on such form available to the Company to register for resale the Registrable Securities as a secondary offering; provided, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Securities Act Rules Compliance and Disclosure Interpretation 612.09, or any successor thereto. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used commercial reasonable efforts to reasonably advocate with the Commission for the registration of all or a greater number of Registrable Securities), the number of Registrable Securities to be registered on such Registration Statement will be reduced pro rata on the basis of the aggregate number of Registrable Securities owned by each such person, and under such circumstances, the Company will not be subject to the payment of Liquidated Damages in Section 2(c). In the event the Company amends the Initial Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on such form available to the Company to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended, or the New Registration Statement (the “Remainder Registration Statements”). No Holder shall be named as an “underwriter” in any Registration Statement without such Holder’s prior written consent, which shall not be unreasonably withheld.
(b) The Company shall use its commercially reasonable efforts to cause each Required Registration Statement to be declared effective by the Commission as soon as practicable, and, with respect to the Initial Registration Statement or the New Registration Statement, as applicable, no later than the Effectiveness Deadline, and shall use its commercially reasonable efforts to keep each Required Registration Statement continuously effective under the Securities Act until the earlier of (i) such time as all of the Registrable Securities covered by such Required Registration Statement have been publicly sold by the Holders or (ii) the date that all Registrable Securities covered by such Required Registration Statement may be sold by the Holders without volume or manner of sale restrictions under Rule 144, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent (the “Effectiveness Period”); provided, however, if the Company does not meet the eligibility requirements for filing on Form S-3 (or any successor registration statement form) at the time of filing of a Required Registration Statement, the Effectiveness Period shall not exceed 180 days following the Effective Date. The Company shall request effectiveness of a Required Registration Statement as of 5:00 p.m., New York City time, on a Trading Day. The Company shall promptly notify the Holders via facsimile or electronic mail of a “.pdf” format data file of the effectiveness of a Registration Statement within one (1) Business Day of the Effective Date. The Company shall file a final Prospectus for a Required Registration Statement with the Commission, as required by Rule 424(b) as promptly as reasonably practicable following the Effective Date.
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(c) If: (i) the Initial Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) the Initial Registration Statement or the New Registration Statement, as applicable, is not declared effective by the Commission (or otherwise does not become effective) for any reason on or prior to the Effectiveness Deadline, or (iii) after its Effective Date, (A) such Registration Statement ceases to be effective for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain continuously effective as to all Registrable Securities for which it is required to be effective, or (B) the Purchaser is not permitted to utilize the Prospectus therein to resell such Registrable Securities (other than during an Allowable Grace Period), (iv) a Grace Period applicable to a Required Registration Statement exceeds the length of an Allowable Grace Period, or (v) after the Filing Deadline, and only in the event a Registration Statement is not effective or available to sell all Registrable Securities, the Purchaser is unable to sell Registrable Securities without restriction under Rule 144, (any such failure or breach in clauses (i) through (v) above being referred to as an “Event,” and, for purposes of clauses (i), (ii), (iii) or (v), the date on which such Event occurs, or for purposes of clause (iv) the date on which such Allowable Grace Period is exceeded, being referred to as an “Event Date”), then in addition to any other rights the Purchaser may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to the Purchaser an amount in cash or shares of Common Stock, at the election of the Purchaser, as liquidated damages and not as a penalty (“Liquidated Damages”), equal to 1.0% of the aggregate purchase price paid by the Purchaser pursuant to the Purchase Agreement for any Registrable Securities held by the Purchaser on the Event Date. If the Purchaser elects to receive payment in Common Shares, the value of the Common Shares will be the closing market price on the Trading Market on the Event Date or if the Event Date is not a Trading Day, the next preceding Trading Day. The parties agree that notwithstanding anything to the contrary herein or in the Purchase Agreement, no Liquidated Damages shall be payable (i) if as of the relevant Event Date, the Registrable Securities may be sold by the Purchaser without volume or manner of sale restrictions under Rule 144, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent, (ii) if any action or inaction taken by the Purchaser caused an Event, (iii) in the event the Purchaser is unable to lawfully sell any of its Registrable Securities (including, without limitation, in the event a Grace Period exceeds the length of an Allowable Grace Period) because of possession of material non-public information or (iv) with respect to any period after the expiration of the Effectiveness Period (it being understood that this clause shall not relieve the Company of any Liquidated Damages accruing prior to the expiration of the Effectiveness Period). If the Company fails to pay any Liquidated Damages pursuant to this Section 2(c) in full within ten (10) Business Days after the date payable, the Company will pay interest on the amount of Liquidated Damages then owing to the Purchaser at a rate of 1.0% per month on an annualized basis (or such lesser maximum amount that is permitted to be paid by applicable law) to the Purchaser, accruing daily from the date such Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event, except in the case of the first Event Date. With respect to the Purchaser, the Effectiveness Deadline for a Required Registration Statement shall be extended without default or Liquidated Damages hereunder in the event that the Company’s failure to obtain the effectiveness of the Registration Statement on a timely basis results from the failure of the Purchaser to timely provide the Company with information requested by the Company and necessary to complete the Registration Statement in accordance with the requirements of the Securities Act (in which case the Effectiveness Deadline would be extended with respect to Registrable Securities held by the Purchaser).
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3. Piggyback Registration.
(a) If the Company intends to file a Registration Statement covering a primary or secondary offering of any of its Common Stock or Other Securities, whether or not the sale is for its own account, which is not a registration solely to implement an employee benefit plan pursuant to a registration statement on Form S-8 (or successor form), a registration statement on Form S-4 (or successor form) or a transaction to which Rule 145 or any other similar rule of the Commission is applicable, the Company will promptly (and in any event at least ten (10) Business Days before the anticipated filing date) give written notice to the Holders of its intention to effect such a registration. The Company will effect the registration under the Securities Act of all Registrable Securities that the Holder(s) request(s) be included in such registration (a “Piggyback Registration”) by a written notice delivered to the Company within five (5) Business Days after the notice given by the Company in the preceding sentence. Subject to Section 3(b), securities requested to be included in a Company registration pursuant to this Section 3 shall be included by the Company on the same form of Registration Statement as has been selected by the Company for the securities the Company is registering for sale referred to above. The Holders shall be permitted to withdraw all or part of the Registrable Securities from the Piggyback Registration at any time at least two (2) Business Days prior to the effective date of the Registration Statement relating to such Piggyback Registration. If the Company elects to terminate any registration filed under this Section 3 prior to the effectiveness of such registration, the Company will have no obligation to register the securities sought to be included by the Holders in such registration under this Section 3. There shall be no limit to the number of Piggybank Registrations pursuant to this Section 3.
(b) If a Registration Statement under this Section 3 relates to an underwritten offering and the managing underwriter(s) advise(s) the Company that in its or their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or Prospectus only such number of securities that in the reasonable opinion of such underwriter(s) can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the Common Stock and other securities the Company proposes to sell, (ii) second, the Registrable Securities of the Holders who have requested inclusion of Registrable Securities pursuant to this Section 3, pro rata on the basis of the aggregate number of such securities or shares owned by each such person, or as such Holders may otherwise agree, and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement. The Company shall select the investment banking firm or firms to act as the lead underwriter or underwriters in connection with an underwritten offering made pursuant to this Section 3. No Holder may participate in any underwritten registration under this Section 3 unless such Holder (i) agrees to sell the Registrable Securities it desires to have covered by the underwritten offering on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
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4. Underwritten Shelf Offerings.
(a) At any time that a shelf Registration Statement covering Registrable Securities pursuant to Section 2 or Section 3 is effective, if any Holder delivers a notice to the Company (a “Take-Down Notice”) stating that it intends to sell all or part of its Registrable Securities included by it on the shelf Registration Statement (a “Shelf Offering”), then the Company shall amend or supplement the shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Offering (taking into account the inclusion of Registrable Securities by any other Holders pursuant to this Section 4(a)). In connection with any Shelf Offering, including any Shelf Offering that is an underwritten offering, such proposing Holder(s) shall also deliver the Take-Down Notice to all other Holders included on such shelf Registration Statement and permit each such Holder to include its Registrable Securities included on the shelf Registration Statement in the Shelf Offering if such Holder notifies the proposing Holder(s) and the Company within five (5) Business Days after delivery of the Take-Down Notice to such Holder.
(b) The Company shall have no obligation to effect an underwritten offering under this Section 4 on behalf of the Holders electing to participate in such offering unless the expected gross proceeds from such offering exceed $2,000,000.
(c) If a Shelf Offering of Registrable Securities included in a Required Registration Statement is to be conducted as an underwritten offering, then the Holders of the majority of the Registrable Securities included in a Required Registration Statement shall select the investment banking firm or firms to act as the lead underwriter or underwriters in connection with such offering; provided, that such selection shall be reasonably acceptable to the Company. If, in connection with any such underwritten offering, the managing underwriter(s) advise(s) the Company that in its or their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or Prospectus only such number of securities that in the reasonable opinion of such underwriter(s) can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the Registrable Securities of the Holders who have requested registration of Registrable Securities pursuant to this Section 4, pro rata on the basis of the aggregate number of such securities or shares owned by each such person, or as the Holders may otherwise agree amongst themselves, (ii) second, the Common Stock and other securities the Company proposes to sell, and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement. No Holder may participate in any underwritten registration under this Section 4 unless such Holder (i) agrees to sell the Registrable Securities it desires to include in the underwritten offering on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
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(d) In addition to Sections (a) and (b) of this Section 4, a Shelf Offering of Registrable Securities included on a Piggyback Registration Statement initiated by Holders shall be subject to the procedures set forth in Section 3.
5. Restrictions on Public Sale by Holders of Registrable Securities. Each Holder agrees, in connection with any underwritten offering of Common Stock pursuant to a Registration Statement (whether or not such Holder elected to include Registrable Securities in such Registration Statement), if requested (pursuant to a written notice) by the managing underwriter or underwriters in an underwritten offering, not to effect any public sale or distribution of any Registrable Securities (except as part of such underwritten offering), including a sale pursuant to Rule 144, or to make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company, other than to an Affiliate or other Holder that has agreed to the same restriction, without the prior written consent of the Company or such underwriter, as the case may be, during the period commencing on the date of the request (which shall be no earlier than seven (7) days prior to the expected “pricing” of such offering) and continuing for not more than 180 days (with respect to an offering pursuant to the Initial Registration Statement) or 60 days after the date of the Prospectus (or Prospectus supplement if the offering is made pursuant to a “shelf” registration), or such shorter time as shall be required by the managing underwriter, pursuant to which such public offering shall be made, plus an extension period, which shall be no longer than 17 days, as may be proposed by the managing underwriter to address the regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”) regarding the publishing of research, or such lesser period as is required by the managing underwriter; provided, that, each Holder will agree to such restricted period only if all executive officers and directors of the Company enter into similar agreements, and the Company has used reasonable best efforts to cause all other holders of at least 5% of the Company’s voting securities to enter into similar agreements.
6. Registration Procedures. Subject to Section 2(c), if and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2 and Section 3 hereof, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement or Registration Statements on such form as shall be available for the sale of the Registrable Securities by the applicable Holders thereof or by the Company in accordance with the intended method or methods of distribution thereof, and use its reasonable best efforts to cause such Registration Statement to become effective and to remain effective as provided herein (including by means of a shelf registration statement pursuant to Rule 415 under the Securities Act if so requested and if the Company is then eligible to use such registration); provided, however, that not less than three (3) Trading Days before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall furnish or otherwise make available to the Holders and to one counsel designated by the Holders of a majority of the outstanding Registrable Securities (“Holders Counsel”), copies of all such documents proposed to be filed, which documents will be subject to the reasonable review and comment of Holders Counsel, and such other documents reasonably requested by Holders Counsel, including any comment letter(s) from the Commission, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, including reasonable access to the Company’s books and records, officers, accountants and other advisors, in all cases subject to Section 6(p) below; provided further, however, that the Company shall not file any Registration Statement containing information to which Holders Counsel reasonably objects in good faith, unless the Company shall be advised by its counsel that the information objected to is required under the Securities Act;
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(b) (i) prepare and file with the Commission such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period (except during an Allowable Grace Period) and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement; (ii) cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act (except during an Allowable Grace Period); (iii) respond as promptly as reasonably practicable to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible, provide the Holders Counsel true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that pertains to the Holders as “Selling Shareholders”; and (iv) comply in all material respects with the applicable provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by a Registration Statement until such time as all of such Registrable Securities shall have been disposed of (subject to the terms of this Agreement) in accordance with the intended methods of disposition by the Holders thereof as set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; provided, that each Holder shall be responsible for the delivery of the Prospectus to the Persons to whom such Holder sells any of the Registrable Securities (including in accordance with Rule 172 under the Securities Act), and each Holder agrees to dispose of Registrable Securities in compliance with applicable federal and state securities laws. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 6(b)) by reason of the Company filing a report on Form 10- K, Form 10-Q or Form 8- K or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the Commission as promptly as practicable.
(c) notify each selling Holder, Holders Counsel and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (v) if the Company has knowledge of the happening of any event that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice shall notify the selling Holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material non-public information);
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(d) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest date reasonably practical;
(e) if requested by the managing underwriters, if any, or the Purchaser or the Holders of a majority of the then outstanding Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and the Purchaser or such Holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received such request; provided, however, that the Company shall not be required to take any actions under this Section 6(e) that are not, in the opinion of counsel for the Company, in compliance with applicable law;
(f) furnish or make available to each selling Holder, Holders Counsel and each managing underwriter, if any, without charge, at least one conformed copy of the Registration Statement, the Prospectus and Prospectus supplement(s), if applicable, and each post-effective amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits, unless requested in writing by such Holder, counsel or underwriter);
(g) promptly deliver to each selling Holder, Holders Counsel, and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such Persons may reasonably request from time to time in connection with the distribution of the Registrable Securities; and the Company, subject to the last paragraph of this Section 6, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;
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(h) prior to any public offering, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders, the underwriters, if any, and Holders Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to take any other action that may be necessary or advisable to enable such Holders to consummate the disposition of such Registrable Securities in such jurisdiction; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each selling Holder that the Registrable Securities represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or such Holders may request at least two (2) Business Days prior to any sale of Registrable Securities in a firm commitment public offering, but in any other such sale, within ten (10) Business Days prior to having to issue the securities;
(j) upon the occurrence of, and its knowledge of, any event contemplated by Sections 6(c)(ii)-(v) above, as promptly as practicable, as applicable: (i) use its commercially reasonable efforts to prevent the issuance of any stop order or obtain its withdrawal at the earliest possible moment if the stop order has been issued, or (ii) prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(k) prior to the effective date of the Registration Statement relating to the Registrable Securities, provide a CUSIP number for the Registrable Securities;
(l) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement;
(m) use its commercially reasonable efforts to cause all Registrable Securities to be offered (i) in connection with the Initial Registration Statement to be listed on a Trading Market (other than OTC Bulletin Board) and (ii) in connection with any other public offering, to be listed on each Trading Market on which securities of the same series or class issued by the Company are then listed, or if no such similar securities are then listed, on a Trading Market (other than the OTC Bulletin Board) selected by the Company, as the case may be, prior to the effectiveness of the relevant Registration Statement; provided, however, if the Registrable Securities that are the subject of an effective Registration Statement are not listed on a Trading Market (other than the OTC Bulletin Board) by the date that is four years and six months following the Closing Date, while continuing to use its commercially reasonable efforts to cause all such Registrable Securities to be listed on a Trading Market (other than the OTC Bulletin Board), the Company shall use commercially reasonable efforts to promptly cause all such Registrable Securities to be qualified for trading in an over-the-counter market operated by OTC Markets Group, Inc.;
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(n) with respect to any sale of Registrable Securities pursuant to a firm commitment underwritten offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) reasonably requested by the Purchaser or the Holders of a majority of the Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriters, if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, (i) make such representations and warranties to the selling Holders and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its commercially reasonable efforts to furnish to the selling Holders opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and Holders Counsel), addressed to each selling Holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (iii) use its commercially reasonable efforts to obtain “cold comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each selling Holder of Registrable Securities (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings and (v) deliver such documents and certificates as may be reasonably requested by the Purchaser or the Holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement, Holders Counsel and the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to Section 6(n)(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;
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(o) make available for inspection by a representative of the selling Holder of Registrable Securities, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorneys or accountants retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information in each case reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that any information that is not generally publicly available at the time of delivery of such information shall be kept confidential by such Persons unless (i) disclosure of such information is required by court or administrative order, (ii) disclosure of such information, in the opinion of counsel to such Person, is required by law or applicable legal process, or (iii) such information becomes generally available to the public other than as a result of a non-permitted disclosure or failure to safeguard by such Person. In the case of a proposed disclosure pursuant to (i) or (ii) above, such Person shall be required to give the Company written notice of the proposed disclosure prior to such disclosure (to the extent permitted by law) and, if requested by the Company, assist the Company in seeking to prevent or limit the proposed disclosure. Without limiting the foregoing, no such information shall be used by such Person as the basis for any market transactions in securities of the Company or its subsidiaries in violation of law;
(p) cause its officers to use their commercially reasonable efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including, without limitation, participation in “road shows”);
(q) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA; and
(r) if the Company becomes eligible to use Form S-3 during the term of this Agreement, the Company shall use its commercially reasonable efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale of the Registrable Securities.
Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the Commission, the Company may delay the disclosure of material non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Company, in the best interests of the Company (such delay, a “Grace Period”). During the Grace Period, the Company shall not be required to maintain the effectiveness of any Registration Statement filed hereunder and, in any event, Holders shall suspend sales of Registrable Securities pursuant to such Registration Statements during the pendency of the Grace Period provided, the Company shall promptly (i) notify the Purchaser in writing of the existence of material non-public information giving rise to a Grace Period or the need to file a post-effective amendment, as applicable, and the date on which such Grace Period will begin, (ii) use commercially reasonable efforts to terminate a Grace Period as promptly as practicable provided that such termination is, in the good faith judgment of the Company, in the best interest of the Company and (iii) notify the Purchaser in writing of the date on which the Grace Period ends; provided, further, that, with respect to a Required Registration Statement only, no single Grace Period shall exceed sixty (60) consecutive days, and during any three hundred sixty-five (365) day period, the aggregate of all Grace Periods shall not exceed an aggregate of one hundred twenty (120) days (each Grace Period complying with this provision being an “Allowable Grace Period”). For purposes of determining the length of a Grace Period, the Grace Period shall be deemed to begin on and include the date the Purchaser receives the notice referred to in clause (i) above and shall end on and include the later of the date the Purchaser receives the notice referred to in clause (iii) above and the date referred to in such notice; provided, that no Grace Period shall be longer than an Allowable Grace Period. Notwithstanding anything to the contrary, the Company shall use commercially reasonable efforts to cause its transfer agent to deliver unlegended Shares to a transferee of the Purchaser in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Purchaser has entered into an irrevocable contract for sale prior to the Purchaser’s receipt of the notice of a Grace Period and for which the Purchaser has not yet settled.
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The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish to the Company in writing such information required in connection with such registration regarding such seller and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing, and the Company may exclude from such registration the Registrable Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.
Each Holder of Registrable Securities covered by such Registration Statement agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 6(c)(ii), 6(c)(iii), 6(c)(iv) or 6(c)(v) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, that the time periods under Section 2 with respect to the length of time that the effectiveness of a Registration Statement must be maintained shall automatically be extended by the amount of time the Holder is required to discontinue disposition of such securities.
7. Registration Expenses. All fees and expenses incident to the Company’s performance of or compliance with its obligations under this Agreement (excluding any underwriting discounts and selling commissions, stock transfer taxes and fees of counsel for the Holders) shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence that are the Company’s responsibility shall include, without limitation, (a) all registration and filing fees (including, without limitation, fees and expenses (i) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, (ii) with respect to compliance with applicable state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as requested by the Holders) and (iii) if not previously paid by the Company in connection with an issuer filing, with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale), (b) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the Holders of a majority of the Registrable Securities included in the Registration Statement), (c) messenger, telephone and delivery expenses of the Company, (d) fees and disbursements of counsel for the Company, (e) Securities Act liability insurance, if the Company so desires such insurance, (f) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (g) those expenses of the selling Holders actually and reasonably incurred, including without limitation, the reasonable fees of Holders Counsel up to $50,000. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.
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The Company shall not be required to pay (i) fees and disbursements of any counsel retained by any Holder or by any underwriter (except as set forth in clauses 7(a)(ii) and 7(g)), or (ii) any underwriter’s fees (including discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals) relating to the distribution of the Registrable Securities (other than with respect to Registrable Securities sold by the Company or as otherwise set forth in this Section 7).
8. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, the officers, directors, agents, general partners, managing members, managers, Affiliates, employees and investment advisers of such Holder, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, general partners, managing members, managers, Affiliates, employees and investment advisers of each such controlling person, and each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees and any legal or other fees or expenses incurred by such party in connection with any investigation or Proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), as incurred, arising out of or based upon (i) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, any preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act, Exchange Act, or any state securities law or any rule or regulation thereunder, and (without limitation of the other portions of this Section 8(a)) will reimburse each such Holder and each Person who controls each such Holder, each such underwriter, and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability, or action; provided that the Company will not be liable to a Holder or underwriter in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission by such Holder or underwriter, but only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith in reliance upon and in conformity with written information that is furnished to the Company by such Holder or underwriter for use therein and relates to such Holder or underwriter, as applicable. It is agreed that the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).
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(b) Indemnification by Holders. Each Holder shall, notwithstanding any termination of this Agreement, indemnify and hold harmless, to the fullest extent permitted by law, severally and not jointly with any other Holders, the Company, its directors, its officers who sign the Registration Statement, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers, from and against all Losses arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in such Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will (without limitation of the other portions of this Section 8(b)) reimburse the Company, its directors, its officers who sign the Registration Statement, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability, or action, in each case to the extent, but only to the extent, that such untrue statement or omission is made in such Registration Statement, preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith in reliance upon and in conformity with written information that is furnished to the Company by such Holder for inclusion therein and that relates to such Holder; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided, further, that the liability of such Holder shall be limited to the net proceeds received by such selling Holder from the sale of Registrable Securities covered by such Registration Statement.
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(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of one (1) counsel reasonably satisfactory to the Indemnified Party and the payment of all reasonable and documented fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such written notice within a reasonable time of commencement of any such Proceeding shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have materially and adversely prejudiced the Indemnifying Party in its ability to defend such Proceeding.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel in writing that a conflict of interest exists if the same counsel were to represent such Indemnified Party and the Indemnifying Party; provided, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or unreasonably conditioned. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all documented fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 8(c)) shall be paid to the Indemnified Party, as incurred, within twenty (20) Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally judicially determined to not be entitled to indemnification hereunder.
(d) Contribution. If a claim for indemnification under Section 8(a) or 8(b) is unavailable to an Indemnified Party (other than in accordance with its terms) or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 8(d) was available to such party in accordance with its terms. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 8(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
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(e) The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in diminution or limitation of the indemnification provisions under the Purchase Agreement.
9. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of its obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.
(b) Prohibition on Other Registrations. The Company agrees (i) not to effect or initiate a registration statement for any public sale or distribution of any securities similar to those being registered pursuant to this Agreement, or any securities convertible into or exchangeable or exercisable for such securities (other than a registration solely to implement an employee benefit plan pursuant to a registration statement on Form S-8 (or successor form), a registration statement on Form S-4 (or successor form) or a transaction to which Rule 145 or any other similar rule of the Commission is applicable), during the fourteen (14) calendar days prior to, and during the sixty (60) calendar-day period beginning on, the effective date of any Registration Statement in which the Holders of Registrable Securities are participating (except as part of any such registration, if permitted).
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(c) Rule 144 Requirements. For so long as the Company is subject to the reporting requirements of the Exchange Act, the Company will use its commercially reasonable efforts to timely file with the Commission such reports and information required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder and as the Commission may require. The Company shall furnish to any Holder of Registrable Securities forthwith upon request a written statement as to its compliance with the reporting requirements of Rule 144 (or any successor exemptive rule), the Securities Act and the Exchange Act (at any time that it is subject to such reporting requirements); a copy of its most recent annual or quarterly report; and such other reports and documents as such Person may reasonably request in availing itself of any rule or regulation of the Commission allowing it to sell any such securities without registration.
(d) Obligations of Holders and Others in a Registration. Each Holder agrees to timely furnish in writing such information regarding such Person, the securities sought to be registered and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably be required to effect the registration of such Registrable Securities (the “Requested Information”) and shall take such other action as the Company may reasonably request in connection with the registration, qualification or compliance or as otherwise provided herein. At least ten (10) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each holder of the information the Company requires from such Holder if such Holder elects to have any of such Holder’s Registrable Securities included in the Registration Statement. If at least five (5) Business Days prior to the filing date, the Company has not received the Requested Information from a Holder (a “Non-Responsive Holder”), then the Company may exclude from any Registration Statement the Registrable Securities of such Non-Responsive Holder.
(e) Rule 144A. The Company agrees that, upon the request of any Holder of Registrable Securities or any prospective purchaser of Registrable Securities designated by a Holder, the Company shall promptly provide (but in any case within fifteen (15) calendar days of a request) to such Holder or potential purchaser, the following information:
(i) a brief statement of the nature of the business of the Company and any subsidiaries and the products and services they offer;
(ii) the most recent consolidated balance sheets and profit and losses and retained earnings statements, and similar financial statements of the Company for the two (2) most recent fiscal years (such financial information shall be audited, to the extent reasonably available); and
(iii) such other information about the Company, any subsidiaries, and their business, financial condition and results of operations as the requesting Holder or purchaser of such Registrable Securities shall reasonably request in order to comply with Rule 144A, as amended, and in connection therewith the anti-fraud provisions of the federal and state securities laws.
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The Company hereby represents and warrants to any such requesting Holder and any prospective purchaser of Registrable Securities from such Holder that the information provided by the Company pursuant to this Section 9(e) will, as of their dates, not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
(f) Limitations on Subsequent Registration Rights. The Company will not enter into any agreements with any holder or prospective holder of any securities of the Company that would grant such holder or prospective holder registration rights with respect to the securities of the Company that would have priority over the Registrable Securities with respect to the inclusion of such securities in any registration. If the Company enters into an agreement that contains terms more favorable, in form or substance, to any shareholders than the terms provided to the Holders under this Agreement, then the Company will modify or revise the terms of this Agreement in order to reflect any such more favorable terms for the benefit of the Holders. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that pursuant to the Morgan Agreement and the Smith Agreement, Bartow Morgan, Jr. and J. Bradford Smith shall have registration rights that are substantially the same as those provided to the Holders under this Agreement.
(g) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell the Registrable Securities only in accordance with a method of distribution described in the Registration Statement.
(h) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6(c)(ii)-(iv), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.
(i) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date hereof, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.
(j) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, or waived unless the same shall be in writing and signed by the Company and Holders of a majority of the then outstanding Registrable Securities; provided that any such amendment, modification, supplement or waiver that materially, adversely and disproportionately effects the rights or obligations of any Holder vis-à-vis the other Holders shall require the prior written consent of such Holder.
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(k) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail (provided the sender receives a machine-generated confirmation of successful facsimile transmission or e-mail notification or confirmation of receipt of an e-mail transmission) at the facsimile number or e-mail address specified in this Section 9(k) prior to 5:00 p.m., New York City time, on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 9(k) on a day that is not a Trading Day or later than 5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:
| If to the Company: | Wingshooter Acquisition Corp. | |
| 1776 Peachtree Street NW, Suite 100 | ||
| Atlanta, GA 30309 | ||
| Attn: Bartow Morgan, Jr. | ||
| Tel: [***] | ||
| Email: [***] | ||
| With a copy to: | Troutman Pepper Hamilton Sanders LLP | |
| 600 Peachtree Street, NE, Suite 3000 | ||
| Atlanta, GA 30308 | ||
| Attn: James Stevens | ||
| Tel: [***] | ||
| Fax: [***] | ||
| Email: [***] |
If to any Holder, to such Holder’s address as set forth on the records of the Company.
(l) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties. Without limiting the generality of the foregoing, after the Acquisition, Georgia Banking Company, as successor by merger to the Company, shall assume and be bound by this Agreement, and references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Company may not assign its rights (except by merger or in connection with another entity acquiring all or substantially all of the Company’s assets) or obligations hereunder without the prior written consent of all the Holders of the then outstanding Registrable Securities. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by the Purchaser to any transferee of the Shares only if: (a) the transferee or assignee (i) acquires Shares of the Purchaser’s Registrable Securities with an original value as of the Closing Date of not less than $5,000,000; (b) the Purchaser agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable period of time after such assignment; (c) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the securities with respect to which such registration rights are being transferred or assigned; (d) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws; and (e) at or before the time the Company received the written notice contemplated by clause (c) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein with respect to a Holder or the Purchaser. In the event of any delay in filing or effectiveness of the Registration Statement because of such assignment by the Purchaser or its transferee, the Company shall not be liable for any damages arising from such delay.
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(m) Execution and Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature were the original thereof.
(n) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(o) Cumulative Remedies. Except as provided in Section 2(c) with respect to Liquidated Damages, the remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(p) Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
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(q) Headings. The headings in this Agreement are for convenience only and shall not limit or otherwise affect the meaning hereof.
(r) Entire Agreement. This Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than as set forth or referred to herein and in the Purchase Agreement. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories, as of the date first indicated above.
| WINGSHOOTER ACQUISITION CORP. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Name: | Bartow Morgan, Jr. | |
| Title: | Chief Executive Officer | |
| PATRIOT FINANCIAL PARTNERS III, L.P. | ||
| By: | /s/ James F. Deutsch | |
| Name: | James F. Deutsch | |
| Its: | Managing Partner | |
[Signature Page to Registration Rights Agreement]
Exhibit 4.3
Execution Version
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is dated as of December 31, 2020, by and between Wingshooter Acquisition Corp., a Georgia corporation (the “Company”), and [●], a Georgia resident (the “Purchaser”).
WHEREAS, this Agreement is made pursuant to the Stock Purchase Agreement, dated as of December 31, 2020, by and between the Company and the Purchaser (the “Purchase Agreement”);
WHEREAS, the Company and Georgia Banking Company, Inc. (“Georgia Banking Company”) entered into that certain Amended and Restated Agreement and Plan of Merger, dated November 11, 2020 (the “Merger Agreement”), pursuant to which the Company will merge with and into Georgia Banking Company, with Georgia Banking Company being the surviving entity (the “Acquisition”);
WHEREAS, references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company; and WHEREAS, in order to induce the Purchaser to enter into the Purchase Agreement, the Company has agreed to grant the Purchaser the rights set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person.
“Agreement” shall have the meaning set forth in the Preamble.
“Allowable Grace Period” has the meaning set forth in Section 6.
“Business Day” means a day other than a Saturday or Sunday or other day on which banks located in New York City are authorized or required by law to close.
“Capital Stock” means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, securities convertible into or exchangeable or exercisable for any of its shares, interests, participations or other equivalents, partnership interests (whether general or limited), limited liability company interests, or equivalent ownership interests in or issued by such Person.
“Closing Date” has the meaning set forth in the Purchase Agreement.
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“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the voting common stock of the Company, par value $0.01 per share, and any securities into which such shares of voting common stock may hereinafter be reclassified including, but without limitation, the shares of Georgia Banking Company common stock, par value $0.01 per share, converted after the effective time of the Acquisition (the “Converted Shares”).
“Company” shall have the meaning set forth in the Preamble.
“Company Securities” shall mean (i) the Common Stock and (ii) all shares existing or hereafter authorized of any class of preferred stock of the Company which has the right (subject always to the rights of any class or series of preferred stock of the Company ranking senior to or pari passu with such preferred stock) to participate in the distribution of the assets and earnings of the Company, including (without duplication) any shares of capital stock into which Company Securities may be converted (as a result of recapitalization, share exchange or similar event) or are issued with respect to Company Securities, including, without limitation, with respect to any stock split or stock dividend, or a successor security.
“Effective Date” means the date that the Registration Statement, filed pursuant to Section 2(a), is first declared effective by the Commission.
“Effectiveness Deadline” means, with respect to the Initial Registration Statement or the New Registration Statement, the fifth (5th) Trading Day after the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review; provided that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the Commission is open for business.
“Effectiveness Period” shall have the meaning set forth in Section 2(b).
“Event” shall have the meaning set forth in Section 2(c).
“Event Date” shall have the meaning set forth in Section 2(c).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Filing Deadline” means, with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a), the date that is the fourth (4th) anniversary of the Closing Date; provided that if the Filing Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Filing Deadline shall be extended to the next Business Day on which the Commission is open for business.
“FINRA” shall have the meaning set forth in Section 5.
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“Georgia Courts” means the courts of the State of Georgia and the United States District Courts located in the City of Atlanta.
“Grace Period” shall have the meaning set forth in Section 6.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Holders Counsel” shall have the meaning set forth in Section 6(a). “Indemnified Party” shall have the meaning set forth in Section 8(c). “Indemnifying Party” shall have the meaning set forth in Section 8(c). “Initial Registration Statement” shall have the meaning set forth in Section 2(a).
“Investor Rights Agreement” shall mean that certain Investor Rights Agreement by and the between the Company and the Purchaser, dated as of the date hereof.
“Liquidated Damages” shall have the meaning set forth in Section 2(c).
“Losses” shall have the meaning set forth in Section 8(a).
“New Registration Statement” shall have the meaning set forth in Section 2(a).
“New Securities” shall mean any equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component (such as an “equity kicker”) (including any hybrid security) of the Company.
“Non-Responsive Holder” shall have the meaning set forth in Section 9(d).
“OTC Pink” means the marketplace for trading over-the-counter stocks provided and operated by OTC Markets Group, Inc.
“Other Securities” means shares of Common Stock or shares of other Capital Stock of the Company that are contractually entitled to registration rights or Capital Stock that the Company is registering pursuant to a Registration Statement.
“Patriot” means Patriot Financial Partners III, L.P., a Delaware limited partnership.
“Patriot Agreement” means that certain Stock Purchase Agreement, as may be amended from time to time, by and between the Company and Patriot.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Piggyback Registration” shall have the meaning set forth in Section 3(a).
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“Principal Market” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Purchase Agreement” shall have the meaning set forth in the Recitals.
“Purchaser” shall have the meaning set forth in the Preamble.
“Registrable Securities” means all of the Shares, Underlying Shares issued upon exercise of warrants, options and other rights to acquire Underlying Shares, any New Securities acquired pursuant to the Investor Rights Agreement and any Shares or Underlying Shares issued or issuable in respect of the Shares or the Underlying Shares by way of conversion, exchange, stock dividend, split or combination, recapitalization, merger, consolidation, other reorganization or otherwise, provided that the Shares or the Underlying Shares shall cease to be Registrable Securities upon the earliest to occur of the following: (A) a sale pursuant to a Registration Statement or Rule 144 under the Securities Act (in which case, only such security sold shall cease to be a Registrable Security); (B) becoming eligible for sale without time, volume or manner of sale restrictions by the Holders under Rule 144; (C) if such Shares or Underlying Shares have ceased to be outstanding; (D) the date a Registration Statement becomes effective including such Shares or Underlying Shares; or (E) if such Shares or Underlying Shares have been sold in a private transaction in which the Holder’s rights under this Agreement have not been assigned to the transferee.
“Registration Statements” means any one or more registration statements of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement (including without limitation the Prospectus, the Initial Registration Statement, the New Registration Statement and any Remainder Registration Statements), amendments and supplements to such Registration Statements, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statements.
“Requested Information” shall have the meaning set forth in Section 9(d).
“Required Registration Statement” means any Initial Registration Statement, New Registration Statement, or Remainder Registration Statement.
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“Remainder Registration Statement” shall have the meaning set forth in Section 2(a).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 144A” means Rule 144A promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“SEC Guidance” means (i) any publicly available written guidance, comments, requirements or requests of the Commission staff and (ii) the Securities Act.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares” means the shares of Common Stock issued or issuable to the Purchaser pursuant to the Purchase Agreement and, following the Acquisition, the Converted Shares.
“Shelf Offering” shall have the meaning set forth in Section 4(a).
“[●] Agreement” means that certain Stock Purchase Agreement, as may be amended from time to time, by and between the Company and [●].
“Take-Down Notice” shall have the meaning set forth in Section 4(a).
“Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported in the OTC Pink; provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.
“Underlying Shares” means the shares of Common Stock.
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2. Mandatory Registration.
(a) On or prior to the Filing Deadline, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 or, if Rule 415 is not available for offers and sales of the Registrable Securities, by such other means of distribution of Registrable Securities as the Company may reasonably determine (the “Initial Registration Statement”). Notwithstanding the registration obligations set forth in this Section 2, in the event that the Commission informs the Company that all such Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof and, as applicable, file the Initial Registration Statement, or use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission and/or (ii) withdraw the Initial Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the Commission, on such form available to the Company to register for resale the Registrable Securities as a secondary offering; provided, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Securities Act Rules Compliance and Disclosure Interpretation 612.09, or any successor thereto. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used commercial reasonable efforts to reasonably advocate with the Commission for the registration of all or a greater number of Registrable Securities), the number of Registrable Securities to be registered on such Registration Statement will be reduced pro rata on the basis of the aggregate number of Registrable Securities owned by each such person, and under such circumstances, the Company will not be subject to the payment of Liquidated Damages in Section 2(c). In the event the Company amends the Initial Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on such form available to the Company to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended, or the New Registration Statement (the “Remainder Registration Statements”). No Holder shall be named as an “underwriter” in any Registration Statement without such Holder’s prior written consent, which shall not be unreasonably withheld.
(b) The Company shall use its commercially reasonable efforts to cause each Required Registration Statement to be declared effective by the Commission as soon as practicable, and, with respect to the Initial Registration Statement or the New Registration Statement, as applicable, no later than the Effectiveness Deadline, and shall use its commercially reasonable efforts to keep each Required Registration Statement continuously effective under the Securities Act until the earlier of (i) such time as all of the Registrable Securities covered by such Required Registration Statement have been publicly sold by the Holders or (ii) the date that all Registrable Securities covered by such Required Registration Statement may be sold by the Holders without volume or manner of sale restrictions under Rule 144, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent (the “Effectiveness Period”); provided, however, if the Company does not meet the eligibility requirements for filing on Form S-3 (or any successor registration statement form) at the time of filing of a Required Registration Statement, the Effectiveness Period shall not exceed 180 days following the Effective Date. The Company shall request effectiveness of a Required Registration Statement as of 5:00 p.m., New York City time, on a Trading Day. The Company shall promptly notify the Holders via facsimile or electronic mail of a “.pdf” format data file of the effectiveness of a Registration Statement within one (1) Business Day of the Effective Date. The Company shall file a final Prospectus for a Required Registration Statement with the Commission, as required by Rule 424(b) as promptly as reasonably practicable following the Effective Date.
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(c) If: (i) the Initial Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) the Initial Registration Statement or the New Registration Statement, as applicable, is not declared effective by the Commission (or otherwise does not become effective) for any reason on or prior to the Effectiveness Deadline, or (iii) after its Effective Date, (A) such Registration Statement ceases to be effective for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain continuously effective as to all Registrable Securities for which it is required to be effective, or (B) the Purchaser is not permitted to utilize the Prospectus therein to resell such Registrable Securities (other than during an Allowable Grace Period), (iv) a Grace Period applicable to a Required Registration Statement exceeds the length of an Allowable Grace Period, or (v) after the Filing Deadline, and only in the event a Registration Statement is not effective or available to sell all Registrable Securities, the Purchaser is unable to sell Registrable Securities without restriction under Rule 144, (any such failure or breach in clauses (i) through (v) above being referred to as an “Event,” and, for purposes of clauses (i), (ii), (iii) or (v), the date on which such Event occurs, or for purposes of clause (iv) the date on which such Allowable Grace Period is exceeded, being referred to as an “Event Date”), and Patriot enforces its right to Liquidated Damages (as defined below) pursuant to that certain Registration Rights Agreement between the Company and Patriot (the “Patriot Registration Rights Agreement”), then in addition to any other rights the Purchaser may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to the Purchaser an amount in cash or shares of Common Stock, at the election of the Purchaser, as liquidated damages and not as a penalty (“Liquidated Damages”), equal to 1.0% of the aggregate purchase price paid by the Purchaser pursuant to the Purchase Agreement for any Registrable Securities held by the Purchaser on the Event Date. If the Purchaser elects to receive payment in Common Shares, the value of the Common Shares will be the closing market price on the Trading Market on the Event Date or if the Event Date is not a Trading Day, the next preceding Trading Day. The parties agree that notwithstanding anything to the contrary herein or in the Purchase Agreement, no Liquidated Damages shall be payable (i) with respect to the Purchaser if Patriot has not enforced its right to Liquidated Damages under the Patriot Registration Rights Agreement, (ii) if as of the relevant Event Date, the Registrable Securities may be sold by the Purchaser without volume or manner of sale restrictions under Rule 144, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent, (iii) if any action or inaction taken by the Purchaser caused an Event, (iv) in the event the Purchaser is unable to lawfully sell any of its Registrable Securities (including, without limitation, in the event a Grace Period exceeds the length of an Allowable Grace Period) because of possession of material non-public information or (v) with respect to any period after the expiration of the Effectiveness Period (it being understood that this clause shall not relieve the Company of any Liquidated Damages accruing prior to the expiration of the Effectiveness Period). If the Company fails to pay any Liquidated Damages pursuant to this Section 2(c) in full within ten (10) Business Days after the date payable, the Company will pay interest on the amount of Liquidated Damages then owing to the Purchaser at a rate of 1.0% per month on an annualized basis (or such lesser maximum amount that is permitted to be paid by applicable law) to the Purchaser, accruing daily from the date such Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event, except in the case of the first Event Date. With respect to the Purchaser, the Effectiveness Deadline for a Required Registration Statement shall be extended without default or Liquidated Damages hereunder in the event that the Company’s failure to obtain the effectiveness of the Registration Statement on a timely basis results from the failure of the Purchaser to timely provide the Company with information requested by the Company and necessary to complete the Registration Statement in accordance with the requirements of the Securities Act (in which case the Effectiveness Deadline would be extended with respect to Registrable Securities held by the Purchaser).
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3. Piggyback Registration.
(a) If the Company intends to file a Registration Statement covering a primary or secondary offering of any of its Common Stock or Other Securities, whether or not the sale is for its own account, which is not a registration solely to implement an employee benefit plan pursuant to a registration statement on Form S-8 (or successor form), a registration statement on Form S-4 (or successor form) or a transaction to which Rule 145 or any other similar rule of the Commission is applicable, the Company will promptly (and in any event at least ten (10) Business Days before the anticipated filing date) give written notice to the Holders of its intention to effect such a registration. The Company will effect the registration under the Securities Act of all Registrable Securities that the Holder(s) request(s) be included in such registration (a “Piggyback Registration”) by a written notice delivered to the Company within five (5) Business Days after the notice given by the Company in the preceding sentence. Subject to Section 3(b), securities requested to be included in a Company registration pursuant to this Section 3 shall be included by the Company on the same form of Registration Statement as has been selected by the Company for the securities the Company is registering for sale referred to above. The Holders shall be permitted to withdraw all or part of the Registrable Securities from the Piggyback Registration at any time at least two (2) Business Days prior to the effective date of the Registration Statement relating to such Piggyback Registration. If the Company elects to terminate any registration filed under this Section 3 prior to the effectiveness of such registration, the Company will have no obligation to register the securities sought to be included by the Holders in such registration under this Section 3. There shall be no limit to the number of Piggybank Registrations pursuant to this Section 3.
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(b) If a Registration Statement under this Section 3 relates to an underwritten offering and the managing underwriter(s) advise(s) the Company that in its or their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or Prospectus only such number of securities that in the reasonable opinion of such underwriter(s) can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the Common Stock and other securities the Company proposes to sell, (ii) second, the Registrable Securities of the Holders who have requested inclusion of Registrable Securities pursuant to this Section 3, pro rata on the basis of the aggregate number of such securities or shares owned by each such person, or as such Holders may otherwise agree, and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement. The Company shall select the investment banking firm or firms to act as the lead underwriter or underwriters in connection with an underwritten offering made pursuant to this Section 3. No Holder may participate in any underwritten registration under this Section 3 unless such Holder (i) agrees to sell the Registrable Securities it desires to have covered by the underwritten offering on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
4. Underwritten Shelf Offerings.
(a) At any time that a shelf Registration Statement covering Registrable Securities pursuant to Section 2 or Section 3 is effective, if any Holder delivers a notice to the Company (a “Take-Down Notice”) stating that it intends to sell all or part of its Registrable Securities included by it on the shelf Registration Statement (a “Shelf Offering”), then the Company shall amend or supplement the shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Offering (taking into account the inclusion of Registrable Securities by any other Holders pursuant to this Section 4(a)). In connection with any Shelf Offering, including any Shelf Offering that is an underwritten offering, such proposing Holder(s) shall also deliver the Take-Down Notice to all other Holders included on such shelf Registration Statement and permit each such Holder to include its Registrable Securities included on the shelf Registration Statement in the Shelf Offering if such Holder notifies the proposing Holder(s) and the Company within five (5) Business Days after delivery of the Take-Down Notice to such Holder.
(b) The Company shall have no obligation to effect an underwritten offering under this Section 4 on behalf of the Holders electing to participate in such offering unless the expected gross proceeds from such offering exceed $2,000,000.
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(c) If a Shelf Offering of Registrable Securities included in a Required Registration Statement is to be conducted as an underwritten offering, then the Holders of the majority of the Registrable Securities included in a Required Registration Statement shall select the investment banking firm or firms to act as the lead underwriter or underwriters in connection with such offering; provided, that such selection shall be reasonably acceptable to the Company. If, in connection with any such underwritten offering, the managing underwriter(s) advise(s) the Company that in its or their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or Prospectus only such number of securities that in the reasonable opinion of such underwriter(s) can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the Registrable Securities of the Holders who have requested registration of Registrable Securities pursuant to this Section 4, pro rata on the basis of the aggregate number of such securities or shares owned by each such person, or as the Holders may otherwise agree amongst themselves, (ii) second, the Common Stock and other securities the Company proposes to sell, and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement. No Holder may participate in any underwritten registration under this Section 4 unless such Holder (i) agrees to sell the Registrable Securities it desires to include in the underwritten offering on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
(d) In addition to Sections (a) and (b) of this Section 4, a Shelf Offering of Registrable Securities included on a Piggyback Registration Statement initiated by Holders shall be subject to the procedures set forth in Section 3.
5. Restrictions on Public Sale by Holders of Registrable Securities. Each Holder agrees, in connection with any underwritten offering of Common Stock pursuant to a Registration Statement (whether or not such Holder elected to include Registrable Securities in such Registration Statement), if requested (pursuant to a written notice) by the managing underwriter or underwriters in an underwritten offering, not to effect any public sale or distribution of any Registrable Securities (except as part of such underwritten offering), including a sale pursuant to Rule 144, or to make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company, other than to an Affiliate or other Holder that has agreed to the same restriction, without the prior written consent of the Company or such underwriter, as the case may be, during the period commencing on the date of the request (which shall be no earlier than seven (7) days prior to the expected “pricing” of such offering) and continuing for not more than 180 days (with respect to an offering pursuant to the Initial Registration Statement) or 60 days after the date of the Prospectus (or Prospectus supplement if the offering is made pursuant to a “shelf” registration), or such shorter time as shall be required by the managing underwriter, pursuant to which such public offering shall be made, plus an extension period, which shall be no longer than 17 days, as may be proposed by the managing underwriter to address the regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”) regarding the publishing of research, or such lesser period as is required by the managing underwriter; provided, that, each Holder will agree to such restricted period only if all executive officers and directors of the Company enter into similar agreements, and the Company has used reasonable best efforts to cause all other holders of at least 5% of the Company’s voting securities to enter into similar agreements.
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6. Registration Procedures. Subject to Section 2(c), if and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2 and Section 3 hereof, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement or Registration Statements on such form as shall be available for the sale of the Registrable Securities by the applicable Holders thereof or by the Company in accordance with the intended method or methods of distribution thereof, and use its reasonable best efforts to cause such Registration Statement to become effective and to remain effective as provided herein (including by means of a shelf registration statement pursuant to Rule 415 under the Securities Act if so requested and if the Company is then eligible to use such registration); provided, however, that not less than three (3) Trading Days before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall furnish or otherwise make available to the Holders and to one counsel designated by the Holders of a majority of the outstanding Registrable Securities (“Holders Counsel”), copies of all such documents proposed to be filed, which documents will be subject to the reasonable review and comment of Holders Counsel, and such other documents reasonably requested by Holders Counsel, including any comment letter(s) from the Commission, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, including reasonable access to the Company’s books and records, officers, accountants and other advisors, in all cases subject to Section 6(p) below; provided further, however, that the Company shall not file any Registration Statement containing information to which Holders Counsel reasonably objects in good faith, unless the Company shall be advised by its counsel that the information objected to is required under the Securities Act;
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(b) (i) prepare and file with the Commission such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period (except during an Allowable Grace Period) and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement; (ii) cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act (except during an Allowable Grace Period); (iii) respond as promptly as reasonably practicable to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible, provide the Holders Counsel true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that pertains to the Holders as “Selling Shareholders”; and (iv) comply in all material respects with the applicable provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by a Registration Statement until such time as all of such Registrable Securities shall have been disposed of (subject to the terms of this Agreement) in accordance with the intended methods of disposition by the Holders thereof as set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; provided, that each Holder shall be responsible for the delivery of the Prospectus to the Persons to whom such Holder sells any of the Registrable Securities (including in accordance with Rule 172 under the Securities Act), and each Holder agrees to dispose of Registrable Securities in compliance with applicable federal and state securities laws. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 6(b)) by reason of the Company filing a report on Form 10- K, Form 10-Q or Form 8- K or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the Commission as promptly as practicable.
(c) notify each selling Holder, Holders Counsel and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (v) if the Company has knowledge of the happening of any event that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice shall notify the selling Holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material non-public information);
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(d) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest date reasonably practical;
(e) if requested by the managing underwriters, if any, or the Purchaser or the Holders of a majority of the then outstanding Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and the Purchaser or such Holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received such request; provided, however, that the Company shall not be required to take any actions under this Section 6(e) that are not, in the opinion of counsel for the Company, in compliance with applicable law;
(f) furnish or make available to each selling Holder, Holders Counsel and each managing underwriter, if any, without charge, at least one conformed copy of the Registration Statement, the Prospectus and Prospectus supplement(s), if applicable, and each post-effective amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits, unless requested in writing by such Holder, counsel or underwriter);
(g) promptly deliver to each selling Holder, Holders Counsel, and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such Persons may reasonably request from time to time in connection with the distribution of the Registrable Securities; and the Company, subject to the last paragraph of this Section 6, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;
(h) prior to any public offering, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders, the underwriters, if any, and Holders Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to take any other action that may be necessary or advisable to enable such Holders to consummate the disposition of such Registrable Securities in such jurisdiction; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;
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(i) cooperate with the selling Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each selling Holder that the Registrable Securities represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or such Holders may request at least two (2) Business Days prior to any sale of Registrable Securities in a firm commitment public offering, but in any other such sale, within ten (10) Business Days prior to having to issue the securities;
(j) upon the occurrence of, and its knowledge of, any event contemplated by Sections 6(c)(ii)-(v) above, as promptly as practicable, as applicable: (i) use its commercially reasonable efforts to prevent the issuance of any stop order or obtain its withdrawal at the earliest possible moment if the stop order has been issued, or (ii) prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(k) prior to the effective date of the Registration Statement relating to the Registrable Securities, provide a CUSIP number for the Registrable Securities;
(l) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement;
(m) use its commercially reasonable efforts to cause all Registrable Securities to be offered (i) in connection with the Initial Registration Statement to be listed on a Trading Market (other than OTC Bulletin Board) and (ii) in connection with any other public offering, to be listed on each Trading Market on which securities of the same series or class issued by the Company are then listed, or if no such similar securities are then listed, on a Trading Market (other than the OTC Bulletin Board) selected by the Company, as the case may be, prior to the effectiveness of the relevant Registration Statement; provided, however, if the Registrable Securities that are the subject of an effective Registration Statement are not listed on a Trading Market (other than the OTC Bulletin Board) by the date that is four years and six months following the Closing Date, while continuing to use its commercially reasonable efforts to cause all such Registrable Securities to be listed on a Trading Market (other than the OTC Bulletin Board), the Company shall use commercially reasonable efforts to promptly cause all such Registrable Securities to be qualified for trading in an over-the-counter market operated by OTC Markets Group, Inc.;
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(n) with respect to any sale of Registrable Securities pursuant to a firm commitment underwritten offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) reasonably requested by the Purchaser or the Holders of a majority of the Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriters, if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, (i) make such representations and warranties to the selling Holders and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its commercially reasonable efforts to furnish to the selling Holders opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and Holders Counsel), addressed to each selling Holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (iii) use its commercially reasonable efforts to obtain “cold comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each selling Holder of Registrable Securities (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings and (iv) deliver such documents and certificates as may be reasonably requested by the Purchaser or the Holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement, Holders Counsel and the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to Section 6(n)(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;
(o) make available for inspection by a representative of the selling Holder of Registrable Securities, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorneys or accountants retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information in each case reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that any information that is not generally publicly available at the time of delivery of such information shall be kept confidential by such Persons unless (i) disclosure of such information is required by court or administrative order, (ii) disclosure of such information, in the opinion of counsel to such Person, is required by law or applicable legal process, or (iii) such information becomes generally available to the public other than as a result of a non-permitted disclosure or failure to safeguard by such Person. In the case of a proposed disclosure pursuant to (i) or (ii) above, such Person shall be required to give the Company written notice of the proposed disclosure prior to such disclosure (to the extent permitted by law) and, if requested by the Company, assist the Company in seeking to prevent or limit the proposed disclosure. Without limiting the foregoing, no such information shall be used by such Person as the basis for any market transactions in securities of the Company or its subsidiaries in violation of law;
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(p) cause its officers to use their commercially reasonable efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including, without limitation, participation in “road shows”);
(q) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA; and
(r) if the Company becomes eligible to use Form S-3 during the term of this Agreement, the Company shall use its commercially reasonable efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale of the Registrable Securities.
Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the Commission, the Company may delay the disclosure of material non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Company, in the best interests of the Company (such delay, a “Grace Period”). During the Grace Period, the Company shall not be required to maintain the effectiveness of any Registration Statement filed hereunder and, in any event, Holders shall suspend sales of Registrable Securities pursuant to such Registration Statements during the pendency of the Grace Period provided, the Company shall promptly (i) notify the Purchaser in writing of the existence of material non-public information giving rise to a Grace Period or the need to file a post-effective amendment, as applicable, and the date on which such Grace Period will begin, (ii) use commercially reasonable efforts to terminate a Grace Period as promptly as practicable provided that such termination is, in the good faith judgment of the Company, in the best interest of the Company and (iii) notify the Purchaser in writing of the date on which the Grace Period ends; provided, further, that, with respect to a Required Registration Statement only, no single Grace Period shall exceed sixty (60) consecutive days, and during any three hundred sixty-five (365) day period, the aggregate of all Grace Periods shall not exceed an aggregate of one hundred twenty (120) days (each Grace Period complying with this provision being an “Allowable Grace Period”). For purposes of determining the length of a Grace Period, the Grace Period shall be deemed to begin on and include the date the Purchaser receives the notice referred to in clause (i) above and shall end on and include the later of the date the Purchaser receives the notice referred to in clause (iii) above and the date referred to in such notice; provided, that no Grace Period shall be longer than an Allowable Grace Period. Notwithstanding anything to the contrary, the Company shall use commercially reasonable efforts to cause its transfer agent to deliver unlegended Shares to a transferee of the Purchaser in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Purchaser has entered into an irrevocable contract for sale prior to the Purchaser’s receipt of the notice of a Grace Period and for which the Purchaser has not yet settled.
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The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish to the Company in writing such information required in connection with such registration regarding such seller and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing, and the Company may exclude from such registration the Registrable Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.
Each Holder of Registrable Securities covered by such Registration Statement agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 6(c)(ii), 6(c)(iii), 6(c)(iv) or 6(c)(v) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, that the time periods under Section 2 with respect to the length of time that the effectiveness of a Registration Statement must be maintained shall automatically be extended by the amount of time the Holder is required to discontinue disposition of such securities.
7. Registration Expenses. All fees and expenses incident to the Company’s performance of or compliance with its obligations under this Agreement (excluding any underwriting discounts and selling commissions, stock transfer taxes and fees of counsel for the Holders) shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence that are the Company’s responsibility shall include, without limitation, (a) all registration and filing fees (including, without limitation, fees and expenses (i) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, (ii) with respect to compliance with applicable state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as requested by the Holders) and (iii) if not previously paid by the Company in connection with an issuer filing, with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale), (b) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the Holders of a majority of the Registrable Securities included in the Registration Statement), (c) messenger, telephone and delivery expenses of the Company, (d) fees and disbursements of counsel for the Company, (e) Securities Act liability insurance, if the Company so desires such insurance, (f) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (g) those expenses of the selling Holders actually and reasonably incurred, including without limitation, the reasonable fees of Holders Counsel up to $50,000. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.
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The Company shall not be required to pay (i) fees and disbursements of any counsel retained by any Holder or by any underwriter (except as set forth in clauses 7(a)(ii) and 7(g)), or (ii) any underwriter’s fees (including discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals) relating to the distribution of the Registrable Securities (other than with respect to Registrable Securities sold by the Company or as otherwise set forth in this Section 7).
8. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, the officers, directors, agents, general partners, managing members, managers, Affiliates, employees and investment advisers of such Holder, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, general partners, managing members, managers, Affiliates, employees and investment advisers of each such controlling person, and each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees and any legal or other fees or expenses incurred by such party in connection with any investigation or Proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), as incurred, arising out of or based upon (i) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, any preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act, Exchange Act, or any state securities law or any rule or regulation thereunder, and (without limitation of the other portions of this Section 8(a)) will reimburse each such Holder and each Person who controls each such Holder, each such underwriter, and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability, or action; provided that the Company will not be liable to a Holder or underwriter in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission by such Holder or underwriter, but only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith in reliance upon and in conformity with written information that is furnished to the Company by such Holder or underwriter for use therein and relates to such Holder or underwriter, as applicable. It is agreed that the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).
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(b) Indemnification by Holders. Each Holder shall, notwithstanding any termination of this Agreement, indemnify and hold harmless, to the fullest extent permitted by law, severally and not jointly with any other Holders, the Company, its directors, its officers who sign the Registration Statement, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers, from and against all Losses arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in such Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will (without limitation of the other portions of this Section 8(b)) reimburse the Company, its directors, its officers who sign the Registration Statement, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability, or action, in each case to the extent, but only to the extent, that such untrue statement or omission is made in such Registration Statement, preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith in reliance upon and in conformity with written information that is furnished to the Company by such Holder for inclusion therein and that relates to such Holder; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided, further, that the liability of such Holder shall be limited to the net proceeds received by such selling Holder from the sale of Registrable Securities covered by such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of one (1) counsel reasonably satisfactory to the Indemnified Party and the payment of all reasonable and documented fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such written notice within a reasonable time of commencement of any such Proceeding shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have materially and adversely prejudiced the Indemnifying Party in its ability to defend such Proceeding.
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An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel in writing that a conflict of interest exists if the same counsel were to represent such Indemnified Party and the Indemnifying Party; provided, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or unreasonably conditioned. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all documented fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 8(c)) shall be paid to the Indemnified Party, as incurred, within twenty (20) Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally judicially determined to not be entitled to indemnification hereunder.
(d) Contribution. If a claim for indemnification under Section 8(a) or 8(b) is unavailable to an Indemnified Party (other than in accordance with its terms) or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 8(d) was available to such party in accordance with its terms. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 8(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
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The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in diminution or limitation of the indemnification provisions under the Purchase Agreement.
9. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of its obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.
(b) Prohibition on Other Registrations. The Company agrees (i) not to effect or initiate a registration statement for any public sale or distribution of any securities similar to those being registered pursuant to this Agreement, or any securities convertible into or exchangeable or exercisable for such securities (other than a registration solely to implement an employee benefit plan pursuant to a registration statement on Form S-8 (or successor form), a registration statement on Form S-4 (or successor form) or a transaction to which Rule 145 or any other similar rule of the Commission is applicable), during the fourteen (14) calendar days prior to, and during the sixty (60) calendar-day period beginning on, the effective date of any Registration Statement in which the Holders of Registrable Securities are participating (except as part of any such registration, if permitted).
(c) Rule 144 Requirements. For so long as the Company is subject to the reporting requirements of the Exchange Act, the Company will use its commercially reasonable efforts to timely file with the Commission such reports and information required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder and as the Commission may require. The Company shall furnish to any Holder of Registrable Securities forthwith upon request a written statement as to its compliance with the reporting requirements of Rule 144 (or any successor exemptive rule), the Securities Act and the Exchange Act (at any time that it is subject to such reporting requirements); a copy of its most recent annual or quarterly report; and such other reports and documents as such Person may reasonably request in availing itself of any rule or regulation of the Commission allowing it to sell any such securities without registration.
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(d) Obligations of Holders and Others in a Registration. Each Holder agrees to timely furnish in writing such information regarding such Person, the securities sought to be registered and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably be required to effect the registration of such Registrable Securities (the “Requested Information”) and shall take such other action as the Company may reasonably request in connection with the registration, qualification or compliance or as otherwise provided herein. At least ten (10) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each holder of the information the Company requires from such Holder if such Holder elects to have any of such Holder’s Registrable Securities included in the Registration Statement. If at least five (5) Business Days prior to the filing date, the Company has not received the Requested Information from a Holder (a “Non-Responsive Holder”), then the Company may exclude from any Registration Statement the Registrable Securities of such Non-Responsive Holder.
(e) Rule 144A. The Company agrees that, upon the request of any Holder of Registrable Securities or any prospective purchaser of Registrable Securities designated by a Holder, the Company shall promptly provide (but in any case within fifteen (15) calendar days of a request) to such Holder or potential purchaser, the following information:
(i) a brief statement of the nature of the business of the Company and any subsidiaries and the products and services they offer;
(ii) the most recent consolidated balance sheets and profit and losses and retained earnings statements, and similar financial statements of the Company for the two (2) most recent fiscal years (such financial information shall be audited, to the extent reasonably available); and
(iii) such other information about the Company, any subsidiaries, and their business, financial condition and results of operations as the requesting Holder or purchaser of such Registrable Securities shall reasonably request in order to comply with Rule 144A, as amended, and in connection therewith the anti-fraud provisions of the federal and state securities laws.
The Company hereby represents and warrants to any such requesting Holder and any prospective purchaser of Registrable Securities from such Holder that the information provided by the Company pursuant to this Section 9(e) will, as of their dates, not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
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(f) Limitations on Subsequent Registration Rights. The Company will not enter into any agreements with any holder or prospective holder of any securities of the Company that would grant such holder or prospective holder registration rights with respect to the securities of the Company that would have priority over the Registrable Securities with respect to the inclusion of such securities in any registration. If the Company enters into an agreement that contains terms more favorable, in form or substance, to any shareholders than the terms provided to the Holders under this Agreement, then the Company will modify or revise the terms of this Agreement in order to reflect any such more favorable terms for the benefit of the Holders. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that pursuant to the [●] Agreement and the Patriot Agreement, [●] and Patriot shall have registration rights that are substantially the same as those provided to the Holders under this Agreement.
(g) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell the Registrable Securities only in accordance with a method of distribution described in the Registration Statement.
(h) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6(c)(ii)-(iv), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.
(i) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date hereof, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.
(j) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, or waived unless the same shall be in writing and signed by the Company and Holders of a majority of the then outstanding Registrable Securities; provided that any such amendment, modification, supplement or waiver that materially, adversely and disproportionately effects the rights or obligations of any Holder vis-à-vis the other Holders shall require the prior written consent of such Holder.
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(k) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail (provided the sender receives a machine-generated confirmation of successful facsimile transmission or e-mail notification or confirmation of receipt of an e-mail transmission) at the facsimile number or e-mail address specified in this Section 9(k) prior to 5:00 p.m., New York City time, on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 9(k) on a day that is not a Trading Day or later than 5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:
| If to the Company: | Wingshooter Acquisition Corp. | |
| 1776 Peachtree Street NW, Suite 100 | ||
| Atlanta, GA 30309 | ||
| Attn: [●] |
If to any Holder, to such Holder’s address as set forth on the records of the Company.
(l) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties. Without limiting the generality of the foregoing, after the Acquisition, Georgia Banking Company, as successor by merger to the Company, shall assume and be bound by this Agreement, and references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Company may not assign its rights (except by merger or in connection with another entity acquiring all or substantially all of the Company’s assets) or obligations hereunder without the prior written consent of all the Holders of the then outstanding Registrable Securities. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by the Purchaser to any transferee of the Shares only if: (a) the transferee or assignee (i) acquires Shares of the Purchaser’s Registrable Securities with an original value as of the Closing Date of not less than $5,000,000; (b) the Purchaser agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable period of time after such assignment; (c) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the securities with respect to which such registration rights are being transferred or assigned; (d) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws; and (e) at or before the time the Company received the written notice contemplated by clause (c) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein with respect to a Holder or the Purchaser. In the event of any delay in filing or effectiveness of the Registration Statement because of such assignment by the Purchaser or its transferee, the Company shall not be liable for any damages arising from such delay.
(m) Execution and Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature were the original thereof.
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(n) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(o) Cumulative Remedies. Except as provided in Section 2(c) with respect to Liquidated Damages, the remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(p) Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
(q) Headings. The headings in this Agreement are for convenience only and shall not limit or otherwise affect the meaning hereof.
(r) Entire Agreement. This Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than as set forth or referred to herein and in the Purchase Agreement. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories, as of the date first indicated above.
| WINGSHOOTER ACQUISITION CORP. | ||
| By: | ||
| [●] | ||
| PURCHASER | ||
| [●] | ||
[Signature Page to Registration Rights Agreement]
Exhibit 4.4
FIRST AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
This First Amendment to the Registration Rights Agreement (this “Amendment”) is entered into effective as of November 20, 2024 by and among Georgia Banking Company, Inc. (as successor in interest to Wingshooter Acquisition Corp.), a Georgia corporation (the “Company”), and each of the investors listed on Schedule A hereto (each an “Investor,” and collectively, the “Investors”).
WHEREAS, the Company and the Investors are parties to those certain Registration Rights Agreements, each dated December 31, 2020 (the “Registration Rights Agreements”), pursuant to which the Company granted to the Investors and any subsequent Holder (as defined in the respective Registration Rights Agreements) certain rights in respect of the registration of the Company’s securities issued or issuable to each Investor; and
WHEREAS, the Company and the Investors have agreed to amend the Registration Rights Agreements as provided for herein;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Amendment, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investors agree as follows:
1. Amendment of Section 1. Section 1 of the Registration Rights Agreements, definition of Filing Deadline, is hereby amended and restated to read as follows:
“Filing Deadline” means, with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a), the date that is the fifth (5th) anniversary of the Closing Date;1 provided that if the Filing Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Filing Deadline shall be extended to the next Business Day on which the Commission is open for business.
2. Limitation of Amendment. Except as expressly set forth herein, this Amendment shall not be deemed to waive, amend or modify any term or condition of the Registration Rights Agreements, each of which is hereby ratified and reaffirmed and shall remain in full force and effect, nor to serve as a consent to any matter prohibited by the terms and conditions thereof.
3. Counterparts. This Amendment may be executed in any number of counterparts and any party hereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which, taken together, will be deemed but one and the same agreement.
4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State.
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1 Note to Draft: Fifth anniversary of the closing date is February 17, 2026.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories, as of the date first indicated above.
| COMPANY: | ||
| GEORGIA BANKING COMPANY, INC. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
[Signature Page to First Amendment to Registration Rights Agreements]
INVESTORS:
| FINANCIAL HYBRID OPPORTUNITY FUND LLC, | FINANCIAL HYBRID OPPORTUNITY SPV I LLC, | |||
| a Delaware limited liability company | a Delaware limited liability company | |||
| FJ CAPITAL MANAGEMENT LLC, | FJ CAPITAL MANAGEMENT LLC, | |||
| Managing Member | Managing Member | |||
| By: | /s/ Martin Friedman | By: | /s/ Martin Friedman | |
| Name: | Martin Friedman | Name: | Martin Friedman | |
| Title: | CEO | Title: | CEO | |
| FINANCIAL OPPORTUNITY FUND LLC, | ||||
| a Delaware limited liability company | ||||
| FJ CAPITAL MANAGEMENT LLC, | ||||
| Managing Member | ||||
| By: | /s/ Martin Friedman | |||
| Name: | Martin Friedman | |||
| Title: | CEO | |||
[Signature Page to First Amendment to Registration Rights Agreements]
| PATRIOT FINANCIAL PARTNERS III, L.P. | ||
| By: | /s/ James Deutsch | |
| James Deutsch, Managing Partner | ||
[Signature Page to First Amendment to Registration Rights Agreements]
| /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. |
[Signature Page to First Amendment to Registration Rights Agreements]
| /s/ J. Bradford Smith | |
| J. Bradford Smith |
[Signature Page to First Amendment to Registration Rights Agreements]
SCHEDULE A
Investors
Bartow Morgan, Jr.
Financial Hybrid Opportunity Fund LLC
Financial Hybrid Opportunity SPV I LLC, a Delaware limited liability company
Financial Opportunity Fund LLC, a Delaware limited liability company
J. Bradford Smith
Patriot Financial Partners III, L.P.
Exhibit 4.5
SECOND AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
This Second Amendment to the Registration Rights Agreement (this “Amendment”) is entered into effective as of November 24, 2025 by and among Georgia Banking Company, Inc. (as successor in interest to Wingshooter Acquisition Corp.), a Georgia corporation (the “Company”), and each of the investors listed on Schedule A hereto (each an “Investor,” and collectively, the “Investors”).
WHEREAS, the Company and the Investors are parties to those certain Registration Rights Agreements, each dated December 31, 2020, as amended by that certain First Amendment to Registration Rights Agreement, dated November 20, 2024 (the “Registration Rights Agreements”), pursuant to which the Company granted to the Investors and any subsequent Holder (as defined in the respective Registration Rights Agreements) certain rights in respect of the registration of the Company’s securities issued or issuable to each Investor; and
WHEREAS, the Company and the Investors have agreed to amend the Registration Rights Agreements as provided for herein;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Amendment, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investors agree as follows:
1. Amendment of Section 1. Section 1 of the Registration Rights Agreements, definition of Filing Deadline, is hereby amended and restated to read as follows:
“Filing Deadline” means, with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a), the date that is the sixth (6th) anniversary of the Closing Date;1 provided that if the Filing Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Filing Deadline shall be extended to the next Business Day on which the Commission is open for business.
2. Limitation of Amendment. Except as expressly set forth herein, this Amendment shall not be deemed to waive, amend or modify any term or condition of the Registration Rights Agreements, each of which is hereby ratified and reaffirmed and shall remain in full force and effect, nor to serve as a consent to any matter prohibited by the terms and conditions thereof.
3. Counterparts. This Amendment may be executed in any number of counterparts and any party hereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which, taken together, will be deemed but one and the same agreement.
4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State.
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1 The sixth anniversary of the Closing Date is February 17, 2027.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories, as of the date first indicated above.
| COMPANY: | ||
| GEORGIA BANKING COMPANY, INC. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
[Signature Page to Second Amendment to Registration Rights Agreements]
INVESTORS:
| FINANCIAL HYBRID OPPORTUNITY FUND LLC, | FINANCIAL HYBRID OPPORTUNITY SPV I LLC, | |||
| a Delaware limited liability company | a Delaware limited liability company | |||
| FJ CAPITAL MANAGEMENT LLC, | FJ CAPITAL MANAGEMENT LLC, | |||
| Managing Member | Managing Member | |||
| By: | /s/ Martin Friedman | By: | /s/ Martin Friedman | |
| Name: | Martin Friedman | Name: | Martin Friedman | |
| Title: | Managing Member | Title: | Managing Member | |
| FINANCIAL OPPORTUNITY FUND LLC, | ||||
| a Delaware limited liability company | ||||
| FJ CAPITAL MANAGEMENT LLC, | ||||
| Managing Member | ||||
| By: | /s/ Martin Friedman | |||
| Name: | Martin Friedman | |||
| Title: | Managing Member | |||
[Signature Page to Second Amendment to Registration Rights Agreements]
| PATRIOT FINANCIAL PARTNERS III, L.P. | ||
| By: | /s/ James F Deutsch | |
| James Deutsch, Managing Partner | ||
[Signature Page to First Amendment to Registration Rights Agreements]
| /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. |
[Signature Page to First Amendment to Registration Rights Agreements]
| /s/ J. Bradford Smith | |
| J. Bradford Smith |
[Signature Page to First Amendment to Registration Rights Agreements]
SCHEDULE A
Investors
Bartow Morgan, Jr.
Financial Hybrid Opportunity Fund LLC
Financial Hybrid Opportunity SPV I LLC, a Delaware limited liability company
Financial Opportunity Fund LLC, a Delaware limited liability company
J. Bradford Smith
Patriot Financial Partners III, L.P.
Exhibit 4.6
Execution Version
CERTAIN CONFIDENTIAL INFORMATION (MARKED
BY BRACKETS AS
“[***]”) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH
(I) NOT MATERIAL AND (II) IS
THE TYPE OF INFORMATION THAT THE
REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is dated as of June 17, 2026 by and between Georgia Banking Company, Inc., a Georgia corporation (the “Company”), and each of the investors identified on the signature pages hereto (individually, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, this Agreement is made pursuant to the Stock Purchase Agreement, dated as of June 17, 2026, by and between the Company and the Purchasers (the “Purchase Agreement”); and
WHEREAS, in order to induce each Purchaser to enter into the Purchase Agreement, the Company has agreed to grant each Purchaser the rights set forth below;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person.
“Agreement” shall have the meaning set forth in the Preamble.
“Allowable Grace Period” has the meaning set forth in Section 6.
“Business Day” means a day other than a Saturday or Sunday or other day on which banks located in New York City are authorized or required by law to close.
“Capital Stock” means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, securities convertible into or exchangeable or exercisable for any of its shares, interests, participations or other equivalents, partnership interests (whether general or limited), limited liability company interests, or equivalent ownership interests in or issued by such Person.
“Closing Date” has the meaning set forth in the Purchase Agreement.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the voting common stock of the Company, par value $0.01 per share and any securities into which such shares of voting common stock may hereinafter be reclassified.
“Company” shall have the meaning set forth in the Preamble.
“Company Securities” shall mean (i) the Common Stock and (ii) all shares existing or hereafter authorized of any class of preferred stock of the Company which has the right (subject always to the rights of any class or series of preferred stock of the Company ranking senior to or pari passu with such preferred stock) to participate in the distribution of the assets and earnings of the Company, including (without duplication) any shares of capital stock into which Company Securities may be converted (as a result of recapitalization, share exchange or similar event) or are issued with respect to Company Securities, including, without limitation, with respect to any stock split or stock dividend, or a successor security.
“Effective Date” means the date that the Registration Statement, filed pursuant to Section 2(a), is first declared effective by the Commission.
“Effectiveness Deadline” means, with respect to the Initial Registration Statement or the New Registration Statement, the fifth (5th) Trading Day after the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review; provided that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the Commission is open for business.
“Effectiveness Period” shall have the meaning set forth in Section 2(b).
“Event” shall have the meaning set forth in Section 2(c).
“Event Date” shall have the meaning set forth in Section 2(c).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Existing Registration Rights Agreements” means those certain Registration Rights Agreements, by and between the Company and Patriot Financial Partners III, L.P., Bartow Morgan, Jr. and J. Bradford Smith, each dated December 31, 2020, respectively.
“Existing Registration Rights Holders” means Patriot Financial Partners III, L.P., Bartow Morgan, Jr. and J. Bradford Smith.
“Filing Deadline” means, with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a), the earlier of February 17, 2027; provided that if the Filing Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Filing Deadline shall be extended to the next Business Day on which the Commission is open for business.
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“FINRA” shall have the meaning set forth in Section 5.
“Fortress” means CF GBC Investors LP, a Delaware limited partnership and any of its successors and assigns that are Affiliates of CF GBC Investors LP.
“Georgia Courts” means the courts of the State of Georgia and the United States District Courts located in the City of Atlanta.
“Grace Period” shall have the meaning set forth in Section 6.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Holders Counsel” shall have the meaning set forth in Section 6(a).
“Indemnified Party” shall have the meaning set forth in Section 8(c).
“Indemnifying Party” shall have the meaning set forth in Section 8(c).
“Initial Registration Statement” shall have the meaning set forth in Section 2(a).
“Investor Rights Agreement” shall mean that certain Investor Rights Agreement by and the between the Company and Fortress, dated as of the date hereof.
“Liquidated Damages” shall have the meaning set forth in Section 2(c).
“Losses” shall have the meaning set forth in Section 8(a).
“New Registration Statement” shall have the meaning set forth in Section 2(a).
“New Securities” shall mean any equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component (such as an “equity kicker”) (including any hybrid security) of the Company.
“Non-Responsive Holder” shall have the meaning set forth in Section 9(d).
“OTC Pink” means the marketplace for trading over-the-counter stocks provided and operated by OTC Markets Group, Inc.
“Other Securities” means shares of Common Stock or shares of other Capital Stock of the Company that are contractually entitled to registration rights or Capital Stock that the Company is registering pursuant to a Registration Statement.
“Patriot” means Patriot Financial Partners III, L.P., a Delaware limited partnership.
“Patriot Registration Rights Agreement” means that certain Registration Rights Agreement, as may be amended from time to time, by and between the Company and Patriot, dated as of December 31, 2020.
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“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Piggyback Registration” shall have the meaning set forth in Section 3(a).
“Principal Market” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Purchase Agreement” shall have the meaning set forth in the Recitals.
“Purchaser” shall have the meaning set forth in the Preamble.
“Registrable Securities” means all of the Shares and any Shares issued or issuable in respect of the Shares by way of conversion, exchange, stock dividend, split or combination, recapitalization, merger, consolidation, other reorganization or otherwise, provided that the Shares shall cease to be Registrable Securities upon the earliest to occur of the following: (A) a sale pursuant to a Registration Statement or Rule 144 under the Securities Act (in which case, only such security sold shall cease to be a Registrable Security); (B) becoming eligible for sale without time, volume or manner of sale restrictions by the Holders under Rule 144; (C) if such Shares have ceased to be outstanding; (D) the date a Registration Statement becomes effective including such Shares; or (E) if such Shares have been sold in a private transaction in which the Holder’s rights under this Agreement have not been assigned to the transferee.
“Registration Statements” means any one or more registration statements of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement (including without limitation the Prospectus, the Initial Registration Statement, the New Registration Statement and any Remainder Registration Statements), amendments and supplements to such Registration Statements, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statements.
“Requested Information” shall have the meaning set forth in Section 9(d).
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“Required Registration Statement” means any Initial Registration Statement, New Registration Statement, or Remainder Registration Statement.
“Remainder Registration Statement” shall have the meaning set forth in Section 2(a).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 144A” means Rule 144A promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto.
“SEC Guidance” means (i) any publicly available written guidance, comments, requirements or requests of the Commission staff and (ii) the Securities Act.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares” means the shares of Common Stock issued or issuable to the Purchasers pursuant to the Purchase Agreement.
“Shelf Offering” shall have the meaning set forth in Section 4(a).
“Take-Down Notice” shall have the meaning set forth in Section 4(a).
“Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported in the OTC Pink; provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.
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2. Mandatory Registration. Solely with respect to Fortress:
(a) On or prior to the Filing Deadline, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities held by Fortress not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 or, if Rule 415 is not available for offers and sales of the Registrable Securities held by Fortress, by such other means of distribution of Registrable Securities held by Fortress as the Company may reasonably determine (the “Initial Registration Statement”). Notwithstanding the registration obligations set forth in this Section 2, in the event that the Commission informs the Company that all such Registrable Securities held by Fortress and any registrable securities held by the Existing Registration Rights Holders cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform Fortress and, as applicable, file the Initial Registration Statement, or use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission and/or (ii) withdraw the Initial Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities held by Fortress permitted to be registered by the Commission, on such form available to the Company to register for resale the Registrable Securities held by Fortress as a secondary offering; provided, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities held by Fortress in accordance with the SEC Guidance, including without limitation, Securities Act Rules Compliance and Disclosure Interpretation 612.09, or any successor thereto. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities held by Fortress (including registrable securities held by the Existing Registration Rights Holders) permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used commercial reasonable efforts to reasonably advocate with the Commission for the registration of all or a greater number of Registrable Securities held by Fortress), the number of Registrable Securities held by Fortress to be registered on such Registration Statement will be reduced pro rata on the basis of the aggregate number of Registrable Securities held by Fortress and registrable securities held by Existing Registration Rights Holders, and under such circumstances, the Company will not be subject to the payment of Liquidated Damages in Section 2(c). In the event the Company amends the Initial Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on such form available to the Company to register for resale those Registrable Securities held by Fortress that were not registered for resale on the Initial Registration Statement, as amended, or the New Registration Statement (the “Remainder Registration Statements”). Fortress shall not be named as an “underwriter” in any Registration Statement without Fortress’s prior written consent, which shall not be unreasonably withheld.
(b) The Company shall use its commercially reasonable efforts to cause each Required Registration Statement to be declared effective by the Commission as soon as practicable, and, with respect to the Initial Registration Statement or the New Registration Statement, as applicable, no later than the Effectiveness Deadline, and shall use its commercially reasonable efforts to keep each Required Registration Statement continuously effective under the Securities Act until the earlier of (i) such time as all of the Registrable Securities held by Fortress covered by such Required Registration Statement have been publicly sold by Fortress or (ii) the date that all Registrable Securities held by Fortress covered by such Required Registration Statement may be sold by Fortress without volume or manner of sale restrictions under Rule 144, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent (the “Effectiveness Period”); provided, however, if the Company does not meet the eligibility requirements for filing on Form S-3 (or any successor registration statement form) at the time of filing of a Required Registration Statement, the Effectiveness Period shall not exceed 180 days following the Effective Date. The Company shall request effectiveness of a Required Registration Statement as of 5:00 p.m., New York City time, on a Trading Day. The Company shall promptly notify Fortress via electronic mail of a “.pdf” format data file of the effectiveness of a Registration Statement within one (1) Business Day of the Effective Date. The Company shall file a final Prospectus for a Required Registration Statement with the Commission, as required by Rule 424(b) as promptly as reasonably practicable following the Effective Date.
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(c) If: (i) the Initial Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) the Initial Registration Statement or the New Registration Statement, as applicable, is not declared effective by the Commission (or otherwise does not become effective) for any reason on or prior to the Effectiveness Deadline, or (iii) after its Effective Date, (A) such Registration Statement ceases to be effective for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain continuously effective as to all Registrable Securities held by Fortress for which it is required to be effective, or (B) Fortress is not permitted to utilize the Prospectus therein to resell such Registrable Securities held by Fortress (other than during an Allowable Grace Period), (iv) a Grace Period applicable to a Required Registration Statement exceeds the length of an Allowable Grace Period, or (v) after the Filing Deadline, and only in the event a Registration Statement is not effective or available to sell all Registrable Securities held by Fortress, Fortress is unable to sell Registrable Securities held by Fortress without restriction under Rule 144, (any such failure or breach in clauses (i) through (v) above being referred to as an “Event,” and, for purposes of clauses (i), (ii), (iii) or (v), the date on which such Event occurs, or for purposes of clause (iv) the date on which such Allowable Grace Period is exceeded, being referred to as an “Event Date”), and Patriot enforces its right to Liquidated Damages (as defined below) pursuant to Patriot Registration Rights Agreement, then in addition to any other rights Fortress may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to Fortress an amount in cash or shares of Common Stock, at the election of Fortress, as liquidated damages and not as a penalty (“Liquidated Damages”), equal to 1.0% of the aggregate purchase price paid by Fortress pursuant to the Purchase Agreement for any Registrable Securities held by Fortress on the Event Date. If Fortress elects to receive payment in Common Stock, the value of the Common Stock will be the closing market price on the Trading Market on the Event Date or if the Event Date is not a Trading Day, the next preceding Trading Day. The parties agree that notwithstanding anything to the contrary herein or in the Purchase Agreement, no Liquidated Damages shall be payable (i) with respect to Fortress if Patriot has not enforced its right to Liquidated Damages under the Patriot Registration Rights Agreement, (ii) if as of the relevant Event Date, the Registrable Securities held by Fortress may be sold by Fortress without volume or manner of sale restrictions under Rule 144, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent, (iii) if any action or inaction taken by Fortress caused an Event, (iv) in the event Fortress is unable to lawfully sell any of its Registrable Securities (including, without limitation, in the event a Grace Period exceeds the length of an Allowable Grace Period) because of possession of material non-public information or (v) with respect to any period after the expiration of the Effectiveness Period (it being understood that this clause shall not relieve the Company of any Liquidated Damages accruing prior to the expiration of the Effectiveness Period). If the Company fails to pay any Liquidated Damages pursuant to this Section 2(c) in full within ten (10) Business Days after the date payable, the Company will pay interest on the amount of Liquidated Damages then owing to Fortress at a rate of 1.0% per month on an annualized basis (or such lesser maximum amount that is permitted to be paid by applicable law) to Fortress, accruing daily from the date such Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event, except in the case of the first Event Date. With respect to Fortress, the Effectiveness Deadline for a Required Registration Statement shall be extended without default or Liquidated Damages hereunder in the event that the Company’s failure to obtain the effectiveness of the Registration Statement on a timely basis results from the failure of Fortress to timely provide the Company with information requested by the Company and necessary to complete the Registration Statement in accordance with the requirements of the Securities Act (in which case the Effectiveness Deadline would be extended with respect to Registrable Securities held by Fortress).
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3. Piggyback Registration.
(a) If the Company intends to file a Registration Statement covering a primary or secondary offering of any of its Common Stock or Other Securities, whether or not the sale is for its own account, which is not a registration solely to implement an employee benefit plan pursuant to a registration statement on Form S-8 (or successor form), a registration statement on Form S-4 (or successor form) or a transaction to which Rule 145 or any other similar rule of the Commission is applicable, the Company will promptly (and in any event at least ten (10) Business Days before the anticipated filing date) give written notice to the Holders of its intention to effect such a registration. The Company will effect the registration under the Securities Act of all Registrable Securities that the Holder(s) request(s) be included in such registration (a “Piggyback Registration”) by a written notice delivered to the Company within five (5) Business Days after the notice given by the Company in the preceding sentence. Subject to Section 3(b), securities requested to be included in a Company registration pursuant to this Section 3 shall be included by the Company on the same form of Registration Statement as has been selected by the Company for the securities the Company is registering for sale referred to above. The Holders shall be permitted to withdraw all or part of the Registrable Securities from the Piggyback Registration at any time at least two (2) Business Days prior to the effective date of the Registration Statement relating to such Piggyback Registration. If the Company elects to terminate any registration filed under this Section 3 prior to the effectiveness of such registration, the Company will have no obligation to register the securities sought to be included by the Holders in such registration under this Section 3. There shall be no limit to the number of Piggyback Registrations pursuant to this Section 3.
(b) If a Registration Statement under this Section 3 relates to an underwritten offering and the managing underwriter(s) advise(s) the Company that in its or their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or Prospectus only such number of securities that in the reasonable opinion of such underwriter(s) can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the Common Stock and other securities the Company proposes to sell, (ii) second, the Registrable Securities of the Holders who have requested inclusion of Registrable Securities pursuant to this Section 3, pro rata on the basis of the aggregate number of such Registrable Securities held by Fortress and registrable securities held by such Holders, or as such Holders may otherwise agree, and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement. The Company shall select the investment banking firm or firms to act as the lead underwriter or underwriters in connection with an underwritten offering made pursuant to this Section 3. No Holder may participate in any underwritten registration under this Section 3 unless such Holder (i) agrees to sell the Registrable Securities it desires to have covered by the underwritten offering on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
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4. Underwritten Shelf Offerings.
(a) At any time that a shelf Registration Statement covering Registrable Securities pursuant to Section 2 or Section 3 is effective, if any Holder delivers a notice to the Company (a “Take-Down Notice”) stating that it intends to sell all or part of its Registrable Securities included by it on the shelf Registration Statement (a “Shelf Offering”), then the Company shall amend or supplement the shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Offering (taking into account the inclusion of Registrable Securities by any other Holders pursuant to this Section 4(a)). In connection with any Shelf Offering, including any Shelf Offering that is an underwritten offering, such proposing Holder(s) shall also deliver the Take-Down Notice to all other Holders included on such shelf Registration Statement and permit each such Holder to include its Registrable Securities included on the shelf Registration Statement in the Shelf Offering if such Holder notifies the proposing Holder(s) and the Company within five (5) Business Days after delivery of the Take-Down Notice to such Holder.
(b) The Company shall have no obligation to effect an underwritten offering under this Section 4 on behalf of the Holders electing to participate in such offering unless the expected gross proceeds from such offering exceed $2,000,000.
(c) If a Shelf Offering of Registrable Securities included in a Required Registration Statement is to be conducted as an underwritten offering, then the Holders of the majority of the Registrable Securities included in a Required Registration Statement shall select the investment banking firm or firms to act as the lead underwriter or underwriters in connection with such offering; provided, that such selection shall be reasonably acceptable to the Company. If, in connection with any such underwritten offering, the managing underwriter(s) advise(s) the Company that in its or their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or Prospectus only such number of securities that in the reasonable opinion of such underwriter(s) can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the Registrable Securities of the Holders who have requested registration of Registrable Securities pursuant to this Section 4, pro rata on the basis of the aggregate number of such Registrable Securities held by Fortress and registrable securities held by such Holders, or as the Holders may otherwise agree amongst themselves, (ii) second, the Common Stock and other securities the Company proposes to sell, and (iii) third, any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement. No Holder may participate in any underwritten registration under this Section 4 unless such Holder (i) agrees to sell the Registrable Securities it desires to include in the underwritten offering on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
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(d) In addition to Sections (a) and (b) of this Section 4, a Shelf Offering of Registrable Securities included on a Piggyback Registration Statement initiated by Holders shall be subject to the procedures set forth in Section 3.
5. Restrictions on Public Sale by Holders of Registrable Securities. Each Holder agrees, in connection with any underwritten offering of Common Stock pursuant to a Registration Statement (whether or not such Holder elected to include Registrable Securities in such Registration Statement), if requested (pursuant to a written notice) by the managing underwriter or underwriters in an underwritten offering, not to effect any public sale or distribution of any Registrable Securities (except as part of such underwritten offering), including a sale pursuant to Rule 144, or to make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company, other than to an Affiliate or other Holder that has agreed to the same restriction, without the prior written consent of the Company or such underwriter, as the case may be, during the period commencing on the date of the request (which shall be no earlier than seven (7) days prior to the expected “pricing” of such offering) and continuing for not more than 180 days (with respect to an offering pursuant to the Initial Registration Statement) or 60 days after the date of the Prospectus (or Prospectus supplement if the offering is made pursuant to a “shelf” registration), or such shorter time as shall be required by the managing underwriter, pursuant to which such public offering shall be made, plus an extension period, which shall be no longer than 17 days, as may be proposed by the managing underwriter to address the regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”) regarding the publishing of research, or such lesser period as is required by the managing underwriter; provided, that, each Holder will agree to such restricted period only if all executive officers and directors of the Company enter into similar agreements, and the Company has used reasonable best efforts to cause all other holders of at least 5% of the Company’s voting securities to enter into similar agreements.
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6. Registration Procedures. Subject to Section 2(c), if and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2 and Section 3 hereof, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement or Registration Statements on such form as shall be available for the sale of the Registrable Securities by the applicable Holders thereof or by the Company in accordance with the intended method or methods of distribution thereof, and use its reasonable best efforts to cause such Registration Statement to become effective and to remain effective as provided herein (including by means of a shelf registration statement pursuant to Rule 415 under the Securities Act if so requested and if the Company is then eligible to use such registration); provided, however, that not less than three (3) Trading Days before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall furnish or otherwise make available to such Holders and to one counsel designated by such Holders of a majority of the outstanding Registrable Securities (“Holders Counsel”), copies of all such documents proposed to be filed, which documents will be subject to the reasonable review and comment of Holders Counsel, and such other documents reasonably requested by Holders Counsel, including any comment letter(s) from the Commission, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, including reasonable access to the Company’s books and records, officers, accountants and other advisors, in all cases subject to Section 6(p) below; provided further, however, that the Company shall not file any Registration Statement containing information to which Holders Counsel reasonably objects in good faith, unless the Company shall be advised by its counsel that the information objected to is required under the Securities Act;
(b) (i) prepare and file with the Commission such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period (except during an Allowable Grace Period) and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement; (ii) cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act (except during an Allowable Grace Period); (iii) respond as promptly as reasonably practicable to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible, provide the Holders Counsel true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that pertains to the Holders as “Selling Shareholders”; and (iv) comply in all material respects with the applicable provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by a Registration Statement until such time as all of such Registrable Securities shall have been disposed of (subject to the terms of this Agreement) in accordance with the intended methods of disposition by the Holders thereof as set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; provided, that each Holder shall be responsible for the delivery of the Prospectus to the Persons to whom such Holder sells any of the Registrable Securities (including in accordance with Rule 172 under the Securities Act), and each Holder agrees to dispose of Registrable Securities in compliance with applicable federal and state securities laws. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 6(b)) by reason of the Company filing a report on Form 10- K, Form 10-Q or Form 8- K or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the Commission as promptly as practicable.
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(c) notify each selling Holder, Holders Counsel and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (v) if the Company has knowledge of the happening of any event that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice shall notify the selling Holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material non-public information);
(d) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest date reasonably practical;
(e) if requested by the managing underwriters, if any, or the Purchasers or the Holders of a majority of the then outstanding Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and the Purchasers or such Holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received such request; provided, however, that the Company shall not be required to take any actions under this Section 6(e) that are not, in the opinion of counsel for the Company, in compliance with applicable law;
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(f) furnish or make available to each selling Holder, Holders Counsel and each managing underwriter, if any, without charge, at least one conformed copy of the Registration Statement, the Prospectus and Prospectus supplement(s), if applicable, and each post-effective amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits, unless requested in writing by such Holder, counsel or underwriter);
(g) promptly deliver to each selling Holder, Holders Counsel, and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such Persons may reasonably request from time to time in connection with the distribution of the Registrable Securities; and the Company, subject to the last paragraph of this Section 6, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;
(h) prior to any public offering, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders, the underwriters, if any, and Holders Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to take any other action that may be necessary or advisable to enable such Holders to consummate the disposition of such Registrable Securities in such jurisdiction; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each selling Holder that the Registrable Securities represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or such Holders may request at least two (2) Business Days prior to any sale of Registrable Securities in a firm commitment public offering, but in any other such sale, within ten (10) Business Days prior to having to issue the securities;
(j) upon the occurrence of, and its knowledge of, any event contemplated by Sections 6(c)(ii)-(v) above, as promptly as practicable, as applicable: (i) use its commercially reasonable efforts to prevent the issuance of any stop order or obtain its withdrawal at the earliest possible moment if the stop order has been issued, or (ii) prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
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(k) prior to the effective date of the Registration Statement relating to the Registrable Securities, provide a CUSIP number for the Registrable Securities;
(l) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement;
(m) use its commercially reasonable efforts to cause all Registrable Securities to be offered (i) in connection with the Initial Registration Statement to be listed on a Trading Market (other than OTC Bulletin Board) and (ii) in connection with any other public offering, to be listed on each Trading Market on which securities of the same series or class issued by the Company are then listed, or if no such similar securities are then listed, on a Trading Market (other than the OTC Bulletin Board) selected by the Company, as the case may be, prior to the effectiveness of the relevant Registration Statement; provided, however, if the Registrable Securities that are the subject of an effective Registration Statement are not listed on a Trading Market (other than the OTC Bulletin Board) by the date that is four years and six months following the Closing Date, while continuing to use its commercially reasonable efforts to cause all such Registrable Securities to be listed on a Trading Market (other than the OTC Bulletin Board), the Company shall use commercially reasonable efforts to promptly cause all such Registrable Securities to be qualified for trading in an over-the-counter market operated by OTC Markets Group, Inc.;
(n) with respect to any sale of Registrable Securities pursuant to a firm commitment underwritten offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) reasonably requested by the Purchasers or the Holders of a majority of the Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriters, if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, (i) make such representations and warranties to the selling Holders and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its commercially reasonable efforts to furnish to the selling Holders opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and Holders Counsel), addressed to each selling Holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (iii) use its commercially reasonable efforts to obtain “cold comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each selling Holder of Registrable Securities (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings and (v) deliver such documents and certificates as may be reasonably requested by the Purchasers or the Holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement, Holders Counsel and the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to Section 6(n)(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;
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(o) make available for inspection by a representative of the selling Holder of Registrable Securities, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorneys or accountants retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information in each case reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that any information that is not generally publicly available at the time of delivery of such information shall be kept confidential by such Persons unless (i) disclosure of such information is required by court or administrative order, (ii) disclosure of such information, in the opinion of counsel to such Person, is required by law or applicable legal process, or (iii) such information becomes generally available to the public other than as a result of a non-permitted disclosure or failure to safeguard by such Person. In the case of a proposed disclosure pursuant to (i) or (ii) above, such Person shall be required to give the Company written notice of the proposed disclosure prior to such disclosure (to the extent permitted by law) and, if requested by the Company, assist the Company in seeking to prevent or limit the proposed disclosure. Without limiting the foregoing, no such information shall be used by such Person as the basis for any market transactions in securities of the Company or its subsidiaries in violation of law;
(p) cause its officers to use their commercially reasonable efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including, without limitation, participation in “road shows”);
(q) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA; and
(r) if the Company becomes eligible to use Form S-3 during the term of this Agreement, the Company shall use its commercially reasonable efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale of the Registrable Securities.
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Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the Commission, the Company may delay the disclosure of material non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Company, in the best interests of the Company (such delay, a “Grace Period”). During the Grace Period, the Company shall not be required to maintain the effectiveness of any Registration Statement filed hereunder and, in any event, Holders shall suspend sales of Registrable Securities pursuant to such Registration Statements during the pendency of the Grace Period provided, the Company shall promptly (i) notify the Purchasers in writing of the existence of material non-public information giving rise to a Grace Period or the need to file a post-effective amendment, as applicable, and the date on which such Grace Period will begin, (ii) use commercially reasonable efforts to terminate a Grace Period as promptly as practicable provided that such termination is, in the good faith judgment of the Company, in the best interest of the Company and (iii) notify the Purchasers in writing of the date on which the Grace Period ends; provided, further, that, with respect to a Required Registration Statement only, no single Grace Period shall exceed sixty (60) consecutive days, and during any three hundred sixty-five (365) day period, the aggregate of all Grace Periods shall not exceed an aggregate of one hundred twenty (120) days (each Grace Period complying with this provision being an “Allowable Grace Period”). For purposes of determining the length of a Grace Period, the Grace Period shall be deemed to begin on and include the date the Purchasers receive the notice referred to in clause (i) above and shall end on and include the later of the date the Purchasers receive the notice referred to in clause (iii) above and the date referred to in such notice; provided, that no Grace Period shall be longer than an Allowable Grace Period. Notwithstanding anything to the contrary, the Company shall use commercially reasonable efforts to cause its transfer agent to deliver unlegended Shares to a transferee of such Purchaser in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which such Purchaser has entered into an irrevocable contract for sale prior to such Purchaser’s receipt of the notice of a Grace Period and for which such Purchaser has not yet settled.
The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish to the Company in writing such information required in connection with such registration regarding such seller and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing, and the Company may exclude from such registration the Registrable Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.
Each Holder of Registrable Securities covered by such Registration Statement agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 6(c)(ii), 6(c)(iii), 6(c)(iv) or 6(c)(v) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, that the time periods under Section 2 with respect to the length of time that the effectiveness of a Registration Statement must be maintained shall automatically be extended by the amount of time Fortress is required to discontinue disposition of such securities.
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7. Registration Expenses. All fees and expenses incident to the Company’s performance of or compliance with its obligations under this Agreement (excluding any underwriting discounts and selling commissions, stock transfer taxes and fees of counsel for the Holders) shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence that are the Company’s responsibility shall include, without limitation, (a) all registration and filing fees (including, without limitation, fees and expenses (i) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, (ii) with respect to compliance with applicable state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as requested by the Holders) and (iii) if not previously paid by the Company in connection with an issuer filing, with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale), (b) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the Holders of a majority of the Registrable Securities included in the Registration Statement), (c) messenger, telephone and delivery expenses of the Company, (d) fees and disbursements of counsel for the Company, (e) Securities Act liability insurance, if the Company so desires such insurance, (f) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (g) those expenses of the selling Holders actually and reasonably incurred, including without limitation, the reasonable fees of Holders Counsel up to $50,000. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.
The Company shall not be required to pay (i) fees and disbursements of any counsel retained by any Holder or by any underwriter (except as set forth in clauses 7(a)(ii) and 7(g)), or (ii) any underwriter’s fees (including discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals) relating to the distribution of the Registrable Securities (other than with respect to Registrable Securities sold by the Company or as otherwise set forth in this Section 7).
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8. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, the officers, directors, agents, general partners, managing members, managers, Affiliates, employees and investment advisers of such Holder, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, general partners, managing members, managers, Affiliates, employees and investment advisers of each such controlling person, and each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees and any legal or other fees or expenses incurred by such party in connection with any investigation or Proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), as incurred, arising out of or based upon (i) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, any preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act, Exchange Act, or any state securities law or any rule or regulation thereunder, and (without limitation of the other portions of this Section 8(a)) will reimburse each such Holder and each Person who controls each such Holder, each such underwriter, and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability, or action; provided that the Company will not be liable to a Holder or underwriter in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission by such Holder or underwriter, but only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith in reliance upon and in conformity with written information that is furnished to the Company by such Holder or underwriter for use therein and relates to such Holder or underwriter, as applicable. It is agreed that the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).
(b) Indemnification by Holders. Each Holder shall, notwithstanding any termination of this Agreement, indemnify and hold harmless, to the fullest extent permitted by law, severally and not jointly with any other Holders, the Company, its directors, its officers who sign the Registration Statement, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers, from and against all Losses arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in such Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will (without limitation of the other portions of this Section 8(b)) reimburse the Company, its directors, its officers who sign the Registration Statement, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and all other prospective sellers for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability, or action, in each case to the extent, but only to the extent, that such untrue statement or omission is made in such Registration Statement, preliminary, final or summary Prospectus, contained therein or related thereto, or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith in reliance upon and in conformity with written information that is furnished to the Company by such Holder for inclusion therein and that relates to such Holder; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided, further, that the liability of such Holder shall be limited to the net proceeds received by such selling Holder from the sale of Registrable Securities covered by such Registration Statement.
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(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of one (1) counsel reasonably satisfactory to the Indemnified Party and the payment of all reasonable and documented fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such written notice within a reasonable time of commencement of any such Proceeding shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have materially and adversely prejudiced the Indemnifying Party in its ability to defend such Proceeding.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel in writing that a conflict of interest exists if the same counsel were to represent such Indemnified Party and the Indemnifying Party; provided, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or unreasonably conditioned. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all documented fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 8(c)) shall be paid to the Indemnified Party, as incurred, within twenty (20) Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally judicially determined to not be entitled to indemnification hereunder.
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(d) Contribution. If a claim for indemnification under Section 8(a) or 8(b) is unavailable to an Indemnified Party (other than in accordance with its terms) or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 8(d) was available to such party in accordance with its terms. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 8(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in diminution or limitation of the indemnification provisions under the Purchase Agreement.
9. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of its obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.
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(b) Prohibition on Other Registrations. The Company agrees (i) not to effect or initiate a registration statement for any public sale or distribution of any securities similar to those being registered pursuant to this Agreement (other than pursuant to the Existing Registration Rights Agreements), or any securities convertible into or exchangeable or exercisable for such securities (other than a registration solely to implement an employee benefit plan pursuant to a registration statement on Form S-8 (or successor form), a registration statement on Form S-4 (or successor form) or a transaction to which Rule 145 or any other similar rule of the Commission is applicable), during the fourteen (14) calendar days prior to, and during the sixty (60) calendar-day period beginning on, the effective date of any Registration Statement in which the Holders of Registrable Securities are participating (except as part of any such registration, if permitted).
(c) Rule 144 Requirements. For so long as the Company is subject to the reporting requirements of the Exchange Act, the Company will use its commercially reasonable efforts to timely file with the Commission such reports and information required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder and as the Commission may require. The Company shall furnish to any Holder of Registrable Securities forthwith upon request a written statement as to its compliance with the reporting requirements of Rule 144 (or any successor exemptive rule), the Securities Act and the Exchange Act (at any time that it is subject to such reporting requirements); a copy of its most recent annual or quarterly report; and such other reports and documents as such Person may reasonably request in availing itself of any rule or regulation of the Commission allowing it to sell any such securities without registration.
(d) Obligations of Holders and Others in a Registration. Each Holder agrees to timely furnish in writing such information regarding such Person, the securities sought to be registered and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably be required to effect the registration of such Registrable Securities (the “Requested Information”) and shall take such other action as the Company may reasonably request in connection with the registration, qualification or compliance or as otherwise provided herein. At least ten (10) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each holder of the information the Company requires from such Holder if such Holder elects to have any of such Holder’s Registrable Securities included in the Registration Statement. If at least five (5) Business Days prior to the filing date, the Company has not received the Requested Information from a Holder (a “Non-Responsive Holder”), then the Company may exclude from any Registration Statement the Registrable Securities of such Non-Responsive Holder.
(e) Rule 144A. The Company agrees that, upon the request of any Holder of Registrable Securities or any prospective purchaser of Registrable Securities designated by a Holder, the Company shall promptly provide (but in any case within fifteen (15) calendar days of a request) to such Holder or potential purchaser, the following information:
(i) a brief statement of the nature of the business of the Company and any subsidiaries and the products and services they offer;
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(ii) the most recent consolidated balance sheets and profit and losses and retained earnings statements, and similar financial statements of the Company for the two (2) most recent fiscal years (such financial information shall be audited, to the extent reasonably available); and
(iii) such other information about the Company, any subsidiaries, and their business, financial condition and results of operations as the requesting Holder or purchaser of such Registrable Securities shall reasonably request in order to comply with Rule 144A, as amended, and in connection therewith the anti-fraud provisions of the federal and state securities laws.
The Company hereby represents and warrants to any such requesting Holder and any prospective purchaser of Registrable Securities from such Holder that the information provided by the Company pursuant to this Section 9(e) will, as of their dates, not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
(f) Limitations on Subsequent Registration Rights. The Company will not enter into any agreements with any holder or prospective holder of any securities of the Company that would grant such holder or prospective holder registration rights with respect to the securities of the Company that would have priority over the Registrable Securities with respect to the inclusion of such securities in any registration. If the Company enters into an agreement that contains terms more favorable, in form or substance, to any shareholders than the terms provided to the Holders under this Agreement, then the Company will modify or revise the terms of this Agreement in order to reflect any such more favorable terms for the benefit of the Holders. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that pursuant to the Existing Registration Rights Agreements the Existing Registration Rights Holders shall have registration rights that are substantially the same as those provided to the Holders under this Agreement.
(g) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell the Registrable Securities only in accordance with a method of distribution described in the Registration Statement.
(h) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6(c)(ii)-(iv), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.
(i) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date hereof, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.
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(j) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, or waived unless the same shall be in writing and signed by the Company and Holders of a majority of the then outstanding Registrable Securities; provided that any such amendment, modification, supplement or waiver that materially, adversely and disproportionately effects the rights or obligations of any Holder vis-à-vis the other Holders shall require the prior written consent of such Holder.
(k) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via e-mail (provided the sender receives an e-mail notification or confirmation of receipt of an e-mail transmission) at the facsimile number or e-mail address specified in this Section 9(k) prior to 5:00 p.m., New York City time, on a Trading Day, (b) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (c) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:
| If to the Company: | Georgia Banking Company, Inc. | |
| 1776 Peachtree Street NW, Suite 300 | ||
| Atlanta, GA 30309 | ||
| Attn: Bartow Morgan, Jr. | ||
| Email: [***] | ||
| With a copy to: | Troutman Pepper Locke LLP | |
| 600 Peachtree Street, NE, Suite 3000 | ||
| Atlanta, GA 30308 | ||
| Attn: James Stevens | ||
| Email: [***] |
If to any Holder, to such Holder’s address as set forth on the records of the Company.
(l) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Company may not assign its rights (except by merger or in connection with another entity acquiring all or substantially all of the Company’s assets) or obligations hereunder without the prior written consent of all the Holders of the then outstanding Registrable Securities. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by each Purchaser to any transferee of the Shares only if: (a) the transferee or assignee (i) acquires Shares of such Purchaser’s Registrable Securities with an original value as of the Closing Date of not less than $5,000,000; (b) such Purchaser agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable period of time after such assignment; (c) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the securities with respect to which such registration rights are being transferred or assigned; (d) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws; and (e) at or before the time the Company received the written notice contemplated by clause (c) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein with respect to a Holder or the Purchaser. In the event of any delay in filing or effectiveness of the Registration Statement because of such assignment by a Purchaser or its transferee, the Company shall not be liable for any damages arising from such delay.
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(m) Execution and Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such “.pdf” signature were the original thereof.
(n) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(o) Cumulative Remedies. Except as provided in Section 2(c) with respect to Liquidated Damages, the remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
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(p) Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
(q) Headings. The headings in this Agreement are for convenience only and shall not limit or otherwise affect the meaning hereof.
(r) Entire Agreement. This Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than as set forth or referred to herein and in the Purchase Agreement. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories, as of the date first indicated above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Name: | Bartow Morgan, Jr. | |
| Title: | Chief Executive Officer | |
[Signature Page to Registration Rights Agreement]
PURCHASER:
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Registration Rights Agreement]
Exhibit 4.7
WARRANT
BOTH THESE SECURITIES AND THE SHARES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) NOR ANY APPLICABLE STATE SECURITIES LAW (THE “STATE ACTS”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT, THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT, THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS.
GEORGIA BANKING COMPANY, INC.
WARRANT
| Warrant | No. 3 | Issuance Date: February 23, 2021 |
Georgia Banking Company, Inc. a Georgia corporation (the “Company”), hereby certifies that, for value received, Patriot Financial Partners III, L.P. (the “Original Holder,” and together with any assignee of this Warrant permitted in accordance with Section 10 below, the “Holder”), is entitled to purchase from the Company, at the price of $21.62 per Share, subject to adjustment as contained herein, all or any part of One Hundred Fifty Thousand Four Hundred Seventy-Eight (150,478) fully paid and non-assessable shares (“Shares”) of non-voting common stock, par value $0.01 per share, of the Company (“Company Non-Voting Stock”), upon and subject to the following terms and conditions:
1. Definitions. As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1.
“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Appraisal Procedure” means a procedure whereby two independent appraisers, one chosen by the Company and one by the Holder (or if there is more than one Holder, a majority in interest of Holders), shall mutually agree upon the determinations then the subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser within fifteen (15) days after the Appraisal Procedure is invoked. If within thirty (30) days after appointment of the two appraisers they are unable to agree upon the amount in question, a third independent appraiser shall be chosen within ten (10) days thereafter by the mutual consent of such first two appraisers or, if such first two appraisers fail to agree upon the appointment of a third appraiser, such appointment shall be made by the American Arbitration Association, or any organization successor thereto, from a panel of arbitrators having experience in the appraisal of the subject matter to be appraised. The decision of the third appraiser so appointed and chosen shall be given within thirty (30) days after the selection of such third appraiser. If three appraisers shall be appointed and the determination of one appraiser is disparate from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such appraiser shall be excluded, the remaining two determinations shall be averaged and such average shall be binding and conclusive on the Company and the Holder; otherwise, the average of all three determinations shall be binding and conclusive on the Company and the Holder. The costs of conducting any Appraisal Procedure shall be shared equally by the Holder and the Company; provided that (i) if such Appraisal Procedure shall result in a determination that is 5% or more greater than the Company’s initial determination, all costs of conducting such Appraisal Procedure shall be borne by the Company, (ii) if such Appraisal Procedure shall result in a determination that is 5% or more less than the Holder’s initial determination, all costs of conducting such Appraisal Procedure shall be borne by the Holder and (iii) if both (i) and (ii) apply this proviso shall be disregarded.
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“Board” means the Board of Directors of the Company.
“business day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other governmental actions to close.
“Company Securities” means (i) the Company Stock and the Warrant, and (ii) securities convertible into or exercisable or exchangeable for Company Stock and/or the Warrant.
“Company Stock” means (i) Company Non-Voting Stock and (ii) Company Voting Stock.
“Company Voting Stock” means voting common stock, par value $0.01 per share, of the Company.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.
“Fundamental Transaction” means any of the following: (i) the Company effects any merger or consolidation of the Company with or into another Person; (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions; (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Company Stock are permitted to tender or exchange their shares for other securities, cash or property; or (iv) the Company effects any reclassification of the Company Stock or any compulsory share exchange pursuant to which the Company Stock is effectively converted into or exchanged for other securities, cash or property.
“Market Price” means, with respect to a particular security, or if the particular security is a non-voting security such non-voting security’s voting counterpart, 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 the New York Stock Exchange, the Nasdaq Stock Market or any national securities exchange, (A) the closing sale price for such day reported by The Nasdaq Global Select Market or any comparable system if such security is traded over-the-counter and quoted in The Nasdaq Global Select Market or any comparable system, or (B) if such security is so traded, but not so quoted, the average of the closing reported bid and ask prices of such security as reported by The Nasdaq Global Select Market or any comparable system. If such security is not listed and traded in a manner that (i) the quotations referred to above are available for the period required hereunder, the Market Price of such security shall be deemed to be the fair value per share of such security as determined in good faith by the Board, assuming a willing buyer and a willing seller, provided that no minority or illiquidity discount or control premium shall be taken into account and no consideration shall be given to any restrictions on transfer or marketability or the existence or absence of, or any limitations on voting rights and (ii) references herein to “trading day” shall be deemed to refer to “day.” If the Holder does not accept the Board’s calculation of fair value per share and the Holder and the Company are unable to agree on fair value per share within fifteen (15) days following written notice to the Holder thereof (or such other time period as may be necessary in connection with a Fundamental Transaction or other transaction), the Appraisal Procedure shall be used to determine the fair value per share. For the avoidance of doubt, Market Price with respect to a non-voting security shall be determined based on such non-voting security’s voting counterpart in accordance with the foregoing formula.
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“Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, governmental entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.
2. Expiration Date. This Warrant shall expire and shall no longer be exercisable upon the date that is the tenth (10th) anniversary of the Issuance Date (the “Expiration Date”).
3. Exercise Price. The initial exercise price of this Warrant shall be $21.62 per share (the “Initial Exercise Price”, and as it may be adjusted as set forth in Section 6 below, the “Exercise Price”).
4. Exercise.
(a) Subject to the provisions set forth in Section 4(b) below, the Holder is entitled to exercise this Warrant in whole or in part at any time or from time to time; provided that the Holder may not exercise this Warrant (or any portion of this Warrant) following the Expiration Date. This Warrant may be exercised by the Holder by the delivery of written notice of exercise to the Company in accordance with Section 13 below. Such notice of exercise shall state the number of Shares for which the Holder desires to exercise this Warrant (the “Exercised Share Number”) and shall be in the form of Annex A hereto or such other form as the Company may from time to time prescribe by notice to the Holder. Payment for Shares acquired upon the exercise of this Warrant (or any portion of this Warrant) shall be made at the time of exercise and shall be made in one of the following manners:
(i) by payment to the Company in cash or by certified check or bank check or by wire transfer of immediately available funds the amount obtained by multiplying the Exercised Share Number by the Exercise Price (the “Aggregate Exercise Price”), or
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(ii) by having the Company withhold Shares issuable upon exercise of this Warrant equal in value to the Aggregate Exercise Price based on the Market Price of the Company Stock on the trading day immediately prior to the date on which this Warrant and the notice of exercise is delivered to the Company.
(b) Notwithstanding the foregoing or anything to the contrary herein, the Holder may be required by the Company to exercise or forfeit this Warrant in whole or in part, at any time, upon receipt by the Company of a written notification from the Company’s primary state and/or federal regulators substantially to the effect that this Warrant must be exercised or forfeited by the Holder in accordance with such written notification solely as a result of a banking institution that is owned by the Company falling below minimum capitalization requirements as determined by such state and/or federal regulators. The Company shall provide a copy of such written notification to the Holder as promptly as possible upon, and in any event within two (2) days of, receipt by the Company of such written notification. Each of the Company and the Holder agrees to work together in good faith to comply with and carry out the instructions provided in such written notification and as directed by such state and/or federal regulators.
(c) This Warrant is not convertible into, is not exercisable for, is not exchangeable for, and may not otherwise become voting securities of the Company in the hands of the Original Holder or an Affiliate of the Original Holder and is only convertible into, exercisable for, exchangeable for, or may otherwise become voting securities of the Company in the hands of a transferee after a transfer:
(i) in a widespread public distribution;
(ii) to the Company;
(iii) in which no transferee (or group of associated transferees) would receive 2 percent (2%) or more of the outstanding securities of any class of voting securities of the Company; or
(iv) to a transferee that would control more than 50 percent (50%) of every class of voting securities of the Company without any transfer from the Holder.
5. Delivery of Shares and Certificates. Within a reasonable time after the exercise of this Warrant and the issuance of Shares in connection therewith, the Company shall cause the Shares to be issued in book entry form, or, upon written notice from the Holder, cause to be delivered to the Holder a certificate representing such Shares, in the name of the Holder or in such other name or names as the Holder may designate. The Company agrees that the Shares so issued will be deemed to have been issued to the Holder as of the close of business on the date on which this Warrant and payment of the Exercise Price are delivered to the Company, notwithstanding that the stock transfer books of the Company may then be closed or certificates representing the Shares may not be actually delivered on such date. If this Warrant shall be exercised with respect to the purchase of less than all of the Shares subject to this Warrant, the Company shall cause to be delivered to the Holder, together with the issuance of Shares, a new warrant in substantially identical form reflecting the Shares that remain subject to exercise by the Holder. The Company will use all commercially reasonable efforts (which shall include the payment of customary listing fees and expenses) to (i) procure, at its sole expense, the listing of the Shares upon exercise of this Warrant, subject to issuance or notice of issuance, on all stock exchanges on which the Company Stock is then listed or traded and (ii) maintain the listing of such Shares after issuance. The Company will 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. Before taking any action which would cause an adjustment pursuant to Section 6 to reduce the Exercise Price below the then par value (if any) of the Company Stock, the Company shall take any and all corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of Company Stock at the Exercise Price as so adjusted.
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6. Certain Adjustments. The Exercise Price and number of Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 6.
(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Company Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Company Stock; (ii) subdivides outstanding shares of Company Stock into a larger number of shares; or (iii) combines outstanding shares of Company Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Company Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Company Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this Section 6(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution (if such dividend or distribution is actually made), and any adjustment pursuant to clause (ii) or (iii) of this Section 6(a) shall become effective immediately after the effective date of such subdivision or combination.
(b) Fundamental Transactions. If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if the Holder had been, immediately prior to such Fundamental Transaction, the holder of the number of Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 6(b) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
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(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 6, the number of Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.
(d) Calculations. No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in such price; provided that any adjustments that by reason of this sentence are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Company Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Company Stock.
(e) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 6, the Company, at its expense, will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent.
(f) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Company Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company (other than rights or warrants to subscribe for or purchase any capital stock of the Company granted to employees of the Company pursuant to equity incentive plans approved by the Board); (ii) authorizes or approves, enters into any agreement contemplating or solicits shareholder approval for any Fundamental Transaction; or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction (but only to the extent such disclosure would not result in the dissemination of material, non-public information to the Holder) at least twenty (20) days prior to the applicable record or effective date on which a Person would need to hold Company Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.
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(g) Certain Events. If any change in the outstanding class and series of shares for which this Warrant is exercisable or any other event occurs as to which the other provisions of this Section 6 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder in accordance with such provisions, then the Company shall make an adjustment in the number and class of shares available under this Warrant, the Exercise Price or the application of such provisions, so as to protect the purchase rights of the Holder. The adjustment shall give the Holder of this Warrant upon exercise for the same Aggregate Exercise Price the total number, class and kind of shares as the Holder would have owned had this Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment.
(h) No Impairment. The Company will not, by amendment to its articles of incorporation or through any 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 terms to be observed or performed by the Company hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.
(i) Adjustment Rules. Any adjustments pursuant to this Section 6 shall be made successively whenever an event referred to herein shall occur. If an adjustment in Exercise Price made hereunder would reduce the Exercise Price to an amount below par value of the Company Stock, then such adjustment in Exercise Price made hereunder shall reduce the Exercise Price to the par value of the Company Stock. If more than one subsection of this Section 6 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 6 so as to result in duplication. Further, any adjustment shall be made to the extent (and only to the extent) that such adjustment would not cause or result in the Holder or any of its Affiliates being in violation of any applicable law, regulation or rule of any governmental authority or self-regulatory organization. Any adjustment (or portion thereof) prohibited pursuant to the preceding sentence shall be postponed and implemented on the first date on which such implementation would not result in the condition described in the preceding sentence.
7. Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and/or delivery such number of Shares (taking into account the adjustments and restrictions of Section 6) as shall be required for issuance or delivery to the Holder following the exercise hereof. The Company covenants that all Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the Holder or taxes in respect of any transfer occurring contemporaneously therewith).
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8. Rights of Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or in equity, until the Holder shall have exercised this Warrant (or any portion of this Warrant) and such Shares shall have been issued by the Company and noted in the stock transfer books and records of the Company. The Company will at no time close its transfer books against transfer of this Warrant in any manner which interferes with the timely exercise of this Warrant. The rights of the Holder are limited to those expressed herein and are not enforceable against the Company except to the extent set forth herein. Nothing contained in this Warrant shall give rise to any liability of the Holder, whether such liability is asserted by the Company or its creditors.
9. Charges, Taxes and Expenses. Issuance of certificates for Shares to the Holder upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company.
10. Assignment.
(a) Subject to compliance with applicable law, without obtaining the consent of the Board to transfer or assign this Warrant, this Warrant and all rights hereunder are transferrable and assignable, in whole or in part, upon the books of the Company by the Holder hereof in person or by duly authorized attorney, and a new warrant shall be made and delivered by the Company, as promptly as reasonably practicable, of the same tenor and date as this Warrant but registered in the name of the transferee or assignee and if the Holder’s entire interest is not being transferred or assigned, in the name of the Holder, upon surrender of this Warrant, duly endorsed. All expenses (other than stock transfer taxes) and other charges payable in connection with the preparation, execution and delivery of any new warrants shall be paid by the Company.
(b) An assignment as to all or any portion of the Warrant shall be in writing in a form acceptable to the Board, shall be signed by or on behalf of the assignor and shall be accompanied by satisfactory evidence of the authority of any person signing on behalf of the assignor.
(c) The provisions of this Warrant shall be binding upon and inure to the benefit of the Company and its successors and permitted assigns. The Company may not assign any of its rights, or delegate any of its obligations, under this Warrant without the prior written consent of the Holder. In the event of assignment of this Warrant by the Company, references herein to “the Company” shall mean such assignee of the Company.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then such action may be taken or such right may be exercised on the next succeeding day that is a business day.
12. Amendments; Counterparts; Waivers. This Warrant may be amended only in writing signed by the Company and the Holder; provided, however, the Company shall not amend, modify or waive any provision of this Warrant if any such amendment, modification or waiver would have the effect of establishing rights or otherwise benefiting a Holder in a manner more favorable in any material respect than the rights and benefits established in favor of all other Holders or group of Holders or adversely affect any individual Holder, or group of Holders, in a manner which is materially different than its effect on any other Holder or group of Holders, unless, in any such case, such Holders have been offered such rights and benefits, and such written instrument shall also be executed by such individual Holder (or in the case of any group of Holders, Holders of a majority of the outstanding Warrants held by such group of Holders). This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Failure of any party to exercise any right or remedy under this Warrant, or delay by a party in exercising such right to remedy, shall not operate as a waiver thereof. The observance of any term of this Warrant may be waived only in a writing signed by the party against whom the waiver is to be effective.
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13. Notices. Any notice which the Company or the Holder may be required or permitted to give to the other shall be in writing, and may be delivered personally or by mail, postage prepaid, or overnight courier, addressed as follows: if to the Company, to Georgia Banking Company, Inc., 6190 Powers Ferry Road, Suite 150, Sandy Springs, Georgia 30339 Attn.: Chief Executive Officer, or to such other office or person as the Company may from time to time direct; and if to the Holder, at Radnor Corporate Center, Building Four, Suite 201, 100 Matsonford Road, Radnor, PA 19087, Attn: James F. Deutsch, or to such other address as the Holder may designate in writing from time to time by notice to the Company in accordance with the provisions of this Section 13. Notices shall be effective (a) upon receipt if sent by mail or delivered personally and (b) the trading day following the date of mailing, if sent by overnight courier with next day delivery specified.
14. Governing Law/Proceedings. The construction, validity, interpretation, performance and enforcement of this Warrant shall be governed by and construed and enforced in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State (except to the extent that mandatory provisions of Delaware law are applicable). Each of the Company and the Holder agrees that all legal proceedings concerning the interpretations, enforcement and defense of this Warrant and the transactions herein contemplated (“Proceedings”) (whether brought against the Company or the Holder or any of their respective Affiliates, employees or agents) shall be commenced exclusively in the state or federal courts located in the city of Atlanta, Georgia. Each of the Company and the Holder hereby irrevocably submits to the exclusive jurisdiction of the state or federal courts located in the city of Atlanta, Georgia for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any state or federal courts located in the city of Atlanta, Georgia, or that such Proceeding has been commenced in an improper or inconvenient forum. Each of the Company and the Holder hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Person at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each of the Company and the Holder hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby. In any litigation, arbitration or court proceeding between the Company and the Holder as the holder of this Warrant relating hereto, the prevailing party shall be entitled to reasonable attorneys’ fees and expenses incurred in enforcing this Warrant. If the Company fails to perform, comply with or observe any covenant or agreement to be performed, complied with or observed by it under this Warrant, the Holder may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Warrant or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Warrant or to enforce any other legal or equitable right, or to take any one or more of such actions. The Company hereby agrees that the Holder shall not be required or otherwise obligated to, and hereby waives any right to demand that the Holder, post any performance or other bond in connection with the enforcement of its rights and remedies hereunder. None of the rights, powers or remedies conferred under this Warrant shall be mutually exclusive, and each right, power or remedy shall be cumulative and in addition to any other right, power or remedy whether conferred by this Warrant or now or hereafter available at law, in equity, by statute or otherwise.
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15. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a new Warrant to purchase Shares, in substantially the form of this Warrant (a “New Warrant”), but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.
16. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the Market Price of the Shares on the date of exercise.
17. Registration of Warrant. The Company shall register this Warrant upon records to be maintained by the Company for that purpose, in the name of the Holder hereof. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof and for all other purposes, absent actual notice to the contrary.
18. Prohibited Actions. The Company agrees that it will not take any action which would entitle the Holder to an adjustment of the Exercise Price if the total number of shares of Company Stock issuable after such action upon exercise of this Warrant, together with all shares of Company Stock then outstanding and all shares of Company Stock then issuable upon the exercise of all outstanding options, warrants, conversion and other rights, would exceed the total number of shares of Company Stock then authorized by its certificate of incorporation.
19. Representations and Warranties of the Company. The Company hereby represents and warrants to the Holder that (a) it has the corporate power and authority to execute this Warrant and consummate the transactions contemplated by this Warrant, (b) there are no statutory or contractual shareholder preemptive rights or rights of refusal with respect to the issuance of this Warrant and (c) the execution and delivery by the Company of this Warrant and the issuance of Company Stock upon exercise of this Warrant do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any lien, security interest, charge or encumbrance upon the Company Securities or assets pursuant to, (iv) result in a violation of or (v) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative or governmental body or agency pursuant to the Company’s articles of incorporation or bylaws or any law in effect as of the date hereof to which the Company is subject, or any agreement, instrument, order, judgment or decree to which the Company is subject as of the date hereof, except for any such authorization, consent, approval or exemption that has been obtained.
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20. Rule 144 Information. For so long as the Company is not subject to the reporting requirements of the Securities Act and the Exchange Act, it will, upon the request of the Holder, make publicly available such information as may be necessary to permit sales pursuant to Rule 144 or Regulation S under the Securities Act, and it shall use commercially reasonable efforts to take such further actions as the Holder may reasonably request, in each case to the extent required from time to time to enable such Holder to sell or otherwise transfer all or any portion of this Warrant without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or Regulation S under the Securities Act, as such rules may be amended from time to time, or any successor rule or regulation hereafter adopted by the United States Securities and Exchange Commission. Upon the written request of the Holder submitted prior to the Company becoming subject to the reporting requirements of the Securities Act and the Exchange Act, the Company will deliver to such Holder a written statement that it has complied with such requirements.
21. Entire Agreement. This Warrant and the exhibits and attachments hereto contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or undertakings with respect thereto.
22. Miscellaneous. The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof. In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first set forth above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
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ANNEX A
FORM OF
ELECTION TO PURCHASE
To Georgia Banking Company, Inc.:
The undersigned is the Holder of Warrant No. the “Warrant”) issued by Georgia Banking Company, Inc., a Georgia corporation (the “Company”). Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.
| 1. | The Warrant is currently exercisable to purchase a total of Shares. |
| 2. | The Exercised Share Number is equal to ____. |
| 3. | The Original Exercise Price is equal to $___.__ per Share. |
| 4. | The Exercise Price is equal to $___.__ per Share. |
| 5. | ¨ A. The Holder shall pay the sum of $ .__ to the Company in accordance with Section 4(a)(i) of the Warrant, which amount is equal to the Aggregate Exercise Price (the Exercised Share Number multiplied by the Exercise Price). |
OR (Holder to choose one)
| ¨ B. The Company shall withhold a number of Shares issuable upon exercise of this Warrant in accordance with Section 4(a)(ii) of the Warrant equal in value to the Aggregate Exercise Price (the Exercised Share Number multiplied by the Exercise Price ) based on the Market Price of the Company Stock on the trading day immediately prior to the date on which this notice of exercise is delivered to the Company. |
The undersigned requests that certificates for the Shares issuable upon this exercise be issued in the name of .
| Date: | |||
| Name of Holder: | |||
| Address of Holder: | |||
| Social Security or Tax Identification Number of Holder: |
| SIGNATURE OF HOLDER: | |||
| Name: | |||
| Title: |
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Exhibit 4.8
WARRANT
BOTH THESE SECURITIES AND THE SHARES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) NOR ANY APPLICABLE STATE SECURITIES LAW (THE “STATE ACTS”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT, THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT, THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS.
GEORGIA BANKING COMPANY, INC.
WARRANT
| Warrant No. [●] | Issuance Date: February 23, 2021 |
Georgia Banking Company, Inc. a Georgia corporation (the “Company”), hereby certifies that, for value received, [●] (the “Original Holder,” and together with any assignee of this Warrant permitted in accordance with Section 10 below, the “Holder”), is entitled to purchase from the Company, at the price of $21.62 per Share, subject to adjustment as contained herein, all or any part of One Hundred Fifty Thousand Four Hundred Seventy-Eight (150,478) fully paid and non-assessable shares (“Shares”) of non-voting common stock, par value $0.01 per share, of the Company (“Company Voting Stock”), upon and subject to the following terms and conditions:
1. Definitions. As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1.
“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Appraisal Procedure” means a procedure whereby two independent appraisers, one chosen by the Company and one by the Holder (or if there is more than one Holder, a majority in interest of Holders), shall mutually agree upon the determinations then the subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser within fifteen (15) days after the Appraisal Procedure is invoked. If within thirty (30) days after appointment of the two appraisers they are unable to agree upon the amount in question, a third independent appraiser shall be chosen within ten (10) days thereafter by the mutual consent of such first two appraisers or, if such first two appraisers fail to agree upon the appointment of a third appraiser, such appointment shall be made by the American Arbitration Association, or any organization successor thereto, from a panel of arbitrators having experience in the appraisal of the subject matter to be appraised. The decision of the third appraiser so appointed and chosen shall be given within thirty (30) days after the selection of such third appraiser. If three appraisers shall be appointed and the determination of one appraiser is disparate from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such appraiser shall be excluded, the remaining two determinations shall be averaged and such average shall be binding and conclusive on the Company and the Holder; otherwise, the average of all three determinations shall be binding and conclusive on the Company and the Holder. The costs of conducting any Appraisal Procedure shall be shared equally by the Holder and the Company; provided that (i) if such Appraisal Procedure shall result in a determination that is 5% or more greater than the Company’s initial determination, all costs of conducting such Appraisal Procedure shall be borne by the Company, (ii) if such Appraisal Procedure shall result in a determination that is 5% or more less than the Holder’s initial determination, all costs of conducting such Appraisal Procedure shall be borne by the Holder and (iii) if both (i) and (ii) apply this proviso shall be disregarded.
“Board” means the Board of Directors of the Company.
“business day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other governmental actions to close.
“Company Non-Voting Stock” means non-voting common stock, par value $0.01 per share of the Company.
“Company Securities” means (i) the Company Stock and the Warrant, and (ii) securities convertible into or exercisable or exchangeable for Company Stock and/or the Warrant.
“Company Stock” means (i) Company Non-Voting Stock and (ii) Company Voting Stock.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.
“Fundamental Transaction” means any of the following: (i) the Company effects any merger or consolidation of the Company with or into another Person; (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions; (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Company Stock are permitted to tender or exchange their shares for other securities, cash or property; or (iv) the Company effects any reclassification of the Company Stock or any compulsory share exchange pursuant to which the Company Stock is effectively converted into or exchanged for other securities, cash or property.
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“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 the New York Stock Exchange, the Nasdaq Stock Market or any national securities exchange, (A) the closing sale price for such day reported by The Nasdaq Global Select Market or any comparable system if such security is traded over-the-counter and quoted in The Nasdaq Global Select Market or any comparable system, or (B) if such security is so traded, but not so quoted, the average of the closing reported bid and ask prices of such security as reported by The Nasdaq Global Select Market or any comparable system. If such security is not listed and traded in a manner that (i) the quotations referred to above are available for the period required hereunder, the Market Price of such security shall be deemed to be the fair value per share of such security as determined in good faith by the Board, assuming a willing buyer and a willing seller, provided that no minority or illiquidity discount or control premium shall be taken into account and no consideration shall be given to any restrictions on transfer or marketability or the existence or absence of, or any limitations on voting rights and (ii) references herein to “trading day” shall be deemed to refer to “day.” If the Holder does not accept the Board’s calculation of fair value per share and the Holder and the Company are unable to agree on fair value per share within fifteen (15) days following written notice to the Holder thereof (or such other time period as may be necessary in connection with a Fundamental Transaction or other transaction), the Appraisal Procedure shall be used to determine the fair value per share.
“Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, governmental entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.
2. Expiration Date. This Warrant shall expire and shall no longer be exercisable upon the date that is the tenth (10th) anniversary of the Issuance Date (the “Expiration Date”).
3. Exercise Price. The initial exercise price of this Warrant shall be $21.62 per share (the “Initial Exercise Price”, and as it may be adjusted as set forth in Section 6 below, the “Exercise Price”).
4. Exercise.
(a) Subject to the provisions set forth in Section 4(b) below, the Holder is entitled to exercise this Warrant in whole or in part at any time or from time to time; provided that the Holder may not exercise this Warrant (or any portion of this Warrant) following the Expiration Date. This Warrant may be exercised by the Holder by the delivery of written notice of exercise to the Company in accordance with Section 13 below. Such notice of exercise shall state the number of Shares for which the Holder desires to exercise this Warrant (the “Exercised Share Number”) and shall be in the form of Annex A hereto or such other form as the Company may from time to time prescribe by notice to the Holder. Payment for Shares acquired upon the exercise of this Warrant (or any portion of this Warrant) shall be made at the time of exercise and shall be made in one of the following manners:
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(i) by payment to the Company in cash or by certified check or bank check or by wire transfer of immediately available funds the amount obtained by multiplying the Exercised Share Number by the Exercise Price (the “Aggregate Exercise Price”), or
(ii) by having the Company withhold Shares issuable upon exercise of this Warrant equal in value to the Aggregate Exercise Price based on the Market Price of the Company Stock on the trading day immediately prior to the date on which this Warrant and the notice of exercise is delivered to the Company.
(b) Notwithstanding the foregoing or anything to the contrary herein, the Holder may be required by the Company to exercise or forfeit this Warrant in whole or in part, at any time, upon receipt by the Company of a written notification from the Company’s primary state and/or federal regulators substantially to the effect that this Warrant must be exercised or forfeited by the Holder in accordance with such written notification solely as a result of a banking institution that is owned by the Company falling below minimum capitalization requirements as determined by such state and/or federal regulators. The Company shall provide a copy of such written notification to the Holder as promptly as possible upon, and in any event within two (2) days of, receipt by the Company of such written notification. Each of the Company and the Holder agrees to work together in good faith to comply with and carry out the instructions provided in such written notification and as directed by such state and/or federal regulators.
5. Delivery of Shares and Certificates. Within a reasonable time after the exercise of this Warrant and the issuance of Shares in connection therewith, the Company shall cause the Shares to be issued in book entry form, or, upon written notice from the Holder, cause to be delivered to the Holder a certificate representing such Shares, in the name of the Holder or in such other name or names as the Holder may designate. The Company agrees that the Shares so issued will be deemed to have been issued to the Holder as of the close of business on the date on which this Warrant and payment of the Exercise Price are delivered to the Company, notwithstanding that the stock transfer books of the Company may then be closed or certificates representing the Shares may not be actually delivered on such date. If this Warrant shall be exercised with respect to the purchase of less than all of the Shares subject to this Warrant, the Company shall cause to be delivered to the Holder, together with the issuance of Shares, a new warrant in substantially identical form reflecting the Shares that remain subject to exercise by the Holder. The Company will use all commercially reasonable efforts (which shall include the payment of customary listing fees and expenses) to (i) procure, at its sole expense, the listing of the Shares upon exercise of this Warrant, subject to issuance or notice of issuance, on all stock exchanges on which the Company Stock is then listed or traded and (ii) maintain the listing of such Shares after issuance. The Company will 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. Before taking any action which would cause an adjustment pursuant to Section 6 to reduce the Exercise Price below the then par value (if any) of the Company Stock, the Company shall take any and all corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of Company Stock at the Exercise Price as so adjusted.
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6. Certain Adjustments. The Exercise Price and number of Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 6.
(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Company Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Company Stock; (ii) subdivides outstanding shares of Company Stock into a larger number of shares; or (iii) combines outstanding shares of Company Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Company Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Company Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this Section 6(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution (if such dividend or distribution is actually made), and any adjustment pursuant to clause (ii) or (iii) of this Section 6(a) shall become effective immediately after the effective date of such subdivision or combination.
(b) Fundamental Transactions. If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if the Holder had been, immediately prior to such Fundamental Transaction, the holder of the number of Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 6(b) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 6, the number of Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.
(d) Calculations. No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in such price; provided that any adjustments that by reason of this sentence are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Company Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Company Stock.
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(e) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 6, the Company, at its expense, will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent.
(f) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Company Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company (other than rights or warrants to subscribe for or purchase any capital stock of the Company granted to employees of the Company pursuant to equity incentive plans approved by the Board); (ii) authorizes or approves, enters into any agreement contemplating or solicits shareholder approval for any Fundamental Transaction; or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction (but only to the extent such disclosure would not result in the dissemination of material, non-public information to the Holder) at least twenty (20) days prior to the applicable record or effective date on which a Person would need to hold Company Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.
(g) Certain Events. If any change in the outstanding class and series of shares for which this Warrant is exercisable or any other event occurs as to which the other provisions of this Section 6 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder in accordance with such provisions, then the Company shall make an adjustment in the number and class of shares available under this Warrant, the Exercise Price or the application of such provisions, so as to protect the purchase rights of the Holder. The adjustment shall give the Holder of this Warrant upon exercise for the same Aggregate Exercise Price the total number, class and kind of shares as the Holder would have owned had this Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment.
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(h) No Impairment. The Company will not, by amendment to its articles of incorporation or through any 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 terms to be observed or performed by the Company hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.
(i) Adjustment Rules. Any adjustments pursuant to this Section 6 shall be made successively whenever an event referred to herein shall occur. If an adjustment in Exercise Price made hereunder would reduce the Exercise Price to an amount below par value of the Company Stock, then such adjustment in Exercise Price made hereunder shall reduce the Exercise Price to the par value of the Company Stock. If more than one subsection of this Section 6 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 6 so as to result in duplication. Further, any adjustment shall be made to the extent (and only to the extent) that such adjustment would not cause or result in the Holder or any of its Affiliates being in violation of any applicable law, regulation or rule of any governmental authority or self-regulatory organization. Any adjustment (or portion thereof) prohibited pursuant to the preceding sentence shall be postponed and implemented on the first date on which such implementation would not result in the condition described in the preceding sentence.
7. Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and/or delivery such number of Shares (taking into account the adjustments and restrictions of Section 6) as shall be required for issuance or delivery to the Holder following the exercise hereof. The Company covenants that all Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the Holder or taxes in respect of any transfer occurring contemporaneously therewith).
8. Rights of Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or in equity, until the Holder shall have exercised this Warrant (or any portion of this Warrant) and such Shares shall have been issued by the Company and noted in the stock transfer books and records of the Company. The Company will at no time close its transfer books against transfer of this Warrant in any manner which interferes with the timely exercise of this Warrant. The rights of the Holder are limited to those expressed herein and are not enforceable against the Company except to the extent set forth herein. Nothing contained in this Warrant shall give rise to any liability of the Holder, whether such liability is asserted by the Company or its creditors.
9. Charges, Taxes and Expenses. Issuance of certificates for Shares to the Holder upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company.
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10. Assignment.
(a) Subject to compliance with applicable law, without obtaining the consent of the Board to transfer or assign this Warrant, this Warrant and all rights hereunder are transferrable and assignable, in whole or in part, upon the books of the Company by the Holder hereof in person or by duly authorized attorney, and a new warrant shall be made and delivered by the Company, as promptly as reasonably practicable, of the same tenor and date as this Warrant but registered in the name of the transferee or assignee and if the Holder’s entire interest is not being transferred or assigned, in the name of the Holder, upon surrender of this Warrant, duly endorsed. All expenses (other than stock transfer taxes) and other charges payable in connection with the preparation, execution and delivery of any new warrants shall be paid by the Company.
(b) An assignment as to all or any portion of the Warrant shall be in writing in a form acceptable to the Board, shall be signed by or on behalf of the assignor and shall be accompanied by satisfactory evidence of the authority of any person signing on behalf of the assignor.
(c) The provisions of this Warrant shall be binding upon and inure to the benefit of the Company and its successors and permitted assigns. The Company may not assign any of its rights, or delegate any of its obligations, under this Warrant without the prior written consent of the Holder. In the event of assignment of this Warrant by the Company, references herein to “the Company” shall mean such assignee of the Company.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then such action may be taken or such right may be exercised on the next succeeding day that is a business day.
12. Amendments; Counterparts; Waivers. This Warrant may be amended only in writing signed by the Company and the Holder; provided, however, the Company shall not amend, modify or waive any provision of this Warrant if any such amendment, modification or waiver would have the effect of establishing rights or otherwise benefiting a Holder in a manner more favorable in any material respect than the rights and benefits established in favor of all other Holders or group of Holders or adversely affect any individual Holder, or group of Holders, in a manner which is materially different than its effect on any other Holder or group of Holders, unless, in any such case, such Holders have been offered such rights and benefits, and such written instrument shall also be executed by such individual Holder (or in the case of any group of Holders, Holders of a majority of the outstanding Warrants held by such group of Holders). This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Failure of any party to exercise any right or remedy under this Warrant, or delay by a party in exercising such right to remedy, shall not operate as a waiver thereof. The observance of any term of this Warrant may be waived only in a writing signed by the party against whom the waiver is to be effective.
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13. Notices. Any notice which the Company or the Holder may be required or permitted to give to the other shall be in writing, and may be delivered personally or by mail, postage prepaid, or overnight courier, addressed as follows: if to the Company, to Georgia Banking Company, Inc., 6190 Powers Ferry Road, Suite 150, Sandy Springs, Georgia 30339 Attn.: Chief Executive Officer, or to such other office or person as the Company may from time to time direct; and if to the Holder, at [●], or to such other address as the Holder may designate in writing from time to time by notice to the Company in accordance with the provisions of this Section 13. Notices shall be effective (a) upon receipt if sent by mail or delivered personally and (b) the trading day following the date of mailing, if sent by overnight courier with next day delivery specified.
14. Governing Law/Proceedings. The construction, validity, interpretation, performance and enforcement of this Warrant shall be governed by and construed and enforced in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State (except to the extent that mandatory provisions of Delaware law are applicable). Each of the Company and the Holder agrees that all legal proceedings concerning the interpretations, enforcement and defense of this Warrant and the transactions herein contemplated (“Proceedings”) (whether brought against the Company or the Holder or any of their respective Affiliates, employees or agents) shall be commenced exclusively in the state or federal courts located in the city of Atlanta, Georgia. Each of the Company and the Holder hereby irrevocably submits to the exclusive jurisdiction of the state or federal courts located in the city of Atlanta, Georgia for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any state or federal courts located in the city of Atlanta, Georgia, or that such Proceeding has been commenced in an improper or inconvenient forum. Each of the Company and the Holder hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Person at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each of the Company and the Holder hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby.
In any litigation, arbitration or court proceeding between the Company and the Holder as the holder of this Warrant relating hereto, the prevailing party shall be entitled to reasonable attorneys’ fees and expenses incurred in enforcing this Warrant. If the Company fails to perform, comply with or observe any covenant or agreement to be performed, complied with or observed by it under this Warrant, the Holder may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Warrant or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Warrant or to enforce any other legal or equitable right, or to take any one or more of such actions. The Company hereby agrees that the Holder shall not be required or otherwise obligated to, and hereby waives any right to demand that the Holder, post any performance or other bond in connection with the enforcement of its rights and remedies hereunder. None of the rights, powers or remedies conferred under this Warrant shall be mutually exclusive, and each right, power or remedy shall be cumulative and in addition to any other right, power or remedy whether conferred by this Warrant or now or hereafter available at law, in equity, by statute or otherwise.
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15. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a new Warrant to purchase Shares, in substantially the form of this Warrant (a “New Warrant”), but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.
16. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the Market Price of the Shares on the date of exercise.
17. Registration of Warrant. The Company shall register this Warrant upon records to be maintained by the Company for that purpose, in the name of the Holder hereof. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof and for all other purposes, absent actual notice to the contrary.
18. Prohibited Actions. The Company agrees that it will not take any action which would entitle the Holder to an adjustment of the Exercise Price if the total number of shares of Company Stock issuable after such action upon exercise of this Warrant, together with all shares of Company Stock then outstanding and all shares of Company Stock then issuable upon the exercise of all outstanding options, warrants, conversion and other rights, would exceed the total number of shares of Company Stock then authorized by its certificate of incorporation.
19. Representations and Warranties of the Company. The Company hereby represents and warrants to the Holder that (a) it has the corporate power and authority to execute this Warrant and consummate the transactions contemplated by this Warrant, (b) there are no statutory or contractual shareholder preemptive rights or rights of refusal with respect to the issuance of this Warrant and (c) the execution and delivery by the Company of this Warrant and the issuance of Company Stock upon exercise of this Warrant do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any lien, security interest, charge or encumbrance upon the Company Securities or assets pursuant to, (iv) result in a violation of or (v) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative or governmental body or agency pursuant to the Company’s articles of incorporation or bylaws or any law in effect as of the date hereof to which the Company is subject, or any agreement, instrument, order, judgment or decree to which the Company is subject as of the date hereof, except for any such authorization, consent, approval or exemption that has been obtained.
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20. Rule 144 Information. For so long as the Company is not subject to the reporting requirements of the Securities Act and the Exchange Act, it will, upon the request of the Holder, make publicly available such information as may be necessary to permit sales pursuant to Rule 144 or Regulation S under the Securities Act, and it shall use commercially reasonable efforts to take such further actions as the Holder may reasonably request, in each case to the extent required from time to time to enable such Holder to sell or otherwise transfer all or any portion of this Warrant without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or Regulation S under the Securities Act, as such rules may be amended from time to time, or any successor rule or regulation hereafter adopted by the United States Securities and Exchange Commission. Upon the written request of the Holder submitted prior to the Company becoming subject to the reporting requirements of the Securities Act and the Exchange Act, the Company will deliver to such Holder a written statement that it has complied with such requirements.
21. Entire Agreement. This Warrant and the exhibits and attachments hereto contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or undertakings with respect thereto.
22. Miscellaneous. The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof. In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first set forth above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
ANNEX A
FORM OF
ELECTION TO PURCHASE
To Georgia Banking Company, Inc.:
The undersigned is the Holder of Warrant No. (the “Warrant”) issued by Georgia Banking Company, Inc., a Georgia corporation (the “Company”). Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.
1. The Warrant is currently exercisable to purchase a total of Shares.
2. The Exercised Share Number is equal to .
3. The Original Exercise Price is equal to $___.__ per Share.
4. The Exercise Price is equal to $___.__ per Share.
| 5. | ¨ A. The Holder shall pay the sum of $ to the Company in accordance with Section 4(a)(i) of the Warrant, which amount is equal to the Aggregate Exercise Price (the Exercised Share Number multiplied by the Exercise Price). |
OR (Holder to choose one)
| ¨ B. The Company shall withhold a number of Shares issuable upon exercise of this Warrant in accordance with Section 4(a)(ii) of the Warrant equal in value to the Aggregate Exercise Price (the Exercised Share Number multiplied by the Exercise Price ) based on the Market Price of the Company Stock on the trading day immediately prior to the date on which this notice of exercise is delivered to the Company. |
The undersigned requests that certificates for the Shares issuable upon this exercise be issued in the name of .
| Date: | |||
| Name of Holder: | |||
| Address of Holder: | |||
Social Security or Tax Identification Number of Holder:
| SIGNATURE OF HOLDER: |
| Name: | ||
| Title: |
Exhibit 4.9
BOTH THE WARRANT AND THE SHARES INTO WHICH THE WARRANT IS EXERCISABLE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) NOR ANY APPLICABLE STATE SECURITIES LAW (THE “STATE ACTS”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT, THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT, THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS.
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this “Agreement”) is made and entered into as of June 1, 2026 (the “Assumption Date”), by Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), in favor of [________________________] (the “Warrant Holder”).
WHEREAS, the Company and Tandem Bancorp, Inc. (“Tandem”) entered into that certain Agreement and Plan of Merger, dated February 24, 2026, by and between the Company and Tandem (the “Merger Agreement”), pursuant to which Tandem merged with and into the Company, with the Company as the surviving corporation (the “Merger”);
WHEREAS, prior to the Merger, Tandem granted to Warrant Holder a warrant to purchase [_________] shares of Tandem’s common stock (the “Tandem Warrant”) with an original issue date of [__________] (the “Original Issue Date”), subject the Warrant Agreement dated as of [______________] (the “Tandem Agreement”); and
WHEREAS, in connection with the Merger and pursuant to the Merger Agreement, Warrant Holder elected to convert his outstanding and unexercised Tandem Warrant into a warrant to purchase shares of the Company’s common stock (the “Warrant”) equal to the number (rounded down to the nearest whole number) of (x) the number of shares of Tandem’s common stock subject to the Tandem Warrant immediately prior to the Effective Time (as defined in the Merger Agreement) times (y) 0.4800 (the “Exchange Ratio”), at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Tandem’s common stock under the Tandem Warrant immediately prior to the Effective Time divided by (B) the Exchange Ratio;
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Warrant. Subject to the terms, restrictions, limitations and conditions stated herein, the Company hereby grants to the Warrant Holder the right (the “Warrant”) to purchase all or any part of an aggregate of [______________] shares of the common stock of the Company, par value $0.01 per share (“Common Stock”), subject to adjustment in accordance with Sections 6 and 7 hereof (such shares, as adjusted, the “Warrant Shares”). The Warrant shall be fully vested as of the Assumption Date. Warrant Holder agrees and understands that the Tandem Warrant has been cancelled as of the Effective Time (and is no longer exercisable) and converted into this Warrant to acquire Warrant Shares pursuant to the terms of this Agreement. Warrant Holder releases all rights to the Tandem Warrant under the Tandem Agreement, as set forth in the Warrant Holder Release Agreement.
2. Term.
(a) The term for the exercise of the Warrant begins at 9:00 a.m., Eastern Time, on the Original Issue Date and ends at 5:00 p.m., Eastern Time, on the 10th anniversary of the Original Issue Date (the “Expiration Time”).
(b) Notwithstanding any other provision of this Agreement, the Warrant shall expire on any earlier date than that provided in Section 2(a) hereof in the event either the primary federal or state regulator of the Company (the “Regulators”) may require the Warrant Holder to exercise or forfeit the Warrant due to the capital of the Company falling below the minimum requirements as determined by the Regulators.
3. Purchase Price. The adjusted price per share to be paid by the Warrant Holder for the Warrant Shares shall be $20.83 subject to adjustment as set forth in Section 7 hereof (such price, as adjusted, the “Purchase Price”).
4. Exercise of Warrant. The Warrant may thereafter be exercised by the Warrant Holder, in whole or in part, at any time or from time to time prior to the Expiration Time, by delivery to the Company of the following:
(a) A completed and signed notice of exercise (including Form W-9, which forms a part thereof) (the “Notice of Exercise”), as attached hereto as Schedule A;
(b) A check payable to the Company for the full amount of the aggregate Purchase Price for the number of Warrant Shares as to which the Warrant is being exercised; and
(c) A copy of this Agreement.
5. Issuance of Warrant Shares. Upon receipt of the items set forth in Section 4 hereof, and subject to the terms hereof, the Company shall cause the number of Warrant Shares specified in the Notice of Exercise to be registered in book-entry form under the name of the Warrant Holder. Notwithstanding the foregoing, the Company shall not be required to issue or register the Warrant Shares in book-entry form or any portion thereof prior to the fulfillment of the following conditions:
(a) The completion of any registration or other qualification of such shares which the Company shall deem necessary or advisable under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, unless the availability of an exemption from such registration or qualification shall be established to the satisfaction of counsel for the Company;
(b) The obtaining of any approval or other clearance from any federal or state governmental agency or body, which the Company shall determine to be necessary or advisable; or
(c) The lapse of such reasonable period of time following the exercise of the Warrant, or any portion thereof, as the Company from time to time may establish for reasons of administrative convenience.
If the Warrant shall have been exercised only in part, the Company shall, at the time of registration in book-entry form of said Warrant Shares, deliver to the Warrant Holder a new statement evidencing the right of the Warrant Holder to purchase the remaining Warrant Shares covered by this Agreement. The Company shall pay all expenses and stock transfer taxes and other charges payable in connection with the book entry registration and delivery of such statement(s).
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6. Antidilution, Etc.
(a) If, at any time, the Company shall:
(i) establish a record date for the determination of holders of record of its outstanding shares of Common Stock for the purpose of entitling them to receive a dividend payable in, or other distributions of, additional shares of its Common Stock;
(ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock;
then (A) the number of Warrant Shares for which the Warrant Holder’s Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Company Common Stock which a record holder of the same number of shares of Common Stock for which Warrant Shares is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (B) the Purchase Price shall be adjusted to equal (x) the Purchase Price multiplied by the Warrant Shares for which the Warrant Holder’s Warrant is exercisable immediately prior to the adjustment divided by (y) the Warrant Shares for which Holder’s Warrant is exercisable immediately after such adjustment.
(b) The following provisions shall be applicable to adjustments made pursuant to Section 6(a) hereof:
(i) The adjustments required by Section 6(a) hereof shall be made whenever and as often as any event requiring an adjustment shall occur. For the purpose of any such adjustment, any event shall be deemed to have occurred at the close of business on the date of its occurrence.
(ii) In computing adjustments under this Section 6(b), fractional interests in the Common Stock shall be taken into account to the nearest 1/10th of a share. In no event, however, shall fractional shares or a scrip representing fractional shares be issued upon the exercise of the Warrant. In lieu thereof, a cash payment shall be made to the Warrant Holder in an amount equal to such fraction multiplied by the Purchase Price.
(iii) If the Company shall establish a record date for the determination of the holders of record of the Common Stock for the purpose of entitling such holders to receive a dividend payable in Company Common Stock and shall, thereafter and before the distribution to shareholders thereof, legally abandon its plan to pay or deliver such dividend, then no adjustment shall be required by reason of the establishment of such record date and any such adjustment previously made in respect thereof shall be rescinded and annulled.
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7. Reorganization, Reclassification, Consolidation or Merger.
(a) If, prior to the Expiration Time, there shall be any reorganization or reclassification of the Common Stock (other than a subdivision or combination of shares provided for in Section 6 hereof), or any consolidation or merger of the Company with another entity, the Warrant Holder shall thereafter be entitled to receive, during the term hereof and upon payment of the Purchase Price, the number of shares of stock or other securities or property of the Company or of the successor entity (or its parent Company) resulting from such consolidation or merger, as the case may be, to which a holder of the Common Stock, deliverable upon the exercise of the Warrant, would have been entitled upon such reorganization, reclassification, consolidation or merger; and in any case, appropriate adjustment (as determined by the Board of Directors of the Company in its sole discretion) shall be made in the application of the provisions herein set forth with respect to the rights and interest thereafter of the Warrant Holder to the end that the provisions set forth herein (including the adjustment of the Purchase Price and the Warrant Shares) shall thereafter be applicable, as near as may reasonably be practicable, in relation to any shares or other property thereafter deliverable upon the exercise hereof.
(b) If any such reorganization, reclassification, consolidation, merger or share exchange results in a cash distribution in excess of the Purchase Price provided by this Warrant, the Warrant Holder may, at the Warrant Holder’s option, exercise this Warrant without making payment of the Purchase Price, and in such case the Company or its successors and assigns shall, upon distribution to such Warrant Holder, consider the Purchase Price to have been paid in full, and in making settlement to such Warrant Holder, shall deduct an amount equal to the Purchase Price from the amount payable to such Warrant Holder. Notwithstanding anything herein to the contrary, the Company will not effect any such reorganization, reclassification, merger, consolidation or share exchange unless prior to the consummation thereof, the corporation that may be required to deliver any stock, securities or other assets upon the exercise of the Warrant issuable pursuant to this Agreement shall agree by an instrument in writing to deliver such stock, cash, securities or other assets to the Warrant Holder. A sale, transfer or lease of all or substantially all of the assets of the Company to another person shall be deemed a reorganization, reclassification, consolidation, merger or share exchange for the foregoing purposes.
8. Notice of Adjustments. Upon any adjustment provided for in Section 6 or Section 7 hereof, the Company, within 30 days thereafter, shall give written notice thereof to the Warrant Holder, which notice shall state the Purchase Price as adjusted and the increased or decreased number of Warrant Shares, setting, forth in reasonable detail the method of calculation of each.
9. Miscellaneous.
(a) Any notice hereunder by the Warrant Holder shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Chief Financial Officer of the Company. Any notice hereunder by the Company shall be given to the Warrant Holder in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Warrant Holder may have on file with the Company.
(b) The Company covenants that it has reserved and will keep available, solely for the purpose of issue upon the exercise of the Warrant, a sufficient number of shares of the Common Stock to permit the exercise of the Warrant in full.
(c) No holder of the Warrant, as such, shall be entitled to vote or receive dividends with respect to the Warrant Shares subject thereto or be deemed to be a shareholder of the Company for any purpose until the Common Stock has been issued.
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(d) This Agreement may be amended only by an instrument in writing executed by the party against whom enforcement of amendment is sought.
(e) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Georgia.
[Signature Page Follows]
5
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.
| Georgia banking Company, iNc. | ||
| By: | ||
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
6
SCHEDULE A
NOTICE OF EXERCISE
OF WARRANT TO PURCHASE COMMON STOCK OF
GEORGIA BANKING COMPANY, INC.
The undersigned, the registered owner of the right to purchase shares of Common Stock (the “Common Stock”) of Georgia Banking Company, Inc. (the “Company”), hereby irrevocably elects to exercise such right to purchase thereunder ________ shares of the Common Stock of the Company and herewith makes payment of $________ therefor, and requests that such shares be issued in the name of, registered and a statement of share ownership be delivered to:
| Name: | |||
| Address: | |||
| Social Security or Tax I.D. Number: |
and if such shares shall not be all of the shares purchasable hereunder, that a new statement warrant ownership of like tenor for the balance of the shares purchasable hereunder be delivered to the undersigned.
| Date: |
| WARRANT HOLDER | |||
| Name: | |||
THIS NOTICE OF EXERCISE SHALL NOT BE GIVEN EFFECT
BY THE COMPANY UNLESS THE HOLDER OF THE UNDERLYING
WARRANT HAS PROPERLY COMPLETED AND SIGNED BOTH
THIS NOTICE OF EXERCISE FORM AND A CURRENT FORM W-9.
Exhibit 5.1
Troutman Pepper Locke LLP Bank of America Plaza, 600 Peachtree Street NE, Suite 3000 Atlanta, GA 30308 |
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troutman.com
October 2, 2026
Georgia Banking Company, Inc.
1776 Peachtree Street NW, Suite 300
Atlanta, GA 30309
| Re: | Georgia Banking Company, Inc. – Registration Statement on Form S-1 |
Ladies and Gentlemen:
We are acting as counsel to Georgia Banking Company, Inc., a Georgia corporation (the “Company”), in connection with the preparation and filing by the Company of the Registration Statement on Form S-1, as amended through the date hereof (the “Registration Statement”), with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), relating to the registration of the offer and sale from time to time, in each case, by the selling shareholders named in the Registration Statement (the “Selling Shareholders”) of 7,040,514 shares (the “Shares”) of the Company’s voting common stock, par value $0.01 per share. The Shares may be sold by the Selling Shareholders, as described in the prospectus forming a part of the Registration Statement (the “Prospectus”).
This opinion is being furnished in accordance with the requirements of Item 16 of Form S-1 and Item 601(b)(5)(i) of Regulation S-K promulgated under the Securities Act.
We have reviewed the corporate proceedings taken by the Company in connection with the authorization and issuance of the Shares and the registration of their offer and sale, the Registration Statement and the Prospectus. We have also examined and relied upon originals or copies of such corporate records, documents, agreements or other instruments of the Company, and such certificates and records of public officials, and such other papers, as we have deemed necessary or appropriate in connection herewith, including, but not limited to, the Company’s Articles of Incorporation, as amended, the Company’s Amended and Restated Bylaws, and the resolutions of the Board of Directors. We have also made such investigations of law as we have deemed necessary or appropriate as a basis for such opinion. As to all matters of fact (including, without limitation, factual conclusions and characterizations and descriptions of purpose, intention or other state of mind), we have relied entirely upon certificates of officers of the Company and certificates of public officials, and have assumed, without independent inquiry, the accuracy of those certificates.
In rendering this opinion, we have assumed the genuineness and authenticity of all signatures on original documents; the legal capacity of all natural persons; the authenticity of all documents submitted to us as originals; the conformity to originals of all documents submitted to us as certified or photocopies; the accuracy and completeness of all documents and records reviewed by us; the accuracy, completeness and authenticity of certificates issued by any governmental official, office or agency and the absence of change in the information contained therein from the effective date of any such certificate; and the due authorization, execution and delivery of all documents where authorization, execution and delivery are prerequisites to the effectiveness of such documents, except we make no such assumption as to the Company.
We have also assumed that (i) the Registration Statement, and any amendments thereto (including post-effective amendments), will have become effective and will not have been terminated or rescinded, (ii) a prospectus supplement, if necessary, will have been prepared and filed with the Commission describing any Shares offered thereby, (iii) all Shares will be sold in compliance with applicable federal and state securities laws and in the manner specified in the Registration Statement and any applicable prospectus supplement, and (iv) the Company has complied with all applicable notice requirements regarding uncertificated shares provided in the Georgia Business Corporation Code (the “GBCC”).
Our opinion is expressed only with respect to the GBCC. We are not opining as to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction or, in the case of Georgia, any other laws, or as to matters of municipal law or the laws of any local agencies within any states (including “blue sky” or other state securities laws).
Based upon the foregoing, and subject to the further assumptions, qualifications and limitations set forth herein, we are of the opinion that the Shares have been duly authorized and validly issued and are fully paid and non-assessable.
This opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein.
We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any facts or circumstances that may change the opinions expressed herein after the date hereof.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and any amendments thereto and to the reference of our firm under the caption “Legal Matters” in the Prospectus. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission. This opinion letter is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Securities Act.
| Sincerely, | |
| /s/ Troutman Pepper Locke LLP | |
| Troutman Pepper Locke LLP |
Exhibit 10.1
Execution Version
CERTAIN CONFIDENTIAL INFORMATION (MARKED BY BRACKETS AS “[***]”) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (this “Agreement”), dated as of December 31, 2020, is made by and between Wingshooter Acquisition Corp., a Georgia corporation (the “Company”) and Patriot Financial Partners III, L.P., a Delaware limited partnership (the “Investor”). The Company and the Investor shall sometimes be referred to herein collectively, as the “Parties” and individually, as a “Party.”
RECITALS
WHEREAS, the Company and Georgia Banking Company, Inc. (“Georgia Banking Company”) entered into that certain Amended and Restated Agreement and Plan of Merger, dated November 11, 2020 (the “Merger Agreement”), pursuant to which the Company will merge with and into Georgia Banking Company, with Georgia Banking Company being the surviving entity (the “Acquisition”);
WHEREAS, references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company;
WHEREAS, Georgia Banking Company is a bank holding company, registered as such under the Bank Holding Company Act of 1956, as amended, and is the record and beneficial owner of 100% of the issued and outstanding capital stock of Georgia Banking Company, a Georgia state chartered bank (the “Bank”);
WHEREAS, concurrently herewith, the Investor has entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the Company, pursuant to which the Investor will purchase from the Company that certain number of shares (the “Shares”) of common stock, par value $0.01 per share, of the Company (the “Common Stock”) equal to the lesser of (a) $30,000,000 divided by the Purchase Price per Share or (b) 24.9% of the issued and outstanding shares of Georgia Banking Company common stock, par value $0.01(“GBC Common Stock”), immediately following the Acquisition on a fully diluted as-converted basis;
WHEREAS, references to the Common Stock in this Agreement following the Acquisition shall be deemed to be references to GBC Common Stock;
WHEREAS, capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Stock Purchase Agreement; and
WHEREAS, in order to induce the Investor to enter into the Stock Purchase Agreement, the Company has agreed to grant the Investor the rights set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the Parties hereby agree as follows:
1. Board/Observer Rights.
(a) Following the Closing, the Company will promptly cause one representative of the Investor (the “Board Representative”) to be elected or appointed to the board of directors of the Company (for the avoidance of doubt, in this instance referring to the board of directors of Wingshooter Acquisition Corp.). Following the Acquisition, the Company will promptly cause the Board Representative to be elected or appointed to the board of directors of the Company (for the avoidance of doubt, in this instance referring to the board of directors of Georgia Banking Company) (the “Board of Directors”), and the board of directors of the Bank (the “Bank Board”), subject to all legal and regulatory requirements regarding service and election or appointment as a director of the Company and the Bank (the “Qualification Requirements”), in each case, so long as the Investor, together with its Affiliates, beneficially owns in the aggregate at least the lesser of either 50% of the total Shares or Converted Shares, as applicable, purchased by the Investor pursuant to the Stock Purchase Agreement or 4.9% of the Common Stock then outstanding (the “Minimum Ownership Interest”). So long as the Investor, together with its Affiliates, satisfies the Minimum Ownership Interest, the Company will, subject to applicable law, recommend to its shareholders the election of the Board Representative to the Board of Directors at any special meeting or annual meeting of the Company’s shareholders called for the purpose of the election of directors, as applicable, subject to satisfaction of the Qualification Requirements. So long as the Investor, together with its Affiliates, satisfies the Minimum Ownership Interest, the Company will, subject to applicable law, elect or appoint the Board Representative to the Bank Board at any special meeting or annual meeting of the Bank’s shareholders called for the purpose of the election of directors, as applicable, subject to satisfaction of the Qualification Requirements. If the Investor no longer satisfies the Minimum Ownership Interest, the Investor will have no further rights under Sections 1(a) through 1(e) and, at the written request of the Board of Directors, shall cause its Board Representative to resign from the Board of Directors and the Bank Board as promptly as possible thereafter.
(b) The Board Representative shall, subject to the Qualification Requirements, be one of the Company’s nominees to serve on the Board of Directors. The Company shall use its commercially reasonable efforts to have the Board Representative elected as a director of the Company by the shareholders of the Company, and the Company shall solicit proxies for the Board Representative to the same extent as it does for any of its other Company nominees to the Board of Directors. The Investor covenants and agrees to hold any Information (as defined below) obtained from its Board Representative in confidence as set forth in Section 8 below. Notwithstanding anything to the contrary contained herein, at all times when the Investor satisfies the Minimum Ownership Interest, it shall comply in all respects with the Federal Reserve’s rule for Control and Divestiture Proceedings as codified in the Federal Reserve’s Regulation Y and any other guidance promulgated in connection with the matters addressed therein.
(c) Subject to Section 1(a), upon the death, resignation, retirement, disqualification, or removal from office as a member of the Board of Directors or the Bank Board of its Board Representative, the Investor shall have the right to designate the replacement for such Board Representative, which replacement must be reasonably acceptable to the Company and must also satisfy the Qualification Requirements. The Board of Directors and the Bank Board shall use their respective commercially reasonable efforts to take all action required to fill the vacancy resulting therefrom with such person, use commercially reasonable efforts to have such person elected as director of the Company by the shareholders of the Company and solicit proxies for such person to the same extent as it does for any of its other nominees to the Board of Directors, as the case may be. If a Board Representative is nominated by the Company for election to the Board of Directors or the Bank Board, but fails to be elected, then subject to the proviso set forth in this Section 1(c) below, the Company or the Bank shall, as soon as practicable thereafter, subject to applicable law, increase the size of such board of directors and, following the procedures set forth above in this Section 1, appoint an individual designated in writing by the Investor who is reasonably acceptable to the Company and meets the Qualification Requirements to be the Board Representative (such individual to be different from the individual who was not elected) to the Board of Directors of the Company and/or the Bank Board (as the case may be).
(d) The Company hereby agrees that, from and after the Closing Date, for so long as the Investor and its Affiliates in the aggregate satisfy the Minimum Ownership Interest, in the event that the Investor does not have a Board Representative serving on the Board of Directors or the Bank Board, as applicable, or such Board Representative is not present at any meeting of the Board of Directors or the Bank Board (including any meetings of committees thereof on which the Board Representative is permitted to attend), the Company shall invite a person designated by the Investor (the “Observer”) to attend in a nonvoting, nonparticipating observer capacity (i) all meetings of the Board of Directors and the Bank Board (including any meetings of committees thereof on which the Board Representative would have been permitted to attend), as applicable, and (ii) any meetings of the Board of Directors and the Bank Board (including any meetings of committees thereof on which the Board Representative is permitted to attend). The Observer shall not have any right to make motions or vote on any matter presented to the Board of Directors or the Bank Board or any committee thereof. The Company shall give the Observer written notice of each meeting of the Board of Directors and the Bank Board at the same time and in the same manner as given to the members of the Board of Directors or the Bank Board (as the case may be), shall provide the Observer with all written materials and other information given to members of the Board of Directors or the Bank Board (as the case may be) at the same time such materials and information are given to such members and shall permit the Observer to attend as an observer at all meetings thereof, and in the event the Company proposes to take any action by written consent in lieu of a meeting, the Company shall give written notice thereof to the Observer prior to the effective date of such consent along with the proposed text of such written consents; provided, however, that the Observer (i) shall enter into a confidentiality agreement in favor of the Company in the form of Exhibit A hereto prior to the Observer being provided the foregoing notices, materials or information relating to, or attending any meeting of, the Board of Directors or the Bank Board or any committee thereof, (ii) shall not be provided any confidential supervisory information without the prior necessary regulatory approval, and (iii) may be excluded by the Board of Directors or the Bank Board or any committee thereof from attending any executive session of such body and from participating in any attorney-client privileged discussion of such body.
(e) The Board Representative shall be entitled to compensation and indemnification and insurance coverage in connection with his or her role as a director of the Company and the Bank to the same extent as the other directors on the Board of Directors or the Bank Board, as applicable, and shall be entitled to reimbursement for reasonable and documented out-of-pocket expenses incurred in attending meetings of the Board of Directors and the Bank Board and any committee thereof, in accordance with the Company’s and the Bank’s policies. The Observer shall not be entitled to compensation, reimbursement of expenses or indemnification from the Company or the Bank with respect to such role, provided however, that the Observer shall be entitled to reimbursement of reasonable and documented out-of-pocket expenses related to attendance at any meeting of the Board of Directors or the Bank Board or any committee thereof at which the Board Representative is not in attendance, whether by telephone or in person, in the same manner as provided for the Board Representative.
(f) The Company acknowledges that the Board Representative may have certain rights to indemnification, advancement of expenses and/or insurance provided by the Investor and/or its Affiliates (collectively, the “Investor Indemnitors”). The Company hereby agrees on behalf of itself and the Bank that with respect to a claim by the Board Representative for indemnification arising out of his or her service as a director of the Company and/or the Bank (1) that the Company and the Bank are the indemnitors of first resort (i.e., the Company and the Bank’s obligations to the Board Representative with respect to indemnification, advancement of expenses and/or insurance (which obligations shall be the same as, but in no event greater than, any such obligations to all other members of the Board of Directors or the Bank Board, as applicable) are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Board Representative are secondary), and (2) the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Board Representative against the Company.
2. Registration Rights. The Company and the Investor shall execute and deliver effective as of the date hereof the Registration Rights Agreement, the form of which is attached hereto as Exhibit B.
3. Information Rights.
(a) From the date of this Agreement, as long as the Investor and its Affiliates in the aggregate satisfy the Minimum Ownership Amount, the Company shall make available to the Investor all materials delivered to the Company’s Board of Directors, the Bank Board, and the committees thereof; provided, however, that the Company shall not be required to deliver such materials to the extent that such delivery would (i) reasonably be expected to constitute a waiver of the attorney-client privilege, (ii) reasonably be expected to result in a breach of any contractual confidentiality obligation of the Company or the Bank or (iii) violate applicable law or regulatory requirements.
(b) The Investor shall also be provided with access, information, and other rights as provided in the Investor VCOC Letter Agreement, a form of which is attached hereto as Exhibit C and will be entered into by the Company and the Investor as of the date of this Agreement.
(c) The Investor hereby acknowledges that it is aware of the restrictions under the federal securities laws imposed on a person in possession of material nonpublic information concerning an issuer, including with respect to purchasing or selling securities of such issuer and the communication of such information to other persons. The Investor agrees that neither it nor its representatives nor any of their respective Affiliates will use any data or information in contravention of such securities laws or any rules or regulations promulgated thereunder.
(d) The information rights set forth in this Sections 3(a)-(b) shall terminate and be of no further force or effect as of the date that the Investor and its Affiliates in the aggregate no longer satisfy the Minimum Ownership Interest.
4. Bank Holding Company Act. The Company will not knowingly take any action which would reasonably be expected to pose a substantial risk that the Investor or any of its Affiliates will become a “bank holding company” under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and the rules and regulations promulgated thereunder, including, without limitation, undertaking any redemption, recapitalization or repurchase of Common Stock, of securities or rights, options, or warrants to purchase Common Stock, or securities of any type whatsoever that are, or may become, convertible into or exchangeable into or exercisable for Common Stock, in each case, where the Investor is not given the right to participate in such redemption, recapitalization or repurchase to the extent of the Investor’s pro-rata proportion; provided, however, that the Company shall not be deemed to have violated this Section 4 if it has given the Investor the opportunity to participate in such redemption, recapitalization or repurchase to the extent of the Investor’s pro-rata proportion and the Investor fails to so participate. In the event the Company breaches its obligations under this Section 4 or believes that it is reasonably likely to breach such an obligation, it shall promptly notify the Investor hereto and shall cooperate in good faith with the Investor to modify ownership or, to the extent commercially reasonable, make other arrangements or take any other action, in each case, as is necessary to cure or avoid such breach.
5. Gross-Up Rights.
(a) Sale of New Securities. For so long as the Investor, together with its Affiliates, satisfies the Minimum Ownership Interest, if at any time after the date hereof the Company makes any public or nonpublic offering or sale of any equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component (such as, an “equity kicker”) (including any hybrid security) (any such security, a “New Security”) (other than (i) any issuance of equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component by the Company to be issued as of the date hereof, as agreed or contemplated (and disclosed to the Investor in writing); (ii) pursuant to the granting or exercise of employee stock options, restricted stock or other stock incentives pursuant to the Company’s stock incentive plans approved by the Board of Directors or the issuance of stock pursuant to the Company’s employee stock purchase plan approved by the Board of Directors or similar plan where stock is being issued or offered to a trust, other entity or otherwise, for the benefit of any employees, officers or directors of the Company, in each case in the ordinary course of providing incentive compensation; (iii) issuances of capital stock as full or partial consideration for a merger, acquisition, joint venture, strategic alliance, license agreement or other similar nonfinancing transaction; (iv) pursuant to an in-kind dividend or similar distribution; (v) pursuant to an initial public offering of Common Stock; (vi) any issuance of any Common Stock, preferred stock or other equity interests of the Company or securities convertible into shares of Common Stock and/or preferred stock or other equity interests of the Company upon the exercise, conversion or exchange of options, warrants or other convertible securities or (vii) within thirty (30) days following completion of this offering, issuances of Common Stock in connection with the Other Private Placements); then in each such instance, the Investor shall be afforded the opportunity to acquire from the Company for the same price (net of any underwriting discounts or sales commissions) and on the same terms as such securities are proposed to be offered to others, up to the amount of New Securities in the aggregate required to enable it to maintain its proportionate Common Stock-equivalent interest in the Company immediately prior to any such issuance of New Securities. The amount of New Securities that the Investor shall be entitled to purchase in the aggregate shall be determined by multiplying (x) the total number or principal amount of such offered New Securities by (y) a fraction, the numerator of which is the total number of shares of Common Stock then held by the Investor (counting for such purposes all shares of Common Stock into or for which any securities owned by the Investor are directly or indirectly convertible or exercisable), if any, and the denominator of which is the total number of shares of Common Stock then outstanding (counting for such purposes all shares of Common Stock into or for which any securities owned by the Investor are directly or indirectly convertible or exercisable).
(b) Limitation on Voting Securities. The purchase of any New Securities by the Investor shall not (i) cause the Investor or any of its Affiliates to violate any banking regulation, (ii) require the Investor or any of its Affiliates to become a bank holding company or otherwise serve as a source of strength for the Company or the Bank or (iii) cause the Investor, together with any other person whose Company securities would be aggregated with the Investor’s Company securities for purposes of any banking regulation or law, to collectively be deemed to own, control or have the power to vote securities which (assuming, for this purpose only, full conversion and/or exercise of such securities by the Investor and such other Persons) would represent more than 24.9% of any class of securities that entitle the holder thereof the right to vote in the election of directors or any other matters with respect to the Company (“Voting Securities”) outstanding at such time. For purposes of this Section 5(b), the term “Affiliate” shall have the meaning under the BHC Act and the Federal Reserve’s Regulation Y. Notwithstanding anything in this Section 5 to the contrary, upon the request of the Investor that the Investor not be issued New Securities that are Voting Securities in whole or in part upon the exercise of its rights to purchase New Securities, the Company shall cooperate with the Investor to modify the proposed issuance of New Securities to the Investor to provide for the issuance of nonvoting securities in lieu of Voting Securities with the same economic rights as such Voting Securities.
(c) Notice. So long as the Investor and its Affiliates in the aggregate satisfy the Minimum Ownership Interest, in the event the Company proposes to offer or sell New Securities (the “Offering”), it shall give the Investor written notice of its intention, describing the price (or range of prices), anticipated amount of New Securities, timing, and other terms upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering), no later than fifteen (15) Business Days, as the case may be, after the initial filing of a registration statement with the Commission with respect to an underwritten public Offering or after the commencement of marketing with respect to a Rule 144A Offering or an Offering pursuant to Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder. If the information contained in the notice constitutes material non-public information (as defined under the applicable securities laws), the Company shall deliver such notice only to the individuals identified (with respect to the Investor) in Section 9(a) hereof, and shall not communicate the information to anyone else acting on behalf of the Investor without the consent of one of the designated individuals. The Investor shall have twenty (20) Business Days from the date of receipt of such a notice to notify the Company in writing that it intends to exercise its rights provided in this Section 5 and as to the amount of New Securities the Investor desires to purchase, up to the maximum amount permitted pursuant to the last sentence of Section 5(a). Such notice shall constitute a nonbinding indication of interest of the Investor to purchase the amount of New Securities so specified at the price and other terms set forth in the Company’s notice to it. The failure of the Investor to respond within such twenty (20) Business Day period shall be deemed a waiver of the Investor’s rights under this Section 5 only with respect to the Offering described in the applicable notice.
(d) Purchase Mechanism. If the Investor exercises its rights provided in this Section 5, the closing of the purchase of the New Securities in connection with the closing of the Offering with respect to which such right has been exercised shall take place within thirty (30) calendar days after the giving of notice of such exercise, which period of time shall be extended for a maximum of one hundred-eighty (180) days in order to comply with applicable laws and regulations (including receipt of any applicable regulatory or shareholder approvals). Investor must execute all customary transaction documentation in connection with such Offering on the same terms as any other participant in the Offering. Notwithstanding anything to the contrary herein, the closing of the purchase of the New Securities by the Investor will occur no earlier than the closing of the Offering triggering the right being exercised by the Investor. Each of the Company and the Investor agree to use its commercially reasonable efforts to secure any regulatory or shareholder approvals or other consents, and to comply with any law or regulation necessary in connection with the offer, sale and purchase of, such New Securities.
(e) Failure of Purchase. In the event the Investor fails to exercise its rights provided in this Section 5 within the twenty (20) Business Day period outlined in Section 5(c) or, if so exercised, the Investor is unable to consummate such purchase within the time period specified in Section 5(d) above because of its failure to obtain any required regulatory or shareholder consent or approval, the Company shall thereafter be entitled (during the period of ninety (90) days following the conclusion of the applicable period) to sell or enter into an agreement (pursuant to which the sale of the New Securities covered thereby shall be consummated, if at all, within ninety (90) days from the date of such agreement) to sell the New Securities not elected to be purchased pursuant to this Section 5 by the Investor or which the Investor is unable to purchase because of such failure to obtain any such consent or approval, at a price and upon terms no more favorable in the aggregate to the purchasers of such New Securities than were specified in the Company’s notice to the Investor. Notwithstanding the foregoing, if such sale is subject to the receipt of any regulatory or shareholder approval or consent or the expiration of any waiting period, the time period during which such sale may be consummated shall be extended until the expiration of five (5) Business Days after all such approvals or consents have been obtained or waiting periods expired, but in no event shall such time period exceed one hundred-eighty (180) days from the date of the applicable agreement with respect to such sale. In the event the Company has not sold the New Securities or entered into an agreement to sell the New Securities within such ninety (90)-day period (or sold and issued New Securities in accordance with the foregoing within ninety (90) days from the date of such agreement (as such period may be extended in the manner described above for a period not to exceed one hundred-eighty (180) days from the date of such agreement)), the Company shall not thereafter offer, issue or sell such New Securities without first offering such New Securities to the Investor in the manner provided above.
(f) Non-Cash Consideration. In the case of the offering of New Securities for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors; provided, however, that such fair value as determined by the Board of Directors shall not exceed the aggregate market price of the securities being offered as of the date the Board of Directors authorizes the offering of such securities.
(g) Cooperation. The Company and the Investor shall cooperate in good faith to facilitate the exercise of the Investor’s rights under this Section 5, including to secure any required approvals or consents.
(h) Termination. The Investor’s rights under this Section 5 shall terminate upon the earlier of (i) the completion of an initial public offering of the Company’s Common Stock and (ii) the date when the Investor and its Affiliates, in the aggregate, fail to satisfy the Minimum Ownership Interest.
6. Warrant.
(a) Upon the closing of the Acquisition, the Company will grant Investor a warrant to purchase shares (the “Warrant”) of non-voting common stock of the Company, par value $0.01 per share (the “Warrant Shares”) in an amount equal to two and a half percent (2.5%) of the outstanding shares of Common Stock after the offering of the Shares and the Acquisition (after giving effect to the conversion of the Shares into Converted Shares), by and between the Company and Investor, in the form attached to hereto as Exhibit D.
(b) Reservation for Issuance. At all times after issuance of the Warrant, the Company shall reserve that number of Warrant Shares sufficient for issuance upon exercise of the Warrant granted to Investor pursuant to this Section 6.
7. Most Favored Nation. For so long as the Investor and its Affiliates, in the aggregate, satisfy the Minimum Ownership Interest, the Company shall not enter into any additional, or modify any existing, agreements, arrangements or understandings with any existing or future investors in the Company that have the effect of establishing rights or otherwise benefiting such investor in a manner more favorable in any material respect to such investor than the rights and benefits established in favor of the Investor by this Agreement, unless, in any such case, the Investor has been provided with such rights and benefits. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that pursuant to the Morgan Agreement and the Smith Agreement, Bartow Morgan, Jr. and J. Bradford Smith shall have rights and benefits that are substantially the same as those provided to the Investor pursuant to this Agreement.
8. Confidentiality. Each Party to this Agreement will hold, and will use commercially reasonable efforts to cause its respective subsidiaries and their directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless disclosure to a Governmental Entity is reasonably necessary or appropriate in connection with any necessary regulatory approval, or request for information or similar process, or unless compelled to disclose by judicial or administrative process or, based on the advice of its counsel, by another requirement of law or the applicable requirements of any Governmental Entity (in which case, the Party permitted to disclose such information shall, to the extent legally permissible and reasonably practicable, provide the other Party with prior written notice of such permitted disclosure so that such other Party may seek confidential treatment of such information from the applicable Governmental Entity), all nonpublic records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) concerning the other Party hereto furnished to it by such other Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (1) previously known by such Party on a nonconfidential basis, (2) in the public domain through no fault of such Party, (3) later lawfully acquired from other sources by the Party to which it was furnished or (4) independently developed or conceived by such Party without use of such Information), and neither Party hereto shall release or disclose such Information to any other person, except its Affiliates, partners, auditors, attorneys, financial advisors, other consultants and advisors with the express understanding that such parties will maintain the confidentiality of the Information and, to the extent permitted above, to Governmental Entities; provided, however, that (i) the Investor is permitted to disclose Information to auditors and bank and securities regulatory authorities without prior written notice to the Company in connection with any audit or examination that does not explicitly reference the Company or this Agreement and (ii) the Investor may identify the Company and the number and value of the Investor’s security holdings in the Company in accordance with applicable investment reporting and disclosure regulations or internal policies without prior notice to or consent from the Company.
9. Miscellaneous.
(a) Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail (provided the sender receives a machine-generated confirmation of successful facsimile transmission or e-mail notification or confirmation of receipt of an e-mail transmission) at the facsimile number or e-mail address specified in this Section 9(a) prior to 5:00 p.m., New York City time, on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows
If to the Company:
Wingshooter Acquisition Corp.
1776 Peachtree Street NW, Suite 100
Atlanta, GA 30309
Attn: Bartow Morgan, Jr.
Tel: [***]
Email: [***]
With a copy to:
Troutman Pepper Hamilton Sanders
LLP
600 Peachtree Street, NE, Suite 3000
Atlanta, GA 30308
Attn: James Stevens
Tel: [***]
Fax: [***]
Email: [***]
If to the Investor:
Patriot Financial Partners III,
L.P.
Radnor Corporate Center
Building Four, Suite 201
100 Matsonford Road
Radnor, PA 19087
Attention: James F. Deutsch
Tel: [***]
Fax: [***]
Email: [***]
With a copy to:
Squire Patton Boggs (US) LLP
201 E. Fourth St., Suite 1900
Cincinnati, OH 45202
Attn: James J. Barresi
Tel: [***]
Fax: [***]
Email: [***]
or such other address as may be designated in writing hereafter, in the same manner, by such Person.
(b) The provisions of this Agreement may not be assigned by the Investor without the prior written consent of the Company, which consent may be withheld by the Company in its sole discretion, and any purported assignment shall be null and void in the absence of such consent. Subject to the foregoing restriction on assignment, this Agreement will be binding upon, and will inure to the benefit of and be enforceable by, the Parties hereto and their respective successors and permitted assigns. Without limiting the generality of the foregoing, after the Acquisition, Georgia Banking Company, as successor by merger to the Company, shall assume and be bound by this Agreement, and references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(c) This Agreement, the Registration Rights Agreement, the Warrant and the VCOC Letter Agreement embodies the entire agreement and understanding between the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than as set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.
(d) This Agreement will be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(e) If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
(f) Any Party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other Party hereto and (ii) waive compliance by the other Party with any of such other Party’s obligations or covenants contained herein; provided, however, that any such extension or waiver shall be valid only if set forth in an instrument in writing signed by each of the Parties to be bound thereby, but no such extension or waiver and no failure to insist on strict compliance by the other Party hereto with an obligation or covenant hereunder shall operate as a waiver of, or estoppel with respect to, any subsequent failure to comply with the same obligation or covenant or any failure to comply therewith by the Party whose performance was waived.
(g) This Agreement may be executed in two (2) or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf’ format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
[Signature(s) Page Follows]
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed, where applicable by their duly authorized representatives, as of the date first above written.
| WINGSHOOTER ACQUISITION CORP. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Name: | Bartow Morgan, Jr. | |
| Title: | Chief Executive Officer | |
| PATRIOT FINANCIAL PARTNERS III, L.P. | ||
| By: | /s/ James F. Deutsch | |
| Name: | James F. Deutsch | |
| Its: | Managing Partner | |
Exhibit A
FORM OF
CONFIDENTIALITY AGREEMENT
[***]
Exhibit B
Registration Rights Agreement
(attached)
[***]
Exhibit C
VCOC Letter
(attached)
[***]
Exhibit D
Warrant
(attached)
[***]
Exhibit 10.2
Execution Version
CERTAIN CONFIDENTIAL INFORMATION (MARKED BY BRACKETS AS “[***]”) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (this “Agreement”), dated as of December 31, 2020, is made by and between Wingshooter Acquisition Corp., a Georgia corporation (the “Company”) and Bartow Morgan, Jr., a Georgia resident (the “Investor”). The Company and the Investor shall sometimes be referred to herein collectively, as the “Parties” and individually, as a “Party.”
RECITALS
WHEREAS, the Company and Georgia Banking Company, Inc. (“Georgia Banking Company”) entered into that certain Amended and Restated Agreement and Plan of Merger, dated November 11, 2020 (the “Merger Agreement”), pursuant to which the Company will merge with and into Georgia Banking Company, with Georgia Banking Company being the surviving entity (the “Acquisition”);
WHEREAS, references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company;
WHEREAS, Georgia Banking Company is a bank holding company, registered as such under the Bank Holding Company Act of 1956, as amended, and is the record and beneficial owner of 100% of the issued and outstanding capital stock of Georgia Banking Company, a Georgia state chartered bank (the “Bank”);
WHEREAS, concurrently herewith, the Investor has entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the Company, pursuant to which the Investor will purchase from the Company up to that certain number of shares (the “Shares”) of common stock, par value $0.01 per share, of the Company (the “Common Stock”) indicated on the Investor’s signature page to the Stock Purchase Agreement;
WHEREAS, references to the Common Stock in this Agreement following the Acquisition shall be deemed to be references to shares of common stock of Georgia Banking Company, par value $0.01 per share (“GBC Common Stock”);
WHEREAS, capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Stock Purchase Agreement; and
WHEREAS, in order to induce the Investor to enter into the Stock Purchase Agreement, the Company has agreed to grant the Investor the rights set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the Parties hereby agree as follows:
1. Board/Observer Rights.
(a) Following the Closing, the Company will promptly cause one representative of the Investor (the “Board Representative”) to be elected or appointed to the board of directors of the Company (for the avoidance of doubt, in this instance referring to the board of directors of Wingshooter Acquisition Corp.). Following the Acquisition, the Company will promptly cause the Board Representative to be elected or appointed to the board of directors of the Company (for the avoidance of doubt, in this instance referring to the board of directors of Georgia Banking Company) (the “Board of Directors”), and the board of directors of the Bank (the “Bank Board”), subject to all legal and regulatory requirements regarding service and election or appointment as a director of the Company and the Bank (the “Qualification Requirements”), in each case, so long as the Investor, together with its affiliates, beneficially owns in the aggregate at least the lesser of either 50% of the total Shares or Converted Shares, as applicable, purchased by the Investor pursuant to the Stock Purchase Agreement or 4.9% of the Common Stock then outstanding (the “Minimum Ownership Interest”). So long as the Investor, together with its affiliates, satisfies the Minimum Ownership Interest, the Company will, subject to applicable law, recommend to its shareholders the election of the Board Representative to the Board of Directors at any special meeting or annual meeting of the Company’s shareholders called for the purpose of the election of directors, as applicable, subject to satisfaction of the Qualification Requirements. So long as the Investor, together with its affiliates, satisfies the Minimum Ownership Interest, the Company will, subject to applicable law, elect or appoint the Board Representative to the Bank Board at any special meeting or annual meeting of the Bank’s shareholders called for the purpose of the election of directors, as applicable, subject to satisfaction of the Qualification Requirements. If the Investor no longer satisfies the Minimum Ownership Interest, the Investor will have no further rights under Sections 1(a) through 1(e) and, at the written request of the Board of Directors, shall cause its Board Representative to resign from the Board of Directors and the Bank Board as promptly as possible thereafter.
(b) The Board Representative shall, subject to the Qualification Requirements, be one of the Company’s nominees to serve on the Board of Directors. The Company shall use its commercially reasonable efforts to have the Board Representative elected as a director of the Company by the shareholders of the Company, and the Company shall solicit proxies for the Board Representative to the same extent as it does for any of its other Company nominees to the Board of Directors. The Investor covenants and agrees to hold any Information (as defined below) obtained from its Board Representative in confidence as set forth in Section 7 below. Notwithstanding anything to the contrary contained herein, at all times when the Investor satisfies the Minimum Ownership Interest, it shall comply in all respects with the Federal Reserve’s rule for Control and Divestiture Proceedings as codified in the Federal Reserve’s Regulation Y and any other guidance promulgated in connection with the matters addressed therein.
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(c) Subject to Section 1(a), upon the death, resignation, retirement, disqualification, or removal from office as a member of the Board of Directors or the Bank Board of its Board Representative, the Investor shall have the right to designate the replacement for such Board Representative, which replacement must be reasonably acceptable to the Company and must also satisfy the Qualification Requirements. The Board of Directors and the Bank Board shall use their respective commercially reasonable efforts to take all action required to fill the vacancy resulting therefrom with such person, use commercially reasonable efforts to have such person elected as director of the Company by the shareholders of the Company and solicit proxies for such person to the same extent as it does for any of its other nominees to the Board of Directors, as the case may be. If a Board Representative is nominated by the Company for election to the Board of Directors or the Bank Board, but fails to be elected, then subject to the proviso set forth in this Section 1(c) below, the Company or the Bank shall, as soon as practicable thereafter, subject to applicable law, increase the size of such board of directors and, following the procedures set forth above in this Section 1, appoint an individual designated in writing by the Investor who is reasonably acceptable to the Company and meets the Qualification Requirements to be the Board Representative (such individual to be different from the individual who was not elected) to the Board of Directors of the Company and/or the Bank Board (as the case may be).
(d) The Company hereby agrees that, from and after the Closing Date, for so long as the Investor and its affiliates in the aggregate satisfy the Minimum Ownership Interest, in the event that the Investor does not have a Board Representative serving on the Board of Directors or the Bank Board, as applicable, or such Board Representative is not present at any meeting of the Board of Directors or the Bank Board (including any meetings of committees thereof on which the Board Representative is permitted to attend), the Company shall invite a person designated by the Investor (the “Observer”) to attend in a nonvoting, nonparticipating observer capacity (i) all meetings of the Board of Directors and the Bank Board (including any meetings of committees thereof on which the Board Representative would have been permitted to attend), as applicable, and (ii) any meetings of the Board of Directors and the Bank Board (including any meetings of committees thereof on which the Board Representative is permitted to attend). The Observer shall not have any right to make motions or vote on any matter presented to the Board of Directors or the Bank Board or any committee thereof. The Company shall give the Observer written notice of each meeting of the Board of Directors and the Bank Board at the same time and in the same manner as given to the members of the Board of Directors or the Bank Board (as the case may be), shall provide the Observer with all written materials and other information given to members of the Board of Directors or the Bank Board (as the case may be) at the same time such materials and information are given to such members and shall permit the Observer to attend as an observer at all meetings thereof, and in the event the Company proposes to take any action by written consent in lieu of a meeting, the Company shall give written notice thereof to the Observer prior to the effective date of such consent along with the proposed text of such written consents; provided, however, that the Observer (i) shall enter into a confidentiality agreement in favor of the Company in the form of Exhibit A hereto prior to the Observer being provided the foregoing notices, materials or information relating to, or attending any meeting of, the Board of Directors or the Bank Board or any committee thereof, (ii) shall not be provided any confidential supervisory information without the prior necessary regulatory approval, and (iii) may be excluded by the Board of Directors or the Bank Board or any committee thereof from attending any executive session of such body and from participating in any attorney-client privileged discussion of such body.
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(e) The Board Representative shall be entitled to compensation and indemnification and insurance coverage in connection with his or her role as a director of the Company and the Bank to the same extent as the other directors on the Board of Directors or the Bank Board, as applicable, and shall be entitled to reimbursement for reasonable and documented out-of-pocket expenses incurred in attending meetings of the Board of Directors and the Bank Board and any committee thereof, in accordance with the Company’s and the Bank’s policies. The Observer shall not be entitled to compensation, reimbursement of expenses or indemnification from the Company or the Bank with respect to such role, provided however, that the Observer shall be entitled to reimbursement of reasonable and documented out-of-pocket expenses related to attendance at any meeting of the Board of Directors or the Bank Board or any committee thereof at which the Board Representative is not in attendance, whether by telephone or in person, in the same manner as provided for the Board Representative.
(f) The Company acknowledges that the Board Representative may have certain rights to indemnification, advancement of expenses and/or insurance provided by the Investor and/or its affiliates (collectively, the “Investor Indemnitors”). The Company hereby agrees on behalf of itself and the Bank that with respect to a claim by the Board Representative for indemnification arising out of his or her service as a director of the Company and/or the Bank (1) that the Company and the Bank are the indemnitors of first resort (i.e., the Company and the Bank’s obligations to the Board Representative with respect to indemnification, advancement of expenses and/or insurance (which obligations shall be the same as, but in no event greater than, any such obligations to all other members of the Board of Directors or the Bank Board, as applicable) are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Board Representative are secondary), and (2) the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Board Representative against the Company.
2. Registration Rights. The Company and the Investor shall execute and deliver effective as of the date hereof the Registration Rights Agreement, the form of which is attached hereto as Exhibit B.
3. Information Rights.
(a) From the date of this Agreement, as long as the Investor and its affiliates in the aggregate satisfy the Minimum Ownership Amount, the Company shall make available to the Investor all materials delivered to the Company’s Board of Directors, the Bank Board, and the committees thereof; provided, however, that the Company shall not be required to deliver such materials to the extent that such delivery would (i) reasonably be expected to constitute a waiver of the attorney-client privilege, (ii) reasonably be expected to result in a breach of any contractual confidentiality obligation of the Company or the Bank or (iii) violate applicable law or regulatory requirements.
(b) The Investor shall also be provided with access, information, and other rights as provided in the Investor Letter Agreement, a form of which is attached hereto as Exhibit C and will be entered into by the Company and the Investor as of the date of this Agreement.
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(c) The Investor hereby acknowledges that it is aware of the restrictions under the federal securities laws imposed on a person in possession of material nonpublic information concerning an issuer, including with respect to purchasing or selling securities of such issuer and the communication of such information to other persons. The Investor agrees that neither it nor its representatives nor any of their respective affiliates will use any data or information in contravention of such securities laws or any rules or regulations promulgated thereunder.
(d) The information rights set forth in this Sections 3(a)-(b) shall terminate and be of no further force or effect as of the date that the Investor and its affiliates in the aggregate no longer satisfy the Minimum Ownership Interest.
4. Gross-Up Rights.
(a) Sale of New Securities. For so long as the Investor, together with its affiliates, satisfies the Minimum Ownership Interest, if at any time after the date hereof the Company makes any public or nonpublic offering or sale of any equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component (such as, an “equity kicker”) (including any hybrid security) (any such security, a “New Security”) (other than (i) any issuance of equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component by the Company to be issued as of the date hereof, as agreed or contemplated (and disclosed to the Investor in writing); (ii) pursuant to the granting or exercise of employee stock options, restricted stock or other stock incentives pursuant to the Company’s stock incentive plans approved by the Board of Directors or the issuance of stock pursuant to the Company’s employee stock purchase plan approved by the Board of Directors or similar plan where stock is being issued or offered to a trust, other entity or otherwise, for the benefit of any employees, officers or directors of the Company, in each case in the ordinary course of providing incentive compensation; (iii) issuances of capital stock as full or partial consideration for a merger, acquisition, joint venture, strategic alliance, license agreement or other similar nonfinancing transaction; (iv) pursuant to an in-kind dividend or similar distribution; (v) pursuant to an initial public offering of Common Stock; (vi) any issuance of any Common Stock, preferred stock or other equity interests of the Company or securities convertible into shares of Common Stock and/or preferred stock or other equity interests of the Company upon the exercise, conversion or exchange of options, warrants or other convertible securities or (vii) within thirty (30) days following completion of this offering, issuances of Common Stock in connection with the Other Private Placements); then in each such instance, the Investor shall be afforded the opportunity to acquire from the Company for the same price (net of any underwriting discounts or sales commissions) and on the same terms as such securities are proposed to be offered to others, up to the amount of New Securities in the aggregate required to enable it to maintain its proportionate Common Stock-equivalent interest in the Company immediately prior to any such issuance of New Securities. The amount of New Securities that the Investor shall be entitled to purchase in the aggregate shall be determined by multiplying (x) the total number or principal amount of such offered New Securities by (y) a fraction, the numerator of which is the total number of shares of Common Stock then held by the Investor (counting for such purposes all shares of Common Stock into or for which any securities owned by the Investor are directly or indirectly convertible or exercisable), if any, and the denominator of which is the total number of shares of Common Stock then outstanding (counting for such purposes all shares of Common Stock into or for which any securities owned by the Investor are directly or indirectly convertible or exercisable).
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(b) Limitation on Voting Securities. The purchase of any New Securities by the Investor shall not (i) cause the Investor or any of its Affiliates to violate any banking regulation, (ii) require the Investor or any of its Affiliates to become a bank holding company or otherwise serve as a source of strength for the Company or the Bank or (iii) cause the Investor, together with any other person whose Company securities would be aggregated with the Investor’s Company securities for purposes of any banking regulation or law, to collectively be deemed to own, control or have the power to vote securities which (assuming, for this purpose only, full conversion and/or exercise of such securities by the Investor and such other Persons) would represent more than 24.9% of any class of securities that entitle the holder thereof the right to vote in the election of directors or any other matters with respect to the Company (“Voting Securities”) outstanding at such time. For purposes of this Section 4(b), the term “Affiliate” shall have the meaning under the BHC Act and the Federal Reserve’s Regulation Y. Notwithstanding anything in this Section 4 to the contrary, upon the request of the Investor that the Investor not be issued New Securities that are Voting Securities in whole or in part upon the exercise of its rights to purchase New Securities, the Company shall cooperate with the Investor to modify the proposed issuance of New Securities to the Investor to provide for the issuance of nonvoting securities in lieu of Voting Securities with the same economic rights as such Voting Securities.
(c) Notice. So long as the Investor and its affiliates in the aggregate satisfy the Minimum Ownership Interest, in the event the Company proposes to offer or sell New Securities (the “Offering”), it shall give the Investor written notice of its intention, describing the price (or range of prices), anticipated amount of New Securities, timing, and other terms upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering), no later than fifteen (15) Business Days, as the case may be, after the initial filing of a registration statement with the Commission with respect to an underwritten public Offering or after the commencement of marketing with respect to a Rule 144A Offering or an Offering pursuant to Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder. If the information contained in the notice constitutes material non-public information (as defined under the applicable securities laws), the Company shall deliver such notice only to the individuals identified (with respect to the Investor) in Section 8(a) hereof, and shall not communicate the information to anyone else acting on behalf of the Investor without the consent of one of the designated individuals. The Investor shall have twenty (20) Business Days from the date of receipt of such a notice to notify the Company in writing that it intends to exercise its rights provided in this Section 4 and as to the amount of New Securities the Investor desires to purchase, up to the maximum amount permitted pursuant to the last sentence of Section 4(a). Such notice shall constitute a nonbinding indication of interest of the Investor to purchase the amount of New Securities so specified at the price and other terms set forth in the Company’s notice to it. The failure of the Investor to respond within such twenty (20) Business Day period shall be deemed a waiver of the Investor’s rights under this Section 4 only with respect to the Offering described in the applicable notice.
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(d) Purchase Mechanism. If the Investor exercises its rights provided in this Section 4, the closing of the purchase of the New Securities in connection with the closing of the Offering with respect to which such right has been exercised shall take place within thirty (30) calendar days after the giving of notice of such exercise, which period of time shall be extended for a maximum of one hundred-eighty (180) days in order to comply with applicable laws and regulations (including receipt of any applicable regulatory or shareholder approvals). Investor must execute all customary transaction documentation in connection with such Offering on the same terms as any other participant in the Offering. Notwithstanding anything to the contrary herein, the closing of the purchase of the New Securities by the Investor will occur no earlier than the closing of the Offering triggering the right being exercised by the Investor. Each of the Company and the Investor agree to use its commercially reasonable efforts to secure any regulatory or shareholder approvals or other consents, and to comply with any law or regulation necessary in connection with the offer, sale and purchase of, such New Securities.
(e) Failure of Purchase. In the event the Investor fails to exercise its rights provided in this Section 4 within the twenty (20) Business Day period outlined in Section 4(c) or, if so exercised, the Investor is unable to consummate such purchase within the time period specified in Section 4(d) above because of its failure to obtain any required regulatory or shareholder consent or approval, the Company shall thereafter be entitled (during the period of ninety (90) days following the conclusion of the applicable period) to sell or enter into an agreement (pursuant to which the sale of the New Securities covered thereby shall be consummated, if at all, within ninety (90) days from the date of such agreement) to sell the New Securities not elected to be purchased pursuant to this Section 4 by the Investor or which the Investor is unable to purchase because of such failure to obtain any such consent or approval, at a price and upon terms no more favorable in the aggregate to the purchasers of such New Securities than were specified in the Company’s notice to the Investor. Notwithstanding the foregoing, if such sale is subject to the receipt of any regulatory or shareholder approval or consent or the expiration of any waiting period, the time period during which such sale may be consummated shall be extended until the expiration of five (5) Business Days after all such approvals or consents have been obtained or waiting periods expired, but in no event shall such time period exceed one hundred-eighty (180) days from the date of the applicable agreement with respect to such sale. In the event the Company has not sold the New Securities or entered into an agreement to sell the New Securities within such ninety (90)-day period (or sold and issued New Securities in accordance with the foregoing within ninety (90) days from the date of such agreement (as such period may be extended in the manner described above for a period not to exceed one hundred-eighty (180) days from the date of such agreement)), the Company shall not thereafter offer, issue or sell such New Securities without first offering such New Securities to the Investor in the manner provided above.
(f) Non-Cash Consideration. In the case of the offering of New Securities for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors; provided, however, that such fair value as determined by the Board of Directors shall not exceed the aggregate market price of the securities being offered as of the date the Board of Directors authorizes the offering of such securities.
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(g) Cooperation. The Company and the Investor shall cooperate in good faith to facilitate the exercise of the Investor’s rights under this Section 4, including to secure any required approvals or consents.
(h) Termination. The Investor’s rights under this Section 4 shall terminate upon the earlier of (i) the completion of an initial public offering of the Company’s Common Stock and (ii) the date when the Investor and its affiliates, in the aggregate, fail to satisfy the Minimum Ownership Interest.
5. Warrant.
(a) Upon the closing of the Acquisition, the Company will grant Investor a warrant to purchase shares (the “Warrant”) of GBC Common Stock (the “Warrant Shares”) in an amount equal to two and a half percent (2.5%) of the outstanding shares of Common Stock after the offering of the Shares and the Acquisition (after giving effect to the conversion of the Shares into Converted Shares), by and between the Company and the Investor, in the form attached hereto as Exhibit D.
(b) Reservation for Issuance. At all times after issuance of the Warrant, the Company shall reserve that number of Warrant Shares sufficient for issuance upon exercise of the Warrant granted to Investor pursuant to this Section 5.
6. Most Favored Nation. For so long as the Investor and its affiliates, in the aggregate, satisfy the Minimum Ownership Interest, the Company shall not enter into any additional, or modify any existing, agreements, arrangements or understandings with any existing or future investors in the Company that have the effect of establishing rights or otherwise benefiting such investor in a manner more favorable in any material respect to such investor than the rights and benefits established in favor of the Investor by this Agreement, unless, in any such case, the Investor has been provided with such rights and benefits. Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that pursuant to the Smith Agreement and the Patriot Agreement, J. Bradford Smith and Patriot Financial Partners III, L.P. shall have rights and benefits that are substantially the same as those provided to the Investor pursuant to this Agreement.
7. Confidentiality. Each Party to this Agreement will hold, and will use commercially reasonable efforts to cause its respective subsidiaries and their directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless disclosure to a Governmental Entity is reasonably necessary or appropriate in connection with any necessary regulatory approval, or request for information or similar process, or unless compelled to disclose by judicial or administrative process or, based on the advice of its counsel, by another requirement of law or the applicable requirements of any Governmental Entity (in which case, the Party permitted to disclose such information shall, to the extent legally permissible and reasonably practicable, provide the other Party with prior written notice of such permitted disclosure so that such other Party may seek confidential treatment of such information from the applicable Governmental Entity), all nonpublic records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) concerning the other Party hereto furnished to it by such other Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (1) previously known by such Party on a nonconfidential basis, (2) in the public domain through no fault of such Party, (3) later lawfully acquired from other sources by the Party to which it was furnished or (4) independently developed or conceived by such Party without use of such Information), and neither Party hereto shall release or disclose such Information to any other person, except its Affiliates, partners, auditors, attorneys, financial advisors, other consultants and advisors with the express understanding that such parties will maintain the confidentiality of the Information and, to the extent permitted above, to Governmental Entities; provided, however, that (i) the Investor is permitted to disclose Information to auditors and bank and securities regulatory authorities without prior written notice to the Company in connection with any audit or examination that does not explicitly reference the Company or this Agreement and (ii) the Investor may identify the Company and the number and value of the Investor’s security holdings in the Company in accordance with applicable investment reporting and disclosure regulations or internal policies without prior notice to or consent from the Company.
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8. Miscellaneous.
(a) Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail (provided the sender receives a machine-generated confirmation of successful facsimile transmission or e-mail notification or confirmation of receipt of an e-mail transmission) at the facsimile number or e-mail address specified in this Section 8(a) prior to 5:00 p.m., New York City time, on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows
If to the Company:
Wingshooter Acquisition Corp.
1776 Peachtree Street NW, Suite 100
Atlanta, GA 30309
Attn: Chairman
If to the Investor:
Bartow Morgan, Jr.
[***]
or such other address as may be designated in writing hereafter, in the same manner, by such Person.
(b) The provisions of this Agreement may not be assigned by the Investor without the prior written consent of the Company, which consent may be withheld by the Company in its sole discretion, and any purported assignment shall be null and void in the absence of such consent. Subject to the foregoing restriction on assignment, this Agreement will be binding upon, and will inure to the benefit of and be enforceable by, the Parties hereto and their respective successors and permitted assigns. Without limiting the generality of the foregoing, after the Acquisition, Georgia Banking Company, as successor by merger to the Company, shall assume and be bound by this Agreement, and references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
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(c) This Agreement, the Registration Rights Agreement, the Warrant and the Letter Agreement embodies the entire agreement and understanding between the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than as set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the Parties hereto with respect to the subject matter hereof.
(d) This Agreement will be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(e) If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
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(f) Any Party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other Party hereto and (ii) waive compliance by the other Party with any of such other Party’s obligations or covenants contained herein; provided, however, that any such extension or waiver shall be valid only if set forth in an instrument in writing signed by each of the Parties to be bound thereby, but no such extension or waiver and no failure to insist on strict compliance by the other Party hereto with an obligation or covenant hereunder shall operate as a waiver of, or estoppel with respect to, any subsequent failure to comply with the same obligation or covenant or any failure to comply therewith by the Party whose performance was waived.
(g) This Agreement may be executed in two (2) or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other Party, it being understood that the Parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf’ format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
[Signature(s) Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed, where applicable by their duly authorized representatives, as of the date first above written.
| WINGSHOOTER ACQUISITION CORP. | ||
| By: | /s/ J. Bradford Smith | |
| J. Bradford Smith, Management Officer | ||
| INVESTOR | ||
| /s/ Bartow Morgan, Jr. | ||
| Bartow Morgan, Jr. | ||
[Signature page to Investor Rights Agreement]
Exhibit A
FORM OF
CONFIDENTIALITY AGREEMENT
[***]
Exhibit B
Registration Rights Agreement
(attached)
[***]
Exhibit C
Letter Agreement
(attached)
[***]
Exhibit D
Warrant
(attached)
[***]
Exhibit 10.3
Execution Version
CERTAIN CONFIDENTIAL INFORMATION (MARKED BY BRACKETS AS “[***]”) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (this “Agreement”), dated as of December 31, 2020, is made by and between Wingshooter Acquisition Corp., a Georgia corporation (the “Company”) and J. Bradford Smith, a Georgia resident (the “Investor”). The Company and the Investor shall sometimes be referred to herein collectively, as the “Parties” and individually, as a “Party.”
RECITALS
WHEREAS, the Company and Georgia Banking Company, Inc. (“Georgia Banking Company”) entered into that certain Amended and Restated Agreement and Plan of Merger, dated November 11, 2020 (the “Merger Agreement”), pursuant to which the Company will merge with and into Georgia Banking Company, with Georgia Banking Company being the surviving entity (the “Acquisition”);
WHEREAS, references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company;
WHEREAS, Georgia Banking Company is a bank holding company, registered as such under the Bank Holding Company Act of 1956, as amended, and is the record and beneficial owner of 100% of the issued and outstanding capital stock of Georgia Banking Company, a Georgia state chartered bank (the “Bank”);
WHEREAS, concurrently herewith, the Investor has entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the Company, pursuant to which the Investor will purchase from the Company up to that certain number of shares (the “Shares”) of common stock, par value $0.01 per share, of the Company (the “Common Stock”) indicated on the Investor’s signature page to the Stock Purchase Agreement;
WHEREAS, references to the Common Stock in this Agreement following the Acquisition shall be deemed to be references to shares of common stock of Georgia Banking Company, par value $0.01 per share (“GBC Common Stock”);
WHEREAS, capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Stock Purchase Agreement; and
WHEREAS, in order to induce the Investor to enter into the Stock Purchase Agreement, the Company has agreed to grant the Investor the rights set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the Parties hereby agree as follows:
1. Registration Rights. The Company and the Investor shall execute and deliver effective as of the date hereof the Registration Rights Agreement, the form of which is attached hereto as Exhibit A.
2. Information Rights.
(a) From the date of this Agreement, as long as the Investor and its affiliates in the aggregate satisfy the Minimum Ownership Amount, the Company shall make available to the Investor all materials delivered to the Company’s Board of Directors, the Bank Board, and the committees thereof; provided, however, that the Company shall not be required to deliver such materials to the extent that such delivery would (i) reasonably be expected to constitute a waiver of the attorney-client privilege, (ii) reasonably be expected to result in a breach of any contractual confidentiality obligation of the Company or the Bank or (iii) violate applicable law or regulatory requirements.
(b) The Investor shall also be provided with access, information, and other rights as provided in the Investor Letter Agreement, a form of which is attached hereto as Exhibit B and will be entered into by the Company and the Investor as of the date of this Agreement.
(c) The Investor hereby acknowledges that it is aware of the restrictions under the federal securities laws imposed on a person in possession of material nonpublic information concerning an issuer, including with respect to purchasing or selling securities of such issuer and the communication of such information to other persons. The Investor agrees that neither it nor its representatives nor any of their respective affiliates will use any data or information in contravention of such securities laws or any rules or regulations promulgated thereunder.
(d) The information rights set forth in this Sections 2(a)-(b) shall terminate and be of no further force or effect as of the date that the Investor and its affiliates in the aggregate no longer satisfy the Minimum Ownership Interest.
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3. Gross-Up Rights.
(a) Sale of New Securities. For so long as the Investor, together with its affiliates, satisfies the Minimum Ownership Interest, if at any time after the date hereof the Company makes any public or nonpublic offering or sale of any equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component (such as, an “equity kicker”) (including any hybrid security) (any such security, a “New Security”) (other than (i) any issuance of equity (including Common Stock and preferred stock), or any securities, warrants, rights, options or debt that is convertible or exchangeable into equity or that includes an equity component by the Company to be issued as of the date hereof, as agreed or contemplated (and disclosed to the Investor in writing); (ii) pursuant to the granting or exercise of employee stock options, restricted stock or other stock incentives pursuant to the Company’s stock incentive plans approved by the Board of Directors or the issuance of stock pursuant to the Company’s employee stock purchase plan approved by the Board of Directors or similar plan where stock is being issued or offered to a trust, other entity or otherwise, for the benefit of any employees, officers or directors of the Company, in each case in the ordinary course of providing incentive compensation; (iii) issuances of capital stock as full or partial consideration for a merger, acquisition, joint venture, strategic alliance, license agreement or other similar nonfinancing transaction; (iv) pursuant to an in-kind dividend or similar distribution; (v) pursuant to an initial public offering of Common Stock; (vi) any issuance of any Common Stock, preferred stock or other equity interests of the Company or securities convertible into shares of Common Stock and/or preferred stock or other equity interests of the Company upon the exercise, conversion or exchange of options, warrants or other convertible securities or (vii) within thirty (30) days following completion of this offering, issuances of Common Stock in connection with the Other Private Placements); then in each such instance, the Investor shall be afforded the opportunity to acquire from the Company for the same price (net of any underwriting discounts or sales commissions) and on the same terms as such securities are proposed to be offered to others, up to the amount of New Securities in the aggregate required to enable it to maintain its proportionate Common Stock-equivalent interest in the Company immediately prior to any such issuance of New Securities. The amount of New Securities that the Investor shall be entitled to purchase in the aggregate shall be determined by multiplying (x) the total number or principal amount of such offered New Securities by (y) a fraction, the numerator of which is the total number of shares of Common Stock then held by the Investor (counting for such purposes all shares of Common Stock into or for which any securities owned by the Investor are directly or indirectly convertible or exercisable), if any, and the denominator of which is the total number of shares of Common Stock then outstanding (counting for such purposes all shares of Common Stock into or for which any securities owned by the Investor are directly or indirectly convertible or exercisable).
(b) Limitation on Voting Securities. The purchase of any New Securities by the Investor shall not (i) cause the Investor or any of its Affiliates to violate any banking regulation, (ii) require the Investor or any of its Affiliates to become a bank holding company or otherwise serve as a source of strength for the Company or the Bank or (iii) cause the Investor, together with any other person whose Company securities would be aggregated with the Investor’s Company securities for purposes of any banking regulation or law, to collectively be deemed to own, control or have the power to vote securities which (assuming, for this purpose only, full conversion and/or exercise of such securities by the Investor and such other Persons) would represent more than 24.9% of any class of securities that entitle the holder thereof the right to vote in the election of directors or any other matters with respect to the Company (“Voting Securities”) outstanding at such time. For purposes of this Section 3(b), the term “Affiliate” shall have the meaning under the BHC Act and the Federal Reserve’s Regulation Y. Notwithstanding anything in this Section 3 to the contrary, upon the request of the Investor that the Investor not be issued New Securities that are Voting Securities in whole or in part upon the exercise of its rights to purchase New Securities, the Company shall cooperate with the Investor to modify the proposed issuance of New Securities to the Investor to provide for the issuance of nonvoting securities in lieu of Voting Securities with the same economic rights as such Voting Securities.
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(c) Notice. So long as the Investor and its affiliates in the aggregate satisfy the Minimum Ownership Interest, in the event the Company proposes to offer or sell New Securities (the “Offering”), it shall give the Investor written notice of its intention, describing the price (or range of prices), anticipated amount of New Securities, timing, and other terms upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering), no later than fifteen (15) Business Days, as the case may be, after the initial filing of a registration statement with the Commission with respect to an underwritten public Offering or after the commencement of marketing with respect to a Rule 144A Offering or an Offering pursuant to Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder. If the information contained in the notice constitutes material non-public information (as defined under the applicable securities laws), the Company shall deliver such notice only to the individuals identified (with respect to the Investor) in Section 7(a) hereof, and shall not communicate the information to anyone else acting on behalf of the Investor without the consent of one of the designated individuals. The Investor shall have twenty (20) Business Days from the date of receipt of such a notice to notify the Company in writing that it intends to exercise its rights provided in this Section 3 and as to the amount of New Securities the Investor desires to purchase, up to the maximum amount permitted pursuant to the last sentence of Section 3(a). Such notice shall constitute a nonbinding indication of interest of the Investor to purchase the amount of New Securities so specified at the price and other terms set forth in the Company’s notice to it. The failure of the Investor to respond within such twenty (20) Business Day period shall be deemed a waiver of the Investor’s rights under this Section 3 only with respect to the Offering described in the applicable notice.
(d) Purchase Mechanism. If the Investor exercises its rights provided in this Section 3, the closing of the purchase of the New Securities in connection with the closing of the Offering with respect to which such right has been exercised shall take place within thirty (30) calendar days after the giving of notice of such exercise, which period of time shall be extended for a maximum of one hundred-eighty (180) days in order to comply with applicable laws and regulations (including receipt of any applicable regulatory or shareholder approvals). Investor must execute all customary transaction documentation in connection with such Offering on the same terms as any other participant in the Offering. Notwithstanding anything to the contrary herein, the closing of the purchase of the New Securities by the Investor will occur no earlier than the closing of the Offering triggering the right being exercised by the Investor. Each of the Company and the Investor agree to use its commercially reasonable efforts to secure any regulatory or shareholder approvals or other consents, and to comply with any law or regulation necessary in connection with the offer, sale and purchase of, such New Securities.
(e) Failure of Purchase. In the event the Investor fails to exercise its rights provided in this Section 3 within the twenty (20) Business Day period outlined in Section 3(c) or, if so exercised, the Investor is unable to consummate such purchase within the time period specified in Section 3(d) above because of its failure to obtain any required regulatory or shareholder consent or approval, the Company shall thereafter be entitled (during the period of ninety (90) days following the conclusion of the applicable period) to sell or enter into an agreement (pursuant to which the sale of the New Securities covered thereby shall be consummated, if at all, within ninety (90) days from the date of such agreement) to sell the New Securities not elected to be purchased pursuant to this Section 3 by the Investor or which the Investor is unable to purchase because of such failure to obtain any such consent or approval, at a price and upon terms no more favorable in the aggregate to the purchasers of such New Securities than were specified in the Company’s notice to the Investor. Notwithstanding the foregoing, if such sale is subject to the receipt of any regulatory or shareholder approval or consent or the expiration of any waiting period, the time period during which such sale may be consummated shall be extended until the expiration of five (5) Business Days after all such approvals or consents have been obtained or waiting periods expired, but in no event shall such time period exceed one hundred-eighty (180) days from the date of the applicable agreement with respect to such sale. In the event the Company has not sold the New Securities or entered into an agreement to sell the New Securities within such ninety (90)-day period (or sold and issued New Securities in accordance with the foregoing within ninety (90) days from the date of such agreement (as such period may be extended in the manner described above for a period not to exceed one hundred-eighty (180) days from the date of such agreement)), the Company shall not thereafter offer, issue or sell such New Securities without first offering such New Securities to the Investor in the manner provided above.
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(f) Non-Cash Consideration. In the case of the offering of New Securities for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors; provided, however, that such fair value as determined by the Board of Directors shall not exceed the aggregate market price of the securities being offered as of the date the Board of Directors authorizes the offering of such securities.
(g) Cooperation. The Company and the Investor shall cooperate in good faith to facilitate the exercise of the Investor’s rights under this Section 3, including to secure any required approvals or consents.
(h) Termination. The Investor’s rights under this Section 3 shall terminate upon the earlier of (i) the completion of an initial public offering of the Company’s Common Stock and (ii) the date when the Investor and its affiliates, in the aggregate, fail to satisfy the Minimum Ownership Interest.
4. Warrant.
(a) Upon the closing of the Acquisition, the Company will grant Investor a warrant to purchase shares (the “Warrant”) of GBC Common Stock (the “Warrant Shares”) in an amount equal to two and a half percent (2.5%) of the outstanding shares of Common Stock after the offering of the Shares and the Acquisition (after giving effect to the conversion of the Shares into Converted Shares), by and between the Company and the Investor, in the form attached hereto as Exhibit C.
(b) Reservation for Issuance. At all times after issuance of the Warrant, the Company shall reserve that number of Warrant Shares sufficient for issuance upon exercise of the Warrant granted to Investor pursuant to this Section 4.
5. Most Favored Nation. For so long as the Investor and its affiliates, in the aggregate, satisfy the Minimum Ownership Interest, the Company shall not enter into any additional, or modify any existing, agreements, arrangements or understandings with any existing or future investors in the Company that have the effect of establishing rights or otherwise benefiting such investor in a manner more favorable in any material respect to such investor than the rights and benefits established in favor of the Investor by this Agreement, unless, in any such case, the Investor has been provided with such rights and benefits. Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that pursuant to the Morgan Agreement and the Patriot Agreement, Bartow Morgan, Jr. and Patriot Financial Partners III, L.P. shall have rights and benefits that are substantially the same as those provided to the Investor pursuant to this Agreement.
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6. Confidentiality. Each Party to this Agreement will hold, and will use commercially reasonable efforts to cause its respective subsidiaries and their directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless disclosure to a Governmental Entity is reasonably necessary or appropriate in connection with any necessary regulatory approval, or request for information or similar process, or unless compelled to disclose by judicial or administrative process or, based on the advice of its counsel, by another requirement of law or the applicable requirements of any Governmental Entity (in which case, the Party permitted to disclose such information shall, to the extent legally permissible and reasonably practicable, provide the other Party with prior written notice of such permitted disclosure so that such other Party may seek confidential treatment of such information from the applicable Governmental Entity), all nonpublic records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) concerning the other Party hereto furnished to it by such other Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (1) previously known by such Party on a nonconfidential basis, (2) in the public domain through no fault of such Party, (3) later lawfully acquired from other sources by the Party to which it was furnished or (4) independently developed or conceived by such Party without use of such Information), and neither Party hereto shall release or disclose such Information to any other person, except its Affiliates, partners, auditors, attorneys, financial advisors, other consultants and advisors with the express understanding that such parties will maintain the confidentiality of the Information and, to the extent permitted above, to Governmental Entities; provided, however, that (i) the Investor is permitted to disclose Information to auditors and bank and securities regulatory authorities without prior written notice to the Company in connection with any audit or examination that does not explicitly reference the Company or this Agreement and (ii) the Investor may identify the Company and the number and value of the Investor’s security holdings in the Company in accordance with applicable investment reporting and disclosure regulations or internal policies without prior notice to or consent from the Company.
7. Miscellaneous.
(a) Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail (provided the sender receives a machine-generated confirmation of successful facsimile transmission or e-mail notification or confirmation of receipt of an e-mail transmission) at the facsimile number or e-mail address specified in this Section 7(a) prior to 5:00 p.m., New York City time, on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows
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If to the Company:
Wingshooter Acquisition Corp.
1776 Peachtree Street NW, Suite 100
Atlanta, GA 30309
Attn: Bartow Morgan, Jr.
If to the Investor:
J. Bradford Smith
[***]
or such other address as may be designated in writing hereafter, in the same manner, by such Person.
(b) The provisions of this Agreement may not be assigned by the Investor without the prior written consent of the Company, which consent may be withheld by the Company in its sole discretion, and any purported assignment shall be null and void in the absence of such consent. Subject to the foregoing restriction on assignment, this Agreement will be binding upon, and will inure to the benefit of and be enforceable by, the Parties hereto and their respective successors and permitted assigns. Without limiting the generality of the foregoing, after the Acquisition, Georgia Banking Company, as successor by merger to the Company, shall assume and be bound by this Agreement, and references to the Company in this Agreement following the Acquisition shall be deemed to be references to Georgia Banking Company. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(c) This Agreement, the Registration Rights Agreement, the Warrant and the Letter Agreement embodies the entire agreement and understanding between the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than as set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the Parties hereto with respect to the subject matter hereof.
(d) This Agreement will be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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(e) If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
(f) Any Party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other Party hereto and (ii) waive compliance by the other Party with any of such other Party’s obligations or covenants contained herein; provided, however, that any such extension or waiver shall be valid only if set forth in an instrument in writing signed by each of the Parties to be bound thereby, but no such extension or waiver and no failure to insist on strict compliance by the other Party hereto with an obligation or covenant hereunder shall operate as a waiver of, or estoppel with respect to, any subsequent failure to comply with the same obligation or covenant or any failure to comply therewith by the Party whose performance was waived.
(g) This Agreement may be executed in two (2) or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other Party, it being understood that the Parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf’ format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
[Signature(s) Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed, where applicable by their duly authorized representatives, as of the date first above written.
| WINGSHOOTER ACQUISITION CORP. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Name: | Bartow Morgan, Jr. | |
| Title: | Chief Executive Officer | |
| INVESTOR | ||
| /s/ J. Bradford Smith | ||
| J. Bradford Smith | ||
[Signature page to Investor Rights Agreement]
Exhibit A
Registration Rights Agreement
(attached)
[***]
A-1
Exhibit B
Letter Agreement
(attached)
[***]
B-1
Exhibit C
Warrant
(attached)
[***]
C-1
Exhibit 10.4
AMENDMENT TO
INVESTOR RIGHTS AGREEMENT
This Amendment to the Investor Rights Agreement (this “Amendment”) is entered into effective as of June 17, 2026 by and among Georgia Banking Company, Inc., a Georgia corporation (the “Company”), and each of the investors identified on the signature pages hereto (each an “Investor,” and collectively, the “Investors”).
WHEREAS, the Company and the Investors are parties to those certain Investor Rights Agreements, each dated December 31, 2020 (the “Investor Rights Agreements”), pursuant to which the Company granted to the Investors certain rights with respect to board representation; and
WHEREAS, the Company and the Investors have agreed to amend the Investor Rights Agreements as provided for herein;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Amendment, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investors agree as follows:
1. Amendments.
(a) Section 1(a) of the Investor Rights Agreements is hereby amended and restated to read as follows:
“Following the Closing, the Company will promptly cause one representative of the Investor (the “Board Representative”) to be elected or appointed to the board of directors of the Company (for the avoidance of doubt, in this instance referring to the board of directors of Wingshooter Acquisition Corp.). Following the Acquisition, the Company will promptly cause the Board Representative to be elected or appointed to the board of directors of the Company (for the avoidance of doubt, in this instance referring to the board of directors of Georgia Banking Company) (the “Board of Directors”), and the board of directors of the Bank (the “Bank Board”), subject to all legal and regulatory requirements regarding service and election or appointment as a director of the Company and the Bank (the “Qualification Requirements”), in each case, so long as the Investor, together with its Affiliates, beneficially owns in the aggregate at least the lesser of either 50% of the total Shares or Converted Shares, as applicable, purchased by the Investor pursuant to the Stock Purchase Agreement or 4.9% of the Common Stock then outstanding (the “Minimum Ownership Interest”). So long as the Investor, together with its Affiliates, satisfies the Minimum Ownership Interest, the Company will, subject to applicable law, recommend to its shareholders the election of the Board Representative to the Board of Directors at any special meeting or annual meeting of the Company’s shareholders called for the purpose of the election of directors, as applicable, subject to satisfaction of the Qualification Requirements. So long as the Investor, together with its Affiliates, satisfies the Minimum Ownership Interest, the Company will, subject to applicable law, elect or appoint the Board Representative to the Bank Board at any special meeting or annual meeting of the Bank’s shareholders called for the purpose of the election of directors, as applicable, subject to satisfaction of the Qualification Requirements. If the Investor no longer satisfies the Minimum Ownership Interest, the Investor will have no further rights under Sections 1(a) through 1(e) and, at the written request of the Board of Directors, use its commercially reasonable efforts to cause its Board Representative to resign from the Board of Directors and the Bank Board as promptly as possible thereafter.”
(b) Section 1(c) of the Investor Rights Agreements is hereby amended and restated to read as follows:
“Subject to Section 1(a), upon the death, resignation, retirement, disqualification, or removal from office as a member of the Board of Directors or the Bank Board of its Board Representative, the Investor shall have the right to designate the replacement for such Board Representative, which replacement must satisfy the Qualification Requirements. The Board of Directors and the Bank Board shall use their respective commercially reasonable efforts to take all action required to fill the vacancy resulting therefrom with such person, use commercially reasonable efforts to have such person elected as director of the Company by the shareholders of the Company and solicit proxies for such person to the same extent as it does for any of its other nominees to the Board of Directors, as the case may be. If a Board Representative is nominated by the Company for election to the Board of Directors or the Bank Board, but fails to be elected, then subject to the proviso set forth in this Section 1(c) below, the Company or the Bank shall, as soon as practicable thereafter, subject to applicable law, increase the size of such board of directors and, following the procedures set forth above in this Section 1, appoint an individual designated in writing by the Investor who meets the Qualification Requirements to be the Board Representative (such individual to be different from the individual who was not elected) to the Board of Directors of the Company and/or the Bank Board (as the case may be).”
2. Limitation of Amendment. Except as expressly set forth herein, this Amendment shall not be deemed to waive, amend or modify any term or condition of the Investor Rights Agreements, each of which is hereby ratified and reaffirmed and shall remain in full force and effect, nor to serve as a consent to any matter prohibited by the terms and conditions thereof.
3. Counterparts. This Amendment may be executed in any number of counterparts and any party hereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which, taken together, will be deemed but one and the same agreement.
4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories, as of the date first indicated above.
| COMPANY: | ||
| GEORGIA BANKING COMPANY, INC. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
[Signature Page to Amendment to Investor Rights Agreements]
| INVESTORS: | ||
| PATRIOT FINANCIAL PARTNERS III, L.P. | ||
| By: | /s/ James Deutsch | |
| James Deutsch, Managing Partner | ||
[Signature Page to Amendment to Investor Rights Agreements]
| /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. |
[Signature Page to Amendment to Investor Rights Agreements]
Exhibit 10.5
Execution Version
CERTAIN CONFIDENTIAL INFORMATION (MARKED
BY BRACKETS AS “[***]”)
HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT
MATERIAL AND (II) IS
THE TYPE OF INFORMATION THAT THE REGISTRANT
TREATS AS PRIVATE OR CONFIDENTIAL.
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (this “Agreement”), dated as of June 17, 2026, is made by and between Georgia Banking Company, Inc., a Georgia corporation (the “Company”) and CF GBC Investors LP, a Delaware limited partnership (the “Investor”). The Company and the Investor shall sometimes be referred to herein collectively, as the “Parties” and individually, as a “Party.”
RECITALS
WHEREAS, concurrently herewith, the Investor has entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the Company, pursuant to which the Investor will purchase from the Company the number of shares of voting common stock, par value $0.01 per share, of the Company (the “Voting Common Stock”) and the number of shares of non-voting common stock, par value $0.01 per share, of the Company (the “Non-Voting Common Stock”, together with the Voting Common Stock, the “Common Stock”) listed on the Investor’s signature page of the Stock Purchase Agreement;
WHEREAS, capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Stock Purchase Agreement; and
WHEREAS, in order to induce the Investor to enter into the Stock Purchase Agreement, the Company has agreed to grant the Investor the rights set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the Parties hereby agree as follows:
1. Board Rights.
(a) Following the Closing, the Company will promptly cause one representative of the Investor (the “Board Representative”) to be elected or appointed to the board of directors of the Company (the “Board of Directors”), subject to all legal and regulatory requirements regarding service and election or appointment as a director of the Company (the “Qualification Requirements”). So long as the Investor, together with its Affiliates, continues to beneficially own in the aggregate at least the lesser of (i) 4.9% of the outstanding shares of Voting Common Stock and (ii) 50% of the Common Stock that Investor beneficially owns immediately following the Closing (the “Minimum Ownership Interest”), the Company will, subject to applicable law, recommend to its shareholders the election of the Board Representative to the Board of Directors at any special meeting or annual meeting of the Company’s shareholders called for the purpose of the election of directors, as applicable, subject to satisfaction of the Qualification Requirements. If the Investor no longer satisfies the Minimum Ownership Interest, the Investor will have no further rights under Sections 1(a) through 1(d) and, at the written request of the Board of Directors, use its commercially reasonable efforts to cause its Board Representative to resign from the Board of Directors as promptly as possible thereafter.
(b) The Board Representative shall, subject to the Qualification Requirements, be one of the Company’s nominees to serve on the Board of Directors. The Company shall use its commercially reasonable efforts to have the Board Representative elected as a director of the Company by the shareholders of the Company, and the Company shall solicit proxies for the Board Representative to the same extent as it does for any of its other Company nominees to the Board of Directors. The Investor covenants and agrees to hold any Information (as defined below) obtained from its Board Representative in confidence as set forth in Section 6 below.
(c) Subject to Section 1(a), upon the death, resignation, retirement, disqualification, or removal from office as a member of the Board of Directors of its Board Representative, the Investor shall have the right to designate the replacement for such Board Representative, which replacement must satisfy the Qualification Requirements. The Board of Directors shall use its commercially reasonable efforts to take all action required to fill the vacancy resulting therefrom with such person, use commercially reasonable efforts to have such person elected as director of the Company by the shareholders of the Company and solicit proxies for such person to the same extent as it does for any of its other nominees to the Board of Directors, as the case may be. If a Board Representative is nominated by the Company for election to the Board of Directors, but fails to be elected, then subject to the proviso set forth in this Section 1(c) below, the Company shall, as soon as practicable thereafter, subject to applicable law, increase the size of such board of directors and, following the procedures set forth above in this Section 1, appoint an individual designated in writing by the Investor who meets the Qualification Requirements to be the Board Representative (such individual to be different from the individual who was not elected) to the Board of Directors of the Company.
(d) The Board Representative shall be entitled to compensation (which may be paid to the Investor in lieu of to the Board Representative, at the option of the Investor) and indemnification and insurance coverage in connection with his or her role as a director of the Company to the same extent as the other directors on the Board of Directors and shall be entitled to reimbursement (which may be paid to the Investor in lieu of to the Board Representative, at the option of the Investor) for reasonable and documented out-of-pocket expenses incurred in attending meetings of the Board of Directors and any committee thereof, in accordance with the Company’s policies.
(e) The Company acknowledges that the Board Representative may have certain rights to indemnification, advancement of expenses and/or insurance provided by the Investor and/or its Affiliates (collectively, the “Investor Indemnitors”). The Company hereby agrees on behalf of itself that with respect to a claim by the Board Representative for indemnification arising out of his or her service as a director of the Company (1) that the Company is the indemnitor of first resort (i.e., the Company’s obligations to the Board Representative with respect to indemnification, advancement of expenses and/or insurance (which obligations shall be the same as, but in no event greater than, any such obligations to all other members of the Board of Directors) are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Board Representative are secondary), and (2) the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Board Representative against the Company.
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(f) The Investor hereby acknowledges that it is aware of the restrictions under the federal securities laws imposed on a person in possession of material nonpublic information concerning an issuer, including with respect to purchasing or selling securities of such issuer and the communication of such information to other persons. The Investor agrees that neither it nor its representatives nor any of their respective Affiliates will use any data or information in contravention of such securities laws or any rules or regulations promulgated thereunder.
(g) Following the Closing, as long as the Investor and its affiliates in the aggregate hold the Minimum Ownership Interest, the Company shall make available to the Investor all materials delivered to the Board and the committees thereof and to the board of directors of the Bank and the committees thereof; provided, that the Company shall not be required to deliver such materials to the extent that such delivery would reasonably be expected to constitute a waiver of the attorney-client privilege or violate applicable law or regulatory requirements.
2. Registration Rights. The Company and the Investor shall execute and deliver effective as of the date hereof the Registration Rights Agreement.
3. Bank Holding Company Act. The Company will not knowingly take any action which would reasonably be expected to pose a risk that the Investor or any of its Affiliates will (a) become a “bank holding company” under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and the rules and regulations promulgated thereunder or (b) own, directly or indirectly, five percent or more of the Voting Common Stock or any other class of voting securities of the Company, including, without limitation, undertaking any redemption, recapitalization or repurchase of Voting Common Stock, of securities or rights, options, or warrants to purchase Voting Common Stock, or securities of any type whatsoever that are, or may become, convertible into or exchangeable into or exercisable for Voting Common Stock, in each case, where the Investor is not given the right to participate in such redemption, recapitalization or repurchase to the extent of the Investor’s pro-rata proportion; provided, however, that the Company shall not be deemed to have violated this Section 3 if it has given the Investor the opportunity to participate in such redemption, recapitalization or repurchase to the extent of the Investor’s pro-rata proportion and the Investor fails to so participate. In the event the Company breaches its obligations under this Section 3 or believes that it is reasonably likely to breach such an obligation, it shall promptly notify the Investor hereto and shall cooperate in good faith with the Investor to modify ownership or, to the extent commercially reasonable, make other arrangements or take any other action, in each case, as is necessary to cure or avoid such breach; provided, that any modification, amendment or waiver of these Investor Rights Agreements shall be subject to this Section 4.
4. Most Favored Nation. For so long as the Investor and its Affiliates, in the aggregate, satisfy the Minimum Ownership Interest, the Company shall not enter into any additional, or modify any existing, agreements, arrangements or understandings with any existing or future investors in the Company that have the effect of establishing rights or otherwise benefiting such investor in a manner more favorable in any material respect to such investor than the rights and benefits established in favor of the Investor by this Agreement, unless, in any such case, the Investor has been provided with such rights and benefits. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that pursuant to the Investor Rights Agreements, Patriot Financial Partners III, LLP, Bartow Morgan, Jr. and J. Bradford Smith have rights and benefits that are more favorable than those provided to the Investor pursuant to this Agreement.
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5. Confidentiality. Each Party to this Agreement will hold, and will use commercially reasonable efforts to cause its respective Affiliates, and its and their respective subsidiaries and their directors, officers, employees, members, managers, investors, potential investors, agents, consultants and advisors to hold, in strict confidence, unless disclosure to a Governmental Entity is reasonably necessary or appropriate in connection with any necessary regulatory approval, or request for information or similar process, or unless compelled to disclose by judicial or administrative process or, based on the advice of its counsel, by another requirement of law or the applicable requirements of any Governmental Entity (in which case, the Party permitted to disclose such information shall, to the extent legally permissible and reasonably practicable, provide the other Party with prior written notice of such permitted disclosure so that such other Party may seek confidential treatment of such information from the applicable Governmental Entity), all nonpublic records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) concerning the other Party hereto furnished to it by such other Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (1) previously known by such Party on a nonconfidential basis, (2) in the public domain through no fault of such Party, (3) later lawfully acquired from other sources by the Party to which it was furnished or (4) independently developed or conceived by such Party without use of such Information), and neither Party hereto shall release or disclose such Information to any other person, except its Affiliates, and its and their respective directors, officers, employees, members, managers, investors, potential investors, partners, auditors, attorneys, financial advisors, other consultants and advisors with the express understanding that such parties will maintain the confidentiality of the Information and, to the extent permitted above, to Governmental Entities; provided, however, that (i) the Investor is permitted to disclose Information to auditors and bank and securities regulatory authorities without prior written notice to the Company in connection with any audit or examination that does not explicitly reference the Company or this Agreement and (ii) the Investor may identify the Company and the number and value of the Investor’s security holdings in the Company in accordance with applicable investment reporting and disclosure regulations or internal policies without prior notice to or consent from the Company.
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6. Miscellaneous.
(a) Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via e-mail (provided the sender receives an e-mail notification or confirmation of receipt of an e-mail transmission) at e-mail address specified in this Section 6(a) prior to 5:00 p.m., New York City time, on a Trading Day, (b) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (c) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows
If to the Company:
Georgia Banking Company, Inc.
1776 Peachtree Street NW, Suite 300
Atlanta, GA 30309
Attn: Bartow Morgan, Jr.
Email: [***]
With a copy to:
Troutman Pepper Locke LLP
600 Peachtree Street, NE, Suite 3000
Atlanta, GA 30308
Attn: James Stevens
Email: [***]
If to the Investor:
CF GBC Investors LP
c/o Fortress Investment Group LLC
1345 Avenue of the Americas, 46th Fl.
New York, NY 10105
Attn: General Counsel / Credit Operations / Henchy Enden
E-mail: [***], [***], [***]
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West
New York, New York 10001
Attn: Michael J. Schwartz; Michael P. Reed
Email: [***]; [***]
or such other address as may be designated in writing hereafter, in the same manner, by such Person.
(b) The provisions of this Agreement may not be assigned by the Investor without the prior written consent of the Company, which consent may be withheld by the Company in its sole discretion; provided, however, that the Investor may assign this Agreement or any of its rights hereunder to any of its Affiliates without the prior written consent of the Company, and any purported assignment shall be null and void in the absence of such consent. Subject to the foregoing restriction on assignment, this Agreement will be binding upon, and will inure to the benefit of and be enforceable by, the Parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
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(c) This Agreement and the Registration Rights Agreement embody the entire agreement and understanding between the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than as set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.
(d) This Agreement will be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(e) If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
(f) Any Party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other Party hereto and (ii) waive compliance by the other Party with any of such other Party’s obligations or covenants contained herein; provided, however, that any such extension or waiver shall be valid only if set forth in an instrument in writing signed by each of the Parties to be bound thereby, but no such extension or waiver and no failure to insist on strict compliance by the other Party hereto with an obligation or covenant hereunder shall operate as a waiver of, or estoppel with respect to, any subsequent failure to comply with the same obligation or covenant or any failure to comply therewith by the Party whose performance was waived.
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(g) This Agreement may be executed in two (2) or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
[Signature(s) Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed, where applicable by their duly authorized representatives, as of the date first above written.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Name: | Bartow Morgan, Jr. | |
| Title: | Chief Executive Officer | |
| CF GBC INVESTORS LP | ||
| By: CF GBC GP LLC, its general partner | ||
| By: | /s/ William A. Covino | |
| Name: | William A. Covino | |
| Title: | Chief Financial Officer | |
[Signature page to Investor Rights Agreement]
Exhibit 10.6
Execution Version
VCOC LETTER AGREEMENT
Wingshooter Acquisition Corp.
1776 Peachtree Street NW, Suite 100
Atlanta, GA 30309
December 31, 2020
Patriot Financial Partners III, L.P.
Radnor Corporate Center
Building Four, Suite 201
100 Matsonford Road
Radnor, PA 19087
Dear Sir/Madam:
Reference is made to the Stock Purchase Agreement, dated as of December 31, 2020 (the “Agreement”), by and between Wingshooter Acquisition Corp., a Georgia corporation (the “Company”), and Patriot Financial Partners III, L.P., a Delaware limited partnership (the “VCOC Investor”). The Company and Georgia Banking Company, Inc. (“Georgia Banking Company”) entered into that certain Amended and Restated Agreement and Plan of Merger, dated November 11, 2020 (the “Merger Agreement”), pursuant to which the Company will merge with and into Georgia Banking Company, with Georgia Banking Company being the surviving entity (the “Acquisition”). References to the Company in this letter following the Acquisition shall be deemed to be references to Georgia Banking Company. Pursuant to the Agreement, the VCOC Investor has agreed to purchase from the Company that certain number of shares (the “Shares”) of common stock, par value $0.01 per share, of the Company (the “Common Stock”) equal to the lesser of (a) $30,000,000 divided by the Purchase Price per Share or (b) 24.9% of the issued and outstanding shares of Common Stock of Georgia Banking Company, par value $0.01 per share, immediately following the Acquisition on a fully diluted as-converted basis. As an inducement for the VCOC Investor to enter into the Agreement, the Company granted the VCOC Investor the rights set forth in the Investor Rights Agreement, dated as of December 31, 2020 (the “Investor Rights Agreement”), by and between the Company and the VCOC Investor, and the Registration Rights Agreement, dated as of December 31, 2020 (the “Registration Rights Agreement”), by and between the Company and the VCOC Investor. Capitalized terms used herein without definition shall have the respective meanings in the Agreement.
For good and valuable consideration acknowledged to have been received, the Company hereby agrees that for so long as the VCOC Investor, directly or through one or more Affiliates, continues to hold any shares of equity in the Company, the Company shall:
| 1. | Provide the VCOC Investor or an individual designated by the VCOC Investor with the governance rights set forth in the Investor Rights Agreement; |
| 2. | Without limitation or prejudice of any of the rights provided to the VCOC Investor under the Agreement, the Investor Rights Agreement, the Registration Rights Agreement, or any other agreement or otherwise, provide the VCOC Investor or an individual designated by the VCOC Investor with: |
| a. | the right to visit and inspect any of the offices and properties of the Company and its subsidiaries and examine and inspect the books and records of the Company and its subsidiaries, at such times as the VCOC Investor shall reasonably request upon three (3) business days’ notice but not more frequently than once per calendar year, provided, however, that such rights shall not extend to confidential bank supervisory communications, customer financial records or other “exempt records” as defined by 12 C.F.R. Part 309, or reports of examination of any national or state chartered insured bank, which information may only be disclosed by the Company or its subsidiaries in accordance with the provisions and subject to the limitations of applicable law or regulation; |
| b. | consolidated balance sheets and statements of income and cash flows of the Company and its subsidiaries prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis (i) as of the end of each quarter of each fiscal year as soon as practicable after preparation thereof but in no event later than ninety (90) days after the end of such quarter, and (ii) with respect to each fiscal year end statement, as soon as practicable after preparation thereof but in no event later than one hundred twenty (120) days after the end of such fiscal year and together with an auditor’s report thereon of a firm of established national reputation; and |
| c. | to the extent the Company or any of its subsidiaries is required by law or pursuant to the terms of any outstanding indebtedness of the Company or any of its subsidiaries to prepare such reports, any annual reports, quarterly reports and other periodic reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 or otherwise, actually prepared by the Company or its subsidiaries as soon as available; provided that, in each case, if the Company makes the information described in clauses (b) and (c) of this Section 2 available through public filings on the EDGAR system or any successor or replacement system of the U.S. Securities and Exchange Commission, the delivery of the information shall be deemed satisfied by such public filings. |
| 3. | Make appropriate officers and directors of the Company and its subsidiaries available periodically and at such times as reasonably requested by the VCOC Investor for consultation with, and advisement by, the VCOC Investor or its designated representative, but not more frequently than once per calendar year, with respect to matters relating to the business and affairs of the Company and its subsidiaries; |
| 4. | To the extent consistent with applicable law and so long as the VCOC Investor does not have a representative or observer on the Company’s board of directors, inform the VCOC Investor or its designated representative in advance with respect to any significant corporate actions, including, without limitation, extraordinary dividends, mergers, acquisitions or dispositions of assets, issuances of significant amounts of debt or equity and material amendments to the articles of incorporation, bylaws and other organization documents of the Company or its subsidiaries, and to provide the VCOC Investor or its designated representative with the right to consult with the Company and its subsidiaries with respect to such actions; provided that such consultation rights shall be limited to once per calendar quarter; provided further that the VCOC Investor is aware that it may receive material nonpublic information about the Company, and the VCOC Investor agrees that it is aware of and shall comply with the federal and state securities laws that restrict any Person who has material, non-public information about a company from purchasing or selling securities of the company or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities; and provide the VCOC Investor or its designated representative with such other rights of consultation which the VCOC Investor’s counsel may determine to be reasonably necessary under applicable legal authorities promulgated after the date hereof to qualify its investment in the Company as a “venture capital investment” as such term is defined in the United States Department of Labor Regulation published at 29 C.F.R. Section 2510.3-101 (the “Plan Asset Regulation”), and cooperate in good faith with the VCOC Investor to amend this letter agreement to reflect such other rights that are mutually satisfactory to the Company and the VCOC Investor and consistent with the Federal Reserve’s rule for Control and Divestiture Proceedings as codified in the Federal Reserve’s Regulation Y, provided that such consultation rights shall be limited to once per calendar quarter. |
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The Company agrees to consider, and to cause its subsidiaries to consider, in good faith, the recommendations of the VCOC Investor or its designated representative in connection with the matters on which it is consulted as described above, recognizing that the ultimate discretion with respect to all such matters shall be retained by the Company and its subsidiaries, as applicable.
The VCOC Investor agrees, and will require each designated representative of the VCOC Investor to agree, to hold in confidence and not use or disclose to any third party (other than its legal counsel and accountants) any confidential information provided to or learned by such party in connection with the VCOC Investor’s rights under this letter agreement except as may otherwise be required by law or legal, judicial or regulatory process, provided that the VCOC Investor takes commercially reasonable steps to minimize the extent of any such required disclosure.
In the event the VCOC Investor transfers all or any portion of its investment in the Company to an affiliated entity (or to a direct or indirect wholly-owned conduit subsidiary of any such affiliated entity) that is intended to qualify as a venture capital operating company under the Plan Asset Regulation, such affiliated entity shall be afforded the same rights that the Company has afforded to the VCOC Investor hereunder and shall be treated, for such purposes, as a third party beneficiary hereunder.
The rights of the VCOC Investor under this letter agreement are unique to the VCOC Investor and shall not be assignable or transferrable other than to an affiliated entity that is intended to qualify as a venture capital operating company under the Plan Asset Regulation.
The VCOC Investor acknowledges that the Company has made no representation that it qualifies, or in the future will qualify, as a “venture capital operating company” or that an investment in the Company qualifies as a “venture capital investment” as those terms are defined in the Plan Asset Regulation and disclaims any responsibility therefor.
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The letter agreement will expire when the VCOC Investor, directly or through one or more Affiliates, no longer holds any shares of equity of the Company.
This letter agreement and the rights and the duties of the parties hereto shall be governed by, and construed in accordance with, the laws of the state of Georgia and may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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| Wingshooter Acquisition Corp. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Name: Bartow Morgan, Jr. | ||
| Title: Chief Executive Officer | ||
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Agreed and acknowledged as of the date first above written:
| Patriot Financial Partners III, L.P. | ||
| By: | /s/ James F. Deutsch | |
| Name: James F. Deutsch | ||
| Title: Managing Partner | ||
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Exhibit 10.7
Execution Version
LETTER AGREEMENT
Wingshooter Acquisition Corp.
1776 Peachtree Street NW, Suite 100
Atlanta, GA 30309
December 31, 2020
[●]
Dear [●]:
Reference is made to the Stock Purchase Agreement, dated as of December 31, 2020 (the “Agreement”), by and between Wingshooter Acquisition Corp., a Georgia corporation (the “Company”), and [●], a Georgia resident (the “Investor”). The Company and Georgia Banking Company, Inc. (“Georgia Banking Company”) entered into that certain Amended and Restated Agreement and Plan of Merger, dated November 11, 2020 (the “Merger Agreement”), pursuant to which the Company will merge with and into Georgia Banking Company, with Georgia Banking Company being the surviving entity (the “Acquisition”). References to the Company in this letter following the Acquisition shall be deemed to be references to Georgia Banking Company. Pursuant to the Agreement, the Investor has agreed to purchase from the Company up to that certain number of shares (the “Shares”) of common stock, par value $0.01 per share, of the Company (the “Common Stock”) indicated on the Investor’s signature page to the Agreement. As an inducement for the Investor to enter into the Agreement, the Company granted the Investor the rights set forth in the Investor Rights Agreement, dated as of December 31, 2020 (the “Investor Rights Agreement”), by and between the Company and the Investor, and the Registration Rights Agreement, dated as of December 31, 2020 (the “Registration Rights Agreement”), by and between the Company and the Investor. Capitalized terms used herein without definition shall have the respective meanings in the Agreement.
For good and valuable consideration acknowledged to have been received, the Company hereby agrees that for so long as the Investor, directly or through one or more Affiliates, continues to hold any shares of equity in the Company, the Company shall:
| 1. | [Provide the Investor or an individual designated by the Investor with the governance rights set forth in the Investor Rights Agreement;] |
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| 2. | Without limitation or prejudice of any of the rights provided to the Investor under the Agreement, the Investor Rights Agreement, the Registration Rights Agreement, or any other agreement or otherwise, provide the Investor or an individual designated by the Investor with: |
| a. | the right to visit and inspect any of the offices and properties of the Company and its subsidiaries and examine and inspect the books and records of the Company and its subsidiaries, at such times as the Investor shall reasonably request upon three (3) business days’ notice but not more frequently than once per calendar year, provided, however, that such rights shall not extend to confidential bank supervisory communications, customer financial records or other “exempt records” as defined by 12 C.F.R. Part 309, or reports of examination of any national or state chartered insured bank, which information may only be disclosed by the Company or its subsidiaries in accordance with the provisions and subject to the limitations of applicable law or regulation; |
| b. | consolidated balance sheets and statements of income and cash flows of the Company and its subsidiaries prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis (i) as of the end of each quarter of each fiscal year as soon as practicable after preparation thereof but in no event later than ninety (90) days after the end of such quarter, and (ii) with respect to each fiscal year end statement, as soon as practicable after preparation thereof but in no event later than one hundred twenty (120) days after the end of such fiscal year and together with an auditor’s report thereon of a firm of established national reputation; and |
| c. | to the extent the Company or any of its subsidiaries is required by law or pursuant to the terms of any outstanding indebtedness of the Company or any of its subsidiaries to prepare such reports, any annual reports, quarterly reports and other periodic reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 or otherwise, actually prepared by the Company or its subsidiaries as soon as available; provided that, in each case, if the Company makes the information described in clauses (b) and (c) of this Section 2 available through public filings on the EDGAR system or any successor or replacement system of the U.S. Securities and Exchange Commission, the delivery of the information shall be deemed satisfied by such public filings. |
| 3. | Make appropriate officers and directors of the Company and its subsidiaries available periodically and at such times as reasonably requested by the Investor for consultation with, and advisement by, the Investor or its designated representative, but not more frequently than once per calendar year, with respect to matters relating to the business and affairs of the Company and its subsidiaries; |
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| 4. | To the extent consistent with applicable law [and so long as the Investor does not have a representative or observer on the Company’s board of directors], inform the Investor or its designated representative in advance with respect to any significant corporate actions, including, without limitation, extraordinary dividends, mergers, acquisitions or dispositions of assets, issuances of significant amounts of debt or equity and material amendments to the articles of incorporation, bylaws and other organization documents of the Company or its subsidiaries, and to provide the Investor or its designated representative with the right to consult with the Company and its subsidiaries with respect to such actions; provided that such consultation rights shall be limited to once per calendar quarter; provided further that the Investor is aware that it may receive material nonpublic information about the Company, and the Investor agrees that it is aware of and shall comply with the federal and state securities laws that restrict any Person who has material, non-public information about a company from purchasing or selling securities of the company or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities; and cooperate in good faith with the Investor to amend this letter agreement to reflect such other rights that are mutually satisfactory to the Company and the Investor and consistent with the Federal Reserve’s rule for Control and Divestiture Proceedings as codified in the Federal Reserve’s Regulation Y, provided that such consultation rights shall be limited to once per calendar quarter. |
The Company agrees to consider, and to cause its subsidiaries to consider, in good faith, the recommendations of the Investor or its designated representative in connection with the matters on which it is consulted as described above, recognizing that the ultimate discretion with respect to all such matters shall be retained by the Company and its subsidiaries, as applicable.
The Investor agrees, and will require each designated representative of the Investor to agree, to hold in confidence and not use or disclose to any third party (other than its legal counsel and accountants) any confidential information provided to or learned by such party in connection with the Investor’s rights under this letter agreement except as may otherwise be required by law or legal, judicial or regulatory process, provided that the Investor takes commercially reasonable steps to minimize the extent of any such required disclosure.
In the event the Investor transfers all or any portion of its investment in the Company to an entity owned or controlled by the Investor, such entity shall be afforded the same rights that the Company has afforded to the Investor hereunder and shall be treated, for such purposes, as a third party beneficiary hereunder.
The rights of the Investor under this letter agreement are unique to the Investor and shall not be assignable or transferrable other than to an entity owned or controlled by the Investor.
The letter agreement will expire when the Investor, directly or through one or more Affiliates, no longer holds any shares of equity of the Company.
This letter agreement and the rights and the duties of the parties hereto shall be governed by, and construed in accordance with, the laws of the state of Georgia and may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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| Wingshooter Acquisition Corp. | ||
| By: | ||
| Name: | [●] | |
| Title: | [●] | |
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Agreed and acknowledged as of the date first above written:
| [●] |
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Exhibit 10.8
April 14, 2023
Commerce Street Financial Partners II, LP
1445 Ross Avenue, Suite 2700
Dallas, Texas 75202
| Re: | Stock Subscription Agreement (the “Agreement”), by and between Georgia Banking Company, Inc. and Commerce Street Financial Partners II, L.P |
Gentlemen:
Reference is hereby made to the subject Agreement. Capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement.
This letter agreement will memorialize and confirm the mutual understanding of the Company and Purchaser as to the following:
1. Notwithstanding Section 2.1(a) of Annex A to the Agreement, the subscription amount of the Purchaser may not be revised by the Company, Placement Agent or any other person without Purchaser’s prior written consent.
2. Section 3.1 of Annex A to the Agreement shall be amended to add the following additional representation of the Company to the Purchaser:
“The consolidated financial statements of the Company and its subsidiaries as of December 31, 2021 and for the periods then ended (copies of which have been made available to Purchaser by the Company) are prepared in accordance with generally accepted accounting principles and fairly present in all material respects the financial condition and results of operations for the dates and periods presented.”
3. So long as the Purchaser beneficially owns at least 4.9% of the then outstanding shares of Common Stock, the Company shall cause one designee of the Purchaser (who shall be a principal of CS Financial Partners II GP, LLC) to attend ail meetings of the Board in a nonvoting, nonparticipating, observer capacity and to receive the informational materials furnished to members of the Board (provided that the designee shall not be entitled to receive or be provided with any confidential supervisory information). If any such designee should resign or otherwise be unable to serve, the Purchaser will entitled to designate such person’s successor as observer so long as the Purchaser beneficially owns at least 4.9% of the then outstanding shares of Common Stock.
4. The Company and the Purchaser agree to fulfill their respective obligations under the Agreement, including the Purchaser’s delivery of the Aggregate Purchase Price pursuant to Section 2.2(b)(ii) of Annex A to the Agreement, and consummate the transactions contemplated by the Agreement on or before April 28, 2023.
5. Except as modified hereby, the remaining terms of the Agreement shall continue in full force and effect.
Please confirm our mutual understanding by your countersignature in the space provided below.
| Very truly yours, | ||
| Georgia Banking Company, Inc. | ||
| By: | /s/ Bartow Morgan, Jr. | |
Accepted and agreed:
Commerce Street Financial Partners II, LP
CS Financial Partners II GP, LLC
| By: | /s/ Carla J. Brooks |
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Exhibit 10.9
Execution Version
LOAN AND SECURITY AGREEMENT
By and Between
GEORGIA BANKING COMPANY, INC.
and
SERVISFIRST BANK
June 10, 2025
Execution Version
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is made and entered into as of June 10, 2025, by and between GEORGIA BANKING COMPANY, INC., a corporation organized under the laws of the State of Georgia (“Borrower”), and SERVISFIRST BANK, an Alabama banking corporation (“Lender”).
WITNESSETH:
Borrower has requested that Lender extend to the Borrower a revolving line of credit in the maximum principal amount of up to $10,000,000 (the “Loan”), and Lender is willing to make the Loan upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, each intending to be legally bound hereby, agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.01. Defined Terms. As used herein:
“Advance” means each loan of money or credit made to Borrower by Lender under the Commitment.
“Affiliate” or “Affiliates” shall mean any Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, Borrower, or (ii) ten percent (10%) or more of the equity interest of which is held beneficially or of record by Borrower. The term “control” means the possession, directly or indirectly, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” means this Loan and Security Agreement, as amended or supplemented from time to time.
“Capital” means, with respect to the Subsidiary Bank, the “tier 1 capital” of the Subsidiary Bank, as reported on Schedule RC-R of the Subsidiary Bank’s most recent quarterly call report.
“Change in Control” means either (i) the acquisition by any Person or any group of Persons (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of beneficial ownership, directly or indirectly, of 25% or more of the outstanding shares of voting stock of Borrower or (ii) Borrower ceases to own 100% of the outstanding shares of voting stock of the Subsidiary Bank.
“Collateral” is defined in Section 4.01 of this Agreement.
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Execution Version
“Collateral Documents” means the documents specified in Section 3.01(B) - (D).
“Commitment” means Lender’s commitment to lend to Borrower up to the sum of $10,000,000 in principal amount outstanding from time to time pursuant to, and subject to, the terms of this Agreement.
“Default” means any event described in Section 7.01.
“Doc Processing Fee” means the fee payable by Borrower to Lender in an amount equal to $950.
“ERISA” means the Employee Retirement Security Act of 1974, as amended.
“Generally Accepted Accounting Principles” or “GAAP” means generally accepted principles of accounting in the United States in effect from time to time applied in a manner consistent with those used in preparing such financial statements as have theretofore been furnished to Lender by Borrower.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, which has or asserts jurisdiction over Lender, Borrower or any of its Subsidiaries, or over the property of any of them.
“Indebtedness” means all items of indebtedness, obligation or liability, whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, including, but without limitation:
(A) All indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other than for collection or deposit in the ordinary course of business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or indirectly, through agreements, contingent or otherwise:
(1) to purchase such indebtedness; or
(2) to purchase, sell or lease (as lessee or lessor) property, products, materials or supplies or to purchase or sell services primarily for the purpose of enabling the debtor to make payment of such indebtedness or to assure the owner of the indebtedness against loss; or
(3) to supply funds to or in any other manner invest in the debtor.
(C) All indebtedness secured by (or for which the holder of such indebtedness has a right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have been assumed; and
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(D) All indebtedness incurred as the lessee of goods or services under leases that, in accordance with Generally Accepted Accounting Principles, should not be reflected on the lessee’s balance sheet.
“Interest Rate” is defined in Section 2.05(A)(1) of this Agreement.
“Laws” means all ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees of any governmental or political subdivision or agency thereof, or any court or similar entity established by any thereof.
“Loan” has the meaning set forth in the recitals of this Agreement.
“Maturity Date” means the earlier of June 10, 2027, or the date the maturity of the Note is accelerated pursuant to Section 7.02 of this Agreement.
“Non-Performing Assets” means, with respect to the Subsidiary Bank, the sum of (a) the Subsidiary Bank’s loans and leases which are on nonaccrual status, (b) the Subsidiary Bank’s loans and leases which are at least ninety (90) days past due, (c) all other non-performing loans and leases of the Subsidiary Bank, (d) the other real estate owned by the Subsidiary Bank, and (e) all other non-performing assets of the Subsidiary Bank.
“Non-Performing Assets Ratio” means, with respect to the Subsidiary Bank, the ratio of the Subsidiary Bank’s Non-Performing Assets to the Subsidiary Bank’s Capital plus Reserves.
“Non-Use Fee” has the meaning set forth in Section 2.08 of this Agreement.
“Note” means the Revolving Note of even date herewith, in the principal amount of $10,000,000, made by Borrower to evidence Borrower’s obligation to repay the Loan and the interest thereon and includes any amendment to such Note and any promissory note given in extension or renewal of, or in substitution for, such Note evidencing Borrower’s obligation to repay the Loan.
“Obligations” means all of the following.
(A) The Obligation of Borrower to pay the principal of and interest on the Note in accordance with the terms thereof, and to satisfy all of its other liabilities to Lender, whether hereunder or otherwise (including, without limitation, under any swap or other hedging agreement made by Borrower with or in favor of Lender), whether now existing or hereafter incurred, matured or unmatured, direct or contingent, joint or several, including any extensions, modifications, renewals thereof and substitutions therefor.
(B) The Obligation of Borrower to repay to Lender all amounts advanced by Lender hereunder or otherwise on behalf of Borrower, including, but without limitation, advances for principal or interest payments to prior secured parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, repairs to or maintenance or storage of any of the Collateral.
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The Obligation of Borrower to reimburse Lender, on demand, for all of Lender’s expenses and costs, including the reasonable fees and expenses of its counsel, in connection with the preparation, administration, amendment, modifications, or enforcement of this Agreement and the documents required hereunder, including, without limitation, any proceeding brought or threatened to enforce payment of any of the obligations referred to in the foregoing paragraphs (A) and (B).
(C) The Obligation of Borrower to comply with the terms of this Agreement, the Note and the Collateral Documents.
“Origination Fee” means the fee payable by Borrower to Lender in an amount equal to $10,000.
“Person” means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, court, or government or political subdivision or agency thereof.
“Pledge Agreement” means that certain Pledge Agreement of even date herewith pursuant to which Lender is granted a security interest in the Pledged Stock.
“Pledged Stock” means one hundred percent (100%) of the capital stock of the Subsidiary Bank.
“Potential Default” means an event of default which but for the lapse of time or the giving of notice, or both, would constitute a Default.
“Prime Rate” means the rate designated as such in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor) on any particular day. The Prime Rate is not necessarily the lowest interest rate charged by Lender.
“Records” means instruments, agreements, correspondence, memoranda, tapes, discs, papers, books and other documents, or transcribed information of any type, whether expressed in ordinary or machine language, and all filing cabinets and other containers in which the foregoing is stored or maintained.
“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as now or from time to time hereafter in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.
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“Reserves” means, with respect to the Subsidiary Bank, the “allowance for loan and lease losses” of the Subsidiary Bank as reported on Schedule RC of the Subsidiary Bank’s most recent quarterly call report.
“Return on Assets Ratio” means, with respect to the Subsidiary Bank, the ratio of (a) year-to-date “net income” of the Subsidiary Bank for the current calendar year, as reported on Schedule RI of the Subsidiary Bank’s most recent quarterly call report, annualized over the current calendar year, to (b) average “total assets” as reported on Schedule RC-K of the Subsidiary Bank’s most recent quarterly call report. “Subsidiary” means any corporation, including but not limited to the Subsidiary Bank, of which more than fifty-one percent (51%) of the outstanding voting securities shall, at the time of determination, be owned directly, or indirectly through one or more intermediaries, by Borrower.
“Subsidiary Bank” means Georgia Banking Company, a banking corporation organized under the laws of the State of Georgia, which is a wholly-owned Subsidiary of Borrower.
“Tier 1 Leverage Ratio” means, with respect to the Subsidiary Bank, the tier 1 leverage ratio as defined by the capital maintenance regulations of the primary federal bank regulatory agency of the Subsidiary Bank and reported on Schedule RC-R of the Subsidiary Bank’s most recent quarterly call report.
Section 1.02 Construction. All accounting terms used herein shall have their customary meanings under, and shall be construed in accordance with, GAAP.
Section 1.03 UCC Definitions. All other capitalized terms contained in this Agreement shall, unless otherwise defined herein or unless the context otherwise indicates, have their respective meanings under the Uniform Commercial Code of Alabama.
ARTICLE 2. THE LOAN
Section 2.01. General Terms.
(A) Subject to the terms and conditions of this Agreement, Lender will lend to Borrower the principal sum of up to $10,000,000 on a revolving basis. Lender shall make Advances under such Loan from time to time until the Maturity Date.
(B) Subject to the terms hereof, Borrower may borrow, repay without penalty or premium, and reborrow under the Loan, from the date of this Agreement until the Maturity Date. If at any time the unpaid principal balance of the Loan exceeds the Commitment, Borrower shall immediately and without demand pay such sums to Lender as are necessary to reduce the principal balance of the Loan to not more than the Commitment.
Section 2.02. The Note. On the date hereof, Borrower will execute and deliver the Note to Lender to evidence Borrower’s Obligations to repay the Loan and the interest thereon.
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Section 2.03. Use of Proceeds; Disbursement of the Loan. Borrower will use the proceeds of the Loan solely (a) for growth capital and general corporate purposes, (b) to reimburse Lender for any expenses incurred by Lender in connection with making the Loan, and (c) to otherwise pay Lender sums due to Lender under this Agreement or the other instruments, agreements and documents related to this Agreement.
Section 2.04. Payments of Principal. If not earlier demanded pursuant to Section 7.02 hereof, the outstanding principal balance of each Advance made under the Loan shall be due and payable to Lender on the Maturity Date.
Section 2.05. Interest Rate and Payments of Interest.
(A) Interest shall be calculated and paid as follows:
(1) Interest on the principal balance of the Loan from time to time outstanding will be payable at a per annum rate (the “Interest Rate”) equal to the greater of (i) the Prime Rate in effect from time to time minus 0.25% (25 bps); or (ii) a floor rate of five percent (5.00%).
(2) Each time a change to the Prime Rate occurs, the Interest Rate shall change concurrently with such change in the Prime Rate.
(3) Interest shall be calculated on the basis of a 360-day year, by multiplying the product of the principal amount outstanding and the applicable rate by the actual number of days elapsed, and dividing by 360, and shall be payable quarterly in arrears, on the 15t day of each and every calendar quarter (that is, on January 1, April 1, July 1, and October 1) commencing with the first calendar quarter following the first Advance and continuing on the 1st day of each calendar quarter thereafter until the outstanding principal balance of all Advances have been repaid in full, with the final payment of accrued and unpaid interest due and payable on the Maturity Date.
(B) If, at any time, the Interest Rate shall be deemed by any competent Governmental Authority to exceed the maximum rate of interest permitted by any applicable Laws, then, for such time as the Interest Rate would be deemed excessive, its application shall be suspended and there shall be charged instead the maximum rate of interest permissible under such Laws.
Section 2.06. Payment to Lender. All sums payable to Lender under the Loan shall be paid directly to Lender in United States Dollars and immediately available funds. If Lender shall send to Borrower statements of amounts due hereunder, such statements shall be considered correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days of its receipt of any statement which it deems to be incorrect. Alternatively, at its sole discretion, Lender may charge against any deposit account of Borrower all or any part of any amount due hereunder.
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Section 2.07. Late Fee/Default Rate of Interest. Borrower promises to pay to Lender a late fee equal to three percent (3.00%) of the amount of each installment of principal and/or installment of interest which is received more than ten (10) days after the due date thereof; provided, however, that such late fee shall not be less than $20.00 nor more than the maximum amount (if any) permitted by law. The principal balance of the Loan outstanding after maturity (whether by acceleration or otherwise) shall bear interest at a per annum rate of interest equal to two percent (2.00%) plus the otherwise applicable Interest Rate and shall be calculated pursuant to Section 2.05 hereof. This section does not extend any payment due date expressly stated in this Agreement or any Collateral Document and does not in any way prevent or estop Lender from requiring that payments be made by Borrower strictly when due. Unless accepted by Lender, and unless accompanied by all other amounts then due to Lender, the tender of such payment by Borrower shall not cure the Default arising from the payment default upon which such late charge was assessed.
Section 2.08. Non-Use Fee. Borrower shall pay on an annual basis in arrears to Lender a non-use fee equal to .20% (20 bps) multiplied by the average unused principal amount of the Commitment for the applicable 12-month period (the “Non-Use Fee”), which amount shall be payable no later than 15 days following the anniversary date of this Agreement after such applicable 12-month period. The Non-Use Fee shall be waived if (i) as of the date of calculation, no Default or Potential Default shall have occurred and be continuing and (ii) the average outstanding balance under the Loan is $4,000,000 or greater during the applicable twelve-month period.
Section 2.09. Origination Fee. On the date hereof, Borrower shall pay to the Lender the Origination Fee.
Section 2.10. Doc Processing Fee. On the date hereof, Borrower shall pay to the Lender the Doc Processing Fee.
ARTICLE 3. CONDITIONS PRECEDENT
The obligation of Lender to make the Loan hereunder is subject to the following conditions precedent:
Section 3.01 Conditions to the Loan. Prior to the initial disbursement of the Loan, Borrower shall have delivered to Lender the following:
| (A) | the duly executed Note; |
| (B) | the duly executed Pledge Agreement; |
| (C) | original certificate representing the Pledged Stock, accompanied by a stock power endorsed in blank; |
| (D) | if requested by Lender, the financing statements described in Section 4.05; |
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| (E) | copies, certified as of the date of this Agreement by Borrower’s corporate secretary, of resolutions of Borrower’s board of directors authorizing the execution, delivery and performance of this Agreement, the Note, the Collateral Documents, and each other document to be delivered pursuant hereto; |
| (F) | copies, certified as of the date of this Agreement by their respective corporate secretaries, of the articles of incorporation of Borrower and the Subsidiary Bank, together with a certificate (dated the date of this Agreement) of their respective corporate secretaries to the effect that such articles of incorporation have not been amended except as provided in such articles; |
| (G) | copies, certified as of the date of this Agreement by their respective corporate secretaries, of the bylaws of Borrower and the Subsidiary Bank, together with a certificate (dated the date of this Agreement) of their respective corporate secretaries to the effect that such bylaws have not been amended except as provided in such bylaws; |
| (H) | a certificate (dated the date of this Agreement) of Borrower’s corporate secretary as to the incumbency and signatures of the officers of Borrower signing this Agreement, the Note, the Collateral Documents, and each other document to be delivered pursuant hereto; |
| (I) | certificates, as of the most recent dates practicable, of the secretary of state and/or department of commerce, respectively of the state of incorporation of Borrower-and the Subsidiary Bank as to the existence and good standing of Borrower and the Subsidiary Bank; |
| (J) | an opinion of counsel to Borrower that Borrower has all necessary authority to enter into this Agreement and perform its obligations hereunder and this Agreement is a valid obligation of Borrower enforceable and binding in accordance with its terms subject to customary qualifications; |
| (K) | receipt by Lender of such financial information, projections, budgets, business plans, cash flows and such other information as Lender may reasonably request, and Lender must be reasonably satisfied that such information fairly presents the business and financial condition of Borrower and does not contain material misstatements or omissions of material facts; |
| (L) | evidence acceptable to Lender that Borrower and the Subsidiary Bank have received all necessary regulatory approvals (or that no regulatory approvals are necessary), including receiving an approval letter or non-objection letter from Borrower’s or Subsidiary Bank’s primary regulator, for (i) Borrower to obtain the Loan, (ii) Borrower and the Subsidiary Bank to enter into and perform their Obligations under this Agreement and the Collateral Documents, and (iii) payment by the Subsidiary Bank of dividends to Borrower in amounts sufficient to comply with the repayment terms of the Loan; and |
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| (M) | such other documentation as Lender shall require regarding Borrower or the Subsidiary Bank, including, without limitation, opinions and certificates of Borrower’s independent certified public accountants, appraisals, reports of other independent consultants selected by Lender, and certificates of Borrower’s officers. |
Section 3.02 Conditions to Each Advance. Without limiting the foregoing, at the time of each Advance under the Loan, Borrower shall have furnished such information to Lender as Lender shall reasonably request to evidence that (a) the proceeds of such Advance will be used for the purposes permitted hereunder, and (b) the use of the proceeds in such manner will not cause or bring about a Default or Potential Default hereunder.
Section 3.03 Certain Events. Without limiting the foregoing, at the time of the disbursement of each Advance:
| (A) | No Default or Potential Default shall have occurred and be continuing; |
| (B) | The Collateral Documents shall be in full force and effect; |
(C) The Subsidiary Bank’s call report for the most recently-ended calendar quarter, filed by the Subsidiary Bank with any applicable regulatory authority, shall have been delivered to Lender;
(D) All representations and warranties set forth in Article 5 shall be true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) as of the time of such disbursement (or, in the case of any such representation or warranty expressly stated to have been made as of a specific date, as of such specific date); and
(E) There shall have been no material adverse change in the consolidated financial condition or business of Borrower or the Subsidiary Bank (measured against the most current financial statements of Borrower and the Subsidiary Bank delivered to or otherwise reviewed by Lender prior to the date of this Agreement).
Section 3.04 Legal Matters, At the time of the disbursement of each Advance, all legal matters necessary to preserve and perfect Lender’s security interest in the Collateral and Borrower’s obligation to repay the Loan shall be satisfactory to Lender and its counsel.
ARTICLE 4. COLLATERAL SECURITY
Section 4.01 Composition of the Collateral. The property in which a security interest is granted pursuant to the provisions of Section 4.03 is herein collectively called the “Collateral.” The Collateral, together with all of Borrower’s other property of any kind held by Lender, shall stand as one general, continuing collateral security for all Obligations and may be retained by Lender until all Obligations have been satisfied in full.
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Section 4.02 [Reserved]
Section 4.03 Security Interest in the Pledged Stock. As further security for the prompt satisfaction of all Obligations, Borrower hereby assigns and transfers to Lender all of its rights, title and interest in and to, and grants Lender a lien upon and security interest in, all of the Pledged Stock, whether now owned or hereafter acquired, together with all replacements therefor and all proceeds thereof, and all Records pertaining to any of the Collateral.
Section 4.04 Priority of Liens. The foregoing liens as set forth in Sections 4.01 and 4.03 shall be first and prior liens on the Pledged Stock and other Collateral.
Section 4.05 Financing Statements.
(A) Borrower:
(1) Hereby authorizes the filing of such financing statements (including amendments thereto and continuation statements thereof) in form satisfactory to Lender as Lender may hereafter specify in order to perfect Lender’s lien on and security interest in the Collateral;
(2) Will pay or reimburse Lender for all costs and taxes of filing or recording such financing statements (including amendments thereto and continuation statements thereof) in form satisfactory to Lender as Lender may hereafter specify, provided such financing statements are consistent with the provisions of this Agreement; and
(3) Will take such other commercially reasonable steps as Lender may direct to perfect Lender’s interest in the Collateral.
(B) In addition to the foregoing, and not in limitation thereof:
(1) A carbon, photographic, or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate public office in lieu thereof; and
(2) To the extent lawful, Borrower hereby appoints Lender as its attorney-in-fact (without requiring Lender to act as such) for the sole purpose of filing any financing statement and any amendment thereto in the name of Borrower, and to perform all other acts that Lender reasonably deems appropriate to perfect and continue its security interest in, and to protect and preserve, the Collateral.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Section 5.01 Original. To induce Lender to enter into this Agreement, Borrower represents and warrants to Lender as follows:
(A) Borrower owns 100% of the outstanding capital stock of the Subsidiary Bank;
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(B) Borrower is a corporation duly organized, validly existing and in good standing under the Laws of the state of its formation; the Subsidiary Bank is a corporation duly organized, validly existing and in good standing under the Laws of the state of its formation; Borrower and the Subsidiary Bank have the lawful power to own their properties and to engage in the business they conduct, and are duly qualified and in good standing as foreign corporations in the jurisdictions wherein the nature of the business transacted by them or property owned by them make such qualification necessary; the states in which Borrower and the Subsidiary Bank are qualified to do business are set forth in Exhibit B; the addresses of Borrower’s and the Subsidiary Bank’s respective principal places of business are set forth in Exhibit B; and as of the date of this Agreement, neither Borrower nor the Subsidiary Bank has changed its name, been the surviving corporation in a merger, acquired any business, within three (3) years and one (1) month prior to the date hereof;
(C) Neither Borrower nor the Subsidiary Bank is in material default with respect to any of its existing Indebtedness, or under any material lease, contract or commitment of any kind, and, to Borrower’s knowledge, all parties (including Borrower and the Subsidiary Bank) to all such material leases, contracts and other commitments to which Borrower or the Subsidiary Bank is a party (expressly excluding any lease, contract or commitment made with a customer of Subsidiary Bank in the ordinary course of Subsidiary Bank’s business) are in material compliance with the provisions of such leases, contracts and other commitments;(D) The making and performance of this Agreement, the Note, and the Collateral Documents will not (immediately, or with the passage of time, or with the giving of notice):
(1) Violate any provision of the articles of incorporation or bylaws of Borrower or the Subsidiary Bank, or violate any Laws or result in a default under any contract, agreement, or instrument to which Borrower or the Subsidiary Bank is a party or by which Borrower or the Subsidiary Bank or any of their respective properties are bound; or
(2) Result in the creation or imposition of any security interest in, or lien or encumbrance upon, any of the assets of Borrower or the Subsidiary Bank, except in favor of Lender;
(E) Borrower has the power and authority to enter into and perform this Agreement, the Note, and the Collateral Documents, and to incur the Obligations herein and therein provided for, and has taken all corporate action necessary to authorize the execution, delivery, and performance of this Agreement, the Note, and the Collateral Documents;
(F) This Agreement and the Collateral Documents are, and the Note when delivered will be, valid, binding, and enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws, and judicial decisions affecting the rights of creditors generally and by general principles of equity;
(G) Except to the extent disclosed to Lender in writing, there is no pending or, to Borrower’s knowledge, threatened order, notice, claim, litigation, proceeding or investigation against or affecting Borrower or the Subsidiary Bank, whether or not covered by insurance, that would reasonably be expected to involve the payment by Borrower or Subsidiary Bank of $500,000.00 or more;
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(H) Borrower has good and marketable title to all of the Collateral, subject to no security interest, encumbrance or lien, or claim of any third person;
(I) Borrower’s and the Subsidiary Bank’s financial statements (including call reports, in the case of the Subsidiary Bank) furnished to Lender, including any schedules and notes pertaining thereto, have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, and fully and fairly present the financial condition of Borrower at the dates thereof and the results of operations for the periods covered thereby, and there have been no material adverse changes in the consolidated financial condition or business of Borrower from the date of the latest financial statements provided to Lender to the date hereof, or the Subsidiary Bank from its most recently filed call report to the date hereof;
(J) As at the date of this Agreement, neither Borrower nor the Subsidiary Bank has any material Indebtedness of any nature, including, but without limitation, liabilities for taxes and any interest or penalties relating thereto, except to the extent reflected (in a footnote or otherwise) and reserved against in the financial statements of Borrower most recently delivered to Lender or the most recent call report of the Subsidiary Bank, or as disclosed in or permitted by this Agreement, as applicable; Borrower does not know and has no reasonable ground to know of any basis for the assertion against it or the Subsidiary Bank of any material Indebtedness of any nature not fully reflected and reserved against in the above referenced respective financial statements or call reports, as applicable;
(K) Except as otherwise permitted herein, Borrower and the Subsidiary Bank have filed all federal, state and local tax returns and other reports they are required by Law to file prior to the date hereof and which are material to the conduct of their business, have paid or caused to be paid all taxes, assessments and other governmental charges that are due and payable prior to the date hereof, and have made adequate provision for the payment of such taxes, assessments or other charges accruing but not yet payable; Borrower has no knowledge of any deficiency or additional assessment in a materially important amount in connection with any taxes, assessments or charges not provided for on its books or the books of the Subsidiary Bank;
(L) Neither Borrower nor the Subsidiary Bank is in material violation of any applicable Laws;
(M) No representation or warranty by Borrower or the Subsidiary Bank contained herein or in any certificate or other document furnished by Borrower or the Subsidiary Bank pursuant hereto contains any untrue statement of material fact or omits to state a material fact necessary to make such representation or warranty not misleading in light of the circumstances under which it was made;
(N) Each consent, approval or authorization of, or filing, registration or qualification with, any Person that is required to be obtained or effected by Borrower or the Subsidiary Bank in connection with the execution and delivery of this Agreement, the Note, and the Collateral Documents, or the undertaking or performance of any obligation hereunder or thereunder, has been duly obtained or effected;
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(O) The Pledged Stock constitutes all of the issued and outstanding capital stock of the Subsidiary Bank. There are no outstanding warrants, options, rights or other commitments (including, but without limitation, convertible notes or securities) entitling any Person to purchase or otherwise acquire any shares of capital stock of Borrower or the Subsidiary Bank. The Pledged Stock does not constitute “Margin Stock” as defined in Federal Reserve Board Regulation U (12 C.F.R. §§ 221.1 et seq.);
(P) Borrower has not made any agreement or taken any action which may cause anyone to become entitled to a commission or finder’s fee as a result of the making of the Loan; and
(Q) Borrower does not maintain any “Defined Benefit Pension Plans”, as defined in ERISA.
Section 5.02 Survival. All of the representations and warranties set forth in Section 5.01 shall survive and shall remain true and correct until all Obligations are satisfied in full (except, if applicable, to the extent that any such representation or warranty expressly relates solely to an earlier date or period of time).
ARTICLE 6. THE BORROWER’S COVENANTS
Borrower hereby covenants and agrees with Lender that, so long as any of the Obligations remain unsatisfied, it will comply with the following covenants:
Section 6.01 Affirmative Covenants.
Unless Lender shall otherwise agree in writing, Borrower shall abide by and perform the following covenants:
(A) Subsidiary Bank shall maintain one or more deposit accounts with Lender, including such account holding the interest reserve referred to in Section 6.01(R). Subsidiary Bank will allow Lender to bid on additional mutually beneficial correspondent services and propose Lender’s Service Charge Settlement program.
(B) Borrower will use the proceeds of the Loan solely for the purposes described in Section 2.03 of this Agreement. Borrower will furnish Lender such evidence as it may reasonably require with respect to such use.
(C) Borrower will furnish Lender all of the following:
(1) with respect to Borrower only, quarterly, within sixty (60) days after the close of each calendar quarter, and at such other times as Lender may request:
(a) a statement of stockholders’ equity and a statement of cash flows of such entity as of and for such quarter;
(b) an income statement of such entity for such quarter; and
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(c) a balance sheet (consolidated, in the case of an entity that has one or more Subsidiaries) of such entity as of the end of such period;
all in reasonable detail, subject to year-end audit adjustments and certified by Borrower’s president or principal financial officer to have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, except for any inconsistencies explained in such certificate.
(2) with respect to each of Borrower and the Subsidiary Bank, annually, within one hundred twenty (120) days after December 31 of each year:
(a) a statement of stockholders’ equity and the consolidated statement of cash flows of the Borrower and its affiliates of and for such fiscal year;
(b) an income statement of such entity for such fiscal year; and
(c) a balance sheet (in the case of an entity that has one or more Subsidiaries, such balance sheet shall be delivered on a consolidated basis and, if requested by Lender, also on a parent-only basis) of such entity as of the end of such fiscal year;
all in reasonable detail, including all supporting schedules and comments, audited by an independent public accountant selected by Borrower and reasonably acceptable to Lender, and certified by such accountant to have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, except for any inconsistencies explained in such certificate. In addition, if requested by Lender, Borrower will obtain from such independent certified public accountants and deliver to Lender, within one hundred twenty (120) days after the close of each fiscal year, the independent certified public accountants’ written statement that in making the examination necessary to their certification they have obtained no knowledge of any Default or Potential Default by Borrower or the Subsidiary Bank, or disclosed all Defaults or Potential Defaults of which they have obtained knowledge; provided, however, that in making their examination such accountants shall not be required to go beyond the bounds of generally accepted auditing procedures for the purpose of certifying financial statements. Lender shall have the right, from time to time, to discuss Borrower’s and the Subsidiary Bank’s affairs directly with Borrower’s and the Subsidiary Bank’s independent public accountants after notice to Borrower and the Subsidiary Bank and upon opportunity for Borrower and the Subsidiary Bank to be present at any such discussions.
(3) Contemporaneously with each quarterly and year-end financial report required by the foregoing paragraphs (1) and (2), a certificate of the president or principal financial officer of Borrower and the Subsidiary Bank, in the form of Exhibit A, stating that he or she has individually reviewed the provisions of this Agreement and that a review of the activities of Borrower and the Subsidiary Bank during such year or quarterly period, as the case may be, has been made by or under the supervision of the signer of such certificate with a view to determining whether Borrower and the Subsidiary Bank have kept, observed, performed and fulfilled all their obligations under this Agreement, and that, to the best of his or her knowledge, Borrower and the Subsidiary Bank have observed and performed each and every undertaking contained in this Agreement and are not at the time in default in the observance or performance of any of the terms and conditions hereof or, if Borrower or the Subsidiary Bank shall be so in default, specifying all such defaults and events of which he or she may have knowledge.
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(4) Promptly after receipt thereof, copies of all material reports and documents submitted to Borrower or the Subsidiary Bank by any applicable regulatory authority (other than those which Borrower and the Subsidiary Bank are prohibited from disclosing under applicable Laws), and, simultaneously with the filing thereof, but in any event within forty-five (45) days of the end of each calendar quarter, copies of all financial reports, including but not limited to quarterly call reports, filed by the Borrower and/or the Subsidiary Bank with any applicable regulatory authority.
(5) Promptly after sending or making available or filing of the same, but in any event within fifteen (15) days after issuance, copies of all reports, proxy statements and financial statements that Borrower or the Subsidiary Bank sends or makes available to the stockholders and all registration statements and reports, including, if applicable, but not limited to 8-Ks and 10-Qs that Borrower or the Subsidiary Bank files with the Securities and Exchange Commission or any successor Person.
(6) Immediately upon the occurrence thereof, notice of (i) any material change in Borrower’s or the Subsidiary Bank’s financial condition or executive management, or (ii) any other change internally or externally that could materially affect the capital, earnings or financial condition of Borrower or the Subsidiary Bank.
(7) Such other reports, financial information, projections, budgets, capital plans and other information as Lender may reasonably require.
Documents required to be delivered pursuant to Section 6.01(A), (B), (C)(1), (C)(2), (C)(4), and (C)(5) (to the extent any such documents are included in materials otherwise filed with the Securities and Exchange Commission, Federal Reserve, or Federal Deposit Insurance Corporation) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are posted on the website of the Securities and Exchange Commission at http://www.sec.gov or otherwise on Borrower’s behalf on an internet or intranet website, if any, to which Lender has access.
(D) Borrower will pay or cause to be paid when due all taxes, assessments and charges or levies imposed upon it or the Subsidiary Bank or on any of its property or the Subsidiary Bank’s property or which it or the Subsidiary Bank is required to withhold and pay over, except where contested in good faith by appropriate proceedings with adequate reserve therefor having been set aside on Borrower’s or the Subsidiary Bank’s books, but Borrower shall pay or cause to be paid all such taxes, assessments, charges or levies forthwith whenever foreclosure on any lien that has attached (or any security therefor) appears imminent.
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(E) Borrower will, when requested so to do and unless prohibited by any federal, state and/or local Laws, make available for inspection by duly authorized representatives of Lender any of its or the Subsidiary Bank’s Records, and will furnish Lender any information regarding its or the Subsidiary Bank’s business affairs and financial condition within a reasonable time after written request therefor.
(F) Borrower will maintain, and will cause the Subsidiary Bank to maintain, liability insurance, property insurance (including, without limitation, fire and extended coverage insurance on all assets owned by Borrower or the Subsidiary Bank, as applicable), and other types of insurance (including, without limitation, insurance coverage on the directors and officers of Borrower and the Subsidiary Bank), all in such form and amounts as are consistent with industry practices and with such insurers as may be satisfactory to Lender. Borrower will furnish to Lender such evidence of insurance as Lender may require. Borrower hereby agrees that, in the event it fails to pay or cause to be paid the premium on any such insurance, Lender may do so and shall be reimbursed by Borrower therefor, along with interest on the amount so paid at the Interest Rate (or default rate, if applicable).
(G) Borrower will take all necessary steps to preserve its and the Subsidiary Bank’s corporate existence and comply with all present and future Laws applicable to it or the Subsidiary Bank in the operation of its or the Subsidiary Bank’s business, and all material leases, contracts and commitments of any kind to which it or the Subsidiary Bank is subject. Borrower will cause the Subsidiary Bank to comply in all material respects with their respective obligations.
(H) Borrower will give immediate notice to Lender of:
(1) any litigation or proceeding in which it or the Subsidiary Bank is a party if it would reasonably be expected to require it or the Subsidiary Bank to pay more than $500,000.00 or deliver assets the value of which exceeds such sum (whether or not the claim is considered to be covered by insurance); and
(2) the institution of any other suit or proceeding involving Borrower or the Subsidiary Bank that might materially and adversely affect Borrower’s or the Subsidiary Bank’s operations, financial condition, property or business.
(I) Within ten (10) days of Lender’s request therefor, Borrower will furnish Lender with copies of federal income tax returns filed by Borrower or the Subsidiary Bank.
Borrower will cause the Subsidiary Bank at all times to maintain (in accordance with Generally Accepted Accounting Principles):
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(1) a “well-capitalized” status in accordance with the regulations of the primary federal bank regulatory agency of the Subsidiary Bank;
(2) a Tier 1 Leverage Ratio greater than seven percent (7.0%);
(3) a Non-Performing Assets Ratio less than twenty-five percent (25%); and
(4) a Return on Assets Ratio greater than six tenths of one percent (0.60%).
(K) Borrower will notify Lender immediately if it becomes aware of the occurrence of any Default or Potential Default, or the failure of Borrower to observe any of its undertakings hereunder.
(L) Borrower shall (a) ensure that no Person which owns a controlling interest in or controls Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (b) not use or permit the use of any proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, (c) comply with all applicable Bank Secrecy Act laws and regulations, as amended, and (d) provide all information necessary for Lender to comply with the USA Patriot Act, as amended from time to time.
(M) Borrower will maintain direct ownership of one hundred percent (100%) of the issued and outstanding capital stock of the Subsidiary Bank.
(N) Borrower will pay, or cause the Subsidiary Bank to pay, when due (or within applicable grace periods) all Indebtedness due third Persons, except when the amount therefor is being contested in good faith by appropriate proceedings and with adequate reserves therefor being set aside on the books of Borrower or the Subsidiary Bank. If default be made by Borrower or the Subsidiary Bank in the payment of any principal (or installment thereof) of, or interest on, any such Indebtedness, Lender shall have the right, in its discretion, to pay such interest or principal for the account of Borrower or the Subsidiary Bank and be reimbursed by Borrower therefor, along with interest on the amount so paid at the Interest Rate (or default rate, if applicable).
(O) Borrower shall cause the Subsidiary Bank to pay dividends to Borrower in an amount sufficient to fulfill its Obligations to repay the Loan. Borrower shall immediately notify Lender within two (2) business days of any regulatory prohibition relative to the payment of dividends to Borrower.
(P) Borrower shall promptly notify Lender in the event of the departure or removal of the current Chief Executive Officer of either Borrower or the Subsidiary Bank, and Lender may accelerate the Loan in accordance with Section 7.02 at any time after 90 days but no longer than 120 days following any such departure or removal.
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(Q) In the event Borrower fails to maintain a Tier 1 Leverage Ratio greater than seven percent (7.0%) in accordance with Section 6.01(J)(2), Borrower shall have a period to cure the failure for thirty (30) days. In the event Borrower fails to maintain a Non-Performing Assets Ratio of less than twenty-five percent (25%) in accordance with Section 6.01(.1)(3) or a Return on Assets Ratio greater than six tenths of one percent (0.60%) in accordance with Section 6.01(J)(4), Borrower shall have a period to cure the failure for three (3) months. The Tier 1 Leverage Ratio and the Non-Performing Assets Ratio shall first be tested at the end of the third quarter of 2025 and each quarter thereafter for the life of the Loan. The Return on Assets Ratio shall be tested beginning at the end of the fourth quarter of 2025 based on the trailing six-month financial statements. Thereafter, the Return on Assets Ratio shall be tested quarterly based on the year-to-date financial statements.
(R) Borrower shall place with Lender an interest reserve of at least $1,400,000 at all times during the term of the Loan, it being understood that such funds may be commingled with other funds of Borrower.
(S) Borrower will notify Lender immediately in the event either Borrower or Subsidiary Bank is changing its name.
Section 6.02 Negative Covenants.
Unless Lender shall otherwise consent in writing, which consent shall not unreasonably be withheld, Borrower shall abide by the following covenants:
(A) Neither Borrower nor the Subsidiary Bank will enter into any merger, consolidation, or reorganization, reclassify its capital stock, or liquidate or dissolve, except pursuant to a transaction in which Borrower or the Subsidiary Bank, as appropriate, is the acquirer and no Change in Control has occurred.
(B) Neither Borrower nor the Subsidiary Bank will (1) sell, transfer, lease or otherwise dispose of all or any material part of its assets, nor sell any item of Collateral, including but without limitation with respect to Borrower, any of the capital stock of the Subsidiary Bank, or (2) purchase any material part of the assets of another Person; in each case, except pursuant to a transaction by the Subsidiary Bank in the ordinary course of business or a transaction in which Borrower or the Subsidiary Bank, as appropriate, is the acquiror and no Change in Control has occurred.
(C) Borrower will not mortgage, pledge, grant or permit to exist a security interest in or lien upon any item of Collateral, including, but without limitation any of the capital stock of the Subsidiary Bank, now owned or hereafter acquired.
(D) Neither Borrower nor the Subsidiary Bank will become liable, directly or indirectly, as guarantor or otherwise for any obligation of any Person, except for the Subsidiary Bank’s endorsement of commercial paper for deposit or collection in the ordinary course of business, and the Subsidiary Bank’s issuance of letters of credit in the ordinary course of business.
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(E) Neither Borrower nor the Subsidiary Bank (whether acting in its individual capacity or as a joint venture partner) will incur, create, assume, or permit to exist any Indebtedness except:
(1) the Loan;
(2) Indebtedness described in the financial statements of Borrower most recently delivered to Lender, or the most recent call reports of the Subsidiary Bank, as applicable;
(3) trade indebtedness incurred in the ordinary course of business;
(4) Indebtedness less than or equal to $5,000,000 in the aggregate;
(5) Indebtedness greater than $5,000,000 and approved in writing by Lender; and
(6) contingent Indebtedness permitted by Section 6.02(D).
Without limiting the foregoing, the Subsidiary Bank shall not issue commercial paper, subordinated debt or any similar debt instrument, and the Subsidiary Bank shall not obtain any non-traditional funding, without Lender’s prior written consent.
(F) [Reserved].
(G) Borrower will not declare or pay any dividends, or make any other payment or distribution on account of its capital stock, if a Default or Potential Default shall have occurred and be continuing. Borrower will not furnish Lender any certificate or other document that will knowingly contain any untrue statement of material fact or that will knowingly omit to state a material fact necessary to make it not materially misleading in light of the circumstances under which it was furnished.
(H) Borrower will not directly or indirectly apply any part of the proceeds of the Loan to the purchasing or carrying of any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or any regulations, interpretations or rulings thereunder.
(I) Borrower will not enter into any transaction with any Affiliate including, without limitation, the purchase, sale or exchange of property or the rendering of any service, except in the ordinary course of business and pursuant to the reasonable requirements of Borrower’s business and upon terms found by its board of directors to be fair and reasonable and no less favorable to Borrower than would obtain in a comparable arm’s-length transaction with a Person not an Affiliate.
ARTICLE 7. DEFAULT
Section 7.01 Events of Default. The occurrence of any one or more of the following events shall constitute a Default hereunder:
(A) Borrower shall fail to pay when due any installment of principal or interest or fee payable hereunder or under the Note, or any of Borrower’s other Obligations to Lender. For the purposes of this paragraph, there shall be a ten (10) day grace period in the event of a late payment.
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(B) Borrower shall fail to observe or perform any other obligation to be observed or performed by it hereunder or under the Note or any of the Collateral Documents. In the event of a failure to meet an obligation under this paragraph, Lender shall give Borrower notice of the failure. From the date notice is received, Borrower shall have a thirty (30) day period in which to cure such failure unless otherwise provided in this Agreement.
(C) Borrower or the Subsidiary Bank shall fail to pay any Indebtedness in excess of $1,000,000.00 due any third Persons after demand therefor and such failure shall continue beyond any applicable grace period, unless any such failure is being contested in good faith by appropriate proceedings with adequate reserve therefor being set aside on Borrower’s or the Subsidiary Bank’s books. For the purposes of this paragraph, there shall be a ten (10) day grace period to cure such failure.
(D) Any financial statement, call report, representation, warranty or certificate made or furnished by Borrower or the Subsidiary Bank to Lender under or in connection with this Agreement, or as an inducement to Lender to enter into this Agreement, or in any separate statement or document to be delivered hereunder to Lender, shall be materially false, incorrect, or incomplete when made.
(E) Borrower shall admit its inability to pay its debts as they mature, or shall make an assignment for the benefit of its or any of its creditors.
(F) Proceedings in bankruptcy, or for reorganization of Borrower or the Subsidiary Bank or for the readjustment of any of its debts, under the Bankruptcy Code, as amended, or any part thereof, or under any other Laws, whether state or federal, for the relief of debtors, now or hereafter existing, (i) shall be commenced against Borrower or the Subsidiary Bank and shall not be discharged within sixty (60) days after their commencement, or (ii) shall be commenced by Borrower or the Subsidiary Bank.
(G) Any proceedings shall be instituted for the appointment of a receiver or trustee for Borrower or the Subsidiary Bank or for any substantial part of their respective assets, or any proceedings shall be instituted for the dissolution of or the full or partial liquidation of Borrower or the Subsidiary Bank, or Borrower or the Subsidiary Bank shall discontinue its business or materially change the nature of its business.
(H) Borrower or the Subsidiary Bank shall suffer final judgments for payment of money aggregating in excess of $1,000,000.00 and shall not discharge the same within a period of thirty (30) days unless, pending further proceedings, execution has been effectively stayed.
(I) A judgment creditor of Borrower shall obtain possession of any of the Collateral by any means, including, but without limitation, levy, distraint, replevin or self-help.
(J) The validity or enforceability of this Agreement, the Note or the Collateral Documents shall be contested by Borrower, the Subsidiary Bank, or any shareholder of Borrower, or the Borrower shall deny that it has any or further liability or Obligation hereunder or thereunder.
(K) Borrower or the Subsidiary Bank shall fail to maintain all material regulatory licenses and permits necessary to the conduct of their respective business.
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(L) If any of Borrower’s or the Subsidiary Bank’s banking regulators (i) enter into or issue a cease and desist order, consent order, written agreement or similar agreement with or against Borrower or the Subsidiary Bank, (ii) require Borrower or the Subsidiary Bank to enter into a memorandum of understanding, letter agreement or other similar written undertaking, or (iii) take such other action that explicitly states that Borrower or the Subsidiary Bank has acted in an unsafe or unsound manner.
(M) Borrower ceases to own one hundred percent (100%) of the issued and outstanding capital stock of the Subsidiary Bank.
(N) There is a Change in Control with respect to Borrower or the Subsidiary Bank.
(O) The occurrence of any regulatory action that would prevent the payment of dividends from Subsidiary Bank to Borrower.
Section 7.02 Acceleration. If a Default shall have occurred and be continuing beyond any applicable grace or cure periods, or if a departure of executive management occurs under Section 6.01(P) and Lender elects to accelerate the Loan during the period set forth in such Section 6.01(P), then, at the option of Lender (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of a Default specified in Sections 7,01(E), (F) or (G)), Lender may terminate all commitments to lend hereunder and may declare, by written notice to Borrower, that all Obligations, whether hereunder or otherwise, are immediately due and payable.
Section 7.03 Remedies. If a Default shall have occurred and be continuing beyond any applicable notice and grace periods, then whether or not acceleration occurs under Section 7.02, Lender shall have, in addition to the rights and remedies given it by this Agreement and the Collateral Documents, all those allowed by all applicable Laws, including, but without limitation, the Uniform Commercial Code as enacted in any jurisdiction in which any Collateral may be located. After deducting from the proceeds of sale or other disposition of the Collateral all expenses (including all reasonable expenses for legal services), Lender shall apply such proceeds toward the satisfaction of the Obligations. Borrower shall be liable for any deficiency, and any remainder of the proceeds after satisfaction in full of the Obligations shall be distributed as required by applicable Laws. Notice of any sale or other disposition shall be given to Borrower (and/or to the Subsidiary Bank, if required under applicable Laws) at least five (5) days before the time of any intended public sale or of the time after which any intended private sale or other disposition of the Collateral is to be made, which Borrower hereby agrees shall be reasonable notice of such sale or other disposition. Borrower agrees to assemble, or to cause to be assembled, at its own expense, the Collateral at such place or places as Lender shall designate. At any such sale or other disposition, Lender may, to the extent permissible under applicable Laws, purchase the whole or any part of the Collateral, free from any right of redemption on the part of Borrower or the Subsidiary Bank, which right is hereby waived and released. Without limiting the generality of any of the rights and remedies conferred upon Lender under this section, Lender may, to the full extent permitted by applicable Laws, at Lender’s option, use, operate, manage and control the Collateral in any lawful manner.
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ARTICLE 8. MISCELLANEOUS
Section 8.01 Construction. The provisions of this Agreement shall be in addition to those of any guaranty, pledge or security agreement, note or other evidence of liability held by Lender, all of which shall be construed as complementary to each other. Nothing herein contained shall prevent Lender from enforcing any or all other notes, guaranty agreements, pledge agreements, or security agreements in accordance with their respective terms.
Section 8.02 Further Assurance. From time to time, Borrower will, or will cause the Subsidiary Bank to, execute and deliver to Lender such additional documents and will provide such additional information as Lender may reasonably require to carry out the terms of this Agreement and be informed of Borrower’s and/or the Subsidiary Bank’s status and affairs.
Section 8.03 Enforcement and Waiver by Lender. Lender shall have the right at all times to enforce the provisions of this Agreement and the Collateral Documents in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of Lender in refraining from so doing at any time or times. The failure of Lender at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. All rights and remedies of Lender are cumulative and concurrent and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy.
Section 8.04 Expenses of Lender. Borrower will, on demand, reimburse Lender for any and all expenses, fees, taxes, or other costs (including, without limitation, (a) expenses for lien searches and other due diligence searches, (b) any recordation tax, indebtedness tax, documentary stamp tax, intangible tax, or similar tax due in connection with the Loan or any security instrument related to the Loan, (c) any recording fees or other costs due in connection with any security instrument related to the Loan, and (d) the reasonable and documented out-of-pocket fees and expenses of legal counsel for Lender) incurred in connection with the enforcement of this Agreement and the Collateral Documents and the collection or attempted collection of the Note and the other Obligations.
Section 8.05 Notices. Any notice or other communication required or permitted to be given by this Agreement, the Note, the Collateral Documents or any related document, or by applicable Laws, shall be in writing and shall be deemed received (a) on the date delivered, if sent by hand delivery (to the person or department if one is specified below) with receipt acknowledged by the recipient thereof, (b) three (3) business days following the date deposited in U.S. mail, certified or registered, with return receipt requested, or (c) one (1) business day following the date deposited with Federal Express or other national overnight carrier, and in each case addressed as follows:
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(A) If to Borrower:
Georgia Banking Company, Inc. c/o Georgia Banking Company
1776 Peachtree St NW, Suite 300
Atlanta, GA 30309
Attention: Mr. Bartow Morgan, Jr., CEO
Mr. Jeffrey A. Kraus, CFO
(B) If to Lender:
ServisFirst Bank
2500 Woodcrest Place
Birmingham, Alabama 35209
Attention: Murray Bibb
Senior Vice President, Correspondent
Banking
Section 8.06 Waiver; Release and Indemnity by Borrower. To the maximum extent permitted by applicable Laws, Borrower:
(A) Waives
(1) protest with respect to all Indebtedness at any time held by Lender on which Borrower is in any way liable; and (2) notice
and opportunity to be heard before exercise by Lender of the remedies of set-off or other summary procedures permitted by any applicable
Laws or by any agreement with Borrower, and except where required hereby or by any applicable Laws, notice of any other action taken by
Lender; and
Releases Lender and its officers, directors, agents, attorneys and employees from all claims for loss or damage caused by any act or omission
on the part of any of them except gross negligence or willful misconduct; and
(B) Indemnifies Lender and its officers, directors, agents, attorneys and employees against, and agrees to hold Lender and all of such other persons harmless from, any claims, demands, liabilities, costs, damages, and judgments (including, without limitation, costs of defense and attorneys’ fees) arising directly or indirectly out of or in connection with any matter involving the Loan, this Agreement, the Note, the Collateral Documents, any related documents, or any of the other matters and transactions contemplated herein or therein, except where such claims, demands, liabilities, costs, damages and judgments arise out of the gross negligence or willful misconduct of Lender. This agreement of indemnity shall be a continuing agreement and shall survive payment of the Loan, the Note and termination of this Agreement.
Section 8.07 Participation. Notwithstanding any other provision in this Agreement, Borrower understands and agrees that Lender may enter into participation agreements with participating banks whereby Lender will allocate to them certain percentages of Lender’s interest in the Loan. Borrower acknowledges that, for the convenience of all parties, this Agreement is being entered into with Lender only and that its obligations under this Agreement are undertaken for the benefit of, and as an inducement to each of any such participating banks as well as Lender, and Borrower hereby grants to each such participating bank, to the extent of its participation in the Loan, the right to set off deposit accounts maintained by Borrower with such bank.
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Section 8.08 Applicable Law: Jurisdiction and Venue. The substantive Laws of the United States and the State of Alabama shall govern the construction of this Agreement and the documents executed and delivered pursuant hereto, and the rights and remedies of the parties hereto and thereto. Borrower hereby consents to the jurisdiction of the State of Alabama; and agrees that venue for any dispute relating to or arising out of the transaction contemplated by this Agreement shall lie exclusively in an appropriate state or federal court located in Jefferson County, Alabama.
Section 8.09 Binding Effect, Assignment and Entire Agreement. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and permitted assigns of the parties hereto. Borrower has no right to assign any of its rights or obligations hereunder without the prior written consent of Lender. Lender may freely assign the Loan, in whole or in part. This Agreement and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties, and may be amended only by a writing signed on behalf of each party.
Section 8.10 Severability. If any provision of this Agreement shall be held invalid under any applicable Laws, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provision, and, to this end, the provisions hereof are severable.
Section 8.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.
Section 8.12 Extension and Renewal. The Loan may, in the sole and absolute discretion of Lender, be renewed or extended beyond the Maturity Date only upon the express written agreement of Borrower and Lender. Any renewal or extension shall be upon the terms and subject to the conditions stated in such written agreement. In the absence of such extension or renewal, the obligations of Lender hereunder with respect to the Loan shall terminate on the Maturity Date.
Section 8.13 Seal. This Agreement is intended to take effect as an instrument under seal.
Section 8.14 No Third Party Beneficiaries, Etc. Monitoring, inspections and review of financial information by Lender may not be relied upon by Borrower or any other Person and shall be for the sole benefit of Lender. Further, there are no third party beneficiaries of this Agreement or any documents related hereto, and no person or entity other than Lender and Borrower shall be entitled to rely hereon or thereon or benefit herefrom or therefrom.
Section 8.15 Waiver of Trial by Jury. EACH OF THE BORROWER AND THE LENDER HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATING TO THIS AGREEMENT, THE NOTE, THE COLLATERAL DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR (b) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE, THE COLLATERAL DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR IN CONNECTION WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED THEREUNDER, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE BORROWER AND THE LENDER AGREE THAT EITHER OR BOTH OF THEM MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
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Section 8.16 Confidential Supervisory Information. Notwithstanding any other provision of this Agreement, no disclosure, representation or warranty shall be made (or other action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information (including confidential supervisory information as defined in 12 C.F.R. § 261.2(c) and as identified in 12 C.F.R. § 309.5(g)(8)) of a Governmental Authority by any party to this Agreement to the extent prohibited by applicable law. To the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of the preceding sentence apply.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
| BORROWER: | ||
| GEORGIA BANKING COMPANY, INC. | ||
| By | /s/ Bartow Morgan, Jr. | |
| Name | Bartow Morgan, Jr. | |
| Its | Chief Executive Officer | |
| LENDER: | ||
| SERVISFIRST BANK | ||
| By | /s/ Murray Bibb | |
| Name | Murray Bibb | |
| Its | Senior Vice President | |
Signature Page for Loan and Security Agreement
EXHIBIT A TO
LOAN AND SECURITY AGREEMENT
BORROWER’S COMPLIANCE CERTIFICATE
ServisFirst Bank
2500 Woodcrest Place
Birmingham, Alabama 35209
Attention: Murray Bibb, Senior Vice President, Correspondent Banking
Re: Loan and Security Agreement dated June 10, 2025
Gentlemen:
In connection with the foregoing, the officer executing this certificate on behalf of Borrower and the Subsidiary Bank certifies as follows:
a) I am familiar with the terms and conditions of the Loan and Security Agreement (the “Loan Agreement”) dated , 20 , between Borrower and Lender. I have individually reviewed the provisions of the Loan Agreement, and a review of the activities of Borrower and the Subsidiary Bank from , 20 , until , 20 , has been made under my supervision with the view of determining whether Borrower and the Subsidiary Bank have kept, observed, performed and fulfilled all their obligations under the Loan Agreement.
b) The financial covenants for the Subsidiary Bank set forth in Section 6.01(J) of the Agreement are set forth below, together with the status or calculation thereof for the above-referenced period:
| Required | As of Reporting Date | |||||
| (1) | Status | “well capitalized | ||||
| (2) | Tier 1 Leverage Ratio greater than | 7.0% | ||||
| (3) | Non-Performing Assets Ratio less than | 25% | ||||
| (4) | Return on Assets Ratio greater than | 0.60% |
c) Borrower and the Subsidiary Bank have observed and performed each and every undertaking contained in the Loan Agreement and are not at this time in default in the observance or performance of any of the terms and conditions thereof except as provided for on the attached schedule. I hereby certify that no Default or Potential Default exists as of the date hereof.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have caused this certificate to be executed by their duly authorized representatives on the dates set forth below.
| GEORGIA BANKING COMPANY, INC. | ||
| By | ||
| Name | ||
| Its | ||
| Date: | ||
| GEORGIA BANKING COMPANY | ||
| By | ||
| Name | ||
| Its | ||
| Date: | ||
COMPLIANCE CERTIFICATE SCHEDULE OF DEFAULTS
A. Nature of Default(s) or Potential Default(s):
B. Steps Borrower proposes to cure Default(s) or Potential Default(s):
EXHIBIT B TO
LOAN AND SECURITY AGREEMENT
STATES QUALIFIED, PRINCIPAL PLACES OF BUSINESS
| Entity | State(s) Qualified | Principal Place of Business | ||
| Georgia Banking Company, Inc. | Georgia | 1776 Peachtree St NW, Suite 300 Atlanta, GA 30309 | ||
| Georgia Banking Company | Georgia | 1776 Peachtree St NW, Suite 300 Atlanta, GA 30309 |
Exhibit 10.10
CERTAIN CONFIDENTIAL INFORMATION (MARKED BY BRACKETS AS “[***]”) HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is effective as of the 30th day of September, 2026 (the “Effective Date”), by and among Georgia Banking Company, Inc. (the “Company”), a bank holding company organized and existing under the laws of the State of Georgia, Georgia Banking Company (the “Bank”), a bank organized under the laws of the State of Georgia and a wholly-owned subsidiary of the Company (collectively, with the Company, the “Employer”), and Bartow Morgan, Jr., a resident of the State of Georgia (the “Executive”).
WHEREAS, the Company, the Bank and the Executive entered into that certain Employment Agreement, dated as of April 27, 2021 (the “Original Agreement”);
WHEREAS, the Executive is currently engaged as the Chief Executive Officer of the Company and the Bank; and
WHEREAS, the Company, the Bank and the Executive desire to amend and restate the Original Agreement with this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth and intending to be legally bound, the Company, the Bank and the Executive agree as follows:
1. Duties.
1.1 Positions. The Executive shall be employed as the Chief Executive Officer of the Company and of the Bank and, subject to the direction of the respective Board of Directors, shall perform and discharge faithfully the duties and responsibilities of the Chief Executive Officer as provided in the bylaws of the Company and the Bank and, to the extent customarily associated with the Executive’s position, which may be assigned to the Executive from time to time in connection with the conduct of the businesses. The duties and responsibilities of the Executive shall be commensurate with the position of chief executive officer of a community bank and the position of chief executive officer of a bank holding company. The Executive shall report to the Boards of Directors of the Company and the Bank. During the Term, at appropriate intervals, the Company through its Board of Directors shall nominate the Executive as a candidate for election or re-election to its Board of Directors and vote, and recommend others vote, for the Executive for election to the Company’s Board of Directors.
1.2 Full-Time Status. In addition to the duties and responsibilities specifically assigned to the Executive pursuant to Section 1.1 hereof, the Executive shall:
(a) subject to Section 1.3, devote substantially all of the Executive’s professional time, energy and skill during regular business hours to the performance of the duties of the Executive’s employment (reasonable vacations and reasonable absences due to illness excepted) and faithfully and industriously perform such duties;
(b) diligently follow and assist in the implementation of all reasonable and lawful management policies and decisions communicated to the Executive by the Board of Directors; and
(c) timely prepare (or supervise the preparation of) and forward to the Board of Directors all reports and accountings as may be reasonably requested of the Executive.
1.3 Permitted Activities. The Executive shall not during the Term be engaged professionally (whether or not during normal business hours) in any other significant business or professional activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage, but as long as the following activities do not interfere in any material respect with the Executive’s obligations to the Employer, nothing in this Agreement shall be construed as preventing the Executive from:
(a) investing the Executive’s personal assets in any manner which will not require any material services on the part of the Executive in the operation or affairs of the entity and in which the Executive’s participation is primarily that of an investor; provided that such investment activity following the Effective Date shall not result in his owning beneficially at any time five percent (5%) or more of the equity securities of any Competing Business; or
(b) participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books, teaching or serving on the board of directors of an entity, so long as any such participation does not interfere in any material respect with the ability of the Executive to effectively discharge his duties hereunder or result, or be likely to result, in any material breach by the Executive of the restrictive covenants set forth in Sections 5, 6, 7 or 8 of this Agreement.
1.4 No Other Agreement. The Executive shall have no employment contract or other written or oral agreement concerning employment with any Person other than the Employer during the Term.
2. Term. This Agreement shall remain in effect for the Term, subject to earlier termination in connection with the termination of the Executive’s employment pursuant to Section 4 hereof. If the Agreement is in effect at the end of the Initial Term, the Term shall be renewed automatically for successive twelve-month periods unless and until one party gives written notice to the other of its or his intent not to extend this Agreement with such written notice to be given not less than ninety (90) days prior to the end of the Initial Term or any such twelve (12)-month renewal period. In the event such notice of non-extension is properly given, this Agreement shall terminate at the end of the remaining Term then in effect, subject to earlier termination in connection with the termination of the Executive’s employment pursuant to Section 4 hereof. In the event that either party provides timely notice of non-renewal of this Agreement, but the Executive continues to provide services to the Employer as an employee, such post-expiration employment shall be deemed to be performed on an “at-will” basis and either party may thereafter terminate such employment with or without notice and for any or no reason and without any obligations determined by reference to this Agreement.
3. Compensation. The Employer shall pay the Executive the following during the Term, except as otherwise provided below:
3.1 Annual Base Salary. The Employer shall pay the Executive an annual base salary of $500,000 (as in effect as of the Effective Date or as subsequently increased thereafter, the “Annual Base Salary”). The Executive’s Annual Base Salary shall be reviewed by the Board of Directors no less frequently than annually based on its evaluation of the Executive’s performance and may be increased (but not decreased) at the discretion of the Board of Directors. The Executive’s Annual Base Salary shall be payable in accordance with the Employer’s normal payroll practices (no less frequently than monthly).
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3.2 Annual Incentive Compensation. The Executive shall be eligible to receive annual bonus compensation, if any, as may be determined by, and based on performance measures established by, the Board of Directors of the Company upon the recommendation of the Compensation Committee of the Board of Directors of the Company (the “Committee”) consistent with the Employer’s strategic planning process, pursuant to any incentive compensation program as may be adopted from time to time by the Board of Directors of the Company, based on recommendations by the Committee (an “Annual Bonus”). The Executive’s minimum target Annual Bonus opportunity for any annual period shall be no less than fifty percent (50%) of the Executive’s Annual Base Salary. The performance measures for any given year shall be set by the Company Board of Directors, after consultation with the Executive, within the first ninety (90) days of the year to which the Annual Bonus opportunity relates. Any Annual Bonus earned shall be payable in cash or pursuant to a deferred compensation plan contribution no later than March 15th of the year following the year to which the Annual Bonus relates in accordance with the Employer’s normal practices for the payment of short-term incentives. To be entitled to any payment of incentive compensation from the Employer, except as provided otherwise herein, the Executive must be employed by the Employer on the last day of the applicable year to which the Annual Bonus relates. The Company shall afford the Executive the opportunity to elect to receive payment of the Annual Bonus or any incentive compensation or any portion thereof that otherwise becomes payable in cash, in shares of Company common stock or any combination of cash and shares of Company common stock. In the event that the Executive elects to receive any incentive compensation in the form of Company common stock, the number of shares of Company common stock to be delivered to the Executive in lieu of such cash payment shall be the number of shares of the Company’s common stock having an aggregate fair market value equal to the cash that otherwise would be paid, as determined using the Market Value per Share as most recently determined by the Board of Directors in accordance with the Company’s stock incentive plan then in effect. The payment of any Annual Bonus shall be subject to any approvals or non-objections required by any regulator of the Employer.
3.3 Equity Compensation. The Executive will be eligible to participate in any stock option plan, restricted stock and long-term equity incentive plans offered by the Company to senior executives on the same basis as such other similarly situated senior executives of the Employer and terms consistent with the Executive’s position with the Employer.
3.4 Health and Life Insurance Benefits. During the Term, the Executive and the Executive’s dependents shall be eligible for participation in and shall receive all benefits under any health and welfare benefit plans, practices, policies and programs provided by the Employer, to the same extent applicable to similarly situated executives of the Employer and their eligible dependents, including treatment provided to the Executive by the “Executive Health” program, and subject to the terms, conditions and eligibility requirements (including any required premium payments or other costs) therefore as may be prescribed by the Employer and set forth in the terms of such plans, practices, policies and programs from time to time. In addition, during the Term, the Executive shall be eligible to maintain life insurance arrangements providing death benefits and/or premium payment assistance benefits to the Executive to the same extent applicable to similarly situated executives of the Employer and their eligible dependents, subject to any changes required to be made under applicable law in effect from time to time.
3.5 Business and Professional Education Expenses; Memberships. The Employer specifically agrees to reimburse the Executive, in accordance with the reimbursement policies from time to time adopted by the Board of Directors of the Employer, for reasonable and necessary business expenses incurred by the Executive in the performance of his duties hereunder; provided, however, that the Executive shall, as a condition of any such reimbursement, submit verification of the nature and amount of such expenses in accordance with such reimbursement policies and in sufficient detail to comply with rules and regulations promulgated by the United States Treasury Department. In addition, the Employer shall reimburse the Executive for educational expenses related to the Executive’s professional development and for membership in professional and civic organizations to the extent such activities are consistent with the Employer’s strategic objectives, subject in each instance to advance approval by the Board of Directors of the Bank for amounts in excess of $1,000. The Executive acknowledges that the Employer makes no representation with respect to the taxability or non-taxability of the benefits provided under this Section 3.5.
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3.6 Paid Leave. The Executive shall be entitled to no less than four (4) weeks of paid leave per calendar year, prorated for partial calendar years. The provisions of this Section 3.6 shall apply notwithstanding any less generous paid leave policy then maintained by the Employer, but the use of the Executive’s paid leave shall otherwise be determined in accordance with the Bank’s paid leave policy as in effect from time to time.
3.7 Benefits. In addition to the benefits specifically described in this Agreement, the Executive shall be entitled to such benefits as may be available from time to time to similarly situated senior executives of the Employer. All such benefits shall be awarded and administered in accordance with the Employer’s standard policies and practices.
3.8 Withholding. The Employer may deduct from each payment of compensation hereunder all amounts required to be deducted and withheld in accordance with applicable federal and state income, FICA and other withholding requirements.
3.9 Apportionment of Obligations. Except as the provisions of this Agreement expressly provide otherwise, the obligations for the payment of the amounts otherwise payable pursuant to this Section 3 and in Section 4 shall be apportioned between the Company and the Bank as they may agree from time to time in their sole discretion and in proportion to services actually rendered by the Executive for such entity; provided, however, that they must satisfy in full all such obligations in a timely manner as set forth in this Agreement regardless of any agreed-upon apportionment. The Executive’s receipt of satisfaction in full of any such obligation from the Company or the Bank shall extinguish the obligations of the other with respect to such obligation. In addition, the satisfaction of the obligations in this Section 3 and Section 4 shall be subject to any approvals or non-objections from, and any conditions or restrictions imposed by, any regulator of the Employer.
3.10 Reimbursement of Expenses; In-Kind Benefits. All expenses eligible for reimbursements described in this Agreement must be incurred by the Executive during the Term of this Agreement to be eligible for reimbursement. All in-kind benefits described in this Section 3 must be provided by the Employer during the Term of this Agreement. The amount of reimbursable expenses incurred, and the amount of in-kind benefits provided, in one taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits provided, in any other taxable year. Each category of reimbursement shall be paid as soon as administratively practicable, but in no event shall any such reimbursement be paid after the last day of the calendar year following the calendar year in which the expense was incurred. Neither rights to reimbursement nor in-kind benefits are subject to liquidation or exchanges for other benefits.
3.11 Clawback of Incentive Compensation. The Executive agrees to repay the gross amount (before any withholdings) of any payment of compensation previously paid or otherwise made available to the Executive under this Agreement, and rescind any vesting of equity awards awarded in connection with the such compensation or the portion thereof and return the shares or the value thereof resulting from that vesting, that are subject to recovery under any applicable law (including any rule of any exchange or service through which the securities of the Company are then traded), or any compensation recoupment policy the Company or its Affiliates may adopt form time to time, including, but not limited to, the following circumstances:
(a) where such compensation was in excess of what should have been paid or made available because the determination of the amount due was based, in whole or in part, on materially inaccurate financial information of the Employer;
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(b) where such compensation constitutes “excessive compensation” within the meaning of 12 C.F.R. Part 30, Appendix A;
(c) where the Executive has committed, is substantially responsible for, or has violated, the respective acts, omissions, conditions, or offenses outlined under 12 C.F.R. Section 359.4(a)(4); and
(d) if the Bank becomes, and for so long as the Bank remains, subject to the provisions of 12 U.S.C. Section 1831(f), where such compensation exceeds the restrictions imposed on the senior executive officers of such an institution.
The Executive agrees to return within sixty (60) days, or within any earlier timeframe required by applicable law or by any of the Employer’s recoupment policies, any such compensation payments and/or rescind any such vesting of equity awards and return the shares or the value thereof resulting from that vesting, that the Employer identifies by written notice provided pursuant to Section 13. If the Executive fails to return such compensation or shares or value thereof promptly, the Executive agrees that the amount of such compensation and/or the value of such shares may be deducted from any and all other compensation owed to the Executive by the Employer. If the Executive is then employed by the Employer, the Executive acknowledges that the Employer may take appropriate disciplinary action (up to, and including, Termination of Employment) if the Executive fails to return such compensation and/or the value of such shares. The Executive acknowledges the Employer’s rights to engage in any legal or equitable action or proceeding in order to enforce the provisions of this Section 3.11. The provisions of this Section 3.11 shall be modified to the extent, and remain in effect for the period, required by applicable law.
4. Termination; Suspension or Reduction of Benefits.
4.1 Termination of Employment. During the Term, the Executive’s Termination of Employment under this Agreement may only occur as follows:
(a) By the Employer:
(1) for Cause;
(2) without Cause (other than pursuant to Section 4.1(a)(3) below) at any time, provided that the Board of Directors of either the Company or the Bank shall give the Executive thirty (30) days prior written notice of its intent to effect his Termination of Employment; or
(3) in the event that a regulator for the Employer requires the Executive’s removal from service as the Chief Executive Officer of the Bank and/or the Company.
A Termination of Employment of the Executive pursuant to Subsection (a)(1) or (a)(2) above shall require the affirmative vote of not less than a majority of the entire membership of the Board of Directors of the Company at a meeting of the Board of Directors called and held for such purpose (after reasonable prior notice to the Executive and an opportunity of the Executive to be heard by the Board of Directors or its designee(s)), finding, with respect to a Termination of Employment to be effected pursuant to Subsection (a)(1) that, in the good faith opinion of the Board of Directors, the Executive is guilty of conduct constituting Cause and specifying the particulars thereof in detail.
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(b) By the Executive:
(1) for any reason (other than pursuant to Section 4.1(b)(2)), provided that the Executive shall give the Employer thirty (30) days’ prior written notice of the Executive’s intent to effect his Termination of Employment; or
(2) for Good Reason, provided that the Executive shall give the Employer the prior written notice described in Section 25(n).
(c) Upon the Executive becoming subject to a Disability.
(d) At any time upon mutual, written agreement of the parties.
(e) Upon expiration, including non-renewal, of the Term.
(f) Notwithstanding anything in this Agreement to the contrary, the Term shall end automatically upon the Executive’s death.
Upon Termination of Employment for any reason, the Executive shall be entitled to receive (A) the Executive’s annual base salary through Executive’s termination of employment which remains unpaid, (B) the amount, if any, of any incentive or bonus compensation earned for any completed fiscal year of the Company which has vested and not yet been paid (but only in case of (B), so long as the Executive was not terminated by the Employer for Cause), (C) any reimbursements for reasonable expenses incurred but not yet paid, and (D) any benefits or other amounts, including both cash and stock components, which pursuant to the terms of any plans, policies or programs subject to ERISA that have become earned, vested and payable, but which have not yet been paid or delivered to the Executive, including payment for any unused paid time-off (but not including amounts that previously had been deferred at the Executive’s request, which amounts will be paid in accordance with the Executive’s existing deferral directions). These obligations will be paid to the Executive in a lump sum as soon as administratively practicable and within sixty (60) days following the Executive’s termination of employment, except that any incentive or bonus compensation described in (B) above shall be paid at the same time such annual bonus would otherwise have been paid.
4.2 Severance. If, during the Term, the Executive experiences a Termination of Employment, either (a) by the Employer without Cause pursuant to Section 4.1(a)(2); or (b) by the Executive for Good Reason pursuant to Section 4.1(b)(2), then, upon his Termination of Employment, the Employer will pay severance (“Severance”) to the Executive, or in the event of his subsequent death, to his designated beneficiary or beneficiaries, or, in the event the Executive has not designated any beneficiaries, to his estate, as the case may be:
(a) an amount equal to the greater of (x) the amount of the Annual Base Salary to be paid for the remainder of the Term of this Agreement, payable in equal installments for the remainder of the Term (no less frequently than monthly); or (y) the amount of the Annual Base Salary at the highest rate in effect in the twelve-month period immediately preceding the Termination of Employment (at the rate in effect before any election by the Executive to defer the receipt of any such annual base salary), payable in equal installments over 12 months (no less frequently than monthly), in each case commencing immediately after Termination of Employment;
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(b) an amount equal to the average annual bonus paid to the Executive with respect to the three (3) calendar-year period immediately preceding the Termination of Employment (including the amount of any such annual bonus that would have been paid with respect to such period but for Executive’s election to defer the receipt of such bonus), annualized for any partial year, payable in lump sum as soon as administratively practicable and within sixty (60) days after the Executive’s Termination of Employment;
(c) payment of an amount equal to the Executive’s actual earned full-year Annual Bonus for the year in which the termination of Executive’s employment occurs, prorated based on the number of days the Executive was employed for the year, payable at the time the Executive’s Annual Bonus for the year otherwise would be paid had the Executive continued employment; and
(d) vesting of that number of the Executive’s outstanding unvested options, restricted stock and other equity-based awards that would have vested based solely on the continued employment of the Executive through the greater of the remainder of the Term or twelve (12) months immediately following the date of termination of employment (with all performance-based awards converted first to service-based awards at target). Additionally, all of Executive’s outstanding stock options shall remain outstanding until the earlier of (i) one year after the date of termination of the Executive’s employment or (ii) the original expiration date of the options (disregarding any earlier expiration date provided for in any other agreement, including without limitation any related grant agreement, based solely on the termination of the Executive’s employment).
4.3 Change in Control. If during the Term and during the period beginning six (6) months prior to and ending twelve (12) months after the closing of a Change in Control, the Executive (a) experiences an involuntary Termination of Employment without Cause (and other than on account of the Executive’s death or Disability); or (b) voluntarily resigns effecting a Termination of Employment for Good Reason, in either such case, then, in addition to any Severance payable pursuant to Section 4.2, the Employer will pay to the Executive, or in the event of his subsequent death, to his designated beneficiary or beneficiaries, or, in the event the Executive has not designated any beneficiaries, to his estate, as the case may be, in cash in a lump sum, net of applicable tax withholdings, and subject to Section 4.5(b) and Section 22 below, as soon as administratively practicable and no later than sixty (60) days following the later of the date of the Executive’s Termination of Employment or the Change in Control:
(a) an amount equal to the product of (x) three (3) multiplied by (y) one (1) times his Annual Base Salary at the highest rate in effect in the twelve (12)-month period immediately preceding the Termination of Employment, less the amount of severance payable under Section 4.2(a) above; and
(b) an amount equal to the product of (x) three (3) multiplied by (y) one (1) times the average annual bonus paid to the Executive with respect to the three (3) calendar-year period immediately preceding the Termination of Employment, annualized for any partial year, less the amount of severance payable under Section 4.2(b) above.
In addition to the foregoing payments, all of the Executive’s outstanding unvested options, restricted stock and other equity-based awards that would have vested based solely on the continued employment of the Executive shall become vested in full (with all outstanding performance-based awards converted first to service-based awards at target), as of the date of the release described in Section 4.5(b) below becomes effective and non-revocable.
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4.4 Section 280G.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Employer to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code (a “Parachute Payment”), then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net after-tax benefit to Executive of the Payment after payment of the Excise Tax to (ii) the net after-tax benefit to Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). In that event, cash payments shall be modified or reduced first pro rata (first with respect to any cash payments that are not subject to Section 409A of the Code and then with respect to cash payments that are subject to Section 409A of the Code) and then any other benefits (in the same order as with respect to the cash benefits). The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in clauses (i) and (ii) of the foregoing sentence shall be made by an independent accounting firm selected by Employer and reasonably acceptable to the Executive, at the Employer’s expense (the “Accountants”), and the Accountants shall provide detailed supporting calculations. Any determination by the Accountants shall be binding upon the Employer and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that Payments which Executive was entitled to, but did not receive pursuant to this Section 4.4, could have been made without the imposition of the Excise Tax (“Underpayment”) or that Payments which the Executive did receive pursuant to this Section 4.4 should not have been so paid (“Overpayment”). If the Employer determines that an Overpayment has been made, any such Overpayment must be treated for all purposes as a loan, to the extent permitted by applicable law, which the Executive must repay to the Company together with interest at the applicable federal rate under Code Section 7872(f)(2). If the Company determines that an Underpayment has occurred, the Accountants shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Employer to or for the benefit of the Executive no later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the determination is made that the Underpayment has occurred.
(b) Section 6 of this Agreement contains covenants of the Executive regarding him refraining from certain activities deemed harmful to the Company for a set period of time in exchange for the promises contained herein. If the Executive is deemed eligible to receive Covered Payments under this Agreement that could be subject to the Excise Tax, the Employer shall seek a valuation from the Accountants to determine the value of the covenant contained in Section 6 of this Agreement and such amount of the Payments shall be allocated to such arrangement and be excluded from treatment as a Parachute Payment. For the avoidance of doubt, it is the intention of this Agreement that the value assigned to the covenants contained in Section 6 of this Agreement by the Accountants not be considered a Parachute Payment for purposes of this Section 4.4.
(c) In addition, if any portion of the Parachute Payments would be subject to the Excise Tax imposed by Section 4999 of the Code, after allocation of Payments to the Executive’s covenants in Section 6 as described above, then to the extent reasonably practicable and permitted by applicable law, upon the written request of the Executive, the Employer shall: (i) use all commercially reasonable efforts to obtain stockholder approval in accordance with Section 280G of the Code with respect to any Payments or benefits that the Executive elects to waive and subject the Executive’s right to receive to approval by the stockholders of the Company; and (ii) to the extent such approval is not obtained or is not requested, consult with the Executive prior to reducing any particular Parachute Payments in order to afford the Executive the opportunity to waive other Parachute Payments, to the extent permitted by Section 409A of the Code.
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(d) Any determination required under this Section 4.4 shall be made in writing in good faith by the Accountants. The Employer and the Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this Section 4.4. For purposes of making the calculations and determinations required by this Section 4.4, the Accountants may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants’ determinations shall be final and binding on the Employer and the Executive. The Company shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 4.4.
(e) The Executive and the Company shall reasonably cooperate with each other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for the Excise Tax.
4.5 Effect of Termination of Employment.
(a) Upon the Executive’s Termination of Employment hereunder for any reason, the Employer shall have no further obligations to the Executive or the Executive’s estate with respect to this Agreement, except for the payment of any amount earned and owing under this Agreement and any payment set forth in Section 4.2 or 4.3, if applicable.
(b) Notwithstanding any other provision of this Agreement to the contrary, as a condition to receipt of any amount in connection with the Executive’s Termination of Employment, the Executive must execute on or after the Executive’s Termination of Employment (and not timely revoke during any revocation period provided pursuant to such release), prior to the sixtieth (60th) day following the date of the Executive’s Termination of Employment, a release and non-disparagement agreement in the form provided by the Employer. No payments set forth in Section 4.2 or 4.3 shall be made unless and until such release and non-disparagement agreement becomes effective and non-revocable; all such payments scheduled to be made prior to that time shall be held and accumulated and paid as soon as administratively practicable and no later than the first payroll period after such release and non-disparagement agreement becomes effective and non-revocable. Notwithstanding the foregoing, if the period for considering and revoking such release spans more than one calendar year, no payments set forth in Section 4.2 or 4.3 shall be made until the subsequent calendar year to the extent necessary to comply with Section 409A of the Code.
(c) Notwithstanding any provision in the Agreement to the contrary, to the extent necessary to avoid the imposition of tax on the Executive under Code Section 409A, any payments that are otherwise payable to the Executive within the first six (6) months following the effective date of Termination of Employment, shall be suspended and paid as soon as practicable following the end of the six-month period following such effective date or, if earlier, the Executive’s death, if the Executive is determined to be a “specified employee” (within the meaning of Code Section 409A(a)(2)(B)(i)) of the Employer (or any related “service recipient” within the meaning of Code Section 409A and the regulations thereunder). Any payments suspended by operation of the foregoing sentence shall be paid as a lump sum within thirty (30) days following the end of such six-month period or, if earlier, the Executive’s death.
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(d) Any actual or constructive termination of the Executive’s employment which does not rise to the level of a Termination of Employment shall not entitle the Executive to any of the payments or benefits described in Section 4.
(e) If the Executive is a member of the Board of Directors of either the Company or the Bank or holds any other office with the Employer or related entities, and the Executive’s employment terminates for any reason whatsoever, the Executive shall immediately resign from his position(s) on the Board(s) of Directors, effective as of the date his employment is terminated.
(f) Notwithstanding anything contained in this Agreement to the contrary, no payments shall be made pursuant to Section 4 or any other provision herein in contravention of the requirements of Section 18(k) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1828(k)).
4.6 Regulatory Action.
(a) If the Executive is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Employer under this Agreement shall terminate, as of the effective date of such order, except for the payment of Annual Base Salary due and owing under Section 3.1 on the effective date of said order, and reimbursement under Section 3.5 of reasonable expenses incurred prior to the effective date of termination that are reimbursable under the Employer’s applicable expense reimbursement policy.
(b) If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Employer under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer shall reinstate any of its obligations which were suspended to the extent permitted by applicable law.
(c) If the Employer is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but the vested rights of the parties shall not be affected.
(d) If the FDIC is appointed receiver or conservator under Section 11(c) of the FDIA (12 U.S.C. 1821(c)) of the Employer or any depository institution controlled by the Employer, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such receivership or conservatorship, other than any rights of the Executive that vested prior to such appointment. To the extent the Employer is or encompasses a depository institution, any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.
(e) If the FDIC provides open bank assistance under Section 13(c) of the FDIA (12 U.S.C. 1823(c)) to the Employer or any depository institution controlled by the Employer, but excluding any such assistance provided to the industry generally, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such assistance, other than any rights of the Executive that vested prior to the FDIC action. To the extent the Employer is or encompasses a depository institution, any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.
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(f) If the FDIC requires a transaction under Section 13(f) or 13(k) of the FDIA (12 U.S.C. 1823(f) and (k)) by the Employer or any depository institution controlled by the Employer, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such transaction, other than any rights of the Executive that vested prior to the transaction. To the extent the Employer is or encompasses a depository institution, any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.
(g) Notwithstanding the timing for the payment or delivery of any severance amounts described in Sections 4.2 and 4.3, no such payments shall be paid or become effective, as applicable, that require the concurrence or consent of the appropriate federal banking agency of the Employer pursuant to 12 C.F.R. Section 359 prior to the receipt of such concurrence or consent. The Employer shall have the obligation to submit an application to pay or deliver such payment to the appropriate federal banking agency within fifteen (15) business days of the Executive’s right to such payment arising and shall provide a copy of such application to the Executive. Any payments suspended by operation of this Section 4.6(g) shall be paid as a lump sum within thirty (30) days following receipt of the concurrence or consent of the appropriate federal banking agency of the Employer or as otherwise directed by such federal banking agency.
(h) All obligations under this Agreement are further subject to such conditions, restrictions, limitations and forfeiture provisions as may separately apply pursuant to any applicable state banking laws and are intended to be applied in a manner that complies with Section 409A of the Code.
4.7 Additional Benefits Upon a Change in Control. Upon a Change in Control, the Employer will provide additional benefits or additional equity compensation, payable in a lump sum payment, and/or the vesting of equity compensation, in an aggregated amount equal to $2.6 million, subject to such performance or other metrics as may be determined by the Board of Directors of the Company, which shall be payable as soon as administratively practicable and within sixty (60) days following a Change in Control.
5. Employer Information.
5.1 Ownership of Employer Information. All Employer Information received or developed by the Executive or by the Employer while the Executive is employed by the Employer will remain the sole and exclusive property of the Employer.
5.2 Obligations of the Executive. The Executive agrees:
(a) to hold Employer Information in strictest confidence;
(b) not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate Employer Information or any physical embodiments of Employer Information to any unauthorized recipient; and
(c) in any event, not to take any action causing, or fail to take any action necessary in order to prevent, any Employer Information from losing its character or ceasing to qualify as Confidential Information or a Trade Secret;
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notwithstanding anything in this Agreement to the contrary, (A) nothing in this Agreement, including but not limited to the release, or other agreement prohibits the Executive from reporting possible violations of law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceedings that may be conducted by Government Agencies, including providing documents or other information; (B) the Executive does not need the prior authorization of the Employer to take any action described in (A), and the Executive is not required to notify the Employer that he has taken any action described in (A); and (C) neither this Agreement nor the release limits the Executive’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Executive will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (x) is made (i) in confidence to a federal, state or local official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (y) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, if the Executive is suing the Employer for retaliation based on the reporting of a suspected violation of law, he may disclose a trade secret to his attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the Executive does not disclose the trade secret except pursuant to court order. This Section 5 shall survive for a period of two (2) years following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets.
5.3 Delivery upon Request or Termination. Upon request by the Employer, and in any event upon the Executive’s Termination of Employment with the Employer, the Executive will promptly deliver to the Employer all property belonging to the Employer and its Affiliates, including, without limitation, all Employer Information then in the Executive’s possession or control.
6. Non-Competition. The Executive agrees that during the Executive’s employment by the Employer hereunder, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of twenty-four (24) months thereafter, the Executive covenants and agrees that the Executive shall not (except on behalf of or with the prior written consent of the Employer), within the Area, either directly or indirectly, on the Executive’s own behalf or in the service or on behalf of others, perform for any Competing Business any services which are the same as or essentially the same as the services the Executive provided for the Employer. The Executive acknowledges that the Employer conducts its business within the Area, that the Executive will perform services for and on behalf of the Employer within the Area, and that this Section 6 (and the definition of the Area) is a reasonable limitation on the Executive’s ability to compete with the Employer.
7. Non-Solicitation of Customers. The Executive agrees that during the Executive’s employment by the Employer hereunder, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of twenty-four (24) months thereafter, the Executive covenants and agrees that the Executive will not (except on behalf of or with the prior written consent of the Employer) on the Executive’s own behalf or in the service or on behalf of others, solicit, divert or appropriate or attempt to solicit, divert or appropriate, any business from any of the Employer’s customers, correspondents or other sources of or purchasers of loans of the Employer, including prospective customers or prospects actively sought by the Employer, with whom the Executive has or had material contact during the last two (2) years of the Executive’s employment with Employer, for purposes of providing products or services that are competitive with those provided by the Employer.
8. Non-Solicitation of Employees. The Executive agrees that during the Executive’s employment by the Employer hereunder, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of twenty-four (24) months thereafter, the Executive covenants and agrees that the Executive will not (except on behalf of or with the prior written consent of the Employer) on the Executive’s own behalf or in the service or on behalf of others, solicit, recruit or hire away or attempt to solicit, recruit or hire away, any employee of the Employer with whom the Executive had material contact during the last two (2) years of the Executive’s employment, whether or not such employee is a full-time employee or a temporary employee of the Employer, such employment is pursuant to written agreement, for a determined period, or at will.
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9. Mutual Non-Disparagement. The Employer agrees that during the Term and for a period of twenty-four (24) months thereafter, Employer will not issue any statement (written or oral) that could reasonably be perceived as disparaging to the Executive. The Executive agrees that during the Term and for a period of two years thereafter, he will not make any statement (written or oral) that could reasonably be perceived as disparaging to the Employer or any person or entity that he reasonably should know is an affiliate of the Employer.
10. Remedies. The Executive agrees that the covenants contained in Sections 5 through 9 of this Agreement are of the essence of this Agreement; that each of the covenants is reasonable and necessary to protect the business, interests and properties of the Employer, and that irreparable loss and damage will be suffered by the Employer should the Executive breach any of the covenants. Therefore, the Executive agrees and consents that, in addition to all the remedies provided by law or in equity, the Employer shall be entitled to a temporary restraining order and temporary and permanent injunctions to prevent a breach or contemplated breach of any of the covenants. Furthermore, in addition to any other remedies, the Executive agrees that any violation of the covenants in Sections 5 through 9 will result in the immediate forfeiture of any remaining payment that otherwise is or may become due under Section 4.2 or 4.3, if applicable. The Executive further agrees that should he breach any of the covenants contained in Sections 5 through 9 of this Agreement, no further amounts will be paid to the Executive pursuant to Section 4 and the Executive shall repay to the Employer the gross amounts (before withholdings) of any amounts previously received by the Executive pursuant to Section 4 that are attributable to that portion of the payments paid for the period during which the Executive was in breach of any of the covenants contained in Sections 5 through 9 of this Agreement. The Employer and the Executive agree that all remedies available to the Employer or the Executive, as applicable, shall be cumulative.
11. Severability. The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any Agreement provision shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision shall be redrawn to make the provision consistent with, and valid and enforceable under, the law or public policy.
12. No Set-Off by the Executive. The existence of any claim, demand, action or cause of action by the Executive against the Employer whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of any of its rights hereunder.
13. Notice. All notices, requests, waivers and other communications required or permitted hereunder shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:
| If to the Employer: | Georgia Banking Company, Inc. |
| Attn: Chairman | |
| 1776 Peachtree Street NW, Suite 300 | |
| Atlanta, Georgia 30309 |
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| If to the Executive: | Bartow Morgan, Jr. |
| [***] | |
| [***] |
or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. All such notices, requests, waivers and other communications shall be deemed to have been effectively given: (a) when personally delivered to the party to be notified; (b) when sent by confirmed facsimile to the party to be notified; (c) five (5) business days after deposit in the United States Mail postage prepaid by certified or registered mail with return receipt requested at any time other than during a general discontinuance of postal service due to strike, lockout, or otherwise (in which case such notice, request, waiver or other communication shall be effectively given upon receipt) and addressed to the party to be notified as set forth above; or (d) two (2) business days after deposit with a national overnight delivery service, postage prepaid, addressed to the party to be notified as set forth above with next-business-day delivery guaranteed. A party may change its or his notice address given above by giving the other party ten (10) days’ written notice of the new address in the manner set forth above.
14. Assignment. The rights and obligations of the Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Employer, as applicable, including without limitation, a purchaser of all or substantially all the assets of the Employer. If the Agreement is assigned pursuant to the foregoing sentence, the assignment shall be by novation and the Employer shall have no further liability hereunder, and the successor or assign, as applicable, shall become the “Employer” hereunder, but the Executive will not be deemed to have experienced a Termination of Employment by virtue of such assignment. The Agreement is a personal contract and the rights and interest of the Executive may not be assigned by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
15. Waiver. A waiver by one party to this Agreement of any breach of this Agreement by any other party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion.
16. Mediation. Except with respect to Sections 5, 6, 7, 8, 9, and 10 above, and as provided in Section 17 hereof, if any dispute arises out of or relates to this Agreement, or a breach thereof, and if the dispute cannot be settled through direct discussions between the parties, the parties agree to first endeavor to settle the dispute in an amicable manner by mediation under the Commercial Mediation Rules of the American Arbitration Association before resorting to any other process for resolving the dispute.
17. Applicable Law and Choice of Forum. This Agreement shall be construed and enforced under and in accordance with the laws of the State of Georgia, except to the extent governed by the laws of the United States of America in which case federal laws shall govern. The parties agree that any appropriate state court located in Fulton County, Georgia or federal court for the Northern District of Georgia shall have exclusive jurisdiction of any case or controversy arising under or in connection with this Agreement shall be a proper forum in which to adjudicate such case or controversy. The parties consent and waive any objection to the jurisdiction or venue of such courts.
18. Mitigation. The Executive shall not be required to mitigate the amount of any payment the Employer becomes obligated to make to the Executive in connection with this Agreement, by seeking other employment or otherwise. Except as specifically provided above with respect to the health care continuation benefit, the amount of any payment provided for in this Agreement shall not be reduced, offset or subject to recovery by the Employer by reason of any compensation earned by the Executive as the result of employment by another employer after any Termination of Employment, or otherwise.
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19. Interpretation. Words importing any gender include all genders. Words importing the singular form shall include the plural and vice versa. The terms “herein,” “hereunder,” “hereby,” “hereto,” “hereof” and any similar terms refer to this Agreement. Any captions, titles or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.
20. Entire Agreement. Except with respect to Section 3.3(b) of the Original Agreement, which will remain in full force and effect, this Agreement embodies the entire and final agreement of the parties on the subject matter stated in this Agreement and amends and replaces the Original Agreement. No amendment or modification of this Agreement shall be valid or binding upon the Employer or the Executive unless made in writing and signed by all parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated.
21. Rights of Third Parties. Nothing herein expressed is intended to or shall be construed to confer upon or give to any person, firm or other entity, other than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.
22. Survival. The obligations of the parties pursuant to Sections 3.11, 4.2, 4.3, 5 through 10, 16, and 17, as applicable, shall survive the Executive’s Termination of Employment hereunder for the period designated under each of those respective sections.
23. Representation Regarding Restrictive Covenants. The Executive represents that the Executive is not and will not become a party to any non-competition or non-solicitation agreement or any other agreement which would prohibit the Executive from entering into this Agreement or providing the services for the Employer contemplated by this Agreement on or after the Effective Date. In the event the Executive is subject to any such agreement, this Agreement shall be rendered null and void and the Employer shall have no obligations to the Executive under this Agreement.
24. Indemnification. To the fullest extent permitted by law, the Company shall indemnify the Executive with respect to any actions, proceedings, investigations, or inquiries (collectively, “Actions”) commenced against or relating to the Executive in his capacity as an officer, director, executive, agent or fiduciary or former officer, director, executive, agent or fiduciary of the Company, or any affiliate thereof, for which the Executive may render service in such capacity, whether by or on behalf of the Company, its shareholders or third parties, including, without limitation, any governmental agent or entity, and the Company shall advance to the Executive on a timely basis an amount equal to the reasonable fees and expenses incurred in defending such Actions, after receipt of an itemized request for such advance, and an undertaking from the Executive to repay the amount of such advance, with interest at a reasonable rate from the date of the request, as determined by the Company, if it shall ultimately be determined that Executive is not entitled (as a matter of law or by judicial determination) to be indemnified against such expenses. This indemnity shall survive any termination of employment under this Agreement and is in addition to and not in limitation of any other right to indemnification or exoneration to which the Executive is entitled at law, or under the governing organizational documents and/or policies of the Company. The Company agrees to use its best efforts to secure and maintain officers’ and directors’ liability insurance, including coverage for the Executive.
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25. Definitions. Whenever used in this Agreement, the following terms and their variant forms shall have the meanings set forth below:
(a) “Affiliate” shall mean any entity which controls, is controlled by, or is under common control with another entity. For this purpose, “control” means ownership of more than fifty percent (50%) of the ordinary voting power or value of the outstanding equity securities of an entity.
(b) “Agreement” shall mean this Agreement and any exhibits incorporated herein together with any amendments hereto made in the manner described in this Agreement.
(c) “Area” shall mean the greater of the State of Georgia or a radius of twenty (20) miles from each office maintained by the Employer as of the Effective Date. It is the express intent of the parties that the Area as defined herein is the area where the Executive performs services on behalf of the Employer under this Agreement. In the event that the Employer expands the geographic reach of its business, the definition of Area shall expand to include the additional territory.
(d) “Board of Directors” shall mean the board of directors of the Bank or the Company or both, as the context indicates, and, where appropriate, includes any committee thereof or other designee.
(e) “Business of the Employer” shall mean the business conducted by the Employer, which is the business of commercial and consumer banking.
(f) “Cause” shall mean:
(1) a material breach of the terms of this Agreement by the Executive not cured by the Executive within twenty (20) business days after his receipt of Employer’s written notice thereof, including, without limitation, a material failure by the Executive to perform the Executive’s duties and responsibilities in the manner and to the extent required under this Agreement which the Board of Directors believes does or is likely to result in material harm to the Employer or any of its Affiliates;
(2) any act by the Executive of fraud against, material misappropriation from, or material dishonesty to either the Company or the Bank which the Board of Directors believes does or is likely to result in material harm to the Employer or any of its Affiliates;
(3) conviction of the Executive of a crime involving breach of trust or moral turpitude or any felony;
(4) conduct by the Executive that amounts to willful misconduct, gross and willful insubordination, gross neglect or inattention to or any intentional material failure to perform the Executive’s duties and responsibilities hereunder, including prolonged absences without the written consent of the Board of Directors; provided that the nature of such conduct shall be set forth with reasonable particularity in a written notice to the Executive who shall have ten (10) days following delivery of such notice to cure such alleged conduct, provided that such conduct is, in the reasonable discretion of the Board of Directors, susceptible to a cure;
(5) the exhibition of a standard of behavior within the scope of or related to his employment that is materially disruptive to the orderly conduct of the Employer’s business operations (including, without limitation, substance abuse, sexual harassment or sexual misconduct);
(6) receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Employer intends to institute any form of formal or informal regulatory action against the Executive; or
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(7) the Executive’s removal and/or permanent prohibition from participating in the conduct of the Employer’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and (g)(1)).
(g) “Change in Control” shall mean if, at any time after the Effective Date, any of the following events shall have occurred:
(1) Any person becomes a beneficial owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than fifty percent (50%) of the total voting power of the outstanding voting securities of the Company; provided, however, that the event described in this Subsection (g)(1) will not be deemed a Change in Control by virtue of any holdings or acquisitions: (i) by the Company or any of its subsidiaries, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries; provided that such holdings or acquisitions by any such plan (other than any plan maintained under Section 401(k) of the Code) or related trust do not exceed fifty percent (50%) of the total voting power of the then outstanding voting securities of the Company, (iii) by any underwriter temporarily holding securities of the Company pursuant to an offering of such securities or (iv) pursuant to a Non-Qualifying Transaction (as defined below);
(2) The consummation of a merger, consolidation, statutory share exchange or similar transaction that requires adoption by the Company’s shareholders (a “Business Combination”), unless immediately following such Business Combination: (x) more than fifty percent (50%) of the total voting power of the outstanding voting securities of the corporation resulting from such Business Combination (the “Surviving Corporation”), or, if applicable, the ultimate parent corporation that, directly or indirectly, has beneficial ownership (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), of one hundred percent (100%) of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by securities that were outstanding immediately before such Business Combination (or, if applicable, is represented by shares into which such voting securities were converted pursuant to such Business Combination), and (y) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination are Incumbent Directors (as defined below) at the time the Board of Directors approved the execution of the agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (x) and (y) above will be deemed a “Non-Qualifying Transaction”);
(3) Consummation of a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets, in either event other than a Non-Qualifying Transaction; or
(4) During any twelve (12)-month period, Incumbent Directors cease to constitute a majority of the members of the Board of Directors.
For purposes of this Section 25(g), the term “Incumbent Director” means, as of any date of determination, an individual who is either (a) a member of the Board of Directors as of the effective date of the adoption of this Agreement or (b) a member who becomes a member of the Board of Directors subsequent to the date of the adoption of this Agreement whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least sixty percent (60%) of the then Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which that person is named as a nominee for director, without objection to that nomination), but excluding, for that purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors.
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Notwithstanding the foregoing, none of the foregoing events will constitute a “Change in Control” unless the event qualifies as a change in the ownership or effective control of the Company, or in a substantial portion of the assets of the Company, within the meaning of Section 409A of the Code.
(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
(i) “Competing Business” shall mean any entity (other than the Employer and its Affiliates) that is conducting business that is the same or substantially the same as the Business of the Employer.
(j) “Confidential Information” means data and information relating to the business of the Employer and its Affiliates (which does not rise to the status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through the Executive’s relationship to the Employer and its Affiliates and which has value to the Employer and its Affiliates and is not generally known to its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by the Employer or its Affiliates, provided that such public disclosure shall not be deemed to be voluntary when made without authorization by the Executive or any other employee of Employer, or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means.
(k) “Disability” shall mean that the Executive suffers from a physical or mental disability or infirmity that qualifies him for disability benefits under any accident and health plan maintained by the Employer that provides income replacement benefits due to disability or, if the Employer does not maintain such a plan, the Executive’s inability to perform the essential functions of the Executive’s job for a period of ninety (90) or more days, with or without reasonable accommodation, as a result of a physical or mental disability or infirmity, as reasonably determined by the Employer.
(l) “Employer Information” means Confidential Information and Trade Secrets.
(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.
(n) “Good Reason” shall mean any of the following which occurs on or after the Effective Date:
(1) a material reduction of the Executive’s Annual Base Salary or Annual Bonus opportunity from its then current rate without the Executive’s consent, other than a reduction that also is applied to substantially all other executive officers of the Employer and the Executive’s reduction is substantially proportionate to, or no greater than, the reduction applied to substantially all other executive officers; or
(2) a material diminution in the authority, responsibilities or duties of the Executive as in effect immediately after the Effective Date, or the assignment to the Executive of duties that are materially inconsistent with Executive’s authority, duties or responsibilities as in effect immediately after the Effective Date, in either case without the Executive’s consent;
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(3) the relocation of the Executive to any principal place of employment other than Atlanta, Georgia, or any requirement that Executive relocate his residence other than to the Atlanta, Georgia metropolitan area, without the Executive’s express written consent to either such relocation; or
(4) any material failure by the Company or the Bank to comply with the terms of this Agreement;
provided, however, that in each case of the above, the Executive must provide written notice to the Company of the occurrence of such action within sixty (60) days after the action first occurs, and the Executive shall only have Good Reason to terminate his employment if the Employer fails to correct such action within thirty (30) days following receipt of such notice. If the Employer does so fail to correct such action, the Executive must give the Employer at least twenty (20) business days advance written notice of the Executive’s effective date of resignation due to such Good Reason, and Executive must terminate employment within ninety (90) days after the Employer fails to correct such action.
(o) “Initial Term” shall mean that period of time commencing on the Effective Date and running until the earlier of (1) December 31, 2029, or (2) any earlier termination of employment of the Executive under this Agreement as provided for in Section 4.
(p) “Person” shall mean any individual, corporation, bank, credit union, general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature.
(q) “Term” shall mean the Initial Term and all subsequent extension periods.
(r) “Termination of Employment” shall mean a termination of the Executive’s employment where either (1) the Executive has ceased to perform any services for the Employer and all affiliated companies that, together with the Employer, constitute the “service recipient” within the meaning of Code Section 409A and the regulations thereunder (collectively, the “Service Recipient”) or (2) the level of bona fide services the Executive performs for the Service Recipient after a given date (whether as an employee or as an independent contractor) permanently decreases (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Executive retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36)-month period (or the full period of service if the Executive has been providing services to the Service Recipient for less than thirty-six (36) months). Termination of Employment shall be construed consistent with the definition of a “separation from service” within the meaning of Section 409A of the Code.
(s) “Trade Secrets” means Employer or Affiliate information including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which:
(1) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
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(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
(t) “Wingshooter” shall mean Wingshooter Acquisition Corp, a Georgia corporation.
26. Deferred Compensation. It is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement which is considered to be deferred compensation subject to Section 409A of the Code shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. Accordingly, notwithstanding any other provision of this Agreement, the Employer is authorized to amend this Agreement to amend or void any election made by the Executive under this Agreement and/or to accelerate or delay the payment of any monies and/or provision of any benefits in such manner as may be determined by it to be reasonably necessary or appropriate to comply, or to evidence or further evidence required compliance, with Section 409A of the Code. Neither the Employer nor the Executive shall take any action to accelerate or delay the payment of any monies and/or provision of any benefits in any manner which would not be in compliance with Section 409A of the Code. For purposes of this Agreement, (i) all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code, and (ii) termination of employment shall mean a “separation from service” within the meaning of Section 409A of the Code. In addition, any payments made under Sections 3 and 4 of this Agreement which are paid on or before the last day of the applicable period for the short-term deferral exclusion under Treasury Regulation § 1.409A-1(b)(4) are intended to be excluded under such short-term deferral exclusion. Any remaining payments under Sections 3 and 4 are intended to qualify for the exclusion for separation pay plans under Treasury Regulation § 1.409A-1(b)(9) to the maximum extent applicable. Nevertheless, if the Executive is deemed on the date of separation from service with the Employer to be a “specified employee”, within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the Employer from time to time, or if none, the default methodology, then with regard to any payment or benefit that is required to be delayed for six (6) months in compliance with Section 409A(a)(2)(B) of the Code, such payment or benefit shall be paid on the earlier of (i) the first day of the seventh (7th) month measured from the date of Executive’s separation from service or (ii) the date of Executive’s death. In the case of benefits required to be delayed under Section 409A of the Code, Executive may pay the cost of benefit coverage, and thereby obtain benefits, during such six (6) month delay period and then be reimbursed by the Company thereafter on the first day of the seventh (7th) month following the date of Executive’s separation from service or, if earlier, on the date of Executive’s death. Additionally, notwithstanding anything in this Agreement to the contrary, if any payment or benefit that constitutes nonqualified deferred compensation subject to Section 409A is conditioned upon the Executive’s execution, delivery, and non-revocation of a release of claims or separation agreement, and the period during which Executive may consider, execute, or revoke such release or separation agreement begins in one taxable year and ends in the following taxable year, then such payment or benefit shall be made or commence in the second taxable year, regardless of the year in which Executive actually executes and delivers the release or separation agreement. In all events, payment shall not be made or commence until the release or separation agreement has become effective and irrevocable. To the extent any reimbursement, in-kind benefit, or similar payment under this Agreement constitutes nonqualified deferred compensation subject to Section 409A: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; (ii) reimbursement shall be made no later than the last day of the Executive’s taxable year following the taxable year in which the expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit. Notwithstanding any other provision of this Agreement, neither the Employer nor its subsidiaries or affiliates shall be liable to the Executive or any other person if any payment or benefit which is to be provided pursuant to this Agreement and which is considered deferred compensation subject to Section 409A of the Code fails to comply with, or be exempt from, the requirements of Section 409A of the Code.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the Company and the Bank has caused this Agreement to be signed by its duly authorized officer and the Executive has affixed Executive’s signature hereto as of the date first shown above.
| Georgia Banking Company, Inc.: | ||
| By: | /s/ Sarah Borders | |
| Sarah Borders | ||
| Chair | ||
| Georgia Banking Company: | ||
| By: | /s/ Sarah Borders | |
| Sarah Borders | ||
| Chair | ||
| Executive: | ||
| /s/ Bartow Morgan, Jr. | ||
| Bartow Morgan, Jr. | ||
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Exhibit 10.11
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (this “Agreement”) is made and entered into as of [●], 2026 (the “Effective Date”), by and among Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), Georgia Banking Company, a bank organized under the laws of the State of Georgia and a wholly-owned subsidiary of the Company (the “Bank”, and together with the Company, the “Employer”), and [_______________] (the “Executive”). The Employer and the Executive are sometimes hereinafter referred to, collectively, as the “Parties” and, individually, as a “Party.”
WHEREAS, the Employer employs the Executive as a key employee of the Employer;
WHEREAS, the Employer desires to assure itself and the Executive of continuity of management and objective judgment in the event of a Change in Control of the Employer, and to induce the Executive to remain employed with the Employer;
WHEREAS, the Employer desires to provide certain compensation and benefits to the Executive in the event of the Executive’s Termination of Employment under certain circumstances in connection with a Change in Control; and
WHEREAS, the Employer and the Executive previously entered into a Change in Control Agreement dated as of ________, 202[●] (the “Prior Agreement”), which provided for certain compensation and benefits to the Executive in the event of the Executive’s Termination of Employment under certain circumstances in connection with a Change in Control, and this Agreement is intended to supersede the Prior Agreement, which will be null and void upon the Effective Date;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth and intending to be legally bound, the Company, the Bank and the Executive agree as follows:
1. Term. This Agreement shall become effective as of the Effective Date and shall remain in effect until the first to occur of the following (the “Term”):
(a) the Executive’s Termination of Employment under circumstances where Change in Control Benefits (as defined below) do not become payable;
(b) the expiration of the Change in Control Protection Period in the absence of a Qualifying Termination of Employment (as defined below) therein; or
(c) the time all Change in Control Benefits that may be payable to the Executive pursuant to Section 2 below have been paid in connection with a Qualifying Termination of Employment.
Except as otherwise provided herein, this Agreement shall terminate and have no further force or effect upon the occurrence of an event described in Section 1(a), (b), or (c), whichever is the first to occur.
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2. Change in Control Benefits upon Termination of Employment.
2.1 Change in Control Benefits. If the Executive (i) experiences an involuntary Termination of Employment without Cause (and other than on account of the Executive’s death or Incapacity); or (ii) voluntarily resigns effecting a Termination of Employment for Good Reason, in either such case, during the Change in Control Protection Period (as defined in Section 24) (each, a “Qualifying Termination of Employment”), the Employer will pay to the Executive, or in the event of his subsequent death, to his designated beneficiary or beneficiaries, or, in the event the Executive has not designated any beneficiaries, to his estate, as the case may be, in cash in a lump sum, net of applicable tax withholdings, and subject to Section 2.2 and Section 25 below, as soon as administratively practicable and no later than sixty (60) days following the later of the date of the Executive’s Termination of Employment or the Change in Control:
(a) an amount equal to the product of (x) _____ (__) multiplied by (y) the Executive’s annual base salary at the highest rate in effect in the twelve (12)-month period immediately preceding the Termination of Employment (at the rate in effect before any election by the Executive to defer the receipt of any such annual base salary); and
(b) an amount equal to the product of (x) _____ (__) multiplied by (y) the average annual bonus paid to the Executive (including the amount of any such annual bonus that would have been paid with respect to such period but for Executive’s election to defer the receipt of such bonus) with respect to the three (3) calendar-year period immediately preceding the Termination of Employment, annualized for any partial year.
In addition to the foregoing payments, all of the Executive’s outstanding unvested options, restricted stock and other equity-based awards that would have vested based solely on the continued employment of the Executive shall become vested in full (with all outstanding performance-based awards converted first to service-based awards at target), as of the date the release described in Section 2.2 below becomes effective and non-revocable.
The payments and benefits in this Section 2.1, collectively, are referred to as the “Change in Control Benefits”.
2.2 Release Condition. Notwithstanding any other provision of this Agreement to the contrary, as a condition to receipt of the Change in Control Benefits, the Executive must execute a release agreement (the “Release”) in favor of the Employer and its Affiliates and their respective officers, directors, employees, agents, insurers, assigns and successors in interest (collectively, the “Releasees”), in such form as is supplied by and acceptable to the Employer, from any and all claims of the Executive arising or relating to the Executive’s employment with the Employer and/or the termination of that employment, and not timely revoke the Release during any revocation period provided pursuant to the terms of the Release, all within the sixty (60) days following the later of the Executive’s Termination of Employment or the Change in Control. The Employer shall provide the Release to the Executive immediately following the effective date of the later of the Executive’s Termination of Employment or the Change in Control. Notwithstanding the foregoing, should the sixty (60)-day period for executing the Release and not timely revoking the Release span more than one (1) calendar year, no Change in Control Benefits shall be paid or commence any sooner than the first day of the subsequent calendar year.
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2.3 Section 280G Parachute Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Employer to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, or any successor provision thereto, (a “Parachute Payment”), then, prior to the making of any Payment to the Executive, a calculation shall be made comparing (i) the net after-tax benefit to the Executive of the Payment after payment of the Excise Tax to (ii) the net after-tax benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). In that event, cash payments shall be modified or reduced first pro rata (first with respect to any cash payments that are not subject to Section 409A of the Code and then with respect to cash payments that are subject to Section 409A of the Code) and then any other benefits (in the same order as with respect to the cash benefits). The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in clauses (i) and (ii) of the foregoing sentence shall be made by an independent accounting firm selected by the Employer, at the Employer’s expense, (the “Accountants”), and the Accountants shall provide detailed supporting calculations. Any determination by the Accountants shall be binding upon the Employer and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to this Section 2.3, could have been made without the imposition of the Excise Tax (“Underpayment”) or that Payments which the Executive did receive pursuant to Section 2.3 should not have been so paid (“Overpayment”). If the Employer determines that an Overpayment has been made, any such Overpayment must be treated for all purposes as a loan, to the extent permitted by applicable law, which the Executive must repay to the Company together with interest at the applicable federal rate under Code Section 7872(f)(2). If the Company determines that an Underpayment has occurred, the Accountants shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Employer to or for the benefit of the Executive no later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the determination is made that the Underpayment has occurred.
(b) Sections 4 through 8 of this Agreement contain restrictive covenants of the Executive to refrain from certain activities deemed harmful to the Company for a set period of time in exchange for the promises contained herein. If the Executive is deemed eligible to receive Payments under this Agreement that could be subject to the Excise Tax, the Employer shall seek a valuation from the Accountants to determine the value of the covenant contained in Sections 4 through 8 of this Agreement and such amount shall be allocated to such arrangement and be excluded from treatment as a Parachute Payment. For the avoidance of doubt, it is the intention of this Agreement that the value assigned to the covenants contained in Sections 4 through 8 of this Agreement by the Accountants not be considered a Parachute Payment for purposes of this Section 2.3.
(c) In addition, if any portion of the Parachute Payments would be subject to the Excise Tax imposed by Section 4999 of the Code, after allocation of Payments to the Executive’s covenants contained in Sections 4 through 8 as described below, then to the extent reasonably practicable and permitted by applicable law, upon the written request of the Executive, the Employer shall (i) use all commercially reasonable efforts to obtain stockholder approval in accordance with Section 280G of the Code with respect to any Payments or benefits that the Executive elects to waive and subject the Executive’s right to receive to approval by the stockholders of the Company; and (ii) to the extent such approval is not obtained or is not requested, consult with the Executive prior to reducing any particular Parachute Payments in order to afford the Executive the opportunity to waive other Parachute Payments, to the extent permitted by Section 409A of the Code.
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(d) Any determination required under this Section 2.3 shall be made in writing in good faith by the Accountants. The Employer and the Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this Section 2.3. For purposes of making the calculations and determinations required by this Section 2.3, the Accountants may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants’ determinations shall be final and binding on the Employer and the Executive. The Company shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 2.3.
(e) The Executive and the Company shall reasonably cooperate with each other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for the Excise Tax.
2.4 Clawback. The Executive agrees to repay the gross amount (before any withholdings) of any payment of the Change in Control Benefits or the portion thereof previously paid or otherwise made available to the Executive under this Agreement, and rescind any vesting of equity awards awarded in connection with the Change in Control Benefits or the portion thereof and return the shares or the value thereof resulting from that vesting, that are subject to recovery under any applicable law (including any rule of any exchange or service through which the securities of the Employer are then traded) or any compensation recoupment policy the Company or its Affiliates may adopt from time to time, including, but not limited to, the following circumstances:
(a) where such compensation was in excess of what should have been paid or made available because the determination of the amount due was based, in whole or in part, on materially inaccurate financial information of the Employer;
(b) where such compensation constitutes “excessive compensation” within the meaning of 12 C.F.R. Part 30, Appendix A;
(c) where the Executive has committed, is substantially responsible for, or has violated, the respective acts, omissions, conditions, or offenses outlined under 12 C.F.R. Section 359.4(a)(4); and
(d) if the Bank becomes, and for so long as the Bank remains, subject to the provisions of 12 U.S.C. Section 1831(f), where such compensation exceeds the restrictions imposed on the senior executive officers of such an institution.
The Executive agrees to return within sixty (60) days, or within any earlier timeframe required by applicable law or by any of the Employer’s recoupment policies, any such compensation payments and/or rescind any such vesting of equity awards and return the shares or the value thereof resulting from that vesting, that the Employer identifies by written notice provided pursuant to Section 12. If the Executive fails to return such compensation or shares or value thereof within the applicable time period, the Executive agrees that the amount of such compensation and/or the value of such shares may be deducted from any and all other compensation owed to the Executive by the Employer. If the Executive is then employed by the Employer, the Executive acknowledges that the Employer may take appropriate disciplinary action (up to, and including, Termination of Employment) if the Executive fails to return such compensation and/or the value of such shares. The Executive acknowledges the Employer’s rights to engage in any legal or equitable action or proceeding in order to enforce the provisions of this Section 2.4. The provisions of this Section 2.4 shall be modified to the extent, and remain in effect for the period, required by applicable law.
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2.5 Regulatory Limitations.
(a) If the Executive is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (the “FDIA”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Employer under this Agreement shall terminate, as of the effective date of such order, except for the payment of annual base salary due and owing on the effective date of said order, and reimbursement of reasonable expenses incurred prior to the effective date of termination that are reimbursable under the Employer’s applicable expense reimbursement policy.
(b) If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Employer under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer shall reinstate any of its obligations which were suspended to the extent permitted by applicable law.
(c) If the Employer is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but the vested rights of the Parties shall not be affected.
(d) If the Federal Deposit Insurance Corporation (the “FDIC”) is appointed receiver or conservator under Section 11(c) of the FDIA (12 U.S.C. 1821(c)) of the Employer or any depository institution controlled by the Employer, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such receivership or conservatorship, other than any rights of the Executive that vested prior to such appointment. To the extent the Employer is or encompasses a depository institution, any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.
(e) If the FDIC provides open bank assistance under Section 13(c) of the FDIA (12 U.S.C. 1823(c)) to the Employer or any depository institution controlled by the Employer, excluding any such assistance provided to the industry generally, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such assistance, other than any rights of the Executive that vested prior to the FDIC action. To the extent the Employer is or encompasses a depository institution, any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.
(f) If the FDIC requires a transaction under Section 13(f) or 13(k) of the FDIA (12 U.S.C. 1823(f) and (k)) by the Employer or any depository institution controlled by the Employer, the Employer shall have the right to terminate all obligations of the Employer under this Agreement as of the date of such transaction, other than any rights of the Executive that vested prior to the transaction. To the extent the Employer is or encompasses a depository institution, any vested rights of the Executive may be subject to such modifications that are consistent with the authority of the FDIC.
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(g) Notwithstanding the timing for the payment or delivery of any Change in Control Benefits described in this Agreement, no such Change in Control Benefits shall be paid or become effective, as applicable, that require the concurrence or consent of the appropriate federal banking agency of the Employer pursuant to 12 C.F.R. Section 359 prior to the receipt of such concurrence or consent. The Employer shall have the obligation to submit an application to pay or deliver such Change in Control Benefits to the appropriate federal banking agency within fifteen (15) business days of the Executive’s right to such payment arising and shall provide a copy of such application to the Executive. Any payments suspended by operation of this Section 2.5(g) shall be paid as a lump sum within thirty (30) days following receipt of the concurrence or consent of the appropriate federal banking agency of the Employer or as otherwise directed by such federal banking agency.
(h) All obligations under this Agreement are further subject to such conditions, restrictions, limitations and forfeiture provisions as may separately apply pursuant to any applicable state banking laws and are intended to be applied in a manner that complies with Section 409A of the Code.
2.6 Accrued Obligations. Notwithstanding any other provision of this Agreement, upon the Executive’s Termination of Employment, regardless of the reason, the Executive shall be entitled to receive the following accrued obligations: (i) the Executive’s base salary through the Executive’s Termination of Employment which remains unpaid; (ii) the amount, if any, of any annual bonus or incentive compensation with respect to any completed fiscal year of the Employer which has vested and not yet been paid; (iii) reimbursement of reasonable expenses incurred before the Executive’s Termination of Employment which remain unpaid; (iv) any vested benefits or amounts which pursuant to the terms of any plans, policies or programs subject to ERISA that have become earned, vested and payable but which have not yet been paid or delivered; and (v) payment of any accrued but unused vacation and sick leave and other accrued benefits that are payable to the Executive pursuant to the terms of such plans. Those accrued obligations will be paid in a lump sum no later than thirty (30) days following the Executive’s Termination of Employment, except for the vested benefits and amounts in clauses (iv) and (v) above, which shall be paid in accordance with the terms of such plans, policies or programs.
3. Tax Withholding. The Employer shall be entitled to withhold appropriate employment and income taxes, if required by applicable law, from the Change in Control Benefits that may become payable or deliverable under this Agreement.
4. Employer Information.
4.1 Ownership of Employer Information. All Employer Information received or developed by the Executive or by the Employer while the Executive is employed by the Employer will remain the sole and exclusive property of the Employer.
4.2 Obligations of the Executive. The Executive agrees:
(a) to hold Employer Information in strictest confidence;
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(b) not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate Employer Information or any physical embodiments of Employer Information to any unauthorized recipient; and
(c) in any event, not to take any action causing, or fail to take any action necessary in order to prevent, any Employer Information from losing its character or ceasing to qualify as Confidential Information or a Trade Secret.
This Section 4.2 shall survive for a period of one (1) year following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets.
4.3 Permitted Disclosures. Notwithstanding anything in this Agreement to the contrary, (i) nothing in this Agreement, including, but not limited to, the Release or other agreement, prohibits the Executive from reporting possible violations of law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigations or proceedings that may be conducted by Government Agencies, including providing documents or other information; (ii) the Executive does not need the prior authorization of the Employer to take any action described in (i), and the Executive is not required to notify the Employer that he has taken any action described in (i); and (iii) neither this Agreement nor the Release limits the Executive’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, the Executive will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a Trade Secret that (A) is made (I) in confidence to a federal, state or local official, either directly or indirectly, or to an attorney; and (II) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, if the Executive is suing the Employer for retaliation based on the reporting of a suspected violation of law, he may disclose a Trade Secret to his attorney and use the Trade Secret information in the court proceeding, so long as any document containing the Trade Secret is filed under seal and the Executive does not disclose the Trade Secret except pursuant to court order. This Section 4.3 shall survive for a period of one (1) year following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets.
4.4 Delivery upon Request or Termination. Upon request by the Employer, and/or in the event of the Executive’s Termination of Employment with the Employer, regardless of the reason, the Executive will promptly deliver to the Employer all property belonging to the Employer and its Affiliates, including, without limitation, all Employer Information then in the Executive’s possession or control.
5. Non-Competition. The Executive agrees that during the Executive’s employment by the Employer, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of twelve (12) months thereafter, the Executive covenants and agrees that the Executive shall not (except on behalf of or with the prior written consent of the Employer), within the Area, either directly or indirectly, on the Executive’s own behalf or in the service or on behalf of others, perform for any Competing Business any services which are the same as or essentially the same as the services the Executive provided for the Employer. The Executive acknowledges that the Employer conducts its business within the Area, that the Executive will perform services for and on behalf of the Employer within the Area, and that this Section 5 (and the definition of the Area) is a reasonable limitation on the Executive’s ability to compete with the Employer.
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6. Non-Solicitation of Customers. The Executive agrees that during the Executive’s employment by the Employer, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of twelve (12) months thereafter, the Executive covenants and agrees that the Executive will not (except on behalf of or with the prior written consent of the Employer) on the Executive’s own behalf or in the service or on behalf of others, solicit, divert or appropriate or attempt to solicit, divert or appropriate, any business from any of the Employer’s customers, correspondents or other sources of or purchasers of loans of the Employer, including prospective customers or prospects actively sought by the Employer, with whom the Executive has or had material contact during the last two (2) years of the Executive’s employment with the Employer, for purposes of providing products or services that are competitive with those provided by the Employer.
7. Non-Solicitation of Employees. The Executive agrees that during the Executive’s employment by the Employer, and in the event of the Executive’s Termination of Employment, regardless of the reason, for a period of twelve (12) months thereafter, the Executive covenants and agrees that the Executive will not (except on behalf of or with the prior written consent of the Employer) on the Executive’s own behalf or in the service or on behalf of others, solicit, recruit or hire away or attempt to solicit, recruit or hire away, any employee of the Employer with whom the Executive had material contact during the last two (2) years of the Executive’s employment, whether or not such employee is a full-time employee or a temporary employee of the Employer, such employment is pursuant to written agreement, for a determined period, or at will.
8. Mutual Non-Disparagement. The Employer agrees that during the Term and for a period of twelve (12) months thereafter, the Employer will not issue any statement (written or oral) that could reasonably be perceived as disparaging to the Executive. The Executive agrees that during the Term and for a period of twelve (12) months thereafter, he will not make any statement (written or oral) that could reasonably be perceived as disparaging to the Employer or any Person that he reasonably should know is an Affiliate of the Employer.
9. Remedies. The Executive agrees that the covenants contained in Sections 4 through 8 of this Agreement are of the essence of this Agreement; that each of the covenants is reasonable and necessary to protect the business, interests and properties of the Employer, and that irreparable loss and damage will be suffered by the Employer should the Executive breach any of the covenants. Therefore, the Executive agrees and consents that, in addition to all the remedies provided by law or in equity, the Employer shall be entitled to a temporary restraining order and temporary and permanent injunctions to prevent a breach or contemplated breach of any of the covenants. Furthermore, in addition to any other remedies, the Executive agrees that any violation of the covenants in Sections 4 through 8 will result in the immediate forfeiture of any remaining payment that otherwise is or may become due under this Agreement, if applicable. The Executive further agrees that should he breach any of the covenants contained in Sections 4 through 8 of this Agreement, no further amounts will be paid to the Executive pursuant to this Agreement and the Executive shall repay to the Employer the gross amounts (before withholdings) of any amounts previously received by the Executive pursuant to this Agreement that are attributable to that portion of the payments paid for the period during which the Executive was in breach of any of the covenants contained in Sections 4 through 8 of this Agreement. The Employer and the Executive agree that all remedies available to the Employer or the Executive, as applicable, shall be cumulative.
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10. Severability. The Parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any provision shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision shall be redrawn to make the provision consistent with, and valid and enforceable under, the law or public policy.
11. No Set-Off by the Executive. The existence of any claim, demand, action or cause of action by the Executive against the Employer whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of any of its rights hereunder.
12. Notice. All notices, requests, waivers and other communications required or permitted hereunder shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:
| If to the Employer: | Georgia Banking Company, Inc. |
| Attn: Chief Executive Officer | |
| 1776 Peachtree Street NW, Suite 300 | |
| Atlanta, Georgia 30309 |
| If to the Executive: | ____________ |
| ____________ | |
| ____________ |
or such other address or to the attention of such other Persons as the recipient Party shall have specified by prior written notice to the sending Party. All such notices, requests, waivers and other communications shall be deemed to have been effectively given: (i) when personally delivered to the Party to be notified; (ii) when sent by confirmed facsimile to the Party to be notified; (iii) five (5) business days after deposit in the United States Mail postage prepaid by certified or registered mail with return receipt requested at any time other than during a general discontinuance of postal service due to strike, lockout or otherwise (in which case such notice, request, waiver or other communication shall be effectively given upon receipt) and addressed to the Party to be notified as set forth above; or (iv) two (2) business days after deposit with a national overnight delivery service, postage prepaid, addressed to the Party to be notified as set forth above with next-business-day delivery guaranteed. A Party may change its or his notice address given above by giving the other Party ten (10) days’ written notice of the new address in the manner set forth in this Section 12.
13. Continued Employment. Nothing herein shall entitle the Executive to continued employment with the Employer nor any of its Affiliates or to continued tenure in any specific office or position or level of compensation. The Executive’s employment with the Employer shall be terminable at the will of the Employer, with or without Cause, subject to the terms of this Agreement and any other written agreement as may be in effect between the parties.
14. Assignment. The rights and obligations of the Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Employer, as applicable, including without limitation, a purchaser of all or substantially all the assets of the Employer. If this Agreement is assigned pursuant to the foregoing sentence, the assignment shall be by novation and the Employer shall have no further liability hereunder, and the successor or assign, as applicable, shall become the “Employer” hereunder, but the Executive will not be deemed to have experienced a Termination of Employment by virtue of such assignment. This Agreement is a personal contract and the rights and interest of the Executive may not be assigned by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
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15. Waiver. A waiver by one Party to this Agreement of any breach of this Agreement by any other Party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion.
16. Applicable Law and Choice of Forum. This Agreement shall be construed and enforced under and in accordance with the laws of the State of Georgia, except to the extent governed by the laws of the United States of America in which case federal laws shall govern. The Parties agree that any appropriate state court located in Fulton County, Georgia or federal court for the Northern District of Georgia shall have exclusive jurisdiction of any case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy. The Parties consent and waive any objection to the jurisdiction or venue of such courts.
17. Mitigation. The Executive shall not be required to mitigate the amount of any Payment the Employer becomes obligated to make to the Executive in connection with this Agreement, by seeking other employment or otherwise. The amount of any Payment provided for in this Agreement shall not be reduced, offset or subject to recovery by the Employer by reason of any compensation earned by the Executive as the result of employment by another employer after any Termination of Employment, or otherwise.
18. Interpretation. Words importing any gender include all genders. Words importing the singular form shall include the plural and vice versa. The terms “herein,” “hereunder,” “hereby,” “hereto,” “hereof” and any similar terms refer to this Agreement. Any captions, titles or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.
19. Entire Agreement. This Agreement embodies the entire and final agreement of the Parties on the subject matter stated in this Agreement. No amendment or modification of this Agreement shall be valid or binding upon the Employer or the Executive unless made in writing and signed by all Parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated.
20. Rights of Third Parties. Nothing herein expressed is intended to or shall be construed to confer upon or give to any Person, other than the Parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.
21. Amendment/Termination. This Agreement may not be modified, amended, supplemented or terminated except by a written agreement between the Employer and the Executive.
22. Survival. The provisions of Sections 2.4, 2.5 and 3 through 24 of this Agreement shall survive, as necessary, the expiration of the term of this Agreement or any other termination of this Agreement.
23. Confidentiality. The Executive represents and agrees that the Executive will keep the terms, amount, value, and nature of consideration paid to the Executive, and the fact of this Agreement completely confidential, and that the Executive will not hereafter disclose any information concerning this Agreement to anyone other than the Executive’s immediate family and professional representatives who will be informed of and bound by this confidentiality clause.
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24. Definitions. Whenever used in this Agreement, the following terms and their variant forms shall have the meanings set forth below:
(a) “Affiliate” shall mean any entity which controls, is controlled by, or is under common control with another entity. For this purpose, “control” means ownership of more than fifty percent (50%) of the ordinary voting power or value of the outstanding equity securities of an entity.
(b) “Area” shall mean the Atlanta-Sandy Springs-Roswell, Georgia Metropolitan Statistical Area. It is the express intent of the Parties that the Area as defined herein is the area where the Executive performs services on behalf of the Employer under this Agreement. In the event that the Employer expands the geographic reach of its business, the definition of Area shall expand to include the additional territory.
(c) “Board of Directors” shall mean the board of directors of the Bank or the Company or both, as the context indicates, and, where appropriate, includes any committee thereof or other designee.
(d) “Business of the Employer” shall mean the business conducted by the Employer, which is the business of commercial and consumer banking.
(e) “Cause” shall mean:
(1) a material breach of the terms of this Agreement by the Executive not cured by the Executive within twenty (20) business days after his receipt of the Employer’s written notice thereof, including, without limitation, a material failure by the Executive to perform the Executive’s duties and responsibilities in the manner and to the extent required under this Agreement which the Board of Directors believes does or is likely to result in material harm to the Employer or any of its Affiliates;
(2) any act by the Executive of fraud against, material misappropriation from, or material dishonesty to either the Company or the Bank which the Board of Directors believes does or is likely to result in material harm to the Employer or any of its Affiliates;
(3) conviction of the Executive of a crime involving breach of trust or moral turpitude or any felony;
(4) conduct by the Executive that amounts to willful misconduct, gross and willful insubordination, gross neglect or inattention to or any intentional material failure to perform the Executive’s duties and responsibilities hereunder, including prolonged absences without the written consent of the Board of Directors; provided that the nature of such conduct shall be set forth with reasonable particularity in a written notice to the Executive who shall have ten (10) days following delivery of such notice to cure such alleged conduct, provided that such conduct is, in the reasonable discretion of the Board of Directors, susceptible to a cure;
(5) the exhibition by the Executive of a standard of behavior within the scope of or related to his employment that is materially disruptive to the orderly conduct of the Employer’s business operations (including, without limitation, substance abuse, sexual harassment or sexual misconduct);
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(6) receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Employer intends to institute any form of formal or informal regulatory action against the Executive; or
(7) the Executive’s removal and/or permanent prohibition from participating in the conduct of the Employer’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(4) and (g)(1)).
(f) “Change in Control” shall mean if, at any time after the Effective Date, any of the following events shall have occurred:
(1) Any Person becomes a beneficial owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than fifty percent (50%) of the total voting power of the outstanding voting securities of the Company; provided, however, that the event described in this Subsection (f)(1) will not be deemed a Change in Control by virtue of any holdings or acquisitions: (i) by the Company or any of its subsidiaries, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries; provided that such holdings or acquisitions by any such plan (other than any plan maintained under Section 401(k) of the Code) or related trust do not exceed fifty percent (50%) of the total voting power of the then outstanding voting securities of the Company, (iii) by any underwriter temporarily holding securities of the Company pursuant to an offering of such securities or (iv) pursuant to a Non-Qualifying Transaction (as defined below);
(2) The consummation of a merger, consolidation, statutory share exchange or similar transaction that requires adoption by the Company’s shareholders (a “Business Combination”), unless immediately following such Business Combination: (i) more than fifty percent (50%) of the total voting power of the outstanding voting securities of the corporation resulting from such Business Combination (the “Surviving Corporation”), or, if applicable, the ultimate parent corporation that, directly or indirectly, has beneficial ownership (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), of one hundred percent (100%) of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by securities that were outstanding immediately before such Business Combination (or, if applicable, is represented by shares into which such voting securities were converted pursuant to such Business Combination), and (ii) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination are Incumbent Directors (as defined below) at the time the Board of Directors approved the execution of the agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (i) and (ii) above will be deemed a “Non-Qualifying Transaction”);
(3) Consummation of a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets, in either event other than a Non-Qualifying Transaction; or
(4) During any twelve (12)-month period, Incumbent Directors cease to constitute a majority of the members of the Board of Directors.
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For purposes of this Section 24(e), the term “Incumbent Director” means, as of any date of determination, an individual who is either (i) a member of the Board of Directors as of the Effective Date or (ii) a member who becomes a member of the Board of Directors subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least sixty percent (60%) of the then incumbent board (either by a specific vote or by approval of the proxy statement of the Company in which that person is named as a nominee for director, without objection to that nomination), but excluding, for that purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors.
Notwithstanding the foregoing, none of the foregoing events will constitute a “Change in Control” unless the event qualifies as a change in the ownership or effective control of the Company, or in a substantial portion of the assets of the Company, within the meaning of Section 409A of the Code.
(g) “Change in Control Protection Period” shall mean the period beginning six (6) months prior to and ending twelve (12) months after the closing of a Change in Control.
(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
(i) “Competing Business” shall mean any entity (other than the Employer and its Affiliates) that is conducting business that is the same or substantially the same as the Business of the Employer.
(j) “Confidential Information” shall mean data and information relating to the business of the Employer and its Affiliates (which does not rise to the status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through the Executive’s relationship to the Employer and its Affiliates and which has value to the Employer and its Affiliates and is not generally known to its competitors. Confidential Information shall not include any data or information (i) that has been voluntarily disclosed to the public by the Employer or its Affiliates, provided that such public disclosure shall not be deemed to be voluntary when made without authorization by the Executive or any other employee of Employer, (ii) that has been independently developed and disclosed by others, or (iii) that otherwise enters the public domain through lawful means.
(k) “Employer Information” shall mean, collectively, Confidential Information and Trade Secrets.
(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.
(m) “Good Reason” shall mean any of the following which occurs on or after the Effective Date:
(1) a material reduction of the Executive’s annual base salary or annual bonus opportunity from its then current rate without the Executive’s consent, other than a reduction that also is applied to substantially all other executive officers of the Employer and the Executive’s reduction is substantially proportionate to, or no greater than, the reduction applied to substantially all other executive officers;
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(2) a material diminution in the authority, responsibilities or duties of the Executive as in effect immediately after the Effective Date, or the assignment to the Executive of duties that are materially inconsistent with Executive’s authority, duties or responsibilities as in effect immediately after the Effective Date, in either case without the Executive’s consent;
(3) the relocation of the Executive to any principal place of employment other than Atlanta, Georgia, or any requirement that the Executive relocate his residence other than to the Atlanta, Georgia metropolitan area, without the Executive’s express written consent to either such relocation; or
(4) any material failure by the Company or the Bank to comply with the terms of this Agreement;
provided, however, that in each case of the above, the Executive must provide written notice to the Employer of the occurrence of such action within sixty (60) days after the action first occurs, and the Executive shall only have Good Reason to terminate his employment if the Employer fails to correct such action within thirty (30) days following receipt of such notice. If the Employer does so fail to correct such action, the Executive must give the Employer at least twenty (20) business days advance written notice of the Executive’s effective date of resignation due to such Good Reason, and the Executive must terminate his employment within ninety (90) days after the Employer fails to correct such action.
(n) “Incapacity” shall mean the inability of the Executive to perform the essential functions of the Executive’s title and position, with or without reasonable accommodation, for a period of ninety (90) days in any consecutive rolling one hundred eighty (180)-day period.
(o) “Person” shall mean any individual, corporation, bank, credit union, general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature.
(p) “Termination of Employment” shall mean a termination of the Executive’s employment where either (i) the Executive has ceased to perform any services for the Employer and all affiliated companies that, together with the Employer, constitute the “service recipient” within the meaning of Section 409A of the Code and the regulations thereunder (collectively, the “Service Recipient”) or (ii) the level of bona fide services the Executive performs for the Service Recipient after a given date (whether as an employee or as an independent contractor) permanently decreases (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six (6) months, or if longer, so long as the Executive retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36)-month period (or the full period of service if the Executive has been providing services to the Service Recipient for less than thirty-six (36) months). Termination of Employment shall be construed consistent with the definition of a “separation from service” within the meaning of Section 409A of the Code.
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(q) “Trade Secrets” shall mean the Employer’s or its Affiliates’ information including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which:
(1) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
25. Deferred Compensation. It is intended that any payment or benefit which the Executive is to be paid or provided pursuant to or in connection with this Agreement which is considered to be deferred compensation subject to Section 409A of the Code shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. Accordingly, notwithstanding any other provision of this Agreement, the Employer is authorized to amend this Agreement to amend or void any election made by the Executive under this Agreement and/or to accelerate or delay the payment of any monies and/or provision of any benefits in such manner as may be determined by it to be reasonably necessary or appropriate to comply, or to evidence or further evidence required compliance, with Section 409A of the Code. Neither the Employer nor the Executive shall take any action to accelerate or delay the payment of any monies and/or provision of any benefits in any manner which would not be in compliance with Section 409A of the Code. For purposes of this Agreement, (i) all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code, and (ii) termination of employment shall mean a “separation from service” within the meaning of Section 409A of the Code. In addition, any payments made under this Agreement which are paid on or before the last day of the applicable period for the short-term deferral exclusion under Treasury Regulation § 1.409A-1(b)(4) are intended to be excluded under such short-term deferral exclusion. Any remaining payments under this Agreement are intended to qualify for the exclusion for separation pay plans under Treasury Regulation § 1.409A-1(b)(9) to the maximum extent applicable. Nevertheless, if the Executive is deemed on the date of separation from service with the Employer to be a “specified employee”, within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the Employer from time to time, or if none, the default methodology, then with regard to any payment or benefit that is required to be delayed for six (6) months in compliance with Section 409A(a)(2)(B) of the Code, such payment or benefit shall be paid on the earlier of (i) the first day of the seventh (7th) month measured from the date of Executive’s separation from service or (ii) the date of Executive’s death. In the case of benefits required to be delayed under Section 409A of the Code, Executive may pay the cost of benefit coverage, and thereby obtain benefits, during such six (6) month delay period and then be reimbursed by the Company thereafter on the first day of the seventh (7th) month following the date of Executive’s separation from service or, if earlier, on the date of Executive’s death. Additionally, notwithstanding anything in this Agreement to the contrary, if any payment or benefit that constitutes nonqualified deferred compensation subject to Section 409A is conditioned upon the Executive’s execution, delivery, and non-revocation of a release of claims or separation agreement, and the period during which Executive may consider, execute, or revoke such release or separation agreement begins in one taxable year and ends in the following taxable year, then such payment or benefit shall be made or commence in the second taxable year, regardless of the year in which Executive actually executes and delivers the release or separation agreement. In all events, payment shall not be made or commence until the release or separation agreement has become effective and irrevocable. To the extent any reimbursement, in-kind benefit, or similar payment under this Agreement constitutes nonqualified deferred compensation subject to Section 409A: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; (ii) reimbursement shall be made no later than the last day of the Executive’s taxable year following the taxable year in which the expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit. Notwithstanding any other provision of this Agreement, neither the Employer nor its subsidiaries or Affiliates shall be liable to the Executive or any other Person if any payment or benefit which is to be provided pursuant to this Agreement and which is considered deferred compensation subject to Section 409A of the Code fails to comply with, or be exempt from, the requirements of Section 409A of the Code.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the Company and the Bank has caused this Agreement to be signed by its duly authorized officer and the Executive has affixed Executive’s signature hereto as of the date first shown above.
| GEORGIA BANKING COMPANY, INC.: |
| By: | ||
| Name: | ||
| Title: |
| GEORGIA BANKING COMPANY: |
| By: | ||
| Name: | ||
| Title: |
| EXECUTIVE: |
| [_____] |
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Exhibit 10.12
Georgia Banking Company, Inc.
Amended and Restated 2021 Stock Incentive Plan
Article 1
Effective Date, Objectives and Duration
1.1 Adoption of the Plan. The Board of Directors of Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Corporation”), hereby amends and restates, effective as of July 28, 2026 (the “Effective Date”), the Georgia Banking Company, Inc. 2021 Stock Incentive Plan, as amended by Amendment No. 1, Amendment No. 2, and Amendment No. 3, respectively (prior to this amendment and restatement, the “Prior Plan” and, after this amendment and restatement, the Georgia Banking Company, Inc. Amended and Restated 2021 Stock Incentive Plan (the “Plan”)). The Prior Plan was approved by the shareholders of the Corporation. The terms of the Plan are set forth herein. Awards may be granted under the Plan on and after the Effective Date; the amendment and restatement of the Prior Plan does not require the approval of the shareholders of the Corporation. Awards granted under the Prior Plan shall be governed by the terms of the Prior Plan and the applicable Award Agreements. The terms of this Plan are not intended to affect the interpretation of the terms of the Prior Plan.
1.2 Duration of the Plan. The Plan commenced on the date of adoption of the Prior Plan by the Board, and the shareholders of the Corporation approved the Prior Plan and all amendments thereto. The Plan shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Article 10 hereof, until the earlier of 11:59 p.m. (ET) on April 26, 2031, or the date all Shares subject to the Plan shall have been issued and the restrictions on all Restricted Shares granted under the Plan shall have lapsed, according to the Plan’s provisions.
Article 2
Definitions
Whenever used in the Plan, the following terms shall have the meanings set forth below:
2.1 “Affiliate” means any corporation, trade or business or other entity, including but not limited to partnerships, limited liability companies and joint ventures, directly or indirectly controlling, controlled by or under common control with the Corporation, within the meaning of Section 405 of the Securities Act. Affiliate includes any corporation, trade or business or other entity that becomes such on or after the Effective Date.
2.2 “Award” means Options (including Non-Qualified Stock Options and Incentive Stock Options), SARs, Restricted Shares, Restricted Stock Units, Dividend Equivalents, Bonus Shares and Other Stock-Based Awards granted under the Plan.
2.3 “Award Agreement” means a written agreement entered into by the Corporation and a Grantee setting forth the terms and provisions applicable to an Award granted under this Plan, including any amendment or modification thereof. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by the Grantee.
2.4 “Beneficiary” means one or more persons or entities that become entitled to receive any amount payable under this Plan at the Grantee’s death. The Grantee’s Beneficiary is the Grantee’s surviving spouse, unless the Grantee designates one or more other persons or entities to be the Grantee’s Beneficiary. The Grantee may make, change or revoke a Beneficiary designation at any time before his or her death without the consent of the Grantee’s spouse or anyone the Grantee previously named as a Beneficiary, and the Grantee may designate primary and secondary Beneficiaries. A Beneficiary designation must comply with procedures established by the Committee and must be received by the Committee before the Grantee’s death. If the Grantee dies without a valid Beneficiary designation (as determined by the Committee) and has no surviving spouse, the Beneficiary shall be the Grantee’s estate.
2.5 “Board” means the Board of Directors of the Corporation.
2.6 “Bonus Shares” means Shares that are awarded to a Grantee with or without cost (save in all events for payment by the Grantee in cash of the nominal value per Share if required by applicable law) and without restrictions either in recognition of past performance (whether determined by reference to another employee benefit plan of the Corporation or otherwise), as an inducement to become an Eligible Person or, with the consent of the Grantee, as payment in lieu of any cash remuneration otherwise payable to the Grantee.
2.7 “Cause” shall have the same definition as under any employment or service agreement between the Corporation or any Affiliate and the Grantee or, if no such employment or service agreement exists or if such employment or service agreement does not contain any such definition or words of similar import, “Cause” means (i) the Grantee’s act or failure to act amounting to gross negligence or willful misconduct to the detriment of the Corporation or any Affiliate; (ii) the Grantee’s dishonesty, fraud, theft or embezzlement of funds or properties in the course of Grantee’s employment or other service; (iii) the Grantee’s commission of or pleading guilty to or confessing to any crime involving breach of trust or moral turpitude or any felony; (iv) the exhibition of a standard of behavior within the scope of or related to his employment or service that is materially disruptive to the orderly conduct of the Corporation’s business operations (including, without limitation, substance abuse, sexual harassment or sexual misconduct); (v) the Grantee’s breach of any restrictive covenant agreement with the Corporation or any Affiliate, including but not limited to, confidentiality covenants, covenants not to compete, non-solicitation covenants and non-disclosure covenants; (vi) receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Corporation intends to institute any form of formal or informal regulatory action against the Grantee; (vii) the Grantee’s removal and/or permanent prohibition from participating in the conduct of the Corporation’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and (g)(1)). For purposes of the Plan, the Grantee’s resignation without the Corporation’s or an Affiliate’s written consent in anticipation of termination by the Corporation or any Affiliate of Grantee’s employment for Cause shall constitute a termination of employment for Cause.
2.8 “Change in Control” shall mean if, at any time after the date hereof, any of the following events shall have occurred:
(a) Any person becomes a beneficial owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the outstanding voting securities of the Corporation; provided, however, that the event described in this clause (a) will not be deemed a Change in Control by virtue of any holdings or acquisitions: (i) by the Corporation or any of its Subsidiaries, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its Subsidiaries; provided that such holdings or acquisitions by any such plan (other than any plan maintained under Section 401(k) of the Code) or related trust do not exceed 50% of the total voting power of the then outstanding voting securities of the Corporation, (iii) by any underwriter temporarily holding securities of the Corporation pursuant to an offering of such securities or (iv) pursuant to a Non-Qualifying Transaction;
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(b) The consummation of a merger, consolidation, statutory share exchange or similar transaction that requires adoption by the Corporation’s shareholders (a “Business Combination”), unless immediately following such Business Combination: (x) more than 50% of the total voting power of the outstanding voting securities of the corporation resulting from such Business Combination (the “Surviving Corporation”), or, if applicable, the ultimate parent corporation that, directly or indirectly, has beneficial ownership (as such term is defined in Sections 13d-3 and Rule 13d-5 under the Exchange Act), of 100% of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by securities that were outstanding immediately before such Business Combination (or, if applicable, is represented by shares into which such voting securities were converted pursuant to such Business Combination), and (y) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination are Incumbent Directors (as defined below) at the time the Board approved the execution of the agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (x) and (y) above will be deemed a “Non-Qualifying Transaction”);
(c) Consummation of a plan of liquidation or dissolution of the Corporation or a sale of all or substantially all of the Corporation’s assets, in either event other than a Non-Qualifying Transaction; or
(d) During any twelve (12)-month period, Incumbent Directors cease to constitute a majority of the members of the Board.
For purposes of this Section 2.8, the term “Incumbent Director” means, as of any date of determination, an individual who is either (a) a member of the Board as of the effective date of the adoption of this Plan or (b) a member who becomes a member of the Board subsequent to the date of the adoption of this Plan whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least sixty percent (60%) of the then Incumbent Board Members (either by a specific vote or by approval of the proxy statement of the Corporation in which that person is named as a nominee for director, without objection to that nomination), but excluding, for that purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.
Notwithstanding the foregoing, a Change in Control shall not occur for purposes of this Plan unless such Change in Control also constitutes a “change in control event” under Section 409A of the Code and the regulations thereunder.
2.9 “Code” means the Internal Revenue Code of 1986, as amended from time to time.
2.10 “Corporation” means Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia, and any successor thereto by operation of law or otherwise.
2.11 “Disability” or “Disabled” means, unless otherwise defined in an Award Agreement, or as otherwise determined under procedures established by the Committee for purposes of the Plan, for any Grantee, any injury, illness or sickness that qualifies as a long-term disability within the meaning of the Corporation’s long-term disability program (“LTD Program”) and on account of which such Grantee is entitled to receive LTD Program benefits; provided, however, in the case of an Incentive Stock Option, “Disability” or “Disabled” has the meaning under Section 22(e)(3) of the Code, and in case of any Award that constitutes deferred compensation within the meaning of Section 409A of the Code, “Disability” and “Disabled” means as defined in regulations under Code Section 409A where necessary for such Award to comply with Section 409A of the Code. For purpose of Code Section 409A, a Grantee will be considered to have incurred a Disability or to be Disabled if: (i) the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) the Grantee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Grantee’s employer.
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2.12 “Dividend Equivalent” means a right to receive cash or Shares equal to any dividends paid on Shares, if and when paid or distributed, on a specified number of Shares, which dividends have a record date on or after the date of grant of the Dividend Equivalents or related Award and before the date the Dividend Equivalents or related Award become payable or are forfeited.
2.13 “Eligible Person” means any employee (including any officer) of, or non-employee consultant to, or Non-Employee Director of, the Corporation or any Affiliate, or potential employee (including a potential officer) of, or potential non-employee consultant to, or potential Non-Employee Director of, the Corporation or an Affiliate; provided, however, that (i) solely with respect to the grant of an Incentive Stock Option, “Eligible Person” shall mean any employee (including any officer) of the Corporation or any Subsidiary Corporation and (ii) the Committee may establish additional eligibility criteria for determining an Eligible Person for any Awards granted hereunder. Solely for purposes of Section 5.6, current or former employees or Non-Employee Directors of, or non-employee consultants to, an Acquired Entity who receive Substitute Awards in substitution for Acquired Entity Awards shall be considered Eligible Persons under this Plan with respect to such Substitute Awards.
2.14 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder.
2.15 “Exercise Price” means with respect to an Option, the price at which a Share may be purchased by a Grantee pursuant to such Option.
2.16 “Fair Market Value” means, unless the Committee determines otherwise, a price that is based on the closing price of a Share as reported on Nasdaq on the applicable trading date or any other established stock exchange or automated quotation system which is the principal stock exchange or automated quotation system upon which the Shares are traded on the applicable date or, if the Shares are not traded on such date, the immediately preceding trading day. Alternatively, if the Shares are exclusively traded over the counter at the time a determination of Fair Market Value is required to be made hereunder, Fair Market Value shall be deemed to be equal to the arithmetic mean between the reported high and low or closing bid and asked prices of a Share on the applicable date, or, if no such trades were made that day, then the most recent date on which Shares were so traded. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate provided such manner is consistent with Treasury Regulation 1.409A-1(b)(5)(iv)(B). The Fair Market Value that the Committee determines shall be final, binding and conclusive on the Company, any Affiliate and each Grantee.
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2.1 “Good Reason” shall have the same definition as under any employment or service agreement between the Company or any Affiliate and the Grantee or, if no such employment or service agreement exists or if such employment or service agreement does not contain any such definition or words of similar import, “Good Reason” means, except as otherwise set forth in the Award Agreement, any of the following without the Grantee’s express written consent: (a) any action taken by the Company or an Affiliate which results in a material reduction in the Grantee’s authority, duties or responsibilities (except that any change in the foregoing that results solely from (i) the Company ceasing to be a publicly traded entity or from the Company becoming a wholly-owned subsidiary of another publicly traded entity or (ii) any change in the geographic scope of the Grantee’s authority, duties or responsibilities will not, in any event and standing alone, constitute a material reduction in the Grantee’s authority, duties or responsibilities); (b) the assignment to the Grantee of duties that are materially inconsistent with Grantee’s authority, duties or responsibilities; (c) any material decrease in the Grantee’s base salary or annual bonus opportunity, except to the extent the Company has instituted a salary or bonus reduction generally applicable to all similar employees of the Company other than in contemplation of or within one year after a Change in Control; or (d) the relocation of the Grantee to any principal place of employment other than that as of the date of grant of the Award, or any requirement that Grantee relocate his or her residence other than to that as of the date of grant of the Award, which in either event would increase the Grantee’s commute by more than fifty (50) miles; provided, however, this subsection (d) shall not apply in the case of business travel which requires the Grantee to relocate temporarily for periods of ninety (90) days or less. Notwithstanding the above, and without limitation, “Good Reason” shall not include any resignation by the Grantee where Cause for the Grantee’s termination by the Company or an Affiliate exists. The Grantee must give the Company or Affiliate that employs the Grantee notice of any event or condition that would constitute “Good Reason” within thirty (30) days of the event or condition which would constitute “Good Reason,” and upon the receipt of such notice the Company or Affiliate that employs the Grantee shall have thirty (30) days to remedy such event or condition. If such event or condition is not remedied within such thirty (30)-day period, any termination of employment by the Grantee for “Good Reason” must occur within thirty (30) days after the period for remedying such condition or event has expired.
2.2 “Grant Date” means the date on which an Award is granted or such later date as specified in advance by the Committee.
2.3 “Grantee” means an Eligible Person to whom an Award has been granted under the Plan.
2.4 “Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code.
2.5 “Incumbent Board Member” means an individual who either is (a) a member of the Board as of the effective date of the adoption of this Plan or (b) a member who becomes a member of the Board subsequent to the date of the adoption of this Plan whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least sixty percent (60%) of the then Incumbent Board Members (either by a specific vote or by approval of the proxy statement of the Corporation in which that person is named as a nominee for director, without objection to that nomination), but excluding, for that purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.
2.6 “Non-Employee Director” means a member of the Board, or the board of directors of an Affiliate, who is not an employee of the Corporation or any Affiliate.
2.7 “Non-Qualified Stock Option” means an option that is not intended to meet the requirements of Section 422 of the Code.
2.8 “Option” means an option granted under Article 6 of the Plan.
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2.9 “Other Stock-Based Award” means a right, granted under Article 12 hereof, that relates to or is valued by reference to Shares or other Awards relating to Shares.
2.10 “Period of Restriction” means the period during which Shares are subject to forfeiture if the conditions specified in the Award Agreement are not satisfied.
2.11 “Period of Vesting” means the period during which the Award is subject to forfeiture or may not be exercised if the conditions specified in the Award Agreement are not satisfied.
2.12 “Person” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government instrumentality, division, agency, body or department.
2.13 “Plan” means this Georgia Banking Company, Inc. 2021 Stock Incentive Plan, in its current form or as hereafter amended.
2.14 “Restricted Shares” means Shares issued under Article 7 that are both subject to forfeiture and are nontransferable if the Grantee does not satisfy the conditions specified in the Award Agreement applicable to such Shares and subject to the Grantee paying the nominal value in cash for each Share to the extent required by the Committee.
2.15 “Restricted Stock Units” are rights, granted under Article 8, to receive Shares if the Grantee satisfies the conditions specified in the Award Agreement applicable to such rights, and subject always to the Grantee paying the nominal value in cash for each such Share.
2.16 “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, as amended from time to time, together with any successor rule.
2.17 “SEC” means the United States Securities and Exchange Commission, or any successor thereto.
2.18 “Section 16 Non-Employee Director” means a member of the Board who satisfies the requirements to qualify as a “non-employee director” under Rule 16b-3.
2.19 “Section 16 Person” means a person who is subject to potential liability under Section 16(b) of the Exchange Act with respect to transactions involving equity securities of the Corporation.
2.20 “Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder.
2.21 “Share” means the common stock, $0.01 par value per share, of the Corporation, and, unless the context otherwise requires, such other securities of the Corporation, as may be substituted or resubstituted for Shares pursuant to Section 4.2 hereof.
2.22 “Stock Appreciation Right” or “SAR” means an Award granted under Article 7 of the Plan.
2.23 “Subsidiary Corporation” means a corporation other than the Corporation in an unbroken chain of corporations beginning with the Corporation if, at the time of granting the Option, each of the corporations other than the last corporation in the unbroken chain owns shares or stock possessing fifty percent (50%) or more of the total combined voting power of all classes of shares or stock in one of the other corporations in such chain.
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2.24 “Surviving Company” means the surviving corporation in any merger or consolidation, involving the Corporation, including the Corporation if the Corporation is the surviving corporation, or the direct or indirect parent company of the Corporation or such surviving corporation following a sale of substantially all of the outstanding shares or stock of the Corporation.
2.25 “Term” of any Option or SAR means the period beginning on the Grant Date of an Option or SAR and ending on the date such Option or SAR expires, terminates or is cancelled. No Option or SAR granted under this Plan shall have a Term exceeding ten (10) years.
2.26 “Termination of Service” means (a) that the employee has terminated employment with the Corporation and its Affiliates, the non-employee consultant is no longer serving as a consultant to the Corporation or an Affiliate or the Non-Employee Director has ceased being a director of the Corporation or any Affiliate or (b) when an entity which is employing the employee or non-employee consultant or on whose board of directors the Non-Employee Director is serving, ceases to be an Affiliate, unless the Grantee otherwise is, or thereupon becomes, an employee, non-employee consultant or Non-Employee Director of the Corporation or another Affiliate, at the time such entity ceases to be an Affiliate. In the event an employee, non-employee consultant or Non-Employee Director becomes one of the other categories of Eligible Persons upon the termination of such employee’s employment, such consultant’s consultancy or such Non-Employee Director’s service, unless otherwise determined by the Committee, in its sole discretion, no Termination of Service will be deemed to have occurred until such time as such person is no longer an employee, non-employee consultant or Non-Employee Director. Notwithstanding the foregoing, however, if an Award constitutes deferred compensation within the meaning of Code Section 409A, Termination of Service with respect to such Award shall mean the Grantee’s Separation from Service within the meaning of Section 409A of the Code, to the extent necessary for such Award to comply with Section 409A of the Code.
Article 3
Administration
3.1 Committee.
(a) The Plan shall be administered by the Compensation Committee or the Board itself if no Compensation Committee exists. Notwithstanding the foregoing, the Board may at any time and in one or more instances reserve administrative powers to itself as the Board. To the extent the Board or Compensation Committee considers it desirable to comply with Rule 16b-3, the Committee shall consist of two or more directors of the Company, all of whom qualify as “independent directors” within the meaning of the Nasdaq listing standards and as Section 16 Non-Employee Directors. The number of members of the Committee shall from time to time be increased or decreased, and shall be subject to such conditions, in each case if and to the extent the Board deems it appropriate to permit transactions in Shares pursuant to the Plan to satisfy such conditions of Rule 16b-3.
(b) The Committee may act through subcommittees, in which case the subcommittee shall be subject to and have the authority hereunder applicable to the Committee, and the acts of the subcommittee shall be deemed to be the acts of the Committee hereunder. Additionally, to the extent applicable law so permits, the Board or the Compensation Committee may appoint and delegate to one or more officers of the Corporation, any or all of the authority of the Board or the Committee, as applicable, with respect to Awards to Grantees other than Grantees who are (i) “executive officers” of the Company (as defined by Rule 3b-7 under the Exchange Act) or to any “officer” of the Company (as defined by Rule 16a-1(f) under the Exchange Act), (ii) Non-Employee Directors, or (iii) expected to be Section 16 Persons at the time any such delegated authority is exercised, and provided that the Board or the Compensation Committee shall fix the maximum number of Shares subject to Awards that such officers may grant. The Committee may revoke or amend the terms of any delegation at any time but such action shall not invalidate any prior actions of the Committee’s delegate or delegates that were consistent with the terms of the Plan and the Committee’s prior delegation. An Award granted to an individual who is a member of the Committee may be approved by the Committee in accordance with the applicable Committee charters then in effect and other applicable law except that the Committee member must abstain from any action with respect to the Committee member’s own Awards.
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(c) Unless the context requires otherwise, any references herein to “Committee” include references to, the Board or the Compensation Committee to the extent the Board or the Compensation Committee, as applicable, has assumed or exercises administrative powers as the Committee pursuant to subsection (a), and to one or more officers of the Corporation the extent they have been delegated authority pursuant to subsection (b), as applicable; provided that, (i) for purposes of Awards to Non-Employee Directors, “Committee” shall include only the full Board, and (ii) for purposes of Awards intended to comply with Rule 16b-3, “Committee” shall include only the Compensation Committee.
3.2 Powers of Committee. The Committee shall have authority to grant Awards upon such terms (not inconsistent with the provisions of this Plan) as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the grant, exercisability, transferability, settlement and forfeitability of all or any part of an Award, among other terms. Notwithstanding any such conditions, the Committee may, in its discretion, accelerate the time at which any Award may be exercised, become transferable or nonforfeitable or be earned and settled including, without limitation, (i) in the event of the Grantee’s death, Disability or Termination of Service or (ii) in connection with a Change in Control. In addition, the Committee shall have complete authority to interpret all provisions of this Plan including, without limitation, the discretion to interpret any terms used in the Plan that are not defined herein; to prescribe the form of Agreements; to adopt, amend and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken, by the Committee in connection with the administration of this Plan shall be final, conclusive and binding on all persons. The members of the Committee shall not be liable for any act done in good faith with respect to this Plan or any Agreement or Award. Unless otherwise provided by the Bylaws of the Corporation, by resolution of the Board or applicable law, a majority of the members of the Committee shall constitute a quorum, and acts of the majority of the members present at any meeting at which a quorum is present, and any acts approved in writing by all members of the Committee without a meeting, shall be the acts of the Committee.
3.3 No Repricings. Notwithstanding any provision in Section 3.2 to the contrary, the terms of any outstanding Option or SAR may not be amended to reduce the Exercise Price of such Option or SAR, or cancel any outstanding Option or SAR in exchange for other Options or SARs with an Exercise Price that is less than the Exercise Price of the cancelled Option or SAR or for any cash payment (or Shares having a Fair Market Value) in an amount that exceeds the excess of the Fair Market Value of the Shares underlying such cancelled Option or SAR over the aggregate Exercise Price of such Option or SAR or for any other Award, without shareholder approval; provided, however, that the restrictions set forth in this Section 3.3, shall not apply (i) unless the Corporation has a class of shares or stock that is registered under Section 12 of the Exchange Act or (ii) to any adjustment allowed under Section 4.2.
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Article 4
Shares Subject to the Plan and Maximum Awards
4.1 Number of Shares Available for Grants. Subject to adjustment as provided in Section 4.2 and except as provided in Section 5.6, the maximum number of Shares hereby reserved for delivery in connection with Awards under the Plan (including Incentive Stock Options) shall be 1,125,000 Shares (the original 452,000 Shares reserved under the original plan and the additional 673,000 Shares added pursuant to Amendment No. 1, Amendment No. 2, and Amendment No. 3); 100% of such Shares may be delivered pursuant to the exercise of Incentive Stock Options granted under the Plan or the Prior Plan (in lieu of other Awards). A Share issued in connection with an Award under the Plan or the Prior Plan shall reduce the total number of Shares available for issuance under the Plan by one provided, however, that, upon settlement of a SAR, the greater of the number of Shares underlying the portion of the SAR that is exercised or the number of Shares actually issued will be treated as having been delivered for purposes of determining the maximum number of Shares available for grant under the Plan and shall not again be treated as available for grant under the Plan. If any Award under the Plan or the Prior Plan terminates without the delivery of Shares, whether by lapse, forfeiture, cancellation or otherwise, the Shares subject to such Award, to the extent of any such termination, shall again be available for grant under the Plan. To the extent Shares subject to an Option or stock-settled SAR granted under the Plan after the Effective Date are withheld by the Corporation for payment of the purchase price of the Shares or as a means of paying the exercise price, or for payment of federal, state or local income or wage tax withholding requirements, the Shares that are so withheld shall be treated as granted and shall not again be available for subsequent grants of Awards under the Plan; to the extent Shares subject to an Option or stock-settled SAR granted under the Prior Plan before the Effective Date are withheld by the Corporation for payment of the purchase price of the Shares or as a means of paying the exercise price, or for payment of federal, state or local income or wage tax withholding requirements, the Shares that are so withheld shall again be available for subsequent grants of Awards under the Plan. To the extent Shares subject to a full-value Award (i.e., an equity-based Award other than an Option or SAR) granted under the Plan or the Prior Plan are not actually issued to the Grantee at the time the Award is exercised or settled, including where Shares are withheld for payment of federal, state or local income or wage tax withholding requirements, the Shares that are so withheld shall again be available for grants of Awards under the Plan. The number of Shares available for issuance under the Plan may not be increased through the Corporation’s purchase of Shares on the open market with the proceeds obtained from the exercise of any Options or other purchase rights granted hereunder. In addition, in the case of any Substitute Award granted in assumption of or in substitution for an Acquired Entity Award, Shares delivered or deliverable in connection with such Substitute Award shall not be counted against the number of Shares reserved under the Plan (to the extent permitted by the rules of any other stock exchange or automated quotation system upon which the Shares are listed or quoted), and available shares of stock under a shareholder-approved plan of an Acquired Entity (as appropriately adjusted to reflect the transaction) also may be used for Awards under the Plan, which shall not reduce the number of Shares otherwise available under the Plan (subject to applicable requirements of any other stock exchange or automated quotation system upon which the Shares are listed or quoted). Shares may be allotted and issued pursuant to the Plan from the Corporation’s authorized but unissued share capital, or the reissue of treasury Shares. The proceeds that the Corporation receives in connection with Awards granted under the Plan, if any, shall be used for general corporate purposes and shall be added to the general funds of the Corporation.
4.2 Adjustments in Authorized Shares and Awards; Liquidation, Dissolution or Change in Control.
(a) In the event that the Committee determines that any dividend or other distribution (excluding any ordinary dividend or distribution) (whether in the form of cash, Shares, or other property), recapitalization, forward or reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, consolidation, scheme of arrangement, split-up, spin-off or combination involving the Corporation or repurchase or exchange of Shares or other securities of the Corporation or other rights to purchase Shares or other securities of the Corporation, or other corporate transaction or event affects the Shares such that any adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property) with respect to which Awards may be granted, (ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, (iii) the Exercise Price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award, (iv) the number and kind of Shares of outstanding Restricted Shares, or the Shares underlying any Award of Restricted Stock Units and (v) any other terms and conditions of the Award. Notwithstanding the foregoing, (x) no such adjustment shall be authorized with respect to any Options or SAR to the extent that such adjustment would cause the Option (determined as if such Option was an Incentive Stock Option) or SAR to violate Section 424(a) of the Code or with respect to any Awards to the extent such adjustment would subject any Grantee to taxation under Section 409A of the Code; and (y) the number of Shares subject to any Award denominated in Shares shall always be a whole number.
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(b) In the event of a merger or consolidation of the Corporation with or into another corporation or a sale of all or substantially all of the shares or stock of the Corporation or all or substantially all of the assets of the Corporation, including by way of a court sanctioned compromise or scheme of arrangement, reorganization, merger, combination, purchase, recapitalization, liquidation, or sale, transfer, exchange or other disposition (a “Corporate Transaction”) that results in a Change in Control, unless an outstanding Award is assumed by the Surviving Company or replaced with an equivalent Award granted by the Surviving Company in substitution for such outstanding Award, the Committee shall cancel any outstanding Awards that are not vested and nonforfeitable as of the consummation of such Corporate Transaction (unless the Committee in its discretion accelerates the vesting of such Awards without the need for the consent of any Grantee in Grantee’s status as the grantee of the Award) and with respect to any vested and nonforfeitable Awards, the Committee may either (i) allow all Grantees to exercise such Awards in the nature of Options to the extent then exercisable or to become exercisable upon the Corporate Transaction within a reasonable period prior to the consummation of the Corporate Transaction and cancel any Awards in the nature of Options or SARs that remain unexercised upon consummation of the Corporate Transaction, or (ii) cancel any or all of such outstanding Awards in exchange for a payment (in cash and/or in securities and/or other property) in an amount equal to the amount that the Grantee would have received (net of the Exercise Price with respect to any Awards in the nature of Options or SARs) and on the same terms (including without limitation any earn-out, escrow or other deferred consideration provisions) as if such vested Awards were settled or distributed or such Awards in the nature of vested Options or SARs were exercised immediately prior to the consummation of the Corporate Transaction. Notwithstanding the foregoing, if an Option or SAR is not assumed by the Surviving Company or replaced with an equivalent Award issued by the Surviving Company and the Exercise Price with respect to any outstanding Option or SAR equals or exceeds the amount payable per Share in the Corporation Transaction, such Awards shall be cancelled without any payment to the Grantee.
(c) Immediately prior to consummation of any Corporate Transaction that results in a Change in Control (subject to consummation of the Change in Control), unless the Award Agreement provides otherwise, and except as otherwise set forth below as to any Award with respect to which the grant, vesting, payment and/or settlement is contingent upon the satisfaction of specified performance measures, all outstanding Awards will become vested and non-forfeitable, earned and payable and any conditions on any such Award shall lapse, as to all of such Award to the extent then outstanding, including Shares as to which the Award would not otherwise be exercisable or non-forfeitable or earned and payable, unless the outstanding Award is assumed by the Surviving Company or replaced with an equivalent Award granted by the Surviving Company in substitution for such outstanding Award. If the outstanding Award is assumed by the Surviving Company or replaced with an equivalent Award granted by the Surviving Company in substitution for such outstanding Award, then all such outstanding Awards will become vested and non-forfeitable, earned and payable and any conditions on any such Award shall lapse, as to all of such Award to the extent then outstanding, including Shares as to which the Award would not otherwise be exercisable or non-forfeitable or earned and payable, upon the Grantee’s subsequent death, Disability, or Termination of Service by the Company and its Affiliates without Cause or by the Grantee for Good Reason, in any such case on or within one (1) year after the Change in Control (provided such accelerated exercisability or vesting does not violate Code Section 409A).
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(d) Notwithstanding the forgoing provisions, if an Award constitutes deferred compensation within the meaning of, and subject to, Code Section 409A, no payment or settlement of such Award shall be made pursuant to this Section, unless the Corporate Transaction or the dissolution or liquidation of the Company, as applicable, constitutes a change in ownership or effective control of the Company or a change in ownership of a substantial portion of the assets of the Company as described in Treasury Regulation Section 1.409A-3(i)(5), where necessary for such Award to comply with Section 409A of the Code, and such payment or settlement does not result in a violation of Section 409A of the Code. Additionally, with respect to any Award with respect to which the grant, vesting, payment and/or settlement is contingent upon the satisfaction of specified performance measures in the specified performance period and which is not assumed by the Surviving Company or replaced with an equivalent Award granted by the Surviving Company in substitution for such outstanding Award, unless the Award Agreement provides otherwise, the Award shall become vested, and be paid and settled, pursuant to this Section, at target, with the amount prorated based on the number of days in the specified performance period prior to and including the date of the Change in Control over the number of days in the specified performance period. If any such Awards are assumed by the Surviving Company or replaced with an equivalent Award granted by the Surviving Company in substitution for such outstanding Award, unless the Award Agreement provides otherwise, the Award shall be converted into a time-based Award as of the Change in Control at target, subject to the Grantee’s continued employment or other service, and such outstanding Awards will become vested and non-forfeitable, earned and payable and any conditions on any such Award shall lapse, as to all of such Award to the extent then outstanding, including Shares as to which the Award would not otherwise be exercisable or non-forfeitable or earned and payable, upon the Grantee’s subsequent death, Disability, or Termination of Service by the Company and its Affiliates without Cause or by the Grantee for Good Reason, in any such case on or within the one (1) year after the Change in Control (provided such accelerated exercisability or vesting does not violate Code Section 409A).
Article 5
Eligibility and General Conditions of Awards
5.1 Eligibility. The Committee may in its discretion grant Awards to any Eligible Person, whether or not such Eligible Person has previously received an Award; provided, however, that all Awards made to Non-Employee Directors shall be determined by the Board in its sole discretion. No Award may be granted at a time when such grant would constitute a breach of applicable law.
5.2 Award Agreement. To the extent not set forth in the Plan, the terms and conditions of each Award shall be set forth in an Award Agreement and, unless the Committee determines otherwise, such Agreement must be signed, acknowledged and returned by the Grantee to the Corporation. Unless the Committee determines otherwise, any failure by the Grantee to sign and return the Agreement within such period of time following the granting of the Award as the Committee shall prescribe shall cause such Award to the Grantee to be null and void. By accepting an Award or other benefits under the Plan (including participation in the Plan), each Grantee shall be conclusively deemed to have indicated acceptance and ratification of, and consented to, all provisions of the Plan and the Agreement.
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5.3 General Terms and Termination of Service. The Committee may impose on any Award or the exercise or settlement thereof, at the date of grant or, subject to the provisions of Section 14.2, thereafter, such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine, including without limitation terms requiring forfeiture or transfer, or acceleration or pro-rata acceleration of Awards in the event of a Termination of Service by the Grantee. Awards may be granted for no consideration other than prior and future services save that in no event will Shares subject to an Award be allotted and issued unless the nominal value per Share is paid in cash, unless permitted otherwise by applicable law. Except as otherwise determined by the Committee pursuant to this Section 5.3 or set forth in an Award Agreement, all Options and SARs that have not been exercised, or any other Awards that remain subject to a risk of forfeiture or which are not otherwise vested, or which have outstanding performance periods, at the time of a Termination of Service shall be forfeited to the Corporation. Additionally, notwithstanding any other provision of this Plan or any Award Agreement to the contrary, no dividends or Dividend Equivalents shall be paid with respect to any Awards that do not become vested, non-forfeitable or payable under the Plan.
5.4 Nontransferability of Awards.
(a) Each Award and each right under any Award shall be exercisable only by the Grantee during the Grantee’s lifetime, or, if permissible under applicable law, by the Grantee’s guardian or legal representative or by a transferee receiving such Award pursuant to a domestic relations order (a “DRO”) as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or the rules thereunder. Nothing herein shall be construed as requiring the Corporation or any Affiliate to honor a DRO except to the extent required under applicable law.
(b) No Award (prior to the time, if applicable, Shares are delivered in respect of such Award), and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Grantee otherwise than by will or by the laws of descent and distribution (or in the case of Restricted Shares, to the Corporation) or pursuant to a DRO, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Corporation or any Affiliate; provided that the designation of a beneficiary to receive benefits in the event of the Grantee’s death shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(c) Notwithstanding subsections (a) and (b) above, to the extent provided in the Award Agreement, Awards (other than Incentive Stock Options and related SARs), may be transferred, without consideration, to a Permitted Transferee. For this purpose, a “Permitted Transferee” in respect of any Grantee means any member of the Immediate Family of such Grantee, any trust of which all of the primary beneficiaries are such Grantee or members of his or her Immediate Family, or any partnership (including limited liability companies and similar entities) of which all of the partners or members are such Grantee or members of his or her Immediate Family; and the “Immediate Family” of a Grantee means the Grantee’s spouse, any person sharing the Grantee’s household (other than a tenant or employee), children, stepchildren, grandchildren, parents, stepparents, siblings, grandparents, nieces and nephews. Such Award may be exercised by such transferee in accordance with the terms of the Award Agreement. If so determined by the Committee, a Grantee may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Grantee, and to receive any distribution with respect to any Award upon the death of the Grantee. A transferee, beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Grantee shall be subject to and consistent with the provisions of the Plan and any applicable Award Agreement, except to the extent the Plan and Award Agreement otherwise provide with respect to such persons, and to any additional restrictions or limitations deemed necessary or appropriate by the Committee.
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5.5 Cancellation, Rescission and Forfeiture of Awards. Unless the Award Agreement specifies otherwise:
(a) the Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict any unexercised or other Award at any time if (i) the Grantee is not in compliance with all applicable provisions of the Award Agreement and the Plan or (ii) the Grantee has a Termination of Service; and
(b) a Grantee shall forfeit any and all rights under any Award or will reimburse the Corporation for any payment under any Award (with interest as required by applicable law) to the extent applicable law or any applicable claw-back or recoupment policy of the Corporation or any of its Affiliates requires such forfeiture or reimbursement.
5.6 Stand-Alone, Tandem and Substitute Awards.
(a) Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for, any other Award granted under the Plan unless such tandem or substitution Award would subject the Grantee to tax penalties imposed under Section 409A of the Code. If an Award is granted in substitution for another Award or any non-Plan award or benefit, the Committee shall require the surrender of such other Award or non-Plan award or benefit in consideration for the grant of the new Award. Awards granted in addition to or in tandem with other Awards or non-Plan awards or benefits may be granted either at the same time as or at a different time from the grant of such other Awards or non-Plan awards or benefits; provided, however, that if any SAR is granted in tandem with an Incentive Stock Option, such SAR and Incentive Stock Option must have the same Grant Date, Term and Exercise Price.
(b) The Committee may, in its discretion and on such terms and conditions as the Committee considers appropriate in the circumstances, grant Awards under the Plan (“Substitute Awards”) in substitution for share or stock and share or stock-based awards (“Acquired Entity Awards”) held by current or former employees or non-employee directors of, or consultants to, another corporation or entity who become Eligible Persons as the result of a merger or consolidation of the employing corporation or other entity (the “Acquired Entity”) with the Corporation or an Affiliate or the acquisition by the Corporation or an Affiliate of property or shares or stock of the Acquired Entity immediately prior to such merger, consolidation or acquisition in order to preserve for the Grantee the economic value of all or a portion of such Acquired Entity Award at such price as the Committee determines necessary to achieve preservation of economic value. The limitations of Sections 4.1 on the number of Shares reserved or available for grants shall not apply to Substitute Awards granted under this Section 5.6.
5.7 Deferral of Award Payouts. The Committee may permit a Grantee to defer, or if and to the extent specified in an Award Agreement require the Grantee to defer, receipt of the payment of cash or the delivery of Shares that would otherwise be due by virtue of the lapse or waiver of restrictions with respect to Awards, the satisfaction of any requirements or goals with respect to Awards, the lapse or waiver of the deferral period for Awards, or the lapse or waiver of restrictions with respect to Awards. If the Committee permits such deferrals, the Committee shall establish rules and procedures for making such deferral elections and for the payment of such deferrals, which shall conform in form and substance with applicable regulations promulgated under Section 409A of the Code to ensure that the Grantee is not subjected to tax penalties under Section 409A of the Code with respect to such deferrals. Except as otherwise provided in an Award Agreement, any payment or any Shares that are subject to such deferral shall be made or delivered to the Grantee as specified in the Award Agreement or pursuant to the Grantee’s deferral election.
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5.8 Extension of Term of Award; Automatic Exercise.
(a) Notwithstanding any provision of the Plan providing for the maximum term of an Award, in the event any Award would expire prior to exercise, vesting or settlement because trading in Shares is prohibited by law or by any insider trading policy of the Corporation, the Committee may extend the term of the Award (or provide for such in the applicable Award Agreement) until thirty (30) days after the expiration of any such prohibitions to permit the Grantee to realize the value of the Award, provided such extension (i) is permitted by law, (ii) does not violate Code Section 409A with respect to any Award, and (iii) does not otherwise adversely impact the tax consequences of the Award (such as with respect to incentive stock options and related Awards).
(b) This Section 5.8(b) applies to an Option or SAR if (i) the Grantee to whom the Option or SAR was granted remains in the continuous employment or service of the Corporation or an Affiliate from the date the Option or SAR was granted until the expiration date of such Option or SAR, (ii) on the expiration date the Fair Market Value of a share exceeds the exercise price of the Option or SAR, (iii) the Option or SAR has become exercisable on or before the expiration date and (iv) the term of the Option or SAR will not be extended as described above. In that event, subject to the other terms of the Plan in all respects, each Option or SAR to which this Section 5.8(b) applies shall be exercised automatically on the expiration date to the extent that it is outstanding and unexercised on such date. An Option that is exercised pursuant to this Section 5.8(b) shall result in the issuance to the Grantee of that number of whole Shares that have a Fair Market Value that most nearly equals, but does not exceed, the excess of the Fair Market Value of a Share on the expiration date over the Option exercise price multiplied by the number of Shares subject to the exercisable portion of the Option. A SAR that is exercised pursuant to this Section 5.8(b) shall be settled in accordance with its terms on the expiration date.
5.9 Conditions on Delivery of Shares. The Corporation will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Corporation’s satisfaction, (ii) as determined by the Corporation, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and rules and regulations of Nasdaq and any other stock exchange or automated quotation system upon which the Shares are listed or quoted, and (iii) the Grantee has executed and delivered to the Company such representations or agreements as the Committee deems necessary or appropriate to satisfy any applicable laws. The Corporation’s inability to obtain authority from any regulatory body having jurisdiction, which the Committee determines is necessary to the lawful issuance and sale of any Shares, will relieve the Corporation of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.
5.10 Performance-Based Awards. The Committee may impose such conditions and/or restrictions on Awards that include restrictions based upon the achievement of specific time-based restrictions, performance measures, time-based restrictions on vesting following the attainment of the performance measures, and/or restrictions under applicable law. In determining if any performance measures to which Awards are subject have been achieved, the Committee will adjust the performance targets in the event of any unbudgeted acquisition, divestiture or other unexpected fundamental change in the business of the Corporation, an Affiliate or business unit or in any product that is material taken as a whole as appropriate to fairly and equitably determine if the Award is to become exercisable, nonforfeitable and transferable or earned and payable pursuant to the conditions set forth in the Award. Additionally, in determining if such performance conditions have been achieved, the Committee also will adjust the performance targets in the event of any (i) unanticipated asset write-downs or impairment charges, (ii) litigation or claim judgments or settlements thereof, (iii) changes in tax laws, accounting principles or other laws or provisions affecting reported results, (iv) accruals for reorganization or restructuring programs, or (v) other extraordinary non-reoccurring items.
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Article 6
Stock Options
6.1 Grant of Options. Subject to and consistent with the provisions of the Plan, Options may be granted to any Eligible Person in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee. No dividend rights or dividend equivalent may be granted in conjunction with any grant of Options.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Exercise Price, the Term of the Option, the number of Shares to which the Option pertains, the time or times at which such Option shall be exercisable, whether the Option is intended to be a Non-Qualified Stock Option or an Incentive Stock Option and such other provisions as the Committee shall determine. Except as otherwise set forth in Section 5.6 above, no Option shall have a term of more than ten (10) years after its Grant Date, subject to earlier termination as provided herein or in the applicable Award Agreement. No Option may be exercised at a time when such exercise and/or the issuance of Shares pursuant to such exercise would be in breach of applicable law. No dividend rights or dividend equivalents may be granted in conjunction with any grant of Options.
6.3 Option Exercise Price. The Exercise Price of an Option under this Plan shall be determined in the sole discretion of the Committee but may not be less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date (except as otherwise set forth in Section 5.6 above) and shall not be less than the nominal value per Share if required by applicable law.
6.4 Grant of Incentive Stock Options. At the time of the grant of any Option, the Committee may in its discretion designate that such Option shall be made subject to additional restrictions to permit it to qualify as an Incentive Stock Option. An Option designated as an Incentive Stock Option:
(a) shall be granted only to an employee of the Corporation or a Subsidiary Corporation;
(b) shall have an Exercise Price of not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date, and, if granted to a person who owns capital stock (including stock treated as owned under Section 424(d) of the Code) possessing more than ten percent (10%) of the total combined voting power of all classes of capital stock of the Corporation or any Subsidiary Corporation (a “More Than Ten Percent (10%) Owner”), have an Exercise Price not less than one hundred and ten percent (110%) of the Fair Market Value of a Share on its Grant Date;
(c) shall be for a period of not more than 10 years (five years if the Grantee is a More Than 10% Owner) from its Grant Date, and shall be subject to earlier termination as provided herein or in the applicable Award Agreement;
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(d) shall not have an aggregate Fair Market Value (as of the Grant Date) of the Shares with respect to which Incentive Stock Options (whether granted under the Plan or any other stock option plan of the Grantee’s employer or any parent or Subsidiary Corporation (“Other Plans”)) are exercisable for the first time by such Grantee during any calendar year (“Current Grant”), determined in accordance with the provisions of Section 422 of the Code, which exceeds $100,000 (the “$100,000 Limit”);
(e) shall, if the aggregate Fair Market Value of the Shares (determined on the Grant Date) with respect to the Current Grant and all Incentive Stock Options previously granted under the Plan and any Other Plans which are exercisable for the first time during a calendar year (“Prior Grants”) would exceed the $100,000 Limit, be, as to the portion in excess of the $100,000 Limit, exercisable as a separate option that is not an Incentive Stock Option at such date or dates as are provided in the Current Grant;
(f) shall require the Grantee to notify the Committee of any disposition of any Shares delivered pursuant to the exercise of the Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to holding periods and certain disqualifying dispositions) (“Disqualifying Disposition”) within 10 days of such a Disqualifying Disposition;
(g) shall by its terms not be assignable or transferable other than by will or the laws of descent and distribution and may be exercised, during the Grantee’s lifetime, only by the Grantee; provided, however, that the Grantee may, to the extent provided in the Plan in any manner specified by the Committee, designate in writing a beneficiary to exercise his or her Incentive Stock Option after the Grantee’s death; and
(h) shall, if such Option nevertheless fails to meet the foregoing requirements, or otherwise fails to meet the requirements of Section 422 of the Code for an Incentive Stock Option, be treated for all purposes of this Plan, except as otherwise provided in subsections (d) and (e) above, as an Option that is not an Incentive Stock Option.
Notwithstanding the foregoing and Section 3.2, the Committee may, without the consent of the Grantee, at any time before the exercise of an Option (whether or not an Incentive Stock Option), take any action necessary to prevent such Option from being treated as an Incentive Stock Option. No Option that is intended to be an Incentive Stock Option shall be invalid for failure to qualify as an Incentive Stock Option.
6.5 Payment of Exercise Price. Except as otherwise provided by the Committee in an Award Agreement, Options shall be exercised by the delivery of a written notice of exercise to the Corporation, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares made by any one or more of the following means:
(a) cash, personal check, cash equivalent or wire transfer;
(b) subject to applicable law and with the approval of the Committee, by delivery of Shares owned by the Grantee prior to exercise, valued at their Fair Market Value on the date of exercise;
(c) subject to applicable law and with the approval of the Committee, Shares acquired upon the exercise of such Option, such Shares valued at their Fair Market Value on the date of exercise;
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(d) subject to applicable law and with the approval of the Committee, Restricted Shares held by the Grantee prior to the exercise of the Option, each such share valued at the Fair Market Value of a Share on the date of exercise; or
(e) subject to applicable law (including the prohibited loan provisions of Section 402 of Sarbanes-Oxley), through the sale of the Shares acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Corporation the amount of sale proceeds sufficient to pay for such Shares, together with, if requested by the Corporation, the amount of federal, state, local or foreign withholding taxes payable by Grantee by reason of such exercise.
Upon exercise of the Option, the Corporation shall issue the respective Shares within thirty (30) days of the date the Option is exercised unless the Award Agreement specifies otherwise.
The Committee may in its discretion specify that, if any Restricted Shares (“Tendered Restricted Shares”) are used to pay the Exercise Price, (x) all the Shares acquired on exercise of the Option shall be subject to the same restrictions as the Tendered Restricted Shares, determined as of the date of exercise of the Option, or (y) a number of Shares acquired on exercise of the Option equal to the number of Tendered Restricted Shares shall be subject to the same restrictions as the Tendered Restricted Shares, determined as of the date of exercise of the Option.
6.6 No Reload Options. No Option granted under the Plan shall contain any provision entitling the Grantee to the automatic grant of additional Options in connection with the exercise of the original Option.
Article 7
Stock Appreciation Rights
7.1 Issuance. Subject to and consistent with the provisions of the Plan, the Committee, at any time and from time to time, may grant SARs to any Eligible Person either alone or in addition to other Awards granted under the Plan. Such SARs may, but need not, be granted in connection with a specific Option granted under Article 6. The Committee may impose such conditions or restrictions on the exercise of any SAR as it shall deem appropriate. No dividend rights or Dividend Equivalents may be granted in conjunction with any grant of SARs.
7.2 Award Agreements. Each SAR grant shall be evidenced by an Award Agreement in such form as the Committee may approve and shall contain such terms and conditions not inconsistent with other provisions of the Plan as shall be determined from time to time by the Committee. Except as otherwise set forth in Section 5.6(b) above, no SAR shall have a term of more than ten (10) years after its Grant Date (or the Term of the related Option if granted in tandem therewith), subject to earlier termination as provided herein or in the applicable Award Agreement. No SAR may be exercised at a time when such exercise and/or the issuance of Shares pursuant to such exercise would be in breach of Applicable Law.
7.3 SAR Exercise Price. The Exercise Price of a SAR shall be determined by the Committee in its sole discretion; provided that, except as otherwise set forth in Section 5.6(b), the Exercise Price shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of the grant of the SAR (or the exercise price of the related Option if granted in tandem therewith).
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7.4 Exercise and Payment. Upon the exercise of an SAR, a Grantee shall be entitled to receive payment from the Corporation in an amount determined by multiplying:
(a) The excess of the Fair Market Value of a Share on the date of exercise over the Exercise Price; by
(b) The number of Shares with respect to which the SAR is exercised.
SARs shall be deemed exercised on the date written notice of exercise in a form acceptable to the Committee is received by the Secretary of the Corporation. The Corporation shall make payment in respect of any SAR within thirty (30) days of the date the SAR is exercised, unless the Award Agreement specifically provides otherwise. Any payment by the Corporation in respect of a SAR may be made in cash, Shares, other property, or any combination thereof, as the Committee, in its sole discretion, shall determine.
Article 8
Restricted Shares
8.1 Grant of Restricted Shares. Subject to and consistent with the provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Shares to any Eligible Person in such amounts as the Committee shall determine.
8.2 Award Agreement. Each grant of Restricted Shares shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Restricted Shares granted, and such other provisions as the Committee shall determine. The Committee may impose such conditions and/or restrictions on any Restricted Shares granted pursuant to the Plan as it may deem advisable, including restrictions based upon the achievement of specific time-based restrictions, performance measures, time-based restrictions on vesting following the attainment of the performance measures, and/or restrictions under applicable law.
8.3 Consideration for Restricted Shares. The Committee shall determine the amount, if any, that a Grantee shall pay for Restricted Shares provided that it shall be no less than the nominal value per Restricted Share if required to be paid by applicable law.
8.4 Effect of Forfeiture. If Restricted Shares are forfeited, and if the Grantee was required to pay for such shares or acquired such Restricted Shares upon the exercise of an Option, the Grantee shall be deemed to have resold such Restricted Shares to the Corporation at a price equal to the lesser of (x) the amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market Value of a Share on the date of such forfeiture. The Corporation shall pay to the Grantee the deemed sale price as soon as is administratively practical. Such Restricted Shares shall cease to be outstanding and shall no longer confer on the Grantee thereof any rights as a shareholder of the Corporation, from and after the date of the event causing the forfeiture, whether or not the Grantee accepts the Corporation’s tender of payment for such Restricted Shares.
8.5 Voting and Dividend Equivalent Rights Attributable to Restricted Shares. A Grantee awarded Restricted Shares will have all voting rights with respect to such Restricted Shares. Unless the Committee determines and sets forth in the Award Agreement that Grantee will not be entitled to receive any dividends with respect to such Restricted Shares, a Grantee will have the right to receive all dividends in respect of such Restricted Shares, which dividends shall be either deemed reinvested in additional shares of Restricted Shares, which shall remain subject to the same forfeiture conditions applicable to the Restricted Shares to which such dividends relate, or paid in cash if and at the time the Restricted Shares are no longer subject to forfeiture, as the Committee shall set forth in the Award Agreement. No dividends may be paid with respect to Restricted Shares that are forfeited.
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8.6 Escrow; Legends. The Committee may provide that the certificates for any Restricted Shares if certificated (x) shall be held (together with a stock transfer form executed in blank by the Grantee) in escrow by the Secretary of the Corporation until such Restricted Shares become non-forfeitable or are forfeited and/or (y) shall bear an appropriate legend restricting the transfer of such Restricted Shares under the Plan. If any Restricted Shares become nonforfeitable, the Corporation shall cause certificates for such shares to be delivered without such legend.
Article 9
Restricted Stock Units
9.1 Grant of Restricted Stock Units. Subject to and consistent with the provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Stock Units to any Eligible Person, in such amount and upon such terms as the Committee shall determine.
(a) Vesting and Delivery. Delivery of Shares subject to a grant of Restricted Stock Units shall occur no later than the 15th day of the third month following the end of the taxable year of the Grantee or the fiscal year of the Corporation in which the Grantee’s rights under such Restricted Stock Units are no longer subject to a substantial risk of forfeiture as defined in final regulations under Section 409A of the Code. Unless otherwise determined by the Committee, to the extent that the Grantee has a Termination of Service while the Restricted Stock Units remain subject to a substantial risk of forfeiture, such Restricted Stock Units shall be forfeited, unless the Committee determines that such substantial risk of forfeiture shall lapse in the event of the Grantee’s Termination of Service.
9.2 Voting and Dividend Equivalent Rights Attributable to Restricted Stock Units. A Grantee awarded Restricted Stock Units will have no voting rights with respect to such Restricted Stock Units prior to the delivery of Shares in settlement of such Restricted Stock Units. Unless the Committee determines and sets forth in the Award Agreement that a Grantee will not be entitled to receive any such dividend equivalents with respect to such Restricted Stock Units, the Grantee will have the right to receive dividend equivalents in respect of Restricted Stock Units, which dividend equivalents shall be either deemed reinvested in additional Shares of Restricted Stock Units, as applicable, which shall remain subject to the same forfeiture conditions applicable to the Restricted Stock Units to which such dividend equivalents relate, or paid in cash if and at the time the Restricted Stock Units are no longer subject to forfeiture and deliverable, as the Committee shall set forth in the Award Agreement. No dividend equivalents may be paid on Restricted Stock Units that are forfeited.
Article 10
Dividend Equivalents
The Committee is authorized to grant Awards of Dividend Equivalents alone or in conjunction with other Awards; provided, however, that no Dividend Equivalents may be granted in conjunction with any grant of Options or SARs, and no Dividend Equivalents may be paid on any Awards other than Options and SARs unless and until the Awards become vested, nonforfeitable and/or payable. The Committee may provide that Dividend Equivalents not paid in connection with an Award shall either be (i) paid or distributed in cash when the Dividend Equivalents or Awards to which such Dividend Equivalents relate become vested, nonforfeitable and/or payable or (ii) deemed to have been reinvested in additional Dividends Equivalents or Awards.
Article 11
Bonus Shares
Subject to the terms of the Plan, including without limitation the repricing restrictions set forth in Section 3.3, the Committee may grant Bonus Shares to any Eligible Person, in such amount and upon such terms and at any time and from time to time as shall be determined by the Committee.
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Article 12
Other Stock-Based Awards
The Committee is authorized, subject to limitations under applicable law, to grant such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including Shares awarded which are not subject to any restrictions or conditions, convertible or exchangeable debt securities or other rights convertible or exchangeable into Shares, and Awards valued by reference to the value of securities of or the performance of specified Affiliates. Subject to and consistent with the provisions of the Plan, the Committee shall determine the terms and conditions of such Awards. Except as provided by the Committee, Shares delivered pursuant to a purchase right granted under this Article 12 shall be purchased for such consideration, paid for by such methods and in such forms, including cash, Shares, outstanding Awards or other property, as the Committee shall determine.
Article 13
Non-Employee Director Awards
Subject to the terms of the Plan, the Committee may grant Awards to any Non-Employee Director, in such amount and upon such terms and at any time and from time to time as shall be determined by the Committee in its sole discretion. Except as otherwise provided in Section 5.6(b), a Non-Employee Director may not be granted Awards during any single calendar year that, taken together with any cash fees paid to such Non-Employee Director during such calendar year in respect of the Non-Employee Director’s service as a member of the Board during such year, exceeds $500,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial accounting purposes) (twice that limit for Awards that are granted to a Non-Employee Director in the fiscal year in which the Non-Employee Director first commences service) (based in each case on the highest level of performance resulting in the maximum payout). Notwithstanding the foregoing, the Board may make exceptions to this limit for individual Non-Employee Directors in extraordinary circumstances, as the Board may determine in its discretion, provided that the Non-Employee Director receiving such additional compensation may not participate in the decision to award such compensation.
Article 14
Amendment, Modification, and Termination
14.1 Amendment, Modification, and Termination. Subject to Section 14.2, the Board may, at any time and from time to time, alter, amend, suspend, discontinue or terminate the Plan in whole or in part without the approval of the Corporation’s shareholders, except that (a) any amendment or alteration shall be subject to the approval of the Corporation’s shareholders if such shareholder approval is required by any applicable law, and (b) the Board may otherwise, in its discretion, determine to submit other such amendments or alterations to shareholders for approval.
14.2 Awards Previously Granted. Except as otherwise specifically permitted in the Plan or an Award Agreement, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Grantee of such Award.
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Article 15
Withholding
15.1 Required Withholding.
(a) The Committee in its sole discretion may provide that when taxes are to be withheld in connection with the exercise of an Option or SAR, or upon the lapse of restrictions on Restricted Shares, or upon the transfer of Shares, or upon payment of any other benefit or right under this Plan (the date on which such exercise occurs or such restrictions lapse or such payment of any other benefit or right occurs hereinafter referred to as the “Tax Date”), the Grantee may elect to make payment for the withholding of federal, state and local taxes, including Social Security and Medicare (“FICA”) taxes by one or a combination of the following methods:
(i) payment of an amount in cash equal to the amount to be withheld (including cash obtained through the sale of the Shares acquired on exercise of an Option or SAR, upon the lapse of restrictions on Restricted Shares, or upon the transfer of Shares, through a broker-dealer to whom the Grantee has submitted irrevocable instructions to deliver promptly to the Corporation, the amount to be withheld);
(ii) delivering part or all of the amount to be withheld in the form of Shares valued at its Fair Market Value on the Tax Date;
(iii) requesting the Corporation to withhold from those Shares that would otherwise be received upon exercise of the Option or SAR, upon the lapse of restrictions on Restricted Stock, or upon the transfer of Shares, a number of Shares having a Fair Market Value on the Tax Date equal to the amount to be withheld; or
(iv) withholding from any compensation otherwise due to the Grantee.
The Committee in its sole discretion may provide that the maximum amount of tax withholding upon exercise of an Option or SAR, upon the lapse of restrictions on Restricted Shares, or upon the transfer of Shares, to be satisfied by withholding Shares upon exercise of such Option or SAR, upon the lapse of restrictions on Restricted Shares, or upon the transfer of Shares, pursuant to clause (iii) above shall not exceed the minimum amount of taxes, including FICA taxes, required to be withheld under federal, state and local law that will not result in adverse financial accounting consequences with respect to such Awards and is permitted under applicable withholding rules promulgated by the Internal Revenue Service or another applicable governmental entity. An election by Grantee under this subsection is irrevocable. Any fractional share amount and any additional withholding not paid by the withholding or surrender of Shares must be paid in cash. If no timely election is made, the Grantee must deliver cash to satisfy all tax withholding requirements.
(b) Any Grantee who makes a Disqualifying Disposition or an election under Section 83(b) of the Code shall remit to the Corporation an amount, if any, sufficient to satisfy all resulting tax withholding requirements in the same manner as set forth in subsection (a) (other than (a)(iii) above).
15.2 Notification under Code Section 83(b). If the Grantee, in connection with the exercise of any Option, or the grant of Restricted Shares, makes the election permitted under Section 83(b) of the Code to include in such Grantee’s gross income in the year of transfer the amounts specified in Section 83(b) of the Code, then such Grantee shall notify the Corporation of such election within 10 days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code. The Committee may, in connection with the grant of an Award or at any time thereafter, prohibit a Grantee from making the election described above.
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Article 16
Additional Provisions
16.1 Successors. All obligations of the Corporation under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Corporation, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business and/or assets of the Corporation.
16.2 Severability. If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
16.3 Requirements of Law. The granting of Awards and the delivery of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or Nasdaq and any other stock exchange or automated quotation system upon which the Shares are listed or quoted as may be required. Notwithstanding any provision of the Plan or any Award, Grantees shall not be entitled to exercise, or receive benefits under, any Award, and the Corporation (and any Affiliate) shall not be obligated to deliver any Shares or deliver benefits to a Grantee, if such exercise or delivery would constitute a violation by the Grantee or the Corporation of any applicable law or regulation.
16.4 Securities Law Compliance.
(a) If the Committee deems it necessary to comply with any applicable law, the Committee may impose any restriction on Awards or Shares acquired pursuant to Awards under the Plan as it may deem advisable. In addition, if requested by the Corporation and any underwriter engaged by the Corporation, Shares acquired pursuant to Awards may not be sold or otherwise transferred or disposed of for such period following the date of the final prospectus or prospectus supplement relating to an underwritten public offering as the Corporation or such underwriter shall specify reasonably and in good faith, not to exceed 180 days in the case of the initial public offering or 90 days in the case of any other public offering. All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, Nasdaq and any other stock exchange or automated quotation system upon which the Shares are listed or quoted, any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. If so requested by the Corporation, the Grantee shall make a written representation to the Corporation that he or she will not sell or offer to sell any Shares unless a registration statement shall be in effect with respect to such Shares under the Securities Act and any applicable state securities law or unless he or she shall have furnished to the Corporation, in form and substance satisfactory to the Corporation, that such registration is not required.
(b) If the Committee determines that the exercise or nonforfeitability of, or delivery of benefits pursuant to, any Award would violate any applicable law or result in the imposition of excise taxes on the Corporation or its Affiliates under the statutes, rules or regulations of any applicable jurisdiction, then the Committee may postpone any such exercise, nonforfeitability or delivery, as applicable, but the Corporation shall use all reasonable efforts to cause such exercise, nonforfeitability or delivery to comply with all such provisions at the earliest practicable date.
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(c) The Committee may require each Grantee receiving Shares pursuant to an Award under the Plan to represent to and agree with the Corporation in writing that the Grantee is acquiring the Shares without a view to distribution thereof. In addition to any legend required by the Plan, the certificates for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer. All certificates for Shares delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the SEC, Nasdaq and any other stock exchange or automated quotation system upon which the Shares are listed or quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(d) A Grantee shall be required to supply the Corporation with certificates, representations and information that the Corporation requests and otherwise cooperate with the Corporation in obtaining any listing, registration, qualification, exemption, consent or approval the Corporation deems necessary or appropriate.
16.5 No Rights as a Shareholder. Unless otherwise determined by the Committee and set forth in the Award Agreement, no Grantee shall have any rights as a shareholder of the Corporation with respect to the Shares (other than Restricted Shares) which may be deliverable upon exercise or payment of such Award until such Shares have been delivered to him or her. Restricted Shares, whether held by a Grantee or in escrow by the Secretary of the Corporation, shall confer on the Grantee all rights of a shareholder of the Corporation, except as otherwise provided in the Plan or Award Agreement. At the time of grant of an Award, the Committee may require the payment of cash dividends thereon to be deferred and, if the Committee so determines, reinvested in additional Awards. Stock dividends and deferred cash dividends issued with respect to Awards shall be subject to the same restrictions and other terms as apply to the Awards with respect to which such dividends are issued. The Committee may in its discretion provide for payment of interest on deferred cash dividends.
16.6 Employee Status. If the terms of any Award provide that it may be exercised or paid only during employment or continued service or within a specified period of time after termination of employment or continued service, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment or service. For purposes of the Plan, employment and continued service shall be deemed to exist between the Grantee and the Corporation and/or an Affiliate if, at the time of the determination, the Grantee is a director, officer, employee, consultant or advisor of the Corporation or an Affiliate. A Grantee on military leave, sick leave or other bona fide leave of absence shall continue to be considered an employee for purposes of the Plan during such leave if the period of leave does not exceed three months, or, if longer, so long as the individual’s right to re-employment with the Corporation or any of its Affiliates is guaranteed either by statute, agreement or contract. If the period of leave exceeds three months, and the individual’s right to re-employment is not guaranteed by statute, agreement or contract, the employment shall be deemed to be terminated on the first day after the end of such three-month period. Except as may otherwise be expressly provided in an Agreement, Awards granted to a director, officer, employee, consultant or adviser shall not be affected by any change in the status of the Grantee so long as the Grantee continues to be a director, officer, employee, consultant or advisor to the Corporation or any of its Affiliates (regardless of having changed from one to the other or having been transferred from one entity to another). The Grantee’s employment or continued service shall not be considered interrupted in the event the Committee, in its discretion and as specified at or prior to such occurrence, determines there is no interruption in the case of a spin-off, sale or disposition of the Grantee’s employer from the Corporation or an Affiliate, except that if the Committee does not otherwise specify such at or prior to such occurrence, the Grantee will be deemed to have a termination of employment or continuous service to the extent the Affiliate that employs the Grantee is no longer the Corporation or an entity that qualifies as an Affiliate.
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16.7 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Georgia, other than its laws respecting choice of law, to the extent not preempted by federal law.
16.8 Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding with respect to the Plan or any Award, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the State of Georgia or the United States District Court for the District of Georgia and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, the Corporation and each Grantee shall irrevocably and unconditionally (a) submit in any proceeding relating to the Plan or any Award Agreement, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the State of Georgia, the court of the United States of America for the District of Georgia, and appellate courts having jurisdiction of appeals from any of the foregoing, and agree that all claims in respect of any such Proceeding shall be heard and determined in such Georgia State court or, to the extent permitted by law, in such federal court, (b) consent that any such Proceeding may and shall be brought in such courts and waives any objection that the Corporation and each Grantee may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Grantee, at the Grantee’s address shown in the books and records of the Corporation or, in the case of the Corporation, at the Corporation’s principal offices, attention Chief Financial Officer, and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the State of Georgia.
16.9 Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Grantee any rights that are greater than those of a general creditor of the Corporation.
16.10 Military Service. Awards shall be administered in accordance with Section 414(u) of the Code and the Uniformed Services Employment and Reemployment Rights Act of 1994.
16.11 No Right to Continue in Service or Employment. Nothing in the Plan or any Award Agreement shall confer upon any Non-Employee Director the right to continue to serve as a director of the Corporation. Nothing contained in the Plan or any Agreement shall confer upon any Grantee any right with respect to the continuation of employment or service by the Corporation or any Affiliate or interfere in any way with the right of the Corporation or any Affiliate, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or service or to increase or decrease the compensation of the Grantee.
16.12 Payment on Behalf of Grantee or Beneficiary.
(a) If the Grantee is incompetent to handle Grantee’s affairs at the time the Grantee is eligible to receive a payment from the Plan, the Committee will make payment to the Grantee’s court-appointed personal representative or, if none, the Committee, in its sole discretion, may make payment to the Grantee’s duly appointed guardian, legal representative, next-of-kin or attorney-in-fact for the benefit of the Grantee.
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(b) If the Beneficiary of a deceased Grantee is a minor or is legally incompetent, the Committee will make payment to the Beneficiary’s court-appointed guardian or personal representative or to a trust established for the benefit of the Beneficiary, or if no such guardian, representative or trust exists, the Committee, in its sole discretion, may make payment to the Beneficiary’s surviving parent or his or her next-of-kin for the benefit of the Beneficiary.
(c) If the Committee for any reason considers it improper to direct any payment as specified in this Section 16.12, the Committee may request a court of appropriate jurisdiction to determine the appropriate payee.
(d) Any payment made by the Committee pursuant to this Section 16.12 shall be in full satisfaction of all liability of the Plan, the Corporation and its Affiliates with respect to any benefit due a Grantee or a Grantee’s Beneficiary under this Plan.
16.13 Data Privacy. As a condition for receiving an Award, each Grantee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this Section by and among the Company and its Affiliates exclusively for implementing, administering and managing the Grantee’s participation in the Plan. The Company and its Affiliates may hold certain personal information about a Grantee, including the Grantee’s name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”). The Company and its Affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Grantee’s participation in the Plan, and the Company and its Affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Grantee’s country, or elsewhere, and the Grantee’s country may have different data privacy laws and protections than the recipients’ country. By accepting an Award, each Grantee authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Grantee’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Grantee may elect to deposit any Shares. The Data related to a Grantee will be held only as long as necessary to implement, administer, and manage the Grantee’s participation in the Plan. A Grantee may, at any time, view the Data that the Company holds regarding such Grantee, request additional information about the storage and processing of the Data regarding such Grantee, recommend any necessary corrections to the Data regarding the Grantee or refuse or withdraw the consents in this Section 16.13 in writing, without cost, by contacting the local human resources representative. The Company may cancel Grantee’s ability to participate in the Plan and, in the Committee’s discretion, the Grantee may forfeit any outstanding Awards if the Grantee refuses or withdraws the consents in this Section 16.13. For more information on the consequences of refusing or withdrawing consent, Grantees may contact their local human resources representative.
16.14 Awards Subject to Share Retention Guidelines and Claw-Back Policies. Notwithstanding any provisions herein to the contrary, (i) Shares acquired by a Grantee under the Plan upon the exercise, payment or settlement of an Award shall be subject to the terms of any Share retention guidelines currently in effect or subsequently adopted by the Board and (ii) all Awards granted under the Plan shall be subject to the terms of any recoupment policy currently in effect or subsequently adopted by the Board to implement Section 304 of Sarbanes-Oxley, Dodd-Frank or Section 10D of the Exchange Act (or with any amendment or modification of such recoupment policy adopted by the Board) to the extent that such Award (whether or not previously exercised or settled) or the value of such Award is required to be returned to the Corporation pursuant to the terms of such recoupment policy.
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16.15 Section 409A.
(a) The provisions of this Section and Section 409A of the Code shall apply to any Award or portion thereof that is or becomes deferred compensation subject to Code Section 409A (a “409A Award”), notwithstanding any provision to the contrary contained in the Plan or the Award Agreement applicable to such Award, to the extent required for the Award to comply with Section 409A of the Code.
(b) Except as otherwise permitted or required by Code Section 409A, no distribution in settlement of a 409A Award may commence earlier than (i) Separation from Service; (ii) the date the Grantee becomes Disabled (as defined in Section 2.26(b)); (iii) the date of the Grantee’s death; (iv) a specified time (or pursuant to a fixed schedule) that is either (a) specified by the Committee upon the grant of the Award and set forth in the Award Agreement or (b) specified by the Grantee in an Election complying with the requirements of Section 409A of the Code; or (vi) a change in control of the Company within the meaning of Treasury Regulation Section 1.409A-3(h)(5).
(c) Notwithstanding anything herein or in any Award Agreement or election to the contrary, to the extent that distribution of a 409A Award is triggered by a Grantee’s Separation from Service, if the Grantee is then a “specified employee” (as defined in Treasury Regulation Section 1.409A-1(i)), no distribution may be made before the date which is six (6) months after such Grantee’s Separation from Service, or, if earlier, the date of the Grantee’s death, to the extent required to comply with Code Section 409A.
(d) If an Award Agreement does not specify a payment date, payment of the Award will be made no later than the 15th day of the third month following the end of the taxable year of the Grantee, or the fiscal year of the Company, during which the Grantee’s right to payment is no longer subject to a substantial risk of forfeiture under Section 409A of the Code, whichever is later. All rights to payments and benefits under an Award shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.
(e) With respect to Options, SARs and other Awards in the nature of purchase rights that are intended to be exempt from Section 409A of the Code, in applying Code Sections 1563(a)(l), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language “at least 20 percent” shall be used instead of “at least 80 percent” at each place it appears in Sections 1563(a)(l), (2) and (3), and in applying Treasury Regulation § 1.414(c)-2 (or any successor provision) for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c), the language “at least 20 percent” shall be used instead of “at least 80 percent” at each place it appears in Treasury Regulation §1.414(c)-2.
16.16 Parachute Limitations. Notwithstanding any other provision of this Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Grantee with the Corporation or any Affiliate, except an agreement, contract, or understanding that expressly addresses Section 280G or Section 4999 of the Code (an “Other Agreement”), and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Grantee (including groups or classes of Grantees or beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee (a “Benefit Arrangement”), if the Grantee is a “disqualified individual,” as defined in Section 280G(c) of the Code, any Award held by that Grantee and any right to receive any payment or other benefit under this Plan shall not become exercisable or vested to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Grantee under this Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to the Grantee under this Plan to be subject to the excise tax under Code Section 4999; provided, however, that the foregoing limitation on Awards under the Plan shall only be applicable to the extent that the imposition of such limitation is, on a net after tax basis, beneficial to the Grantee. The Committee shall have the authority to determine what restrictions and/or reductions in payments shall be made under this Section in order to avoid the detrimental tax consequences of Code Section 4999, and may use such authority to cause a reduction to payments or benefits that would be made by reason of contracts, agreements or arrangements that are outside the scope of the Plan, to the extent such a reduction would result in a greater, net after-tax benefit to the Grantee. Any such reduction shall be in the order specified by first reducing or eliminating any cash benefits, then by reducing or eliminating any accelerated vesting of equity awards in the manner that results in the largest amount being paid to Grantee and then by reducing or eliminating any other remaining payments, in each case in reverse order beginning with the payments which are to be paid the farthest in time from the date of the transaction triggering the reduction and reducing first any such payments within each category that are not subject to Section 409A of the Code.
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16.17 Miscellaneous.
(a) No person shall have any claim or right to receive an Award hereunder. The Committee’s granting of an Award to a Grantee at any time shall neither require the Committee to grant any other Award to such Grantee or other person at any time or preclude the Committee from making subsequent grants to such Grantee or any other person.
(b) Nothing contained herein prohibits the Grantee from: (1) reporting possible violations of federal law or regulations, including any possible securities laws violations, to any governmental agency or entity; (2) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (3) otherwise fully participating in any federal whistleblower programs, including but not limited to any such programs managed by the SEC. The Grantee does not need prior authorization from the Corporation to make any such reports or disclosures, and is not required to notify the Corporation about such disclosures.
(c) Agreements evidencing Awards under the Plan shall contain such other terms and conditions, not inconsistent with the Plan, as the Committee may determine in its sole discretion, including penalties for the commission of competitive acts or other actions detrimental to the Corporation. Notwithstanding any other provision hereof, the Committee shall have the right at any time to deny or delay a Grantee’s exercise of Options or SARs or the settlement of an Award if such Grantee is reasonably believed by the Committee (i) to be engaged in material conduct adversely affecting the Corporation or (ii) to be contemplating such conduct, unless and until the Committee shall have received reasonable assurance that the Grantee is not engaged in, and is not contemplating, such material conduct adverse to the interests of the Corporation.
(d) Grantees are and at all times shall remain subject to the securities trading policies adopted by the Corporation from time to time throughout the period of time during which they may exercise Options or sell Shares acquired pursuant to the Plan.
(e) Notwithstanding any other provision of this Plan, (i) the Corporation shall not be obliged to issue any shares pursuant to an Award unless at least the par value of such newly issued share has been fully paid in advance in accordance with applicable law (which requirement may mean the holder of an Award is obliged to make such payment) and (ii) the Corporation shall not be obliged to issue or deliver any shares in satisfaction of Awards until all legal and regulatory requirements associated with such issue or delivery have been complied with to the satisfaction of the Committee.
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(f) The Committee has no obligation to search for the whereabouts of any Grantee or Beneficiary if the location of such Grantee or Beneficiary are not made known to the Committee.
(g) The Committee may in its discretion require the transferee of a Grantee to supply it with written notice of the Grantee’s death or Disability and to supply it with a copy of the will (in the case of the Grantee’s death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require that the agreement of the transferee to be bound by all of the terms and conditions of the Plan and the particular Award.
(h) By accepting Awards and as a condition to the exercise of Awards and the enjoyment of any benefits of the Plan, including participation therein, each Grantee agrees to be bound by and subject to non-competition, confidentiality and invention ownership agreements acceptable to the Committee or any officer or director to whom the Committee elects to delegate such authority.
(i) Notwithstanding any other provision of the Plan or any Agreement to the contrary, a Grantee shall forfeit any and all rights under an Award upon receipt of notice from the Corporation or an Affiliate that the Grantee will incur a Termination of Service by the Corporation or such Affiliate for Cause.
(j) As a condition for the delivery of any Shares pursuant to any Award the Committee may require the Grantee to execute and be bound by any agreement that generally exists between the Corporation and similarly-situated shareholders.
(k) The Committee in its discretion may provide in an Award Agreement that the Corporation may repurchase Shares issued pursuant to the Plan upon a Grantee’s termination of Continuous Service.
(l) In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the federal securities laws, including the Corporation’s initial public offering, Grantees shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Plan without the prior written consent of the Corporation or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time, not exceeding one hundred eighty (180) days, following the date of the final prospectus for the offering as may be requested by the Corporation or such underwriters. The Market Stand-Off shall in any event terminate two (2) years after the date of the Corporation’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Corporation’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to such Market Stand-Off. In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Shares acquired under this Plan until the end of the applicable stand-off period. The Corporation and its underwriters shall be beneficiaries of the agreement set forth in this paragraph. This paragraph shall not apply to Shares registered in a public offering under the federal securities laws, and the Grantee shall be subject to this paragraph only if the directors and officers of the Corporation are subject to similar arrangements.
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Exhibit 10.13
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Time Based)
PURSUANT TO THE
Georgia Banking Company, Inc. Amended and Restated 2021 Stock Incentive Plan
Grantee: __________________________
Grant Date: __________________________
Number of RSUs subject to this Award: _______________ representing the right to receive a number of Shares equal to or lower than (including zero) the number of RSUs, subject to the terms and conditions attached hereto, and subject to adjustment pursuant to Section 4 of the Plan.
THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) dated as of the Grant Date specified above, is entered into by and between Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), and the Grantee specified above, pursuant to the Georgia Banking Company, Inc. Amended and Restated 2021 Stock Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Executive Committee of the Board of Directors of the Company (the “Committee”); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Restricted Stock Units provided herein to the Grantee;
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation by Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Grantee hereby acknowledges receipt of a true copy of the Plan and that the Grantee has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Restricted Stock Units. The Company hereby grants to the Grantee, as of the Grant Date specified above, Restricted Stock Units (“RSUs”) in the amount set forth above, subject to, and in accordance with, the restrictions, terms and conditions set forth in this Agreement and the Plan. Except as otherwise provided by the Plan, the Grantee agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Grantee with any protection against potential future dilution of the Grantee’s interest in the Company for any reason. The Grantee shall have no rights as a shareholder with respect to any Shares covered by the RSUs unless and until the Grantee has become the holder of record of such Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in the Plan or this Agreement.
3. Vesting.
(a) Vesting. Subject to Section 3(b) hereof, the RSUs shall vest as of the date(s) set forth below (each a “Vesting Date”), provided the Grantee has not incurred a Termination of Service prior to such vesting date:
| Vesting Date | Number of RSU Shares |
|
[Date]
[Date]
[Date] |
[ ]
[ ]
[ ] |
There shall be no proportionate or partial vesting in the periods prior to each Vesting Date and all vesting shall occur only on the appropriate Vesting Date, subject to the Grantee’s continued employment or service with the Company or any of its Affiliates on each applicable Vesting Date. If the Grantee incurs a Termination of Service prior to an applicable Vesting Date, the outstanding unvested RSUs shall immediately be forfeited as of the date of Termination of Service.
(b) Change in Control. Notwithstanding the foregoing, in the event a Change in Control occurs, the outstanding unvested portion of the RSUs shall become vested as of the date of such Change in Control, provided the Grantee has not incurred a Termination of Service prior to the date of the Change in Control.
4. Settlement of Vested RSUs.
(a) Subject to Sections 5, 8 and 13 hereof, if the Grantee becomes vested in RSUs in accordance with Section 3, the Company shall pay to the Grantee the number of Shares equal to the number of vested RSUs in respect of such vested RSUs on the date of vesting. Such Shares shall be delivered in a lump sum within thirty (30) days following the Vesting Date as defined in Section 3. The Grantee shall have no right to dividend equivalents or dividends on the RSUs.
(b) Notwithstanding Section 4(a), to the extent the Grantee is eligible to participate in a deferred compensation plan established for such purpose, the Grantee may elect to defer delivery of the Shares that would otherwise be due by virtue of the lapse or waiver of the vesting requirements as set forth in Section 3. If such deferral election is made, the Committee shall, in its sole discretion, establish the rules and procedures for such deferrals which shall be in compliance with Section 409A (as defined in Section 14 hereof).
5. Further Holding Period. Following the Vesting Date, one-half of the Net Shares (as defined below) vesting on such applicable Vesting Date shall be subject to a further holding period of twenty-four (24) months, during which such shares may not be sold, assigned, pledged, mortgaged, transferred or otherwise disposed of, although the shares are considered vested and are no longer subject to forfeiture. The further holding period will be deemed satisfied and lapsed prior to the twenty-four (24)-month anniversary of the Vesting Date in the event of the Grantee’s death, Disability or the occurrence of a Change in Control. For this purpose, “Net Shares” are the net of any Shares withheld for the payment of taxes as provided in Section 8.
6. Non-Transferability. The RSUs, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not be sold, exchanged, transferred, assigned, pledged, encumbered or otherwise disposed of or hypothecated in any way by the Grantee (or any beneficiary(ies) of the Grantee who holds the RSUs as a result of a transfer by will or by the laws of descent and distribution), other than by testamentary disposition by the Grantee or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its sole discretion, permit the RSUs to be transferred to a Permitted Transferee for no value, provided that such transfer shall only be valid upon execution of a written instrument in form and substance acceptable to the Committee in its sole discretion evidencing such transfer and the transferee’s acceptance thereof signed by the Grantee and the transferee, and provided, further, that the RSUs may not be subsequently transferred other than by will or by the laws of descent and distribution or to another Permitted Transferee (as permitted by the Committee in its sole discretion) in accordance with the terms of the Plan and this Agreement, and shall remain subject to the terms of the Plan and this Agreement. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way the RSUs, or the levy of any execution, attachment or similar legal process upon the RSUs, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
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7. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without regard to the choice of law principles thereof.
8. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Grantee’s FICA and other obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law with respect to the RSUs and, if the Grantee fails to do so, the Company may otherwise refuse to issue or transfer any Shares otherwise required to be issued pursuant to this Agreement. Any required withholding obligation with regard to the Grantee may be satisfied as set forth in Article 15 of the Plan (if permitted by the Committee).
9. Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Grantee. The Company shall give written notice to the Grantee of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
10. Notices. Any notice hereunder by the Grantee shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Chief Financial Officer of the Company. Any notice hereunder by the Company shall be given to the Grantee in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Grantee may have on file with the Company.
11. No Right to Employment or Service. Any questions as to whether and when there has been a Termination of Service and the cause of such Termination of Service shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Grantee’s employment or service at any time, for any reason and with or without Cause.
12. Transfer of Personal Data. The Grantee authorizes, agrees and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data related to the RSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Grantee.
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13. Compliance with Laws. The issuance of the RSUs (and the Shares upon settlement of the RSUs) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. The Company shall not be obligated to issue the RSUs or any of the Shares pursuant to this Agreement if any such issuance would violate any such requirements.
14. Section 409A. This Agreement shall at all times be interpreted and operated in compliance with, or meet an exemption from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the standards, regulations or other guidance promulgated thereunder (“Section 409A”). Any action that may be taken (and, to the extent possible, any action actually taken) by the Company shall not be taken (or shall be void and without effect), if such action violates the requirements of Section 409A. Any provision in this Agreement that is determined to violate the requirements of Section 409A shall be void and without effect. In addition, any provision that is required to appear in this Agreement in accordance with Section 409A that is not expressly set forth herein shall be deemed to be set forth herein, and the Agreement shall be administered in all respects as if such provision were expressly set forth. The Company shall delay the commencement of any delivery of Shares that are payable to the Grantee upon his separation from service if the Grantee is a “key employee” of the Company (as determined by the Company in accordance with procedures established by the Company that are consistent with Section 409A) to the date which is immediately following the earlier of (i) six months after the date of the Grantee’s separation from service or (ii) the Grantee’s death, to the extent such delay is required under the provisions of Section 409A to avoid imposition of additional income and other taxes, provided that the Company and the Grantee agree to take into account any exemptions available under Section 409A. For purposes of this Agreement, termination of employment or Termination of Service shall be construed consistent with the meaning of a “separation from service” within the meaning of Section 409A.
15. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Grantee shall not assign (except in accordance with Section 5 hereof) any part of this Agreement without the prior express written consent of the Company.
16. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
18. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
19. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
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20. Acquired Rights. The Grantee acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the award of the RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give the Grantee any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Grantee’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
21. Restrictive Covenants.
(a) Definitions. For purposes of this Section 21, the following terms shall have the following meanings:
| (i) | “Business of Company” means the business of providing banking services to commercial and consumer customers. |
| (ii) | “Company” means the Georgia Banking Company, Inc., or any of its subsidiaries, including Georgia Banking Company. |
| (iii) | “Competing Business” means any Person, business or subdivision of a business which substantially engages in the Business of Company, or which is actively planning to engage in the Business of Company, excluding subdivisions of a business, if any, which are unrelated to the Business of Company. |
| (iv) | “Confidential Information” means proprietary or confidential data, information, documents, or materials (in oral, written, electronic or other forms) that belongs to or pertains to the Company and which was disclosed to the Grantee or which the Grantee became aware of as a consequence of the Grantee’s relationship with the Company, which is of tangible or intangible value to the Company, and the details of which are not generally known to the competitors of the Company. Confidential Information shall include (but is not limited to): (i) the identities of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of Company vendors or potential vendors, and the terms or proposed terms upon which the Company may purchase products and services from such vendors, (iii) technology used by the Company to provide its services, (iv) marketing and/or business plans and strategies, (v) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, (vi) the nature, origin, composition and development of the Company’s products and services, and (vii) information provided to the Company by third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information shall not include information: (x) that has been voluntarily disclosed to the public by the Company, except where such public disclosure has been made by the Grantee without authorization from the Company, (y) that has been independently developed and disclosed by others, or (z) that has otherwise entered the public domain through lawful means. |
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| (v) | “Customer” means any Person to which the Company has sold its products or provided its services (including those to which such products or services are sold or provided during the Grantee’s employment). |
| (vi) | “Material Contact” for purposes of the non-solicitation of Company employees and contractors provision contained in Section 21(c) of this Agreement means contact in person, by telephone, or by paper or electronic correspondence, in furtherance of the business interests of the Company, and within the twenty-four (24) months prior to the solicitation. |
| (vii) | “Material Contact” for purposes of the customer non-solicitation provision contained in Section 21(d) of this Agreement means contact between the Grantee and each Customer or potential customer of the Company within the twenty-four (24) months prior to the solicitation: |
| (1) | with whom or which the Grantee dealt on behalf of the Company; |
| (2) | whose dealings with the Company were coordinated or supervised by the Grantee; |
| (3) | about whom the Grantee obtained Confidential Information in the ordinary course of business as a result of the Grantee’s association with the Company; or |
| (4) | who receives products or services authorized by Company, the sale or provision of which results or resulted in compensation, commissions or earnings for the Grantee within the two (2) years prior to the date of the Grantee’s termination or resignation. |
| (viii) | “Prospective Customer” means any Person which the Company has solicited to purchase the Company’s products or use its services (including those solicited during the Grantee’s employment). |
| (ix) | “Restricted Period” means during the Grantee’s employment with the Company and the twelve (12) months following the Grantee’s separation from employment from the Company for any reason or no reason. |
| (x) | “Trade Secrets” means trade secrets as defined by applicable law. |
(b) Confidentiality.
| (i) | No Disclosure of Confidential Information and Trade Secrets. The Grantee agrees that during employment, and following the Grantee’s separation from employment from the Company for any reason or no reason, the Grantee will not directly or indirectly use, copy, disclose, publish or otherwise distribute to any other Person or entity any Confidential Information or Trade Secrets of the Company. In the event that the Grantee becomes aware of unauthorized disclosures of the Confidential Information by anyone at any time, whether intentionally or by accident, the Grantee shall promptly notify the Company. This Agreement does not limit the remedies available to the Company under common or statutory law as to trade secrets or other types of confidential information, which may impose additional duties of non-use or non-disclosure. |
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| (ii) | Exception for Disclosure of Trade Secrets in Certain Circumstances. Notwithstanding anything herein to the contrary, the Grantee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a Trade Secret that (i) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if the Grantee files a lawsuit for retaliation for reporting a suspected violation of law, the Grantee may disclose the Trade Secret to his or her attorney and use the Trade Secret information in the court proceeding, as long as the Grantee files any document containing the Trade Secret under seal and does not disclose the Trade Secret, except pursuant to court order. |
(c) Non-Solicitation of Company Employees and Contractors. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, recruit, attempt to solicit or recruit, or induce any employee or independent contractor of the Company with whom the Grantee had Material Contact, to terminate or lessen such employment or contract with the Company.
(d) Non-Solicitation of Company Customers. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, divert or appropriate any Customers, Prospective Customers, correspondents or other sources of or purchasers of loans of the Company with whom the Grantee had Material Contact, for the purpose of selling any products or services for a Competing Business.
(e) Acknowledgements. The Grantee acknowledges and agrees that the provisions of Section 21 of this Agreement (the “Restrictive Covenants”) are reasonable as to time, scope and territory given the Company’s need to protect its Confidential Information and its relationships and goodwill with its Customers, suppliers, employees and contractors, all of which have been developed at great time and expense to the Company. The Grantee represents that the Grantee has the skills and abilities to obtain alternative employment that would not violate the Restrictive Covenants in the event that the Grantee leaves employment with the Company, and that the Restrictive Covenants do not pose an undue hardship on the Grantee. The Grantee further acknowledges that the Grantee’s breach of any of the Restrictive Covenants would likely cause irreparable injury to the Company, and therefore entitle the Company to injunctive relief, in addition to any other remedies available in law or equity or pursuant to Section 21(f) below.
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(f) Claw Back. The Grantee further acknowledges and agrees that, if the Grantee breaches any of the Restrictive Covenants set forth herein, (i) the Grantee shall forfeit any and all rights with respect to the RSUs granted pursuant to this Agreement and the Plan (whether vested or otherwise) and any other rights and interests with respect thereto; (ii) no further Shares or other amounts shall be paid to the Grantee under this Agreement; and (iii) the Grantee shall return to the Company, no later than thirty (30) days after such breach, any Shares or other cash or property received with respect to the RSUs granted pursuant to this Agreement and the Plan (including any gross proceeds (before taxes or other deductions) received from the disposition of any Shares acquired pursuant to such RSUs or their then fair market value if no proceeds were received upon such disposition). The terms set forth in this Agreement concerning the right of the Company to a claw back are in addition to any other rights to recovery or damages available at law or equity and are not a limitation of any such rights. This provision shall survive the termination of the Grantee’s employment or service with the Company or any of its subsidiaries at any time and for any reason.
22. Acknowledgment. BY ACCEPTING THIS AGREEMENT, THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE HAS READ, UNDERSTOOD AND AGREES TO ALL OF THE PROVISIONS OF THIS AGREEMENT, AND THAT THE GRANTEE WAS AFFORDED SUFFICIENT OPPORTUNITY BY THE COMPANY TO OBTAIN INDEPENDENT LEGAL ADVICE AT THE GRANTEE’S EXPENSE PRIOR TO ACCEPTING THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
By signing below, the Grantee hereby accepts the RSUs grant subject to all its terms and provisions and agrees to be bound by the terms and provisions of this Agreement, including Section 21, and the Plan. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors of the Company, or the Committee or other committee responsible for the administration of the Plan, upon any questions arising under the Plan.
| GRANTEE | ||
| By: | ||
| Name: | ||
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Exhibit 10.14
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Performance Based)
PURSUANT TO THE
Georgia Banking Company, Inc. Amended and Restated 2021 Stock Incentive Plan
Grantee: __________________________
Grant Date: __________________________
Number of RSUs subject to this Award: _______________ representing the right to receive a number of Shares equal to or lower than (including zero) the number of RSUs, subject to the terms and conditions attached hereto, and subject to adjustment pursuant to Section 4 of the Plan.
THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) dated as of the Grant Date specified above, is entered into by and between Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), and the Grantee specified above, pursuant to the Georgia Banking Company, Inc. Amended and Restated 2021 Stock Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Executive Committee of the Board of Directors of the Company (the “Committee”); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Restricted Stock Units provided herein to the Grantee;
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation by Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Grantee hereby acknowledges receipt of a true copy of the Plan and that the Grantee has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Restricted Stock Units. The Company hereby grants to the Grantee, as of the Grant Date specified above, Restricted Stock Units (“RSUs”) in the amount set forth above, subject to, and in accordance with, the restrictions, terms and conditions set forth in this Agreement, Exhibit A and the Plan. Except as otherwise provided by the Plan, the Grantee agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Grantee with any protection against potential future dilution of the Grantee’s interest in the Company for any reason. The Grantee shall have no rights as a shareholder with respect to any Shares covered by the RSUs unless and until the Grantee has become the holder of record of such Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in the Plan or this Agreement.
3. Vesting.
(a) Subject to Section 3(b), the number of RSUs that shall become earned and vested (if any) will be determined based on performance during the Performance Period (defined in Exhibit A) in accordance with the performance measures, targets and methodology and subject to such time-based vesting conditions as set forth in Exhibit A.
No RSUs shall become earned and vested following the Grantee’s Termination of Service, except as expressly provided in herein or in Exhibit A, as applicable, or as otherwise provided pursuant to the terms of the Plan. RSUs will become earned and vested as of the last day of the Performance Period, and subject to additional time-based vesting, but only if the Grantee has remained continuously employed through the such date. If the Grantee incurs a Termination of Service prior to the last day of the Performance Period, or applicable time-based vesting date, the outstanding unvested RSUs shall immediately be forfeited as of the date of Termination of Service.
(b) Change in Control. Notwithstanding the forgoing, if a Change in Control (as defined in the Plan) occurs on or before the last day of the Performance Period, the outstanding unvested performance-based RSUs shall be deemed earned at target and shall become vested and nonforfeitable and shall be paid upon the Change in Control.
4. Settlement of Vested RSUs.
(a) Subject to Sections 5, 8 and 13 hereof, if the Grantee becomes vested in RSUs in accordance with Section 3, the Company shall pay to the Grantee the number of Shares equal to the number of vested RSUs in respect of such vested RSUs on the date of vesting (each a “Vesting Date”). Such Shares shall be delivered in a lump sum within thirty (30) days following the Vesting Date as defined in Exhibit A, provided that in no event shall such Shares be delivered later than the 15th day of the third month following the end of the Grantee’s first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture. The Grantee shall have no right to dividend equivalents or dividends on the RSUs.
(b) Notwithstanding Section 4(a), to the extent the Grantee is eligible to participate in a deferred compensation plan established for such purpose, the Grantee may elect to defer delivery of the Shares that would otherwise be due by virtue of the lapse or waiver of the vesting requirements as set forth in Section 3. If such deferral election is made, the Committee shall, in its sole discretion, establish the rules and procedures for such deferrals which shall be in compliance with Section 409A (as defined in Section 14 hereof).
5. Further Holding Period. Following the Vesting Date, one-half of the Net Shares (as defined below) vesting on such applicable Vesting Date shall be subject to a further holding period of twenty-four (24) months, during which such shares may not be sold, assigned, pledged, mortgaged, transferred or otherwise disposed of, although the shares are considered vested and are no longer subject to forfeiture. The further holding period will be deemed satisfied and lapsed prior to the twenty-four (24)-month anniversary of the Vesting Date in the event of the Grantee’s death, Disability or the occurrence of a Change in Control. For this purpose, “Net Shares” are the net of any Shares withheld for the payment of taxes as provided in Section 8.
6. Non-Transferability. The RSUs, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not be sold, exchanged, transferred, assigned, pledged, encumbered or otherwise disposed of or hypothecated in any way by the Grantee (or any beneficiary(ies) of the Grantee who holds the RSUs as a result of a transfer by will or by the laws of descent and distribution), other than by testamentary disposition by the Grantee or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its sole discretion, permit the RSUs to be transferred to a Permitted Transferee for no value, provided that such transfer shall only be valid upon execution of a written instrument in form and substance acceptable to the Committee in its sole discretion evidencing such transfer and the transferee’s acceptance thereof signed by the Grantee and the transferee, and provided, further, that the RSUs may not be subsequently transferred other than by will or by the laws of descent and distribution or to another Permitted Transferee (as permitted by the Committee in its sole discretion) in accordance with the terms of the Plan and this Agreement, and shall remain subject to the terms of the Plan and this Agreement. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way the RSUs, or the levy of any execution, attachment or similar legal process upon the RSUs, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
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7. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without regard to the choice of law principles thereof.
8. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Grantee’s FICA and other obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law with respect to the RSUs and, if the Grantee fails to do so, the Company may otherwise refuse to issue or transfer any Shares otherwise required to be issued pursuant to this Agreement. Any required withholding obligation with regard to the Grantee may be satisfied as set forth in Article 15 of the Plan (if permitted by the Committee).
9. Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Grantee. The Company shall give written notice to the Grantee of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
10. Notices. Any notice hereunder by the Grantee shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Chief Financial Officer of the Company. Any notice hereunder by the Company shall be given to the Grantee in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Grantee may have on file with the Company.
11. No Right to Employment or Service. Any questions as to whether and when there has been a Termination of Service and the cause of such Termination of Service shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Grantee’s employment or service at any time, for any reason and with or without Cause.
12. Transfer of Personal Data. The Grantee authorizes, agrees and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data related to the RSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Grantee.
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13. Compliance with Laws. The issuance of the RSUs (and the Shares upon settlement of the RSUs) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. The Company shall not be obligated to issue the RSUs or any of the Shares pursuant to this Agreement if any such issuance would violate any such requirements.
14. Section 409A. This Agreement shall at all times be interpreted and operated in compliance with, or meet an exemption from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the standards, regulations or other guidance promulgated thereunder (“Section 409A”). Any action that may be taken (and, to the extent possible, any action actually taken) by the Company shall not be taken (or shall be void and without effect), if such action violates the requirements of Section 409A. Any provision in this Agreement that is determined to violate the requirements of Section 409A shall be void and without effect. In addition, any provision that is required to appear in this Agreement in accordance with Section 409A that is not expressly set forth herein shall be deemed to be set forth herein, and the Agreement shall be administered in all respects as if such provision were expressly set forth. The Company shall delay the commencement of any delivery of Shares that are payable to the Grantee upon his separation from service if the Grantee is a “key employee” of the Company (as determined by the Company in accordance with procedures established by the Company that are consistent with Section 409A) to the date which is immediately following the earlier of (i) six months after the date of the Grantee’s separation from service or (ii) the Grantee’s death, to the extent such delay is required under the provisions of Section 409A to avoid imposition of additional income and other taxes, provided that the Company and the Grantee agree to take into account any exemptions available under Section 409A. For purposes of this Agreement, termination of employment or Termination of Service shall be construed consistent with the meaning of a “separation from service” within the meaning of Section 409A.
15. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Grantee shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company.
16. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
18. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
19. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
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20. Acquired Rights. The Grantee acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the award of the RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give the Grantee any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Grantee’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
21. Restrictive Covenants.
(a) Definitions. For purposes of this Section 21, the following terms shall have the following meanings:
| (i) | “Business of Company” means the business of providing banking services to commercial and consumer customers. |
| (ii) | “Company” means the Georgia Banking Company, Inc., or any of its subsidiaries, including Georgia Banking Company. |
| (iii) | “Competing Business” means any Person, business or subdivision of a business which substantially engages in the Business of Company, or which is actively planning to engage in the Business of Company, excluding subdivisions of a business, if any, which are unrelated to the Business of Company. |
| (iv) | “Confidential Information” means proprietary or confidential data, information, documents, or materials (in oral, written, electronic or other forms) that belongs to or pertains to the Company and which was disclosed to the Grantee or which the Grantee became aware of as a consequence of the Grantee’s relationship with the Company, which is of tangible or intangible value to the Company, and the details of which are not generally known to the competitors of the Company. Confidential Information shall include (but is not limited to): (i) the identities of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of Company vendors or potential vendors, and the terms or proposed terms upon which the Company may purchase products and services from such vendors, (iii) technology used by the Company to provide its services, (iv) marketing and/or business plans and strategies, (v) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, (vi) the nature, origin, composition and development of the Company’s products and services, and (vii) information provided to the Company by third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information shall not include information: (x) that has been voluntarily disclosed to the public by the Company, except where such public disclosure has been made by the Grantee without authorization from the Company, (y) that has been independently developed and disclosed by others, or (z) that has otherwise entered the public domain through lawful means. |
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| (v) | “Customer” means any Person to which the Company has sold its products or provided its services (including those to which such products or services are sold or provided during the Grantee’s employment). |
| (vi) | “Material Contact” for purposes of the non-solicitation of Company employees and contractors provision contained in Section 21(c) of this Agreement means contact in person, by telephone, or by paper or electronic correspondence, in furtherance of the business interests of the Company, and within the twenty-four (24) months prior to the solicitation. |
| (vii) | “Material Contact” for purposes of the customer non-solicitation provision contained in Section 21(d) of this Agreement means contact between the Grantee and each Customer or potential customer of the Company within the twenty-four (24) months prior to the solicitation: |
| (1) | with whom or which the Grantee dealt on behalf of the Company; |
| (2) | whose dealings with the Company were coordinated or supervised by the Grantee; |
| (3) | about whom the Grantee obtained Confidential Information in the ordinary course of business as a result of the Grantee’s association with the Company; or |
| (4) | who receives products or services authorized by Company, the sale or provision of which results or resulted in compensation, commissions or earnings for the Grantee within the two (2) years prior to the date of the Grantee’s termination or resignation. |
| (viii) | “Prospective Customer” means any Person which the Company has solicited to purchase the Company’s products or use its services (including those solicited during the Grantee’s employment). |
| (ix) | “Restricted Period” means during the Grantee’s employment with the Company and the twelve (12) months following the Grantee’s separation from employment from the Company for any reason or no reason. |
(x) “Trade Secrets” means trade secrets as defined by applicable law.
(b) Confidentiality.
| (i) | No Disclosure of Confidential Information and Trade Secrets. The Grantee agrees that during employment, and following the Grantee’s separation from employment from the Company for any reason or no reason, the Grantee will not directly or indirectly use, copy, disclose, publish or otherwise distribute to any other Person any Confidential Information or Trade Secrets of the Company. In the event that the Grantee becomes aware of unauthorized disclosures of the Confidential Information by anyone at any time, whether intentionally or by accident, the Grantee shall promptly notify the Company. This Agreement does not limit the remedies available to the Company under common or statutory law as to trade secrets or other types of confidential information, which may impose additional duties of non-use or non-disclosure. |
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| (ii) | Exception for Disclosure of Trade Secrets in Certain Circumstances. Notwithstanding anything herein to the contrary, the Grantee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a Trade Secret that (i) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if the Grantee files a lawsuit for retaliation for reporting a suspected violation of law, the Grantee may disclose the Trade Secret to his or her attorney and use the Trade Secret information in the court proceeding, as long as the Grantee files any document containing the Trade Secret under seal and does not disclose the Trade Secret, except pursuant to court order. |
(c) Non-Solicitation of Company Employees and Contractors. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, recruit, attempt to solicit or recruit, or induce any employee or independent contractor of the Company with whom the Grantee had Material Contact, to terminate or lessen such employment or contract with the Company.
(d) Non-Solicitation of Company Customers. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, divert or appropriate any Customers, Prospective Customers, correspondents or other sources of or purchasers of loans of the Company with whom the Grantee had Material Contact, for the purpose of selling any products or services for a Competing Business.
(e) Acknowledgements. The Grantee acknowledges and agrees that the provisions of Section 21 of this Agreement (the “Restrictive Covenants”) are reasonable as to time, scope and territory given the Company’s need to protect its Confidential Information and its relationships and goodwill with its Customers, suppliers, employees and contractors, all of which have been developed at great time and expense to the Company. The Grantee represents that the Grantee has the skills and abilities to obtain alternative employment that would not violate the Restrictive Covenants in the event that the Grantee leaves employment with the Company, and that the Restrictive Covenants do not pose an undue hardship on the Grantee. The Grantee further acknowledges that the Grantee’s breach of any of the Restrictive Covenants would likely cause irreparable injury to the Company, and therefore entitle the Company to injunctive relief, in addition to any other remedies available in law or equity or pursuant to Section 21(f) below.
(f) Claw Back. The Grantee further acknowledges and agrees that, if the Grantee breaches any of the Restrictive Covenants set forth herein, (i) the Grantee shall forfeit any and all rights with respect to the RSUs granted pursuant to this Agreement and the Plan (whether vested or otherwise) and any other rights and interests with respect thereto; (ii) no further Shares or other amounts shall be paid to the Grantee under this Agreement; and (iii) the Grantee shall return to the Company, no later than thirty (30) days after such breach, any Shares or other cash or property received with respect to the RSUs granted pursuant to this Agreement and the Plan (including any gross proceeds (before taxes or other deductions) received from the disposition of any Shares acquired pursuant to such RSUs or their then fair market value if no proceeds were received upon such disposition). The terms set forth in this Agreement concerning the right of the Company to a claw back are in addition to any other rights to recovery or damages available at law or equity and are not a limitation of any such rights. This provision shall survive the termination of the Grantee’s employment or service with the Company or any of its subsidiaries at any time and for any reason.
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22. Acknowledgment. BY ACCEPTING THIS AGREEMENT, THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE HAS READ, UNDERSTOOD AND AGREES TO ALL OF THE PROVISIONS OF THIS AGREEMENT, AND THAT THE GRANTEE WAS AFFORDED SUFFICIENT OPPORTUNITY BY THE COMPANY TO OBTAIN INDEPENDENT LEGAL ADVICE AT THE GRANTEE’S EXPENSE PRIOR TO ACCEPTING THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
By signing below, the Grantee hereby accepts the RSUs grant subject to all its terms and provisions and agrees to be bound by the terms and provisions of this Agreement, including Exhibit A and Section 21, and the Plan. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors of the Company, or the Committee or other committee responsible for the administration of the Plan, upon any questions arising under the Plan.
| GRANTEE | ||
| By: | ||
| Name: | ||
[EXHIBIT A FOLLOWS]
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Exhibit 10.15
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
GEORGIA BANKING COMPANY, INC. AMENDED AND RESTATED 2021 STOCK
INCENTIVE PLAN
Grantee: __________________________
Grant Date: __________________________
Per Share Exercise Price: $_______________
Number of Shares subject to this Option: _______________
Expiration Date: ________________________
THIS INCENTIVE STOCK OPTION AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), and the Grantee specified above, pursuant to the Georgia Banking Company, Inc. Amended and Restated 2021 Stock Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Executive Committee of the Board of Directors of the Company (the “Committee”); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Incentive Stock Option provided herein to the Grantee;
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation by Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Grantee hereby acknowledges receipt of a true copy of the Plan and that the Grantee has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Option. The Company hereby grants to the Grantee, as of the Grant Date specified above, an Incentive Stock Option (the “Option”) to acquire from the Company at the Per Share Exercise Price specified above, the aggregate number of shares of Common Stock specified above (the “Option Shares”). Except as otherwise provided by the Plan, the Grantee agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Grantee with any protection against potential future dilution of the Grantee’s interest in the Company for any reason. The Grantee shall have no rights as a shareholder with respect to any Shares covered by the Option unless and until the Grantee has become the holder of record of such Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in the Plan or this Agreement.
3. Tax Matters. The Option granted hereunder is intended to qualify as an “incentive stock option” under Section 422 of the Code. Notwithstanding the foregoing, the Option will not qualify as an “incentive stock option,” among other events, (a) if the Grantee disposes of the Option Shares at any time during the two-year period following the date of this Agreement or the one-year period following the date of exercise of the Option pursuant to which such Option Shares were acquired; (b) except in the event of the Grantee’s death or Disability, if the Grantee is not employed by the Company, a Parent Corporation or a Subsidiary Corporation at all times during the period beginning on the date of this Agreement and ending on the day that is three months before the date of any exercise of the Option; or (c) to the extent that the aggregate fair market value of the Shares subject to “incentive stock options” held by the Grantee which become exercisable for the first time in any calendar year (under all plans of the Company, a Parent Corporation or a Subsidiary Corporation) exceeds $100,000. For purposes of clause (c) above, the “fair market value” of the Shares shall be determined as of the Grant Date. To the extent that the Option does not qualify as an “incentive stock option,” it shall not affect the validity of the Option and shall constitute a separate non-qualified stock option. In the event that the Grantee disposes of the Option Shares within either two (2) years following the Grant Date or one year following the date of exercise of the Option, the Grantee must deliver to the Company, within seven (7) days following such disposition, a written notice specifying the date on which such Shares were disposed of, the number of Shares so disposed, and, if such disposition was by a sale or exchange, the amount of consideration received.
4. Vesting and Exercise.
(a) Vesting. Subject to the provisions of Sections 4(b) to 4(d) hereof, the Option shall vest and become exercisable as of the date(s) set forth below (each a “Vesting Date”), provided the Grantee has not incurred a Termination of Service prior to such Vesting Date:
| Vesting Date | Number of Option Shares |
|
[Date]
[Date]
[Date] |
[ ]
[ ]
[ ] |
There shall be no proportionate or partial vesting in the periods prior to each Vesting Date and all vesting shall occur only on the appropriate Vesting Date, subject to the Grantee’s continued employment or service with the Company or any of its Affiliates on each applicable Vesting Date. Upon expiration of the Option, the Option shall be cancelled and no longer exercisable.
(b) Committee Discretion. In addition to the foregoing, the Committee may, in its sole discretion, accelerate vesting of the Option at any time and for any reason.
(c) Change in Control. Notwithstanding the foregoing, in the event a Change in Control occurs, the Option shall become exercisable in full, to the extent not exercisable previously, on the earlier of the date of the Change in Control or the date the Option is to be terminated in connection with the Change in Control, provided the Grantee has not incurred a Termination of Service prior to the earlier of the date of the Change in Control or the date the Option is to be terminated in connection with the Change in Control.
(d) Expiration. Unless earlier terminated in accordance with the terms and provisions of the Plan and/or this Agreement, all portions of the Option (whether vested or not vested) shall expire and shall no longer be exercisable after the Expiration Date specified above.
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(e) Treatment of Unvested Options upon Termination of Service. Subject to this Section 4, any portion of the Option that is not vested as of the date of the Grantee’s Termination of Service for any reason shall terminate and expire as of the date of such Termination of Service.
5. Exercise Following Termination of Service. Subject to the terms of the Plan and this Agreement, the Option, to the extent vested, shall remain exercisable as follows:
(a) Termination of Service Due to Death or Disability. In the event of the Grantee’s Termination of Service by reason of death or Disability, the vested portion of the Option shall remain exercisable until the earlier of (i) one year from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 4(d) hereof; provided, however, that in the case of a Termination of Service due to Disability, if the Grantee dies within such one year exercise period, any unexercised Option held by the Grantee shall thereafter be exercisable by the legal representative of the Grantee’s estate or the recipient of the unexercised Option by will or by the laws of descent and distribution, to the extent exercisable, for a period of one year from the date of death, but in no event beyond the expiration of the stated term of the Option pursuant to Section 4(d) hereof.
(b) Termination Without Cause. In the event of the Grantee’s involuntary Termination of Service by the Company without Cause, the vested portion of the Option shall remain exercisable until the earlier of (i) ninety (90) days from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 4(d) hereof.
(c) Voluntary Resignation. In the event of the Grantee’s voluntary Termination of Service (other than a voluntary Termination of Service described in Section 5(d) hereof), the vested portion of the Option shall remain exercisable until the earlier of (i) thirty (30) days from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 4(d) hereof.
(d) Termination of Service for Cause. In the event of the Grantee’s Termination of Service for Cause or in the event of the Grantee’s voluntary Termination of Service (as provided in Section 5(c) hereof) after an event that would be grounds for a Termination of Service for Cause, the Grantee’s entire Option (whether or not vested) shall terminate and expire upon such Termination of Service. Additionally, during the first sixty (60) days after the Grantee’s Termination of Service for any reason other than Cause, the Company shall have the right to re-characterize such Termination of Service as a Termination of Service for Cause; upon such re-characterization, the entire outstanding Option (whether or not vested) will be forfeited.
6. Method of Exercise and Payment. Subject to Section 10 hereof, to the extent that the Option has become vested and exercisable with respect to a number of Shares as provided herein, the Option may thereafter be exercised by the Grantee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein and in accordance with the Plan.
7. Further Holding Period. Following the Vesting Date, one-half of the Net Shares (as defined below) subject to the Option vesting on such applicable Vesting Date shall be subject to a further holding period of twenty-four (24) months, during which such shares may not be sold, assigned, pledged, mortgaged, transferred or otherwise disposed of, although the shares are considered vested, exercisable and are no longer subject to forfeiture. The further holding period will be deemed satisfied and lapsed prior to the twenty-four (24)-month anniversary of the Vesting Date in the event of the Grantee’s death, Disability or the occurrence of a Change in Control. For this purpose, “Net Shares” are the net of any Shares withheld upon the exercise of such vested portion of the Option for the payment of the exercise price and/or taxes as provided in Sections 6 and 10.
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8. Non-Transferability. The Option, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not be sold, exchanged, transferred, assigned, pledged, encumbered, or otherwise disposed of or hypothecated in any way by the Grantee (or any beneficiary(ies) of the Grantee who holds the Option as a result of a transfer by will or by the laws of descent and distribution), other than by testamentary disposition by the Grantee or the laws of descent and distribution. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way the Option, or the levy of any execution, attachment or similar legal process upon the Option, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
9. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without regard to the choice of law principles thereof.
10. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Grantee’s FICA and other obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law with respect to the Option and, if the Grantee fails to do so, the Company may otherwise refuse to issue or transfer any Shares otherwise required to be issued pursuant to this Agreement. Any required withholding obligation with regard to the Grantee may be satisfied as set forth in Article 15 of the Plan (if permitted by the Committee) by reducing the amount of cash or Shares otherwise deliverable upon exercise of the Option.
11. Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Grantee. The Company shall give written notice to the Grantee of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
12. Notices. Any notice hereunder by the Grantee shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Chief Financial Officer of the Company. Any notice hereunder by the Company shall be given to the Grantee in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Grantee may have on file with the Company.
13. No Right to Employment or Service. Any questions as to whether and when there has been a Termination of Service and the cause of such Termination of Service shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Grantee’s employment or service at any time, for any reason and with or without Cause.
14. Transfer of Personal Data. The Grantee authorizes, agrees and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data related to the Option awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Grantee.
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15. Compliance with Laws. The issuance of the Option (and the Option Shares upon exercise of the Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. The Company shall not be obligated to issue the Option or any of the Option Shares pursuant to this Agreement if any such issuance would violate any such requirements.
16. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the Option is intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.
17. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Grantee shall not assign (except in accordance with Section 8 hereof) any part of this Agreement without the prior express written consent of the Company.
18. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
20. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
21. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
22. Acquired Rights. The Grantee acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the award of the Option made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the Option awarded hereunder) give the Grantee any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Grantee’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
23. Restrictive Covenants.
| (a) | Definitions. For purposes of this Section 23, the following terms shall have the following meanings: |
| (i) | “Business of Company” means the business of providing banking services to commercial and consumer customers. |
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| (ii) | “Company” means the Georgia Banking Company, Inc., or any of its subsidiaries, including Georgia Banking Company. |
| (iii) | “Competing Business” means any Person, business or subdivision of a business which substantially engages in the Business of Company, or which is actively planning to engage in the Business of Company, excluding subdivisions of a business, if any, which are unrelated to the Business of Company. |
| (iv) | “Confidential Information” means proprietary or confidential data, information, documents, or materials (in oral, written, electronic or other forms) that belongs to or pertains to the Company and which was disclosed to the Grantee or which the Grantee became aware of as a consequence of the Grantee’s relationship with the Company, which is of tangible or intangible value to the Company, and the details of which are not generally known to the competitors of the Company. Confidential Information shall include (but is not limited to): (i) the identities of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of Company vendors or potential vendors, and the terms or proposed terms upon which the Company may purchase products and services from such vendors, (iii) technology used by the Company to provide its services, (iv) marketing and/or business plans and strategies, (v) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, (vi) the nature, origin, composition and development of the Company’s products and services, and (vii) information provided to the Company by third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information shall not include information: (x) that has been voluntarily disclosed to the public by the Company, except where such public disclosure has been made by the Grantee without authorization from the Company, (y) that has been independently developed and disclosed by others, or (z) that has otherwise entered the public domain through lawful means. |
| (v) | “Customer” means any Person to which the Company has sold its products or provided its services (including those to which such products or services are sold or provided during the Grantee’s employment). |
| (vi) | “Material Contact” for purposes of the non-solicitation of Company employees and contractors provision contained in Section 23(c) of this Agreement means contact in person, by telephone, or by paper or electronic correspondence, in furtherance of the business interests of the Company, and within the twenty-four (24) months prior to the solicitation. |
| (vii) | “Material Contact” for purposes of the customer non-solicitation provision contained in Section 23(d) of this Agreement means contact between the Grantee and each Customer or potential customer of the Company within the twenty-four (24) months prior to the solicitation: |
| (1) | with whom or which the Grantee dealt on behalf of the Company; |
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| (2) | whose dealings with the Company were coordinated or supervised by the Grantee; |
| (3) | about whom the Grantee obtained Confidential Information in the ordinary course of business as a result of the Grantee’s association with the Company; or |
| (4) | who receives products or services authorized by Company, the sale or provision of which results or resulted in compensation, commissions or earnings for the Grantee within the two (2) years prior to the date of the Grantee’s termination or resignation. |
| (viii) | “Prospective Customer” means any Person which the Company has solicited to purchase the Company’s products or use its services (including those solicited during the Grantee’s employment). |
| (ix) | “Restricted Period” means during the Grantee’s employment with the Company and the twelve (12) months following the Grantee’s separation from employment from the Company for any reason or no reason. |
(x) “Trade Secrets” means trade secrets as defined by applicable law.
(b) Confidentiality.
| (i) | No Disclosure of Confidential Information and Trade Secrets. The Grantee agrees that during employment, and following the Grantee’s separation from employment from the Company for any reason or no reason, the Grantee will not directly or indirectly use, copy, disclose, publish or otherwise distribute to any other Person any Confidential Information or Trade Secrets of the Company. In the event that the Grantee becomes aware of unauthorized disclosures of the Confidential Information by anyone at any time, whether intentionally or by accident, the Grantee shall promptly notify the Company. This Agreement does not limit the remedies available to the Company under common or statutory law as to trade secrets or other types of confidential information, which may impose additional duties of non-use or non-disclosure. |
| (ii) | Exception for Disclosure of Trade Secrets in Certain Circumstances. Notwithstanding anything herein to the contrary, the Grantee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a Trade Secret that (i) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if the Grantee files a lawsuit for retaliation for reporting a suspected violation of law, the Grantee may disclose the Trade Secret to his or her attorney and use the Trade Secret information in the court proceeding, as long as the Grantee files any document containing the Trade Secret under seal and does not disclose the Trade Secret, except pursuant to court order. |
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| (c) | Non-Solicitation of Company Employees and Contractors. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, recruit, attempt to solicit or recruit, or induce any employee or independent contractor of the Company with whom the Grantee had Material Contact, to terminate or lessen such employment or contract with the Company. |
| (d) | Non-Solicitation of Company Customers. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, divert or appropriate any business of Customers, Prospective Customers, correspondents or other sources of or purchasers of loans of the Company with whom the Grantee had Material Contact, for the purpose of selling any products, services or loans for a Competing Business. |
| (e) | Acknowledgements. The Grantee acknowledges and agrees that the provisions of Section 23 of this Agreement (the “Restrictive Covenants”) are reasonable as to time, scope and territory given the Company’s need to protect its Confidential Information and its relationships and goodwill with its Customers, suppliers, employees and contractors, all of which have been developed at great time and expense to the Company. The Grantee represents that the Grantee has the skills and abilities to obtain alternative employment that would not violate the Restrictive Covenants in the event that the Grantee leaves employment with the Company, and that the Restrictive Covenants do not pose an undue hardship on the Grantee. The Grantee further acknowledges that the Grantee’s breach of any of the Restrictive Covenants would likely cause irreparable injury to the Company, and therefore entitle the Company to injunctive relief, in addition to any other remedies available in law or equity or pursuant to Section 23(f) below. |
| (f) | Claw Back. The Grantee further acknowledges and agrees that, if the Grantee breaches any of the Restrictive Covenants set forth herein, (i) the Grantee shall forfeit any and all rights with respect to the Options granted pursuant to this Agreement and the Plan (whether vested or otherwise) and any other rights and interests with respect thereto; (ii) no further Shares or other amounts shall be paid to the Grantee under this Agreement; and (iii) the Grantee shall return to the Company, no later than thirty (30) days after such breach, any Shares or other cash or property received with respect to the Options granted pursuant to this Agreement and the Plan (including any gross proceeds (before taxes or other deductions) received from the disposition of any Shares acquired pursuant to such Options or their then fair market value if no proceeds were received upon such disposition). The terms set forth in this Agreement concerning the right of the Company to a claw back are in addition to any other rights to recovery or damages available at law or equity and are not a limitation of any such rights. This provision shall survive the termination of the Grantee’s employment or service with the Company or any of its subsidiaries at any time and for any reason. |
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24. Acknowledgment. BY ACCEPTING THE AGREEMENT, THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE HAS READ, UNDERSTOOD AND AGREES TO ALL OF THE PROVISIONS OF THIS AGREEMENT, AND THAT THE GRANTEE WAS AFFORDED SUFFICIENT OPPORTUNITY BY THE COMPANY TO OBTAIN INDEPENDENT LEGAL ADVICE AT THE GRANTEE’S EXPENSE PRIOR TO ACCEPTING THE AGREEMENT.
[Remainder of Page Intentionally Left Blank]
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
By signing below, the Grantee hereby accepts the Option subject to all its terms and provisions and agrees to be bound by the terms and provisions of this Agreement, including Section 23, and the Plan. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors of the Company, or the Committee or other committee responsible for the administration of the Plan, upon any questions arising under the Plan.
| GRANTEE: | ||
| By: | ||
| Name: | ||
10
Exhibit 10.16
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
GEORGIA BANKING COMPANY, INC. AMENDED AND RESTATED 2021 STOCK
INCENTIVE PLAN
Grantee: __________________________
Grant Date: __________________________
Per Share Exercise Price: $_______________
Number of Shares subject to this Option: _______________
Expiration Date: ________________________
THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), and the Grantee specified above, pursuant to the Georgia Banking Company, Inc. Amended and Restated 2021 Stock Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Executive Committee of the Board of Directors of the Company (the “Committee”); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Non-Qualified Stock Option provided herein to the Grantee;
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation by Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Grantee hereby acknowledges receipt of a true copy of the Plan and that the Grantee has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control. No part of the Option granted hereby is intended to qualify as an “incentive stock option” under Section 422 of the Code.
2. Grant of Option. The Company hereby grants to the Grantee, as of the Grant Date specified above, a Non-Qualified Stock Option (the “Option”) to acquire from the Company at the Per Share Exercise Price specified above, the aggregate number of shares of Common Stock specified above (the “Option Shares”). Except as otherwise provided by the Plan, the Grantee agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Grantee with any protection against potential future dilution of the Grantee’s interest in the Company for any reason. The Grantee shall have no rights as a shareholder with respect to any Shares covered by the Option unless and until the Grantee has become the holder of record of such Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in the Plan or this Agreement.
3. Vesting and Exercise.
(a) Vesting. Subject to the provisions of Sections 3(b) to 3(d) hereof, the Option shall vest and become exercisable as of the date(s) set forth below (each a “Vesting Date”), provided the Grantee has not incurred a Termination of Service prior to such Vesting Date:
| Vesting Date | Number of Option Shares |
|
[Date]
[Date]
[Date] |
[ ]
[ ]
[ ] |
There shall be no proportionate or partial vesting in the periods prior to each Vesting Date and all vesting shall occur only on the appropriate Vesting Date, subject to the Grantee’s continued employment or service with the Company or any of its Affiliates on each applicable Vesting Date. Upon expiration of the Option, the Option shall be cancelled and no longer exercisable.
(b) Committee Discretion. In addition to the foregoing, the Committee may, in its sole discretion, accelerate vesting of the Option at any time and for any reason.
(c) Change in Control. Notwithstanding the foregoing, in the event a Change in Control occurs, the Option shall become exercisable in full, to the extent not exercisable previously, on the earlier of the date of the Change in Control or the date the Option is to be terminated in connection with the Change in Control, provided the Grantee has not incurred a Termination of Service prior to the earlier of the date of the Change in Control or the date the Option is to be terminated in connection with the Change in Control.
(d) Expiration. Unless earlier terminated in accordance with the terms and provisions of the Plan and/or this Agreement, all portions of the Option (whether vested or not vested) shall expire and shall no longer be exercisable after the Expiration Date specified above.
(e) Treatment of Unvested Options upon Termination of Service. Subject to this Section 3, any portion of the Option that is not vested as of the date of the Grantee’s Termination of Service for any reason shall terminate and expire as of the date of such Termination of Service.
4. Exercise Following Termination of Service. Subject to the terms of the Plan and this Agreement, the Option, to the extent vested, shall remain exercisable as follows:
(a) Termination of Service Due to Death or Disability. In the event of the Grantee’s Termination of Service by reason of death or Disability, the vested portion of the Option shall remain exercisable until the earlier of (i) one year from the date of such Termination of Service and (ii) the expiration of the stated term of the Option pursuant to Section 3(d) hereof; provided, however, that in the case of a Termination of Service due to Disability, if the Grantee dies within such one-year exercise period, any unexercised Option held by the Grantee shall thereafter be exercisable by the legal representative of the Grantee’s estate or the recipient of the unexercised Option by will or by the laws of descent and distribution, to the extent exercisable, for a period of one year from the date of death, but in no event beyond the expiration of the stated term of the Option pursuant to Section 3(d) hereof.
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(b) Termination Without Cause. In the event of the Grantee’s involuntary Termination of Service by the Company without Cause, the vested portion of the Option shall remain exercisable until the earlier of (i) ninety (90) days from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 3(d) hereof.
(c) Voluntary Resignation. In the event of the Grantee’s voluntary Termination of Service (other than a voluntary Termination of Service described in Section 4(d) hereof), the vested portion of the Option shall remain exercisable until the earlier of (i) thirty (30) days from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 3(d) hereof.
(d) Termination of Service for Cause. In the event of the Grantee’s Termination of Service for Cause or in the event of the Grantee’s voluntary Termination of Service (as provided in Section 4(c) hereof) after an event that would be grounds for a Termination of Service for Cause, the Grantee’s entire Option (whether or not vested) shall terminate and expire upon such Termination of Service. Additionally, during the first sixty (60) days after the Grantee’s Termination of Service for any reason other than Cause, the Company shall have the right to re-characterize such Termination of Service as a Termination of Service for Cause; upon such re-characterization, the entire outstanding Option (whether or not vested) will be forfeited.
5. Method of Exercise and Payment. Subject to Section 8 hereof, to the extent that the Option has become vested and exercisable with respect to a number of Shares as provided herein, the Option may thereafter be exercised by the Grantee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein and in accordance with the Plan.
6. Further Holding Period. Following the Vesting Date, one-half of the Net Shares (as defined below) subject to the Option vesting on such applicable Vesting Date shall be subject to a further holding period of twenty-four (24) months, during which such shares may not be sold, assigned, pledged, mortgaged, transferred or otherwise disposed of, although the shares are considered vested, exercisable and are no longer subject to forfeiture. The further holding period will be deemed satisfied and lapsed prior to the twenty-four (24)-month anniversary of the Vesting Date in the event of the Grantee’s death, Disability or the occurrence of a Change in Control. For this purpose, “Net Shares” are the net of any Shares withheld upon the exercise of such vested portion of the Option for the payment of the exercise price and/or taxes as provided in Sections 5 and 9.
7. Non-Transferability. The Option, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not be sold, exchanged, transferred, assigned, pledged, encumbered or otherwise disposed of or hypothecated in any way by the Grantee (or any beneficiary(ies) of the Grantee who holds the Option as a result of a transfer by will or by the laws of descent and distribution), other than by testamentary disposition by the Grantee or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its sole discretion, permit the Option to be transferred to a Permitted Transferee for no value, provided that such transfer shall only be valid upon execution of a written instrument in form and substance acceptable to the Committee in its sole discretion evidencing such transfer and the transferee’s acceptance thereof signed by the Grantee and the transferee, and provided, further, that the Option may not be subsequently transferred other than by will or by the laws of descent and distribution or to another Permitted Transferee (as permitted by the Committee in its sole discretion) in accordance with the terms of the Plan and this Agreement, and shall remain subject to the terms of the Plan and this Agreement. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way the Option, or the levy of any execution, attachment or similar legal process upon the Option, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
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8. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without regard to the choice of law principles thereof.
9. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Grantee’s FICA and other obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law with respect to the Option and, if the Grantee fails to do so, the Company may otherwise refuse to issue or transfer any Shares otherwise required to be issued pursuant to this Agreement. Any required withholding obligation with regard to the Grantee may be satisfied as set forth in Article 15 of the Plan (if permitted by the Committee) by reducing the amount of cash or Shares otherwise deliverable upon exercise of the Option.
10. Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Grantee. The Company shall give written notice to the Grantee of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
11. Notices. Any notice hereunder by the Grantee shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Chief Financial Officer of the Company. Any notice hereunder by the Company shall be given to the Grantee in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Grantee may have on file with the Company.
12. No Right to Employment or Service. Any questions as to whether and when there has been a Termination of Service and the cause of such Termination of Service shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Grantee’s employment or service at any time, for any reason and with or without Cause.
13. Transfer of Personal Data. The Grantee authorizes, agrees and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data related to the Option awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Grantee.
14. Compliance with Laws. The issuance of the Option (and the Option Shares upon exercise of the Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. The Company shall not be obligated to issue the Option or any of the Option Shares pursuant to this Agreement if any such issuance would violate any such requirements.
15. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the Option is intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.
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16. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Grantee shall not assign (except in accordance with Section 7 hereof) any part of this Agreement without the prior express written consent of the Company.
17. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
19. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
20. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
21. Acquired Rights. The Grantee acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the award of the Option made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the Option awarded hereunder) give the Grantee any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Grantee’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
22. Restrictive Covenants.
(a) Definitions. For purposes of this Section 22, the following terms shall have the following meanings:
| (i) | “Business of Company” means the business of providing banking services to commercial and consumer customers. |
| (ii) | “Company” means the Georgia Banking Company, Inc., or any of its subsidiaries, including Georgia Banking Company. |
| (iii) | “Competing Business” means any Person, business or subdivision of a business which substantially engages in the Business of Company, or which is actively planning to engage in the Business of Company, excluding subdivisions of a business, if any, which are unrelated to the Business of Company. |
| (iv) | “Confidential Information” means proprietary or confidential data, information, documents, or materials (in oral, written, electronic or other forms) that belongs to or pertains to the Company and which was disclosed to the Grantee or which the Grantee became aware of as a consequence of the Grantee’s relationship with the Company, which is of tangible or intangible value to the Company, and the details of which are not generally known to the competitors of the Company. Confidential Information shall include (but is not limited to): (i) the identities of the Company’s customers or potential customers, their purchasing histories, and the terms or proposed terms upon which the Company offers or may offer its products and services to such customers, (ii) the identity of Company vendors or potential vendors, and the terms or proposed terms upon which the Company may purchase products and services from such vendors, (iii) technology used by the Company to provide its services, (iv) marketing and/or business plans and strategies, (v) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, (vi) the nature, origin, composition and development of the Company’s products and services, and (vii) information provided to the Company by third parties under a duty to maintain the confidentiality of such information. Notwithstanding the foregoing, Confidential Information shall not include information: (x) that has been voluntarily disclosed to the public by the Company, except where such public disclosure has been made by the Grantee without authorization from the Company, (y) that has been independently developed and disclosed by others, or (z) that has otherwise entered the public domain through lawful means. |
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| (v) | “Customer” means any Person to which the Company has sold its products or provided its services (including those to which such products or services are sold or provided during the Grantee’s employment). |
| (vi) | “Material Contact” for purposes of the non-solicitation of Company employees and contractors provision contained in Section 22(c) of this Agreement means contact in person, by telephone, or by paper or electronic correspondence, in furtherance of the business interests of the Company, and within the twenty-four (24) months prior to the solicitation. |
| (vii) | “Material Contact” for purposes of the customer non-solicitation provision contained in Section 22(d) of this Agreement means contact between the Grantee and each Customer or potential customer of the Company within the twenty-four (24) months prior to the solicitation: |
| (1) | with whom or which the Grantee dealt on behalf of the Company; |
| (2) | whose dealings with the Company were coordinated or supervised by the Grantee; |
| (3) | about whom the Grantee obtained Confidential Information in the ordinary course of business as a result of the Grantee’s association with the Company; or |
| (4) | who receives products or services authorized by Company, the sale or provision of which results or resulted in compensation, commissions or earnings for the Grantee within the two (2) years prior to the date of the Grantee’s termination or resignation. |
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| (viii) | “Prospective Customer” means any Person which the Company has solicited to purchase the Company’s products or use its services (including those solicited during the Grantee’s employment). |
| (ix) | “Restricted Period” means during the Grantee’s employment with the Company and the twelve (12) months following the Grantee’s separation from employment from the Company for any reason or no reason. |
(x) “Trade Secrets” means trade secrets as defined by applicable law.
(b) Confidentiality.
| (i) | No Disclosure of Confidential Information and Trade Secrets. The Grantee agrees that during employment, and following the Grantee’s separation from employment from the Company for any reason or no reason, the Grantee will not directly or indirectly use, copy, disclose, publish or otherwise distribute to any other Person any Confidential Information or Trade Secrets of the Company. In the event that the Grantee becomes aware of unauthorized disclosures of the Confidential Information by anyone at any time, whether intentionally or by accident, the Grantee shall promptly notify the Company. This Agreement does not limit the remedies available to the Company under common or statutory law as to trade secrets or other types of confidential information, which may impose additional duties of non-use or non-disclosure. |
| (ii) | Exception for Disclosure of Trade Secrets in Certain Circumstances. Notwithstanding anything herein to the contrary, the Grantee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a Trade Secret that (i) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if the Grantee files a lawsuit for retaliation for reporting a suspected violation of law, the Grantee may disclose the Trade Secret to his or her attorney and use the Trade Secret information in the court proceeding, as long as the Grantee files any document containing the Trade Secret under seal and does not disclose the Trade Secret, except pursuant to court order. |
(c) Non-Solicitation of Company Employees and Contractors. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, recruit, attempt to solicit or recruit, or induce any employee or independent contractor of the Company with whom the Grantee had Material Contact, to terminate or lessen such employment or contract with the Company.
(d) Non-Solicitation of Company Customers. The Grantee agrees that during the Restricted Period, the Grantee shall not, directly or indirectly, whether on the Grantee’s own behalf or on behalf of any other Person, solicit, divert or appropriate any Customers, Prospective Customers, correspondents or other sources of or purchasers of loans of the Company with whom the Grantee had Material Contact, for the purpose of selling any products or services for a Competing Business.
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(e) Acknowledgements. The Grantee acknowledges and agrees that the provisions of Section 22 of this Agreement (the “Restrictive Covenants”) are reasonable as to time, scope and territory given the Company’s need to protect its Confidential Information and its relationships and goodwill with its Customers, suppliers, employees and contractors, all of which have been developed at great time and expense to the Company. The Grantee represents that the Grantee has the skills and abilities to obtain alternative employment that would not violate the Restrictive Covenants in the event that the Grantee leaves employment with the Company, and that the Restrictive Covenants do not pose an undue hardship on the Grantee. The Grantee further acknowledges that the Grantee’s breach of any of the Restrictive Covenants would likely cause irreparable injury to the Company, and therefore entitle the Company to injunctive relief, in addition to any other remedies available in law or equity or pursuant to Section 22(f) below.
(f) Claw Back. The Grantee further acknowledges and agrees that, if the Grantee breaches any of the Restrictive Covenants set forth herein, (i) the Grantee shall forfeit any and all rights with respect to the Options granted pursuant to this Agreement and the Plan (whether vested or otherwise) and any other rights and interests with respect thereto; (ii) no further Shares or other amounts shall be paid to the Grantee under this Agreement; and (iii) the Grantee shall return to the Company, no later than thirty (30) days after such breach, any Shares or other cash or property received with respect to the Options granted pursuant to this Agreement and the Plan (including any gross proceeds (before taxes or other deductions) received from the disposition of any Shares acquired pursuant to such Options or their then fair market value if no proceeds were received upon such disposition). The terms set forth in this Agreement concerning the right of the Company to a claw back are in addition to any other rights to recovery or damages available at law or equity and are not a limitation of any such rights. This provision shall survive the termination of the Grantee’s employment or service with the Company or any of its subsidiaries at any time and for any reason.
23. Acknowledgment. BY ACCEPTING THIS AGREEMENT, THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE HAS READ, UNDERSTOOD AND AGREES TO ALL OF THE PROVISIONS OF THIS AGREEMENT, AND THAT THE GRANTEE WAS AFFORDED SUFFICIENT OPPORTUNITY BY THE COMPANY TO OBTAIN INDEPENDENT LEGAL ADVICE AT THE GRANTEE’S EXPENSE PRIOR TO ACCEPTING THIS AGREEMENT.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
By signing below, the Grantee hereby accepts the Option subject to all its terms and provisions and agrees to be bound by the terms and provisions of this Agreement, including Section 22, and the Plan. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors of the Company, or the Committee or other committee responsible for the administration of the Plan, upon any questions arising under the Plan.
| GRANTEE: | ||
| By: | ||
| Name: | ||
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Exhibit 10.17
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
GEORGIA BANKING COMPANY, INC. 2021 STOCK INCENTIVE PLAN
Grantee: ________________________
Original Grant Date: __________________
Date of Assumption: June 1, 2026
Adjusted Per Share Exercise Price: $_______________
Number of Shares subject to this Option: _______________
Expiration Date: ______________________
THIS INCENTIVE STOCK OPTION AWARD AGREEMENT (this “Agreement”), dated as of Date of Assumption specified above, is entered into by and between Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), and the Grantee specified above, pursuant to the Georgia Banking Company, Inc. 2021 Stock Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Executive Committee of the Board of Directors of the Company (the “Committee”);
WHEREAS, the Company and Tandem Bancorp, Inc. (“Tandem”) entered into that certain Agreement and Plan of Merger, dated February 24, 2026, by and between the Company and Tandem (the “Merger Agreement”), pursuant to which Tandem merged with and into the Company, with the Company as the surviving corporation, effective as of June 1, 2026 (the “Merger”);
WHEREAS, prior to the Merger, Tandem granted to Grantee a stock option to purchase [●] shares of Tandem’s common stock (the “Tandem Option”), subject to the terms and conditions of the Amended and Restated Tandem Bancorp, Inc. 2019 Stock Incentive Plan, as amended, and Grantee’s corresponding Incentive Stock Option Agreement dated as of [●] (the “Tandem Agreement”);
WHEREAS, in connection with the Merger and pursuant to the Merger Agreement, Grantee elected to convert Grantee’s outstanding and unexercised Tandem Option into an option to purchase shares of the Company’s common stock (the “Option”) equal to the number (rounded down to the nearest whole share) of (x) the number of shares of Tandem’s common stock subject to the Tandem Option immediately prior to the Effective Time (as defined in the Merger Agreement) times (y) 0.4800 (the “Exchange Ratio”), at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Tandem’s common stock under the Tandem Option immediately prior to the Effective Time divided by (B) the Exchange Ratio; and
WHEREAS, pursuant to the Merger Agreement, the Option became fully vested and exercisable, as of the Effective Time;
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, and in fulfillment of the Company’s obligations under Section 3.2 of the Merger Agreement, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation by Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Grantee hereby acknowledges receipt of a true copy of the Plan and that the Grantee has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Option. The Company hereby grants to the Grantee, as of the Grant Date specified above, an Incentive Stock Option (the “Option”) to acquire from the Company at the Per Share Exercise Price specified above, the aggregate number of shares of Common Stock specified above (the “Option Shares”). Except as otherwise provided by the Plan, the Grantee agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Grantee with any protection against potential future dilution of the Grantee’s interest in the Company for any reason. The Grantee shall have no rights as a shareholder with respect to any Shares covered by the Option unless and until the Grantee has become the holder of record of such Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in the Plan or this Agreement. Grantee agrees and understands that Grantee’s Tandem Option has been cancelled as of the Effective Time (and is no longer exercisable) and converted into this Option to acquire Option Shares pursuant to the terms of this Agreement. Grantee releases and waives all rights to the Tandem Option under the Tandem Agreement, as set forth in the Option Holder Release Agreement.
3. Tax Matters. The Option granted hereunder is intended to continue to qualify as an “incentive stock option” under Section 422 of the Code. Notwithstanding the foregoing, the Option will not qualify as an “incentive stock option,” among other events, (a) if the Grantee disposes of the Option Shares at any time during the two-year period following the Original Grant Date or the one-year period following the date of exercise of the Option pursuant to which such Option Shares were acquired; (b) except in the event of the Grantee’s death or Disability, if the Grantee is not employed by the Company, a Parent Corporation or a Subsidiary Corporation at all times during the period beginning on the date of this Agreement and ending on the day that is three months before the date of any exercise of the Option; or (c) to the extent that the aggregate fair market value of the Shares subject to “incentive stock options” held by the Grantee which become exercisable for the first time in any calendar year (under all plans of the Company, a Parent Corporation or a Subsidiary Corporation) (including any accelerated vesting and exercisability in connection with the Company’s assumption of the Tandem Option) exceeds $100,000. For purposes of clause (c) above, the “fair market value” of the Shares shall be determined as of the Original Grant Date (as adjusted). To the extent that the Option does not qualify as an “incentive stock option,” it shall not affect the validity of the Option and shall constitute a separate non-qualified stock option. In the event that the Grantee disposes of the Option Shares within either two (2) years following the Original Grant Date or one year following the date of exercise of the Option, the Grantee must deliver to the Company, within seven (7) days following such disposition, a written notice specifying the date on which such Shares were disposed of, the number of Shares so disposed, and, if such disposition was by a sale or exchange, the amount of consideration received.
4. Vesting and Exercise.
(a) Vesting. The Option is fully vested and exercisable as of the date of this Agreement (the “Vesting Date”).
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(b) Expiration. Unless earlier terminated in accordance with the terms and provisions of the Plan and/or this Agreement, all portions of the Option that have not been exercised previously shall expire and shall no longer be exercisable after the Expiration Date specified above.
5. Termination of Service. Subject to the terms of the Plan and this Agreement, the Option, to the extent vested, shall remain exercisable as follows:
(a) Termination of Service Due to Death or Disability. In the event of the Grantee’s Termination of Service by reason of death or Disability, the vested portion of the Option shall remain exercisable until the earlier of (i) one year from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 4(b) hereof; provided, however, that in the case of a Termination of Service due to Disability, if the Grantee dies within such one year exercise period, any unexercised Option held by the Grantee shall thereafter be exercisable by the legal representative of the Grantee’s estate or the recipient of the unexercised Option by will or by the laws of descent and distribution, to the extent exercisable, for a period of one year from the date of death, but in no event beyond the expiration of the stated term of the Option pursuant to Section 4(b) hereof.
(b) Termination Without Cause. In the event of the Grantee’s involuntary Termination of Service by the Company without Cause, the vested portion of the Option shall remain exercisable until the earlier of (i) ninety (90) days from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 4(b) hereof.
(c) Voluntary Resignation. In the event of the Grantee’s voluntary Termination of Service (other than a voluntary Termination of Service subject to and described in Section 5(d) hereof), the unexercised portion of the Option shall remain exercisable until the earlier of (i) thirty (30) days from the date of such Termination of Service, and (ii) the expiration of the stated term of the Option pursuant to Section 4(b) hereof.
(d) Termination of Service for Cause. In the event of the Grantee’s Termination of Service for Cause or in the event of the Grantee’s voluntary Termination of Service (as provided in Section 5(c) hereof) after an event that would be grounds for a Termination of Service for Cause, the Grantee’s entire Option shall terminate and expire upon such Termination of Service. Additionally, during the first sixty (60) days after the Grantee’s Termination of Service for any reason other than Cause, the Company shall have the right to re-characterize such Termination of Service as a Termination of Service for Cause; upon such re-characterization, the entire outstanding Option will be forfeited.
6. Method of Exercise and Payment. Subject to Section 9 hereof, the Option may be exercised by the Grantee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein and in accordance with the Plan.
7. Non-Transferability. The Option, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not be sold, exchanged, transferred, assigned, or otherwise disposed of in any way by the Grantee (or any beneficiary(ies) of the Grantee), other than by testamentary disposition by the Grantee or the laws of descent and distribution. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way the Option, or the levy of any execution, attachment or similar legal process upon the Option, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
8. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without regard to the choice of law principles thereof.
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9. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Grantee’s FICA and other obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law with respect to the Option and, if the Grantee fails to do so, the Company may otherwise refuse to issue or transfer any Shares otherwise required to be issued pursuant to this Agreement. Any required withholding obligation with regard to the Grantee may be satisfied as set forth in Article 15 of the Plan (if permitted by the Committee) by reducing the amount of cash or Shares otherwise deliverable upon exercise of the Option.
10. Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Grantee. The Company shall give written notice to the Grantee of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
11. Notices. Any notice hereunder by the Grantee shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Chief Financial Officer of the Company. Any notice hereunder by the Company shall be given to the Grantee in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Grantee may have on file with the Company.
12. No Right to Employment or Service. Any questions as to whether and when there has been a Termination of Service and the cause of such Termination of Service shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Grantee’s employment or service at any time, for any reason and with or without Cause.
13. Transfer of Personal Data. The Grantee authorizes, agrees and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data related to the Option awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Grantee.
14. Compliance with Laws. The issuance of the Option (and the Option Shares upon exercise of the Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. The Company shall not be obligated to issue the Option or any of the Option Shares pursuant to this Agreement if any such issuance would violate any such requirements.
15. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the Option is intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.
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16. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Grantee shall not assign (except in accordance with Section 7 hereof) any part of this Agreement without the prior express written consent of the Company.
17. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
19. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
20. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
21. Acquired Rights. The Grantee acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the award of the Option made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company pursuant to the terms of the Merger Agreement; (c) no past grants or awards (including, without limitation, the Option awarded hereunder) give the Grantee any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Grantee’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
22. Acknowledgment. BY ACCEPTING THE AGREEMENT, THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE HAS READ, UNDERSTOOD AND AGREES TO ALL OF THE PROVISIONS OF THIS AGREEMENT, AND THAT THE GRANTEE WAS AFFORDED SUFFICIENT OPPORTUNITY BY THE COMPANY TO OBTAIN INDEPENDENT LEGAL ADVICE AT THE GRANTEE’S EXPENSE PRIOR TO ACCEPTING THE AGREEMENT.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
By signing below, the Grantee hereby accepts the Option subject to all its terms and provisions and agrees to be bound by the terms and provisions of this Agreement and the Plan. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors of the Company, or the Committee or other committee responsible for the administration of the Plan, upon any questions arising under the Plan.
| GRANTEE: | ||
| By: | ||
| Name: | ||
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Exhibit 10.18
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
AMENDED AND RESTATED
GEORGIA BANKING COMPANY, INC. 2021 STOCK INCENTIVE PLAN
Grantee: __________________________
Original Grant Date: ____________________
Date of Assumption: June 1, 2026
Adjusted Per Share Exercise Price: $_______________
Number of Shares subject to this Option: _______________
Expiration Date: ________________________
THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”), dated as of Date of Assumption specified above, is entered into by and between Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), and the Grantee specified above, pursuant to the Georgia Banking Company, Inc. 2021 Stock Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Executive Committee of the Board of Directors of the Company (the “Committee”);
WHEREAS, the Company and Tandem Bancorp, Inc. (“Tandem”) entered into that certain Agreement and Plan of Merger, dated February 24, 2026, by and between the Company and Tandem (the “Merger Agreement”), pursuant to which Tandem merged with and into the Company, with the Company as the surviving corporation, effective as of June 1, 2026 (the “Merger”);
WHEREAS, prior to the Merger, Tandem granted to Grantee a stock option to purchase [_________] shares of Tandem’s common stock (the “Tandem Option”), subject to the terms and conditions of the Amended and Restated Tandem Bancorp, Inc. 2019 Stock Incentive Plan, as amended, and Grantee’s corresponding Incentive Stock Option Agreement dated as of [______________], as amended by that certain First Amendment to Incentive Stock Option Agreement, dated as of May 28, 2026 (the “Tandem Agreement”);
WHEREAS, in connection with the Merger and pursuant to the Merger Agreement, Grantee elected to convert Grantee’s outstanding and unexercised Tandem Option into an option to purchase shares of the Company’s common stock (the “Option”) equal to the number (rounded down to the nearest whole share) of (x) the number of shares of Tandem’s common stock subject to the Tandem Option immediately prior to the Effective Time (as defined in the Merger Agreement) times (y) 0.4800 (the “Exchange Ratio”), at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Tandem’s common stock under the Tandem Option immediately prior to the Effective Time divided by (B) the Exchange Ratio; and
WHEREAS, pursuant to the Merger Agreement, the Option became fully vested and exercisable, as of the Effective Time;
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, and in fulfillment of the Company’s obligations under Section 3.2 of the Merger Agreement, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Grantee hereby acknowledges receipt of a true copy of the Plan and that the Grantee has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control. No part of the Option granted hereby is intended to qualify as an “incentive stock option” under Section 422 of the Code.
2. Grant of Option. The Company hereby grants to the Grantee, as of the Grant Date specified above, a Non-Qualified Stock Option (the “Option”) to acquire from the Company at the Per Share Exercise Price specified above, the aggregate number of shares of Common Stock specified above (the “Option Shares”). Except as otherwise provided by the Plan, the Grantee agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Grantee with any protection against potential future dilution of the Grantee’s interest in the Company for any reason. The Grantee shall have no rights as a shareholder with respect to any Shares covered by the Option unless and until the Grantee has become the holder of record of such Shares, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in the Plan or this Agreement. Grantee agrees and understands that Grantee’s Tandem Option has been cancelled as of the Effective Time (and is no longer exercisable) and converted into this Option to acquire Option Shares pursuant to the terms of this Agreement. Grantee releases and waives all rights to the Tandem Option under the Tandem Agreement, as set forth in the Option Holder Release Agreement. Grantee also acknowledges and agrees that Grantee’s Tandem Option no longer qualified as an “incentive stock option” within the meaning of Section 422 of the Code as a result of the modification of the Tandem Option by that certain First Amendment to Incentive Stock Option Agreement, dated as of May 28, 2026 (the “First Amendment”), and therefore this Option does not qualify as an “incentive stock option,” and will not be eligible for tax treatment as an “incentive stock option,” on any exercise on or after the Date of Assumption (notwithstanding Section 2 of the First Amendment).
3. Vesting and Exercise.
(a) Vesting. The Option is fully vested and exercisable as of the date of this Agreement (the “Vesting Date”).
(b) Expiration. Unless earlier terminated in accordance with the terms and provisions of the Plan and/or this Agreement, all portions of the Option that have not been exercised previously shall expire and shall no longer be exercisable after the Expiration Date specified above.
4. Termination of Service. In the event of the Grantee’s Termination of Service for any reason other than Cause (and provided that Cause is not determined to exist as described below in this paragraph), the unexercised portion of the Option shall remain exercisable until the Expiration Date; provided, however, that in the case of a Termination of Service due to death or Disability, any unexercised Option held by the Grantee shall thereafter be exercisable, as applicable, by the legal representative of the Grantee or the Grantee’s estate or the recipient of the unexercised Option by will or by the laws of descent and distribution until the Expiration Date. In the event of the Grantee’s Termination of Service for Cause or in the event of the Grantee’s voluntary Termination of Service after an event that would be grounds for a Termination of Service for Cause, the Grantee’s entire Option (whether or not vested) shall terminate and expire upon such Termination of Service. Additionally, during the first sixty (60) days after the Grantee’s Termination of Service for any reason other than Cause, the Company shall have the right to re-characterize such Termination of Service as a Termination of Service for Cause; upon such re-characterization, the entire outstanding Option (whether or not vested) will be forfeited.
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5. Method of Exercise and Payment. Subject to Section 8 hereof, the Option may be exercised by the Grantee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein and in accordance with the Plan.
6. Non-Transferability. The Option, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not be sold, exchanged, transferred, assigned, or otherwise disposed of in any way by the Grantee (or any beneficiary(ies) of the Grantee), other than by testamentary disposition by the Grantee or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its sole discretion, permit the Option to be transferred to a Permitted Transferee for no value, provided that such transfer shall only be valid upon execution of a written instrument in form and substance acceptable to the Committee in its sole discretion evidencing such transfer and the transferee’s acceptance thereof signed by the Grantee and the transferee, and provided, further, that the Option may not be subsequently transferred other than by will or by the laws of descent and distribution or to another Permitted Transferee (as permitted by the Committee in its sole discretion) in accordance with the terms of the Plan and this Agreement, and shall remain subject to the terms of the Plan and this Agreement. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way the Option, or the levy of any execution, attachment or similar legal process upon the Option, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
7. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia, without regard to the choice of law principles thereof.
8. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Grantee to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Grantee’s FICA and other obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law with respect to the Option and, if the Grantee fails to do so, the Company may otherwise refuse to issue or transfer any Shares otherwise required to be issued pursuant to this Agreement. Any required withholding obligation with regard to the Grantee may be satisfied as set forth in Article 15 of the Plan (if permitted by the Committee) by reducing the amount of cash or Shares otherwise deliverable upon exercise of the Option.
9. Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Grantee. The Company shall give written notice to the Grantee of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
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10. Notices. Any notice hereunder by the Grantee shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Chief Financial Officer of the Company. Any notice hereunder by the Company shall be given to the Grantee in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Grantee may have on file with the Company.
11. No Right to Employment or Service. Any questions as to whether and when there has been a Termination of Service and the cause of such Termination of Service shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate the Grantee’s employment or service at any time, for any reason and with or without cause.
12. Transfer of Personal Data. The Grantee authorizes, agrees and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data related to the Option awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Grantee.
13. Compliance with Laws. The issuance of the Option (and the Option Shares upon exercise of the Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. The Company shall not be obligated to issue the Option or any of the Option Shares pursuant to this Agreement if any such issuance would violate any such requirements.
14. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the Option is intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.
15. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Grantee shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company.
16. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
18. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
19. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
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20. Acquired Rights. The Grantee acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the award of the Option made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company pursuant to the Merger Agreement; (c) no past grants or awards (including, without limitation, the Option awarded hereunder) give the Grantee any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Grantee’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
22. Acknowledgment. BY ACCEPTING THE AGREEMENT, THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE HAS READ, UNDERSTOOD AND AGREES TO ALL OF THE PROVISIONS OF THIS AGREEMENT, AND THAT THE GRANTEE WAS AFFORDED SUFFICIENT OPPORTUNITY BY THE COMPANY TO OBTAIN INDEPENDENT LEGAL ADVICE AT THE GRANTEE’S EXPENSE PRIOR TO ACCEPTING THE AGREEMENT.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| GEORGIA BANKING COMPANY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
By signing below, the Grantee hereby accepts the Option subject to all its terms and provisions and agrees to be bound by the terms and provisions of this Agreement and the Plan. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors of the Company, or the Committee or other committee responsible for the administration of the Plan, upon any questions arising under the Plan.
| GRANTEE: | ||
| By: | ||
| Name: | ||
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EXHIBIT A
[Performance criteria to be inserted, as applicable]
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Exhibit 10.19
GEORGIA BANKING COMPANY, INC.
DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective January 1, 2022)
GEORGIA BANKING COMPANY, INC.
DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective January 1, 2022)
Georgia Banking Company, Inc., a bank holding company organized and existing under the laws of the State of Georgia (the “Company”), hereby amends and restates the Georgia Banking Company, Inc. Deferred Compensation Plan (the “Plan”), effective as of January 1, 2022 (the “Effective Date”), for the purpose of attracting and retaining high quality executives and Directors and promoting in them increased efficiency and an interest in the successful operation of the Company. The Plan is intended to, and shall be interpreted to, comply in all respects with Code Section 409A and those provisions of ERISA applicable to an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees.”
ARTICLE I
DEFINITIONS
1.1 “Account” or “Accounts” shall mean the bookkeeping account or accounts established under this Plan pursuant to Article 4.
1.2 “Affiliate” of a person means, with respect to any person, any person which directly or indirectly controls, is controlled by, or is under common control with such person, provided that no security holder of the Company shall be deemed to be an Affiliate of any other security holder or of the Company or any of its Subsidiaries solely by reason of any investment in the Company. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such person, whether through the ownership of voting securities, by contract or otherwise.
1.3 “Base Salary” shall mean a Participant’s annual base salary, excluding incentive and discretionary bonuses, commissions, reimbursements and other non-regular remuneration, received from the Employer prior to reduction for any salary deferrals under benefit plans sponsored by the Employer, including but not limited to plans established pursuant to Code Section 125 or qualified pursuant to Code Section 401(k).
1.4 “Beneficiary” or “Beneficiaries” shall mean the person, persons or entity designated as such pursuant to Section 7.1.
1.5 “Board” shall mean the Board of Directors of the Company.
1.6 “Bonus(es)” shall mean amounts paid to the Participant by the Employer in the form of discretionary or annual incentive compensation or any other bonus designated by the Committee, before reductions for contributions to or deferrals under any benefit plans sponsored by the Employer, including but not limited to plans established pursuant to Code Section 125 or qualified pursuant to Code Section 401(k).
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1.7 “Change in Control” shall mean if, at any time after the date hereof, any of the following events shall have occurred:
(a) Any person becomes a beneficial owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the outstanding voting securities of the Company; provided, however, that the event described in this clause (a) will not be deemed a Change in Control by virtue of any holdings or acquisitions: (i) by the Company or any of its Subsidiaries, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries; provided that such holdings or acquisitions by any such plan (other than any plan maintained under Section 401(k) of the Code) or related trust do not exceed 50% of the total voting power of the then outstanding voting securities of the Company, (iii) by any underwriter temporarily holding securities of the Company pursuant to an offering of such securities or (iv) pursuant to a Non-Qualifying Transaction;
(b) The consummation of a merger, consolidation, statutory share exchange or similar transaction that requires adoption by the Company’s shareholders (a “Business Combination”), unless immediately following such Business Combination: (x) more than 50% of the total voting power of the outstanding voting securities of the corporation resulting from such Business Combination (the “Surviving Corporation”), or, if applicable, the ultimate parent corporation that, directly or indirectly, has beneficial ownership (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), of 100% of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by securities that were outstanding immediately before such Business Combination (or, if applicable, is represented by shares into which such voting securities were converted pursuant to such Business Combination), and (y) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination are Incumbent Directors (as defined below) at the time the Board approved the execution of the agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (x) and (y) above will be deemed a “Non-Qualifying Transaction”);
(c) Consummation of a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets, in either event other than a Non-Qualifying Transaction; or
(d) During any twelve (12)-month period, Incumbent Directors cease to constitute a majority of the members of the Board.
For purposes of this Section 1.7, the term “Incumbent Director” means, as of any date of determination, an individual who is either (a) a member of the Board as of the effective date of the adoption of this Plan or (b) a member who becomes a member of the Board subsequent to the date of the adoption of this Plan whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least sixty percent (60%) of the then Incumbent Board Members (either by a specific vote or by approval of the proxy statement of the Company in which that person is named as a nominee for director, without objection to that nomination), but excluding, for that purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.
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Notwithstanding the foregoing, a Change of Control shall not occur for purposes of this Plan unless such Change of Control also constitutes a “change in control event” under Section 409A of the Code and the regulations thereunder.
1.8 “Code” shall mean the Internal Revenue Code of 1986, as amended, as interpreted by Treasury regulations and applicable authorities promulgated thereunder.
1.9 “Commissions” shall mean amounts paid to the Participant by the Employer in the form of commissions and designated by the Committee as eligible for deferral under the Plan, before reductions for contributions to or deferrals under any benefit plans sponsored by the Employer, including but not limited to plans established pursuant to Code Section 125 or qualified pursuant to Code Section 401(k).
1.10 “Committee” shall mean the person or persons appointed by the Board to administer the Plan in accordance with Article 9.
1.11 “Company Contributions” shall mean the contributions made by the Company pursuant to Section 3.3.
1.12 “Company Contribution Account” shall mean the Account maintained for the benefit of the Participant which is credited with Company Contributions, if any, pursuant to Section 4.2.
1.13 “Compensation” shall mean all amounts eligible for deferral for a particular Plan Year under Section 3.1.
1.14 “Crediting Rate” shall mean the notional earnings and losses credited on the Participant’s Account balance which are based on the Participant’s choice (or, if applicable, Committee’s direction) among the investment alternatives made available by the Committee pursuant to Section 3.4 of the Plan.
1.15 “Deferral Account” shall mean an Account maintained for each Participant that is credited with Participant Deferrals pursuant to Section 4.1
1.16 “Deferrals” shall mean the contributions made by the Participant pursuant to Section 3.1.
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1.17 “Director” shall mean a member of the Board and/or any member of the Board of Directors of any Subsidiary, who is selected by the Committee to be eligible to participate in the Plan.
1.18 “Director’s Fees” shall mean compensation for services as a member of the Board of Directors of the Company or any Subsidiary, excluding reimbursement of expenses or other non-regular forms of compensation, before reductions for contributions to or deferrals under any deferred compensation plan sponsored by the Company or any Subsidiary. The Committee may, in its discretion, provide for separate Participant Elections for the portion of the Director’s Fees that serves as a cash retainer and the portion of the Director’s Fees that reflects meeting fees, as applicable.
1.19 “Disability” or “Disabled” shall mean (consistent with the requirements of Code Section 409A) that the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s Employer. For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration. A Participant shall also be deemed Disabled if determined to be disabled in accordance with the applicable disability insurance program of such Participant’s Employer, provided that the definition of “disability” applied under such disability insurance program complies with the requirements of this Section.
1.20 “Distributable Amount” shall mean the vested balance in the applicable Account as determined under Article 4.
1.21 “Eligible Executive” shall mean a highly compensated or management level employee of an Employer selected by the Committee to be eligible to participate in the Plan.
1.22 “Employer(s)” shall be defined as follows:
(a) Except as otherwise provided in part (b) of this Section, the term “Employer” shall mean the Company and/or any of its Subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.
(b) For the purpose of determining whether a Participant has experienced a Separation from Service, the term “Employer” shall mean:
(1) The entity for which the Participant performs services and with respect to which the legally binding right to compensation deferred or contributed under this Plan arises; and
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(2) All other entities with which the entity described above would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades or businesses, whether or not incorporated, under common control), as applicable. In order to identify the group of entities described in the preceding sentence, however, the Committee shall use an ownership threshold of at least 50% as a substitute for the 80% minimum ownership threshold that appears in, and otherwise must be used when applying, the applicable provisions of (A) Code Section 1563 for determining a controlled group of corporations under Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2 for determining the trades or businesses that are under common control under Code Section 414(c).
1.23 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, including Department of Labor and Treasury regulations and applicable authorities promulgated thereunder.
1.24 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.
1.25 “Financial Hardship” shall mean a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2), and (d)(1)(B))) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but shall in all events correspond to the meaning of the term “unforeseeable emergency” under Code Section 409A.
1.26 “Fund” or “Funds” shall mean one or more of the investments selected by the Committee pursuant to Section 3.4 of the Plan.
1.27 “Hardship Distribution” shall mean an accelerated distribution of vested benefits or a cancellation of deferral elections pursuant to Section 6.6 to a Participant who has suffered a Financial Hardship.
1.28 “Joint Notices” shall mean the Employee Benefits Security Administration (“EBSA”) Disaster Relief Notice 2020-01, Notice of Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak issued by the Department of Labor, the Department of the Treasury and the Internal Revenue Service, EBSA Disaster Relief Notice 2021-01, and any successors thereto.
1.29 “Outbreak Period” shall mean the period from March 1, 2020 through the date that is 60 days after the announced end of the national emergency related to the COVID-19 pandemic, or through such other date announced by the federal agencies.
1.30 “Participant” shall mean any Eligible Executive or Director who becomes a Participant in this Plan in accordance with Article 2.
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1.31 “Participant Election(s)” shall mean the forms or procedures by which a Participant makes elections with respect to (a) voluntary deferrals of his/her Compensation, (b) the Funds, which shall act as the basis for crediting of interest on Account balances, and (c) the form and timing of distributions from Accounts. Participant Elections may take the form of an electronic communication followed by appropriate confirmation according to specifications established by the Committee.
1.32 “Payment Date” shall mean the date by which a total distribution of the Distributable Amount shall be made or the date by which installment payments of the Distributable Amount shall commence.
(a) For benefits triggered by the Separation from Service (including Retirement) or death of a Participant, the Payment Date shall be as soon as administratively practicable (but no later than ninety (90) days) after the event triggering the payout occurs, and the applicable amount shall be calculated as of the last business day of the month in which the event triggering the payout occurs. Subsequent installments, if any, shall be paid as soon as administratively practicable in, and no later than the last day of, the same calendar quarter of each Plan Year following the Plan Year in which the event triggering the payout occurs, and the applicable amount shall be calculated as of the last business day of the month immediately preceding the month in which the subsequent installment will be paid. In the case of death, the Committee shall be provided with documentation reasonably necessary to establish the fact of the Participant’s death; and
(b) The Payment Date of a Scheduled Distribution or a Scheduled Vesting Date Distribution shall be that date as soon as administratively practicable (but no later than ninety (90) days) after the date on which the distribution is scheduled to commence, and the applicable Distributable Amount shall be calculated as of the last business day of the month immediately preceding the month in which the distribution will be paid. Subsequent installments, if any, shall be paid as soon as administratively practicable in, and no later than the last day of, the same calendar quarter of each Plan Year following the Plan Year in which the Payment Date of the Scheduled Distribution or Scheduled Vesting Date Distribution occurs, and the applicable amount shall be calculated as of the last business day of the month immediately preceding the month in which the subsequent installment will be paid.
Notwithstanding the foregoing, the Payment Date shall not be before the earliest date on which benefits may be distributed under Code Section 409A without violation of the provisions thereof, as reasonably determined by the Committee.
The Distributable Amount shall be determined for amounts credited to the Company Stock Unit Account based on the fair market value of the Stock, as determined by the Committee for valuing Stock and designated for use under the Plan, as of the last business day of the month immediately preceding the date the Distributable Amount is to be paid.
1.33 “Performance-Based Compensation” shall mean Compensation the entitlement to or amount of which is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(e).
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1.34 “Person” shall mean any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government instrumentality, division, agency, body or department.
1.35 “Plan Year” shall mean the calendar year.
1.36 “Prorated Percentage” shall mean that percentage, (i) the numerator of which is the sum of one (1) (provided the Participant remains employed by or in service to the Company or any Subsidiary from the date the amounts are credited to the Participant’s Account(s) through the last day of the Plan Year in which the amounts are credited to the Participant’s Account(s)) plus that number of full Plan Years after the Plan Year in which the amounts are credited to the Participant’s Account(s), during which the Participant remained employed by or in service to the Company or any Subsidiary, and (ii) the denominator of which is the sum of one (1) plus that number of Plan Years after the Plan Year in which the amounts are credited to the Participant’s Account(s) that Participant had to remain employed by or in service to the Company or any Subsidiary for the entirety of such amounts to vest in full.
1.37 “Restricted Stock Units” shall mean rights to receive shares of Stock (or cash based on the fair market value of shares of Stock) selected by the Committee in its sole discretion and awarded to the Participant under an equity incentive plan or director compensation program, and the deferred amount shall be calculated using the closing price of Stock (based on the most recently available determination of such pricing, as determined by the Committee in its sole discretion) at the end of the business day closest to the date such Restricted Stock Unit would otherwise vest, but for the election to defer. The portion of any Restricted Stock Unit deferred shall, at the time the Restricted Stock Unit would otherwise vest under the terms of the applicable equity incentive plan or director compensation program, but for the election to defer, be reflected on the books of the Company as an unfunded, unsecured promise to deliver to the Participant a specific number of actual shares of Stock in the future or the fair market value of such number of shares of Stock in the form of cash, as set forth in the agreement awarding the Restricted Stock Units.
1.38 “Retirement” shall mean, for Deferrals and modifications of the time and form of payment of Deferrals and Discretionary Contributions other than by a Director, the Participant’s Separation from Service on or after age sixty-five (65) with the approval of the Committee to treat the Separation from Service as a “Retirement” and, for Deferrals and modifications of the time and form of payment of Deferrals and Discretionary Contributions by a Director, the Participant’s Separation from Service.
1.39 “Scheduled Distribution” shall mean a scheduled distribution date elected by the Participant or specified by the Committee (if the Participant does not, or is not permitted to, elect any such date) for distribution of amounts from a specified Account, including notional earnings and losses credited thereon, as provided under Section 6.4.
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1.40 “Scheduled Vesting Date Distribution” shall mean a scheduled distribution date, based upon the vesting date or dates originally determined by the Company in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s) or such other date or dates set forth herein, upon which the Participant’s Account(s) or portions thereof will vest, or continue to vest, on and after the Participant’s Retirement, for distribution of such amounts from a specified Account, including notional earnings and losses credited thereon, as provided under Section 6.4.
1.41 “Separation from Service” shall mean a termination of services provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other than by reason of death, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:
(a) For a Participant who provides services to an Employer as an employee, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such employer. A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her employer reasonably anticipate that either (i) no further services will be performed for the employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the employer after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the employer if the Participant has been providing services to the Employer less than 36 months).
If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer shall be treated as continuing intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period. In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.
(b) For a Participant, if any, who provides services to an Employer as an independent contractor, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for such Employer, provided that the expiration of such contract(s) is determined by the Committee to constitute a good-faith and complete termination of the contractual relationship between the Participant and such Employer.
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(c) For a Participant, if any, who provides services to an Employer as both an employee and an independent contractor, a Separation from Service generally shall not occur until the Participant has ceased providing services for such Employer as both an employee and as an independent contractor, as determined in accordance with the provisions set forth in parts (a) and (b) of this Section, respectively. Similarly, if a Participant either (i) ceases providing services for an Employer as an independent contractor and begins providing services for such Employer as an employee, or (ii) ceases providing services for an Employer as an employee and begins providing services for such Employer as an independent contractor, the Participant will not be considered to have experienced a Separation from Service until the Participant has ceased providing services for such Employer in both capacities, as determined in accordance with the applicable provisions set forth in parts (a) and (b) of this Section.
Notwithstanding the foregoing provisions in this part (c), if a Participant provides services for an Employer as both an employee and as a Director, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a Director shall not be taken into account in determining whether the Participant has experienced a Separation from Service as an employee, and the services provided by such Participant as an employee shall not be taken into account in determining whether the Participant has experienced a Separation from Service as a Director.
1.42 “Stock” shall mean the Company’s common stock, $0.01 par value per share, or any other equity securities of the Company designated by the Committee.
1.43 “Subsidiary” shall mean any corporation, company or other entity (i) more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than 50% of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company.
1.44 “Switch Date” shall mean, with respect to a Participant other than a Director, the date on which the sum of the Participant’s age plus Years of Service equals sixty (60).
1.45 “Years of Service” shall mean the cumulative consecutive years of continuous full-time employment with the Employer (including approved leaves of absence of six months or less or legally protected leaves of absence), beginning on the date the Participant most recently began service with the Employer, and counting each anniversary thereof. A partial year of employment shall not be treated as a Year of Service.
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ARTICLE II
PARTICIPATION
2.1 Enrollment Requirements; Commencement of Participation
(a) As a condition to participation, each Eligible Executive and Director shall complete, execute and return to the Committee the appropriate Participant Elections, as well as such other documentation and information as the Committee reasonably requests, by the deadline(s) established by the Committee. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.
(b) Each Eligible Executive and Director shall commence participation in the Plan on the date that the Committee determines that the Eligible Executive or Director has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.
(c) If an Eligible Executive or Director fails to meet all requirements established by the Committee within the period required, that Eligible Executive or Director shall not be eligible to participate in the Plan during such Plan Year.
ARTICLE III
CONTRIBUTIONS & DEFERRAL ELECTIONS
3.1 Elections to Defer Compensation. Elections to defer Compensation shall take the form of a whole percentage (less applicable payroll withholding requirements for Social Security, Medicare and income taxes and employee benefit plans, as determined in the sole and absolute discretion of the Committee) of up to a maximum of:
(1) 70% of Base Salary,
(2) 70% of Commissions,
(3) 100% of Bonuses,
(4) 100% of Director’s Fees and
(5) 100% of Restricted Stock Units
The Committee may, in its sole discretion, adjust for subsequent Plan Years on a prospective basis the minimum (if any) and maximum deferral percentages described in this Section for one or more types of Compensation (including, without limitation, for particular types of Bonuses) and for one or more subsequent Plan Years; such revised deferral percentages shall be indicated on a Participant Election form approved by the Committee. Notwithstanding the foregoing, in no event shall the minimum and maximum deferral percentages be adjusted after the last date on which deferral elections for the applicable type(s) of Compensation must be submitted and become irrevocable in accordance with Section 3.2 below and the requirements of Code Section 409A.
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The Committee also may, in its sole discretion, establish a minimum and maximum dollar amount of Compensation that a Participant may defer for a Plan Year and may adjust that minimum and maximum for subsequent Plan Years on a prospective basis as the Committee may determine. Notwithstanding the foregoing, in no event shall the minimum and maximum dollar amounts that may be deferred be adjusted after the last date on which deferral elections for the applicable type(s) of Compensation must be submitted and become irrevocable in accordance with Section 3.2 below and the requirements of Code Section 409A.
In addition, the Committee may determine, it sole discretion, which of the types of Compensation described above shall be available for elective deferral under this Plan for any particular Plan Year; such determination by the Committee regarding the types of Compensation available for elective deferral shall be made no later than the date that any deferral election for such Compensation must become irrevocable in accordance with Section 3.2 below and the requirements of Code Section 409A.
3.2 Timing of Deferral Elections; Effect of Participant Election(s).
(a) General Timing Rule for Deferral Elections. Except as otherwise provided in this Section 3.2, in order for a Participant to make a valid election to defer Compensation, the Participant must submit Participant Election(s) on or before the deadline established by the Committee, which shall be no later than the December 31st preceding the Plan Year in which the services relating to such compensation will begin to be performed. In the case of deferrals of Restricted Stock Units, except where otherwise permitted in accordance with this Section 3.2 and Code Section 409A, the Participant must submit such Participant Election on or before the deadline established by the Committee, which shall be no later than the December 31st preceding the Plan Year in which Restricted Stock Units are initially granted to the Participant under the terms of the applicable equity incentive plan or director compensation program.
Any deferral election made in accordance with this Section 3.2(a) shall be irrevocable; provided, however, that if the Committee permits or requires Participants to make a deferral election by the deadline described above for an amount that qualifies as Performance-Based Compensation, the Committee may permit a Participant to subsequently change his or her deferral election for such compensation by submitting new Participant Election(s) in accordance with Section 3.2(d) below.
(b) Timing of Deferral Elections for New Plan Participants. An Eligible Executive or Director who first becomes eligible to participate in the Plan on or after the beginning of a Plan Year, as determined in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg. §1.409A-1(c)(2), may be permitted to make an election to defer the portion of Compensation attributable to services to be performed after such election, provided that the Participant submits Participant Election(s) on or before the deadline established by the Committee, which in no event shall be later than thirty (30) days after the Participant first becomes eligible to participate in the Plan.
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Notwithstanding the foregoing, an Eligible Executive or Director who first becomes eligible to participate in the Plan as of the Effective Date may be permitted to make an election to defer the portion of Compensation attributable to services to be performed after the Effective Date, provided that the Participant submits Participant Election(s) before the Effective Date.
If a deferral election made in accordance with this Section 3.2(b) relates to compensation earned based upon a specified performance period, the amount eligible for deferral shall be equal to (i) the total amount of compensation for the performance period, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in the service period after the Participant’s deferral election is made and becomes irrevocable, and the denominator of which is the total number of days in the performance period.
Any deferral election made in accordance with this Section 3.2(b) shall become irrevocable no later than the 30th day after the date the Participant first becomes eligible to participate in the Plan, except that any deferral election permitted to be made prior to the Effective Date shall become irrevocable no later than the Effective Date.
(c) Timing of Deferral Elections for Fiscal Year Compensation. In the event that the fiscal year of an Employer is different than the taxable year of a Participant, the Committee may determine that a deferral election may be made for “fiscal year compensation” (as defined below), by submitting Participant Election(s) on or before the deadline established by the Committee, which in no event shall be later than the last day of the Employer’s fiscal year immediately preceding the fiscal year in which the services related to such compensation will begin to be performed. For purposes of this Section, the term “fiscal year compensation” shall only include Bonuses relating to a service period coextensive with one or more consecutive fiscal years of the Employer, of which no amount is paid or payable during the Employer’s fiscal year(s) that constitute the service period.
A deferral election made in accordance with this Section 3.2(c) shall be irrevocable; provided, however, that if the Committee permits or requires Participants to make a deferral election by the deadline described in this Section 3.2(c) for an amount that qualifies as Performance-Based Compensation, the Committee may permit a Participant to subsequently change his or her deferral election for such compensation by submitting new Participant Election(s) in accordance with 3.2(d) below.
(d) Timing of Deferral Elections for Performance-Based Compensation. Subject to the limitations described below, the Committee may determine that an irrevocable deferral election for an amount that qualifies as Performance-Based Compensation may be made by submitting Participant Election(s) on or before the deadline established by the Committee, which in no event shall be later than six (6) months before the end of the performance period.
In order for a Participant to be eligible to make a deferral election for Performance-Based Compensation in accordance with the deadline established pursuant to this Section 3.2(d), the Participant must have performed services continuously from the later of (i) the beginning of the performance period for such compensation, or (ii) the date upon which the performance criteria for such compensation are established, through the date upon which the Participant makes the deferral election for such compensation. In no event shall a deferral election submitted under this Section 3.2(d) be permitted to apply to any amount of Performance-Based Compensation that has become readily ascertainable.
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(e) Timing Rule for Deferral of Compensation Subject to Risk of Forfeiture. With respect to compensation (i) to which a Participant has a legally binding right to payment in a subsequent year, and (ii) that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least twelve (12) months from the date the Participant obtains the legally binding right, the Committee may determine that an irrevocable deferral election for such compensation may be made by timely delivering Participant Election(s) to the Committee in accordance with its rules and procedures, no later than the 30th day after the Participant obtains the legally binding right to the compensation, provided that the election is made and becomes irrevocable at least twelve (12) months in advance of the earliest date at which the forfeiture condition could lapse, as determined in accordance with Treas. Reg. §1.409A-2(a)(5).
Any deferral election(s) made in accordance with this Section 3.2(e) shall become irrevocable no later than the 30th day after the Participant obtains the legally binding right to the compensation subject to such deferral election(s).
For purposes of this 3.2(e), a condition will not be treated as failing to require the Participant to continue to provide services for a period of at least twelve (12) months from the date the Participant obtains the legally binding right merely because the condition immediately lapses upon the death or disability (as defined in § 1.409A-3(i)(4)) of the Participant, or upon a change in control event (as defined in § 1.409A-3(i)(5)), provided that if death, disability, or a change in control event occurs and the condition lapses before the end of such twelve (12)-month period, a deferral election may be given effect only if the deferral election is permitted without regard to this Section 3.2(e).
(f) Separate Deferral Elections for Each Plan Year. In order to defer each type of Compensation for a Plan Year, a Participant must submit a separate deferral election with respect to each type of Compensation for such Plan Year with respect to which the Committee permits a separate deferral election by affirmatively filing a Participant Election during the enrollment period established by the Committee prior to the beginning of such Plan Year (or at such other time contemplated under this Section 3.2), which election shall be effective on the first day of the next following Plan Year (unless otherwise specified on the Participant Election). Notwithstanding any other provision of the Plan, no Scheduled Distribution Election may be made that would result in the Deferral being paid sooner than the third Plan Year immediately following the year in which the Compensation would be paid absent the deferral election, except with respect to Bonuses initially allocated to Funds other than the Company Stock Unit Fund which can be paid as soon as any Deferrals of Base Salary or, if none, Commissions, for the given Plan Year.
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3.3 Company Contributions. The Company shall have the discretion to make Company Contributions to the Plan at any time and in any amount on behalf of any Participant. If the amount of a Company Contribution is to be determined with reference to the amount of the Participant’s Deferrals, such contribution shall be referred to herein as a Matching Contribution. Any Company Contribution that is not determined with reference to the amount of the Participant’s Deferrals shall be referred to herein as a Discretionary Contribution. Company Contributions shall be made in the complete and sole discretion of the Company, and no Participant shall have the right to receive any Company Contribution in any particular Plan Year regardless of whether Company Contributions are made on behalf of other Participants. The Committee may, in its sole discretion, require that any such Company Contribution shall be allocated, initially and/or irrevocably, to the Company Stock Unit Fund (as described in Section 3.4 below). If the Committee elects to make Matching Contributions with respect to some or all of a Participant’s Deferrals, or will require some or all of a Participant’s Deferrals to be allocated to the Company Stock Unit Fund as a condition to receipt of Matching Contributions, the Committee intends to communicate same, along with the schedule or schedules, if any, on which such Deferrals and Matching Contributions and any notional earnings and losses thereon credited to the Participant’s Account(s) shall become vested, within a reasonable period of time in advance of the last date on which deferral elections for the applicable type(s) of Compensation must be submitted and become irrevocable.
3.4 Investment Elections.
(a) Participant Designation. Except as otherwise provided in section 3.4(c) below, at the time of entering the Plan and/or of making a deferral election under the Plan, the Participant shall designate, on a Participant Election provided by the Committee, the Funds in which the Participant’s Accounts shall be deemed to be invested for purposes of determining the amount of notional earnings and losses to be credited to each Account. The Participant may specify that all or any percentage of his or her Accounts shall be deemed to be invested, in whole percentage increments, in one or more of the Funds selected as alternative investments under the Plan from time to time by the Committee pursuant to subsection (b) of this Section. If a Participant fails to make an election among the Funds as described in this section, the Participant’s Account balance shall automatically be allocated into the lowest-risk Fund, as determined by the Committee in its sole discretion (except as otherwise provided in Section 3.4(c) below). A Participant may change any designation made under this Section on a prospective basis as permitted by the Committee by filing a revised election, on a Participant Election provided by the Committee. Notwithstanding the foregoing, the Committee, in its sole discretion, may impose limitations on the frequency with which one or more of the Funds elected in accordance with this Section may be added or deleted by such Participant; furthermore, the Committee, in its sole discretion, may impose limitations on the frequency with which the Participant may change the portion of his or her Account balance allocated to each previously or newly elected Fund.
(b) Investment Funds. The Committee may select, in its sole and absolute discretion, each of the types of commercially available investments communicated to the Participant pursuant to subsection (a) of this Section to be the Funds. The Crediting Rate of each such commercially available investment shall be used to determine the amount of notional earnings or losses to be credited to the Participant’s Account under Article IV. The Participant’s choice among investments shall be solely for purposes of calculation of the Crediting Rate on Accounts. The Employers shall have no obligation to set aside or invest amounts as directed by the Participant and, if an Employer elects to invest amounts as directed by the Participant, the Participant shall have no more right to such investments than any other unsecured general creditor of the Employer. Amounts allocated to Funds other than the Company Stock Unit Fund shall only be distributable in cash.
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(c) Company Stock Unit Fund.
(1) Notwithstanding Section 3.4(a) and (b) above, a Participant’s Restricted Stock Unit deferrals (to the extent payable in shares of Stock but for the election to defer), Matching Contributions (to the extent required by the Committee), Discretionary Contributions (to the extent required by the Committee), Bonuses (to the extent permitted by the Committee and elected by the Participant) and Director’s Fees (to the extent permitted by the Committee and elected by the Participant) will be allocated to a Fund that tracks the performance of the Company’s Stock (the “Company Stock Unit Fund”). Participants may not select any other Fund to be used to determine the amounts to be credited or debited to their Restricted Stock Unit deferrals (to the extent payable in shares of Stock but for the election to defer), Matching Contributions (to the extent required by the Committee), Discretionary Contributions (to the extent required by the Committee), Bonuses (to the extent required by the Committee to remain allocated to the Company Stock Unit Fund once allocated thereto by the Participant), and Director’s Fees (to the extent required by the Committee to remain allocated to the Company Stock Unit Fund once allocated thereto by the Participant). A Participant may not elect to allocate any Base Salary or Commissions deferrals to the Company Stock Unit Fund. Bonuses that the Committee permits, and the Participant elects, to be allocated to the Company Stock Unit Fund may be so allocated (to the extent elected by the Participant) only as of the time the Deferral is to be credited initially to the Participant’s Account(s), and no Bonus amounts initially allocated to the Company Stock Unit Fund may be re-allocated to any other Fund once allocated to the Company Stock Unit Fund, or re-allocated into the Company Stock Unit Fund once initially allocated to another Fund, unless otherwise permitted by the Committee. Director’s Fees (to the extent permitted by the Committee) may be allocated to the Company Stock Unit Fund at the election of the Participant only as of the time the Deferral is to be credited initially to the Participant’s Account(s), and no Director’s Fees initially allocated to the Company Stock Unit Fund may be re-allocated to any other Fund once allocated to the Company Stock Unit Fund or re-allocated into the Company Stock Unit Fund once initially allocated to another Fund other than the Company Stock Unit Fund, unless otherwise permitted by the Committee. Amounts allocated to the Company Stock Unit Fund shall only be distributable in actual shares of Stock, unless the Committee determines, in its sole discretion, that such amounts shall be distributed in cash.
(2) Any stock dividends, cash dividends or other non-cash dividends that would have been payable on the Stock credited to a Participant’s Accounts shall be credited to the Participant’s Accounts in the form of additional shares of Stock and shall automatically be deemed to be re-invested in the Company Stock Unit Fund (irrevocably until such amounts are distributed to the Participant with respect to Restricted Stock Units, Company Contributions or other Deferrals to the extent required by the Committee). The number of shares credited to the Participant for a particular stock dividend shall be equal to (A) the number of shares of Stock credited to the Participant’s Account as of the record date for such dividend in respect of each share of Stock, multiplied by (B) the number of additional or fractional shares of Stock actually paid as a dividend in respect of each share of Stock. The number of shares credited to the Participant for a particular cash dividend or other non-cash dividend shall be equal to (A) the number of shares of Stock credited to the Participant’s Account as of the record date for such dividend in respect of each share of Stock, multiplied by (B) the fair market value of the dividend, divided by (C) the “fair market value” of the Stock on the payment date for such dividend.
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(3) The number of shares of Stock credited to the Participant’s Account may be adjusted by the Committee, in its sole discretion, to prevent dilution or enlargement of Participants’ rights with respect to the portion of his or her Account allocated to the Company Stock Unit Fund in the event of any reorganization, reclassification, stock split, or other unusual corporate transaction or event which affects the value of the Stock, provided that any such adjustment shall be made taking into account any crediting of shares of Stock to the Participant under this Section.
(4) For purposes of this Section, the fair market value of the Stock shall be, in the event the Stock is traded on a recognized securities exchange, an amount equal to the closing price of the Stock on such exchange on the date set for valuation or, if no sales of Stock were made on said exchange on that date, the closing price of the Stock on the next preceding day on which sales were made on such exchange; or, if the Stock is not so traded, the value determined, in its sole discretion, by the Committee in compliance with Code Section 409A.
3.5 Distribution Elections.
(a) Initial Election. At the time of making a deferral election under the Plan, the Participant shall designate the time and form of distribution of Deferrals made pursuant to such election (together with any notional earnings and losses credited thereon) from among the alternatives specified under Article VI for the applicable distribution (except as otherwise set forth herein). Such distribution election for a given Plan Year shall relate solely to that Plan Year’s Deferrals and, if any, Matching Contributions on those Deferrals for the Plan Year (although the Participant will not be permitted to make a separate distribution election for a given Plan Year for Matching Contributions; Matching Contributions will be subject to the distribution election that the Participant makes with respect to the Deferrals to which the Matching Contributions relate, except as otherwise set forth herein). Unless the Committee permits otherwise, the deferral election a Participant makes for a given Plan Year for Deferrals of Base Salary, Deferrals of Commissions and Deferrals of Bonuses initially allocated to Funds other than Company Stock Unit Fund must be the same. In the event of any conflict, the Participant's deferral election for Deferrals of Base Salary shall control, and if there are no deferrals of Base Salary, the Participant's deferral election for Deferrals of Commissions shall control. The Participant may make separate deferral elections for each Plan Year for (i) Deferrals of Bonuses initially allocated to the Company Stock Unit Fund, (ii) Deferrals of Director’s Fees and (iii) Deferrals of Restricted Stock Units. A new distribution election must be made at the time of subsequent deferral elections in accordance with the Participant Election forms. Notwithstanding the foregoing, Matching Contributions may be distributed later than the Deferrals to which the Matching Contributions relate, as set forth in Article IV, to the extent such Matching Contributions will vest later than the deferrals to which they relate on account of a Separation from Service upon Retirement.
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(b) Modification of Election. A distribution election with respect to previously deferred amounts may only be changed under the terms and conditions specified in Code Section 409A and this Section, and only to the extent permitted by the Committee in its sole discretion. Notwithstanding the foregoing, a distribution election with respect to Matching Contributions may only be changed if, and consistent with, any change made for the Deferrals to which the Matching Contributions relate. Further, because a single distribution election applies to Deferrals of Base Salary, Deferrals of Commissions and Deferrals of Bonuses initially allocated to Funds other than the Company Stock Unit Fund as described above, any change to such distribution election will control distribution of all amounts subject to that election. Additionally, the terms of distribution with respect to Discretionary Contributions set forth in Section 6.5 may be changed under the terms and conditions specified in Section 409A and this Section, to the extent permitted by the Committee in its sole discretion. Except as permitted under Code Section 409A, no acceleration of a distribution is permitted. A subsequent election that delays payment or changes the form of payment shall be permitted if and only if all of the following requirements are met:
(1) the new election does not take effect until at least twelve (12) months after the date on which the new election is made;
(2) in the case of payments made other than on account of death, Disability or Financial Hardship, the new election delays payment for at least five (5) years from the date that payment would otherwise have been made, absent the new election; and
(3) in the case of payments made according to a Scheduled Distribution, the new election is made not less than twelve (12) months before the date on which payment would have been made (or, in the case of installment payments, the first installment payment would have been made) absent the new election.
For purposes of application of the above change limitations, installment payments shall be treated as a single payment under Code Section 409A. Election changes made pursuant to this Section shall be made in accordance with rules established by the Committee and shall comply with all requirements of Code Section 409A and applicable authorities.
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ARTICLE IV
ACCOUNTS
4.1 Deferral Accounts. The Committee shall establish and maintain a Deferral Account for each Participant under the Plan. Each Participant’s Deferral Account shall be further divided into separate subaccounts (“Fund Subaccounts”), each of which corresponds to a separate Participant Election and/or a Fund designated pursuant to Section 3.4. A Participant’s Deferral Account shall be credited as follows:
(a) As soon as reasonably possible after amounts are withheld and deferred from a Participant’s Compensation (which shall generally be within three (3) business days of such withholding), the Committee shall credit the Fund Subaccounts of the Participant’s Deferral Account with an amount equal to Compensation deferred by the Participant in accordance with the designation under Section 3.4; that is, the portion of the Participant’s deferred Compensation designated to be deemed to be invested in a Fund shall be credited to the Fund Subaccount to be invested in that Fund;
(b) Each business day, each Fund Subaccount of a Participant’s Deferral Account shall be credited with earnings or losses in an amount equal to that determined by multiplying the balance credited to such Fund Subaccount as of the prior day, less any distributions valued as of the end of the prior day, by the Crediting Rate for the corresponding Fund as determined by the Committee pursuant to Section 3.4; and
(c) In the event that a Participant elects for a given Plan Year’s deferral of Compensation a Scheduled Distribution, all amounts attributed to the deferral of Compensation for such Plan Year shall be accounted for in a manner which allows separate accounting for the deferral of Compensation and investment gains and losses associated with amounts allocated to each such separate Scheduled Distribution.
4.2 Company Contribution Account. The Committee shall establish and maintain a Company Contribution Account for each Participant under the Plan. Each Participant’s Company Contribution Account shall be further divided into separate Fund Subaccounts corresponding to the Fund designated pursuant to Section 3.4 to the extent that such Company Contributions are not required to be allocated to the Company Stock Unit Fund. A Participant’s Company Contribution Account shall be credited as follows:
(a) As soon as reasonably possible after a Company Contribution is made, the Company shall credit the Fund Subaccounts of the Participant’s Company Contribution Account with an amount equal to the Company Contributions, if any, made on behalf of that Participant, that is, the proportion of the Company Contributions, if any, designated to be deemed to be invested in a certain Fund shall be credited to the Fund Subaccount to be invested in that Fund. Unless the Participant elects otherwise, any Company Contribution that may not be deemed invested in such a Fund shall be deemed invested in the default Fund selected by the Committee for such purpose; and
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(b) Each business day, each Fund Subaccount of a Participant’s Company Contribution Account shall be credited with earnings or losses in an amount equal to that determined by multiplying the balance credited to such Fund Subaccount as of the prior day, less any distributions valued as of the end of the prior day, by the Crediting Rate for the corresponding Fund as determined by the Committee pursuant to Section 3.4.
4.3 Trust. The Company shall be responsible for the payment of all benefits under the Plan. At its discretion, the Company may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan. Such trust or trusts may be revocable or irrevocable prior to a Change in Control, but the assets thereof shall be subject to the claims of the Company’s creditors. Benefits paid to the Participant from any such trust or trusts shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan. Notwithstanding the foregoing, the Company, prior to and in the event of a Change in Control, shall establish one or more irrevocable grantor trusts, and/or provide that any such revocable trusts previously established become irrevocable, until all obligations under the Plan are satisfied, for the purpose of providing for payment of benefits under the Plan, and the Company shall be responsible for contributing to such trusts cash and cash equivalents so that the assets held in the trusts, as of the date of the Change in Control, are no less than the aggregate balances of the total Deferral Accounts in the Plan as of the date of the Change in Control. After a Change of Control, any Participant or Beneficiary for whom a Deferral Account and payment schedule is on file with the Company at the time of such Change of Control shall be presumed conclusively, for all purposes, to be entitled to any deferred compensation payable to such Participant or Beneficiary on the basis of information contained in such Deferral Account and payment schedule, and the amount and the form of payment of the deferred compensation so payable shall be conclusive and binding on all parties. Nothing contained herein shall be construed to require a transfer of funds to any such trust in connection with a change in the Company’s financial health, or during a restricted period with respect to the Company, as such terms are defined in subsections (b)(2) and (b)(3) of Section 409A of the Code.
4.4 Statement of Accounts. The Committee shall provide each Participant with electronic statements at least quarterly setting forth the Participant’s Account balance as of the end of each applicable period.
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ARTICLE V
VESTING
5.1 Vesting of Deferral Accounts. The Participant shall be vested at all times in any Deferrals of Base Salary, Commissions, Bonuses initially allocated to a Fund other than the Company Stock Unit Fund, and/or Director's Fees and any notional earnings and losses thereon, credited to the Participant's Deferral Account(s). Deferrals of Bonuses that are initially allocated to the Company Stock Unit Fund and Deferrals of Restricted Stock Units, and any notional earnings and losses thereon, credited to the Participant’s Deferral Account(s) shall be vested upon the schedule or schedules determined by the Committee in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), subject to the Participant remaining employed by or in service to the Company or any Subsidiary from the date the amounts are credited to the Participant’s Deferral Account(s) until the applicable vesting date, provided, however, that the entirety of the Participant’s Deferral Account(s) with respect to such amounts shall immediately become 100% vested (to the extent not vested previously) in the event of a Change in Control or the Participant’s death or Disability, in any case, prior to the Participant’s Separation from Service. Additionally, deferrals of Bonuses that are initially allocated to the Company Stock Unit Fund and Deferrals of Restricted Stock Units, and any notional earnings and losses thereon, credited to the Participant’s Deferral Account(s) for any Plan Year beginning on or after the Effective Date, shall continue to vest based upon the schedule or schedules originally determined by the Company in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), in the event of the Participant’s Retirement, provided the Participant, no later than thirty (30) days after Participant’s Separation from Service upon Retirement, enters into and executes a Business Protections Agreement, which will include without limitation certain confidentiality, non-solicitation and non-competition restrictive covenants, in the form supplied by the Company, and continues to comply with the terms of such agreement through the applicable vesting date.
If no such vesting schedule or schedules are stated by the Committee and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), and the Committee does not state and communicate to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s) that such amounts will be vested at all times, then such amounts will vest at the rate of twenty percent (20%) per Plan Year, beginning as of the last day of the Plan Year in which the amounts are credited to the Participant’s Deferral Account(s), and continuing through the last day of the fourth (4th) Plan Year following the Plan Year in which the amounts are credited to the Participant’s Deferral Account(s), until they become 100% vested, subject to the Participant remaining employed by or in service to the Company or any Subsidiary from the date the amounts are credited to the Participant’s Deferral Account(s) until the applicable vesting date, and such amounts shall become 100% vested (to the extent not vested previously) in the event of a Change in Control or the Participant’s death or Disability, in any case, prior to the Participant’s Separation from Service. Additionally, deferrals of Bonuses that are initially allocated to the Company Stock Unit Fund and Deferrals of Restricted Stock Units, and any notional earnings and losses thereon, credited to the Participant’s Deferral Account(s) for any Plan Year beginning on or after the Effective Date, shall continue to vest based upon the schedule or schedules originally determined by the Company in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), in the event of the Participant’s Retirement, provided the Participant, no later than thirty (30) days after Participant’s Separation from Service upon Retirement, enters into and executes a Business Protections Agreement, which will include without limitation certain confidentiality, non-solicitation and non-competition restrictive covenants, in the form supplied by the Company, and continues to comply with the terms of such agreement through the applicable vesting date.
Notwithstanding the foregoing, the Committee may determine that Deferrals of Bonuses that are initially allocated to the Company Stock Unit Fund and Deferrals of Restricted Stock Units, and any notional earnings and losses thereon, credited to the Participant’s Deferral Account(s), shall be vested at all times.
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5.2 Vesting of Company Contribution Account. Amounts credited to the Participant’s Company Contribution Account, and any notional earnings and losses thereon, shall be vested based upon the schedule or schedules determined by the Company in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s); subject to the Participant remaining employed by or in service to the Company or any Subsidiary from the date the amounts are credited to the Participant’s Deferral Account(s) until the applicable vesting date; provided, however, the entirety of the Participant’s Company Contribution Account with respect to such amounts shall immediately become 100% vested (to the extent not vested previously) in the event of a Change in Control or the Participant’s death or Disability, in any case, prior to the Participant’s Separation from Service. Additionally, if and only if such amounts were scheduled to vest originally as of a single date, i.e., cliff vesting (and not in percentages, installments or portions over a specified time period), a Prorated Percentage of the amounts credited to the Participant’s Company Contribution Account, and any notional earnings and losses thereon, for any Plan Year beginning on or after the Effective Date, that are not vested as of the Participant’s Separation from Service, shall become vested as of the latest scheduled vesting date upon which the entirety of such amounts credited to the Participant’s Company Contribution Account, and any notional earnings and losses thereon, would have vested based upon the schedule or schedules originally determined by the Company in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), in the event of the Participant’s Retirement, provided the Participant, no later than thirty (30) days after Participant’s Separation from Service upon Retirement, enters into and executes a Business Protections Agreement, which will include without limitation certain confidentiality, non-solicitation and non-competition restrictive covenants, in the form supplied by the Company, and continues to comply with the terms of such agreement through the applicable vesting date.
If no such vesting schedule or schedules are stated by the Committee and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), and the Committee does not state and communicate to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s) that such amounts will be vested at all times, such amounts will become 100% vested as of the last day of the fourth (4th) Plan Year following the Plan Year in which the amounts are credited to the Participant’s Deferral Account(s), subject to the Participant remaining employed by or in service to the Company or any Subsidiary from the date the amounts are credited to the Participant’s Account(s) until such date, provided, however, the entirety of the Participant’s Company Contribution Account with respect to such amounts will be 100% vested (to the extent not vested previously) in the event of a Change in Control or the Participant’s death or Disability, in any case, prior to the Participant’s Separation from Service. Additionally, in the case of these default vesting provisions, a Prorated Percentage of the amounts credited to the Participant’s Company Contribution Account, and any notional earnings and losses thereon, for any Plan Year beginning on or after the Effective Date, that are not vested as of the Participant’s Separation from Service, shall become vested as of the latest scheduled vesting date upon which the entirety of such amounts credited to the Participant’s Company Contribution Account, and any notional earnings and losses thereon, would have vested based upon the schedule or schedules originally determined by the Company in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), in the event of the Participant’s Retirement, provided the Participant, no later than thirty (30) days after Participant’s Separation from Service upon Retirement, enters into and executes a Business Protections Agreement, which will include without limitation certain confidentiality, non-solicitation and non-competition restrictive covenants, in the form supplied by the Company, and continues to comply with the terms of such agreement through the applicable vesting date.
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Notwithstanding the foregoing, the Committee may determine that amounts credited to the Participant’s Company Contribution Account, and any notional earnings and losses thereon, credited to the Participant’s Deferral Account(s), shall be vested at all times.
ARTICLE VI
DISTRIBUTIONS
6.1 Retirement Distributions. Except as otherwise provided herein, for any Distributable Amount credited to the Participant’s Account(s) with respect to a Plan Year beginning prior to the Effective Date, in the event of the Participant’s Separation from Service and, for a Participant other than a Director, provided the Separation from Service occurs on or after the Participant’s Switch Date, the Distributable Amount credited to the Participant’s Account(s) shall be paid to the Participant in a lump sum on the Payment Date as of or following the Participant’s Retirement, unless the Participant is permitted to make and has made an alternative benefit election on a timely basis to receive substantially equal annual installments over no more than fifteen (15) years. Except as otherwise provided herein, for any Distributable Amount credited to the Participant’s Account(s) with respect to a Plan Year beginning on or after the Effective Date, in the event of the Participant’s Retirement, the Distributable Amount credited to the Participant’s Account(s) shall be paid to the Participant in a lump sum on the Payment Date as of or following the later of (i) the Participant’s Retirement, if the amounts are vested as of such date, or (ii) subject to Section 5.2 above, the date on which the Distributable Amount is scheduled to vest, based upon the Participant’s continued compliance with the Business Protections Agreement through such date, unless the Participant is permitted to make and has made an alternative benefit election on a timely basis to receive substantially equal annual installments over no more than fifteen (15) years. In accordance with a Participant Election approved by the Committee, for each Plan Year the Participant may elect a separate form of distribution for amounts payable upon Retirement for each separately identifiable Deferral and, to the extent permitted by the Committee, any Company Contribution to be credited to the Participant’s Account(s) (as set forth in Section 3.2(f)). A Participant may delay and change the form of a Retirement distribution election, provided such change complies with the requirements of Section 3.5(b).
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6.2 Distributions Other Than Upon Retirement. Except as otherwise provided herein, for any Distributable Amount credited to the Participant’s Account(s) with respect to a Plan Year beginning prior to the Effective Date, in the event of the Participant’s Separation from Service, and, for a Participant other than a Director, provided the Separation from Service occurs prior to the Participant’s Switch Date, the Distributable Amount credited to the Participant’s Account(s) shall be paid to the Participant in a lump sum on the Payment Date as of or following the Participant’s Separation from Service. Except as otherwise provided herein, for any Distributable Amount credited to the Participant’s Account(s) with respect to a Plan Year beginning on or after the Effective Date, in the event of the Participant’s Separation from Service other than upon Retirement, the Distributable Amount credited to the Participant’s Account(s) shall be paid to the Participant in a lump sum on the Payment Date as of or following the Participant’s Separation from Service other than upon Retirement, if the amounts are vested as of such date, unless the Participant is permitted to make and has made an alternative benefit election on a timely basis to receive substantially equal annual installments over no more than fifteen (15) years. In accordance with a Participant Election approved by the Committee, for each Plan Year the Participant may elect a separate form of distribution for amounts payable upon a Separation from Service other than upon Retirement for each separately identifiable Deferral and, to the extent permitted by the Committee, any Company Contribution to be credited to the Participant’s Account(s) (as set forth in Section 3.2(f)). A Participant may delay and change the form of a Separation from Service other than upon Retirement distribution election, provided such change complies with the requirements of Section 3.5(b).
6.3 Death Benefits. In the event that a Participant dies prior to complete distribution of his or her vested Account(s), the Company shall pay to the Participant’s Beneficiary a death benefit equal to the total Distributable Amount remaining in the Participant’s Account(s), to the extent vested as of such date, in a lump sum on the Payment Date as of or following the Participant’s death.
6.4 Scheduled Distributions.
(a) Scheduled Distribution Election. Participants shall be entitled to elect to receive a Scheduled Distribution with respect to all, but not less than all, of his or her Deferrals for a Plan Year. In the case of a Participant who has elected to receive a Scheduled Distribution, such Participant shall receive the Distributable Amount, with respect to the specified Deferrals, including notional earnings and losses thereon, which have been elected by the Participant to be subject to such Scheduled Distribution election in accordance with Section 3.5 of the Plan on the applicable Payment Date. The Committee shall determine the earliest commencement date that may be elected by the Participant for each Scheduled Distribution and such date shall be indicated on the Participant Election; provided, however, that the earliest commencement date that may be elected by the Participant for any Scheduled Distribution selected with respect to an amount credited to the Participant’s Account(s) for a given Plan Year shall be the Plan Year in which the entirety of such amount credited to the Participant’s Account(s) for the Plan Year becomes 100% vested. The Scheduled Distribution shall be distributed in a single lump sum, unless the Participant elects in accordance with Section 3.5 to receive the Scheduled Distribution in substantially equal annual installments over a period of no more than five (5) years.
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In accordance with a Participant Election approved by the Committee, as set forth in Section 3.2(f), for each Plan Year the Participant may elect a separate Scheduled Distribution Election for (i) Deferrals of Base Salary, Commissions and Bonuses initially allocated to Funds other than the Company Stock Unit Fund (which must be subject to the same deferral election), (ii) Deferrals of Bonuses initially allocated to the Company Stock Unit Fund, (iii) Deferrals of Director's Fees and (iv) Deferrals of Restricted Stock Units.
A Participant may delay and change the form of a Scheduled Distribution, provided such change complies with the requirements of Section 3.5(b) and applies to the Participant’s Scheduled Distribution with respect to all of his or her Deferrals for the given Plan Year.
(b) Relationship to Other Benefits.
(1) With respect to any Scheduled Distribution that relates to any Plan Year beginning prior to the Effective Date, in the event that distribution of a Participant’s Account with respect to that Plan Year is triggered as the result of a Separation from Service (including Retirement) or death prior to commencement of a Scheduled Distribution or in the case of the Participant’s death after a Scheduled Distribution has commenced installment payments, the amounts subject to such Scheduled Distribution shall not be distributed under this Section 6.4, but rather shall be distributed in accordance with Sections 6.1, 6.2 or 6.3, as applicable. With respect to any Scheduled Distribution that relates to any Plan Year beginning on or after the Effective Date, in the event that distribution of a Participant’s Account is triggered as the result of a Participant’s death prior to commencement of a Scheduled Distribution or in the case of the Participant’s death after a Scheduled Distribution has become distributable or commenced installment payments, the amounts subject to such Scheduled Distribution shall not be distributed under this Section 6.4, but rather shall be distributed in accordance with Section 6.3.
(2) With respect to any Scheduled Distribution that relates to any Plan Year beginning prior to the Effective Date, in the event of a Participant’s Separation from Service (including Retirement) after a Scheduled Distribution has commenced installment payments, such Scheduled Distribution benefits shall continue to be paid at the same time and in the same form as they would have been paid to the Participant had the Separation from Service (including Retirement) not occurred. With respect to any Scheduled Distribution that relates to any Plan Year beginning on or after the Effective Date, in the event of a Participant’s Separation from Service (including Retirement) prior to commencement of a Scheduled Distribution or after a Scheduled Distribution has commenced or otherwise become distributable, such Scheduled Distribution benefits shall be paid or continue to be paid at the same time and in the same form as they would have been paid to the Participant had the Separation from Service (including Retirement) not occurred, if the amounts are vested as of such Scheduled Distribution date.
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(3) In the event of a Participant’s Separation from Service upon Retirement prior to commencement of a Scheduled Distribution, the Distributable Amount, including notional earnings and losses thereon, which relate to any Plan Year beginning on or after the Effective Date and which have been elected by the Participant to be subject to such Scheduled Distribution shall continue to vest based upon the schedule or schedules originally determined by the Company in its sole discretion and communicated to the Participant prior to the deadline established by the Committee for submitting the Participant’s Election(s), to the extent set forth in Section 5.1 above, or become vested to the extent set forth in Section 5.2 above, in the event of the Participant’s Retirement prior to the Scheduled Distribution; provided the Participant, no later than thirty (30) days after Participant’s Separation from Service upon Retirement, enters into and executes a Business Protections Agreement, which will include without limitation certain confidentiality, non-solicitation and non-competition restrictive covenants, in the form supplied by the Company, and continues to comply with the terms of such agreement through the applicable vesting date(s).
6.5 Company Contributions Distributions. Matching Contributions will be distributed from the Plan in accordance with the Participant Election made by the Participant for the Participant’s Deferrals with respect to which the Matching Contributions are made, subject to the other provisions of this Article VI to the extent applicable. A Participant may delay and change the form of a Matching Contribution distribution election, provided such change complies with the requirements of Section 3.5(b), except that Matching Contributions (other than Matching Contributions that vest later than the Participant’s Deferrals to which the Matching Contributions relate) can only be distributed at the same time and in the same form as the Participant’s Deferrals to which the Matching Contributions relate. For purposes of clarity, the time or form of payment applicable to Matching Contributions may only be modified to the extent the time or form of payment applicable to the related Deferrals is modified, unless otherwise provided by the Committee. Subject to Section 6.4(b) and, to the extent applicable, the other provisions of this Article VI, Discretionary Contributions shall be distributed in a lump sum as a Scheduled Distribution that has been elected to be distributed on the first business day of June of the Plan Year in which the entirety of the Discretionary Contribution credited to the Participant’s Account(s) for the given Plan Year becomes 100% vested, provided, however, if the Discretionary Contribution is not scheduled to vest in its entirety as of June of such Plan Year, the Discretionary Contributions shall be distributed on such day in the Plan Year that the Discretionary Contributions are scheduled to vest in their entirety, unless the Participant modifies the time and form of payment applicable to such Discretionary Contribution in accordance with the provisions of Section 3.5(b).
6.6 Hardship Distribution. Upon a finding that the Participant has suffered a Financial Hardship, in accordance with Code Section 409A, the Committee may, at the request of the Participant, accelerate distribution of vested benefits and/or approve cancellation of deferral elections under the Plan, subject to the following conditions:
(a) The request to take a Hardship Distribution shall be made by filing a form provided by and filed with the Committee prior to the end of any calendar month.
(b) A Hardship Distribution made pursuant to this Section with respect to the Financial Hardship shall not exceed the amount necessary to satisfy such Financial Hardship, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), or by cancellation of Deferrals.
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(c) The amount (if any) determined by the Committee as a Hardship Distribution shall be paid in a single lump sum as soon as practicable after the end of the calendar month in which the Hardship Distribution determination is made by the Committee. A Hardship Distribution will reduce the Participant’s vested Account(s) on a pro rata basis.
6.7 Limited Cashouts. Notwithstanding any provision in this Plan to the contrary, the Committee shall, if the Participant incurs a Separation from Service, and may, in its sole discretion, in any other circumstances, distribute in a mandatory lump sum any Participant’s entire Account under the Plan, provided that any such distribution is made in accordance with the requirements of Treas. Reg. §1.409A-3(j)(4)(v) or its successor (each such payment, a “Limited Cashout”). Specifically, any such Limited Cashout pursuant to this Section 6.7 shall be subject to the following requirements:
| (a) | To the extent the Limited Cashout is being made pursuant to the Committee’s exercise of discretion, such discretion shall be evidenced in writing no later than the date of the lump sum payment; |
| (b) | The lump sum payment shall result in the termination and liquidation of the entirety of the Participant's Account under the Plan, as applicable, as well as the Participant’s interest in all other plans, agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Treas. Reg. §1.409A–1(c)(2) with the Account(s) that is being distributed from this Plan; and |
| (c) | The lump sum payment (and the Participant’s entire interest in any and all other “plans” that would be aggregated with the Account(s) being distributed from this Plan in accordance with Treas. Reg. §1.409A–1(c)(2)) is not greater than the applicable dollar amount under Code Section 402(g)(1)(B) at the time of the Limited Cashout. |
Any Limited Cashout that is made pursuant to the Committee’s exercise of discretion shall be calculated as of the last business day of any month that is no earlier than ninety (90) days prior to the date on which the Limited Cashout occurs and in accordance with Section 409A of the Code. A Limited Cashout on a Separation from Service will be calculated in the same manner as any other distribution upon a Separation from Service.
6.8 Forfeiture of Non-Vested Amounts. Notwithstanding any other provision of the Plan, the portion of the Participant’s Account(s) that is not vested (and will not become vested) at the time of the Participant’s Separation from Service (including Retirement) or death, including any notional earnings and losses thereon, shall be forfeited at such time without any payment to the Participant.
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6.9 Acceleration of Vesting. Notwithstanding any other provision of the Plan, in no event will any acceleration of vesting of a Participant’s Account(s) change the time of distribution of the Participant’s Account(s) if the change in the time of the distribution would fail to be in compliance with Section 409A of the Code.
ARTICLE VII
PAYEE DESIGNATIONS AND LIMITATIONS
7.1 Beneficiaries.
(a) Beneficiary Designation. The Participant shall have the right, at any time, to designate any person or persons as Beneficiary (both primary and contingent) to whom payment under the Plan shall be made in the event of the Participant’s death. The Participant may revoke an existing Beneficiary designation by filing another Beneficiary designation. The Beneficiary designation shall be effective when it is submitted to and acknowledged by the Committee during the Participant’s lifetime in the format prescribed by the Committee.
(b) Absence of Valid Designation. If a Participant fails to designate a Beneficiary as provided above, or if every person designated as Beneficiary predeceases the Participant or dies prior to complete distribution of the Participant’s benefits, then the Participant’s Beneficiary shall be: (i) the Participant’s legally married spouse, if any, (ii) if no such spouse exists, the Participant’s children (including adopted children) per stirpes, or (iii) if there are no children, then the Participant’s estate. The Committee shall direct the distribution of such benefits to the appropriate Beneficiary.
7.2 Payments to Minors. In the event any amount is payable under the Plan to a minor, payment shall not be made to the minor, but instead such payment shall be made (a) to that person’s living parent(s) to act as custodian, (b) if that person’s parents are then divorced, and one parent is the sole custodial parent, to such custodial parent, to act as custodian, or (c) if no parent of that person is then living, to a custodian selected by the Committee to hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which the minor resides. If no parent is living and the Committee decides not to select another custodian to hold the funds for the minor, then payment shall be made to the duly appointed and currently acting guardian of the estate for the minor or, if no guardian of the estate for the minor is duly appointed and currently acting within sixty (60) days after the date the amount becomes payable, payment shall be deposited with the court having jurisdiction over the estate of the minor.
7.3 Payments on Behalf of Persons Under Incapacity. In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such determination shall constitute a full release and discharge of any and all liability of the Committee and the Company under the Plan.
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ARTICLE VIII
LEAVE OF ABSENCE
8.1 Paid Leave of Absence. If a Participant is authorized by the Participant's Employer to take a paid leave of absence from the employment of the Employer, and such leave of absence does not constitute a Separation from Service, (a) the Participant shall continue to be considered eligible for the benefits provided under the Plan, and (b) Deferrals shall continue to be withheld during such paid leave of absence in accordance with Article III.
8.2 Unpaid Leave of Absence If a Participant is authorized by the Participant's Employer to take an unpaid leave of absence from the employment of the Employer for any reason, and such leave of absence does not constitute a Separation from Service, such Participant shall continue to be eligible for the benefits provided under the Plan. During the unpaid leave of absence, the Participant shall not be allowed to make any additional Deferral elections but existing deferral elections will continue to the extent required by Section 409A of the Code. However, if the Participant returns to employment, the Participant may elect to defer for the Plan Year following his or her return to employment and for every Plan Year thereafter while a Participant in the Plan, provided such deferral elections are otherwise allowed and a Participant Election is delivered to and accepted by the Committee for each such election in accordance with Article III above.
ARTICLE IX
ADMINISTRATION
9.1 Committee. The Plan shall be administered by a Committee appointed by the Board, which shall have the exclusive right and full discretion (a) to appoint agents to act on its behalf, (b) to select and establish Funds, (c) to interpret the Plan, (d) to decide any and all matters arising hereunder (including the right to remedy possible ambiguities, inconsistencies, or admissions), (e) to make, amend and rescind such rules as it deems necessary for the proper administration of the Plan and (f) to make all other determinations and resolve all questions of fact necessary or advisable for the administration of the Plan, including determinations regarding eligibility for benefits payable under the Plan. All interpretations of the Committee with respect to any matter hereunder shall be final, conclusive and binding on all persons affected thereby. No member of the Committee or agent thereof shall be liable for any determination, decision, or action made in good faith with respect to the Plan. The Company will indemnify and hold harmless the members of the Committee and its agents from and against any and all liabilities, costs, and expenses incurred by such persons as a result of any act, or omission, in connection with the performance of such persons’ duties, responsibilities, and obligations under the Plan, other than such liabilities, costs, and expenses as may result from the bad faith, willful misconduct, or criminal acts of such persons.
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9.2 Filing of Claim. All claims for benefits under the Plan shall be submitted, in writing, to the Committee or, on forms prescribed by the Committee for such purpose, and must be signed by the Participant or, in the case of a death benefit, by Participant’s Beneficiary or legal representative. Any Participant or Beneficiary who disputes the amount of his or her entitlement to Plan benefits must file a claim in writing within one hundred eighty (180) days of the event that the Participant or Beneficiary is asserting constitutes an entitlement to such Plan benefits or, if later, within ninety (90) days of the date the payment is due. Failure by the Participant or Beneficiary to submit such claim within such time periods shall bar the Participant or Beneficiary from any claim for benefits under the Plan as the result of the occurrence of such event or the failure to make such payment. In no event shall the Participant or other claimant be entitled to challenge a decision of the Committee with respect to a claim unless and until the claims procedures herein have been complied with and exhausted. Each claim shall be approved or disapproved by the Committee within ninety (90) days of the Committee’s receipt of each such claim. However, if special circumstances require an extension of time for the Committee to process the claim, the ninety (90) day period may be extended for an additional ninety (90) days. Prior to the termination of the initial ninety (90) day period, the Committee shall provide the claimant with a written notice setting forth the reason for the extension. The notice shall indicate the special circumstance requiring the extension of time and the date by which the Committee expects to render the benefit determination. A claim for benefits that depends on a determination of a Disability (a “Disability claim”) is subject to different time periods as described in Section 9.5 below.
9.3 Denial of Claim. In the event any claim (or benefit) is denied in whole or in part, the Committee shall, within the time period described in Section 9.2 above, notify the claimant in writing of such denial and of the claimant’s right to a review by the Committee and shall set forth, in a manner calculated to be understood by the claimant, specific reasons for such denial; including specific references to the Plan provisions on which the denial is based; descriptions of, and reasons for, any material or information necessary for the claimant to perfect his claim for review; and an explanation of the Plan’s review procedure and time limits applicable to such procedures, including the claimant’s right to bring civil action following an adverse benefit determination on review.
9.4 Appeal of Denied Claim. Any person whose application is denied in whole or in part may appeal to the Committee for a review of such denial and may review pertinent Plan documents to help prepare for the appeal. Such appeal shall be made by submitting to the Committee, within sixty (60) days of the receipt of initial denial, a written statement requesting a review of such denial and setting forth the grounds on which such appeal is made and any issues or comments which the claimant deems pertinent to his application. The claimant shall have the opportunity to submit written comments, documents and records relating to the claim and shall have reasonable access to and copies of documents and records relevant to the claim, upon request and free of charge. The Committee shall make an independent determination of the claimant’s eligibility for benefits within sixty (60) days of such appeal and shall give written notice to the claimant of its determination on review within such time period. If there are special circumstances requiring an extension of time for processing, a decision shall be rendered within one hundred twenty (120) days after receipt of the request for review. If an extension of time is required, the Committee will provide the claimant with written notification of the special circumstances involved and the date by which the Committee expects to render a final decision. The Committee shall conduct a full and fair review of the claim that takes into account all comments, documents, records, and other information submitted by the claimant or the claimant’s authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The decision of the Committee on any appeal for benefits shall be final and conclusive. If a claimant’s request is wholly or partially denied on review, the Committee must give written notice to the claimant, in a manner calculated to be understood by the claimant, that contains the specific reasons for the denial, the Plan provisions on which the denial is based, a description of the Plan’s claim review procedures and the time limits applicable thereto, including the claimant’s right to bring civil action, and a statement of the claimant’s right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.
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9.5 Disability. Notwithstanding the claim procedures set forth in Sections 9.2, 9.3 and 9.4 above, the following claim procedures shall apply for any claim based on a Disability.
(a) If a Participant applies for a benefit under the Plan based on a Disability, and in the event a claim for benefits is wholly or partially denied by the Committee, the Committee shall, within a reasonable period of time, but no later than forty-five (45) days after receipt of the claim, notify the claimant in writing of the denial of the claim. This forty-five (45) day period may be extended up to thirty (30) days if such an extension is necessary due to matters beyond the control of the Plan, and the claimant is notified, prior to the expiration of the initial forty-five (45) day period, of the circumstances requiring the extension of time and the date by which the Committee expects to render a decision. If, prior to the end of the first thirty (30) day extension period, the Committee determines that, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to an additional thirty (30) days, provided that the Committee notifies the claimant, prior to the expiration of the first thirty (30) days extension period, of the circumstances requiring the extension and the date as of which the Committee expects to render a decision. In the case of any extension, the notice of extension also shall specifically explain the standards on which entitlement to a benefit upon Disability is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and the claimant shall be afforded at least forty-five (45) days within which to provide the specified information, if any.
(b) If the Committee denies the claim for a Disability benefit in whole or in part, the claimant shall be provided with written notice of the denial stating the specific reason for the denial; reference to the specific Plan provisions on which the denial is based; a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and a description of the Plan’s review procedures (as set forth below) and the time limits applicable to such procedures, including the claimant’s right to bring civil action following an adverse benefit determination. The notice will be provided in a culturally and linguistically appropriate manner as described in 29 CFR § 2560.503-1(o)(1)(i) – (iii). The notice will Provide a discussion of the decision, including an explanation of the basis for disagreeing with or not following the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant, the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination, or a disability determination regarding the claimant presented by the claimant to the Plan made by the Social Security Administration. If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, the notice must either provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing. The notice will explain the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or, alternatively, provide a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist. The notice also will provide a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimants claim for benefits.
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(c) If the claim for a Disability benefit is denied in full or in part, the claimant shall have the right to appeal the decision and may review pertinent Plan documents to help prepare for the appeal, by sending a written request for review to the Committee within one hundred eighty (180) days of his receipt of the claim denial notification. The claimant may submit written comments, documents, records, and other information relating to his or her claim for benefits. Upon request, the claimant shall be provided free of charge and reasonable access to, and copies of, all documents, records and other information relevant to his claim.
(d) Upon receipt of the claimant’s appeal of the denial of his claim, the Committee shall conduct a review that takes into account all comments, documents, records, and other information submitted by the claimant or his authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The review shall not afford deference to the initial benefit determination and shall be conducted by an individual who is neither the individual who made the adverse benefit determination that is the subject of the appeal, nor the subordinate of such individual. The Committee shall consult a medical professional who has appropriate training and experience in the field of medicine relating to the claimant’s disability and who is neither consulted as part of the initial denial nor is the subordinate to such individual and shall identify the medical or vocational experts whose advice is obtained with respect to the initial benefit denial, without regard to whether the advice was relied upon in making the decisions. If a claim is denied due a medical judgment, the Committee will consult with a healthcare professional who has appropriate training and experience in the field of medicine involved in the medical judgment. The healthcare professional consulted will not be the same person consulted in connection with the initial benefit decision (nor be the subordinate of that person). The decision on review also will identify any medical or vocational experts who advised the Company’s benefits department in connection with the original benefit decision, even if the advice was not relied upon in making the decision.
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(e) The Committee shall notify the claimant of its determination on review within a reasonable period of time, but generally not later than forty-five (45) days after receipt of the request for review, unless the Committee determines that special circumstances require an extension of time for processing the claim. If the Committee determines that an extension of time for processing is required, written notice of the extension will be furnished to the claimant prior to the termination of the initial forty-five (45) day period. In no event shall such extension exceed a period of forty-five (45) days from the end of the initial period. The extension notice shall indicate the special circumstances requiring extension of time and the date by which the Committee expects to render the determination on review.
(f) Before issuing an adverse benefit determination on review, the Committee shall provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the Plan or other person making the benefit determination (or at the direction of the Plan or such other person) in connection with the clam; such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided under this Section 9.5 to give the claimant a reasonable opportunity to respond prior to that date. Before the Committee can issue an adverse benefit determination on review based on a new or additional rationale, the Committee shall provide the claimant, free of charge, with the rationale; such rationale must be provided as soon as possible and sufficiently in advance of the date on which notice of adverse benefit determination on review is required to be provided under this Section 9.5 to give the claimant a reasonable opportunity to respond prior to that date.
(g) If the Committee denies the claim on appeal, it shall notify the claimant in writing, in a manner calculated to be understood by him, of the specific reason or reasons for the adverse determination; reference to the specific Plan provisions on which the adverse determination is based; a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his claim; and a statement indicating the claimant’s right to file a lawsuit upon completion of the claims procedure process and any applicable contractual limitations period that applies to the claimant’s right to bring such an action, including the calendar date on which the contractual limitations period expires for the claim. The notice will provide a discussion of the decision, including an explanation of the basis for disagreeing with or not following the views presented by the claimant to the Plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant, the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination, or a disability determination regarding the claimant presented by the claimant to the Plan made by the Social Security Administration. If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, the notice must either provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing. The notice must provide the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan in making the adverse determination or, alternatively, a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist. The notice will be provided in a culturally and linguistically appropriate manner as described in 29 C.F.R. § 2560.503-1(o)(1)(i) – (iii).
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(h) The decision upon appeal, or the initial decision if no appeal is taken, shall be final, conclusive and binding on all parties, subject, however, to the provisions of the Internal Revenue Code and ERISA.
9.6 Tolling Requirements. Effective as of the original adoption date of the Plan, notwithstanding anything in this Section IX or the Plan to the contrary, the Outbreak Period will be disregarded in determining the deadline for filing a claim for benefits and for requesting a review of a denied claim for benefits under the Plan, in accordance with, and subject to, applicable agency guidance; provided, however, in no event shall any period of time that is to be disregarded during the Outbreak Period in accordance with the Joint Notices exceed a period of one year from the date the individual was first required or permitted to take an action that is covered by the Joint Notices.
9.7 Time to File Suit. No lawsuit by a Participant or other claimant may be filed prior to exhausting the Plan’s administrative appeal process. Except for any action against a fiduciary for a breach of fiduciary duty under ERISA, the Participant or other claimant shall only have one hundred eighty (180) days from the date of receipt of the Committee’s final decision on review in which to file suit regarding a claim for benefits under the Plan. If suit is not filed within such one hundred eighty (180) days, it shall be forever barred. The Committee’s decisions made hereunder shall be final and binding on all interested parties.
9.8 Disability Claim: Deemed Exhaustion of Claims Procedure. If the Plan fails to strictly adhere to all the requirements of the procedures set out in this Article IX with respect to a Disability claim, the claimant is deemed to have exhausted the administrative remedies available under the Plan, except as provided in this Section 9.7. Accordingly, the claimant is entitled to pursue any available remedies under Section 502(a) of ERISA on the basis that the Plan failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. If a claimant chooses to pursue remedies under Section 502(a) of ERISA under such circumstances, the claim or appeal is deemed denied on review without the exercise of discretion by an appropriate fiduciary. The administrative remedies available under the Plan with respect to a Disability claim will not be deemed exhausted based on de minimis violations that do not cause, and are not likely to cause, prejudice or harm to the claimant so long as the Plan demonstrates that the violation was for good cause or due to matters beyond the control of the Plan and that the violation occurred in the context on an ongoing, good faith exchange of information between the Plan and the claimant. This exception is not available if the violation is part of a pattern or practice of violations by the Plan. The claimant may request a written explanation of the violation from the Plan, and the Plan must provide such explanation within ten (10) days, including a specific description of its bases, if any, for asserting that the violation should not cause the administrative remedies available under the Plan to be deemed exhausted. If a court rejects the claimant’s request for immediate review under this Section 9.7 on the basis that the Plan met the standards for the exception under this Section 9.7, the claim shall be considered as re-filed on appeal upon the Plan’s receipt of the court’s decision. Within a reasonable time after the receipt of the decision, the Plan shall provide the claimant with notice of the resubmission.
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9.9 Disability Claim: Independence and Impartiality of Decision Maker. In the case of a Disability claim, the Plan shall ensure that all claims and appeals for disability benefits are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. Accordingly, decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual (such as a claims adjudicator or medical or vocational expert) shall not be based on the likelihood that the individual will support the denial of benefits.
ARTICLE X
MISCELLANEOUS
10.1 Termination of Plan Although the Company anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that the Company will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, the Company reserves the right to terminate the Plan with respect to any or all Participants. In the event of a Plan termination, no new deferral elections shall be permitted for the affected Participants and such Participants shall no longer be eligible to receive new Company Contributions. However, after the Plan termination the Account balances of such Participants shall continue to be credited with deferrals attributable to any deferral election that was in effect prior to the Plan termination to the extent deemed necessary to comply with Code Section 409A and related Treasury Regulations, and additional amounts shall continue to be credited or debited to such Participants’ Account balances pursuant to Article IV. In addition, following a Plan termination, Participant Account balances shall remain in the Plan and shall not be distributed until such amounts become eligible for distribution in accordance with the other applicable provisions of the Plan. Notwithstanding the preceding sentence, to the extent permitted by Treas. Reg. §1.409A-3(j)(4)(ix) or as otherwise permitted under Code Section 409A, the Company may provide that upon termination of the Plan, all Account balances of the Participants shall be distributed, subject to and in accordance with any rules established by the Company deemed necessary to comply with the applicable requirements and limitations of Code Section 409A.
10.2 Amendment. The Company may, at any time, amend or modify the Plan in whole or in part with respect to any Employer. Notwithstanding the foregoing, no amendment or modification shall be effective to decrease the value of a Participant's vested Account balance in existence at the time the amendment or modification is made.
10.3 Unsecured General Creditor. The benefits paid under the Plan shall be paid from the general assets of the Company, and the Participant and any Beneficiary or their heirs or successors shall be no more than unsecured general creditors of the Company with no special or prior right to any assets of the Company for payment of any obligations hereunder. It is the intention of the Company that this Plan be unfunded for purposes of ERISA and the Code.
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10.4 Restriction Against Assignment. The Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or entity. No part of a Participant’s Accounts shall be liable for the debts, contracts, or engagements of any Participant, Beneficiary, or their successors in interest, nor shall a Participant’s Accounts be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. No part of a Participant’s Accounts shall be subject to any right of offset against or reduction for any amount payable by the Participant or Beneficiary, whether to the Company or any other party, under any arrangement other than under the terms of this Plan.
10.5 Withholding. The Participant shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements, Social Security, Medicare and other employee tax or other requirements applicable to the granting, crediting, vesting or payment of benefits under the Plan. There shall be deducted from each payment made under the Plan or any other Compensation payable to the Participant (or Beneficiary) all taxes that are required to be withheld by the Company in respect to such payment or participation in this Plan. To the extent permissible under Code Section 409A, the Company shall have the right to reduce any payment (or other Compensation) by the amount of cash sufficient to provide the amount of said taxes.
10.6 Code Section 409A. The Company intends that the Plan comply with the requirements of Code Section 409A (and all applicable Treasury Regulations and other guidance issued thereunder) and shall be operated and interpreted consistent with that intent. Notwithstanding the foregoing, the Company makes no representation that the Plan complies with Code Section 409A, and the Company shall not be liable to any person if the Plan fails to comply with Section 409A of the Code. Notwithstanding any other provision of the Plan, in no event shall payment to a Participant who is a “specified employee” within the meaning of Code Section 409A on his or her Separation from Service date, commence earlier than the first day following the earlier of (i) the end of the six (6) month period following such date or (ii) the Participant’s death, if and only to the extent required by Code Section 409A. In that event, any payments that would otherwise have been made prior to the earlier of (i) the end of the six (6) month period following such date or (ii) the Participant’s death will be accumulated and paid in a lump sum as soon as administratively practicable (and no later than the calendar month) following the earlier of such dates. The Committee may, its discretion, accelerate the payment of all or a portion of a Participant’s vested Account prior to the time specified in this Plan to the extent such acceleration is permitted by Treasury Regulation Section 1.409A-3(j)(4). Such permitted accelerations shall include payments to comply with domestic relations orders, payments to comply with conflicts of interest laws, payment of employment taxes, payment upon income inclusion under Code Section 409A, and/or such other circumstances as are permitted by Section 409A and the Treasury Regulations thereunder.
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10.7 Effect of Payment. Any payment made in good faith to a Participant or the Participant’s Beneficiary shall, to the extent thereof, be in full satisfaction of all claims against the Committee, its members, the Employer and the Company.
10.8 Errors in Account Statements, Deferrals or Distributions. In the event an error is made in an Account statement, such error shall be corrected on the next statement following the date such error is discovered. In the event of an operational error, including, but not limited to, errors involving deferral amounts, overpayments or underpayments, such operational error shall be corrected in a manner consistent with and as permitted by any correction procedures established under Code Section 409A. If any portion of a Participant’s Account(s) under this Plan is required to be included in income by the Participant prior to receipt due to a failure of this Plan to comply with the requirements of Code Section 409A, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of (i) the portion of his or her Account required to be included in income as a result of the failure of the Plan to comply with the requirements of Code Section 409A, or (ii) the unpaid vested Account balance.
10.9 Domestic Relations Orders Notwithstanding any provision in this Plan to the contrary, in the event that the Committee receives a domestic relations order, as defined in Code Section 414(p)(1)(B), pursuant to which a court has determined that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under the Plan, the Committee shall have the right to immediately distribute the spouse’s or former spouse’s vested interest in the Participant’s benefits under the Plan to such spouse or former spouse to the extent necessary to fulfill such domestic relations order, provided that such distribution is in accordance with the requirements of Code Section 409A.
10.10 Employment Not Guaranteed. Nothing contained in the Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to continue the provision of services in any capacity whatsoever to the Employer.
10.11 No Guarantee of Tax Consequences. The Employer, Company, Board and Committee make no commitment or guarantee to any Participant that any federal, state or local tax treatment will apply or be available to any person eligible for benefits under the Plan and assume no liability whatsoever for the tax consequences to any Participant.
10.12 Successors of the Company. The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.
10.13 Notice. Any notice or filing required or permitted to be given to the Company or the Participant under this Agreement shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, in the case of the Company, to the principal office of the Company, directed to the attention of the Committee, and in the case of the Participant, to the last known address of the Participant indicated on the employment records of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Notices to the Company may be permitted by electronic communication according to specifications established by the Committee.
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10.14 Headings. Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.
10.15 Gender, Singular and Plural. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
10.16 Governing Law. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA. To the extent any provision of, or legal issue relating to, this Plan is not fully preempted by federal law, such issue or provision shall be governed by the laws of the State of Georgia.
10.17 Entire Agreement. Unless specifically indicated otherwise, this Plan supersedes any and all prior communications, understandings, arrangements or agreements between the parties, including the Employer, the Company, the Board, the Committee and any and all Participants, whether written, oral, express or implied relating thereto.
10.18 Binding Arbitration. Any claim, dispute or other matter in question of any kind relating to this Plan which is not resolved by the claims procedures under this Plan shall be settled by arbitration in accordance with the applicable employment dispute resolution rules of the American Arbitration Association. Notice of demand for arbitration shall be made in writing to the opposing party and to the American Arbitration Association within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall a demand for arbitration be made after the date when the applicable statute of limitations would bar the institution of a legal or equitable proceeding based on such claim, dispute or other matter in question. The decision of the arbitrators shall be final and may be enforced in any court of competent jurisdiction. The arbitrators may award reasonable fees and expenses to the prevailing party in any dispute hereunder and shall award reasonable fees and expenses in the event that the arbitrators find that the losing party acted in bad faith or with intent to harass, hinder or delay the prevailing party in the exercise of its rights in connection with the matter under dispute.
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IN WITNESS WHEREOF, the Board of the Company has approved the adoption of this Plan as of the Effective Date and has caused the Plan to be executed by its duly authorized representative this 25th day of October, 2021.
| Georgia Banking Company, Inc. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr. | ||
| Chief Executive Officer | ||
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GEORGIA BANKING COMPANY, INC. DEFERRED COMPENSATION PLAN
Exhibit A - General Plan Information
Plan Name
Georgia Banking Company, Inc. Nonqualified Deferred Compensation Plan
Plan Sponsor
Georgia Banking Company, Inc.
1776 Peachtree Street NW, Suite 540
Atlanta, GA 30309
(770) 226-8800
Employer Identification Number (EIN)
58-2382447
Plan Type
The Plan is a nonqualified deferred compensation plan that is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.
Plan Administrator
Plan Administrative Committee
Georgia Banking Company, Inc.
1776 Peachtree Street NW, Suite 540
Atlanta, GA 30309
(770) 226-8800
Agent for Service of Legal Process
c/o Suzanne Deep
Georgia Banking Company, Inc.
1776 Peachtree Street NW, Suite 540
Atlanta, GA 30309
Plan Year
The calendar year
GEORGIA BANKING COMPANY, INC. DEFERRED COMPENSATION PLAN
Exhibit B – Statement of ERISA Rights
As participant in this Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Plan participants shall be entitled to:
| · | examine, without charge at the Plan Administrative Committee’s office and at other specified locations, such as worksites and union halls, all documents governing the Plan, including collective bargaining agreements, and a copy of the latest Annual Report (Form 5500 series), if any, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration (f/k/a the Pension Welfare Benefits Administration). |
| · | obtain copies of all documents governing the operation of the Plan including collective bargaining agreements and copies of the latest Annual Report (Form 5500 series), if any, and an updated summary plan description, by making a written request to the Plan Administrative Committee and paying a reasonable charge for the copies. |
receive a summary of the Plan’s annual financial report. The Plan Administrative Committee is required by law to furnish each participant under the Plan with a copy of this summary annual report.
In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in your interest and in the interest of the other Plan participants and beneficiaries.
No one, including your employer, your union, or any other person may fire you or otherwise discriminate against you, in any way solely to prevent you from getting a benefit or exercising your rights under ERISA. If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest Annual Report from the Plan and do not receive them within thirty (30) days, you may file suit in federal court. In such a case, the court may require the Plan Administrative Committee to provide the documents and pay you up to $110 a day until you receive them, unless they were not sent because of reasons beyond the control of the Plan Administrative Committee.
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If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If your suit is successful, the court may order the person you have sued to pay costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
If you have any questions about the Plan, you should contact the Plan Administrative Committee. If you have any questions about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrative Committee, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
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Exhibit 10.20
GEORGIA
PRIMARY BANK
2017 LONG-TERM INCENTIVE PLAN
GEORGIA
PRIMARY BANK
2017 LONG-TERM INCENTIVE PLAN
TABLE OF CONTENTS
Page
| SECTION 1 | SECTION I. DEFINITIONS | 3 | |
| 1.1. | Definitions | 3 | |
| SECTION 2 | THE LONG-TERM INCENTIVE PLAN | 7 | |
| 2.1. | Purpose of the Plan | 7 | |
| 2.2. | Stock Subject to the Plan | 7 | |
| 2.3. | Administration of the Plan | 7 | |
| 2.4. | Eligibility and Limits | 8 | |
| SECTION 3 | TERMS OF AWARDS | 8 | |
| 3.1. | Terms and Conditions of All Awards | 8 | |
| 3.2. | Terms and Conditions of Options | 9 | |
| 3.3. | Terms and Conditions of Stock Appreciation Rights | 11 | |
| 3.4. | Terms and Conditions of Other Stock-Based Awards | 12 | |
| 3.5. | Terms and Conditions of Cash Performance Awards | 12 | |
| 3.6. | Treatment of Awards on Termination of Service | 13 | |
| SECTION 4 | RESTRICTIONS ON STOCK | 13 | |
| 4.1. | Escrow of Shares | 13 | |
| 4.2. | Restrictions on Transfer | 14 | |
| SECTION 5 | GENERAL PROVISIONS | 14 | |
| 5.1. | Withholding | 14 | |
| 5.2. | Changes in Capitalization; Merger; Liquidation | 14 | |
| 5.3. | Compliance with Code | 15 | |
| 5.4. | Other Cash Awards | 16 | |
| 5.5. | Right to Terminate Employment or Service | 16 | |
| 5.6. | Non-Alienation of Benefits | 16 | |
| 5.7. | Restrictions on Delivery and Sale of Shares; Legends | 16 | |
| 5.8. | Listing and Legal Compliance | 16 | |
| 5.9. | Termination and Amendment of the Plan | 17 | |
| 5.10. | Stockholder Approval | 17 | |
| 5.11. | Choice of Law | 17 | |
| 5.12. | Effective Date of Plan | 17 |
GEORGIA
PRIMARY BANK
2017 LONG-TERM INCENTIVE PLAN
SECTION 1 SECTION I. DEFINITIONS
1.1. Definitions. Whenever used herein, the masculine pronoun will be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following capitalized words and phrases are used herein with the meaning thereafter ascribed:
(a) “Affiliate” means:
(1) Any Subsidiary or Parent;
(2) An entity that directly or through one or more intermediaries controls, is controlled by, or is under common control with the Company, as determined by the Company; or
(3) Any entity in which the Company has such a significant interest that the Company determines it should be deemed an “Affiliate”, as determined in the sole discretion of the Company.
(b) “Award Agreement” means any written agreement, contract, or other instrument or document as may from time to time be designated by the Company as evidencing an Award granted under the Plan.
(c) “Award Program” means a written program established by the Committee, pursuant to which Awards are granted under the Plan under uniform terms, conditions, and restrictions set forth in such written program.
(d) “Awards” means, collectively, Cash Performance Awards, Incentive Stock Options, Nonqualified Stock Options, Other Stock-Based Awards, and Stock Appreciation Rights.
(e) “Board of Directors” means the board of directors of the Company.
(f) “Cash Performance Award” means an Award described in Section 3.5 that is settled in cash and does not have a value that is derivative of the value of, determined by reference to a number of shares of, or determined by reference to dividends payable on, Stock.
(g) “Code” means the Internal Revenue Code of 1986, as amended, and the applicable rules and regulations promulgated thereunder.
(h) “Committee” means the committee appointed by the Board of Directors to administer the Plan; provided that, if no such committee is appointed, the Board of Directors in its entirety shall constitute the Committee. Notwithstanding the foregoing, with respect to Awards granted by an officer or officers of the Company and/or the Chairperson of the Committee pursuant to Section 2.3(b), the “Committee” as used in the Plan shall mean such officer or officers and/or such Chairperson, unless the context would clearly indicate otherwise.
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(i) “Company” means Georgia Primary Bank, a bank organized under the laws of the State of Georgia.
(j) “Disability” unless otherwise defined by the Committee in the applicable Award Agreement or Award Program, has the same meaning as provided in the longterm disability plan or policy maintained or, if applicable, most recently maintained, by the Company or, if applicable, any Affiliate of the Company for the Participant. If no long-term disability plan or policy was ever maintained on behalf of the Participant or, if the determination of Disability relates to an Incentive Stock Option, Disability means that condition described in Code Section 22(e)(3), as amended from time to time. In the event of a dispute, the determination of Disability will be made by the Committee and will be supported by advice of a physician competent in the area to which such Disability relates.
(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations promulgated thereunder.
(l) “Exercise Price” means the exercise price per share of Stock purchasable under an Option.
(m) “Fair Market Value” means the value of a share of Stock as of a date, determined as follows:
(1) if the shares of Stock are readily tradable or reported on an established securities market, Fair Market Value of the Stock may be determined based upon the last sale before or the first sale after such date, the closing price on the trading day before or the trading day of such date, the arithmetic mean of the high and low prices on the trading day before or the trading day of such date, or any other reasonable method using actual transactions in the Stock as reported by such market or system; or
(2) if the shares of Stock are not readily tradable or reported on an established securities market, Fair Market Value of the Stock shall mean the fair market value of a share of Stock determined by the reasonable application of a reasonable valuation method, where such valuation method is based on the facts, circumstances, and all other available information that are material to the value of the Company as of the valuation date.
An “established securities market” includes a national securities exchange which is registered under Section 6 of the Exchange Act; a foreign national securities exchange which is officially recognized, sanctioned, or supervised by governmental authority; and any over-the-counter market. For purposes of Clause (1), Fair Market Value of a share of Stock also may be determined using an average selling price during a specified period that is within thirty (30) days before or thirty (30) days after the applicable determination date provided that the process under which the Award is granted irrevocably specifies the commitment to the grant with a price set using such an average selling price before the beginning of the specified period. For purposes of Clause (2), the use of a value previously calculated under a reasonable valuation method is not reasonable as of a later date if such calculation fails to reflect information available after the date of the calculation that may materially affect the value of the Company or if the value was calculated with respect to a date that is more than twelve (12) months earlier than the date for which the valuation is being used. For purposes of granting Nonqualified Stock Options or Stock Appreciation Rights, Fair Market Value of the Stock shall be determined in accordance with any other applicable requirements of Code Section 409A. Notwithstanding anything to the contrary in this Section 1.1(m), for purposes of granting Incentive Stock Options, Fair Market Value of the Stock shall be determined in accordance with the requirements of Code Section 422.
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(n) “Incentive Stock Option” means an incentive stock option within the meaning of Code Section 422.
(o) “Nonqualified Stock Option” means a stock option that is not an Incentive Stock Option.
(p) “Option” means a Nonqualified Stock Option or an Incentive Stock Option.
(q) “Other Stock-Based Award” means an Award described in Section 3.4 that has a value that is derivative of the value of, determined by reference to a number of shares of, or determined by reference to dividends payable on, Stock and may be settled in cash or in Stock. Other Stock-Based Awards may include, but not be limited to, grants of Stock, grants of rights to receive Stock in the future, or dividend equivalent rights.
(r) “Over 10% Owner” means an individual who at the time an Incentive Stock Option to such individual is granted owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its Parent or Subsidiaries, determined by applying the attribution rules of Code Section 424(d).
(s) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, with respect to Incentive Stock Options, at the time of the granting of the Option, each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A Parent shall include any entity other than a corporation to the extent permissible under Code Section 424(f) or regulations and rulings thereunder.
(t) “Participant” means an individual who receives an Award hereunder.
(u) “Plan” means the Georgia Primary Bank 2017 Long-Term Incentive Plan.
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(v) “Separation from Service” shall mean a termination of a Participant’s employment or other service relationship with the Company, subject to the following requirements:
(1) in the case of a Participant who is an employee of the Company, a termination of the Participant’s employment where either (i) the Participant has ceased to perform any services for the Company and all affiliated companies that, together with the Company, constitute the “service recipient” within the meaning of Code Section 409A (collectively, the “Service Recipient”) or (ii) the level of bona fide services the Participant performs for the Service Recipient after a given date (whether as an employee or as an independent contractor) permanently decreases (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of service if the Participant has been providing services to the Service Recipient for less than 36 months); or
(2) in the case of a Participant who is an independent contractor engaged by the Service Recipient, a termination of the Participant’s service relationship with the Service Recipient where (i) the contract (or in the case of more than one contract, all contracts) under which services are performed for the Service Recipient expires, if the expiration constitutes a good-faith and complete termination of the contractual relationship; or (ii) with respect to amounts payable to the Participant under an Award upon the termination of the independent contractor’s relationship with the Service Recipient, no amount will be paid to the Participant before a date that is at least twelve (12) months after the day on which the contract expires under which the Participant performs services for the Service Recipient (or, in the case of more than one contract, all such contracts expire) and no amount payable to the Participant on that date is actually paid to the Participant if, after the expiration of the contract (or contracts) and before that date, the Participant performs services for the Service Recipient as an independent contractor or an employee; or in any case, as may otherwise be permitted under, or required by, Code Section 409A.
(w) “Stock” means the Company’s common stock, $5.00 par value per share.
(x) “Stock Appreciation Right” means a stock appreciation right described in Section 3.3.
(y) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the relevant time, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. A “Subsidiary” shall include any entity other than a corporation to the extent permissible under Code Section 424(f) or regulations or rulings thereunder.
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(z) “Termination of Employment” means the termination of the employment relationship between a Participant and the Company and its Affiliates, regardless of whether severance or similar payments are made to the Participant for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement. The Committee will, in its absolute discretion, determine the effect of all matters and questions relating to a Termination of Employment as it affects an Award, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of Employment.
SECTION 2 THE LONG-TERM INCENTIVE PLAN
2.1. Purpose of the Plan. The Plan is intended to (a) provide incentives to certain officers, employees, directors, consultants, and other service providers of the Company and its Affiliates to stimulate their efforts toward the continued success of the Company and to operate and manage the business in a manner that will provide for the long-term growth and profitability of the Company; (b) encourage stock ownership by certain officers, employees, directors, consultants, and other service providers by providing them with a means to acquire a proprietary interest in the Company, acquire shares of Stock, or to receive compensation which is based upon appreciation in the value of Stock; and (c) provide a means of obtaining, rewarding and retaining officers, employees, directors, consultants, and other service providers.
2.2. Stock Subject to the Plan.
(a) Subject to adjustment in accordance with Section 5.2, 237,353 shares of Stock are hereby reserved exclusively for issuance upon exercise, settlement, or payment pursuant to Awards, all or any of which may be pursuant to any one or more Awards, including without limitation, Incentive Stock Options.
(b) Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. The shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted, or otherwise unsettled portion of any Award that is forfeited or cancelled or expires or terminates for any reason without becoming vested, paid, exercised, converted, or otherwise settled in full in Stock will again be available for purposes of the Plan. For purposes of determining the number of shares of Stock issued upon the exercise, settlement, or grant of an Award under this Section, any shares of Stock withheld to satisfy tax withholding obligations or the Exercise Price shall be considered issued under the Plan.
2.3. Administration of the Plan.
(a) The Plan is administered by the Committee. The Committee has full authority in its discretion to determine the officers, employees, directors, consultants, and other service providers of the Company or its Affiliates to whom Awards will be granted and the terms and provisions of Awards, subject to the Plan. Subject to the provisions of the Plan, the Committee has full and conclusive authority to interpret the Plan; to prescribe, amend, and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the respective Award Agreements and Award Programs and to make all other determinations necessary or advisable for the proper administration of the Plan. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). The Committee’s decisions are final and binding on all Participants. Each member of the Committee shall serve at the discretion of the Board of Directors and the Board of Directors may from time to time remove members from or add members to the Committee. Vacancies on the Committee shall be filled by the Board of Directors.
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(b) Notwithstanding any other provision of this Plan, the Board of Directors may by resolution authorize one or more officers of the Company and/or the Chairman of the Committee to do one or more of the following: (1) designate individuals (other than the individual(s) to whom such authority is delegated) to receive Awards under the Plan; (2) determine the number of shares of Stock or cash value subject to such Awards; provided however, that the resolution shall specify the total number of shares of Stock or cash value, as applicable, that may be granted subject to such Awards; (3) interpret the provisions of an Award Agreement or Award Program; and/or (4) determine the treatment of Awards upon a Termination of Employment or Separation from Service.
2.4. Eligibility and Limits. Awards may be granted only to officers, employees, directors, consultants, and other service providers of the Company or any Affiliate of the Company; provided, however, that an Incentive Stock Option may only be granted to an employee of the Company or any Parent or Subsidiary. In the case of Incentive Stock Options, the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of Stock with respect to which stock options intended to meet the requirements of Code Section 422 become exercisable for the first time by an individual during any calendar year under all plans of the Company and its Parents and Subsidiaries may not exceed $100,000; provided further, that if the limitation is exceeded, the Incentive Stock Option(s) which cause the limitation to be exceeded will be treated as Nonqualified Stock Option(s), unless the provisions of the applicable Award Agreement provide otherwise.
SECTION 3 TERMS OF AWARDS
3.1. Terms and Conditions of All Awards.
(a) The number of shares of Stock as to which an Award may be granted or the amount of an Award will be determined by the Committee in its sole discretion, subject to the provisions of Section 2.2 as to the total number of shares available for grants under the Plan.
(b) Each Award will either be evidenced by an Award Agreement in such form and containing such terms, conditions, and restrictions as the Committee may determine to be appropriate, including without limitation, performance criteria, if any, that must be achieved as a condition to vesting or settlement of the Award, or, except as provided in the Plan, be made subject to the terms of an Award Program, containing such terms, conditions, and restrictions as the Committee may determine to be appropriate, including without limitation, performance criteria, if any, that must be achieved as a condition to vesting or settlement of the Award. Each Award Agreement or Award Program is subject to the terms of the Plan and any provisions contained in the Award Agreement or Award Program that are inconsistent with the Plan are null and void.
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(c) The date as of which an Award is granted will be the date on which the Committee has approved the terms and conditions of the Award and has determined the recipient of the Award and the number of shares, if any, covered by the Award, and has taken all such other actions necessary to complete the grant of the Award or such later date as may be specified in the approval of such Award.
(d) Any Award may be granted in connection with all or any portion of a previously or contemporaneously granted Award. Exercise or vesting of an Award granted in connection with another Award may result in a pro rata surrender or cancellation of any related Award, as specified in the applicable Award Agreement or Award Program.
(e) Awards are not transferable or assignable except by will or by the laws of descent and distribution governing the State in which the Participant was domiciled at the time of the Participant’s death, and are exercisable, during the Participant’s lifetime, only by the Participant; or in the event of the Disability of the Participant, by the legal representative of the Participant; or in the event of death of the Participant, by the legal representative of the Participant’s estate or if no legal representative has been appointed within ninety (90) days of the Participant’s death, by the person(s) taking under the laws of descent and distribution governing the State in which the Participant was domiciled at the time of the Participant’s death; except to the extent that the Committee may provide otherwise as to any Awards, other than Incentive Stock Options.
(f) After the date of grant of an Award, the Committee may, in its sole discretion, modify the terms and conditions of an Award, except to the extent that such modification would be inconsistent with other provisions of the Plan or would adversely affect the rights of a Participant under the Award, except as otherwise permitted under the Plan or Award.
3.2. Terms and Conditions of Options. Each Option granted under the Plan must be evidenced by an Award Agreement. At the time any Option is granted, the Committee will determine whether the Option is to be an Incentive Stock Option described in Code Section 422 or a Nonqualified Stock Option, and the Option must be clearly identified as to its status as an Incentive Stock Option or a Nonqualified Stock Option. Incentive Stock Options may only be granted to employees of the Company or any Subsidiary or Parent. At the time any Incentive Stock Option granted under the Plan is exercised, the Company will be entitled to legend the certificates representing the shares of Stock purchased pursuant to the Option to clearly identify them as representing the shares purchased upon the exercise of an Incentive Stock Option. An Incentive Stock Option may only be granted within ten (10) years from the earlier of the date the Plan is adopted by the Board of Directors or approved by the Company’s stockholders, or any extension of such period permitted by Code Section 422.
(a) Option Price. Subject to adjustment in accordance with Section 5.2 and the other provisions of this Section 3.2, the Exercise Price must be as set forth in the applicable Award Agreement, but in no event may it be less than the Fair Market Value on the date the Option is granted. With respect to each grant of an Incentive Stock Option to a Participant who is an Over 10% Owner, the Exercise Price may not be less than one hundred and ten percent (110%) of the Fair Market Value on the date the Option is granted.
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(b) Option Term. Any Incentive Stock Option granted to a Participant who is not an Over 10% Owner is not exercisable after the expiration of ten (10) years after the date the Option is granted. Any Incentive Stock Option granted to an Over 10% Owner is not exercisable after the expiration of five (5) years after the date the Option is granted. The term of any Nonqualified Stock Option shall be as specified in the applicable Award Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to exercise of an Option will be made in any form or manner authorized by the Committee in the Award Agreement or by amendment thereto, including, but not limited to, cash, cash equivalents, or, if the Award Agreement provides, but in any case subject to such procedures or restrictions as the Committee may impose:
(1) by delivery to the Company of a number of shares of Stock owned by the holder having an aggregate Fair Market Value of not less than the product of the Exercise Price multiplied by the number of shares the Participant intends to purchase upon exercise of the Option on the date of delivery;
(2) in a cashless exercise through a broker, except if and to the extent prohibited by law as to officers and directors, including without limitation, the Sarbanes-Oxley Act of 2002, as amended; or
(3) by having a number of shares of Stock withheld, the Fair Market Value of which as of the date of exercise is sufficient to satisfy the Exercise Price. Payment must be made at the time that the Option or any part thereof is exercised, and no shares may be issued or delivered upon exercise of an Option until full payment has been made by the Participant. The holder of an Option, as such, has none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted under the Plan is exercisable by whom, at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Award Agreement; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may modify the terms of an Option to the extent not prohibited by the terms of the Plan, including, without limitation, accelerating the time or times at which such Option may be exercised in whole or in part, including, without limitation, upon a change in control and may permit the Participant or any other designated person to exercise the Option, or any portion thereof, for all or part of the remaining Option term, notwithstanding any provision of the Award Agreement to the contrary.
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(e) Termination of Incentive Stock Option. With respect to an Incentive Stock Option, in the event of Termination of Employment of a Participant, the Option or portion thereof held by the Participant which is unexercised will expire, terminate, and become unexercisable no later than the expiration of three (3) months after the date of Termination of Employment; provided, however, that in the case of a holder whose Termination of Employment is due to death or Disability, one (1) year may be substituted for such three (3) month period; provided, further that such time limits may be exceeded by the Committee under the terms of the grant, in which case, the Incentive Stock Option will be a Nonqualified Option if it is exercised after the time limits that would otherwise apply. For purposes of this Subsection (e), a Termination of Employment of the Participant will not be deemed to have occurred if the Participant is employed by another corporation (or a parent or subsidiary corporation of such other corporation) which has assumed the Incentive Stock Option of the Participant in a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options. Notwithstanding anything to the contrary in this Section 3.2, any Option issued in substitution for an option previously issued by another entity, which substitution occurs in connection with a transaction to which Code Section 424(a) is applicable, may provide for an exercise price computed in accordance with such Code Section and may contain such other terms and conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as possible the same terms and conditions (including the applicable vesting and termination provisions) as those contained in the previously issued option being replaced thereby.
(g) Limitation on Repricing. Except as provided in Section 5.2, the Exercise Price of an Option may not be reduced, directly or indirectly, after the grant of the Option if such reduction would have adverse tax implications under Code Section 409A.
3.3. Terms and Conditions of Stock Appreciation Rights. Each Stock Appreciation Right granted under the Plan must be evidenced by an Award Agreement. A Stock Appreciation Right entitles the Participant to receive the excess of (i) the Fair Market Value of a specified or determinable number of shares of the Stock at the time of payment or exercise over (ii) a specified or determinable price, which may not be less than the Fair Market Value on the date of grant. A Stock Appreciation Right granted in connection with an Award may only be exercised to the extent that the related Award has not been exercised, paid, or otherwise settled.
(a) Settlement. Upon settlement of a Stock Appreciation Right, the Company must pay to the Participant, at the discretion of the Committee, the appreciation in cash or shares of Stock (valued at the aggregate Fair Market Value on the date of payment or exercise) as provided in the Award Agreement or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right granted under the Plan is exercisable or payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Award Agreement; provided, however, that subsequent to the grant of a Stock Appreciation Right, the Committee, at any time before complete termination of such Stock Appreciation Right, may accelerate the time or times at which such Stock Appreciation Right may be exercised or paid in whole or in part.
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(c) Limitation on Repricing. Except as provided in Section 5.2, the price of a Stock Appreciation Right may not be reduced, directly or indirectly, after the grant of the Stock Appreciation Right, if such reduction would have adverse tax implications under Code Section 409A.
3.4. Terms and Conditions of Other Stock-Based Awards. An Other Stock-Based Award shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of either (i) a number of, or the value of, a specified or determinable number of shares of Stock granted by the Committee, (ii) a percentage or multiple of the value of a specified number of shares of Stock determined by the Committee, or (iii) dividend equivalents on a specified, or a determinable number, or a percentage or multiple of a specified number, of shares of Stock determined by the Committee. At the time of the grant, the Committee must determine the specified number of shares of Stock or the percentage or multiple of the specified number of shares of Stock, as may be applicable; and the performance criteria, if any, applicable to the determination of the ultimate payment value of the Other Stock-Based Award. The Committee may provide for an alternate percentage or multiple under certain specified conditions.
(a) Payment. Payment in respect of Other Stock-Based Awards may be made by the Company in cash or shares of Stock (valued at Fair Market Value as of the date payment is owed) as provided in the applicable Award Agreement or Award Program or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Other Stock-Based Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee may specify in the applicable Award Agreement or Award Program; provided, however, that subsequent to the grant of an Other Stock-Based Award, the Committee, at any time before complete termination of such Other Stock-Based Award, may accelerate the time or times at which such Other Stock-Based Award may be paid in whole or in part.
3.5. Terms and Conditions of Cash Performance Awards. A Cash Performance Award shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of either (i) the value of a specified or determinable number of units (stated in terms of a designated or determinable dollar amount per unit) granted by the Committee, or (ii) a percentage or multiple of a specified amount determined by the Committee. At the time of the grant, the Committee must determine the base value of each unit; the number of units subject to a Cash Performance Award; the specified amount and the percentage or multiple of the specified amount, as may be applicable; and the performance criteria, if any, applicable to the determination of the ultimate payment value of the Cash Performance Award. The Committee may provide for an alternate base value for each unit or an alternate percentage or multiple under certain specified conditions.
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(a) Payment. Payment in respect of Cash Performance Awards shall be made by the Company in cash.
(b) Conditions to Payment. Each Cash Performance Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee may specify in the applicable Award Agreement or Award Program; provided, however, that subsequent to the grant of a Cash Performance Award, the Committee, at any time before complete termination of such Cash Performance Award, may accelerate the time or times at which such Cash Performance Award may be paid in whole or in part.
3.6. Treatment of Awards on Termination of Service. Except as otherwise provided by Section 3.2(e), any Award under this Plan to a Participant who has experienced a Termination of Employment, Separation from Service, or termination of some other service relationship with the Company and its Affiliates may be cancelled, accelerated, paid or continued, as provided in the applicable Award Agreement or Award Program, or, as the Committee may otherwise subsequently determine to the extent not prohibited by the Plan. The portion of any Award exercisable in the event of continuation or the amount of any payment due under a continued Award may be adjusted by the Committee to reflect the Participant’s period of service from the date of grant through the date of the Participant’s Termination of Employment, Separation from Service or termination of some other service relationship or such other factors as the Committee determines are relevant to its decision to continue the Award.
SECTION 4 RESTRICTIONS ON STOCK
4.1. Escrow of Shares. Any certificates representing the shares of Stock issued under the Plan will be issued in the Participant’s name, but, if the applicable Award Agreement or Award Program so provides, the shares of Stock will be held by a custodian designated by the Committee (the “Custodian”). Each applicable Award Agreement or Award Program providing for transfer of shares of Stock to the Custodian may require a Participant to complete an irrevocable stock power appointing the Custodian or the Custodian’s designee as the attorney-in-fact for the Participant for the term specified in the applicable Award Agreement or Award Program, with full power and authority in the Participant’s name, place and stead to transfer, assign, and convey to the Company any shares of Stock held by the Custodian for such Participant, if the Participant forfeits the shares under the terms of the applicable Award Agreement or Award Program. During the period that the Custodian holds the shares subject to this Section, the Participant is entitled to all rights, except as provided in the applicable Award Agreement or Award Program, applicable to shares of Stock not so held. Any dividends declared on shares of Stock held by the Custodian must, as provided in the applicable Award Agreement or Award Program, be paid directly to the Participant or, in the alternative, be retained by the Custodian or by the Company until the expiration of the period specified in the applicable Award Agreement or Award Program and shall then be delivered, together with any proceeds, with the shares of Stock to the Participant or to the Company, as applicable.
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4.2. Restrictions on Transfer. The Participant does not have the right to make or permit to exist any disposition of the shares of Stock issued pursuant to the Plan except as provided in the Plan or the applicable Award Agreement or Award Program. Any disposition of the shares of Stock issued under the Plan by the Participant not made in accordance with the Plan or the applicable Award Agreement or Award Program will be void. The Company will not recognize, or have the duty to recognize, any disposition not made in accordance with the Plan and the applicable Award Agreement or Award Program, and the shares so transferred will continue to be bound by the Plan and the applicable Award Agreement or Award Program.
SECTION 5 GENERAL PROVISIONS
5.1. Withholding. The Company shall deduct from all cash distributions under the Plan any taxes required to be withheld by federal, state, or local government. Whenever the Company proposes or is required to issue or transfer shares of Stock under the Plan or upon the vesting of any Award, the Company has the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state, and local tax withholding requirements prior to the delivery of any certificate or certificates for such shares or the vesting of such Award. A Participant may satisfy the withholding obligation in cash, cash equivalents, in kind or, if and to the extent the applicable Award Agreement, Award Program, or Committee procedure so provides, a Participant may elect to have the number of shares of Stock the Participant is to receive reduced by, or tender back to the Company, the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock, is sufficient to satisfy federal, state, and local, if any, withholding obligations arising from the settlement or vesting of an Award.
5.2. Changes in Capitalization; Merger; Liquidation.
(a) The number and kind of shares of Stock reserved for the grant of Options, Stock Appreciation Rights, and Other Stock-Based Awards under the Plan; the number and kind of shares of Stock pertaining to each outstanding Option, Stock Appreciation Right, and Other Stock-Based Award and reserved for issuance upon the exercise, settlement, vesting, grant or payment, as applicable, of such Award; the Exercise Price of each outstanding Option; the threshold price of each outstanding Stock Appreciation Right; and the total number of shares of Stock that may be subject to Awards granted by one or more officers of the Company and/or the Chairperson of the Committee shall be proportionately adjusted for any nonreciprocal transaction between the Company and the holders of capital stock of the Company that causes the per share value of the shares of Stock underlying an Award to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend (each, an “Equity Restructuring”).
(b) In the event of a merger, consolidation, reorganization, extraordinary dividend, sale of substantially all of the Company’s assets, other change in capital structure of the Company, tender offer for shares of Stock, or a change in control, that in each case does not constitute an Equity Restructuring, the Committee may make such adjustments with respect to Awards and take such other action as it deems necessary or appropriate, including, without limitation, the substitution of new Awards by the Company or by a third party, the settlement of any Award in cash or cash equivalents, the acceleration of Awards, the removal of restrictions on outstanding Awards, other adjustments to outstanding Awards, or the termination of outstanding Awards in exchange for the cash value, if any, determined in good faith by the Committee of the vested and/or unvested portion of the Awards, all as may be provided in the applicable Award Agreement or Award Program or, if not expressly addressed therein, as the Committee subsequently may determine in its sole discretion. The Committee may also use the Plan to assume awards not originally granted under the Plan. Any adjustment pursuant to this Section 5.2 may provide, in the Committee’s discretion, for the elimination without payment therefor of any fractional shares that might otherwise become subject to any Award, but except as set forth in this Section may not otherwise diminish the then value of the Award.
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(c) Notwithstanding any other provision of this Plan to the contrary, in taking any action pursuant to Subsection (a) or (b) with respect to a Nonqualified Stock Option or a Stock Appreciation Right, the Committee shall consider any provisions of Code Section 409A and the regulations thereunder that are required to be followed as a condition of the Nonqualified Stock Option and the Stock Appreciation Right not being treated as the grant of a new Option or Stock Appreciation Right or a change in the form of payment. Any adjustment described in the preceding sentence may include a substitution in whole or in part of other equity securities of the issuer in lieu of the shares of Stock that are subject to the Award.
(d) The existence of the Plan and the Awards granted pursuant to the Plan shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.
5.3. Compliance with Code.
(a) Code Section 422. All Incentive Stock Options to be granted hereunder are intended to comply with Code Section 422, and all provisions of the Plan and all Incentive Stock Options granted hereunder must be construed in such manner as to effectuate that intent.
(b) Code Section 409A. Except to the extent provided otherwise by the Committee, Awards under the Plan are intended to satisfy the requirements of Code Section 409A (and the Treasury Department guidance and regulations issued thereunder) so as to avoid the imposition of any additional taxes or penalties under Code Section 409A. If the Committee determines that an Award, Award Agreement, Award Program, payment, distribution, deferral election, transaction, or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Code Section 409A, then unless the Committee provides otherwise, such Award, Award Agreement, Award Program, payment, distribution, deferral election, transaction, or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan, Award Agreement, and/or Award Program will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Code Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.
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5.4. Other Cash Awards. The Committee may, at any time and in its discretion, grant to any holder of an Award the right to receive, at such times and in such amounts as determined by the Committee in its discretion, a cash amount which is intended to reimburse such person for all or a portion of the federal, state, and local income taxes imposed upon such person as a consequence of the receipt, vesting, or settlement of the Award.
5.5. Right to Terminate Employment or Service. Nothing in the Plan or in any Award Agreement or Award Program confers upon any Participant the right to continue as an officer, employee, director, consultant, or other service provider of the Company or any of its Affiliates or affect the right of the Company or any of its Affiliates to terminate the Participant’s employment or services at any time.
5.6. Non-Alienation of Benefits. Other than as provided herein, no benefit under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do so shall be void. No such benefit may, prior to receipt by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of the Participant.
5.7. Restrictions on Delivery and Sale of Shares; Legends. Each Award is subject to the condition that if at any time the Committee, in its discretion, shall determine that the listing, registration, or qualification of the shares covered by such Award upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection with the granting of such Award or the purchase or delivery of shares thereunder, the delivery of any or all shares pursuant to such Award may be withheld unless and until such listing, registration, or qualification shall have been effected. If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities laws with respect to the shares of Stock purchasable or otherwise deliverable under Awards then outstanding, the Committee may require, as a condition of exercise of any Option or as a condition to any other delivery of Stock pursuant to an Award, that the Participant or other recipient of an Award represent, in writing, that the shares received pursuant to the Award are being acquired for investment and not with a view to distribution and agree that the shares will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities laws. The Company may include on certificates representing shares delivered pursuant to an Award such legends referring to the foregoing representations or restrictions or any other applicable restrictions on resale as the Company, in its discretion, shall deem appropriate.
5.8. Listing and Legal Compliance. The Committee may suspend the exercise or payment of any Award so long as it determines that securities exchange listing or registration or qualification under any securities laws is required in connection therewith and has not been completed on terms acceptable to the Committee.
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5.9. Termination and Amendment of the Plan. The Board of Directors at any time may amend or terminate the Plan without stockholder approval. Unless the Award Agreement or Award Program explicitly provides otherwise, no such termination or amendment without the consent of the holder of an Award may adversely affect the rights of the Participant under such Award. The Board of Directors shall consider that to preserve the Plan’s ability to grant Incentive Stock Options, stockholder approval is required for any amendment to the Plan that increases the number of shares of Stock available for the grant of Incentive Stock Options under the Plan or changes the employees (or class of employees) eligible to receive Incentive Stock Options, or, subject to certain exceptions, if the Plan is assumed in connection with a corporate transaction which results in a change in either the granting corporation or the stock available for purchase or grant under the Plan.
5.10. Stockholder Approval. The Plan shall be submitted to the stockholders of the Company for their approval within twelve (12) months before or after the adoption of the Plan by the Board of Directors of the Company. If such approval is not obtained, any Award granted hereunder will be void.
5.11. Choice of Law. The laws of the State of Georgia shall govern the Plan, to the extent not preempted by federal law, without reference to the principles of conflict of laws.
5.12. Effective Date of Plan. The Plan shall become effective as of the date the Plan was approved by the Board of Directors.
IN WITNESS WHEREOF, the Company has executed this Plan, and the Plan has become effective, pursuant to Section 5.12, as of March 21, 2017, the date of its adoption by the Board of Directors.
| GEORGIA PRIMARY BANK | |||
| By: | /s Jane Skelton | ||
| Title: | Chief Financial Officer & Corporate Secretary | ||
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Exhibit 10.21
FIRST
AMENDMENT TO THE
GEORGIA PRIMARY BANK
2017 LONG-TERM INCENTIVE PLAN
THIS FIRST AMENDMENT is made as of April 1, 2021, by Primary Bancshares, Inc., a bank holding company organized under the laws of the State of Georgia (the “Company”).
WHEREAS, pursuant to that certain Agreement and Plan of Share Exchange (the “Share Exchange Agreement”) between the Georgia Primary Bank (the “Bank”) and the Company by which all issued and outstanding shares of the Bank’s common stock were exchanged for shares of the Company’s common stock (the “Share Exchange”) and by which the Bank is now wholly-owned by the Company, a bank holding company (the “Reorganization”), the Company has assumed sponsorship of the Georgia Primary Bank 2017 Long–Term Incentive Plan (the “Plan”); and
WHEREAS, in connection with the Reorganization and the Share Exchange, the Company wishes to amend the Plan to reflect the change in Plan sponsorship, to reflect that shares of common stock of the Company have been substituted for shares of common stock of the Bank, and to make other conforming changes to the Plan resulting from the consequences of the Reorganization and Share Exchange;
NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended, effective immediately following the effective date of the Reorganization, as follows:
1. By deleting the phrase “Georgia Primary Bank 2017 Long-Term Incentive Plan” each time it appears in the Plan and substituting therefor the phrase “Primary Bancshares, Inc. 2017 Long-Term Incentive Plan.”
2. By deleting existing Section 1.1(i) and substituting therefor the following:
“(i) ‘Company’ means, prior to the adoption of the Plan by Primary Bancshares, Inc., Georgia Primary Bank and, after the adoption of the Plan by Primary Bancshares, Inc., Primary Bancshares, Inc..”
3. By deleting existing Section 1.1(u) in its entirety and by substituting therefor the following:
“(u) ‘Plan’ means the “Primary Bancshares, Inc. 2017 Long-Term Incentive Plan.”
4. By deleting existing Section 1.1(w) in its entirety and by substituting therefor the following:
“(w) ‘Stock’ means, prior to the adoption of the Plan by Primary Bancshares, Inc., the common stock of Georgia Primary Bank, $5.00 par value per share and, after the adoption of the Plan by Primary Bancshares, Inc., the common stock of Primary Bancshares, Inc., $5.00 par value per share.”
5. By deleting Section 2.2 in its entirety and by substituting therefor the following:
“2.2 Stock Subject to the Plan.
(a) Subject to adjustment in accordance with Section 5.2, Two Hundred Thirty-Seven Thousand Three Hundred Fifty-Three (237,353) shares of Stock (the ‘Maximum Plan Shares’) are hereby reserved exclusively for issuance upon exercise or payment pursuant to Awards, all or any of which may be Incentive Stock Options, such number including shares of the common stock of Georgia Primary Bank, if any, issued pursuant to Awards prior to the adoption of the Plan by Primary Bancshares, Inc.
(b) Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. The shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted, or otherwise unsettled portion of any Award that is forfeited or cancelled or expires or terminates for any reason without becoming vested, paid, exercised, converted, or otherwise settled in full in Stock will again be available for purposes of the Plan. For purposes of determining the number of shares of Stock issued upon the exercise, settlement, or grant of an Award under this Section, any shares of Stock withheld to satisfy tax withholding obligations or the Exercise Price shall be considered issued under the Plan.”
6. By deleting the last sentence of the head language of Section 3.2 in its entirety.
7. By deleting Section 5.1 in its entirety and substituting therefor the following:
“5.1 Withholding. The Company shall deduct or, if applicable, shall cause the appropriate Affiliate to deduct from all cash distributions under the Plan any taxes required to be withheld by federal, state, or local government. Whenever the Company proposes or is required to issue or transfer shares of Stock under the Plan or upon the vesting of any Award, the Company has the right to require the recipient to remit to the Company or appropriate Affiliate an amount sufficient to satisfy any federal, state, and local tax withholding requirements prior to the delivery of any certificate or certificates for such shares or the vesting of such Award. A Participant may satisfy the withholding obligation in cash, cash equivalents, in kind or, if and to the extent the applicable Award Agreement, Award Program, or Committee procedure so provides, a Participant may elect to have the number of shares of Stock the Participant is to receive reduced by, or tender back to the Company, the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock, is sufficient to satisfy federal, state, and local, if any, withholding obligations arising from the settlement or vesting of an Award.”
8. By deleting Section 5.10 in its entirety and substituting therefor the following:
“5.10 Stockholder Approval. The Plan was originally approved by the board of directors of Georgia Primary Bank on March 21, 2017, and by the stockholders of Georgia Primary Bank on April 18, 2017. The assumption of the Plan by the Company, its substitution as the granting corporation under the Plan and the substitution of Company common stock as the securities issuable under the Plan was approved by the shareholders of Georgia Primary Bank in connection with their approval of the Agreement and Plan of Share Exchange between the Georgia Primary Bank and the Company and was approved by the sole shareholder of the Company within twelve (12) months before the adoption of the Plan by the Company.”
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9. By deleting Section 5.12 in its entirety and substituting therefor the following:
“5.12. Effective Date of the Plan. The effective date of the Plan, as adopted by the Board of Directors of the Company, is December 15, 2020. Incentive Stock Options may continue to be granted under the Plan on and after this effective date until December 14, 2030, subject to any earlier termination of the Plan pursuant to Section 5.9 or any extension of such period permitted by Code Section 422.”
Except as specifically amended hereby, the remaining provisions of the Plan shall remain in full force and effect as prior to the adoption of this First Amendment.
IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed effective immediately following the effective date of the Reorganization.
| PRIMARY BANCSHARES, INC.: | |||
| By: | /s/ Jane Skelton | ||
| Title: | Chief Financial Officer & Secretary | ||
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Exhibit 10.22
GEORGIA BANKING COMPANY, INC.
AMENDMENT
TO THE
PRIMARY BANCSHARES, INC. 2017 LONG-TERM INCENTIVE PLAN
THIS AMENDMENT TO PRIMARY BANCSHARES, INC. 2017 LONG-TERM INCENTIVE PLAN (this “Amendment”) is made as of March 1, 2025, by Georgia Banking Company, Inc. (the “Company”), a successor by merger to Primary Bancshares, Inc. (“Primary”).
WHEREAS, the Company and Primary have entered into that certain Agreement and Plan of Merger, dated October 9, 2024, by and between the Company and Primary, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of January 22, 2025 (collectively, the “Company Merger Agreement”), pursuant to which Primary will merge with and into the Company, with the Company as the surviving corporation (the “Company Merger”);
WHEREAS, immediately following the Company Merger, Primary’s wholly-owned Georgia bank subsidiary, Georgia Primary Bank (“Primary Bank”), will merge with and into the Company’s wholly-owned Georgia bank subsidiary, Georgia Banking Company (the “Bank”), with the Bank as the surviving bank (the “Bank Merger” and together with the Company Merger, the “Mergers”), in accordance with the terms and conditions of that certain Agreement and Plan of Merger, dated as of October 9, 2024, by and between the Bank and Primary Bank (the “Bank Merger Agreement”);
WHEREAS, Primary granted stock options to purchase shares of Primary’s common stock (“Options”) to certain current and former service providers of Primary and/or Primary Bank (the “Optionees”), subject to the terms and conditions of the Primary Bancshares, Inc. 2017 Long-Term Incentive Plan, as amended (the “Plan”) and each Optionee’s Nonqualified Stock Option Award (the “Award Notice”) and the Terms and Conditions to the Nonqualified Stock Option Award (“Terms and Conditions” and together with the Award Notice, the “Award Agreements”);
WHEREAS, in connection with the Company Merger and pursuant to the Company Merger Agreement and Section 5.2 of the Plan, certain Optionees elected to convert their outstanding and unexercised Options into options to purchase shares of the Company’s common stock (the “Rollover Options”);
WHEREAS, pursuant to the Merger Agreement, the Company has assumed the Plan and any Rollover Options granted thereunder, as of the Effective Time;
WHEREAS, pursuant to Section 5.9 of the Plan, the Company now desires to amend the Plan;
WHEREAS, immediately following the Effective Time (the “Amendment Effective Time”), the Plan is hereby amended to reflect the assumption of the Plan by the Company; and
WHEREAS, capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings given to such terms in the Plan.
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NOW, THEREFORE, effective as of the Amendment Effective Time, the Plan is hereby amended as follows:
I. The Plan is hereby amended to add a “Preamble” before “Section I. Definitions” to read as follows:
“PREAMBLE
Primary Bancshares, Inc. and Georgia Banking Company, Inc. entered into that certain Agreement and Plan of Merger, dated October 9, 2024, by and between the Company and Primary, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of January 22, 2025 (collectively, the “Merger Agreement”), pursuant to which Primary Bancshares, Inc. merged with and into the Georgia Banking Company, Inc. on or about March 1, 2025 (the “Closing Date”), with the Georgia Banking Company, Inc. as the surviving corporation (the “Merger”).
In connection with the Merger, Georgia Banking Company, Inc. assumed the Plan, as well as any Options granted under the Plan that were outstanding and unexercised immediately prior to the Closing Date and that were to be converted into options to purchase shares of Georgia Banking Company, Inc.’s common stock (collectively, the “Rollover Options”). Georgia Banking Company, Inc. intends to maintain the Plan following the Closing Date to govern the outstanding Rollover Options and permit the grant of new equity incentives to eligible service providers of Georgia Banking Company, Inc. and its Subsidiaries.”
II. Section 1.1(i) of the Plan is hereby amended by deleting the definition of “Company” therein and replacing it in its entirety with the following:
“(i) “Company” means (i) “Primary Bancshares, Inc.” prior to the Closing Date, and (ii) “Georgia Banking Company, Inc.” after the Closing Date”
III. Section 1.1(u) of the Plan is hereby amended by deleting the definition of “Plan” therein and replacing it in its entirety with the following:
“(u) “Plan” means (i) the “Primary Bancshares, Inc. 2017 Long Term Incentive Plan” prior to the Closing Date, and (ii) the “Georgia Banking Company, Inc. 2017 Long Term Incentive Plan” after the Closing Date”
IV. Section 1.1(p) of the Plan is hereby amended by deleting the definition of “Stock” therein and replacing it in its entirety with the following:
“(w) “Stock” means the common stock, $0.01 par value per share, of Georgia Banking Company, Inc.”
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V. Section 2.2 of the Plan is hereby amended and restated in its entirety to read as follows:
“2.2 Stock Subject to the Plan.
(a) Subject to adjustment in accordance with Section 5.2, One Hundred Thirty Nine Thousand Three Hundred Twenty Six (139,326) shares of Stock (the “Maximum Plan Shares”) are hereby reserved exclusively for issuance upon exercise or payment pursuant to Awards, including upon exercise of any Rollover Options, all or any of which may be Incentive Stock Options.
(b) Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. The shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted, or otherwise unsettled portion of any Award, including any adjusted shares subject to a Rollover Option that is forfeited or cancelled or expires or terminates for any reason without becoming vested, paid, exercised, converted, or otherwise settled in full in Stock will again be available for purposes of the Plan. For purposes of determining the number of shares of Stock issued upon the exercise, settlement, or grant of an Award under this Section, any shares of Stock withheld to satisfy tax withholding obligations or the Exercise Price shall be considered issued under the Plan.”
VI. Section 2.4 of the Plan is hereby amended and restated in its entirety to read as follows:
“2.4 Eligibility and Limits. Awards may be granted only to officers, employees, directors, consultants, and other service providers of the Company or any Affiliate of the Company that provided services to Primary Bankshares, Inc. or its Affiliates prior to the Closing Date continued provide services Georgia Banking Company, Inc. or its Affiliates following the Closing Date; provided, however, that an Incentive Stock Option may only be granted to an employee of the Company or any Parent or Subsidiary. In the case of Incentive Stock Options, the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of Stock with respect to which stock options intended to meet the requirements of Code Section 422 become exercisable for the first time by an individual during any calendar year under all plans of the Company and its Parents and Subsidiaries may not exceed $100,000; provided further, that if the limitation is exceeded, the Incentive Stock Option(s) which cause the limitation to be exceeded will be treated as Nonqualified Stock Option(s), unless the provisions of the applicable Award Agreement provide otherwise.”
VII. Section 5.12 of the Plan is hereby amended and restated in its entirety to read as follows:
“5.12. Effective Date of the Plan. The effective date of the Plan, as assumed and adopted by the Board of Directors of the Company, is March 1, 2025; provided, however, no Incentive Stock Options shall be granted unless and until the Company’s stockholders approve the Plan.”
VIII. Except as specifically amended by this Amendment, all terms and conditions of the Award Agreement shall remain in full force and effect and shall not be modified by this Amendment.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its duly authorized officer as of the date first written above.
| GEORGIA BANKING COMPANY, INC., | |||
| a Georgia Corporation | |||
| By: | /s/ Bartow Morgan, Jr. | ||
| Bartow Morgan, Jr. | |||
| Chief Executive Officer | |||
[Signature Page to Amendment to 2017 Long-Term Incentive Plan]
Exhibit 10.23
NONQUALIFIED STOCK OPTION AWARD
PURSUANT TO THE PRIMARY BANCHARES, INC.
2017 LONG-TERM INCENTIVE PLAN
THIS NONQUALIFIED STOCK OPTION AWARD is granted as of the Grant Date by PRIMARY BANCSHSARES, INC. (the “Company”), a bank holding company organized under the laws of the State of Georgia, in favor of __________________________ (the “Optionee”).
Upon and subject to the Terms and Conditions attached hereto and incorporated herein by reference and further subject to the provisions of the Primary Banchares, Inc. 2017 Long-Term Incentive Plan, the Company hereby awards as of the Grant Date to Optionee a nonqualified stock option (the “Option”), as described below, to purchase the Option Shares.
| A. | Grant Date: _______________________. |
| B. | Type of Option: Nonqualified Stock Option. |
| C. | Plan under which granted: Primary Bancshares, Inc. 2017 Long-Term Incentive Plan. |
| D. | Option Shares: All or any part of _________ shares of the Company’s common stock, $5.00 par value per share (the “Common Stock”), subject to adjustment as provided in the attached Terms and Conditions. |
| E. | Exercise Price: $______ per share, subject to adjustment as provided in the attached Terms and Conditions. The Exercise Price is, in the judgment of the Committee, not less than 100% of the Fair Market Value of a share of Common Stock on the Grant Date. |
| F. | Option Period: The Option may be exercised only during the Option Period which commences on the Grant Date and ends, generally, on the earlier of (a) the tenth (10th) anniversary of the Grant Date; or (b) the earliest of (i) immediately upon the Optionee’s involuntary Termination of Employment for Cause, (ii) thirty (30) days following the date the Optionee ceases to be an employee of the Company (including any Affiliate) for reasons other than for Cause or due to death or Disability, or (iii) one (1) year following the date the Optionee ceases to be an employee of the Company (including any Affiliate) due to death or Disability. Note that other limitations to exercising the Option, as described in the attached Terms and Conditions, may apply. |
| G. | Vesting Schedule: The Option may be exercised only to the extent of Vested Option Shares (as defined in Schedule 1). Option Shares shall become vested in accordance with Schedule 1 hereto (the “Vesting Schedule”). Any portion of the Option which is not vested at the time of Optionee’s Termination of Employment shall be forfeited to the Company. |
IN WITNESS WHEREOF, the parties have signed this Award as of the Grant Date set forth above.
| PRIMARY BANCSHARES, INC.: | ||
| By: | ||
| Title: | ||
TERMS AND CONDITIONS
TO THE
NONQUALIFIED STOCK OPTION AWARD
PURSUANT TO THE PRIMARY BANCSHARES, INC.
2017 LONG-TERM INCENTIVE PLAN
1. Exercise of Option. Subject to the provisions provided in the Award, these accompanying Terms and Conditions and the provisions of the Plan, the Option may be exercised with respect to all or any portion of the Vested Option Shares at any time during the Option Period by:
(a) the delivery to the Company, at its principal place of business, of a written notice of exercise in substantially the form attached hereto as Exhibit 1, which shall be actually delivered to the Company no earlier than thirty (30) days and no later than ten (10) days prior to the date upon which Optionee desires to exercise all or any portion of the Option, unless prior notice is waived by the Committee;
(b) payment to the Company of the Exercise Price multiplied by the number of Vested Option Shares being purchased (the “Purchase Price”), as provided in Section 3; and
(c) satisfaction of the withholding tax obligations under Section 2.
(d) Notwithstanding any other provision of this Award, in the event that the capital of Georgia Primary Bank falls below the minimum requirements determined by its primary federal regulator (the “Regulator”), the Regulator may direct the Company to require the Optionee to exercise, or otherwise forfeit, the Option in whole or in part. If the Regulator gives such direction, the Company will notify the Optionee within forty-five (45) days from the date the Regulator notifies the Company in writing that the Optionee must exercise, or otherwise forfeit, the Option in whole or in part. If the Optionee does not exercise the Option in accordance with the Company’s direction within twenty-one (21) days of the Company’s notification to the Optionee, the Committee may provide for the cancellation of the Option.
Upon acceptance of such notice and receipt of payment in full of the Purchase Price and, if applicable, withholding taxes, the Company shall cause to be issued a certificate representing the Vested Option Shares purchased. Notwithstanding the foregoing, in the event the Optionee is given notice of Termination of Employment for Cause, the Optionee’s ability to exercise the Option shall be suspended from the giving of such notice until such time as the Optionee cures the circumstance(s) constituting Cause, if expressly permitted by the applicable employment or services agreement or otherwise, or, if there is no opportunity to cure or no cure is timely effected, from and after the giving of such notice through and including the effective date of the Optionee’s Termination of Employment.
2. Withholding. The Optionee must satisfy applicable federal, state and local, if any, withholding taxes imposed by reason of the exercise of the Option by paying to the Company the full amount of the withholding obligation in cash or by certified or bank cashier’s check.
3. Purchase Price. Payment of the Purchase Price for all Vested Option Shares purchased pursuant to the exercise of an Option shall be made:
(a) in cash or certified or bank cashier’s check;
(b) at the discretion of the Committee, by electing to have the number of shares of Common Stock to be issued upon exercise reduced by the number of shares of Common Stock having a Fair Market Value, as determined under the Plan, on the date of exercise either equal to the Purchase Price or in combination with cash or certified or bank cashier’s check equal to the Purchase Price; in such case, the Optionee will be deemed to have elected to receive a taxable payment of cash equal to the excess of the Fair Market Value of the number of shares of Common Stock withheld to pay the Purchase Price (less any cash or certified or bank cashier’s check payment actually paid by the Optionee) over the portion of the Purchase Price attributable to the shares withheld, which amount shall be used to pay the Purchase Price, in exchange for cancellation of the portion of the vested Option attributable to the number of shares of Common Stock the Company has withheld to satisfy the Purchase Price; or
(c) if and when the Common Stock becomes traded by brokers, whether on a national securities exchange or otherwise, by receipt of the Purchase Price in cash from a broker, dealer or other “creditor” as defined by Regulation T issued by the Board of Governors of the Federal Reserve System following delivery by the Optionee to the Committee of instructions in a form acceptable to the Committee regarding delivery to such broker, dealer or other creditor of that number of Vested Option Shares with respect to which the Option is exercised;
(d) by the delivery to the Company of a number of shares of Common Stock owned by the Optionee having an aggregate Fair Market Value on the date of exercise equal to the Purchase Price; or
(e) in any combination of the foregoing.
4. Rights as Shareholder. Until the stock certificates reflecting the Option Shares accruing to the Optionee upon exercise of the Option are issued to the Optionee, the Optionee shall have no rights as a shareholder with respect to such Option Shares. The Company shall make no adjustment for any dividends or distributions or other rights on or with respect to Option Shares for which the record date is prior to the issuance of that stock certificate, except as the Plan or the attached Award otherwise provides.
5. Restriction on Transfer of Option.
(a) General Restrictions. The Optionee (and any subsequent holder of the Option) may not sell, pledge or otherwise directly or indirectly transfer (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest in or any beneficial interest in the Option except pursuant to the provisions of this Award. Any sale, pledge or other transfer (or any attempt to effect the same) of the Option in violation of any provision of this Award shall be void, and the Company shall not record such transfer, assignment, pledge or other disposition on its books or treat any purported transferee or pledgee of the Option as the owner or pledgee of the Option for any purpose.
(b) Certain Permitted Transfers of Options. The restrictions contained in this Section will not apply with respect to transfers of the Option pursuant to applicable laws of descent and distribution; provided that the restrictions contained in this Section will continue to be applicable to the Option after any such transfer; and provided further that the transferee(s) of the Option must agree in writing to be bound by the provisions of this Award.
6. Changes in Capitalization.
(a) The number of Option Shares and the Exercise Price shall be proportionately adjusted for nonreciprocal transactions between the Company and the holders of capital stock of the Company that cause the per share value of the shares of Common Stock underlying the Option to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend (each, an “Equity Restructuring”).
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(b) In the event of a merger, consolidation, reorganization, extraordinary dividend, sale of substantially all of the Company’s assets or other material change in the capital structure of the Company, or a tender offer for shares of Common Stock, or a change in control of the Company, that in each case is not an “Equity Restructuring,” the Committee shall take such action to make such adjustments in the Option or the terms of this Award as the Committee, in its sole discretion, determines in good faith is necessary or appropriate, including, without limitation, adjusting the number and class of securities subject to the Option, with a corresponding adjustment in the Exercise Price, substituting a new option to replace the Option, accelerating the termination of the Option Period or terminating the Option in consideration of a cash payment to the Optionee in an amount equal to the excess of the then Fair Market Value of the Option Shares over the aggregate Exercise Price of the Vested Option Shares. Any determination made by the Committee pursuant to this Subsection (b) will be final and binding on the Optionee. Any action taken by the Committee need not treat all optionees equally.
(c) The existence of the Plan and the Option granted pursuant to this Award shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Common Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding. Any adjustment pursuant to this Section may provide, in the Committee’s discretion, for the elimination without payment therefor of any fractional shares that might otherwise become subject to any Option.
7. Special Limitation on Exercise. No purported exercise of the Option shall be effective without the approval of the Committee, which may be withheld to the extent that the exercise, either individually or in the aggregate together with the exercise of other previously exercised stock options and/or offers and sales pursuant to any prior or contemplated offering of securities, would, in the sole and absolute judgment of the Committee, require the filing of a registration statement with the United States Securities and Exchange Commission or with the securities commission of any state. If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities law with respect to shares of Common Stock purchasable or otherwise deliverable under the Option, the Optionee (a) shall deliver to the Company, prior to the exercise of the Option or as a condition to the delivery of Common Stock pursuant to the exercise of an Option, such information, representations and warranties as the Company may reasonably request in order for the Company to be able to satisfy itself that the Option Shares are being acquired in accordance with the terms of an applicable exemption from the securities registration requirements of applicable federal and state securities laws and (b) shall agree that the shares of Common Stock so acquired will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities law.
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8. Legend on Stock Certificates. Certificates evidencing the Option Shares, to the extent appropriate at the time, shall have noted conspicuously on the certificate legends intended to give all persons full notice of the existence of the conditions, restrictions, rights and obligations set forth herein and in the Plan, and the Optionee shall not make any transfer of the Option Shares without first complying with the restrictions on transfer described in such legends. Such legends may include the following:
transfer is restricted
The shares evidenced by this certificate have been issued pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”) and applicable state securities laws and as such may only be sold or otherwise transferred: (1) pursuant to registration or an exemption from registration under the Securities Act, including but not limited to Rule 144 thereunder, and the securities laws of any applicable state or other jurisdiction; or (2) if, in the opinion of counsel, in form and substance satisfactory to the issuer, such transfer is exempt from registration or is otherwise in compliance with applicable federal and state securities laws.
The securities evidenced by this certificate are subject to restrictions on transfer which also apply to the transferee as set forth in a Nonqualified Stock Option Award, dated __________________, a copy of which is available from the Company.
9. Governing Laws. This Award and these Terms and Conditions shall be construed, administered and enforced according to the laws of the State of Georgia; provided, however, the Option may not be exercised except in compliance with exemptions available under applicable state securities laws of the state in which the Optionee resides and/or any other applicable securities laws.
10. Successors. This Award and these Terms and Conditions shall be binding upon and inure to the benefit of the heirs, legal representatives, successors and permitted assigns of the Optionee and the Company.
11. Notice. Except as otherwise specified herein, all notices and other communications required or permitted under this Award shall be in writing and, if mailed by prepaid first-class mail or certified mail, return receipt requested, shall be deemed to have been received on the earlier of the date shown on the receipt or three (3) business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand, facsimile transmission or overnight courier, in which event the notice shall be deemed effective when delivered or transmitted. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses: to the Company (attention of the Secretary), at 3880 Roswell Road, Atlanta, GA 30342, or at any other address as the Company, by notice to Optionee, may designate in writing from time to time; and to Optionee, at Optionee's address as shown on the records of the Company, or at any other address as Optionee, by notice to the Company, may designate in writing from time to time.
12. Severability. In the event that any one or more of the provisions or portion thereof contained in the Award and these Terms and Conditions shall for any reason be held to be invalid, illegal or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of the Award and these Terms and Conditions, and the Award and these Terms and Conditions shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
13. Entire Agreement. Subject to the terms and conditions of the Plan, the Award and the Terms and Conditions express the entire understanding of the parties with respect to the Option.
14. Violation. Except as provided in Section 5, any transfer, pledge, sale, assignment, or hypothecation of the Option or any portion thereof shall be a violation of the terms of the Award or these Terms and Conditions and shall be void and without effect.
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15. Headings and Capitalized Terms. Section headings used herein are for convenience of reference only and shall not be considered in construing the Award or these Terms and Conditions. Capitalized terms used, but not defined, in either the Award or the Terms and Conditions shall be given the meaning ascribed to them in the Plan.
16. Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of the Award and these Terms and Conditions, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
17. No Right to Continued Retention. Neither the establishment of the Plan nor the award of Option Shares hereunder shall be construed as giving the Optionee the right to continued employment with the Company or any Affiliate.
18. Definitions. For purposes of this Award, the following terms shall have the meanings ascribed to them below:
(a) For purposes of this Award, the term “Cause” has the same meaning as provided in the employment agreement between the Optionee and the Company and/or, if applicable, any Affiliate on the date of Termination of Employment, or if no such definition or employment agreement exists, “Cause” means:
(i) any act by the Optionee of fraud against, material misappropriation from, or material dishonesty to either the Company or any Affiliate;
(ii) conviction of the Optionee of a crime involving breach of trust or moral turpitude or any felony;
(iii) conduct by the Optionee that amounts to willful misconduct, gross and willful insubordination, gross neglect or inattention to or material failure to perform the Optionee’s duties and responsibilities in the manner and to the extent required by his position(s) with the Company or any Affiliate, including prolonged absences; provided that the nature of such conduct shall be set forth with reasonable particularity in a written notice to the Optionee who shall have ten (10) days following delivery of such notice to cure such alleged conduct, provided that such conduct is, in the reasonable discretion of the Company, susceptible to a cure;
(iv) exhibition by the Optionee of a standard of behavior within the scope of or related to his employment that is materially disruptive to the orderly conduct of the business operations of the Company or any Affiliate (including, without limitation, substance abuse, sexual harassment or sexual misconduct) in the reasonable opinion of the Company;
(v) receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Company or any Affiliate intends to institute any form of formal or informal regulatory action against the Optionee; or
(vi) the Optionee’s removal and/or permanent prohibition from participating in the conduct of the affairs of the Company or any Affiliate by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and (g)(1)).
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(b) “Change in Control” shall mean the occurrence of any of the following events on or after the Grant Date:
(i) the acquisition by any one person of the ability to vote or to direct the disposition of more than fifty percent (50%) of the total voting power of the Company; or
(ii) the consummation of a merger, share exchange, consolidation or other business combination of the Company with any other person or affiliate thereof, other than a merger, share exchange, consolidation or business combination that would result in the outstanding Common Stock immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into common stock of the surviving entity or a parent or affiliate thereof) more than fifty percent (50%) of the outstanding Common Stock, or of the common stock of such surviving entity or parent or affiliate thereof, outstanding immediately after such merger, consolidation or business combination
Notwithstanding the foregoing, in the event of a merger, consolidation, reorganization, share exchange or other transaction as to which the holders of the capital stock of the Company before the transaction continue after the transaction to hold, directly or indirectly through a holding company or otherwise, shares of capital stock of the Company (or other surviving company) representing more than fifty percent (50%) of the value or ordinary voting power to elect directors of the capital stock of the Company (or other surviving company), such transaction shall not constitute a Change in Control.
(c) Other capitalized terms that are not defined herein have the meaning set forth in the Plan or the Award, except where the context does not reasonably permit.
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EXHIBIT 1
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
PRIMARY BANCSHARES, INC.
| Name | ||
| Address | ||
| Date |
Primary Bancshares, Inc.
3880 Roswell Road
Atlanta, GA 30342
Attn: Corporate Secretary
Re: Exercise of Nonqualified Stock Option
Gentlemen:
Subject to acceptance hereof by Primary Bancshares, Inc. (the “Company”) and pursuant to the provisions of the Primary Bancshares, Inc. 2017 Long-Term Incentive Plan (the “Plan”), I hereby give notice of my election to exercise options granted to me to purchase ______________ shares of Common Stock of the Company under the Nonqualified Stock Option Award (the “Award”) dated as of ____________________. The purchase shall take place as of __________, 20___ (the “Exercise Date”).
On or before the Exercise Date, I will pay the applicable purchase price as follows:
| [ ] | by delivery of cash or a certified (or bank cashier’s) check for $___________ for the full purchase price payable to the order of Primary Bancshares, Inc. |
| [ ] | by having a number of Option Shares withheld, the Fair Market Value of which as of the date of exercise is sufficient to satisfy the Exercise Price; I understand that as a result of this election, I will be deemed to have elected to receive a taxable payment of cash equal to the excess of the Fair Market Value of the number of shares of Common Stock withheld to pay the Purchase Price (less any payment I make by certified or bank cashier’s check) over the portion of the purchase price attributable to the shares withheld, which amount shall be used to pay the purchase price, in exchange for a cancellation of the portion of the vested Option attributable to the number of shares of Common Stock the Company has withheld to satisfy the purchase price; |
| [ ] | by delivery of the purchase price by _________________________, a broker, dealer or other “creditor” as defined by Regulation T issued by the Board of Governors of the Federal Reserve System. I hereby authorize the Company to issue a stock certificate for the number of shares indicated above in the name of said broker, dealer or other creditor or its nominee pursuant to instructions received by the Company and to deliver said stock certificate directly to that broker, dealer or other creditor (or to such other party specified in the instructions received by the Company from the broker, dealer or other creditor) upon receipt of the purchase price. Note: This choice is available only if and when the Common Stock becomes traded by brokers; or |
| [ ] | by delivery of shares of Common Stock that I own and that are represented by a stock certificate I will surrender to the Company with my endorsement. If the number of shares of Common Stock represented by such stock certificate exceed the number to be applied against the purchase price, I understand that a new stock certificate will be issued to me reflecting the excess number of shares. |
| Exhibit 1 – Page 1 of 3 |
The required federal, state, and local income tax withholding obligations on the exercise of the Award shall be paid on or before the Exercise Date in cash or by certified or bank cashier’s check as provided in the Award.
I understand that I am not permitted to exercise the Option if I have been given notice that my employment will be terminated for Cause. I understand that if my ability to exercise is suspended in the manner provided for in the foregoing sentence, my ability to exercise may only be reinstated in the event that I cure the circumstances specified in such notice that was the basis for my termination for Cause and only if such ability to cure is expressly provided for in the applicable employment agreement or otherwise.
As soon as the stock certificate is registered in my name, please deliver it to me at the above address.
If the Common Stock being acquired is not registered for issuance to and resale by the Optionee pursuant to an effective registration statement on Form S-8 (or successor form) filed under the Securities Act of 1933, as amended (the “1933 Act”), I hereby represent, warrant, covenant, and agree with the Company as follows:
The shares of the Common Stock being acquired by me will be acquired for my own account without the participation of any other person, with the intent of holding the Common Stock for investment and without the intent of participating, directly or indirectly, in a distribution of the Common Stock and not with a view to, or for resale in connection with, any distribution of the Common Stock, nor am I aware of the existence of any distribution of the Common Stock;
I am not acquiring the Common Stock based upon any representation, oral or written, by any person with respect to the future value of, or income from, the Common Stock but rather upon an independent examination and judgment as to the prospects of the Company;
The Common Stock was not offered to me by means of publicly disseminated advertisements or sales literature, nor am I aware of any offers made to other persons by such means;
I am able to bear the economic risks of the investment in the Common Stock, including the risk of a complete loss of my investment therein;
I understand and agree that the Common Stock will be issued and sold to me without registration under any state law relating to the registration of securities for sale, and will be issued and sold in reliance on the exemptions from registration under the 1933 Act, provided by Sections 3(b) and/or 4(2) thereof and the rules and regulations promulgated thereunder;
The Common Stock cannot be offered for sale, sold or transferred by me other than pursuant to: (A) an effective registration under the 1933 Act or in a transaction otherwise in compliance with the 1933 Act; and (B) evidence satisfactory to the Company of compliance with the applicable securities laws of other jurisdictions. The Company shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the above laws;
The Company will be under no obligation to register the Common Stock or to comply with any exemption available for sale of the Common Stock without registration or filing, and the information or conditions necessary to permit routine sales of securities of the Company under Rule 144 under the 1933 Act are not now available and no assurance has been given that it or they will become available. The Company is under no obligation to act in any manner so as to make Rule 144 available with respect to the Common Stock;
| Exhibit 1 – Page 2 of 3 |
I have and have had complete access to and the opportunity to review and make copies of all material documents related to the business of the Company, including, but not limited to, contracts, financial statements, tax returns, leases, deeds and other books and records. I have examined such of these documents as I wished and am familiar with the business and affairs of the Company. I realize that the purchase of the Common Stock is a speculative investment and that any possible profit therefrom is uncertain;
I have had the opportunity to ask questions of and receive answers from the Company and any person acting on its behalf and to obtain all material information reasonably available with respect to the Company and its affairs. I have received all information and data with respect to the Company which I have requested and which I have deemed relevant in connection with the evaluation of the merits and risks of my investment in the Company;
I have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of the purchase of the Common Stock hereunder and I am able to bear the economic risk of such purchase; and
The agreements, representations, warranties and covenants made by me herein extend to and apply to all of the Common Stock of the Company issued to me pursuant to this Award. Acceptance by me of the certificate representing such Common Stock shall constitute a confirmation by me that all such agreements, representations, warranties and covenants made herein shall be true and correct at that time.
I understand that the certificates representing the shares being purchased by me in accordance with this notice shall bear a legend referring to the foregoing covenants, representations and warranties and restrictions on transfer, and I agree that a legend to that effect may be placed on any certificate which may be issued to me as a substitute for the certificates being acquired by me in accordance with this notice. I further understand that capitalized terms used in this Notice of Exercise without definition shall have the meanings given to them in the Award or the Plan, as applicable.
| Very truly yours, | ||||
| AGREED TO AND ACCEPTED: | ||||
| PRIMARY BANCSHARES, INC.: | ||||
| By: | Date: | |||
| Title: | ||||
| Number of Shares Exercised: _______ | Number of Shares Remaining: _________ |
| Exhibit 1 – Page 3 of 3 |
SCHEDULE 1
VESTING SCHEDULE
NONQUALIFIED STOCK OPTION AWARD
ISSUED PURSUANT TO THE
PRIMARY BANCSHARES, INC.
2017 LONG-TERM INCENTIVE PLAN
| A. | “Vested Option Shares” means only that percentage of the number of Option Shares subject to the Option as to which the Option becomes exercisable if the Optionee continues, at all times, as an officer or employee of the Company or any Affiliate from the Grant Date to the applicable anniversary of the Grant Date below. |
| Percentage of Option Shares | |||
| Vesting Date | which are Vested Option Shares | ||
| Prior to the first anniversary of the Grant Date | 0% | ||
| First anniversary of the Grant Date | 331/3% | ||
| Second anniversary of the Grant Date | 662/3% | ||
| Third anniversary of the Grant Date | 100% |
| B. | Notwithstanding Item A above, if a Change in Control occurs during the Option Period prior to the Optionee experiencing a Termination of Employment, the Option shall become fully vested upon the effective date of such Change in Control. |
| C. | Any portion of the Option which is not vested as of the date the Optionee experiences a Termination of Employment shall be forfeited. |
| Schedule 1 – Page 1 of 1 |
Exhibit 10.25
GEORGIA BANKING COMPANY, INC.
AMENDMENT
TO
NONQUALIFIED STOCK OPTION AWARD
PURSUANT TO THE 2017 LONG-TERM INCENTIVE PLAN
THIS AMENDMENT TO NONQUALIFIED STOCK OPTION AWARD PURSUANT TO THE 2017 LONG-TERM INCENTIVE PLAN (this “Amendment”) is made as of March 1, 2025, by Georgia Banking Company, Inc. (the “Company”), a successor by merger to Primary Bancshares, Inc. (“Primary”).
WHEREAS, the Company and Primary have entered into that certain Agreement and Plan of Merger, dated October 9, 2024, by and between the Company and Primary, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of January 22, 2025 (collectively, the “Company Merger Agreement”), pursuant to which Primary will merge with and into the Company, with the Company as the surviving corporation (the “Company Merger”);
WHEREAS, immediately following the Company Merger, Primary’s wholly-owned Georgia bank subsidiary, Georgia Primary Bank (“Primary Bank”), will merge with and into the Company’s wholly-owned Georgia bank subsidiary, Georgia Banking Company (the “Bank”), with the Bank as the surviving bank (the “Bank Merger” and together with the Company Merger, the “Mergers”), in accordance with the terms and conditions of that certain Agreement and Plan of Merger, dated as of October 9, 2024, by and between the Bank and Primary Bank (the “Bank Merger Agreement”);
WHEREAS, Primary granted stock options to purchase shares of Primary’s common stock (“Options”) to certain current and former service providers of Primary and/or Primary Bank (the “Optionees”), subject to the terms and conditions of the Primary Bancshares, Inc. 2017 Long-Term Incentive Plan, as amended (the “Plan”) and each Optionee’s Nonqualified Stock Option Award (the “Award Notice”) and the Terms and Conditions to the Nonqualified Stock Option Award (“Terms and Conditions” and together with the Award Notice, the “Award Agreements”);
WHEREAS, in connection with the Company Merger and pursuant to the Company Merger Agreement and Section 5.2 of the Plan, certain Optionees elected to convert their outstanding and unexercised Options into options to purchase shares of the Company’s common stock (the “Rollover Options”) equal to the number (rounded down to the nearest whole number) of (x) the number of shares of Primary’s common stock subject to such Option immediately prior to the Effective Time (as defined in the Company Merger Agreement) times (y) 0.5870 (the “Exchange Ratio”), at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Primary’s common stock of such Option immediately prior to the Effective Time divided by (B) the Exchange Ratio (the “Option Conversion”);
WHEREAS, pursuant to the Company Merger Agreement and the terms and conditions of the applicable Award Agreements and Plan, the Rollover Options will be fully vested and exercisable, as of the Effective Time;
1
WHEREAS, pursuant to the Merger Agreement, the Company has assumed the Plan and any Rollover Options granted thereunder (including the Award Agreements governing the Rollover Options) as of the Effective Time, with the modifications described above;
WHEREAS, as of the Effective Time (the “Amendment Effective Time”), each Award Agreement, set forth on Exhibit A is hereby amended to reflect the Option Conversion and the assumption by the Company of the Rollover Options and the Plan under which the Options were granted, with such modifications as may be necessary to reflect the Mergers;
WHEREAS, following the Amendment Effective Time, the Rollover Options shall continue to be governed by their terms as in effect prior to the Closing Date, except as amended by this Amendment; and
WHEREAS, capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings given to such terms in the Plan.
NOW, THEREFORE, effective as of the Amendment Effective Time, the Award Agreements are hereby amended as follows:
I. Following the Amendment Effective Time, references to the “Plan” and the “Georgia Primary Bank 2017 Long-Term Incentive Plan” shall refer to the “Georgia Banking Company, Inc. 2017 Long-Term Incentive Plan.”
II. Following the Amendment Effective Time, references to the “Company” and “Primary Bankshares, Inc.” shall refer to “Georgia Banking Company, Inc.”
III. Following the Amendment Effective Time, references to “Common Stock” shall refer to the common stock, $0.01 par value per share, of Georgia Banking Company, Inc.
IV. Clause C of the Award Notice is hereby amended and restated in its entirety to read as follows:
“C. Plan under which granted: Georgia Banking Company, Inc. 2017 Long-Term Incentive Plan”
V. The following sentence is added to the end of Clause D of the Award Notice to read as follows:
“Notwithstanding the foregoing, the number of outstanding Option Shares subject to the unexercised portion of the Option shall be adjusted effective as of the Amendment Effective Time, and shall equal the product (rounded down to the nearest whole number) of (x) the number of unexercised Option Shares subject to the Option (as set forth above) times (y) 0.5870 (the “Exchange Ratio”).”
VI. The following sentence is added to the end of Clause E of the Award Notice to read as follows:
“Notwithstanding the foregoing, the Exercise Price per Option Share shall be adjusted effective as of the Amendment Effective Time, and shall equal the quotient (rounded up to the nearest whole cent) of (A) the Exercise Price per Option Share immediately prior to the Effective Time divided by (B) the Exchange Ratio.”
2
VII. Clause F of the Award Notice is hereby amended and restated in its entirety to read as follows:
| “F. | Option Period: The vested portion of the Option may be exercised only during the Option Period which commences on the Grant Date and ends, generally, on the earlier of (a) the tenth (10th) anniversary of the Grant Date; or (b) the earliest of (i) immediately upon the Optionee’s involuntary Termination of Employment for Cause, (ii) ninety (90) days following the date the Optionee ceases to be an employee of the Company (including any Affiliate) for reasons other than for Cause or due to death or Disability, or (iii) one (1) year following the date the Optionee ceases to be an employee of the Company (including any Affiliate) due to death or Disability. Note that other limitations to exercising the Option, as described in the attached Terms and Conditions, may apply.” |
VIII. Except as specifically amended by this Amendment, all terms and conditions of the Award Agreement shall remain in full force and effect and shall not be modified by this Amendment.
[SIGNATURE PAGE FOLLOWS]
3
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its duly authorized officer as of the date first written above.
| GEORGIA BANKING COMPANY, INC., | |||
| a Georgia Corporation | |||
| By: | /s/ Bartow Morgan, Jr. | ||
| Bartow Morgan, Jr. | |||
| Chief Executive Office | |||
[Signature Page to Amendment to Non-Qualified Stock Option Award Pursuant to the 2017 Long-Term Incentive Plan]
Exhibit 10.26
GEORGIA BANKING COMPANY, INC.
AMENDMENT
TO
NONQUALIFIED STOCK OPTION AWARD
THIS AMENDMENT TO NONQUALIFIED STOCK OPTION AWARD (this “Amendment”) is made as of March 1, 2025, by Georgia Banking Company, Inc. (the “Company”), a successor by merger to Primary Bancshares, Inc. (“Primary”).
WHEREAS, the Company and Primary have entered into that certain Agreement and Plan of Merger, dated October 9, 2024, by and between the Company and Primary, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of January 22, 2025 (collectively, the “Company Merger Agreement”), pursuant to which Primary will merge with and into the Company, with the Company as the surviving corporation (the “Company Merger”);
WHEREAS, immediately following the Company Merger, Primary’s wholly-owned Georgia bank subsidiary, Georgia Primary Bank (“Primary Bank”), will merge with and into the Company’s wholly-owned Georgia bank subsidiary, Georgia Banking Company (the “Bank”), with the Bank as the surviving bank (the “Bank Merger” and together with the Company Merger, the “Mergers”), in accordance with the terms and conditions of that certain Agreement and Plan of Merger, dated as of October 9, 2024, by and between the Bank and Primary Bank (the “Bank Merger Agreement”);
WHEREAS, Primary granted stock options to purchase shares of Primary’s common stock (“Options”) to certain current and former service providers of Primary and/or Primary Bank (the “Optionees”), subject to the terms and conditions of each Optionee’s Nonqualified Stock Option Award (the “Award Notice”) and the Terms and Conditions to the Nonqualified Stock Option Award (“Terms and Conditions” and together with the Award Notice, the “Award Agreements”);
WHEREAS, in connection with the Company Merger and pursuant to the Company Merger Agreement and Section 6 of the Terms and Conditions, certain Optionees elected to convert their outstanding and unexercised Options into options to purchase shares of the Company’s common stock (the “Rollover Options”) equal to the number (rounded down to the nearest whole number) of (x) the number of shares of Primary’s common stock subject to such Option immediately prior to the Effective Time (as defined in the Company Merger Agreement) times (y) 0.5870 (the “Exchange Ratio”), at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Primary’s common stock of such Option immediately prior to the Effective Time divided by (B) the Exchange Ratio(the “Option Conversion”);
WHEREAS, pursuant to the Company Merger Agreement and the terms and conditions of the applicable Award Agreements, the Rollover Options will be fully vested and exercisable, as of the Effective Time;
WHEREAS, pursuant to the Merger Agreement, the Company has assumed the Rollover Options and the Award Agreements governing the Rollover Options granted thereunder, as of the Effective Time, with the modifications described above;
1
WHEREAS, as of the Effective Time (the “Amendment Effective Time”), each Award Agreement, set forth on Exhibit A is hereby amended to reflect the Option Conversion and the assumption by the Company of the Rollover Options and the Plan under which the Options were granted, with such modifications as may be necessary to reflect the Mergers;
WHEREAS, following the Amendment Effective Time, the Rollover Options shall continue to be governed by their terms as in effect prior to the Closing Date, except as amended by this Amendment; and
WHEREAS, capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings given to such terms in the Award Agreement.
NOW, THEREFORE, effective as of the Amendment Effective Time, the Award Agreements are hereby amended as follows:
I. Following the Amendment Effective Time, references to the “Company” and “Primary Bankshares, Inc.” shall refer to “Georgia Banking Company, Inc.”
II. Following the Amendment Effective Time, references to “Common Stock” shall refer to the common stock, $0.01 par value per share, of Georgia Banking Company, Inc.
III. The following sentence is added to the end of Clause D of the Award Notice to read as follows:
“Notwithstanding the foregoing, the number of outstanding Option Shares subject to the unexercised portion of the Option shall be adjusted effective as of the Amendment Effective Time, and shall equal the product (rounded down to the nearest whole number) of (x) the number of unexercised Option Shares subject to the Option (as set forth above) times (y) 0.5870 (the “Exchange Ratio”).”
IV. The following sentence is added to the end of Clause E of the Award Notice to read as follows:
“Notwithstanding the foregoing, the Exercise Price per Option Share shall be adjusted effective as of the Amendment Effective Time, and shall equal the quotient (rounded up to the nearest whole cent) of (A) the Exercise Price per Option Share immediately prior to the Effective Time divided by (B) the Exchange Ratio.”
V. Except as specifically amended by this Amendment, all terms and conditions of the Award Agreement shall remain in full force and effect and shall not be modified by this Amendment.
[SIGNATURE PAGE FOLLOWS]
2
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its duly authorized officer as of the date first written above.
| GEORGIA BANKING COMPANY, INC., | |||
| a Georgia Corporation | |||
| By: | /s/ Bartow Morgan, Jr. | ||
| Bartow Morgan, Jr. | |||
| Chief Executive Officer | |||
[Signature Page to Amendment to Non-Qualified Stock Option Award]
Exhibit 10.27
CERTAIN CONFIDENTIAL INFORMATION (MARKED
BY BRACKETS AS “[***]”) HAS
BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) IS
THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR
CONFIDENTIAL.
SUBORDINATED NOTE PURCHASE AGREEMENT
This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of July 25, 2025, and is made by and among Tandem Bancorp, Inc., a Georgia corporation (the “Company”), and the purchasers of the Subordinated Notes (as defined herein) identified on the signature pages hereto (each a “Purchaser” and collectively, the “Purchasers”).
RECITALS
WHEREAS, the Company is offering up to $12,000,000 in aggregate principal amount of Subordinated Notes, which aggregate amount is intended to be eligible to qualify as Tier 2 Capital (as defined herein);
WHEREAS, the Company has engaged Performance Trust Capital Partners, LLC as its exclusive placement agent (“Placement Agent”) for the offering of the Subordinated Notes;
WHEREAS, each of the Purchasers is an institutional “accredited investor” as such term is defined in Rule 501(a)(1), (2), (3), (7), (8) or (9) of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) or a QIB (as defined herein);
WHEREAS, the offer and sale of the Subordinated Notes by the Company is being made in reliance upon the exemptions from registration available under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D; and
WHEREAS, each Purchaser is willing to purchase from the Company a Subordinated Note in the principal amount set forth on such Purchaser’s respective signature page hereto (the “Subordinated Note Amount”) in accordance with the terms, subject to the conditions and in reliance on, the recitals, representations, warranties, covenants and agreements set forth herein and in the Subordinated Notes.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. DEFINITIONS.
1.1 Defined Terms. The following capitalized terms used in this Agreement and in the Subordinated Notes have the meanings defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement may be defined in such sections.
“Affiliate(s)” means, with respect to any Person (as defined herein), such Person’s immediate family members, partners, members, managers, or parent and subsidiary corporations, and any other Person directly or indirectly controlling, controlled by, or under common control with said Person and its respective Affiliates.
“Agreement” has the meaning set forth in the preamble hereto.
“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Subordinated Note represented by a global certificate, the rules and procedures of DTC (as defined below) that apply to such transfer or exchange.
“Articles” means the Articles of Incorporation of the Company, as in effect on the Closing Date.
“Bank” means Tandem Bank, a Georgia state-chartered bank and wholly owned subsidiary of the Company.
“Board” means the board of directors of the Company.
“Business Day” means any day other than a Saturday, Sunday or any other day on which banking institutions in the State of Georgia are permitted or required by any applicable law or executive order to close.
“Bylaws” means the Bylaws of the Company, as in effect on the Closing Date.
“Closing” has the meaning set forth in Section 2.5.
“Closing Date” means July 25, 2025.
“Common Stock” has the meaning set forth in Section 4.1.2.
“Company” has the meaning set forth in the preamble hereto and shall include any successors to the Company.
“Company Covered Person” has the meaning set forth in Section 4.2.4.
“Company’s Reports” means (i) the Company’s audited consolidated financial statements for the year ended December 31, 2024; (ii) the Company unaudited consolidated financial statements for the three-months ended March 31, 2025; and (iii) the Consolidated Reports of Condition and Income of the Bank for the quarter ended March 31, 2025, as filed with the FDIC.
“Data Room” means the electronic data room established by the Company in connection with the transactions contemplated by this Agreement.
“Disbursement” has the meaning set forth in Section 3.1.
“Disqualification Event” has the meaning set forth in Section 4.2.4.
“DTC” means The Depository Trust Company.
“Equity Interest” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person which is not a corporation, and any and all warrants, options or other rights to purchase any of the foregoing.
“Event of Default” has the meaning set forth in the Subordinated Notes.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
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“FDIC” means the Federal Deposit Insurance Corporation.
“FRB” means the Board of Governors of the Federal Reserve System.
“GAAP” means generally accepted accounting principles in effect from time to time in the United States of America.
“Global Note” has the meaning set forth in Section 3.1.
“Governmental Agency(ies)” means, individually or collectively, any federal, state, county or local governmental body, department, commission, board, regulatory authority or agency (including, without limitation, each applicable Regulatory Agency (as defined herein)) with jurisdiction over the Company or a Subsidiary (as defined herein) of the Company.
“Governmental Licenses” has the meaning set forth in Section 4.3.
“Hazardous Materials” means flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous Materials Laws and/or other applicable environmental laws, ordinances or regulations.
“Hazardous Materials Laws” means any laws, regulations, orders, permits, licenses or requirements pertaining to the protection, preservation, conservation or regulation of the environment, including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of other jurisdictions or orders and regulations.
“Indebtedness” means: (i) all items arising from the borrowing of money that, according to GAAP, would be included in determining total liabilities as shown on the consolidated balance sheet of the Company; and (ii) all obligations secured by any lien in property (real, personal, or mixed) owned by the Company or any Subsidiary of the Company whether or not such obligations shall have been assumed; provided, however, Indebtedness shall not include deposits or other indebtedness created, incurred or maintained in the ordinary course of the Company’s or the Bank’s business (including, without limitation, federal funds purchased, advances from any Federal Home Loan Bank, secured deposits of municipalities, letters of credit issued by the Company or the Bank or any other Subsidiary of the Company or the Bank and repurchase arrangements, and interest rate swaps) and consistent with customary banking practices and applicable laws and regulations.
“Leases” means all leases, licenses or other documents providing for the use or occupancy of any portion of any Property (as defined herein), including all amendments, extensions, renewals, supplements, modifications, sublets and assignments thereof and all separate letters or separate agreements relating thereto.
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“Material Adverse Effect” means, with respect to any Person, any change or effect that (i) is or would be reasonably likely to be material and adverse to the financial condition, results of operations or business or assets of such Person and its Subsidiaries taken as a whole, or (ii) would materially impair the ability of such Person to perform its respective obligations under any of the Transaction Documents (as defined herein), or otherwise materially impede the consummation of the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Agencies, (2) changes in GAAP or regulatory accounting requirements applicable to financial institutions and their holding companies generally, (3) changes after the date of this Agreement in general economic or capital market conditions affecting financial institutions or their market prices generally and not specifically related to the Company, the Bank or the Purchasers, (4) pandemics, epidemics, disease outbreaks, and other public health emergencies, (5) direct effects of compliance with this Agreement on the operating performance of the Company, the Bank or the Purchasers, including expenses incurred by the Company, the Bank or the Purchasers in consummating the transactions contemplated by this Agreement, and (6) the effects of any action or omission taken by the Company with the prior written consent of the Purchasers, and vice versa, or as otherwise contemplated by this Agreement and the Subordinated Notes.
“Maturity Date” means July 30, 2035.
“Paying Agency Agreement” means the Paying Agency and Registrar Agreement, dated as of July 25, 2025, between the Company and the Paying Agent.
“Paying Agent” means UMB, National Bank, as paying agent and registrar under the Paying Agency Agreement, or any successor in accordance with the applicable provisions of the Paying Agency Agreement.
“Person” means an individual, a corporation (whether or not for profit), a partnership (general or limited), a limited liability company, a joint venture, an association, a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental Agency) or any other entity or organization.
“Placement Agent” has the meaning set forth in the Recitals.
“Property” means any real property owned or leased by the Company or any Affiliate or Subsidiary of the Company.
“Purchaser” or “Purchasers” has the meaning set forth in the preamble hereto.
“QIB” means a Qualified Institutional Buyer within the meaning of Rule 144A under the Securities Act.
“Regulation D” has the meaning set forth in the Recitals.
“Regulatory Agency” means any federal or state agency charged with the supervision or regulation of depository institutions or holding companies of depository institutions, or engaged in the insurance of depository institution deposits, or any court, administrative agency or commission or other authority, body or agency having supervisory or regulatory authority with respect to the Company, the Bank or any of their Subsidiaries.
“Secondary Market Transaction” has the meaning set forth in Section 5.5.
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“Securities Act” has the meaning set forth in the Recitals.
“Settlement Agent” means UMB, National Bank, as settlement agent under the Settlement Agent Agreement, or any successor in accordance with the applicable provisions of the Settlement Agent Agreement.
“Settlement Agent Agreement” means the Settlement Agent Services Agreement, dated as of July 25, 2025, between the Company and the Settlement Agent.
“Subordinated Note” means the Subordinated Note in the form attached as Exhibit A hereto, as amended, restated, supplemented or modified from time to time, and each Subordinated Note delivered in substitution or exchange for such Subordinated Note (any one or more Subordinated Notes into which this Subordinated Note may be subdivided, exchanged, or substituted in the future referred to, collectively, with this Subordinated Note, as the “Subordinated Notes”).
“Subordinated Note Amount” has the meaning set forth in the Recitals.
“Subsidiary” or “Subsidiaries” means with respect to any Person, any corporation or other entity a majority of the outstanding Equity Interests of which is directly or indirectly owned by such Person.
“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R. Part 217, 12 C.F.R. Part 225 and 12 C.F.R. 250, as amended, modified and supplemented and in effect from time to time or any replacement thereof.
“Transaction Documents” has the meaning set forth in Section 3.2.1.1.
1.2 Interpretations. The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined. The words “hereof,” “herein” and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “including” when used in this Agreement without the phrase “without limitation,” shall mean “including, without limitation.” All references to time of day herein are references to Eastern Time unless otherwise specifically provided. All references to this Agreement or the Subordinated Notes shall be deemed to be to such documents as amended, modified or restated from time to time. With respect to any reference in this Agreement to any defined term, (i) if such defined term refers to a Person, then it shall also mean all heirs, legal representatives and permitted successors and assigns of such Person, and (ii) if such defined term refers to a document, instrument or agreement, then it shall also include any amendment, replacement, extension or other modification thereof.
1.3 Exhibits Incorporated. All Exhibits attached hereto are hereby incorporated into this Agreement.
2. SUBORDINATED DEBT.
2.1 Certain Terms. Subject to the terms and conditions herein contained and on the Closing Date, the Company hereby agrees to issue and sell to the Purchasers, severally and not jointly, Subordinated Notes in an aggregate principal amount equal to the aggregate of each Purchaser’s Subordinated Note Amounts. The Purchasers, severally and not jointly, each agree to purchase the Subordinated Notes in an amount equal to such Purchaser’s Subordinated Note Amount from the Company on the Closing Date in accordance with the terms of, and subject to the conditions and provisions set forth in, this Agreement and the Subordinated Notes. The Subordinated Note Amounts shall be disbursed in accordance with Section 3.1. The Subordinated Notes shall bear interest per annum as set forth in the Subordinated Notes. The unpaid principal balance of the Subordinated Notes plus all accrued but unpaid interest thereon shall be due and payable on the Maturity Date, or such earlier date on which such amount shall become due and payable on account of (i) acceleration by the Purchasers in accordance with the terms of the Subordinated Notes and this Agreement or (ii) the Company’s delivery of a notice of redemption or repayment in accordance with the terms of the Subordinated Notes. In the event of an irreconcilable conflict between this Agreement and the Subordinated Notes with respect to the terms of the Subordinated Notes, the Subordinated Notes will govern.
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2.2 Subordination. The Subordinated Notes shall be subordinated in accordance with the subordination provisions set forth therein.
2.3 Maturity Date. On the Maturity Date, the Company shall pay all sums due and owing under this Agreement and the Subordinated Notes in full. The Company acknowledges and agrees that the Purchasers have not made any commitments, either express or implied, to extend the terms of the Subordinated Notes past their Maturity Date and shall not extend such terms beyond the Maturity Date unless the Company and the Purchasers hereafter specifically otherwise agree in writing.
2.4 Unsecured Obligations. The obligations of the Company to the Purchasers under the Subordinated Notes shall be unsecured and not covered by a guarantee of the Company or any Affiliate of the Company.
2.5 The Closing. The closing of the sale and purchase of the Subordinated Notes (the “Closing”) shall occur remotely via the electronic or other exchange of documents and signature pages, at 10:00 a.m. Eastern Time on the Closing Date, or at such other place or time or on such other date as the parties hereto may agree.
2.6 Payments. The Company agrees that matters concerning payments and application of payments shall be as set forth in this Agreement and in the Subordinated Notes.
2.7 No Right of Offset. Each Purchaser hereby expressly waives any right of offset it may have against the Company or any of its Subsidiaries.
2.8 Use of Proceeds. The Company shall use the net proceeds from the sale of Subordinated Notes for organic growth, general corporate purposes, and potential future strategic opportunities.
3. DISBURSEMENT.
3.1 Disbursement. On the Closing Date, assuming all of the terms and conditions set forth in Section 3.2 have been satisfied by the Company and the Company has executed and delivered to each of the Purchasers this Agreement and any other related documents in form and substance reasonably satisfactory to the Purchasers, each Purchaser shall disburse in immediately available funds the Subordinated Note Amount set forth on each Purchaser’s respective signature page hereto to the Company in exchange for either (a) for each Purchaser who is a QIB, an electronic securities entitlement through the facilities of DTC in accordance with the Applicable Procedures with a principal amount equal to such Purchaser’s Subordinated Note Amount, or (b) for each Purchaser who is not a QIB, a physical Subordinated Note with a principal amount equal to such Purchaser’s Subordinated Note Amount (the “Disbursement”). The Company will deliver to the Paying Agent a global certificate representing the Subordinated Notes (the “Global Note”), registered in the name of Cede & Co., as nominee for DTC, representing all Subordinated Note Amounts settled through the facilities of DTC. The Company will deliver to each Purchaser who is not a QIB a physical Subordinated Note in definitive form (or evidence of the same with the original physical Subordinated Note to be delivered by the Company by overnight delivery on the next Business Day in accordance with the delivery instructions of such Purchaser), registered in such names and denominations as such Purchasers may reasonably request.
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3.2 Conditions Precedent to Disbursement.
3.2.1 Conditions to the Purchasers’ Obligation. The obligation of each Purchaser to consummate the purchase of the Subordinated Notes to be purchased by such Purchaser at Closing and to effect the Disbursement is subject to delivery by or at the direction of the Company to such Purchaser (or, with respect to the Settlement Agent Agreement and the Paying Agency Agreement, to the Settlement Agent and the Paying Agent, respectively) of each of the following (or written waiver by such Purchaser prior to the Closing of such delivery):
3.2.1.1 Transaction Documents. This Agreement, the Settlement Agent Agreement, the Paying Agency Agreement and the Global Note or such Purchaser’s physical Subordinated Note (collectively, the “Transaction Documents”), each duly authorized and executed by the Company.
3.2.1.2 Authority Documents.
(a) A copy, certified by the Secretary or Assistant Secretary of the Company, of the Articles of the Company;
(b) A certificate of existence of the Company issued by the Georgia Secretary of State;
(c) A copy, certified by the Secretary or Assistant Secretary of the Company, of the Bylaws of the Company;
(d) A copy, certified by the Secretary or Assistant Secretary of the Company, of the resolutions of the Board, and any committee thereof, authorizing the issuance of the Subordinated Notes and the execution, delivery and performance of the Transaction Documents;
(e) An incumbency certificate of the Secretary or Assistant Secretary of the Company certifying the names of the officer or officers of the Company authorized to sign the Transaction Documents and the other documents provided for in this Agreement;
(f) The opinion of Troutman Pepper Locke LLP, counsel to the Company, dated as of the Closing Date, substantially in the form set forth at Exhibit B attached hereto addressed to the Purchasers and the Placement Agent;
(g) Evidence of the Company’s status as a registered bank holding company under the Bank Holding Company Act of 1956, as amended; and
(h) Evidence of the Bank’s status as an insured depository institution under the applicable provisions of the Federal Deposit Insurance Act.
3.2.1.3 Other Documents. Such other certificates, schedules, resolutions, notes and/or other documents which are provided for hereunder or as a Purchaser may reasonably request.
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3.2.2 Conditions to the Company’s Obligation.
3.2.2.1 With respect to a given Purchaser, the obligation of the Company to consummate the sale of the Subordinated Notes and to effect the Closing is subject to delivery by or at the direction of such Purchaser to the Company of this Agreement, duly authorized and executed by such Purchaser and the Company’s receipt of the Subordinated Note Amount set forth on such Purchaser’s signature page hereto.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser as follows:
4.1 Organization and Authority.
4.1.1 Organization Matters of the Company and Its Subsidiaries.
4.1.1.1 The Company is a duly organized corporation, is validly existing and in good standing under the laws of the State of Georgia and has all requisite corporate power and authority to conduct its business and activities as presently conducted, to own its properties, and to perform its obligations under the Transaction Documents. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect with respect to the Company. The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.
4.1.1.2 The entities set forth on Schedule A attached hereto are the only direct or indirect Subsidiaries of the Company. Other than the Bank, the Company has no Subsidiaries. All of the issued and outstanding shares of capital stock or other equity interests in the Bank have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company, directly, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim; none of the outstanding shares of capital stock of, or other Equity Interests in, the Bank were issued in violation of the preemptive or similar rights of any security holder of the Bank or any other entity.
4.1.1.3 The Bank is a Georgia state-chartered bank. The deposit accounts of the Bank are insured by the FDIC up to applicable limits. The Bank has not received any notice or other information indicating that the Bank is not an “insured depository institution” as defined in 12 U.S.C. Section 1813, nor has any event occurred which could reasonably be expected to adversely affect the status of the Bank as an FDIC-insured institution. The Bank has the requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as presently conducted.
4.1.1.4 The Company and its Subsidiaries have made payment of all franchise and similar taxes in all of the respective jurisdictions in which they are incorporated, chartered or qualified, except for such taxes (i) where the failure to pay such taxes will not have a Material Adverse Effect on the Company or its Subsidiaries, (ii) the validity of which is being contested in good faith, or (iii) for which proper reserves have been set aside on the books of the Company or any applicable Subsidiary of the Company, as the case may be.
4.1.2 Capital Stock and Related Matters. The Articles of the Company authorize the Company to issue up to (i) 20,000,000 shares of common stock, $1.00 par value per share (“Common Stock”) and (ii) 1,000,000 shares of preferred stock, $1.00 par value per share. As of the date hereof, there are 2,396,734 shares of the Company’s common stock issued and outstanding and no shares of the Company’s preferred stock issued and outstanding. All of the outstanding capital stock of the Company has been duly authorized and validly issued and is fully paid and non-assessable. There are, as of the date hereof, no outstanding options, rights, warrants or other agreements or instruments obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of the Company or obligating the Company to grant, extend or enter into any such agreement or commitment to any Person other than the Company, except (i) pursuant to the Company’s equity incentive plans duly adopted by the Company’s Board and (ii) the warrants issued in connection with the opening of the Bank to purchase an aggregate of 173,000 shares of Common Stock, with an exercise price of $10.00 per share, expiring November 1, 2029.
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4.2 No Impediment to Transactions.
4.2.1 Transaction is Legal and Authorized. The issuance of the Subordinated Notes, the borrowing of the aggregate of the Subordinated Note Amount, the use of proceeds, the execution and delivery of the Transaction Documents and compliance by the Company with all of the provisions of the Transaction Documents are within the corporate and other powers of the Company.
4.2.2 Agreement, Settlement Agent Agreement and Paying Agency Agreement. This Agreement, the Settlement Agent Agreement and the Paying Agency Agreement have been duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery by the other parties thereto, constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.
4.2.3 Subordinated Notes. The Subordinated Notes have been duly authorized by the Company and when executed by the Company and issued, delivered to and paid for by the Purchasers in accordance with the terms of the Agreement, will have been duly executed, authenticated, issued and delivered, and will constitute legal, valid and binding obligations of the Company and enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.
4.2.4 Exemption from Registration. Neither the Company, nor any of its Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Subordinated Notes. Assuming the accuracy of the representations and warranties of each Purchaser set forth in this Agreement, the Subordinated Notes will be issued in a transaction exempt from the registration requirements of the Securities Act. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge, any Person described in Rule 506(d)(1) (each, a “Company Covered Person”). The Company has exercised reasonable care to determine whether any Company Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e).
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4.2.5 No Defaults or Restrictions. Neither the execution and delivery of the Transaction Documents by the Company nor compliance by the Company with their respective terms and conditions will (whether with or without the giving of notice or lapse of time or both) (i) violate, conflict with or result in a breach of, or constitute a default under: (1) the Articles or Bylaws; (2) any of the terms, obligations, covenants, conditions or provisions of any corporate restriction or of any contract, agreement, indenture, note, mortgage, deed of trust, pledge, bank loan or credit agreement, or any other agreement or instrument to which the Company or Bank, as applicable, is now a party or by which it or any of its properties may be bound or affected; (3) any judgment, order, writ, injunction, decree or demand of any court, arbitrator, grand jury, or Governmental Agency applicable to the Company or the Bank; or (4) any statute, rule or regulation applicable to the Company, except, in the case of items (2), (3) or (4), for such violations and conflicts that would not, singularly or in the aggregate, result in a Material Adverse Effect on the Company and its Subsidiaries taken as a whole, or (ii) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any property or asset of the Company. Neither the Company nor the Bank is in default in the performance, observance or fulfillment of any of the terms, obligations, covenants, conditions or provisions contained in any indenture or other agreement creating, evidencing or securing Indebtedness of any kind or pursuant to which any such Indebtedness is issued, or any other agreement or instrument to which the Company or the Bank, as applicable, is a party or by which the Company or the Bank, as applicable, or any of its properties may be bound or affected, except, in each case, for defaults that would not, singularly or in the aggregate, result in a Material Adverse Effect on the Company.
4.2.6 Governmental Consent. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained by the Company that have not been obtained, and no registrations or declarations are required to be filed by the Company that have not been filed in connection with, or, in contemplation of, the execution and delivery of, and performance under, the Transaction Documents, except for applicable requirements, if any, of the Securities Act, the Exchange Act or state securities laws or “blue sky” laws of the various states and any applicable federal or state banking laws and regulations customarily made or obtained following Closing. Prior to the Closing Date, the Company and the Bank have received from the Regulatory Agencies any required approval of, or consent or nonobjection to, the issuance and sale of the Subordinated Notes contemplated by this Agreement.
4.3 Possession of Licenses and Permits. The Company and its Subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate Governmental Agencies necessary to conduct the business now operated by them, except where the failure to possess such Governmental Licenses would not, singularly or in the aggregate, have a Material Adverse Effect on the Company or such applicable Subsidiary. The Company and each Subsidiary of the Company is in compliance with the terms and conditions of all such Governmental Licenses, except where the failure to so comply would not, individually or in the aggregate, have a Material Adverse Effect on the Company or such applicable Subsidiary of the Company. All such Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect on the Company or such applicable Subsidiary of the Company. Neither the Company nor any Subsidiary of the Company has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses.
4.4 Financial Condition.
4.4.1 Company Financial Statements. The financial statements of the Company included in the Company’s Reports (including the related notes, where applicable), which have been made available to the Purchasers (i) have been prepared from, and are in accordance with, the books and records of the Company; (ii) fairly present in all material respects the results of operations, cash flows, changes in stockholders’ equity and financial position of the Company and its consolidated Subsidiaries, for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount), as applicable; (iii) complied as to form, as of their respective dates of filing in all material respects with applicable accounting and banking requirements as applicable, with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except, in each case, (x) as indicated in such statements or in the notes thereto, (y) for any statement therein or omission therefrom that was corrected, amended or supplemented or otherwise disclosed or updated in a subsequent Company’s Report, and (z) to the extent that any unaudited interim financial statements do not contain the footnotes required by GAAP, and were or are subject to normal and recurring year-end adjustments, which were not or are not expected to be material in amount, either individually or in the aggregate. The books and records of the Company have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements. The Company does not have any material liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved against on the consolidated balance sheet of the Company contained in the Company’s Reports for the Company’s most recently completed quarterly or annual fiscal period since the end of such quarterly or annual fiscal period, as applicable, and for liabilities incurred in the ordinary course of business consistent with past practice or in connection with this Agreement and the transactions contemplated hereby.
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4.4.2 Absence of Default. Since the end of the Company’s last fiscal year ended December 31, 2024, no event has occurred which either of itself or with the lapse of time or the giving of notice or both, would give any creditor of the Company the right to accelerate the maturity of any material Indebtedness of the Company. The Company is not in default under any Lease, agreement or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, except for such default(s) as would not result in a Material Adverse Effect on the Company.
4.4.3 Solvency. After giving effect to the consummation of the transactions contemplated by this Agreement, the Company has capital sufficient to carry on its business and transactions and is solvent and able to pay its debts as they mature. No transfer of property is being made and no Indebtedness is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company or any Subsidiary of the Company.
4.4.4 Ownership of Property. The Company and each of its Subsidiaries have good and marketable title as to all real property owned by them and good title to all assets and properties owned by the Company and such Subsidiaries in the conduct of their businesses, whether such assets and properties are real or personal, tangible or intangible, including assets and property reflected in the most recent balance sheet contained in the Company’s Reports or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of in the ordinary course of business, since the date of such balance sheet), subject to no encumbrances, liens, mortgages, security interests or pledges, except (i) those items which secure liabilities for public or statutory obligations or any discount with, borrowing from or other obligations to the Federal Home Loan Bank or FRB, inter-bank credit facilities, reverse repurchase agreements or any transaction by the Bank acting in a fiduciary capacity, (ii) statutory liens for amounts not yet delinquent or which are being contested in good faith and (iii) such as do not, individually or in the aggregate, materially and adversely affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company or any of its Subsidiaries. The Company and each of its Subsidiaries, as lessee, have the right under valid and existing Leases of real and personal properties that are material to the Company or such Subsidiary, as applicable, in the conduct of their business to occupy or use all such properties as presently occupied and used by them. Such existing Leases and commitments to Lease constitute or will constitute operating Leases for both tax and financial accounting purposes except as otherwise disclosed in the Company’s Reports and the Lease expense and minimum rental commitments with respect to such Leases and Lease commitments are as disclosed in all material respects in the Company’s Reports.
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4.5 No Material Adverse Change. Since the end of the Company’s fiscal year ended December 31, 2024, there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
4.6 Legal Matters.
4.6.1 Compliance with Law. The Company and each of its Subsidiaries (i) has complied with and (ii) is not under investigation with respect to, and, to the Company’s knowledge, has not been threatened to be charged with or given any notice of any material violation of, any applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any Governmental Agency, having jurisdiction over the conduct of its business or the ownership of its properties, except where any such failure to comply or violation would not reasonably be expected to have a Material Adverse Effect on the Company. The Company and each of its Subsidiaries is in compliance with, and at all times prior to the date hereof has been in compliance with its own privacy policies and written commitments to customers, consumers and employees, concerning data protection, the privacy and security of personal data, and the nonpublic personal information of its customers, consumers and employees, in each case except where any such failure to comply would not result, individually or in the aggregate, in a Material Adverse Effect on the Company. At no time during the two years prior to the date hereof has the Company or any of its Subsidiaries received any written notice asserting any violations of any of the foregoing, except for any violations that have not had and are not reasonably expected to have a Material Adverse Effect. Notwithstanding the foregoing, nothing in this Section 4.6.1 or otherwise in this Agreement shall require the Company or any of its Subsidiaries to disclose any confidential supervisory information of the Company or any of its Subsidiaries.
4.6.2 Regulatory Enforcement Actions. The Company, the Bank and the Company’s and the Bank’s other Subsidiaries, if any, are in compliance in all material respects with all laws administered by and regulations of any Governmental Agency applicable to it or to them, except where the failure to comply would not have a Material Adverse Effect on the Company or the applicable Subsidiary. None of the Company, the Bank, the Company’s or the Bank’s Subsidiaries nor any of their officers or directors is now operating under any restrictions, agreements, memoranda, commitment letter, supervisory letter or similar regulatory correspondence, or other commitments (other than restrictions of general application) imposed by any Governmental Agency, nor are, to the Company’s knowledge any such restrictions threatened, or any agreements, memoranda or commitments being sought by any Governmental Agency. To the Company’s knowledge, no legal or regulatory violations previously identified by, or penalties or other remedial action previously imposed by, any Governmental Agency remain unresolved.
4.6.3 Pending Litigation. There are no actions, suits, proceedings or written agreements pending, or, to the Company’s knowledge, threatened or proposed, against the Company or any of its Subsidiaries at law or in equity or before or by any Governmental Agency that would reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, or materially and or adversely affect the issuance or payment of the Subordinated Notes; and neither the Company nor any of its Subsidiaries is a party to or named as subject to the provisions of any order, writ, injunction, or decree of, or any written agreement with, any court, commission, board or agency, domestic or foreign, that either separately or in the aggregate, could reasonably be expected to result in a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
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4.6.4 Environmental. No Property is or, to the Company’s knowledge, has been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or presence of any Hazardous Materials and neither the Company nor any of its Subsidiaries has engaged in such activities. There are no claims or actions pending or, to the Company’s knowledge, threatened against the Company or any of its Subsidiaries by any Governmental Agency or by any other Person relating to any Hazardous Materials or pursuant to any Hazardous Materials Laws.
4.6.5 Brokerage Commissions. Except for commissions paid or payable to the Placement Agent, neither the Company nor any Affiliate of the Company is obligated to pay any brokerage commission or finder’s fee to any Person in connection with the transactions contemplated by this Agreement.
4.6.6 Investment Company Act. Neither the Company nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
4.7 No Misstatement or Omission. None of the representations or warranties made by the Company in this Agreement or in any certificate, or other document delivered to the Purchasers by or on behalf of the Company pursuant to or in connection with this Agreement, when taken together as a whole with the Company’s Reports, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances in which they were made.
4.8 Internal Accounting Controls. The Company and the Bank have established and maintain a system of internal control over financial reporting that pertains to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the Company’s assets (on a consolidated basis), provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s and the Bank’s receipts and expenditures and receipts and expenditures of each of the Company’s other Subsidiaries are being made only in accordance with authorizations of the Company’s management and Board, and provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company (on a consolidated basis) that could have a Material Adverse Effect on the Company. Such internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP. Since the conclusion of the Company’s last completed fiscal year there has not been and there currently is not (i) any significant deficiency or material weakness in the design or operation of its internal control over financial reporting which is reasonably likely to adversely affect its ability to record, process, summarize and report financial information, or (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s or the Bank’s internal control over financial reporting. The Company (A) has implemented and maintains disclosure controls and procedures reasonably designed and maintained to ensure that material information relating to the Company is made known to the Chief Executive Officer and the Chief Financial Officer of the Company by others within the Company and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Board any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting. Such disclosure controls and procedures are effective for the purposes for which they were established.
4.9 Tax Matters. The Company, the Bank and each other Subsidiary of the Company other than the Bank have (i) filed all material foreign, U.S. federal, state and local tax returns, information returns and similar reports that are required to be filed, and all such tax returns are true, correct and complete in all material respects, and (ii) paid all material taxes required to be paid by it and any other material assessment, fine or penalty levied against it other than taxes (x) currently payable without penalty or interest, or (y) being contested in good faith by appropriate proceedings.
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4.10 Exempt Offering. Assuming the accuracy of each Purchaser’s representations and warranties set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Subordinated Notes by the Company to the Purchasers.
4.11 Representations and Warranties Generally. The representations and warranties of the Company set forth in this Agreement that do not contain a “Material Adverse Effect” qualification or other express materiality or similar qualification are true and correct as of the date hereof, except where failure of such representations and warranties to be so true and correct does not have a Material Adverse Effect; provided, however, that any such representations and warranties made as of a specified date need only be true and correct as of such date. The representations and warranties of the Company set forth in this Agreement that contain a “Material Adverse Effect” qualification or other express materiality or similar qualification, are true and correct as of the date hereof; provided, however, that any such representations and warranties made as of a specified date need only be true and correct as of such date.
5. GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.
The Company hereby further covenants and agrees with each Purchaser as follows:
5.1 Compliance with Transaction Documents. The Company shall comply with, observe and timely perform each and every one of the covenants, agreements and obligations under the Transaction Documents.
5.2 Affiliate Transactions. The Company shall not itself, nor shall it cause, permit or allow any of its Subsidiaries to enter into any transaction, including the purchase, sale or exchange of property or the rendering of any service, with any Affiliate of the Company except in the ordinary course of business and pursuant to the reasonable requirements of the Company’s or such Affiliate’s business and upon terms consistent with applicable laws and regulations and reasonably found by the appropriate board(s) of directors to be fair and reasonable and no less favorable to the Company or such Affiliate than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate.
5.3 Compliance with Laws.
5.3.1 Generally. The Company shall comply and cause the Bank and each of its other Subsidiaries to comply in all material respects with all applicable statutes, laws, rules, regulations, orders and restrictions in respect of the conduct of its business and the ownership of its properties, except, in each case, where such noncompliance would not reasonably be expected to have a Material Adverse Effect on the Company.
5.3.2 Regulated Activities. The Company shall not itself, nor shall it cause, permit or allow the Bank or any other of its Subsidiaries to (i) engage in any business or activity not permitted by all applicable laws and regulations, except where such business or activity (or the effect thereof if such laws and regulations were enforced) would not reasonably be expected to have a Material Adverse Effect on the Company, the Bank and/or such of its Subsidiaries or (ii) make any loan or advance secured by the capital stock of another bank or depository institution, or acquire the capital stock, assets or obligations of or any interest in another bank or depository institution, in each case other than in accordance with applicable laws and regulations and safe and sound banking practices.
5.3.3 Taxes. The Company shall and shall cause the Bank and any other of its Subsidiaries to promptly pay and discharge all taxes, assessments and other governmental charges imposed upon the Company, the Bank or any other of its Subsidiaries or upon the income, profits, or property of the Company or any Subsidiary of the Company and all claims for labor, material or supplies which, if unpaid, might by law become a lien or charge upon the property of the Company, the Bank or any other of its Subsidiaries. Notwithstanding the foregoing, none of the Company, the Bank or any other of its Subsidiaries shall be required to pay any such tax, assessment, charge or claim, so long as the validity thereof shall be contested in good faith by appropriate proceedings, and appropriate reserves therefor shall be maintained on the books of the Company, the Bank or such other Subsidiary, as the case may be.
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5.3.4 Corporate Existence. The Company shall do or cause to be done all things necessary to maintain, preserve and renew its corporate existence and that of the Bank and the Company’s other Subsidiaries and its and their rights and franchises, and comply in all material respects with all related laws applicable to the Company, the Bank or the Company’s other Subsidiaries; provided, however, (i) that the Company will not be required to preserve the existence (corporate or other) or rights of any of its Subsidiaries (other than the Bank) if the Board determines that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and that the loss thereof will not be disadvantageous in any material respect to the Noteholders (as defined in the Subordinated Notes), and (ii) that the Company may consummate a merger in which (A) the Company is the surviving entity or (B) if the Company is not the surviving entity, the surviving entity assumes, by operation of law or otherwise, all of the obligations of the Company under the Subordinated Notes.
5.3.5 Dividends, Payments, and Guarantees During Event of Default. Upon the occurrence of an Event of Default (as defined under the Subordinated Notes), until such Event of Default is cured by the Company or waived by the Noteholders in accordance with Section 17 (Waiver and Consent) of the Subordinated Notes and except as required by any federal or state Governmental Agency, the Company shall not (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock; (b) make any payment of principal of, or interest or premium, if any, on, or repay, repurchase or redeem any of the Company’s Indebtedness that ranks equal with or junior to the Subordinated Notes; or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of the Company’s common stock; (ii) any declaration of a non-cash dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of the Company’s capital stock or the exchange or conversion of one class or series of the Company’s capital stock for another class or series of the Company’s capital stock; (iv) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of the Company’s common stock related to or from any benefit plans for the Company’s directors, officers or employees or any of the Company’s dividend reinvestment plans.
5.3.6 Tier 2 Capital. If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, the Company will immediately notify the Noteholders, and thereafter the Company and the Noteholders will work together in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to cause the same to be eligible to qualify as Tier 2 Capital; provided, however, that nothing contained in this Agreement shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event as described in the Subordinated Notes.
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5.4 Absence of Control. It is the intent of the parties to this Agreement that in no event shall the Purchasers, by reason of any of the Transaction Documents, be deemed to control, directly or indirectly, the Company, and the Purchasers shall not exercise, or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of the Company.
5.5 Secondary Market Transactions. To the extent and so long as not in violation of Section 6.4 hereof, each Purchaser shall have the right at any time and from time to time to securitize its Subordinated Note(s) or any portion thereof in a single asset securitization or a pooled loan securitization of rated single or multi-class securities secured by or evidencing ownership interests in the Subordinated Note(s) (each such securitization is referred to herein as a “Secondary Market Transaction”). In connection with any such Secondary Market Transaction, the Company shall, at the Company’s expense, cooperate with the Purchasers and otherwise reasonably assist the Purchasers in satisfying the market standards to which the Purchasers customarily adhere or which may be reasonably required in the marketplace or by applicable rating agencies in connection with any such Secondary Market Transaction, but in no event shall the Company be required to incur any material costs or expenses in connection therewith. Subject to any written confidentiality obligation, including the terms of any non-disclosure agreement between the Purchasers and the Company, all information regarding the Company may be furnished to any Person reasonably deemed necessary by the Purchaser in connection with participation in such Secondary Market Transaction. All documents, financial statements, appraisals and other data relevant to the Company or the Subordinated Notes may be retained by any such Person, subject to the terms of any confidentiality or nondisclosure agreement between the Purchaser and the Company.
5.6 Information Available to Facilitate Resales.
5.6.1 Rule 144A Information. While any Subordinated Notes remain “restricted securities” within the meaning of the Securities Act, the Company will make available, upon request, to any seller of such Subordinated Notes the information specified in Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.
5.6.2 Current Public Information. At the written request of a Purchaser or any holder of a Subordinated Note, with a view to making available to the Purchaser or such holder the benefits of certain rules and regulations of the Securities and Exchange Commission permitting the sale of the Subordinated Notes without registration as soon as allowed, the Company shall, at all times from the date of this Agreement through the date that the restrictive legend is removed from the Subordinated Notes, use its commercially reasonable efforts to make and keep available adequate current public information with respect to the Company, as those terms are understood and defined in Rule 144(c) or any similar or analogous rules promulgated under the Securities Act, and, upon written request of a Purchaser or a holder of a Subordinated Note, the Company shall provide a written statement that the Company has complied with such requirements.
5.7 Partial Redemption through DTC. With respect to any partial redemption of the Subordinated Notes, partial redemptions for Subordinated Notes redeemed through DTC will be processed through the Depository Trust Issuer Corporation, in accordance with its rules and procedures, as a “Pro Rata Pass-Through Distribution of Principal.”
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company, and covenants with the Company, severally and not jointly, as follows:
6.1 Legal Power and Authority. The Purchaser has all necessary power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation.
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6.2 Authorization and Execution. The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of such Purchaser, and, assuming due authorization, execution and delivery by the other parties hereto, this Agreement is a legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.
6.3 No Conflicts. Neither the execution or delivery of or performance under the Transaction Documents nor the consummation of any of the transactions contemplated thereby will conflict with, violate, constitute a breach of or a default under (whether with or without the giving of notice or lapse of time or both) (i) the Purchaser’s organizational documents, (ii) any agreement to which the Purchaser is party, (iii) any law applicable to the Purchaser or (iv) any order, writ, judgment, injunction, decree, determination or award binding upon or affecting the Purchaser.
6.4 Purchase for Investment. The Purchaser acknowledges that the Subordinated Notes have not been registered under the Securities Act or under any state securities laws. The Purchaser is purchasing the Subordinated Note for its own account and not with a view to distribution and with no present intention of reselling, distributing or otherwise disposing of the same. The Purchaser has no present or contemplated agreement, undertaking, arrangement, obligation, Indebtedness or commitment providing for, or which is likely to compel, a disposition of the Subordinated Notes in any manner.
6.5 Institutional Accredited Investor. The Purchaser is and will be on the Closing Date (i) an institutional “accredited investor” as such term is defined in Rule 501(a) of Regulation D and as contemplated by subsections (1), (2), (3), (7), (8) or (9) of Rule 501(a) of Regulation D, and has no less than $5,000,000 in total assets, or (ii) a QIB.
6.6 Financial and Business Sophistication. The Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment in the Subordinated Notes. The Purchaser has relied solely upon its own knowledge of, and/or the advice of its own legal, financial or other advisors with regard to, the legal, financial, tax and other considerations involved in deciding to invest in the Subordinated Notes.
6.7 Ability to Bear Economic Risk of Investment. The Purchaser recognizes that an investment in the Subordinated Notes is a speculative investment that involves substantial risk, including risks related to the Company’s business, operating results, financial condition and cash flows, which risks it has carefully considered in connection with making an investment in the Subordinated Notes. The Purchaser has the ability to bear the economic risk of the prospective investment in the Subordinated Notes, including the ability to hold the Subordinated Notes indefinitely, and further including the ability to bear a complete loss of all of its investment in the Company.
6.8 Information. The Purchaser acknowledges that (i) it is not being provided with the disclosures that would be required if the offer and sale of the Subordinated Notes were registered under the Securities Act, nor is it being provided with any offering circular, private placement memorandum or prospectus prepared in connection with the offer and sale of the Subordinated Notes; (ii) it has conducted its own examination of the Company and the terms of the Subordinated Notes to the extent it deems necessary to make its decision to invest in the Subordinated Notes; (iii) it has availed itself of publicly available financial and other information concerning the Company to the extent it deems necessary to make its decision to purchase the Subordinated Notes (including meeting with representatives of the Company); and (iv) it has not received nor relied on any form of general solicitation or general advertising (within the meaning of Regulation D) from the Company in connection with the offer and sale of the Subordinated Notes. The Purchaser has reviewed the information set forth in the Company’s Reports and the exhibits and schedules thereto and hereto and the information contained in the Data Room.
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6.9 Access to Information. The Purchaser acknowledges that it and its advisors have been furnished with all materials relating to the business, finances and operations of the Company and its Subsidiaries that have been requested by it or its advisors and have been provided access to the Data Room and reviewed the information contained therein, given the opportunity to ask questions of, and to receive answers from, persons acting on behalf of the Company concerning the terms and conditions of the transactions contemplated by this Agreement in order to make an informed and voluntary decision to enter into this Agreement.
6.10 Investment Decision. The Purchaser has made its own investment decision based upon its own judgment, due diligence and advice from such advisors as it has deemed necessary and not upon any view expressed by any other Person or entity, including the Placement Agent. Neither any inquiries nor any other due diligence investigations conducted by it or its advisors or representatives, if any, shall modify, amend or affect its right to rely on the Company’s representations and warranties contained herein. The Purchaser is not relying upon, and has not relied upon, any advice, statement, representation or warranty made by any Person by or on behalf of the Company, including, without limitation, the Placement Agent, except for the express statements, representations and warranties of the Company made or contained in this Agreement. Furthermore, the Purchaser acknowledges that (i) the Placement Agent has not performed any due diligence review on behalf of it and (ii) nothing in this Agreement or any other materials presented by or on behalf of the Company to it in connection with the purchase of the Subordinated Notes constitutes legal, tax or investment advice.
6.11 Private Placement; No Registration; Restricted Legends. The Purchaser understands and acknowledges that the Subordinated Notes are characterized as “restricted securities” under Rule 144 of the Securities Act and are being sold by the Company without registration under the Securities Act in reliance on the exemption from federal and state registration set forth in, respectively, Rule 506(b) of Regulation D promulgated under Section 4(a)(2) of the Securities Act and Section 18 of the Securities Act, or any state securities laws, and accordingly, may be resold, pledged or otherwise transferred only if exemptions the registration requirements of the from the Securities Act and applicable state securities laws are available to it. The Purchaser is not subscribing for the Subordinated Notes as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting. The Purchaser further acknowledges and agrees that all certificates or other instruments representing the Subordinated Notes will bear the restrictive legend set forth in the form of Subordinated Note. The Purchaser further acknowledges its primary responsibilities under the Securities Act and, accordingly, will not sell or otherwise transfer the Subordinated Notes or any interest therein without complying with the requirements of the Securities Act and the rules and regulations promulgated thereunder and the requirements set forth in this Agreement. Neither the Placement Agent nor the Company have or has made or are or is making any representation, warranty or covenant, express or implied, as to the availability of any exemption from registration under the Securities Act or any applicable state securities laws for the resale, pledge or other transfer of the Subordinated Notes, or that the Subordinated Notes purchased by the Purchaser will ever be able to be lawfully resold, pledged or otherwise transferred.
6.12 Placement Agent. The Purchaser will purchase the Subordinated Note(s) directly from the Company and not from the Placement Agent and understands that neither the Placement Agent nor any other broker or dealer has any obligation to make a market in the Subordinated Notes.
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6.13 Tier 2 Capital. If the Company provides notice as contemplated in Section 5.3.6 of the occurrence of the event contemplated in such section, thereafter the Company and the Noteholders will work together in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes so that the Subordinated Notes qualify as Tier 2 Capital; provided, however, that nothing contained in this Agreement shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event as described in the Subordinated Notes.
6.14 Not Debt of the Bank; Not Savings Accounts, etc. The Purchaser acknowledges that the Company is a bank holding company and the Company’s rights and the rights of the Company’s creditors, including, the Noteholders, to participate in the assets of any Company Subsidiary during its liquidation or reorganization are structurally subordinate to the prior claims of the Subsidiary’s creditors. The Purchaser acknowledges and agrees that the Subordinated Notes are not savings accounts or deposits of the Bank and are not insured or guaranteed by the FDIC or any other Governmental Agency, and that no Governmental Agency has passed upon or will pass upon the offer or sale of the Subordinated Notes or has made or will make any finding or determination as to the fairness of this investment.
6.15 Accuracy of Representations. The Purchaser understands that each of the Placement Agent and the Company are relying and will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements in connection with the transactions contemplated by this Agreement, and agrees that if any of the representations or acknowledgements made by it are no longer accurate as of the Closing Date, or if any of the agreements made by it are breached on or prior to the Closing Date, it shall promptly notify the Placement Agent and the Company.
7. MISCELLANEOUS.
7.1 Prohibition on Assignment by the Company. Except as described in Section 8(b) (Merger or Sale of Assets) of the Subordinated Notes, the Company may not assign, transfer or delegate any of its rights or obligations under this Agreement or the Subordinated Notes without the prior written consent of all the Noteholders.
7.2 Time of the Essence. Time is of the essence for this Agreement.
7.3 Waiver or Amendment. No waiver or amendment of any term, provision, condition, covenant or agreement herein or in the Subordinated Notes shall be effective except with the consent of the holders of more than fifty percent (50%) of the aggregate principal amount (excluding any Subordinated Notes held by the Company or any of its Affiliates) of the Subordinated Notes at the time outstanding; provided, however, that without the consent of each holder of an affected Subordinated Note, no such amendment or waiver may: (i) reduce the principal amount of the Subordinated Note; (ii) reduce the rate of or change the time for payment of interest on any Subordinated Note; (iii) extend the maturity of any Subordinated Note; (iv) change the currency in which payment of the obligations of the Company under this Agreement and the Subordinated Notes are to be made; (v) lower the percentage of aggregate principal amount of outstanding Subordinated Notes required to approve any amendment of this Agreement or the Subordinated Notes; (vi) make any changes to Section 4(c) (Partial Redemption), Section 5 (Events of Default; Acceleration), Section 6 (Failure to Make Payments), Section 7 (Affirmative Covenants of the Company), Section 8 (Negative Covenants of the Company), Section 15 (Priority), or Section 17 (Waiver and Consent) of the Subordinated Notes that adversely affect the rights of any holder of a Subordinated Note; or (vii) make any change to this Section 7.3 (Waiver or Amendment) that adversely affects the rights of any holder of a Subordinated Note. Notwithstanding the foregoing, the Company may amend or supplement the Subordinated Notes without the consent of the holders of the Subordinated Notes to cure any ambiguity, defect or inconsistency or to provide for uncertificated Subordinated Notes in addition to or in place of certificated Subordinated Notes, or to make any change that does not adversely affect the rights of any holder of any of the Subordinated Notes. No failure to exercise or delay in exercising, by a Purchaser or any holder of the Subordinated Notes, of any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right or remedy provided by law. The rights and remedies provided in this Agreement are cumulative and not exclusive of any right or remedy provided by law or equity. No notice or demand on the Company in any case shall, in itself, entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Purchasers to any other or further action in any circumstances without notice or demand. No consent or waiver, expressed or implied, by the Purchasers to or of any breach or default by the Company in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance of the same or any other obligations of the Company hereunder. Failure on the part of the Purchasers to complain of any acts or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Purchasers of their rights hereunder or impair any rights, powers or remedies on account of any breach or default by the Company.
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7.4 Severability. Any provision of this Agreement which is unenforceable or invalid or contrary to law, or the inclusion of which would adversely affect the validity, legality or enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and provisions of this Agreement shall subsist and be fully effective according to the tenor of this Agreement the same as though any such invalid portion had never been included herein. Notwithstanding any of the foregoing to the contrary, if any provisions of this Agreement or the application thereof are held invalid or unenforceable only as to particular persons or situations, the remainder of this Agreement, and the application of such provision to persons or situations other than those to which it shall have been held invalid or unenforceable, shall not be affected thereby, but shall continue valid and enforceable to the fullest extent permitted by law.
7.5 Notices. Any notice which any party hereto may be required or may desire to give hereunder shall be deemed to have been given if in writing and if delivered personally, or if mailed, postage prepaid, by United States registered or certified mail, return receipt requested, or if delivered by a responsible overnight commercial courier promising next Business Day delivery, or transmitted by email with confirmation of transmission, addressed:
| if to the Company: |
Tandem Bancorp, Inc. 2356 Main Street Tucker, GA 30084 Attention: Charles DeWitt, President and Chief Executive Officer Email: [***] |
| with a copy to: |
Troutman Pepper Locke LLP 600 Peachtree Street, N.E. Suite 3000 Atlanta, GA 30308 Attention: James Stevens and Brenna Sheffield Emails: [***] and [***]
|
| if to the Purchasers: | To the address indicated on such Purchaser’s signature page. |
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or to such other address or addresses as the party to be given notice may have furnished in writing to the party seeking or desiring to give notice, as a place for the giving of notice; provided that no change in address shall be effective until five (5) Business Days after being given to the other party in the manner provided for above. Any notice given in accordance with the foregoing shall be deemed effective when delivered personally or, if mailed, three (3) Business Days after it shall have been deposited in the United States mail as aforesaid or, if sent by overnight courier, the Business Day following the date of delivery to the courier (provided next Business Day delivery was requested), or, if sent by email, upon receipt of confirmation of transmission.
7.6 Successors and Assigns. This Agreement shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns; except that (i) unless a Purchaser consents in writing, no assignment made by the Company in violation of this Agreement shall be effective or confer any rights on any purported assignee of the Company, and (ii) unless the assignment complies with the Assignment Form attached to the Subordinated Notes, no assignment made by a Purchaser shall be effective or confer any rights on any purported assignee of the Purchaser. The term “successors and assigns” will not include a purchaser of any of the Subordinated Notes from any Purchaser merely because of such purchase but shall include a purchaser of any of the Subordinated Notes pursuant to an assignment complying with the Assignment Form attached to the Subordinated Notes.
7.7 No Joint Venture. Nothing contained herein or in any document executed pursuant hereto and no action or inaction whatsoever on the part of a Purchaser, shall be deemed to make a Purchaser a partner or joint venturer with the Company.
7.8 Documentation. All documents and other matters required by any of the provisions of this Agreement to be submitted or furnished to a Purchaser shall be in form and substance satisfactory to such Purchaser.
7.9 Entire Agreement. This Agreement and the Subordinated Notes, along with any exhibits hereto and thereto, and any nondisclosure agreements between the Purchaser and the Company or the Placement Agent, constitute the entire agreement between the parties hereto with respect to the subject matter hereof and may not be modified or amended in any manner other than by supplemental written agreement executed by the parties hereto. No party, in entering into this Agreement, has relied upon any representation, warranty, covenant, condition or other term that is not set forth in this Agreement or in the Subordinated Notes.
7.10 Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to its laws or principles of conflict of laws. Nothing herein shall be deemed to limit any rights, powers or privileges which a Purchaser may have pursuant to any law of the United States of America or any rule, regulation or order of any department or agency thereof and nothing herein shall be deemed to make unlawful any transaction or conduct by a Purchaser which is lawful pursuant to, or which is permitted by, any of the foregoing.
7.11 No Third Party Beneficiary. This Agreement is made for the sole benefit of the Company and the Purchasers, and no other Person shall be deemed to have any privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever, nor shall any other Person have any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder; provided, that the Placement Agent may rely on the representations and warranties contained herein (including those of the Company and Purchasers) to the same extent as if it were a party to this Agreement, and the Placement Agent may rely on the opinion of counsel to the Company to be delivered pursuant to Section 3.2.1.2(f) .
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7.12 Legal Tender of United States. All payments hereunder shall be made in coin or currency which at the time of payment is legal tender in the United States of America for public and private debts.
7.13 Captions; Counterparts. Captions contained in this Agreement in no way define, limit or extend the scope or intent of their respective provisions. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
7.14 Knowledge; Discretion. All references herein to a Purchaser’s or the Company’s knowledge shall be deemed to mean the knowledge of such party based on the actual knowledge of such party’s Chief Executive Officer and Chief Financial Officer or such other persons holding equivalent offices. Unless specified to the contrary herein, all references herein to an exercise of discretion or judgment by a Purchaser, to the making of a determination or designation by a Purchaser, to the application of a Purchaser’s discretion or opinion, to the granting or withholding of a Purchaser’s consent or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to a Purchaser, or otherwise involving the decision making of a Purchaser, shall be deemed to mean that such Purchaser shall decide using the reasonable discretion or judgment of a prudent lender.
7.15 Waiver of Right to Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF THE COMPANY OR THE PURCHASERS. THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF THEIR OWN FREE WILL. THE PARTIES HERETO FURTHER ACKNOWLEDGE THAT (I) THEY HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (II) THIS WAIVER HAS BEEN REVIEWED BY THE PARTIES HERETO AND THEIR COUNSEL AND IS A MATERIAL INDUCEMENT FOR ENTRY INTO THIS AGREEMENT AND (III) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN.
7.16 Expenses. Except as otherwise provided in this Agreement, each of the parties hereto will bear and pay all other costs and expenses, including attorneys’ fees, incurred by it or on its behalf in connection with the transactions contemplated pursuant to this Agreement.
7.17 Survival. Each of the representations and warranties set forth in this Agreement shall survive the consummation of the transactions contemplated hereby for a period of one year after the date hereof. Except as otherwise provided herein, all covenants and agreements contained herein shall survive until, by their respective terms, they are no longer operative.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Company has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
COMPANY:
TANDEM BANCORP, INC. | |
| Charles M. DeWitt, III | |
| President and Chief Executive Officer |
[Company Signature Page to Subordinated Note Purchase Agreement]
IN WITNESS WHEREOF, the Purchaser has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
| PURCHASER: | |||
| [INSERT PURCHASER’S NAME] | |||
| By: | |||
| Name: | [●] | ||
| Title: | [●] | ||
| Address of Purchaser (location of Purchaser for purposes of any Form D filing): | |||
| [●] | |||
| Principal Amount of Purchased Subordinated Note: | |||
| $[●] | |||
[Purchaser Signature Page to Subordinated Note Purchase Agreement]
EXHIBIT A
[See attached]
A-1
EXHIBIT B
OPINION OF COUNSEL
1. The Company (i) is validly existing and is in good standing under the laws of the State of Georgia, (ii) has the corporate power and authority to carry on its business and to own, lease and operate its properties and assets as described in the Company’s Reports and (iii) is duly qualified or licensed to transact business as a foreign corporation in each jurisdiction in which the nature of such business or the ownership or leasing of such properties requires such qualification or licensing, except where the failure to be so authorized would not, individually or in the aggregate, have a Material Adverse Effect on the Company.
2. The Company has (A) the corporate power and authority to execute and deliver the Transaction Documents to which it is a party and perform its obligations under the Transaction Documents, (B) taken all corporate action necessary to authorize the execution, delivery and performance of the Transaction Documents to which it is a party and (C) validly executed and delivered the Transaction Documents to which it is a party.
3. The Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, fraudulent or voluntary conveyance, moratorium, liquidation, reorganization or similar federal or state laws affecting the enforcement of creditors’ rights in general, (ii) general principles of equity, whether applied by a court of law or equity, including the possible unavailability of specific performance, appointment of a receiver or injunctive relief, (iii) the exercise of discretionary powers by any court before which specific performance, injunctive relief or other equitable remedies may be sought, (iv) other equitable remedies and defenses, (v) procedural requirements of law applicable to the enforcement of creditors’ remedies and (vi) judicial discretion inherent in the forum addressing enforceability.
4. The Subordinated Notes, when issued and delivered to and paid for by Purchaser in accordance with the terms of the Agreement, will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, fraudulent or voluntary conveyance, moratorium, liquidation, reorganization or similar federal or state laws affecting the enforcement of creditors’ rights in general, (ii) general principles of equity, whether applied by a court of law or equity, including the possible unavailability of specific performance, appointment of a receiver or injunctive relief, (iii) the exercise of discretionary powers by any court before which specific performance, injunctive relief or other equitable remedies may be sought, (iv) other equitable remedies and defenses, (v) procedural requirements of law applicable to the enforcement of creditors’ remedies and (vi) judicial discretion inherent in the forum addressing enforceability.
5. Assuming the accuracy of the representations and warranties of, and compliance with the covenants and agreements by, each of the Purchasers and the Company set forth in the Agreement, it is not necessary in connection with the offer, sale and delivery of the Subordinated Notes to the Purchasers to register the Subordinated Notes under the Securities Act, it being understood that such counsel expresses no opinion as to any subsequent transfer, sale or conveyance of the Subordinated Notes.
* The opinion letter of counsel will be subject to customary limitations, qualifications and carveouts.
B-1
SCHEDULE A
DIRECT AND INDIRECT SUBSIDIARIES
Tandem Bank
Exhibit 10.28
Execution Version
CERTAIN CONFIDENTIAL INFORMATION (MARKED
BY BRACKETS AS “[***]”) HAS
BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND
(II) IS
THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR
CONFIDENTIAL.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of June 17, 2026 by and among Georgia Banking Company, Inc., a Georgia corporation (the “Company”), each of the shareholders of the Company listed on Schedule I hereto (each, a “Selling Shareholder” and, collectively, the “Selling Shareholders”), and each of the investors identified on the signature pages hereto (individually, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, each Purchaser wishes to purchase, and the Company and the Selling Shareholders wish to sell, upon the terms and conditions stated in this Agreement, that certain number of shares of voting common stock, par value $0.01 per share, of the Company (the “Common Stock”) and non-voting common stock, par value per share $0.01, of the Company (the “Non-Voting Common Stock”) in the aggregate number indicated below such Purchaser’s name on the signature page to this Agreement (such shares of Common Stock and Non-Voting Common Stock sold by the Company, the “Primary Shares,” and such shares of Common Stock sold by the Selling Shareholders, the “Secondary Shares,” and together, the “Shares”);
WHEREAS, the Company and the Selling Shareholders have engaged Performance Trust Capital Partners, LLC as their exclusive placement agent (the “Placement Agent”) for the offering of the Shares (the “Offering”); and
WHEREAS, the Company and each Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act;
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company, the Selling Shareholders and each Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1:
“Action” means any Proceeding, inquiry, or notice of violation pending or, to the Company’s Knowledge, threatened against the Company or any of its properties or any officer, director or employee of the Company acting in his or her capacity as an officer, director or employee before or by any federal, state, county, local or foreign court, arbitrator, governmental or administrative agency, regulatory authority, stock market, stock exchange or trading facility.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Aggregate Purchase Price” means with respect to each Purchaser, the aggregate Purchase Price to be paid for the Shares purchased hereunder indicated below such Purchaser’s name on such Purchaser’s signature page hereto.
“Agreement” shall have the meaning ascribed to such term in the Preamble.
“Bank” means Georgia Banking Company, a Georgia chartered bank and wholly owned subsidiary of the Company.
“Bank Regulatory Authorities” shall mean any governmental agency, authority or instrumentality having supervisory or regulatory authority with respect to the Company and the Bank.
“BHC Act” means the Bank Holding Company Act of 1956, as amended.
“Board” means the board of directors of the Company.
“Business Combination” means a merger, consolidation, statutory share exchange, or similar transaction that requires adoption by the Company’s shareholders.
“Business Day” means a day, other than a Saturday or Sunday, on which banks in the City of Atlanta, Georgia are open for the general transaction of business.
“Change in Control” means, with respect to the Company, the occurrence of any of the following events:
(1) any Person or “group” becomes a beneficial owner (as defined in Rules 13d-3 of the Exchange Act), directly or indirectly, of 50% or more of the aggregate shares of Common Stock;
(2) the consummation of a Business Combination, unless immediately following such Business Combination more than 50% of the total voting power of the corporation resulting from such Business Combination (the “Surviving Corporation”), or, if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership (as defined in Rules 13d-3 of the Exchange Act) of 100% of the voting securities eligible to elect directors of the Surviving Corporation, is represented by Common Stock that was outstanding immediately before such Business Combination;
(3) the shareholders of the Company approve a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets; or
(4) the Company has entered into a definitive agreement, the consummation of which would result in the occurrence of any of the events described in clauses (1) through (3) of this definition above.
“Closing” means the closing of the purchase and sale of the Shares pursuant to this Agreement.
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“Closing Date” means the Business Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all of the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or waived, as the case may be, or such other date as the parties may agree.
“Commission” has the meaning set forth in the Recitals.
“Common Stock” has the meaning set forth in the Recitals and includes any securities into which the Common Stock may hereafter be reclassified or changed.
“Company” shall have the meaning ascribed to such term in the Preamble.
“Company Deliverables” has the meaning set forth in Section 2.2(a).
“Company Indemnified Person” has the meaning set forth in Section 4.3(a).
“Company’s Knowledge” means, with respect to any statement made to the knowledge of the Company, that the statement is based upon the actual knowledge of the executive officers of the Company having responsibility for the matter or matters that are the subject of the statement after reasonable investigation.
“Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Covered Persons” has the meaning set forth in Section 3.1(o).
“Data Site” means the electronic data site established and maintained in connection with the Offering.
“Disqualification Event” has the meaning set forth in Section 3.1(o).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.
“FDIC” means the Federal Deposit Insurance Corporation.
“Federal Reserve” means the Board of Governors of the Federal Reserve System.
“Financial Statements” has the meaning set forth in Section 3.1(i).
“Fortress” means CF GBC Investors LP, an affiliate of Fortress Investment Group LLC.
“GAAP” means U.S. generally accepted accounting principles, as applied by the Company.
“Georgia Courts” means the courts of the State of Georgia and the United States District Courts located in the City of Atlanta.
“Governmental Entity” means any court, arbitrator, administrative agency or commission, board, bureau or other governmental or Bank Regulatory Authority or instrumentality.
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“Indemnified Person” has the meaning set forth in Section 4.3(b).
“Information” has the meaning set forth in Section 4.9.
“Investor Confidential Information” means each Purchaser’s, its Affiliates’, its investment advisers’ and or its or their control persons’ or equity holders’ nonpublic, proprietary, personal or otherwise confidential information, including the identities of any limited partners, shareholders or members of any Purchaser, any of its Affiliates or any of its investments.
“Investor Rights Agreements” means those certain (i) VCOC Letters, by and between the Company and Patriot Financial Partners III, L.P, Bartow Morgan, Jr. and J. Bradford Smith, each dated December 31, 2020, respectively, (ii) Investor Rights Agreements, by and between the Company and Patriot Financial Partners III, L.P, Bartow Morgan, Jr. and J. Bradford Smith, each dated December 31, 2020, respectively, (iii) VCOC Letter, by and among the Company and Financial Hybrid Opportunity Fund LLC (“FHOF”), Financial Hybrid Opportunity SPV I LLC (“FHOS”), Financial Opportunity Fund LLC (“FOF”, together with FHOF and FHOS, “FJ”), dated as of February 9, 2021 and (iv) Investor Rights Agreement, by and among the Company and FJ, dated as of February 9, 2021.
“Lien” means any lien, charge, claim, encumbrance, security interest, right of first refusal, preemptive right, mortgage, deed of trust, pledge, conditional sale agreement, restrictions on transfer or other restriction of any kind.
“Material Adverse Effect” means any event, circumstance, change or occurrence that has had or would reasonably be expected to have, individually or in the aggregate (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, properties, business, condition (financial or otherwise), liabilities or prospects of the Company, taken as a whole, or (iii) any adverse impairment to the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document; provided, however, that in determining whether a Material Adverse Effect has occurred, there shall be excluded any effect to the extent resulting from the following: (A) changes, after the date hereof, in GAAP or regulatory accounting principles generally applicable to banks or their holding companies, (B) changes, after the date hereof, in applicable laws, rules and regulations or interpretations thereof by Governmental Entities, (C) actions or omissions of the Company expressly required by the terms of this Agreement or taken with the prior written consent of each Purchaser, (D) changes in general economic, monetary or financial conditions in the United States, (E) changes in global or national political conditions, including any outbreak or escalation or escalation of hostilities, declared or undeclared acts of war, terrorism, epidemics, pandemics, or disease outbreaks, and (F) the public disclosure of this Agreement or the transactions contemplated by this Agreement; except, with respect to clauses (A), (D) and (E), to the extent that the effects of such changes have a disproportionate effect on the Company, the Bank or any of its Subsidiaries, taken as a whole, relative to other similarly situated banks or their holding companies generally.
“Material Contract” means any of the following agreements of the Company:
(1) any employment, severance, termination, or consulting agreement with any executive officer;
(2) any arrangement regarding any outstanding debt securities, notes, credit agreement, or other instruments of the Company by which the Company is bound, which, in each case, evidences a material amount of indebtedness of the Company;
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(3) any contract containing covenants that limit in any material respect the ability of the Company or any employee of the Company to compete in any line of business or with any Person or which involve any material restriction of the geographical area in which, or method by which or with whom, the Company may carry on its business (other than as may be required by law or applicable regulatory authorities), and any contract that could require the disposition of any material assets or line of business of the Company;
(4) any material joint venture, partnership, strategic alliance, or other similar contract (including any franchising agreement, but in any event excluding introducing broker agreements), and any contract relating to the acquisition or disposition of any material business or material assets (whether by merger, sale of stock or assets, or otherwise), which acquisition or disposition is not yet complete or where such contract contains continuing material obligations or contains continuing indemnity obligations of the Company;
(5) any real property lease and any other lease with annual rental payments aggregating $100,000 or more;
(6) other than with respect to loans, any contract providing for, or reasonably likely to result in, the receipt or expenditure of more than $250,000 on an annual basis, including the payment or receipt of royalties or other amounts calculated based upon revenues or income;
(7) any contract that by its terms limits the payment of dividends or other distributions by the Company;
(8) any standstill or similar agreement pursuant to which any party has agreed not to acquire assets or securities of another person;
(9) any contract that would reasonably be expected to prevent, materially delay, or materially impede the Company’s ability to consummate the transactions contemplated by the Transaction Documents;
(10) any contract that contains a put, call, or similar right pursuant to which the Company could be required to purchase or sell, as applicable, any equity interests or assets that have a fair market value or purchase price of more than $100,000; and
(11) any agreement that contains any (A) exclusive dealing obligation, (b) “clawback” or similar undertaking requiring the reimbursement or refund of any fees, (C) “most favored nation” or similar provision granted by the Company, or (D) provision that grants any right of first refusal or right of first offer or similar right or that limits or purposes to limit the ability of the Company to own, operate, sell, transfer, pledge or otherwise dispose of any assets or business; and
(12) any other contract, agreement or understanding material to the Company or its operations.
“Material Permits” has the meaning set forth in Section 3.1(n).
“Non-Voting Common Stock” has the meaning set forth in the Recitals and includes any securities into which the Non-Voting Common Stock may hereafter be reclassified or changed (other than through conversion to Common Stock).
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“OFAC” has the meaning set forth in Section 3.1(u).
“Offering” has the meaning set forth in the recitals.
“Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.
“Placement Agent” has the meaning set forth in the Recitals.
“Primary Shares” has the meaning set forth in the Recitals.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Purchase Price” means $30 per Share.
“Purchaser” has the meaning set forth in the Preamble.
“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).
“Registration Rights Agreements” means those certain Registration Rights Agreements, by and between the Company and Patriot Financial Partners III, L.P., Bartow Morgan, Jr. and J. Bradford Smith, each dated December 31, 2020, respectively, and that certain Registration Rights Agreement, by and among the Company and the Selling Shareholders, dated as of February 9, 2021.
“Regulation D” has the meaning set forth in the Recitals.
“Required Notices” has the meaning set forth in Section 3.1(e).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Secondary Shares” has the meaning set forth in the Recitals.
“Securities Act” means the Securities Act of 1933, as amended.
“Selling Shareholder” and “Selling Shareholders” have the meanings set forth in the Preamble.
“Selling Shareholder Indemnified Person” has the meaning set forth in Section 4.3(b).
“Shares” has the meaning set forth in the Recitals.
“Subsidiary” means any entity in which the Company, directly or indirectly, owns 50% or more of the outstanding capital stock or otherwise has Control over such entity.
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“Tax” or “Taxes” mean (i) any federal, state, local or foreign income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add on minimum, ad valorem, transfer or excise Tax, or any other Tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, imposed by any Governmental Entity and (ii) any liability in respect of any items described in clause (i) above payable by reason of contract, assumption, transferee or successor liability, operation of law, Treasury Regulations Section 1.1502-6(a) (or any predecessor or successor thereof or analogous or similar provisions of law) or otherwise.
“Tax Return” means any return, declaration, report or similar statement filed or required to be filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax.
“Transaction Documents” means this Agreement, the annexes, schedules and exhibits attached hereto, and any other documents or agreements executed or delivered in connection with the transactions contemplated hereunder.
ARTICLE II
PURCHASE AND SALE
2.1 Closing.
(a) Purchase of Shares. Subject to the terms and conditions set forth in this Agreement, each Purchaser shall purchase the number of Shares as indicated below such Purchaser’s name on such Purchaser’s signature page to this Agreement for the Aggregate Purchase Price. The Shares purchased by each Purchaser shall be comprised of Primary Shares and Secondary Shares in the same proportion that the total number of Primary Shares and the total number of Secondary Shares being sold to all Purchasers at the Closing bears, respectively, to the total number of Shares being sold to all Purchasers at the Closing, as determined by the Company in consultation with the Placement Agent (such that each Purchaser shall purchase its pro rata portion of Primary Shares and its pro rata portion of Secondary Shares); provided, to the extent Fortress’ ownership of the Company’s Common Stock would exceed 4.9% of the Company’s total outstanding shares of Common Stock following the Offering, the Primary Shares issued to Fortress shall be comprised of sufficient shares of Non-Voting Common Stock to maintain Fortress’ ownership of the Company’s Common Stock at 4.9% of the Company’s total outstanding shares of Common Stock following the Offering.
(b) Closing. The Closing of the purchase and sale of the Shares shall take place on the Closing Date remotely by electronic means as the parties may mutually agree.
2.2 Closing Deliveries.
(a) On or prior to the Closing, the Selling Shareholders shall deliver or cause to be delivered to the Company (for further delivery to the Purchasers, as applicable) the following (the “Selling Shareholder Deliverables”):
(i) this Agreement, duly executed by the Selling Shareholders;
(ii) certificates (if any) representing the Secondary Shares to be sold by such Selling Shareholder hereunder, together with duly executed stock powers or other instruments of transfer, in form reasonably acceptable to the Company and sufficient to transfer such Secondary Shares to the applicable Purchasers free and clear of all Liens (other than restrictions on transfer arising under applicable securities laws); and
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(iii) any other documents, certificates and agreements, reasonably requested by the Company in connection with the transfer of the Secondary Shares to the Purchasers.
(b) On or prior to the Closing, the Company shall issue, deliver or cause to be delivered to each Purchaser and the Selling Shareholders, as applicable, the following (the “Company Deliverables”):
(i) this Agreement, duly executed by the Company;
(ii) the Shares, by delivery of evidence of the Shares registered in the name of such Purchaser or its nominee (per its instructions), or, to the extent requested by such Purchaser, by delivery of one or more stock certificates evidencing the Shares purchased by such Purchaser hereunder, registered in the name of such Purchaser or its nominee (per its instructions); and
(iii) the Selling Shareholders’ pro rata portion of the funds received for the Aggregate Purchase Price for all Secondary Shares sold in the Offering, by wire transfer of immediately available funds in accordance with the Selling Shareholders’ written instructions.
(c) On or prior to the Closing, each Purchaser shall deliver or cause to be delivered to the Company the following (the “Purchaser Deliverables”):
(i) this Agreement, duly executed by such Purchaser;
(ii) the Aggregate Purchase Price, in U.S. dollars and in immediately available funds to the Company, by wire transfer of immediately available funds in accordance with the Company’s written instructions;
(iii) a fully completed and duly executed Accredited Investor Questionnaire in the form attached hereto as Exhibit A;
(iv) a fully completed and duly executed Book Entry Questionnaire in the form attached here as Exhibit B; and
(v) a fully completed and duly executed Form W-9 in the form attached hereto as Exhibit C.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby represents and warrants as of the date hereof and as of the Closing Date (except for the representations and warranties that speak as of a specific date, which shall be made as of such date), to each Purchaser that:
(a) Organization and Qualification. The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Georgia and is a bank holding company registered under the BHC Act. The Company has the corporate power and authority (including all licenses, franchises, permits and other governmental authorizations as are legally required) to carry on its business as now being conducted, to own, lease and operate its properties and assets as now owned, leased or operated and to enter into and carry out its obligations under this Agreement. The Company does not own or control any Affiliate or Subsidiary, other than the Subsidiaries described in this Section 3.1. The nature of the business of the Company and its activities do not require it to be qualified to do business in any jurisdiction other than the State of Georgia. The Company has no equity interest, direct or indirect, in any other bank or corporation or in any partnership, joint venture or other business enterprise or entity, other than the Bank or as acquired through settlement of indebtedness, foreclosure, the exercise of creditors’ remedies or in a fiduciary capacity, and the business carried on by the Company has not been conducted through any other direct or indirect Subsidiary or Affiliate of the Company other than the Bank.
(b) The Bank is a Georgia chartered bank, duly organized and validly existing under the Laws of the State of Georgia and in good standing under all laws of the State of Georgia. The Bank has the corporate power and authority (including all licenses, franchises, permits and other governmental authorizations as are legally required) to carry on its business as now being conducted, to own, lease and operate its properties and assets as now owned, leased or operated and to enter into and to carry on the business and activities now conducted by it. The Bank is an insured bank as defined in the Federal Deposit Insurance Act. The Bank is duly licensed or qualified to do business in each jurisdiction in which the nature of its business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except when the failure to be so licensed or qualified would not be material. Other than GBC Insurance Services, Inc. or Georgia Business Capital, Inc., the Bank has no equity interest, direct or indirect, in any other bank or corporation or in any partnership, joint venture or other business enterprise or entity, except as acquired through settlement of indebtedness, foreclosure, the exercise of creditors’ remedies or in a fiduciary capacity. The business carried on by the Bank is not conducted through any direct or indirect Subsidiary or Affiliate of the Bank.
(c) Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder, including, without limitation, to issue the Shares in accordance with the terms hereof. The Company’s execution and delivery of each of the Transaction Documents and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, and no further corporate action is required by the Company, its Board or its shareholders in connection therewith. Each of the Transaction Documents has been (or upon delivery will have been) duly executed by the Company and is, or when delivered in accordance with the terms hereof or thereof, will constitute the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
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(d) No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation by the Company of the transactions contemplated hereby (including, without limitation, the issuance of the Primary Shares) do not and will not (i) conflict with or violate any provisions of the Company’s certificate or articles of incorporation or bylaws, or otherwise result in a violation of the organizational documents of the Company, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would result in a default) under, result in the creation of any Lien upon any of the properties or assets of the Company under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and the rules and regulations thereunder, assuming the correctness of the representations and warranties made by the Purchaser herein, of any self-regulatory organization to which the Company or its securities are subject), or by which any property or asset of the Company is bound or affected, except in the case of clauses (ii) and (iii) such as would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required by applicable state securities laws and (ii) the filing of a Notice of Exempt Offering of Securities on Form D with the Commission under Regulation D of the Securities Act and (iii) the notice with respect to the gross-up rights provided to each investor party to one of the Investor Rights Agreements (collectively, the “Required Notices”). The Company is unaware of any facts or circumstances relating to the Company that might prevent the Company from obtaining or effecting any of the foregoing.
(f) Issuance of the Shares. The Primary Shares have been duly authorized and, when issued and delivered to the Purchasers against payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and free of all Liens created by the Company, with the holders thereof being entitled to all rights accorded to a holder of Common Stock or Non-Voting Common Stock, as applicable.
(g) Capitalization. (i) The authorized capital stock of the Company consists of 50,000,000 shares of common stock, consisting of 40,000,000 shares of Common Stock and 10,000,000 shares of Non-Voting Common Stock, of which 9,281,302 of Common Stock are issued and outstanding as of June 12, 2026. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, have been issued in compliance in all material respects with all applicable federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase any capital stock of the Company. (ii) Other than the gross-up rights provided pursuant in the Investor Rights Agreements, none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. (iii) The Company currently has warrants to purchase 300,956 shares of Common Stock issued and outstanding and warrants to purchase 150,478 shares of Non-Voting Common Stock issued and outstanding. (iv) Other than as described herein and options granted under the Company’s equity incentive plan, there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company. (v) There are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and, there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company. (vi) There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Shares, other than anti-dilution or similar provisions that have been waived by the respective holders thereof. (vii) The Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. (viii) Except as disclosed on Schedule 3.1(aa) and the Registration Rights Agreements, there are no agreements or arrangements under which the Company is obligated to register the sale of any of the securities of the Company under the Securities Act. (ix) Except as disclosed on Schedule 3.1(aa), the Registration Rights Agreements and Investor Rights Agreements are the only contracts, commitments, understandings or arrangements with the Selling Shareholders or other shareholders of the Company to which the Company is a party which grant the shareholders of the Company rights related to their stock.
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(h) Tax Matters. The Company (i) has prepared, on a consolidated basis, and timely filed all foreign, US federal, state and local income and all other Tax Returns, reports and declarations or were required by any jurisdiction to which it is subject and such returns, reports and declarations are true, complete and correct in all material respects, (ii) has paid all Taxes and other governmental assessments and charges owed and due by the Company (whether or not shown on any Tax Return), except those being contested in good faith and with respect to which adequate reserves have been set aside on the books of the Company in accordance with GAAP, (iii) has withheld or collected from each payment made to each of its employees, independent contractors, shareholders, creditors and other third parties the amount of all Taxes required to be withheld or collected therefrom, and has paid the same to the proper authorized depositories or government authorities, (iv) has set aside on its books provisions reasonably adequate for the payment of all Taxes for periods subsequent to the periods to which the above referenced returns, reports or declarations apply and (v) complied with all applicable information reporting requirements in all material respects. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to each Purchaser hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(i) Financial Statements. The Company’s consolidated financial statements as of December 31, 2024 and December 31, 2025 and for the fiscal years ended December 31, 2024 and December 31, 2025, and its unaudited consolidated financial statements as of March 31, 2026 (collectively, the “Financial Statements”) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated, except that the unaudited Financial Statements may not contain all footnotes required by GAAP. The Financial Statements fairly present in all material respects the financial condition and operating results of the Company and the Subsidiaries as of the dates, and for the periods, indicated therein, subject in the case of the unaudited Financial Statements to normal year-end audit adjustments.
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(j) Material Changes. Since December 31, 2025, except with respect to the Agreement and Plan of Merger, dated February 24, 2026, by and between the Company and Tandem Bancorp, Inc., (i) there have been no events, occurrences or developments that have had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice, (iii) the Company has not altered materially its method of accounting or the manner in which it keeps its accounting books and records, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) except as described in Section 3.1(g), the Company has not issued any equity securities to any officer, director or Affiliate, and (vi) there has not been any material change or amendment to, or any waiver of any material right by the Company under, any Material Contract under which the Company is bound or subject.
(k) Litigation. There is no Action, pending or, to the Company’s Knowledge, threatened, which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the issuance of the Primary Shares pursuant to the Transaction Documents or (ii) is reasonably likely to have a Material Adverse Effect, individually or in the aggregate, if there were an unfavorable decision. Neither the Company nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty nor is any Action, to the Company’s Knowledge, currently threatened. There is no Action by the Company pending or which the Company intends to initiate (other than collection or similar claims in the ordinary course of business). There has not been, and to the Company’s Knowledge there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or any executive officers or directors of the Company in their capacities as such, which individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
(l) Employment Matters. No labor dispute exists or, to the Company’s Knowledge, is imminent with respect to any of the employees of the Company that would have or reasonably be expected to have a Material Adverse Effect. None of the Company’s employees is a member of a union that relates to such employee’s relationship with the Company, the Company is not a party to a collective bargaining agreement, and the Company believes that its relationship with its employees is good. To the Company’s Knowledge, there is no activity involving any of the employees of the Company seeking to certify a collective bargaining unit or similar organization. To the Company’s Knowledge, no executive officer is, or is now expected to be, subject to or in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of a third party, and to the Company’s Knowledge, the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters. The Company is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. As of the date of this Agreement, no material employee has given notice to the Company of his or her intent to terminate his or her employment or service relationship with the Company. The Company is in material compliance with all laws concerning the classification of employees and independent contractors and has properly classified all such individuals for purposes of participation in employee benefit plans.
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(m) Compliance. The Company is not (i) in violation of any term or provision of certificate or articles of incorporation or bylaws or similar organizational documents, (ii) in violation of any order of any court, arbitrator or governmental body having jurisdiction over the Company or its properties or assets, or (iii) in violation of, or in receipt of written notice that it is in violation of, any statute, rule, regulation, policy or guideline or order of any governmental authority, self-regulatory organization applicable to the Company, except in each case as would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) Regulatory Permits. The Company possesses all certificates, authorizations, consents and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its businesses as currently conducted, except where the failure to possess such certificates, authorizations, consents or permits, individually or in the aggregate, has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (“Material Permits”), and (i) the Company has not received any notice in writing of Proceedings relating to the revocation or material adverse modification of any such Material Permits and (ii) the Company is unaware of any facts or circumstances that would give rise to the revocation or material adverse modification of any Material Permits.
(o) No “Bad Actor” Disqualification. The Company has exercised reasonable care, in accordance with Commission rules and guidance, to determine whether any Covered Person (as defined below) is subject to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (each a “Disqualification Event”). To the Company’s Knowledge, no Covered Person is subject to a Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has complied, to the extent applicable, with any disclosure obligations under Rule 506(e) under the Securities Act. “Covered Persons” are those persons specified in Rule 506(d)(1) under the Securities Act, including the Company; any predecessor or Affiliate of the Company; any director, executive officer, other officer participating in the offering, general partner or managing member of the Company; any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power; any promoter (as defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of the sale of the Shares; and any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of the Shares other than the Placement Agent (a “Solicitor”), any general partner or managing member of any Solicitor, and any director, executive officer or other officer participating in the offering of any Solicitor or general partner or managing member of any Solicitor.
(p) Placement Agent Fees. The Company, together with the Selling Shareholders, shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than fees or commissions of persons engaged by any Purchaser or such Purchaser’s investment advisor) relating to or arising out of the transactions contemplated hereby. Other than the Placement Agent, the Company has not engaged any placement agent or other agent in connection with the sale of the Shares.
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(q) Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section 3.2 of this Agreement, the accuracy of the information disclosed in the Accredited Investor Questionnaires, no registration under the Securities Act is required for the offer and sale of the Primary Shares by the Company to the Purchasers under the Transaction Documents.
(r) No Integrated Offering. Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf, has, directly or indirectly, at any time within the past six months made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Shares under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Shares to require approval of shareholders of the Company for purposes of any applicable shareholder approval provisions. None of the Company, its Affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of the issuance of any of the Shares under the Securities Act or shareholder approval under applicable shareholder approval provisions.
(s) Investment Company. The Company is not required to be registered as, and immediately after receipt of payment for the Shares will not be required to be registered as, an “investment company,” an “affiliated person” of, “promoter” for or “principal underwriter” for, an entity “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
(t) Unlawful Payments. Neither the Company nor any directors, officers, nor to the Company’s Knowledge, employees, agents or other Persons acting at the direction of or on behalf of the Company has, in the course of its actions for, or on behalf of, the Company: (i) directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to foreign or domestic political activity; (ii) made any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees or to any foreign or domestic political parties or campaigns from corporate funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful bribe, rebate, payoff, influence payment, kickback or other material unlawful payment to any foreign or domestic government official or employee.
(u) OFAC. Neither the Company nor, to the Company’s Knowledge, any director, officer, agent, employee, Affiliate or Person acting on behalf of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not knowingly, directly or indirectly, use the proceeds of the sale of the Primary Shares, or lend, contribute or otherwise make available such proceeds to any other Person or entity, towards any sales or operations in any country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.
(v) Compliance with Money Laundering Laws. The operations of the Company and its subsidiaries are, and, to the knowledge of the Company and its subsidiaries, have been at all times in the past five years, conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or its subsidiaries, threatened.
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(w) No General Solicitation or General Advertising. Neither the Company nor any Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Shares.
(x) Change in Control. The issuance of the Shares to the Purchasers as contemplated by this Agreement will not trigger any rights under any “change of control” provision in any agreements to which the Company is a party, including any employment, “change in control,” severance or other compensatory agreements and any benefit plan, which results in payments to the counterparty or the acceleration of vesting of benefits.
(y) Disclosure. The Company understands and confirms that each Purchaser will rely on the foregoing representations and warranties in purchasing the Shares. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby, furnished by or on behalf of the Company, when taken as a whole, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(z) Shell Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1).
(aa) No Preferential Rights. Except as set forth on Schedule 3.1(aa), the Company has not granted to any Purchaser any rights, preferences, or benefits with respect to the Shares or the transactions contemplated by this Agreement that are more favorable in any material respect than those granted to any other Purchaser, other than the difference relating solely to the number of Shares purchased or, with respect to Fortress, the issuance of Non-Voting Common Stock contemplated in Section 2.1(a).
3.2 Representations and Warranties of the Selling Shareholders. The Selling Shareholders, hereby represent and warrant to the Purchasers and the Company as of the date hereof and as of the Closing Date as follows:
(a) Organization; Authority; Enforcement. The Selling Shareholders are duly organized, validly existing and in good standing under the laws of the jurisdiction of their organization with the requisite corporate, partnership, limited liability company or other power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations hereunder. The execution and delivery of the Transaction Documents and performance by the Selling Shareholders of the transactions contemplated hereby have been duly authorized by all necessary corporate or, if such Selling Shareholder is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Selling Shareholder. This Agreement has been duly executed by the Selling Shareholders, and when delivered by the Selling Shareholders in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Selling Shareholders, enforceable against it in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
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(b) No Conflicts. The execution, delivery and performance by the Selling Shareholders of the Transaction Documents and the consummation by the Selling Shareholders of the transactions contemplated hereby (including the sale and delivery of the Secondary Shares), do not and will not (i) conflict with or violate any provision of the organizational documents of the Selling Shareholder, (ii) conflict with, constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which any Selling Shareholder is a party or by which any property or asset of any Selling Shareholder is bound, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree applicable to any Selling Shareholder or by which any property or asset of any Selling Shareholder is bound, except, in the case of clauses (ii) and (iii), for any such conflict, default or violation that would not reasonably be expected to materially impair or delay the ability of any Selling Shareholder to perform its obligations hereunder.
(a) Filings, Consents and Approvals. No consent, approval, order, authorization or filing with, or notice to, any Governmental Entity or any other Person is required on the part of the Selling Shareholders in connection with the execution, delivery and performance by the Selling Shareholders of the Transaction Documents or the consummation by the Selling Shareholders of the transactions contemplated hereby, other than (i) those that have been obtained or made prior to the Closing and (ii) those the failure of which to obtain or make would not reasonably be expected to materially impair or delay the ability of any Selling Shareholder to perform its obligations hereunder.
(b) Title to Secondary Shares. Each Selling Shareholder is the record and beneficial owner of, and has good and valid title to, the Secondary Shares being sold by such Selling Shareholder hereunder, free and clear of any and all Liens, preemptive rights, rights of first refusal, pledges, security interests, encumbrances, equities, claims, options, proxies, voting trusts or agreements, agreements, limitations on such Selling Shareholder’s voting rights, charges or restrictions of any kind (other than restrictions on transfer arising under applicable securities laws or those arising under this Agreement or the other Transaction Documents). Each Selling Shareholder has properly net exercised its warrant to purchase the shares of Common Stock included in the Secondary Shares. Upon delivery to the Purchasers of the Secondary Shares being sold by the Selling Shareholder hereunder at the Closing in accordance with the terms of this Agreement, good and valid title to such Secondary Shares will pass to the applicable Purchasers, free and clear of all Liens other than restrictions on transfer arising under applicable securities laws or created by or through such Purchasers. No registration under the Securities Act is required for the offer and sale of the Secondary Shares by the Selling Shareholders to the Purchasers under the Transaction Documents.
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(c) Placement Agent Fees. The Selling Shareholders, together with the Company, shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than fees or commissions of persons engaged by each Purchaser or its investment advisor) relating to or arising out of the transactions contemplated hereby. Other than the Placement Agent, no Selling Shareholder has engaged any placement agent or other agent in connection with the sale of the Shares.
(d) Acknowledgment Regarding Purchase of Shares. The Selling Shareholders acknowledge and agree that each Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Selling Shareholders further acknowledge that each Purchaser is not acting as a financial advisor or fiduciary of the Selling Shareholders (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by such Purchaser or its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to such Purchaser’s purchase of the Shares.
(e) OFAC. Neither the Selling Shareholder nor, to the Selling Shareholder’s knowledge, any director, officer, agent, employee, Affiliate or Person acting on behalf of the Selling Shareholder is currently subject to any U.S. sanctions administered by OFAC; and the Selling Shareholder will not knowingly, directly or indirectly, use the proceeds of the sale of the Shares, or lend, contribute or otherwise make available such proceeds to any other Person or entity, towards any sales or operations in any other sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.
(f) Compliance with Money Laundering Laws. The operations of the Selling Shareholders are, and, to the knowledge of the Selling Shareholders, have been at all times in the past five years, conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Money Laundering Laws, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Selling Shareholders with respect to the Money Laundering Laws is pending or, to the knowledge of the Selling Shareholders, threatened.
(g) Disclosure. The Selling Shareholders understand and confirm that each Purchaser and the Company will rely on the foregoing representations and warranties. All disclosure provided to the Purchasers and the Company regarding the Selling Shareholders and the transactions contemplated hereby, furnished by or on behalf of the Selling Shareholders, when taken as a whole, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(h) Non-Affiliates. No Selling Shareholder is an Affiliate of the Company.
(i) No Preferential Rights. No Selling Shareholder has granted to any Purchaser any rights, preferences, or benefits with respect to the Shares or the transactions contemplated by this Agreement that are more favorable in any material respect than those granted to any other Purchaser, other than the difference relating solely to the number of Shares purchased.
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3.3 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Person, represents and warrants as of the date hereof and as of the Closing Date (except for the representations and warranties that speak as of a specific date, which shall be made as of such date) to the Company and the Selling Shareholders as follows:
(a) Organization; Authority.
(i) If Purchaser is an individual, Purchaser has the full right, power, and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out his or her obligations hereunder and thereunder.
(ii) If Purchaser is an entity, Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate, partnership, limited liability company or other power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or, if Purchaser is not a corporation, such partnership, limited liability company or other applicable like action, on the part of Purchaser. This Agreement has been duly executed by Purchaser, and when delivered by Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of Purchaser, enforceable against it in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(b) No Conflicts. The execution, delivery and performance by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of Purchaser, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which Purchaser is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Purchaser to perform his, her or its obligations hereunder. Other than securities or blue sky laws of the states of the United States and except as otherwise provided in this Agreement, and assuming the accuracy of the representations and warranties of the Company and the performance of the covenants and agreements of the Company contained herein, no material notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entities, or expiration or termination of any statutory waiting period, is necessary for the consummation by Purchaser of the transactions set forth in this Agreement.
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(c) Investment Intent. Purchaser understands that the Primary Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities laws and is acquiring the Primary Shares as principal for its own account and not with a view to, or for distributing or reselling such Primary Shares or any part thereof in violation of the Securities Act or any applicable state securities laws, provided, however, that by making the representations herein, Purchaser does not agree to hold any of the Primary Shares for any minimum period of time and reserves the right at all times to sell or otherwise dispose of all or any part of such Primary Shares pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Purchaser is acquiring the Primary Shares hereunder in the ordinary course of its business. Purchaser does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the Primary Shares to or through any Person.
(d) Purchaser Status. At the time Purchaser was offered the Shares, Purchaser was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.
(e) General Solicitation. Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general advertisement.
(f) Experience of Purchaser. Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment. Purchaser understands that (i) its investment in the Shares involves a high degree of risk, (ii) no representation is being made by any party (including, without limitation, the Placement Agent) as to the business or prospects of the Company or the future value of the Shares, and (iii) no representation is being made by any party (including, without limitation, the Placement Agent) as to any pro formas, projections, forecasts, illustrations, illustrative examples, or estimates delivered to or made available to Purchaser (or any of its Affiliates, advisors or representatives) related to the Company or the Bank, without limitation, those contained in any investor presentation or otherwise made available on the Data Site.
(g) Access to Information. Purchaser acknowledges that it is Purchaser’s responsibility to conduct its own independent investigation and evaluation of the Company. Purchaser acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the Offering and the merits and risks of investing in the Shares, and any such questions have been answered to its satisfaction; (ii) access to information about the Company and its Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment in the Shares; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment in the Shares. Neither such inquiries nor any other investigation conducted by or on behalf of Purchaser or its representatives or counsel shall modify, amend or affect Purchaser’s right to rely on the truth, accuracy and completeness of the Company’s representations and warranties contained in the Transaction Documents. Purchaser has sought such accounting, legal and Tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Shares.
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(h) Brokers and Finders. Other than the Placement Agent with respect to the Company (which fees are to be paid by the Company and the Selling Shareholders), no Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company, any Selling Shareholder or any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of Purchaser.
(i) Independent Investment Decision. Purchaser has independently evaluated the merits of its decision to purchase the Shares pursuant to the Transaction Documents, and Purchaser confirms that it has not relied on the advice of any other Purchaser’s business and/or legal counsel in making such decision. Purchaser acknowledges that the Company has not produced an offering memorandum or other private placement memorandum, prospectus or circular with respect to the Offering. Purchaser understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to Purchaser in connection with the purchase of the Shares constitutes legal, Tax or investment advice. Purchaser has consulted such legal, Tax and investment advisors as Purchaser, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares. Purchaser understands that the Placement Agent has acted solely as the agent of the Company and the Selling Shareholders in this placement of the Shares and that Purchaser has not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such Persons has made any representations or warranties to Purchaser in connection with the transactions contemplated by the Transaction Documents. Such Persons, including, without limitation, the Placement Agent, are third-party beneficiaries to this Section 3.2(i). Purchaser has received or had access to all of the information Purchaser deemed necessary in order to make its investment decision with respect to the Shares.
(j) Reliance on Exemptions. Purchaser understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and Purchaser’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of Purchaser to acquire the Shares.
(k) No Public Market; Governmental Review; Shares Not Insured. Purchaser understands that there is no established market for the Shares and that no public market for the Shares may develop. Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares no have such authorities passed upon or endorsed the merits of the Offering of the Shares. Purchaser understands that the Shares are not deposits or other obligations of a depository institution and are not insured by the FDIC, including the FDIC’s Deposit Insurance Fund, or any other governmental agency.
(l) Residency. Purchaser’s residence or office in which its investment decision with respect to the Shares was made is located at the address on Purchaser’s signature page hereto.
(m) Financial Capability. Purchaser has or will have immediately available funds necessary to pay the Aggregate Purchase Price and consummate the Closing, as of the Closing Date, on the terms and conditions contemplated by this Agreement.
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(n) OFAC and Anti-Money Laundering. Purchaser understands, acknowledges, represents and agrees that (i) Purchaser is not the target of any sanction, regulation or law promulgated by OFAC, the Financial Crimes Enforcement Network or any other U.S. Governmental Entity (“U.S. Sanctions Laws”); (ii) Purchaser is not owned by, controlled by, under common control with, or acting on behalf of any person that is the target of U.S. Sanctions Laws; (iii) Purchaser is not a “foreign shell bank” and is not acting on behalf of a “foreign shell bank” under applicable anti-money laundering laws and regulations; (iv) Purchaser’s entry into this Agreement or consummation of the transactions contemplated hereby will not contravene U.S. Sanctions Laws or applicable anti-money laundering laws or regulations; (v) Purchaser will promptly provide to any regulatory or law enforcement authority such information or documentation as may be required to comply with U.S. Sanctions Laws or applicable anti-money laundering laws or regulations; and (vi) the Company may provide to any regulatory or law enforcement authority information or documentation regarding, or provided by, Purchaser for the purposes of complying with U.S. Sanctions Laws or applicable anti-money laundering laws or regulations.
(o) No Outside Discussion of Offering. As of the date of this Agreement, Purchaser has not discussed the offering with any other party or potential investors (other than the Company, the Selling Shareholders, the Placement Agent and Purchaser’s authorized representatives, advisors, counsel, and Purchaser’s underlying investors to whom the Company was not identified), except as expressly permitted under the terms of this Agreement or any non-disclosure agreement between the Company and the Purchaser.
3.4 The Company, the Selling Shareholders and the Purchasers acknowledge and agree that no party to this Agreement has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Article III.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Primary Shares may result in dilution of the outstanding shares of Common Stock or Non-Voting Common Stock. The Company further acknowledges that its obligations under the Transaction Documents, including without limitation its obligation to issue the Primary Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other shareholders of the Company.
4.2 Legend.
(a) Each Purchaser agrees that all certificates or other instruments, if any, representing the Primary Shares subject to this Agreement will bear a legend and with respect to Primary Shares held in book-entry form, the transfer agent of the Company will record a legend on the share register substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
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(b) Upon receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend set forth in Section 4.2(a) is no longer required under the Securities Act and applicable state securities laws, the Company shall promptly cause the legend to be removed from any certificate or instrument or share registrar (as the case may be) representing such Shares, as applicable. The Company shall be responsible for removal of legend costs, including the fees of its legal counsel for issuing a blanket legal opinion.
(c) The Company will use its commercially reasonable efforts to, at the reasonable request of Purchaser, (i) (x) deliver all the necessary documentation to cause Company’s transfer agent to remove all restrictive legends from any Primary Shares that are subject to or have been or are about to be sold or transferred pursuant to an effective registration statement or are being sold pursuant to Rule 144, at the time of sale by the Purchaser or any affiliate of the Purchaser and (y) cause its legal counsel to deliver to the transfer agent the necessary legal opinions required by the transfer agent, if any, in connection with the instruction under clause (x) above upon the receipt of representation letters and such other customary supporting documentation from the Purchaser or its affiliate as requested by (and in a form reasonably acceptable to) such counsel, and (ii) remove any legend from the book entry position evidencing its Shares following the earliest of such time as such Shares are eligible for sale by the Purchaser without restriction as to volume or manner of sale pursuant to Rule 144. The Company shall be responsible for the fees of its transfer agent, its legal counsel (including for purposes of giving the opinion referenced herein) and all Depository Trust Company fees or other fees associated with such issuance.
4.3 Indemnification.
(a) Indemnification by the Company of the Purchasers and the Selling Shareholders. The Company will indemnify and hold each Purchaser, each Selling Shareholder and their directors, officers, shareholders, members, partners, employees, agents and investment advisers (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser or Selling Shareholder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners, employees, agents and investment advisers (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling Person (each, an “Company Indemnified Person”) harmless from any and all damages, liabilities, obligations, claims, contingencies, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any such Company Indemnified Person may suffer or incur as a result of (i) any breach of any of the representations, warranties, covenants or agreements made by the Company in the Transaction Documents, (ii) any Proceeding instituted against a Company Indemnified Person in any capacity, or any of them or their respective Affiliates, by any shareholder of the Company or other third party who is not an Affiliate of such Company Indemnified Person, with respect to any of the transactions contemplated by this Agreement, or (iii) any Proceeding involving the Company arising out of or related to any event, fact, change, occurrence, development or condition prior to the Closing. The Company will not be liable to any Company Indemnified Person under this Agreement to the extent, but only to the extent that, a loss, claim, damage or liability is directly attributable to any Company Indemnified Person’s breach of any of the representations, warranties, covenants or agreements made by such Company Indemnified Person in this Agreement.
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(b) Indemnification by the Selling Shareholders of the Purchasers and the Company. The Selling Shareholders will indemnify and hold each Purchaser, the Company and their directors, officers, shareholders, members, partners, employees, agents and investment advisers (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser or the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners, employees, agents and investment advisers (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling Person (each, an “Selling Shareholder Indemnified Person”, together with the Company Indemnified Person, an “Indemnified Person”) harmless from any and all Losses that any such Selling Shareholder Indemnified Person may suffer or incur as a result of (i) any breach of any of the representations, warranties, covenants or agreements made by any Selling Shareholder in the Transaction Documents, or (ii) any Proceeding involving the Selling Shareholders arising out of or related to any event, fact, change, occurrence, development or condition prior to the Closing. The Selling Shareholders will not be liable to any Selling Shareholder Indemnified Person under this Agreement to the extent, but only to the extent that, a loss, claim, damage or liability is directly attributable to any Selling Shareholder Indemnified Person’s breach of any of the representations, warranties, covenants or agreements made by such Selling Shareholder Indemnified Person in this Agreement.
(c) Conduct of Indemnification Proceedings. Promptly after receipt by any Indemnified Person of any notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any Proceeding in respect of which indemnity may be sought pursuant to Section 4.3(a) or Section 4.3(b), such Indemnified Person shall promptly notify the Company or the Selling Shareholders, as applicable, in writing and the Company or the Selling Shareholders, as applicable, shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided that the failure of any Indemnified Person so to notify the Company or the Selling Shareholders, as applicable, shall not relieve the Company of its obligations hereunder except to the extent that such failure shall have materially and adversely prejudiced the Company or the Selling Shareholders, as applicable (as finally determined by a court of competent jurisdiction, which determination is not subject to appeal or further review). In any such Proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company or the Selling Shareholders, as applicable, and the Indemnified Person shall have mutually agreed to the retention of such counsel; (ii) the Company or the Selling Shareholders, as applicable, shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Person in such Proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified Person, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, provided, however, that the Company or the Selling Shareholders, as applicable, shall not be required to pay for more than two separate counsel for all Indemnified Persons. The Company or the Selling Shareholders, as applicable, shall not be liable for any settlement of any Proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Without the prior written consent of the Indemnified Person, neither the Company nor the Selling Shareholders, as applicable, shall effect any settlement of any pending or threatened Proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such Proceeding.
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(d) Limitation on Amount of Company’s and Selling Shareholders Indemnification Liability.
(i) Tipping Basket. Neither the Company nor the Selling Shareholders will be liable for Losses that are otherwise indemnifiable under Section 4.3(a)(i) and Section 4.3(b)(i) until the total of all Losses under Section 4.3(a)(i) and Section 4.3(b)(i) incurred by the Indemnified Person exceeds 1.5% of the Aggregate Purchase Price of such Indemnified Person (or the related Purchaser), at which point the full amount of all indemnifiable Losses shall be recoverable.
(ii) Maximum. The maximum aggregate liability of the Company and the Selling Shareholders for all indemnifiable Losses under Section 4.3(a)(i) and Section 4.3(b)(i) is the Aggregate Purchase Price of such Indemnified Person (or the related Purchaser) plus all costs and expenses, including without limitation reasonable attorneys’ fees, that may be incurred or paid by the Indemnified Person in connection with an indemnity sought pursuant to Section 4.3(a)(i) or Section 4.3(b)(i).
(iii) The provisions of Section 4.3(d)(i) and (ii) do not apply to (A) claims due to the inaccuracy of any of the representations or breach of any of the warranties of the Company in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d), 3.1(e), 3.1(f), 3.1(g), 3.1(i), or 3.1(o), (B) indemnification claims involving fraud or knowing and intentional misconduct by the Company, (C) claims due to the inaccuracy of any of the representations or breach of any of the warranties of the Selling Shareholders in Sections 3.2(a), 3.2(b), 3.2(c), 3.2(d), 3.2(e) or 3.1(f), or (B) indemnification claims involving fraud or knowing and intentional misconduct by the Selling Shareholders.
(iv) Exclusive Remedy. The indemnity provided for in this Section 4.3 shall be the sole and exclusive monetary remedy of Indemnified Persons after the Closing for any inaccuracy of any representation or warranty or any other breach of any covenant or agreement contained in this Agreement; provided that nothing herein shall limit in any way any such party’s remedies in respect of fraud by any other party in connection with the transactions contemplated by this Agreement.
4.4 Use of Proceeds. The Company intends to use the net proceeds from the sale of the Primary Shares hereunder for general corporate purposes. The Company will not receive any proceeds from the sale of the Secondary Shares.
4.5 No Change of Control. The Company shall use reasonable best efforts to obtain all necessary irrevocable waivers, adopt any required amendments and make all appropriate determinations so that the issuance of the Shares to the Purchasers will not trigger a “change of control” or other similar provision in any of the agreements to which the Company is a party, including without limitation any employment, “change in control,” severance or other agreements and any benefit plan, which results in payments to the counterparty or the acceleration of vesting of benefits.
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4.6 Filings; Other Actions. Each party agrees, upon request, to furnish the other party with all information (other than Investor Confidential Information) concerning itself, its subsidiaries, Affiliates, directors, officers, partners, and shareholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice, or application made by or on behalf of such other party or any of its subsidiaries to any Bank Regulatory Authority in connection with this Agreement. Notwithstanding anything in this Section 4.6 or elsewhere in this Agreement to the contrary, (a) each Purchaser shall not be required to provide any materials to the Company that it deems private or confidential; and (b) each Purchaser shall provide information only to the extent typically provided by such Purchaser to such Bank Regulatory Authority and subject to such confidentiality requests as such Purchaser may reasonably seek.
4.7 Reasonable Efforts. Each of the Company and each Purchaser agree to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with such Purchaser in doing, all commercially reasonable things necessary, proper or advisable to consummate and make effective, in the most expeditious manner commercially practicable, the transactions contemplated by the Transaction Documents.
4.8 Notice of Certain Events. Each party hereto shall promptly notify the other party hereto of (a) any event, condition, fact, circumstance, occurrence, transaction or other item of which such party becomes aware prior to the Closing that would constitute a violation or breach of the Transaction Documents (or a breach of any representation or warranty contained herein or therein) or, if the same were to continue to exist as of the Closing Date, would constitute the non-satisfaction of any of the conditions set forth in Sections 5.1 or 5.2 hereof, and (b) any event, condition, fact, circumstance, occurrence, transaction or other item of which such party becomes aware that would have been required to have been disclosed pursuant to the terms of this Agreement had such event, condition, fact, circumstance, occurrence, transaction or other item existed as of the date hereof; provided that delivery of any notice pursuant to this Section 4.8 shall not modify the representations, warranties, covenants, agreements or obligations of the parties (or remedies with respect thereto) or the conditions to the obligations of the parties under this Agreement. Notwithstanding the foregoing, neither party shall be required to take any action that would jeopardize such party’s attorney-client privilege.
4.9 Confidentiality. Each party to this Agreement will hold, and will use commercially reasonable efforts to cause its respective subsidiaries and their directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless disclosure to a Governmental Entity is reasonably necessary or appropriate in connection with any necessary regulatory approval, or request for information or similar process, or unless compelled to disclose by judicial or administrative process or, based on the advice of its counsel, by another requirement of law or the applicable requirements of any Governmental Entity (in which case, the party permitted to disclose such information shall, to the extent legally permissible and reasonably practicable, provide the other party with prior written notice of such permitted disclosure so that such other party may seek confidential treatment of such information from the applicable Governmental Entity), all nonpublic records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) concerning the other party hereto furnished to it by such other party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (a) previously known by such party on a nonconfidential basis, (b) in the public domain through no fault of such party, (c) later lawfully acquired from other sources by the party to which it was furnished or (d) independently developed or conceived by such party without use of such Information), and neither party hereto shall release or disclose such Information to any other person, except its Affiliates, and to its and their respective directors, officers, employees, partners, investors, potential investors, auditors, financial advisors, other consultants and advisors with the express understanding that such parties will maintain the confidentiality of the Information and, to the extent permitted above, to Governmental Entities; provided, however, that (i) each Purchaser is permitted to disclose Information to auditors and bank and securities regulatory authorities without prior written notice to the Company in connection with any audit or examination that does not explicitly reference the Company or this Agreement and (ii) each Purchaser may identify the Company and the number and value of such Purchaser’s security holdings in the Company in accordance with applicable investment reporting and disclosure regulations or internal policies without prior notice to or consent from the Company.
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4.10 Conduct of Business. From the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, except as contemplated by the Transaction Documents, the Company will: (a) operate its business in the ordinary course consistent with past practice, preserve intact the current business organization of the Company; (b) use commercially reasonable efforts to retain the services of their employees, consultants and agents; (c) preserve the current relationships of the Company with material customers and other Persons with whom the Company has and intends to maintain significant relations; (d) pay all applicable federal, state, local and foreign Taxes when due and payable (other than those Taxes the payment of which the Company challenges in good faith in appropriate proceedings and which are fully reserved for to the extent required by GAAP); (e) maintain, renew, keep in full force and effect and preserve its rights, franchises and licenses and all permits necessary for the conduct of the business of the Company as currently conducted; (f) comply with all orders, writs, and decrees applicable to it and to the conduct of its business and operations, maintain all of its operating assets in their current condition (normal wear and tear excepted); (g) refrain from taking or omitting to take any action that would constitute a breach of Section 3.1(j); and (h) refrain from (i) declaring, setting aside or paying any distributions or dividends on, or making any distributions (whether in cash, securities, or other property) in respect of, any of its capital stock, (ii) splitting, combining or reclassifying any of its capital stock or issuing or authorizing the issuance of any other securities in respect of, in lieu of or in substitution for capital stock or any of its other securities, and (iii) purchasing, redeeming or otherwise acquiring any capital stock, assets or other securities or any rights, warrants or options to acquire any such capital stock, assets or other securities, other than acquisitions of investment securities in the ordinary course of business.
4.11 No Additional Issuances; No Side Letters. Between the date of this Agreement and the Closing Date, the Company shall not (i) except for the Primary Shares being issued pursuant to this Agreement and any shares related to equity awards granted under the Company’s equity incentive plan, issue or agree to issue any additional shares of Common Stock, Non-Voting Common Stock or other securities or (ii) except as set forth in Schedule 3.1(aa), enter into any side letter, understanding, agreement, or other arrangement with any Purchaser or any other person that would provide such person with rights or benefits relating to the Shares that are materially more favorable than those provided to the Purchasers generally, unless the Company offers substantially the same rights or benefits to all Purchasers.
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ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to the Obligations of Each Purchaser to Purchase Shares. The obligations of each Purchaser hereunder to purchase the Shares at the Closing are subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any or all of which may be waived in whole or in part by such Purchaser in its sole discretion with respect to its obligations):
(a) Representations and Warranties of the Company and the Selling Shareholders. The representations and warranties of the Company and the Selling Shareholders contained in this Agreement shall be true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except to the extent that any such representation or warranty is expressly made as of a specified date, in which case such representation or warranty shall be true and correct as of such specified date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Performance by the Company. The Company and the Selling Shareholders shall have performed in all material respects all covenants and agreements required to be performed by them under this Agreement at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction, nor shall there have been any regulatory communication, that prohibits the consummation of any of the transactions contemplated by the Transaction Documents or restricts each Purchaser or any of such Purchaser’s Affiliates from owning or voting any Shares of the Company in accordance with the terms hereof.
(d) Consents. All Required Notices and all other consents, waivers, authorizations and approvals of any Governmental Entity or any other Person required to be obtained by the Company or the Selling Shareholders in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect.
(e) Company Deliverables. The Company shall have delivered the Company Deliverables in accordance with Section 2.2(b).
(f) Selling Shareholder Deliverables. The Selling Shareholders shall have delivered the Selling Shareholder Deliverables in accordance with Section 2.2(a).
(g) Termination. This Agreement shall not have been terminated in accordance with Section 6.14 herein.
(h) Bank Regulatory Issues. The purchase of such Shares by each Purchaser shall not, at the time of Closing, (i) cause such Purchaser or any of its Affiliates to violate any banking regulation, (ii) require such Purchaser or any of its Affiliates to become a bank holding company or otherwise serve as a source of strength for the Company or the Bank or (iii) cause such Purchaser, together with any other person whose Company securities would be aggregated with such Purchaser’s Company securities for purposes of any banking regulation or law, to collectively be deemed to own, control or have the power to vote securities which (assuming, for this purpose only, full conversion and/or exercise of such securities by such Purchaser and such other Persons) would represent more than 9.9% of any class of voting securities of the Company outstanding at such time. For purposes of this Section 5.1(i), the term “Affiliate” shall have the meaning under the BHC Act and the Federal Reserve’s Regulation Y.
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(i) Material Adverse Effect. No Material Adverse Effect shall have occurred since the date of this Agreement.
(j) No Change in Control. The Company shall not have agreed to enter into or entered into (i) any agreement or transaction in order to raise capital, or (ii) any transaction that resulted in, or would result in if consummated, a Change in Control of the Company.
5.2 Conditions Precedent to the Obligations of the Company and the Selling Shareholders to sell the Shares. The obligations of the Company and the Selling Shareholders to consummate the transactions contemplated by this Agreement at the Closing are subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any or all of which may be waived in whole or in part by the Company and the Selling Shareholders in their sole discretion):
(a) Representations and Warranties. The representations and warranties made by each Purchaser in Section 3.3 hereof shall be true and correct as of the date when made, and as of the Closing Date as though made on and as of such date, except for representations and warranties that speak as of a specific date.
(b) Performance. Each Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Purchaser at or prior to the Closing Date.
(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction, nor shall there have been any regulatory communication, that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(d) Purchaser Deliverables. Each Purchaser shall have delivered its Purchaser Deliverables in accordance with Section 2.2(c).
(e) Termination. This Agreement shall not have been terminated in accordance with Section 6.14 herein.
ARTICLE VI
MISCELLANEOUS
6.1 Fees and Expenses. The parties hereto shall be responsible for the payment of all expenses incurred by them in connection with the preparation and negotiation of the Transaction Documents and the consummation of the transactions contemplated hereby. The Company and the Selling Shareholders shall pay all amounts owed to the Placement Agent relating to or arising out of the transactions contemplated hereby. The Company shall pay all stamp Taxes and other Taxes and duties levied in connection with the sale and issuance of the Primary Shares to the Purchasers.
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6.2 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company, the Selling Shareholders and each Purchaser will execute and deliver to the other such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents.
6.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via e-mail (provided the sender receives e-mail notification or confirmation of receipt of an e-mail transmission) at the e-mail address specified in this Section 6.3 prior to 5:00 p.m., Eastern time, on a Business Day, (b) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (c) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:
| If to the Company: | Georgia Banking Company, Inc. |
| 1776 Peachtree Street NW, Suite 300 | |
| Atlanta, GA 30309 | |
| Attn: Bartow Morgan, Jr. | |
| Email: [***] | |
| With a copy to: | Troutman Pepper Locke LLP |
| 600 Peachtree Street, NE, Suite 3000 | |
| Atlanta, GA 30308 | |
| Attn: James Stevens | |
| Email: [***] | |
| If to the Selling Shareholders: | at the address set forth under such Selling Shareholders name on the signature page to this Agreement |
| If to a Purchaser: | at the address set forth under such Purchaser’s name on the signature page to this Agreement |
or such other address as may be designated in writing hereafter, in the same manner, by such Person.
6.4 Amendments; Waivers; No Additional Consideration. No amendment or waiver of any provision of this Agreement will be effective with respect to any party unless made in writing and signed by an officer or a duly authorized representative of such party. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.
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6.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents.
6.6 Successors and Assigns. The provisions of this Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. This Agreement, or any rights or obligations hereunder, may not be assigned (i) by the Company without the prior written consent of the Purchaser or the Purchasers whose rights or obligations would be affected by such assignment, or (ii) by any Purchaser without the prior written consent of the Company and the Selling Shareholders; provided that any Purchaser may assign its rights hereunder, in whole or in part, to any Affiliate of such Purchaser; provided further that any such transferee of a Purchaser shall agree in writing to be bound by the terms and conditions of this Agreement that apply to such Purchaser.
6.7 No Third-Party Beneficiaries. Other than with respect to the Placement Agent as set forth herein, this Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than Indemnified Persons.
6.8 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts made and to be performed entirely within such State. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) may be commenced on an exclusive basis in the Georgia Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the Georgia Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such Georgia Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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6.9 Survival. The representations, warranties, agreements, and covenants contained herein shall survive the Closing and the delivery of the Shares as follows: (i) the representations and warranties of the Company set forth in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d), 3.1(e), 3.1(f), 3.1(g) and 3.1(p) shall survive indefinitely, (ii) the representations and warranties of the Company set forth in Section 3.1(h) shall survive for the applicable statute of limitations, and (iii) all other representations and warranties of the Company set forth in Sections 3.1 shall survive for a period of 12 months following the Closing and the delivery of the Primary Shares. All representations and warranties of the Selling Shareholders set forth in Sections 3.2(a), 3.2(b), 3.2(c), 3.2(d) and 3.2(e) shall survive indefinitely and (ii) all other representations and warranties of the Selling Shareholders set forth in Sections 3.2 shall survive for a period of 12 months following the Closing and the delivery of the Secondary Shares.
6.10 Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
6.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
6.12 Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for any losses in connection therewith. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares. If a replacement certificate or instrument evidencing any Shares is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.
6.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers, the Company and the Selling Shareholders may be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a remedy at law would be adequate.
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6.14 Termination. This Agreement may be terminated and the sale and purchase of the Shares as between the Company and the Selling Shareholders and any Purchaser or the Purchasers may be abandoned at any time prior to the Closing:
(a) by the written consent of the Company, the Selling Shareholders and the Purchasers;
(b) by the Company or any Purchaser, 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;
(c) by any Purchaser, upon written notice to the Company and the Selling Shareholders, solely with respect to such Purchaser, if there has been a breach of any representation, warranty, covenant or agreement made by the Company or the Selling Shareholders in this Agreement, or any such representation or warranty shall have become untrue after the date of this Agreement, in each case such that a closing condition in Section 5.1(a) or Section 5.1(b); or
(d) by the Company or by the Selling Shareholders (solely with respect to the sale of Shares by such Selling Shareholder), upon written notice to any Purchaser, solely with respect to such Purchaser, if there has been a breach of any representation, warranty, covenant or agreement made by such Purchaser in this Agreement, or any such representation or warranty shall have become untrue after the date of this Agreement, in each case such that a closing condition in Section 5.2(a) or Section 5.2(b) would not be satisfied with respect to such Purchaser.
6.15 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under this Agreement and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
6.16 Adjustments in Stock Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock or Non-Voting Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock or Non-Voting Common Stock), combination or other similar recapitalization or event occurring after the date hereof and prior to the Closing, each reference in this Agreement to a number of shares or a price per share shall be deemed to be amended to appropriately account for such event.
6.17 Publicity. Except as may be required by applicable law, neither the Company, the Selling Shareholders nor any representative of either of the Company or the Selling Shareholders (including the Placement Agent) will issue any press release or public statement that identifies any Purchaser or any investment advisor to any Purchaser, or otherwise makes any public statement with respect to any Purchaser or any investment advisor to any Purchaser, without the prior written consent of such Purchaser. Any such press release or public statement required by applicable law shall only be made by the Company, the Selling Shareholders or the Placement Agent after reasonable notice and opportunity for review by the applicable Purchaser or Purchasers.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| GEORGIA BANKING COMPANY, INC., | ||
| a Georgia corporation | ||
| By: | ||
| Bartow Morgan | ||
| Chief Executive Officer | ||
SELLING SHAREHOLDERS:
| FINANCIAL HYBRID OPPORTUNITY FUND LLC, | FINANCIAL HYBRID OPPORTUNITY SPV I LLC, | |
| a Delaware limited liability company | a Delaware limited liability company |
| FJ CAPITAL MANAGEMENT LLC, | FJ CAPITAL MANAGEMENT LLC, | |||||
| Managing Member | Managing Member | |||||
| By: | By: | |||||
| Name: | Name: | |||||
| Title: | Title: | |||||
| FINANCIAL OPPORTUNITY FUND LLC, | Address for Notice: | |
| a Delaware limited liability company |
| c/o FJ Capital Management LLC | ||||
| 7901 Jones Branch Drive Suite 210 | ||||
| FJ CAPITAL MANAGEMENT LLC, | McLean, VA 22102 | |||
| Managing Member | Tel: 703-331-5500 | |||
| Attn: Martin Friedman and Jeffrey Kashdin | ||||
| Email: [***] and [***] | ||||
| With a copy to: | ||||
| By: | ||||
| Name: | Stuart | Moore | Staub | |||
| Title: | 641 Higuera Street, Suite 302 | |||
| San Luis Obispo, CA 93401 | ||||
| Attn: Richard J. Perry, Jr. | ||||
| Email: [***] | ||||
SELLING SHAREHOLDERS CONTINUED:
| STRATEGIC VALUE INVESTORS, LP, | ||
| a Delaware limited partnership | ||
| By: | ||
| Name: | ||
| Title: | ||
| Address for Notice: | ||
| Attn: | ||
| Email: | ||
| With a copy to: | ||
| Attn: | ||
| Email: | ||
| PURCHASER: | |
| By: | ||
| Name: | ||
| Title: |
| Number of Shares Purchased: | ||
| Aggregate Purchase Price: | ||
| Address for Notice: | ||
SCHEDULE I
Selling Shareholders
| Selling Shareholders | Number of Secondary Shares To be Sold | |||
| Financial Hybrid Opportunity Fund LLC | 298,911 | |||
| Financial Hybrid Opportunity SPV I LLC | 185,937 | |||
| Financial Opportunity Fund LLC | 426,008 | |||
| Strategic Value Investors, LP | 383,958 | |||
| Total | 1,294,814 | |||
EXHIBIT A
ACCREDITED INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: Georgia Banking Company, Inc. (the “Company”)
This Investor Questionnaire (“Questionnaire”) must be completed by each potential investor in connection with the offer and sale of shares of the Company (collectively, the “Shares”). The Shares are being offered and sold by the Company without registration under the Securities Act of 1933, as amended (the “Securities Act”), and the securities laws of certain states, in reliance on the exemptions contained in Section 4(a)(2) of the Securities Act and on Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. The Company must determine that a potential investor meets certain suitability requirements before offering or selling Shares to such investor. The purpose of this Questionnaire is to assure the Company that each investor will meet the applicable suitability requirements. The information supplied by you will be used in determining whether you meet such criteria, and reliance upon the private offering exemptions from registration is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any security. Your answers will be kept strictly confidential. However, by signing this Questionnaire, you will be authorizing the Company to provide a completed copy of this Questionnaire to such parties as the Company deems appropriate in order to ensure that the offer and sale of the Shares will not result in a violation of the Securities Act or the securities laws of any state and that you otherwise satisfy the suitability standards applicable to purchasers of the Shares. All potential investors must answer all applicable questions and complete, date and sign this Questionnaire. Please print or type your responses and attach additional sheets of paper if necessary to complete your answers to any item.
PART A. BACKGROUND INFORMATION
Name of Beneficial Owner of the Shares:
Business Address:
(Number and Street)
| (City) | (State) | (Zip Code) |
Telephone Number: (___)________________________________
If a corporation, partnership, limited liability company, trust or other entity:
| Type of entity: |
1
Accredited Investor Questionnaire
Was the entity formed for the purpose of investing in the Shares?
Yes ____ No ____
Taxpayer Identification No. ____________________________________________________________
The state in the United States in which you made your investment decision:__________________________________
If an individual:
| Residence Address: |
(Number and Street)
| (City) | (State) | (Zip Code) |
Telephone Number: (___)_____________________________________________________________________________________________________
Age:__________ Citizenship: ____________
Where registered to vote: _______________
The state in the United States in which you maintain your residence:____________________
Are you a director or executive officer of the Company?
Yes ____ No ____
Social Security Number: ____________________________________
2
Accredited Investor Questionnaire
PART B. ACCREDITED INVESTOR QUESTIONNAIRE
In order for the Company to offer and sell the Shares in conformance with state and federal securities laws, the following information must be obtained regarding your investor status. Please initial each category below applicable to you as a Purchaser of Shares.
| -------- | 1. | A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; |
| -------- | 2. | A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; |
| -------- | 3. | An investment adviser registered pursuant to Section 203 of the Investment Advisers Act of 1940, as amended, or registered pursuant to the laws of a state; |
| -------- | 4. | An investment adviser relying on the exemption from registering with the Commission under section 203(l) or (m) of the Investment Advisers Act of 1940, as amended |
| -------- | 5. | An insurance company as defined in Section 2(a)(13) of the Securities Act; |
| -------- | 6. | An investment company registered under the Investment Company Act of 1940, as amended; |
| -------- | 7. | A business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940, as amended; |
| -------- | 8. | A Small Business Investment Company licensed by the Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; |
| -------- | 9. | A Rural Business Investment Company as defined in Section 384A of the Consolidated Farm and Rural Development Act of 1961, as amended; |
| -------- | 10. | A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
| -------- | 11. | An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; |
| -------- | 12. | A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended; |
| -------- | 13. | An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership, or limited liability company not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000; |
| -------- | 14. | A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of investing in the Company; |
| -------- | 15. | A natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, at the time of his or her purchase exceeds $1,000,000 (see Note 15 and 16 below); |
| -------- | 16. | A natural person who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year (see Note 15 and 16 below); |
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| -------- | 17. | An executive officer or director of the Company; and |
| -------- | 18. | An entity in which all of the equity owners qualify under any of the above subparagraphs. If the undersigned belongs to this investor category only, list the equity owners of the undersigned, and the investor category which each such equity owner satisfies. |
| -------- | 19. | An entity, of a type not listed in Categories 1 through 14 or 18 above, that was not formed for the specific purpose of acquiring the Shares and owns “investments” (as defined in Rule 2a51-1(b) under the Investment Company Act of 1940, as amended) in excess of $5,000,000 |
| -------- | 20. | A natural person holding in good standing one or more of the following professional licenses: |
| (a) | General Securities Representative license (Series 7); |
| (b) | Private Securities Offerings Representative license (Series 82), and |
| (c) | Investment Adviser Representative license (Series 65); |
| -------- | 21. | A “family office” (as defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, as amended): |
| (a) | with assets under management in excess of $5,000,000, |
| (b) | that is not formed for the specific purpose of acquiring the Shares, and |
| (c) | whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment in the Company; or |
| -------- | 22. | A “family client” (as defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, as amended) of a family office meeting the requirements in Category 21 above and whose prospective investment in the issuer is directed by such family office pursuant to clause (c) of Category 21. |
Notes to 15 and 16. For the purposes of calculating “joint net worth” under paragraph 15, joint net worth can be the aggregate net worth of the investor and spouse or spousal equivalent, and assets need not be held jointly to be included in the calculation. Reliance on the joint net worth standard does not require that the securities be purchased jointly.
For purposes of calculating net worth under paragraph 15:
| (a) | The person’s primary residence shall not be included as an asset; | |
| (b) | Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the Shares, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of the Shares exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and | |
| (c) | Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of the Shares shall be included as a liability. |
The term “spousal equivalent” under paragraphs 15 and 16 means a cohabitant occupying a relationship generally equivalent to that of a spouse.
| A. | FOR EXECUTION BY AN INDIVIDUAL: |
| Date:_________________________, 2026 | By: |
| Print Name: |
| B. | FOR EXECUTION BY AN ENTITY: |
| Date:_________________________, 2026 | Entity Name: |
| By: | ||
| Print Name: | ||
| Title: |
| C. | ADDITIONAL SIGNATURES (if required by partnership, corporation or trust document): |
| Date:_________________________, 2026 | Entity Name: |
| By: | ||
| Print Name: | ||
| Title: |
| Date:_________________________, 2026 | Entity Name: |
| By: | ||
| Print Name: | ||
| Title: |
[SIGNATURE PAGE TO ACCREDITED INVESTOR QUESTIONNAIRE]
EXHIBIT B
BOOK ENTRY QUESTIONNAIRE
BOOK ENTRY REGISTRATION INSTRUCTIONS
| Name: | ||
| Additional Name if Tenant in Common or Joint Tenant: | ||
| Mailing Address | ||
| Social Security Number or other Taxpayer Identification Number:_____________________________________________ | ||
| Number of shares to be registered in above name(s): __________________ | ||
Legal form of ownership:
| ¨ | Individual | ¨ | Joint Tenants with Rights of Survivorship | ||
| ¨ | Tenants in Common | ¨ | Uniform Gift to Minors | ||
| ¨ | Individual Retirement Account | ¨ | Trust | ||
| ¨ | Other | ||||
EXHIBIT C
FORM W-9
[Attached]
Schedule 3.1(aa)
Concurrent with this Agreement, the Company will enter into a Registration Rights Agreement with Fortress and each Purchaser purchasing 50,000 or more in Shares, and an Investor Rights Agreement with Fortress, each substantially in the form of such agreements that the Company has entered into with its other significant equity investors and pursuant to which, subject to the terms and conditions thereof, the Company will grant mandatory registration rights to Fortress and piggyback registration and offering participation rights to Fortress and the other Purchasers party thereto, and nominate for election an individual appointed by Fortress to serve on the board of directors of the Company.
Exhibit 10.29

CONFIDENTIAL
|
Georgia Banking Company, Inc 1776 Peachtree Rd NW, Suite 300 Attn: Board of Directors |
September 2, 2026 |
Ladies & Gentlemen:
This letter and placement agent agreement (the “Agreement”) confirms the engagement of Performance Trust Capital Partners, LLC (“Performance Trust”) by Georgia Banking Company, Inc. (the “Company”) to act as financial advisor in connection with the Company’s evaluation of a public offering (“Offering”), including the proposed registration for resale, of equity securities (the “Securities”) of the Company (the “Transaction”) to one or more investors (“Investors”).
| 1. | Scope of Engagement and Services |
As the Company’s financial advisor regarding the Transaction, Performance Trust may provide certain expertise and administrative and other services to the Company in connection with the Transaction; however, the parties hereto acknowledge and agree that Performance Trust will not identify potential investors or engage in marketing the Transaction to such investors or serve in any other capacity as the Company’s placement agent for the Transaction. In connection with and in furtherance of the foregoing, Performance Trust will assist the Company pursuant to this Agreement by providing the following mutually agreed upon general financial advisory services, if requested:
(a) advise and assist the Company in identifying and evaluating strategic and/or other transactional alternatives available to the Company regarding a public offering and developing approaches relating to any decided-upon course of action; and
(b) assist the Company in the preparation of a prospectus, confidential investor presentation, or other marketing materials to be used in connection with the Transaction (“Offering Materials”), it being understood that the contents of the Offering Materials shall be the sole responsibility of the Company.
Any new or expanded engagement beyond what is expressly described herein will require the parties’ agreement and may require the parties to enter into additional documentation to reflect such new or expanded engagement. In no event shall Performance Trust be obligated to purchase the Securities for its own account or for the accounts of its customers.
| 2. | Agreements, Covenants, Representations, and Warranties of the Company |
(a) During the period of Performance Trust’s engagement hereunder, (i) the Company will not, and will cause its affiliates not to, discuss the Transaction (or any placement or sale of Securities) with any third parties (except through Performance Trust) and will promptly notify Performance Trust if it receives any inquiry concerning the Transaction; and (ii) represents, and warrants to, and covenants with, Performance Trust that it has not employed and will not employ any broker, placement agent (other than Performance Trust), or other person in connection with the Transaction.
(b) The Company shall (i) fully cooperate with Performance Trust, (ii) promptly furnish to Performance Trust any and all due diligence materials, proposals, copies of any financial reports, any information and data concerning the Company relevant to the Securities or the Transaction, and the terms and conditions of the Offering, (iii) such other information concerning the business and financial condition of the Company and its affiliates, including Georgia Banking Company (the “Bank”) (such other information, the “Information”), and (iv) provide Performance Trust with full access to the Company’s officers, directors, employees, appraisers, independent accountants, legal counsel, and other consultants and advisors (collectively, “Company Representatives”) that Performance Trust may from time to time reasonably request.

| Page 2 of 9 | |
(c) The Company acknowledges and agrees that the Offering Materials are its own work product and that Performance Trust may rely on all Information furnished by the Company to Performance Trust for use in connection with the Transaction and further represents and warrants that, at all times during any Offering of the Securities, the Offering Materials will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. The Company agrees that if, at any time prior to the closing date, any of the agreements contained in the preceding sentence would be incorrect if the Offering Materials were being furnished, and such representations were being made, at the closing date of the Offering, the Company will promptly notify Performance Trust and supplement the Offering Materials so that such representations will be correct in all material respects as of the closing date.
(d) The Company agrees to cause to be furnished to Performance Trust, on the closing date of the Offering, copies of such opinions of counsel and other documents, letters, certificates, and opinions provided to Investors in the Securities as Performance Trust may reasonably request and that any such opinions of counsel and certificates shall be addressed to, or may be expressly relied upon by, Performance Trust. The Company agrees to advise Performance Trust prior to closing of the Transaction of all developments known to the Company materially affecting the Company or the accuracy of the Offering Materials. The Company hereby agrees that at each closing Performance Trust shall be entitled to rely on the representations and warranties made by the Company to Investors in the purchase or subscription agreement related to the sale of such Securities.
| 3. | Compensation and Expenses |
(a) Compensation. In consideration of the services provided by Performance Trust pursuant to this Agreement, Performance Trust will receive reimbursement of expenses (as set forth below) and indemnification. No fee will be due or payable by the Company in connection with the Transaction.
(b) Expenses. Upon Performance Trust’s request from time to time, the Company agrees to promptly reimburse Performance Trust for all out-of-pocket expenses incurred by Performance Trust (including fees and disbursements of counsel, and of other consultants and advisors retained by Performance Trust) in connection with the matters contemplated by this Agreement, including, without limitation, (i) any such expenses arising from Performance Trust being requested to participate in any legal or regulatory proceeding and (ii) travel, food, and lodging costs. The Company also agrees to reimburse Performance Trust for all out-of-pocket expenses incurred by Performance Trust in connection with the establishment, maintenance, and use of any electronic data room and the obtaining of CUSIP numbers, if applicable, in connection with the Transaction, and all such expenses shall be billed by Performance Trust as separate line items; provided, however, that such data room and CUSIP expenses shall be payable in addition to, and shall not be included in, or counted against, any cap or other limitation on expense reimbursement set forth herein. All such expenses shall be reimbursable even if a Transaction contemplated by this Agreement is not consummated. Should it be necessary for Performance Trust or any of its representatives to appear before any administrative, judicial, governmental, or regulatory authority in connection with a Transaction for performing the services, the Company will provide additional compensation at Performance Trust's standard hourly rates for such services plus all reasonable out-of-pocket expenses, including, without limitation, reasonable attorneys' fees and charges. The Company’s obligation to pay Performance Trust the foregoing fees and reimburse Performance Trust for its expenses as set forth herein shall not be subject to counterclaim or set-off or otherwise affected by any claim or dispute the Company may have involving Performance Trust or any other party.

| Page 3 of 9 | |
(c) As is customary, the Company and the Bank will bear all other expenses incurred in connection with the Transaction, including, without limitation, the cost of any third-party service providers including, but not limited to, compliance with blue-sky laws. In the event that Performance Trust incurs any such expenses on behalf of the Company or the Bank, the Company and the Bank will promptly reimburse Performance Trust for such expenses.
| 4. | Term and Termination |
This Agreement shall remain in effect until earlier of the closing of a Transaction or its termination by either party. Either party may terminate this Agreement at any time, with or without cause, upon 10 calendar days’ prior written notice to the other party. Notwithstanding the foregoing, the provisions of Sections 2 (Covenants, Representations, and Warranties of the Company), 3 (Compensation and Expenses), 5 (Confidentiality), 6 (Disclosures), 7 (Use of Financial Models), 8 (Indemnification), 10 (Binding Effect), 11 (Governing Law), 12 (Entire Agreement), 13 (Independent Contractor; Non-Exclusive Relationship), and Appendix A and Appendix B shall survive termination. Any notice of termination must be provided in writing (email being sufficient).
| 5. | Confidentiality |
Performance Trust will maintain in confidence all Information provided by the Company and will not disclose any such Information to any person or entity (other than to Performance Trust’s and its affiliates’ officers, employees, counsel, consultants or advisors who are participating in the engagement or otherwise have a need to know the information in order for Performance Trust to provide the services under this Agreement (collectively, “Performance Trust Representatives”)) unless (a) such information is in the public domain, (b) such information was in Performance Trust’s possession prior to being furnished to Performance Trust by the Company and is not subject to a confidentiality agreement, (c) the Company authorizes Performance Trust to disclose such information, including without limitation, as set forth in Appendix B and for the use in marketing materials, presentations, or Offering Materials, or (d) Performance Trust is required by any law, regulation, order, or rule of any governmental, regulatory, or supervisory authority to disclose such information, including to establish any due diligence defense.
| 6. | Disclosures |
Performance Trust is a full-service securities firm engaged in securities trading and brokerage activities and provides investment banking and financial services. In the ordinary course of business, Performance Trust may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own account or the account of its customers, in debt or equity securities of the Company, its affiliates, or other entities that may be involved in the Transaction.
Performance Trust and its affiliates may, from time to time, perform various investment banking and financial services for other clients who may have conflicting interests with respect to the Company or the Transaction. Specifically, Performance Trust may be engaged by other clients who are currently being, or in the future may be, considered as potential Investors in the Offering. Performance Trust will not use confidential information obtained from the Company pursuant to this engagement in connection with the performance by Performance Trust of services for other counterparties. The Company also acknowledges that Performance Trust has no duty to disclose to the Company, or use for the Company’s benefit, any information acquired while providing services to any other party, engaging in any transaction or carrying on any other business.

| Page 4 of 9 | |
Furthermore, the Company acknowledges that Performance Trust and Performance Trust Representatives may have fiduciary or other relationships whereby Performance Trust or Performance Trust Representatives may exercise voting power over securities of various counterparties, which securities may from time to time include securities of the Company, potential purchasers of the Securities, or others with interests in respect of the Transaction. The Company acknowledges that Performance Trust and Performance Trust Representatives may exercise such powers and otherwise perform their functions in connection with such fiduciary or other relationships without regard to Performance Trust’s or Performance Trust Representatives’ relationship to the Company hereunder.
In addition to the disclosures contained in this Section 6, in providing the services under this Agreement, Performance Trust makes the disclosures contained in Appendix B hereto. The Company has discussed the disclosures provided under this Agreement in this Section 6 and in Appendix B and has consulted with its own internal and external advisors with respect to legal, tax, and accounting matters.
If the Company has any questions or concerns about the disclosures contained herein, the Company agrees to make those questions or concerns known immediately to Performance Trust.
| 7. | Use of Financial Models |
The financial models and presentations used by Performance Trust in performing its services hereunder have been developed by and are proprietary to Performance Trust and are protected under applicable copyright law. The Company and the Bank will not reproduce or distribute all or any portion of such models or presentations without the prior written consent of Performance Trust.
| 8. | Indemnification |
In connection with Performance Trust’s engagement pursuant to this Agreement, the Company agrees to the provisions with respect to indemnifying Performance Trust and other matters set forth in Appendix A to this Agreement, which forms an integral part of this Agreement and has the same force and effect as if expressly set forth in the body of this Agreement. The Company understands that if Performance Trust is asked to act for the Company in any other formal additional capacity relating to this engagement but not specifically addressed in this Agreement, such activities shall constitute separate engagements and the terms of any such separate engagements will be embodied in one or more separate written agreements as mutually agreed. The indemnity provision in Appendix A shall apply to any such separate engagements unless superseded by an indemnity provision set forth in a separate agreement applicable to any such additional engagement and shall remain in full force and effect regardless of any completion, modification, or termination of Performance Trust’s engagement.
| 9. | Press Release |
Notwithstanding anything to the contrary herein, following the completion of the engagement, Performance Trust shall have the right to produce marketing “pitch” materials and place advertisements in financial and other newspapers or public forums, in each case at its own expense describing its services to the Company hereunder; provided such marketing “pitch” materials and advertisements do not violate any provisions of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).
| 10. | Binding Effect |
This Agreement will be binding upon Performance Trust, the Company and their respective successors. No waiver, amendment, or other modification of this Agreement shall be effective unless in writing and signed by each party to be bound. If any legal provision in this Agreement shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

| Page 5 of 9 | |
| 11. | Governing Law |
This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws principles thereof. Each of the parties hereby irrevocably waives any right to trial by jury in any action, proceeding, or counterclaim (whether based upon contract, tort or otherwise) in connection with any dispute arising out of this Agreement or any conduct in connection with, or matters contemplated by, this Agreement. Each of the parties hereto irrevocably agrees that, except as otherwise set forth in this paragraph, any state or federal court sitting in New York County, the State of New York shall have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute arising out of or relating to this Agreement and, for such purposes, irrevocably submits to the jurisdiction of such courts. The Company hereby agrees that service of any process, summons, notice or document by hand delivery or registered mail addressed to the Company, shall be effective service of process for any suit, action or proceeding brought in any such court. The Company irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. The Company agrees that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other court to whose jurisdiction the Company is or may in the future be subject. The Company further agrees that nothing herein shall affect Performance Trust’s right to effect service of process in any other manner permitted by law or to bring a suit, action or proceeding (including a proceeding for enforcement of a judgment) in any other court or jurisdiction in accordance with applicable law.
| 12. | Entire Agreement |
This Agreement is the entire agreement of the parties and supersedes all prior or contemporaneous written or oral negotiations, correspondence, agreements, and understandings regarding the subject matter hereof.
| 13. | Independent Contractor; Non-Exclusive Relationship |
Performance Trust is and will hereafter act as an independent contractor and not as an employee, fiduciary or agent of the Company, and nothing in this Agreement may be interpreted or construed to create any employment, partnership, joint venture, fiduciary, agency or other relationship between Performance Trust and the Company. The Company acknowledges and agrees that this Agreement will not restrict Performance Trust from serving as a financial advisor or from providing any other investment banking or broker-dealer services to other clients.
[Remainder of page left intentionally blank.]

| Page 6 of 9 | |
Performance Trust looks forward to working with the Company on this engagement. Please confirm that the foregoing is in accordance with your understanding and agreement by signing and returning to Performance Trust the duplicate of this Agreement.
| Sincerely, | ||
| Performance Trust Capital Partners, LLC | ||
| By: | /s/ William F. Brackett | |
| William F. Brackett, Managing Director | ||
The undersigned hereby agrees to the above terms as of the date first written above.
| Georgia Banking Company, Inc. | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr., CEO & Director | ||
The undersigned hereby agrees to the above terms as of the date first written above, solely with respect to the obligations set forth under Section 2(b) (Agreements, Covenants, Representations, and Warranties of the Company), Section 3(c) (Compensation and Expenses), Section 7 (Use of Financial Models), Section 8 (Indemnification) and Appendix A, and the survival of each pursuant to Section 4 (Term and Termination) to the extent that such terms apply to the Georgia Banking Company.
| Georgia Banking Company | ||
| By: | /s/ Bartow Morgan, Jr. | |
| Bartow Morgan, Jr., CEO & Director | ||

| Page 7 of 9 | |
Appendix A
Indemnification Provisions
To the fullest extent permitted by applicable law, each of the Company and the Bank agree, jointly and severally, to indemnify and hold harmless Performance Trust, its affiliates and respective officers, directors, employees, agents, and each other entity or person, if any, controlling Performance Trust or any of their affiliates within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (each, an “Indemnified Person”) from and against any and all losses, claims, damages, penalties, fines, forfeitures, or liabilities (or actions in respect thereof) (collectively, “Liabilities”), to which any such Indemnified Person may become subject arising out of or in connection with this Agreement; and shall reimburse the Indemnified Person for any legal or other expenses reasonably incurred (as they are incurred) by such Indemnified Person in connection with investigating, responding to, or defending any of the foregoing; provided however, the Company shall not be obligated to indemnify and hold harmless an Indemnified Person to the extent such Liabilities are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of such Indemnified Person. Each of the Company and the Bank also agree that no Indemnified Person shall have any liability (whether direct or indirect, in contract, tort, or otherwise) to either the Company or the Bank for or in connection with this Agreement, or any Transaction contemplated thereby, except to the extent that any liability for Liabilities or expenses incurred by the Company are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of such Indemnified Person. Notwithstanding anything to the contrary in the foregoing, the indemnification obligation shall not apply to the Bank to the extent that the Bank’s federal or state banking regulators determine in writing that such obligation is prohibited by Section 23A or Section 23B of the Federal Reserve Act or Regulation W promulgated thereunder.
Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that Performance Trust and any Indemnified Person may from time to time receive subpoenas, civil investigative demands, examination requests, or other inquiries (collectively, “Regulatory Inquiries”) from governmental, judicial, supervisory, self-regulatory, or regulatory authorities, including, without limitation, the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, the U.S. Department of Justice, federal or state banking regulators, or any other similar authority (each, a “Regulator”). The Company further acknowledges that (i) Performance Trust and any Indemnified Person may be legally prohibited from providing notice of, or disclosing the existence, scope, or content of, any such Regulatory Inquiry until such time as the applicable Regulator permits such notice or disclosure; and (ii) compliance by Performance Trust or any Indemnified Person with any such Regulatory Inquiry, including responding, testifying, producing documents or information, or otherwise cooperating with a Regulator (collectively, “Regulatory Cooperation”), shall not constitute a breach of this Agreement or a waiver of any rights hereunder.
To the fullest extent permitted by applicable law, Liabilities and reasonable expenses incurred by any Indemnified Person arising out of or relating to any Regulatory Inquiry or Regulatory Cooperation shall be subject to the indemnification and reimbursement obligations set forth in this Appendix A; provided, however, that the Company shall have no indemnification obligation to the extent such Liabilities are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of such Indemnified Person.
If the foregoing indemnification shall for any reason be unavailable to any Indemnified Person or insufficient to hold it harmless, then, to the extent permitted by applicable law, the Company and the Bank, on the one hand, and Performance Trust, on the other hand, shall contribute to the aggregate Liabilities and expenses of the nature contemplated herein in such proportions as is appropriate to reflect the relative benefit to the Company and the Bank, on the one hand, and Performance Trust, on the other hand, received or proposed to be received by the Company from this Agreement or the services, or if such allocation is not permitted by a court of competent jurisdiction, then on a basis appropriate to also recognize the relative fault of the Company and Performance Trust in connection with any events or actions giving rise to the Liabilities as well as any other relevant equitable considerations.

| Page 8 of 9 | |
Notwithstanding the foregoing provision to the contrary, the total contribution of Performance Trust shall not exceed the total fees paid to it by the Company under this Agreement. The relative benefits received by the Company and the Bank on the one hand and Performance Trust on the other hand in connection with this Agreement shall be deemed to be in the same respective proportions as the benefits received by the Company (and the Bank) bear to the total fees received by Performance Trust under this Agreement. For purposes of this Appendix A, each officer or director of each party to this Agreement, and each person, if any, that controls a party to this Agreement within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such party.
Promptly after receipt by an Indemnified Person of notice of any claim or the commencement of any action, such Indemnified Person shall, if a claim in respect thereof is to be made against the Company or the Bank, notify the Company or the Bank in writing of the claim or the commencement thereof; but the omission to so notify the Company shall not relieve the Company or the Bank from any liability it may have to any Indemnified Person except to the extent that it has been materially prejudiced by such failure. For the avoidance of doubt, an Indemnified Person shall have no obligation to provide notice to the Company to the extent such notice is restricted, delayed, or prohibited by applicable law, regulation, or directive of a Regulator in connection with a Regulatory Inquiry, and any delay or failure to provide notice for such reason shall not relieve the Company of its indemnification obligations except to the extent the Company is materially prejudiced thereby and such prejudice is not attributable to such legal prohibition. In case any such action is brought against any Indemnified Person and it notifies the Company or the Bank of the commencement thereof, the Company and the Bank shall be entitled to participate therein and, to the extent that, by written notice delivered to each Indemnified Person promptly after receiving the aforesaid notice from an Indemnified Person, the Company and the Bank elect to assume the defense thereof, it may participate with counsel satisfactory to each Indemnified Person; provided, however, that if the defendants in any such action include both an Indemnified Person and the Company or the Bank and the Indemnified Person or parties shall reasonably have concluded that there may be legal defenses available to it or them and/or other indemnified parties that are different from or additional to those available to the Company, the Bank, the Indemnified Person or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Person or parties. Upon receipt of notice from the Company or the Bank to such Indemnified Person of its election so to assume the defense of such action and approval by the Indemnified Person of such counsel, the Company and the Bank shall not be liable to such Indemnified Person under this paragraph for fees of separate counsel, unless (i) such Indemnified Person shall have employed separate counsel (plus any local counsel) in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence, (ii) the Company and the Bank shall not have employed counsel satisfactory to such Indemnified Person to represent such Indemnified Person within a reasonable time after notice of commencement of the action, or (iii) the Company or the Bank shall have authorized the employment of counsel for such Indemnified Person at the expense of the Company or the Bank. The Company acknowledges that it shall not have the right to participate in, assume the defense of, or otherwise control any Regulatory Inquiry, nor shall it require any Indemnified Person to contest or resist any Regulatory Inquiry, if doing so would violate applicable law or the direction of a Regulator. Neither the Company nor the Bank shall be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent or if there shall be a final judgment against the Indemnified Person, the Company and the Bank, on a joint and several basis, agree to indemnify the Indemnified Person from and against any Liabilities by reason of such settlement or judgment. Neither the Company nor the Bank shall, without prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought thereunder by such Indemnified Person, unless such settlement (i) does not include a statement as to or admission of, fault, culpability or a failure to act by or on behalf of any such Indemnified Person, and (ii) includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding.

| Page 9 of 9 | |
Appendix B
Disclosures
Performance Trust is not undertaking to provide any advice relating to legal, regulatory, accounting, or tax matters. In furtherance thereof, the Company acknowledges and agrees that (a) it and its affiliates have relied and will continue to rely on the advice of their own legal, tax and accounting advisors for all matters relating to the Transaction and any other matters, and (b) neither it, nor any of its affiliates, has received, or has relied upon, the advice of Performance Trust or any of its affiliates regarding matters of law, regulation, taxation or accounting.
The Company acknowledges and agrees that Performance Trust’s engagement pursuant to this Agreement does not constitute an agreement or a commitment, express or implied, by Performance Trust or any of its affiliates to provide any type of financing to the Company or in connection with any Transaction. In performing the services hereunder, Performance Trust is not assuming any responsibility for the decision of the Company or any other party to pursue (or not to pursue) any business strategy or to effect (or not to effect) a Transaction.
The Company acknowledges that various employees of Performance Trust employees own shares of capital stock of the Company, which amount of shares is, in aggregate, de minimis. This creates a conflict of interest because Performance Trust may be incentivized to seek a lower (or higher) price for the Securities in the Placement to maximize (or minimize) the value such employees’ investment in GBC.
By signing this Agreement and continuing with the engagement hereunder, the Company acknowledges and understands the conflicts described above and consents to Performance Trust’s dual placement agent and financial advisory roles and Performance Trust’s resulting obligation to share confidential information with each Transaction party. The Company further represents that it has had the opportunity to be, or has been, represented by counsel in giving the waivers contained in this Appendix B.

EXHIBIT 21.1
LIST OF SUBSIDIARIES
Georgia Banking Company, Inc., a Georgia corporation, owns, either directly or indirectly, 100% of the stock of the following subsidiaries:
| Subsidiary Name | State of Incorporation |
| Georgia Banking Company | State of Georgia |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the inclusion in this Registration Statement on Form S-1 of Georgia Banking Company, Inc. of our report dated July 28, 2026, with respect to our audits of the consolidated financial statements as of December 31, 2025 and 2024, and for each of the years in the two-year period ended December 31, 2025.
We also consent to the reference to us under the heading “Experts” in the Prospectus.
| /s/ Wipfli LLP | ||
| Atlanta, Georgia | ||
| October 2, 2026 |