EXHIBIT 4.1
WARRANT PLAN
OF
SMITH RIVER BANKSHARES, INC.
ARTICLE I
PURPOSE OF THE PLAN
The Board of Directors of Smith River Bankshares, Inc. ("Company")
has determined that it is in the best interests of the Company to issue Warrants
to the Company's organizers to purchase the Company's Common Stock in connection
with the Company's initial public offering of Common Stock ("Initial Stock
Offering"). The Company proposes to issue up to 87,500 shares of Common Stock
and Warrants to purchase Common Stock in Units in the respective amount to each
organizer set forth on Exhibit A hereto (as to each such organizer, the "Initial
Warrants"). Each Unit will contain one share of Common Stock and one Warrant
which will entitle the holder thereof to purchase additional Common Stock
subject to the terms and conditions hereof. Therefore, the Board of Directors,
in order to provide for the above, has adopted this Warrant Plan ("Plan") on the
date set forth herein.
ARTICLE II
SCOPE OF THE PLAN
Section 1. Definitions. Unless the context clearly indicates otherwise,
the following terms have the meanings set forth below:
1.01. "Board" means the Board of Directors of the Company.
1.02. "Change in Control" means a change in control occurring after
Commencement Date of a nature that would be required to be reported (assuming
such event has not been "previously reported") in response to Item 1(a) of the
Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act");
provided that, notwithstanding the foregoing and without limitation, such a
change in control shall be deemed to have occurred at such time after the
Opening Date as (a) any Person is or becomes the "beneficial owner" (as defined
in Rule 13d-3 or Rule 13d-5 under the Exchange Act as in effect on June 1,
1999), directly or indirectly of 20% or more of the combined voting power of the
Company's voting securities; (b) the Incumbent Board ceases for any reason to
constitute at least the majority of the Board, provided that any person becoming
a director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least 75%
of the directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination) shall be, for
purposes of Section 1.02 considered as though such person were a member of the
Incumbent Board; (c) all or substantially all of the assets of the Company or
the assets of Smith River Community Bank, N.A. are sold, transferred or conveyed
by any means, including but not limited to direct purchase or merger, if the
transferee is not controlled by the Company. (For purposes of the foregoing
"control" means the ownership of more than 50% of the combined voting power of
such entity's voting securities); or (d) the Company is merged or consolidated
with another corporation or entity and as a result of such merger or
consolidation less than 75% of the outstanding voting securities of the
surviving or resulting corporation or entity shall be owned in the aggregate by
the former shareholders of the Company. Notwithstanding anything in the
foregoing to the contrary, no change in control shall be deemed to have occurred
for purposes of this Plan by virtue of any transaction after the Commencement
Date (x) arranged or caused by a federal bank regulatory agency possessing
appropriate jurisdiction on the grounds of failing financial condition of the
Company or Smith River Community Bank, N.A. which results in the acquisition,
directly or indirectly, of 20% or more of the combined voting power of the
Company's voting securities by any Person or (y) which results in the Company,
any subsidiary of the Company or any profit sharing plan, employee stock
ownership plan or employee benefit plan of the Company or any of its
subsidiaries (or any trustee of or fiduciary with respect to any such plan
acting in such capacity) acquiring, directly or indirectly, 20% or more of the
combined voting power of the Company's voting securities.
1.03. "Common Stock" means the common stock (no par value) of the
Company.
1.04. "Commencement Date" means the date Smith River Community Bank,
N.A. opens for business.
1.05. "Expiration Date" shall be 5:00 p.m. Eastern Standard Time on the
tenth anniversary of the Commencement Date.
1.06. "Incumbent Board" means the Board as constituted on the date this
Plan is adopted.
1.07. "Person" has the meaning ascribed to that term in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934.
1.08. "Plan" means this Warrant Plan as adopted by the Board as set
forth herein and as amended from time to time.
1.09. "Warrant" means the right to purchase additional shares of Common
Stock pursuant to this Plan.
1.10. "Warrant Certificate" means the evidence of ownership of
Warrants, as executed and issued by the Company in substantially the form
attached hereto as Exhibit B.
Section 2. Warrants. There is hereby authorized 87,500 Warrants, each
of which shall be redeemable for one share of Common Stock of the Company.
Warrants shall be included only in Units offered by the Company in its Initial
Stock Offering and may be issued only to those persons set forth on Exhibit A
hereto in the amount of the Initial Warrants set forth on Exhibit A with respect
to them. Any Warrants not issued in connection with the Initial Stock Offering
shall automatically expire.
Section 3. Form of Warrants. The certificates evidencing the Warrants
(the "Warrant Certificates") shall be substantially in the form set forth in
Exhibit B attached hereto, and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with provisions of this Plan, or as may be required
to comply with any law, or with any rule or regulation made pursuant thereto, or
to conform to usage. Each Warrant Certificate shall entitle the registered
holder thereof, subject to the provisions of this Plan and of such Warrant
Certificate, to purchase (when exercisable and prior to the Expiration Date) one
fully paid and non-assessable share of Common Stock for each Warrant evidenced
by such Warrant Certificate, at $10.00 per share.
Section 4. Issuance of Warrants. The Warrant Certificates when issued
shall be dated and signed on behalf of the Company, manually or by facsimile
signature, by its Chairman of the Board or President, and by its Secretary or an
Assistant Secretary under its corporate seal, if any. The seal of the Company,
if any, may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrants.
Section 5. Registration of Warrant Certificates; Registered Owners. The
Company shall maintain or cause to be maintained books for registration of
ownership and permitted transfer of ownership of the Warrant Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Warrant Certificates and the number of Warrants evidenced by each
such Warrant Certificate. The Company may deem and treat the registered holder
of a Warrant Certificate as the absolute owner thereof and of the Warrants
evidenced thereby (notwithstanding any notation of ownership or other writing
thereon made by anyone), for the purpose of any exercise of such Warrants and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
Section 6. Transfers and Exchanges. The Warrants shall not be
transferable by the holder except by operation of the law. The Warrants may be
detached from the Unit of which they are a part and the Common Stock forming the
other part of the Unit sold or otherwise transferred separately.
Section 7. Mutilated, Destroyed, Lost or Stolen Warrant Certificates.
Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in the case of loss, theft or destruction, receipt by the Company of indemnity
or security reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and, in the case of mutilation, upon
surrender and cancellation of the Warrant Certificate, the Company shall deliver
a new Warrant Certificate of like tenor representing in the aggregate the same
number of Warrants.
Section 8. Payment of Taxes. With respect to any Warrant, the Company
will pay all documentary stamp taxes attributable to the initial issuance of
shares of Common Stock upon the exercise of the Warrant; provided, however, that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue of any Warrant or any
certificates for shares of Common Stock in a name other than that of the
registered holder of the Warrant or Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company shall not be required to issue or deliver
such Warrant or certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of such tax if
any, or shall have established to the satisfaction of the Company that such tax
if required, has been paid.
Section 9. Exercise, Purchase Price and Duration of Warrants. Subject
to the provisions of this Plan, the holder of a Warrant shall have the right to
purchase from the Company (and the Company shall issue and sell to that holder)
one fully paid and non-assessable share of Common Stock for each Warrant the
holder is then entitled to exercise hereunder at the initial exercise price of
$10.00 per share (subject to adjustment as provided in Section 11 hereof), upon
the surrender of the Warrant Certificate evidencing such Warrant to the Company
on any business day prior to 5:00 p.m. Eastern Standard Time on or before the
Expiration Date, with the Form of Election to Exercise on the reverse thereof
duly completed and executed, and payment of the Exercise Price in lawful money
of the United States of America in cash or by cashiers' or certified check
payable to the Company. The holder may exercise its rights under the Warrants
only as follows: (a) no Warrant may be exercised prior to the first anniversary
of the Commencement Date; (b) beginning on the first anniversary of the
Commencement Date, 33-1/3% of the Initial Warrants may be exercised by the
holder; (c) beginning on the second anniversary of the Commencement Date, an
additional 33-1/3% of the Initial Warrants may be exercised by the holder; and
(d) beginning on the third anniversary date of the Commencement Date, the last
33-1/3% of the Initial Warrants may be exercised by each holder and, in each
case, (i) the holder has continuously served as a director of the Company or
Smith River Community Bank, N.A. since the Commencement Date through the date
such Warrants become exercisable; and (ii) the holder has attended at least 75%
of all meetings of the boards of directors of the Company or Smith River
Community Bank, N.A. during such period. Notwithstanding the foregoing or
anything to the contrary in this Plan all of the Initial Warrants shall
automatically and unconditionally become immediately exercisable upon a Change
in Control of the Company. The exercise price and the shares of Common Stock
issuable upon exercise of a Warrant shall be subject to adjustment from time to
time in the manner specified in Section 11 and, as initially established or as
so adjusted, are referred to herein as the "Exercise Price" and the "Shares",
respectively. The Warrants shall be so exercisable either as an entirety or from
time to time in part at the election of the registered holder thereof except
that the Company shall not be required to issue certificates in denominations of
less than 100 shares. In the event that fewer than all Warrants evidenced by a
Warrant Certificate are exercised at any time prior to 5:00 p.m. Eastern
Standard Time on the Expiration Date a new Warrant Certificate will be issued
for the Warrants not so exercised.
No payments or adjustments shall be made for any cash dividends,
whether paid or declared, on Shares issuable on the exercise of a Warrant.
No fractional Shares shall be issued upon exercise of Warrant,
but, in lieu thereof, there shall be paid to the registered holder of the
Warrant Certificate evidencing such Warrant or other person designated on the
Form of Election to Exercise as soon as practicable after date of surrender, an
amount in cash equal to the fraction of the current market value of a share of
Common Stock equal to the fraction of a Share to which such Warrant related. For
such purpose, the current market value of a Share shall be the book value of the
Common Stock as of the last day of the month immediately preceding the date of
the Election to Exercise.
Subject to Section 8 hereof, upon surrender of a Warrant
Certificate, with the Form of Election to Exercise duly completed and executed,
together with payment of the Exercise Price, the Company shall issue and deliver
the full number of Shares issuable upon exercise of the Warrants tendered for
exercise. Shares shall be deemed to have been issued, and any Person so
designated by the registered holder shall be deemed to have become the holder of
record of a Share, as of the date of the surrender of the Warrant Certificate to
which the Share relates and payment of the appropriate Exercise Price; provided,
however, if the date of surrender of a Warrant Certificate shall occur within
any period during which the transfer books for the Company's Common Stock are
closed for any purpose, such Person shall not be deemed to have become a holder
of record of a Share until the opening of business on the day of reopening said
transfer books, and certificates representing such Shares shall not be issuable
until such day.
Section 10. Reservation of Shares. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock, for the purpose of enabling it to
satisfy any obligation to issue Shares upon exercise of Warrants, through the
close of business on the Expiration Date, the number of Shares deliverable upon
the exercise of all outstanding Warrants.
The Company covenants that all Shares issued upon exercise of the
Warrants will, upon issuance in accordance with the terms of this Agreement, be
fully paid and non-assessable.
The shares allocated for such Warrants were included for Registration
under the Securities Act of 1993, and Rule 415 adopted thereunder, in a
registration of securities filed by the Company with the Securities and Exchange
Commission on November 2, 1999.
Section 11. Adjustment of Exercise Price and Number of Shares
Purchasable. The Exercise Price and the number of Shares which may be purchased
upon the exercise of each Warrant are subject to adjustment from time to time
upon the occurrence, after the date hereof, if the Company shall (i) declare a
dividend on the Common Stock payable in shares of common stock, (ii) subdivide
the outstanding Common Stock into a greater number of shares or (iii) combine
the outstanding Common Stock into a smaller number of shares, then the Exercise
Price in effect on the record date for that dividend or on the effective date of
that subdivision or combination, and/or the number and kind of shares of capital
stock issuable on that date, shall be proportionately adjusted so that the
holder of any Warrant exercised after such time shall be entitled to receive
solely the aggregate number and kind of shares of capital stock which, if the
Warrant had been exercised immediately prior to that date, such holder would
have owned upon exercise and been entitled to receive by virtue of that
dividend, subdivision, or combination. The foregoing adjustments shall be made
by the Company successively whenever any event listed above shall occur.
Section 12. Notices to Warrant Holders. Upon any adjustment to the
Exercise Price pursuant to Section 11 hereof, the Company within twenty calendar
days thereafter shall cause to be given to the registered holders of outstanding
Warrant Certificates at their respective addresses appearing on the Warrant
Certificate register written notice of the adjustments by first-class mail,
postage prepaid.
Section 13. Supplements and Amendments. The Company may from time to
time supplement or amend this Plan without the consent or concurrence of or
notice to any holders of Warrant Certificates or Warrants in order to cure any
ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, to correct any defective
provision, clerical omission, mistake or manifest error herein contained, or to
make any other provision with respect to matters or questions arising under this
Plan which shall not be inconsistent with the provisions of the Warrant
Certificates; provided that such action shall not adversely affect the interests
of the holders of the Warrant Certificates or Warrants.
Section 14. Governing Law. This Plan and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Virginia and for all purposes shall be governed by, construed and
enforced in accordance with the laws of said State.
Section 15. Benefits of This Plan. Nothing in this Plan shall be
construed to give to any person or corporation other than the Company and the
registered holders of the Warrant Certificates or Warrants any legal or
equitable right, remedy or claim under this Plan; this Plan shall be for the
sole and exclusive benefit of the Company and the registered holders of the
Warrant Certificates.
Section 16. Forfeiture. If at any time while the Warrants are
outstanding, the Board of Governors of the Federal Reserve System makes a formal
capital call on the Company or the Comptroller of the Currency makes a formal
capital call on Smith River Community Bank, N.A., the holder will be required to
exercise all exercisable Warrants in whole or part as may be needed for
additional required capital or the Warrants shall be forfeited. The number of
Shares as to which the Warrants shall be exercised by each holder to meet the
capital call will be calculated pro rata on the basis of the number of Shares
subject to Warrant. The exercise price for Shares purchased upon such exercise
shall be equal to the greater of $10 per Share or the then current book value
per share of the Shares. Any Warrants not required to be exercised under the
terms of any such capital call may be exercised under the original terms of this
Agreement.
Adopted by the Board of Directors of Smith River Bankshares, Inc.
On the 27th day of July, 1999.
Amended by the Board of Directors of Smith River Bankshares, Inc.
On the 26th day of August, 1999.
Amended by the Board of Directors of Smith River Bankshares, Inc.
On the 21st day of December, 2000.
CERTIFICATE NO.
NUMBER OF WARRANTS:
WARRANT CERTIFICATE FOR PURCHASE OF
COMMON STOCK (NO PAR VALUE) OF
SMITH RIVER BANKSHARES, INC.
(See Reverse side for Summary of Terms of Warrant Plan)
THIS CERTIFIES THAT, for value received, _________________________
is the owner of the number of Warrants set forth above, each of which entitles
the owner to purchase, subject to the terms and conditions hereof and of the
Warrant Plan referred to herein, prior to the Expiration Date (as herein
defined), one share of Common Stock, no par value per share ("Shares"), of Smith
River Bankshares, Inc., a Virginia corporation ("Company") at $10.00 per share
("Exercise Price"), payable to the Company in cash, or by cashiers check or
other official bank check. Exercisable Warrants may be exercised by delivery and
surrender of this Warrant Certificate, along with the form of Election to
Exercise on the reverse hereof duly completed and executed together with payment
of the Exercise Price at the office of the Company or its duly appointed agent.
The Warrants evidenced by this Warrant Certificate are NOT TRANSFERABLE except
as specifically permitted by the Warrant Plan.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject to all of the terms, provisions and
conditions of that certain Warrant Plan dated as of July 27, 1999 (hereinafter
called the "Warrant Plan"), as amended on August 26, 1999, adopted by the
Company, to all of which terms, provisions and conditions the registered holder
of this Warrant Certificate consents by acceptance hereof. The Warrant Plan and
the summary of its terms set forth on the reverse side of this Warrant
Certificate are hereby incorporated into this Warrant Certificate by reference
and made a part hereof. The Warrant Plan sets forth the terms and conditions
under which the exercise price for a Warrant, the number of shares to be
received upon exercise of a Warrant, or both, may be adjusted. Reference is
hereby made to the Warrant Plan for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Company and the holders of the Warrant Certificates or Warrants and all Warrants
and Warrant Certificates are subject, in all respects, to the same. In the event
of any conflict between the provisions of this Warrant Certificate and the
Warrant Plan, the provisions of the Warrant Plan shall control.
Copies of the Warrant Plan are available for inspection at the
Company's Office, or may be obtained upon written request addressed to the
Secretary, Smith River Bankshares, Inc., 730 E. Church Street & Booker Road,
Martinsville, Virginia 24112. The Company shall not be required upon the
exercise of the Warrants evidenced by this Warrant Certificate to issue
fractions of Warrants or Shares, but shall make adjustments therefor in cash on
the basis of the current market value of any fractional interest as provided in
the Warrant Plan.
The Warrants evidenced by this Warrant Certificate shall expire at 5:00 p.m.
Eastern Standard Time on ______________________ or sooner if called by The Board
of Directors pursuant to the Warrant Plan. The day and time of expiration is
referred to herein as the "Expiration Date".
IN WITNESS WHEREOF, Smith River Bankshares, Inc. has caused this
certificate to be executed by the signature of its duly authorized officers and
has caused its corporate seal to be hereunto affixed.
Dated:
----------------------- -------------------------------------
President
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Secretary/Treasurer
(Reverse Side of Warrant Certificate)
SMITH RIVER BANKSHARES, INC.
Summary of Terms of Warrant Plan
The Warrant Plan provides that, upon the occurrence of certain
events, the initial exercise price set forth on the face of this Warrant
Certificate may, subject to specified conditions, be adjusted (such exercise
price, as initially established or as adjusted from time to time, is referred to
herein as the "Exercise Price"). If the Exercise Price is adjusted, the Warrant
Plan provides that the number of shares which can be purchased upon the exercise
of each Warrant represented by this Warrant Certificate and the type of
securities or other property subject to purchase upon the exercise of each
Warrant represented by this Warrant Certificate are subject to modification or
adjustment.
The Warrants evidenced by this Warrant Certificate may not be
immediately exercisable and may not be exercisable at all unless and until the
conditions to the same, as specified in the Warrant Plan, occur. The Warrant
Plan also permits acceleration of the right to exercise the Warrants evidenced
by this Warrant Certificate in the event of a Change of Control of the Company
(as defined in the Warrant Plan).
The Warrants evidenced by this Warrant Certificate shall expire at
5:00 p.m. Local Time on _________________, or sooner if called in accordance
with the Warrant Plan.
In the event that upon any exercise the number of Warrants exercised
shall be fewer than the total number of Warrants represented hereby, the Company
shall issue to the registered holder a new Warrant Certificate evidencing the
Warrants not so exercised.
No payment or adjustment will be made for any cash dividends, whether
paid or declared, on any Shares issuable upon exercise of a Warrant. The Company
shall not be required to issue fractions of Shares or any certificates which
evidence fractional Shares. In lieu of a fractional Share, if any, the Company
shall pay to the registered holder of a Warrant with regard to which the
fractional Share would be issuable, an amount in cash equal to the same fraction
of the current market value (as determined pursuant to the Warrant Plan) of a
Share.
The Company may deem and treat the registered holder of this Warrant
Certificate as the absolute owner hereof and of the Warrants represented by this
Warrant Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone) for the purposes of any exercise of such Warrants and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
Prior to the exercise of the Warrants represented hereby, the
registered holder of this Warrant Certificate, shall not be entitled to vote on
or be deemed the holder of Common Stock or any other securities of the Company
which may at any time be issuable on the exercise hereof for any purpose, and
nothing contained in the Warrant Plan or herein shall be construed to confer
upon the holder of this Warrant Certificate, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings or other actions, affecting stockholders or to receive dividends or
subscription rights or otherwise.
ELECTION TO EXERCISE
The undersigned hereby irrevocably elects to exercise Warrants
evidenced by this warrant Certificate, to purchase full Shares of the Common
Stock of the Company ("Shares") and herewith tenders payment for such Shares in
the amount of $_________ in accordance with the terms hereof. The undersigned
requests that a certificate representing such Shares be registered in the name
of ____________________________ and that the Certificate be delivered as
follows:
--------------------------------
Name (Please Print)
Whose address is
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Address (Please Print)
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Delivery Address (if different) (Please Print)
If said Shares are fewer than all the Shares purchasable hereunder, the
undersigned requests that a new Warrant Certificate evidencing the right to
purchase the balance of the Shares be registered in the name of the undersigned,
whose address is listed below.
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Name of Registered Holder of Warrant (Please Print)
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Address (Please Print)
----------------------------------------------------
Delivery Address (if different) (Please Print)
- --------------------- -------------------------------
Dated Signature
- ----------------------------
(Social Security or Other Taxpayer
Identification Number of Holder)
Signature Guaranteed:
- ----------------------------
NOTE: The above signature must correspond with the name as written upon
the face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever. If the holder hereof is hereby electing to
exercise fewer than all Warrants represented by this Warrant Certificate and is
requesting that a new Warrant Certificate evidencing the Warrants not exercised
be registered in a name other than that in which this Warrant Certificate is
registered, the signature of the holder of this Warrant Certificate must be
guaranteed.