Document:

EXHIBIT105.H  (EXHIBIT105.H;1)

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EXHIBIT 10.5

 

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective as of the 24th day of October, 2002, by and between Mountain Bancshares, Inc., a Georgia corporation (the "Company"), and The Bankers Bank (the "Escrow Agent").

W I T N E S S E T H:

WHEREAS, the Company proposes to offer and sell (the "Offering") up to 1,200,000 share of Common Stock, $5.00 par value per share (the "Shares"), to investors at $10.00 per Share pursuant to a registered public offering; and

WHEREAS, the Company desires to establish an escrow for funds forwarded by subscribers for Shares, and the Escrow Agent is willing to serve as Escrow Agent upon the terms and conditions herein set forth.

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.Deposit with Escrow Agent.

(a)The Escrow Agent agrees that it will from time to time accept, in its capacity as escrow agent, subscription funds for the Shares (the "Escrowed Funds") in the form of checks received by the Company from subscribers. All checks shall be made payable to the Escrow Agent. If any check does not clear normal banking channels in due course, the Escrow Agent will promptly notify the Company. Any check which does not clear normal banking channels and is returned by the drawer's bank to Escrow Agent will be promptly turned over to the Company along with all other subscription documents relating to such check. Any check received that is made payable to a party other than the Escrow Agent shall be returned to the Company for return to the proper party. The Company in its sole and absolute discretion may reject any subscription for shares for any reason and upon such rejection it shall notify and instruct the Escrow Agent in writing to return the Escrowed Funds by check made payable to the subscriber. If the Company rejects or cancels any subscription for any reason the Company will retain any interest earned on the Escrowed Funds to help defray organizational costs.

(b)Subscription agreements for the Shares shall be reviewed for accuracy by the Company and, immediately thereafter, the Company shall deliver to the Escrow Agent the following information: (i) the name and address of the subscriber; (ii) the number of Shares subscribed for by such subscriber; (iii) the subscription price paid by such subscriber; (iv) the subscriber's tax identification number certified by such subscriber; and (v) a copy of the subscription agreement.

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2.Investment of Escrowed Funds. Upon collection of each check by the Escrow Agent, the Escrow Agent shall invest the funds in deposit accounts or certificates of deposit which are fully insured by the Federal Deposit Insurance Corporation or another agency of the United States government, short-term securities issued or fully guaranteed by the United States government, federal funds, or such other investments as the Escrow Agent and the Company shall agree. The Company shall provide the Escrow Agent with instructions from time to time concerning in which of the specific investment instruments described above the Escrowed Funds shall be invested, and the Escrow Agent shall adhere to such instructions. Unless and until otherwise instructed by the Company, the Escrow Agent shall by means of a "Sweep" or other automatic investment program invest the Escrowed Funds in blocks of $1,000 in federal funds. Interest and other earnings shall start accruing on such funds as soon as such funds would be deemed to be available for access under applicable banking laws and pursuant to the Escrow Agent's own banking policies.

3.Distribution of Escrowed Funds. The Escrow Agent shall distribute the Escrowed Funds in the amounts, at the times, and upon the conditions hereinafter set forth in this Agreement.

(a)If at any time on or prior to the expiration date of the offering as described in the prospectus relating to the offering, (the "Closing Date"), (i) the Escrow Agent has certified to the Company in writing that the Escrow Agent has received at least $8,250,000 in Escrowed Funds, and (ii) the Escrow Agent has received a certificate from the President or the Chairman of the Board of the Company that all other conditions to the release of funds as described in the Company's Registration Statement filed with the Securities and Exchange Commission pertaining to the public offering have been met, then the Escrow Agent shall deliver the Escrowed Funds to the Company to the extent such Escrowed Funds are collected funds. If any portion of the Escrowed Funds are not collected funds, then the Escrow Agent shall notify the Company of such fact and shall distribute such funds to the Company only after such funds become collected funds. For purposes of this Agreement, "collected funds" shall mean all funds received by the Escrow Agent, which have cleared normal banking channels. 

(b)If the Escrowed Funds do not, on or prior to the Closing Date, become deliverable to the Company based on failure to meet the conditions described in Paragraph 3(a), or if the Company terminates the offering at any time prior to the Closing Date and delivers written notice to the Escrow Agent of such termination (the "Termination Notice"), the Escrow Agent shall return the Escrowed Funds which are collected funds as directed in writing by the Company to the respective subscribers in amounts equal to the subscription amount theretofore paid by each of them. All uncleared checks representing Escrowed Funds which are not collected funds as of the Initial Closing Date shall be collected by the Escrow Agent, and together with all related subscription documents thereof shall be delivered to the Company by the Escrow Agent, unless the Escrow Agent is otherwise specifically directed in writing by the Company.

4.Distribution of Interest. Any interest earned on the Escrowed Funds shall be retained by the Company.

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5.Fee of Escrow Agent. The escrow account will accrue a service charge of $15.00 per month. In addition, a $20.00 per check fee will be charged if the escrow account has to be refunded due to a failure to complete the subscription. All of these fees are payable upon the release of the Escrowed Funds, and the Escrow Agent is hereby authorized to deduct such fees from the Escrowed Funds prior to any release thereof pursuant to Section 3 hereof. 

6.Liability of Escrow Agent.

(a)In performing any of its duties under the Agreement, or upon the claimed failure to perform its duties hereunder, the Escrow Agent shall not be liable to anyone for any damages, losses or expenses which it may incur as a result of the Escrow Agent so acting, or failing to act; provided, however, the Escrow Agent shall be liable for damages arising out of its willful default or misconduct or its gross negligence under this Agreement. Accordingly, the Escrow Agent shall not incur any such liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of its counsel or counsel for the Company which is given with respect to any questions relating to the duties and responsibilities of the Escrow Agent hereunder; or (ii) any action taken or omitted to be taken in reliance upon any document, including any written notice or instructions provided for this Escrow Agreement, not only as to its due execution and to the validity and effectiveness of its provisions but also as to the truth and accuracy of any information contained therein, if the Escrow Agent shall in good faith believe such document to be genuine, to have been signed or presented by a proper person or persons, and to conform with the provisions of this Agreement.

(b)The Company agrees to indemnify and hold harmless the Escrow Agent against any and all losses, claims, damages, liabilities and expenses, including, without limitation, reasonable costs of investigation and counsel fees and disbursements which may be imposed by the Escrow Agent or incurred by it in connection with its acceptance of this appointment as Escrow Agent hereunder or the performance of its duties hereunder, including, without limitation, any litigation arising from this Escrow Agreement or involving the subject matter thereof; except, that if the Escrow Agent shall be found guilty of willful misconduct or gross negligence under this Agreement, then, in that event, the Escrow Agent shall bear all such losses, claims, damages and expenses.

(c)If a dispute ensues between any of the parties hereto which, in the opinion of the Escrow Agent, is sufficient to justify its doing so, the Escrow Agent shall retain legal counsel of its choice as it reasonably may deem necessary to advise it concerning its obligations hereunder and to represent it in any litigation to which it may be a part by reason of this Agreement. The Escrow Agent shall be entitled to tender into the registry or custody of any court of competent jurisdiction all money or property in its hands under the terms of this Agreement, and to file such legal proceedings as it deems appropriate, and shall thereupon be discharged from all further duties under this Agreement. Any such legal action may be brought in any such court as the Escrow Agent shall determine to have jurisdiction thereof. In connection with such dispute, the Company shall indemnify the Escrow Agent against its court costs and reasonable attorney's fees incurred.

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(d)The Escrow Agent may resign at any time upon giving thirty (30) days written notice to the Company. If a successor escrow agent is not appointed by Company within thirty (30) days after notice of resignation, the Escrow Agent may petition any court of competent jurisdiction to name a successor escrow agent and the Escrow Agent herein shall be fully relieved of all liability under this Agreement to any and all parties upon the transfer of the Escrowed Funds and all related documentation thereto, including appropriate information to assist the successor escrow agent with the reporting of earnings of the Escrowed Funds to the appropriate state and federal agencies in accordance with the applicable state and federal income tax laws, to the successor escrow agent designated by the Company appointed by the court.

7.Appointment of Successor. The Company may, upon the delivery of thirty (30) days written notice appointing a successor escrow agent to the Escrow Agent, terminate the services of the Escrow Agent hereunder. In the event of such termination, the Escrow Agent shall immediately deliver to the successor escrow agent selected by the Company, all documentation and Escrowed Funds including interest earnings thereon in its possession, less any fees and expenses due to the Escrow Agent or required to be paid by the Escrow Agent to a third party pursuant to this Agreement.

8.Notice. All notices, requests, demands and other communications or deliveries required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given three days after having been deposited for mailing if sent by registered mail, or certified mail return receipt requested, or delivery by courier, to the respective addresses set forth below:

	
If to the subscribers for Shares:
	
To their respective addresses as specified in their Subscription Agreements.

	
 
	
 

	
The Company:
	
Mountain Bancshares, Inc.

671 Lumpkin Campground Parkway, Suite 200

P. O. Box 509

Dawsonville, Georgia 30534

Attention: John Lewis

	
 
	
 

	
With a copy to:
	
T. Treadwell Syfan

Stewart, Melvin & Frost, LLP

200 Main Street, Suite 600

P. O. Box 3280

Gainesville, Georgia 30503

	
 
	
 

	
The Escrow Agent:
	
The Bankers Bank

2410 Paces Ferry Road

600 Paces Summit

Atlanta, GA 30339-4098

Attention:Jo W. Avery

Vice President

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9.Representations of the Company. The Company hereby acknowledges that the status of the Escrow Agent with respect to the offering of the Shares is that of agent only for the limited purposes herein set forth, and hereby agrees it will not represent or imply that the Escrow Agent, by serving as the Escrow Agent hereunder or otherwise, has investigated the desirability or advisability in an investment in the Shares, or has approved, endorsed or passed upon the merits of the Shares, nor shall the Company use the name of the Escrow Agent in any manner whatsoever in connection with the offer or sale of the Shares, other than by acknowledgment that it has agreed to serve as Escrow Agent for the limited purposes herein set forth.

10.General.

(a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Georgia.

(b) The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

(c) This Agreement sets forth the entire agreement and understanding of the parties with regard to this escrow transaction and supersedes all prior agreements, arrangements and understandings relating to the subject matter hereof.

(d) This Agreement may be amended, modified, superseded or canceled, and any of the terms or conditions hereof may be waived, only by a written instrument executed by each party hereto or, in the case of a waiver, by the party waiving compliance. The failure of any part at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver in any one or more instances by any part of any condition, or of the breach of any term contained in this Agreement, whether by conduct or otherwise, shall be deemed to be, or construed as, a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of the breach of any other terms of this Agreement.

(e) This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(f) This Agreement shall inure to the benefit of the parties hereto and their respective administrators, successors and assigns. The Escrow Agent shall be bound only by the terms of this Escrow Agreement and shall not be bound by or incur any liability with respect to any other agreement or understanding between the parties except as herein expressly provided. The Escrow Agent shall not have any duties hereunder except those specifically set forth herein.

(g) No interest in any part to this Agreement shall be assignable in the absence of a written agreement by and between all the parties to this Agreement, executed with the same formalities as this original Agreement.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as the date first written above.

	
COMPANY:
	
ESCROW AGENT:

	
MOUNTAIN BANCSHARES, INC.

By: s/John L. Lewis

President
	
THE BANKERS BANK

By: s/Jo W. Avery

Vice President

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<PAGE>EXHIBIT106.H  (EXHIBIT106.H;1)

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EXHIBIT 10.6

STOCK WARRANT AGREEMENT

THIS AGREEMENT is made as of the ____ day of ______________, 2002, by and between __________________________ (hereinafter "Director") and MOUNTAIN BANCSHARES, INC. (hereinafter the "Company").

WHEREAS, Director is an organizer and an organizing director of the Company and the Company desires to encourage the organizing directors of the Company to serve as directors of the Company and of the Company's banking subsidiary, Mountain State Bank (the "Bank"), for at least three (3) years, and to compensate the organizing directors for the financial risks incurred by them in organizing the Company, through warrants to purchase stock, in accordance with the Organizing Director Stock Warrant Plan adopted by the Organizing Directors of the Company on _______________, ________ (hereinafter the "Plan").

NOW, THEREFORE, in consideration of the premises, it is agreed:
1.Grant of Warrants and Time of Exercise.

(a)The Company hereby grants to Director the right, privilege and option to purchase, subject to the limitations herein set forth, a total of ______ shares. (the "Total Shares") of the common stock of the Company until ___________, _________, at which time this warrant shall expire. (Note: Maximum number of years from grant to expiration shall be ten years.) The stock warrants granted hereunder are intended to be nonqualified stock warrants not qualified under Section 422 of the Internal Revenue Code.

(b)Director may exercise the option to purchase as to one-third (1/3) of the Total Shares only after expiration of one (1) year of continuous service as a director of the Company from the date hereof, as to an additional one-third (1/3) of the Total Shares only after expiration of two (2) years of continuous service as a director from the date hereof, and as to an additional one-third (1/3) of the Total Shares only after expiration of three (3) years of continuous service as a director from the date hereof. Shares which may be purchased under the above schedule beginning at the times specified in the schedule may be purchased at any time before the expiration of the warrant.

(c)Notwithstanding the foregoing, Director shall have the right to immediately exercise all warrants granted under this Agreement at any time permitted under this Agreement (without regard to subparagraph (b) above from and after the date the first Change in Control, as defined in subparagraph (d) below, occurs.

(d)For purposes of this Agreement, a "Change in Control" occurs when:
(1)any "person," including a "group" as determined in accordance with Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act")(other than the Company, any subsidiary of the Company, or any employee benefit plan, as defined in ERISA, of any of the foregoing) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities;

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(2)as a result of, or in connection with, any tender offer or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company;

(3)The Company is merged or consolidated with another corporation and as a result of the merger or consolidation less than 75% of the outstanding voting securities of the surviving or resulting corporation shall then be owned in the aggregate by the former shareholders of the Company, other than (i) affiliates within the meaning of the Exchange Act or (ii) any party to the merger or consolidation;

(4)a tender offer or exchange offer is made and consummated for the ownership of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding voting securities; or

(5)The Company transfers substantially all of its assets to another corporation which is not a wholly-owned subsidiary of the Company.

(e)Notwithstanding anything to the contrary contained herein, in the event the Bank's capital falls below the minimum requirements contained in Part 3 of Title 12 of the Code of Federal Regulations, or falls below a higher requirement as may be determined by the Federal Deposit Insurance Corporation (the "FDIC"), the Federal Reserve Bank (the "FRB"), or the Georgia Department of Banking and Finance (the "DBF"), the FDIC, FRB or DBF may direct the Company to require Director to exercise or forfeit this warrant. Within 45 days from the date the FDIC, FRB, or DBF notifies the Company, the Company shall notify Director in writing that holders of warrants must exercise or forfeit their warrants. The Company shall cancel this warrant if Director does not exercise this warrant as to all of the warrant shares within 21 days of such notice to exercise given to the Company, and upon such cancellation this warrant shall be of no further force and effect. The Company has agreed to comply with any FDIC, FRB or DBF request that the Company invoke its right to require Director to exercise or forfeit this warrant under the previous circumstances.

(f)Director acknowledges and agrees that he has been furnished information concerning the differences in the tax consequences between "incentive stock options" and nonqualified stock warrants and that he understands the tax effect of a nonqualified stock warrant.

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2.Purchase Price. The purchase price of the shares shall be $10.00 per share, which is the fair market value of the Company shares as of the date of this agreement. The purchase price shall be paid in full in cash. Notwithstanding the foregoing, the purchase price may be subject to adjustment as provided in Paragraph 5 hereof.

3.Method of Exercise. The warrant granted above shall be exercised by written notice directed to the Board of Directors of the Company, at the Company's principal place of business, accompanied by a check in payment of the warrant price for the number of shares specified and paid for. The Company shall make delivery of such shares purchased as soon as is practicable, provided that if any law or regulation requires the Company to take any action with respect to the shares specified in such notice before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to take such action.

4.Termination of Warrants. The warrant granted hereunder shall terminate upon the first to occur of the following dates:
(a)The expiration of 3 months after the date on which Director's service as a director terminates, other than by reason of permanent and total disability or death of Director or other than due to a Change of Control;

(b)The expiration of twelve months after the date on which Director's service as a director terminates, if such termination is by reason of Director's permanent and total disability;

(c)In the event of Director's death while serving as a director of the Company, his executors or administrators may exercise, within six months following the date of his death, the warrant as to any of the shares subject to exercise of the warrant at Director's death to the extent not exercised prior to his death;

(d)The date shown in subparagraph 1(a) hereof.

5.Reclassification, Consolidation, or Merger. If and to the extent the number of issued shares of common stock of the Company shall be increased or reduced by change in par value, split up, reclassification, distribution of a dividend payable in stock, or the like, the number of shares subject to warrant and the warrant price per share shall be proportionately adjusted. If the Company is reorganized or consolidated or merged with another corporation, Director shall be entitled to receive warrants covering shares of such reorganized, consolidated, or merged company (or its parent company) in the same proportion, at an equivalent price, and subject to the same conditions. For purposes of the preceding sentence, the excess of the aggregate fair market value of the shares subject to the warrant immediately after the reorganization, consolidation, or merger over the aggregate warrant price of such shares shall not be more than the excess of the aggregate fair market value of all shares subject to the warrant immediately before such reorganization, consolidation, or merger over the aggregate warrant price of such shares, and the new warrant or assumption of the old warrant shall not give Director additional benefits which he did not have under the old warrant, or deprive him of benefits which he had under the old warrant.

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6.Administration. The Board of Directors of the Company is responsible for administering the Plan pursuant to which the warrant granted herein is authorized. In connection with the Plan, the Board may interpret it, prescribe, amend and rescind rules and regulations relating to it, and make all other determinations necessary or appropriate for the administration of the Plan.

7.Amendment. This warrant may be amended only by an instrument in writing executed by the party against whom enforcement of amendment is sought.

8.Rights Prior to Exercise of Warrant. This warrant is non-transferrable by Director except in the event of his death as provided in Paragraph 4(c) above, and during his lifetime is exercisable only by him. Director shall have no rights as a stockholder with respect to the optioned shares until payment of the option price and delivery to him of such shares as herein provided.

9.Restrictions on Disposition of Stock. All shares acquired by Director pursuant to this Agreement shall be subject to all restrictions on sale generally applicable to common shares of the Company, if any. All shares issued to Director under this Agreement shall contain a legend on the reverse side containing such restrictions as may be required in connection with the transfer of such shares under State or Federal law, or under the Bylaws of the Company.

10.Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

11.Conditions to Agreement. Notwithstanding anything to the contrary contained herein, the Company shall not be required to issue or deliver any certificate for shares of the common stock purchased upon exercise of the warrant or any portion thereof prior to the fulfillment of the following conditions:
(a)The admission of such shares for listing on all stock exchanges on which the common stock is then listed;

(b)The completion of any registration or other qualification of such shares which the 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;

(c)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

(d)The lapse of such reasonable period of time following the exercise of the warrant as the Company from time to time may establish for reasons of administrative convenience.

The Company shall have no obligation to obtain the fulfillment of these conditions; provided, however, Director shall have one full calendar year after these conditions have been fulfilled to exercise his or her warrants granted herein, notwithstanding any other provision herein.

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12.Miscellaneous.

(a)The Company covenants that it has reserved and will keep available, solely for the purpose of issue upon the exercise hereof, a sufficient number of shares of common stock to permit the exercise hereof in full.

(b)As a condition of transfer to Director of shares of the Company stock upon exercise of this warrant, Director shall remit to the Company any applicable employment taxes (including FICA taxes, FUTA taxes, Wage Withholding at Source and state employment taxes) required by law to be withheld due to the compensation income created upon exercise of this warrant.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.

	
DIRECTOR:

	
_____________________________ (SEAL)

	
 

	
COMPANY:

	
MOUNTAIN BANCSHARES, INC.

	
By: ________________________________

	
Title: _________________________

	
Attest: ______________________________

	
Title: _________________________

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