CAPITAL WARRANT AGREEMENT
EXHIBIT
10.4
This
Capital Warrant Agreement (“Agreement”) is executed as of this 30th day of
April, 2009 by Grand River Commerce, Inc., a Michigan corporation (“Company”),
in favor of the individuals listed on Exhibit A (each, an
“Initial Holder”), in accordance with the terms and subject to the conditions
set forth in this Agreement.
WHEREAS,
the organizers of Grand River Bank, a Michigan chartered bank (the “Bank”), have
undertaken substantial investment risk in supporting the Company in connection
with its initial offering of common stock; and
WHEREAS,
in recognition of such investment risk by the organizers in supporting the
Company in its initial capitalization, the Company desires to grant to each
organizer warrants to purchase shares of common stock of the Company (each, a
“Warrant” and, collectively, the “Warrants”) in the amounts set forth
herein.
NOW,
THEREFORE, in consideration of the foregoing and the agreements hereinafter set
forth, the receipt and sufficiency of which are hereby acknowledged, the Company
and, by acceptance of a Warrant, each Initial Holder (as defined herein) agree
as follows:
1. Grant
of Warrants. Subject to the terms, restrictions, limitations
and conditions stated in this Agreement, the receipt and sufficiency of which
are hereby acknowledged, the Company hereby grants to Initial Holder the number
of Warrants set forth beside his name on Exhibit
A. Each Warrant initially shall be exercisable for one fully
paid and non-assessable share of common stock, par value $0.01 per share, of the
Company (“Share”), subject to adjustment as provided in Section 11 of this Agreement. The Initial
Holders and all subsequent registered holders of the Warrants (each, a “Holder”
and, collectively, the “Holders”) shall have the rights and obligations set
forth in this Agreement.
2. Warrant
Certificates. Each Warrant shall be evidenced by a warrant
certificate, which shall be substantially in the form attached to this Agreement
as Exhibit B
(“Warrant Certificate”). Each Warrant Certificate shall have such
marks of identification or designation and such legends or endorsements thereon
as the Company deems appropriate, so long as they are not inconsistent with the
provisions of this Agreement, or as are required to comply with any law, rule or
regulation applicable to the Company or the Shares. The Warrant
Certificates shall be executed on behalf of the Company by the manual, facsimile
or imprinted signature of its Chairman of the Board, its President or any senior
vice president and shall be attested by the manual, facsimile or imprinted
signature its Secretary or Cashier, or any assistant secretary or assistant
cashier.
3. Term of
Warrants.
(a) The
term for the exercise of the Warrants shall begin at 9:00 a.m., Grand Rapids,
Michigan time on April 30, 2009 (the “Issue Date”). The term for the
exercise of the Warrants shall expire at 2:00 p.m., Grand Rapids, Michigan time
on the earlier to occur of (i) the tenth anniversary of the Issue Date, or (ii)
the date provided in Section 3(b) of this Agreement (the “Expiration
Time”).
(b) Notwithstanding
any provision of this Agreement or any Warrant Certificate to the contrary, the
Warrants shall expire, to the extent not exercised, within 45 days following the
receipt of notice from the Bank’s state or primary federal regulator
(“Regulator”) that (i) the Bank has not maintained its minimum capital
requirements (as determined by the Regulator); and (ii) the Regulator is
requiring exercise or forfeiture of warrants. Upon receipt of such
notice from the Regulator, the Company shall promptly notify each Holder that he
must exercise the Warrants granted to him prior to the end of the 45-day period
or such earlier period as may be specified by the Regulator or forfeit such
Warrant(s). In case of forfeiture, no Holder shall have any cause of
action, of any kind or nature, against the Company or any of its officers or
directors with respect to the forfeiture. In addition, neither the
Company nor the Bank shall be liable to any Holder due to the failure or
inability of the Company to provide adequate notice to Holder.
4. Exercise of
Warrants. The purchase price per Share to be paid by a Holder
for Shares subject to the Warrants shall be $10.00, subject to adjustment as set
forth in Section 11 of this Agreement (the “Exercise Price”). A
Holder may exercise Warrants evidenced by a Warrant Certificate in whole or in
part at any time prior to the Expiration Time by delivering to the secretary of
the Company (i) the Warrant Certificate; (ii) a written notice to the Company
specifying the number of Shares with respect to which Warrants are being
exercised; and (iii) a check for the full amount of the aggregate Exercise Price
of the Shares being acquired.
5. Delivery of Shares; Partial
Exercise. Upon receipt of the items set forth in Section 4,
and subject to the terms of this Agreement, the Company shall promptly deliver
to, and register in the name of, the Holder a certificate or certificates
representing the number of Shares acquired by exercise of a
Warrant. In the event of a partial exercise of Warrant(s), a new
Warrant Certificate evidencing the number of Shares that remain subject to the
Warrant shall be issued by the Company to such Holder or to his duly authorized
assigns.
6. Registration of Transfer and
Exchange.
(a) The
Company shall keep, or cause to be kept, at its principal place of business or
at such other location designated by the Company, a register or registers in
which, subject to such reasonable regulations as the Company may prescribe, the
registrar and transfer agent (the “Securities Registrar”) shall register the
Warrant Certificates and the transfers thereof as provided herein (“Securities
Register”). The initial Securities Registrar shall be the secretary
of the Company, and thereafter, the Securities Registrar may be removed and/or
appointed as authorized by the Company.
(b) Upon
surrender for registration of transfer of any Warrant Certificate, the Company
shall issue and deliver to the Holder or his duly authorized assigns, one or
more new Warrant Certificates of like tenor and in like aggregate
amount.
(c) At
the option of the Holder, Warrant Certificates may be exchanged for other
Warrant Certificates of like tenor and in like aggregate amount upon surrender
of the Warrant Certificates to be exchanged; provided, however, that no
modifications to the terms of this Agreement or the Warrant Certificate may be
made in connection with such exchange. Upon such surrender, the
Company shall issue and deliver to the Holder or his duly authorized assigns,
one or more new Warrant Certificates of like tenor and in like aggregate
amount.
(d) Every
Warrant Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied (if so required by the Company or the Securities
Registrar) by a written instrument or instruments of transfer, in form
satisfactory to the Company or the Securities Registrar, duly executed by the
registered Holder or by such Holder’s duly authorized attorney in
writing.
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7. Replacement of Warrant
Certificates.
(a) Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of a Warrant Certificate and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of mutilation,
surrender and cancellation of such Warrant Certificate, the Company shall issue
and deliver to the Holder or his duly authorized assigns, one or more new
Warrant Certificates of like tenor and in like aggregate amount. In
the case of loss, theft or destruction of a Warrant Certificate, prior to the
issuance of a replacement Warrant Certificate, the Company may also require that
a bond be posted in such amount as the Company may determine is necessary as
indemnity against any claim that may be made against it with respect to such
Warrant Certificate.
(b) All
Warrants shall be held and owned under the express condition that the provisions
of this Section are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Warrant Certificates and shall preclude (to
the extent lawful) all other rights and remedies, notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
(c) Upon
the issuance of any new Warrant Certificate under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Company and its agents and counsel) connected
therewith.
(d) Every
new Warrant Certificate issued pursuant to this Section shall constitute an
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Warrant Certificate shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Warrant Certificates duly issued
hereunder.
8. Persons Deemed
Holders. Prior to the due presentment of a Warrant Certificate
for registration of transfer or exchange, the Company, any Securities Registrar
and any other agent of the Company may treat the person in whose name such
Warrant Certificate is registered in the Securities Register as the sole Holder
of such Warrant Certificate and of the Warrant represented by such Warrant
Certificate for all purposes whatsoever, and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant Certificate or in the
Warrant represented by such Warrant Certificate on the part of any person and
shall be unaffected by any notice to the contrary.
9.
Cancellation. All
Warrant Certificates surrendered for the purpose of exercise, exchange or
registration of transfer shall be cancelled by the Securities Registrar, and no
Warrant Certificates shall be issued in lieu thereof, except as expressly
permitted by the provisions of this Agreement.
10. Fractional
Shares. The Company shall not be required to issue Warrant
Certificates exercisable for fractional Shares or to issue fractional Shares
upon the exercise of Warrants. Warrant Certificates exercisable for fractional
Shares shall expire as of the Expiration Date, and a Holder of such Warrant
Certificates shall not be entitled to any consideration of any kind or nature in
respect of such Warrant or Warrant Certificate.
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11. Stock Dividends, Splits,
Etc.
(a) If,
prior to the Expiration Time, the Company shall subdivide its outstanding Shares
into a greater number of Shares, or declare and pay a dividend of its Shares
payable in additional Shares, the Exercise Price, as then in effect, shall be
proportionately reduced, and the Company shall proportionately increase the
number of Shares then subject to exercise under this Warrant (and not previously
exercised.)
(b) If,
prior to the Expiration Time, the Company shall combine its outstanding Shares
into a lesser number of Shares, the Exercise Price, as then in effect, shall be
proportionately increased, and the Company shall proportionately reduce the
number of Shares then subject to exercise under this Warrant (and not previously
exercised.)
12. Reorganization,
Reclassifications, Consolidation or Merger. If, prior to the
Expiration Time, there shall be a reorganization or reclassification of the
Shares (other than as provided in Section 11 of this Agreement), or any
consolidation or merger of the Company with another entity, the Holder shall be
entitled to receive, during the remainder of the term of this Agreement and upon
payment of the Exercise 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 Shares, deliverable upon the exercise of a Warrant, would have been
entitled upon such reorganization, reclassification, consolidation or merger;
and, in any case, the Company shall make appropriate adjustments (as determined
by the board of directors of the Company in its sole discretion) in the
application of the provisions with respect to the rights and interests of the
Holders so that the provisions set forth in this Agreement (including the
adjustment to the Exercise Price and the number of Shares issuable upon exercise
of the Warrants) shall be applicable, as nearly as may be practicable, to any
shares or other property thereafter deliverable upon the exercise of this
Warrant.
13. Certificate as to
Adjustments; Issuance of New Warrant Certificates. Within
thirty (30) days following any adjustment provided for in Section 11 or
12 of this Agreement, the Company shall give written notice of the
adjustment to the Holders as provided in Section 14(a) of this
Agreement. The notice shall state the Exercise Price as adjusted and
the increased or decreased number of shares purchasable upon the exercise of the
Warrant(s) and shall set forth in reasonable detail the method of calculation
for each. Notwithstanding anything to the contrary set forth herein
or in the Warrant Certificates, the Company may, at its option, issue new
Warrant Certificates evidencing the Warrants, in such form as may be approved by
the Company, to reflect any adjustment or change in the Exercise Price and the
number or kind of stock or other securities or property purchasable upon
exercise of the Warrants.
14. Miscellaneous.
(a) Any
notice or other communication required or permitted to be made hereunder shall
be in writing, duly signed by the party giving such notice or communication and
shall be deemed delivered and effective when given personally or mailed by
first-class registered or certified mail, postage prepaid as follows (or at such
other address for a party as shall be specified by like notice): (i) if given to
the Company, at its principal place of business; and (ii) if given to a Holder,
at the address set forth for the Holder on the books and records of the
Company. A notice given to the Company by a Holder with respect to
the exercise of a Warrant shall not be effective until received by the
Company.
(b) The
Company shall, at all times, reserve and keep available out of its authorized
and unissued Shares or out of any Shares held in treasury that number of Shares
that will from time to time be sufficient to permit the exercise in full of all
outstanding Warrants. The Company shall take all such action as may
be necessary to ensure that all Shares delivered upon exercise of any Warrants
shall, at the time of delivery of the Warrant Certificates for such Shares, be
duly authorized, validly issued, fully paid and nonassessable.
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(c) The
Company shall pay when due and payable any and all federal and state transfer
taxes and charges (other than any applicable income taxes) that may be payable
in respect of the issuance and delivery of Warrant Certificates or of
certificates for Shares receivable upon the exercise of any Warrants; provided,
however, that the Company shall not be required to pay any tax that may be
payable in respect of the issuance and delivery (i) of any Warrant Certificate
or stock certificate registered in a name other than that of the Holder of the
Warrant Certificate that has been surrendered, or (ii) of any Warrant
Certificate under Section 7.
(d) No
Holder, in his capacity as such, shall be entitled to vote or receive dividends
or shall be deemed for any other purpose the holder of the Shares or other
securities which may at any time be issuable upon the exercise of such
Warrant. Nothing contained herein or in any Warrant Certificate shall
be construed to confer upon any Holder, in his capacity as such, any of the
rights of a shareholder of the Company, including any right to vote for the
election of directors or upon any matter submitted to shareholders of the
Company at any meeting thereof, to give or withhold consent to any corporate
action, or to receive notices of meeting or other actions affecting
shareholders.
(e) Each
Holder, by accepting a Warrant Certificate, accepts and agrees to the terms of
this Agreement. The terms of this Agreement shall be binding upon the
Company and the Holders and their respective heirs, successors, representatives
and permitted assigns. Nothing expressed or referred to herein is
intended or will be construed to give any person other than the Company or the
Holders any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provision herein contained, it being the intention of the
Company and the Holders that this Agreement, the assumption of obligations and
statements of responsibilities hereunder, and all other conditions and
provisions hereof are for the sole benefit of the Company and the Holders and
for the benefit of no other person.
(f) This
Agreement constitutes the full understanding of the Company and the Holders, a
complete allocation of risks between them and a complete and exclusive statement
of the terms and conditions of their agreement relating to the subject matter
hereof and supersedes any and all prior agreements, whether written or oral,
that may exist between the Company and any Holder with respect
thereto. Except as otherwise specifically provided in this Agreement,
no conditions, usage of trade, course of dealing or performance, understanding
or agreement purporting to modify, vary, explain or supplement the terms or
conditions of this Agreement will be binding unless hereafter or
contemporaneously herewith made in writing and signed by the party to be bound,
and no modification will be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement.
(g) The
headings contained in this Agreement are for convenience of reference only and
will not affect in any way the meaning or interpretation of this
Agreement. The words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement will refer to this Agreement as a
whole and not to any particular provision in this Agreement. Each use
herein of the masculine, neuter or feminine gender will be deemed to include the
other genders. Each use herein of the plural will include the
singular and vice versa, in each case as the context requires or as is otherwise
appropriate. The word “or” is used in the inclusive
sense. References to a person are also to its permitted successors or
assigns. No provision of this Agreement is to be construed to require, directly
or indirectly, any person to take any action, or omit to take any action, which
action or omission would violate applicable law (whether statutory or common
law), rule or regulation.
(h) This
Agreement shall terminate upon the earlier of (i) the Expiration Time, or
(ii) the close of business on the date on which all Warrants shall have
been exercised.
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(i) Notwithstanding
anything in this Agreement to the contrary, in no event will the Holder of a
Warrant be entitled to receive a net-cash settlement or other consideration in
lieu of physical settlement in Shares upon exercise of the
Warrant. Accordingly, the Warrant may expire unexercised and
worthless if either a current registration statement covering the Shares is not
effective or if no exemption to registration of the Shares under federal or
applicable state securities laws is available.
(j) THIS AGREEMENT, EACH WARRANT AND EACH
WARRANT CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF MICHIGAN WITHOUT REGARD TO THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS. IN THE EVENT
OF A DISPUTE INVOLVING THIS AGREEMENT, THE PARTIES IRREVOCABLY AGREE THAT VENUE
FOR SUCH DISPUTE SHALL LIE EXCLUSIVELY IN A COURT OF COMPETENT JURISDICTION IN
KENT COUNTY, MICHIGAN.
IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed by a duly authorized officer as
of the date first above written.
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GRAND
RIVER COMMERCE, INC.
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a
Michigan corporation
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/s/
Xxxxxx X. Xxxxxxx
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By:
Xxxxxx X. Xxxxxxx, Chief Executive
Officer
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6
EXHIBIT
A
LIST
OF INITIAL HOLDERS
EXHIBIT
B
CAPITAL
WARRANT CERTIFICATE
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS SPECIFIED IN THAT CERTAIN CAPITAL WARRANT AGREEMENT DATED AS OF APRIL
30, 2009, BY GRAND RIVER COMMERCE, INC., A MICHIGAN CORPORATION (“COMPANY”), IN
FAVOR OF THE PERSONS LISTED ON EXHIBIT A THERETO, AS
THE SAME MAY BE AMENDED FROM TIME TO TIME (“AGREEMENT”). A COPY OF
THE FORM OF THE AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE BANK DURING NORMAL BUSINESS HOURS. THE HOLDER
OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
THE PROVISIONS OF THE AGREEMENT.
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No.
W-___
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Number
of Warrants:
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GRAND
RIVER COMMERCE, INC.
WARRANT
CERTIFICATE
This
Warrant Certificate certifies that ____________________, or registered assigns,
is the registered holder of a warrant to purchase the number of fully-paid and
non-assessable shares of common stock, $0.01 per share par value of the Company
(“Shares”) set forth above, at the exercise price, subject to adjustment in
certain events (“Exercise Price”), of $10.00 per share (“Warrant”).
The
Warrant evidenced by this Warrant Certificate is part of a duly authorized issue
of Warrants issued pursuant to the Agreement, which is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the Holder. All terms used,
but not otherwise defined, in this Warrant Certificate shall have the meanings
assigned to them in the Agreement. If any provision of this Warrant
Certificate conflicts with a provision of the Agreement, the provision of the
Agreement shall supercede.
This
Warrant may not be exercised after 2:00 p.m., Grand Rapids, Michigan time, on
the earlier to occur of (i) the tenth anniversary of the date that Grand River
Bank opens for business, or (ii) the date provided in Section 3(b) of the
Agreement (the “Expiration Time”).
The
Holder may exercise the Warrant evidenced by this Warrant Certificate in whole
or in part at any time prior to the Expiration Time by delivering to the
secretary or the cashier of the Company (i) the Warrant Certificate; (ii) a
written notice to the Company specifying the number of Shares with respect to
which Warrants are being exercised; and (iii) a check for the full amount of the
aggregate Exercise Price of the Shares being
acquired. Notwithstanding anything in this Agreement to the contrary,
in no event will the Holder of a Warrant be entitled to receive a net-cash
settlement or other consideration in lieu of physical settlement in Shares upon
exercise of the Warrant if the Shares underlying the Warrant are not covered by
an effective registration statement under federal or applicable state securities
laws. Accordingly, the Warrant may expire unexercised and worthless
if either a current registration statement covering the Shares is not effective
or if no exemption to registration of the Shares under federal or applicable
state securities laws is available.
Upon
receipt of the items set forth above, and subject to the terms of the Agreement,
the Company shall promptly deliver to, and register in the name of, the Holder a
certificate or certificates representing the number of Shares acquired by
exercise of this Warrant. In the event of a partial exercise of this
Warrant, a new Warrant Certificate evidencing the number of Shares that remain
subject to this Warrant shall be issued by the Company to such Holder or to his
duly authorized assigns.
The
Agreement provides that upon the occurrence of certain events the Exercise Price
and the type and/or number of the Company’s securities issuable thereupon may,
subject to certain conditions, be adjusted. In such event, the
Company may, at its option, issue a new Warrant Certificate evidencing the
adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants.
Upon
surrender for registration of transfer of this Warrant Certificate, subject to
the terms of the Agreement, the Company shall issue and deliver to the Holder or
his duly authorized assigns, one or more new Warrant Certificates of like tenor
and in like aggregate amount.
Prior to
the due presentment of this Warrant Certificate for registration of transfer or
exchange, the Company, any Securities Registrar and any other agent of the
Company may treat the person in whose name this Warrant Certificate is
registered in the Securities Register as the sole Holder of this Warrant
Certificate and of the Warrant represented by this Warrant Certificate for all
purposes whatsoever, and shall not be bound to recognize any equitable or other
claim to or interest in this Warrant Certificate or in the Warrant represented
by this Warrant Certificate on the part of any person and shall be unaffected by
any notice to the contrary.
The
Holder, in his capacity as such, shall not be entitled to vote or receive
dividends or shall be deemed from any other purpose the holder of the Shares or
other securities which may at any time be issuable upon the exercise of this
Warrant. Nothing contained in this Warrant Certificate shall be
construed to confer upon the Holder, in his capacity as such, any of the rights
of a shareholder of the Company, including any right to vote for the election of
directors or upon any matter submitted to shareholders of the Company at any
meeting thereof, to give or withhold consent to any corporation action, or to
receive notices of meeting or other actions affecting shareholders.
Any
notice or other communication required or permitted to be made by the Holder to
the Company shall be in writing, duly signed by the Holder and shall be deemed
delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid to the Company, at its principal
place of business (or such other address as designated in writing to the Holder
by the Company). A notice given to the Company by a Holder with
respect to the exercise of this Warrant shall not be effective until received by
the Company.
The
Holder understands and acknowledges that upon exercise of this Warrant, the
Holder may recognize taxable income equal to the difference between the fair
market value of the underlying Shares and the Exercise Price of the
Warrant. Holders are encouraged to consult with their tax advisors
before exercising the Warrant.
IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.
Dated as
of April 30, 2009.
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GRAND
RIVER COMMERCE, INC.
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a
Michigan corporation
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By:
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Xxxxxx
X. Xxxxxxx, President & Chief Executive
Officer
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[SEAL]
Attest:
