UP TO 2,000,000 SHARES OF COMMON STOCK OF GRAND RIVER COMMERCE, INC. AGENCY AGREEMENT
Exhibit
1.01
UP TO
2,000,000 SHARES
OF
COMMON
STOCK
OF
GRAND
RIVER COMMERCE, INC.
____________________________
____________________________
Dated as
of February 23, ▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Capital, LLC
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Grand River Commerce, Inc., a Michigan
corporation (the “Company”), and, upon formation, Grand River Bank, a Michigan
state-chartered banking association in organization (the “Bank”), proposes,
subject to the terms and conditions stated herein, to engage Commerce Street
Capital, LLC (the “Agent” or “you”) to assist the Company in structuring an
offering of the Company’s common stock (the “Common Stock”) and, as agent of the
Company, to assist in the sale on a “best efforts” basis of a minimum of
1,500,000 and up to a maximum of 2,000,000 shares of the Common Stock, $.01 par
value per share (the “Shares”) for $10.00 per share.
1. The
Offering. The Company is offering the Shares, in connection
with the Company’s initial public offering (the “Offering”) and capitalization
of the Bank, a de novo,
Federal Deposit Insurance Corporation (“FDIC”) insured Michigan state banking
association.
The Company has prepared and filed, in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (collectively, the “1933 Act”), with the
Securities and Exchange Commission (the “Commission”) a registration statement
on Form S-1 (File No. 333-147456) under the 1933 Act, including a
prospectus, relating to the Shares. Except where the context
otherwise requires, “Registration Statement,” as used herein, means the
registration statement, as amended at the time of such registration statement’s
effectiveness for purposes of Section 11 of the 1933 Act (the “Effective
Time”), including (i) all documents filed as a part thereof, (ii) any
information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 424(b) under the 1933 Act and deemed, pursuant to Rule 430A or
Rule 430C under the 1933 Act, to be part of the registration statement at the
Effective Time, and (iii) any registration statement filed to register the
offer and sale of the Shares pursuant to Rule 462(b) under the 1933
Act.
Except where the context otherwise
requires, a “Preliminary Prospectus,” as used herein, means any preliminary
prospectus included in the Registration Statement or filed with the Commission
pursuant to Rule 424(a) under the 1933 Act.
Except where the context otherwise
requires, “Prospectus,” as used herein, means the prospectus filed by the
Company with the Commission pursuant to Rule 424(b) under the 1933 Act on or
before the second business day after the Effective Time (or such earlier time as
may be required under the 1933 Act), or, if no such filing is required, the
final prospectus included in the Registration Statement at the Effective
Time.
“Permitted Free Writing Prospectuses,”
as used herein, means the documents listed on Schedule A attached
hereto and each “road show” (as defined in Rule 433(h)(4) under the 1933 Act),
if any, related to the offering of the Shares contemplated hereby that is a
“written communication” (as defined in Rule 405 under the 1933
Act).
“Disclosure
Package,” as used herein, means any Preliminary Prospectus together with any
combination of one or more of the Permitted Free Writing Prospectuses, if
any.
“Blue Sky
Application,” as used herein, means any instrument or document executed by the
Company or based upon written information supplied by the Company filed in any
state or jurisdiction to register or qualify any or all of the Shares or to
claim an exemption therefrom or provided to any state or jurisdiction to exempt
the Company as a broker-dealer or the officers, directors or employees as
broker-dealers or agents of the Company under the securities laws
thereof.
Any
reference herein to the Registration Statement, any Preliminary Prospectus, the
Prospectus or any Permitted Free Writing Prospectus shall be deemed to refer to
and include the
documents,
if any, incorporated by reference, or deemed to be incorporated by reference,
therein (the “Incorporated Documents”), including, without limitation, unless
the context otherwise requires, the documents, if any, filed as exhibits to such
Incorporated Documents. Any reference herein to the terms “amend,”
“amendment” or “supplement” with respect to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus
shall be deemed to refer to and include the filing of any document under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the “Exchange Act”) on or after the Effective Time, or the date of
such Preliminary Prospectus, the Prospectus or such Permitted Free Writing
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
The organizers of the Bank have filed
with the Michigan Office of Financial and Insurance Services (the “MOFIS”) for
approval to form a de
novo state banking association, and with the FDIC for insurance of
deposit accounts, and have filed amendments (as so amended, the “Applications”)
thereto as required by the MOFIS and the FDIC (the MOFIS and the FDIC are
collectively referred to herein as the “Regulatory Agencies”).
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In
connection with the Offering, the Agent will assist the Company with the
following services: (a) establishing a comprehensive plan for the development
and execution of the Offering; (b) establishing a computer database that will
enable the Company’s management and directors to gauge the progress of the
Offering on a daily basis; (c) preparing written news releases regarding the
Offering and the Company, as well as its officers and directors for
dissemination by the Company; (d) preparing layout and design work for the
Company’s “tombstone” announcements, and will assist on placement and related
sales factors, such as location in newspaper, style of announcement, and
announcement identification techniques; (e) coordinating certain aspects of the
Company’s selling efforts with respect to the Offering including recommendations
regarding allocation of each director’s fundraising responsibilities and
consultations with officers and directors regarding sales techniques that will
enable them to maximize their efforts; (f) preparing officers and directors of
the Company to introduce and describe the Offering to potential investors at
investor meetings, including open houses, breakfast meetings, luncheon meetings,
and cocktail receptions; and (g) working with the officers and management of the
Company in processing all retirement account purchases of shares in the Offering
through the various types of retirement accounts that potential investors may
have already established. If potential investors wish to use retirement funds to
invest in the Shares, but do not have a retirement account established or have a
custodian that will not process this type of transaction, then Agent will seek
out those retirement custodians who will allow such a transaction and refer the
potential investor to such retirement custodians. The Company
acknowledges that the ability of the Agent to perform its obligations hereunder
is dependent upon the Company’s and the Bank’s management, directors and
organizers complying with the guidelines set forth in Appendix 4, attached
hereto and made a part hereof.
2. Retention of Agent;
Compensation; Sale and Delivery of the Shares. Subject to the
terms and conditions herein set forth, the Company hereby appoints the Agent as
its exclusive financial advisor and placement agent (i) to utilize its “best
efforts” to solicit subscriptions for Shares and to assist the Company with
respect to the Company’s sale of the Shares in the Offering, and (ii) to manage
the sale of Shares through a group of selected broker dealers, if
necessary.
On the basis of the representations and
warranties and subject to the terms and conditions of this Agency Agreement
(this “Agreement”), the Agent accepts such appointment and agrees to consult
with and assist the Company and the Bank as to matters set forth in the letter
agreement dated November 18, 2008 between the Company and the Agent (“Letter
Agreement”), a copy of which is attached hereto as Exhibit
A. Upon execution, this Agreement shall supersede and replace
the Letter Agreement. It is acknowledged by the Company that the
Agent shall not be obligated to purchase any Shares and shall not be obligated
to take any action which Agent deems to be inconsistent with any applicable law,
regulation, decision or order. Subscriptions will be offered as described in the
Prospectus. Except as otherwise provided in this Agreement, the
appointment of the Agent will terminate upon completion of the
Offering.
In the event the Company is unable to
sell a minimum of 1,500,000 Shares within the period herein provided, this
Agreement shall terminate and the Company shall cause the Escrow Agent (as
defined below) to refund to any persons who have subscribed for any of the
Shares the full amount it received from them, as set forth in the Prospectus;
and none of the parties to this Agreement shall have any obligation to the other
parties hereunder, except as set forth in this Section 2 and in Sections 6, and
8 hereof.
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In the event the Offering is terminated
and the Closing (as defined below) does not occur, then in no event shall the
Agent receive the fees set forth in subparagraph (b) below. Provided, however, regardless
of whether or not the Closing occurs, the Agent shall be entitled to receive the
consulting fees set forth in subparagraphs (a) and (d) below and to receive
reimbursement of its actual accountable out-of-pocket expenses, as set forth in
subparagraph (c) below.
If all conditions precedent to the
consummation of the Offering are satisfied, the Company agrees to issue, or have
issued, the Shares sold in the Offering and to release for delivery certificates
for such Shares on one or more Closing Dates (as defined below) against payment
to the Company by any means authorized pursuant hereto; provided, however, that no
funds shall be released to the Company until the conditions specified in Section
7 hereof shall have been complied with to the reasonable satisfaction of the
Agent and its counsel. The release of Shares against payment therefor shall be
made on a date and at a place mutually acceptable to the Company and the Agent
(the “Closing”). Certificates for Shares shall be delivered directly to the
purchasers in accordance with their directions. The date upon which the Company
shall release or deliver the Shares sold in the Offering, in accordance with the
terms herein, is called the “Closing Date.” The Agent shall receive the
following compensation for its services hereunder:
a. The
Company will pay, or cause the Bank to pay, the Agent a cash advisory fee equal
to $20,000 payable upon the Agent’s receipt of a “no objection” notice from the
Financial Industry Regulatory Authority, Inc. (“FINRA”) in connection with the
Agent’s compensation under this Agreement (the “No Objection Notice”), and a
cash advisory fee equal to $20,000 upon the later of (i) receipt of the No
Objection Notice, or (ii) upon the date in which the Agent’s personnel commence
working on-site at the Bank (the later of (i) or (ii) above referred to herein
as the “Commencement Date”); provided that, this cash
advisory fee shall be prorated through the end of the month in which the
Commencement Date occurs (for example, if the Commencement Date is on December
15, then this cash advisory fee would be $10,000). On the first day
of the first full month after the Commencement Date and for each month
thereafter, the Company will pay, or cause the Bank to pay, the Agent a cash
advisory fee equal to $20,000 (due at the start of each new monthly period) for
the term of this Agreement on the dates set forth on Appendix 1 attached
hereto and made a part hereof; provided that, no payment
shall be due under this Section 2(a) until FINRA shall have issued the No
Objection Notice. Any advisory fee payable pursuant to the foregoing
sentences shall be paid regardless of whether the Offering is successfully
completed in next day funds following the applicable due date.
b. The
Company will pay, or cause the Bank to pay, the Agent a commission equal to (i)
five percent (5.0%) of the gross proceeds of the Offering from subscriptions
received from investors who are not introduced to the Company by the Agent
(excluding (x) subscriptions received from directors, officers and organizers of
the Company prior to the date of the Agent’s receipt of the No Objection Notice,
and (y) subscriptions from investors for which all funds are held in escrow
prior to the date of the Agent’s receipt of the No Objection Notice), and (ii)
six percent (6.0%) of the gross proceeds from the Offering from subscriptions
received from investors introduced to the Company by the Agent (which investors
shall be documented in writing prior to the Closing); provided, however, the
commission due to the Agent pursuant to this Section 2(b) shall be reduced by
the aggregate amount of fees paid to the Agent pursuant to Section 2(a) above.
Any commissions payable hereunder, shall be paid in next day funds on each
Closing Date.
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c. Agent
shall be reimbursed for expenses as contemplated by Section 6 hereof, regardless
of whether the Offering is successfully completed, in accordance with the
policies set forth on Appendix 2 attached
hereto. Any fee, out-of-pocket expenses or commissions payable hereunder, shall
be paid in next day funds following the Company’s receipt of an invoice from the
Agent.
d. If the
Company elects to engage the Agent as a sponsoring dealer in any state, the
Company shall pay the Agent an additional fee of $10,000 for the first state in
which the Agent serves as sponsoring dealer and a fee of $2,500 for each
additional state requiring a sponsoring dealer (the “Sponsoring Dealer
Fee”).
e. The
Company acknowledges and agrees that in connection with the Offering, sale of
the Shares or any other services the Agent may be deemed to be providing
hereunder, notwithstanding any preexisting relationship, advisory or otherwise,
between the parties or any oral representations or assurances previously or
subsequently made by the Agent: (i) no fiduciary or agency relationship exists
between the Company, the Bank or any other person, on the one hand, and the
Agent, on the other hand; (ii) the Agent is not acting as advisor, expert or
otherwise, to the Company, including, without limitation, with respect to the
determination of the Offering price of the Shares, and such relationship between
the Company or the Bank, on the one hand, and the Agent, on the other hand, is
entirely and solely commercial, based on arms-length negotiations; (iii) any
duties and obligations that the Agent may have to the Company or the Bank shall
be limited to those duties and obligations specifically stated herein; and (iv)
the Agent and its respective affiliates may have interests that differ from
those of the Company or the Bank. The Company hereby waives any claims that the
Company may have against the Agent with respect to any breach of fiduciary duty
in connection with the Offering.
3. Representations and
Warranties of the Company and the Bank.
The Company represents and warrants to,
and agrees to cause the Bank to represent and warrant to, the Agent
that:
a. The
Company has all such power, authority, authorizations, approvals and orders as
may be required to enter into this Agreement, to carry out the provisions and
conditions hereof and to issue and sell the Shares as contemplated herein and as
described in the Registration Statement, any Preliminary Prospectuses, the
Prospectus or any Permitted Free Writing Prospectus. The consummation
of the Offering, the execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated have been duly and
validly authorized by all necessary corporate action on the part of the Company
and this Agreement has been validly executed and delivered by the Company and is
the valid, legal and binding agreement of the Company enforceable in accordance
with its terms, except to the extent, if any, that the provisions of Section 8
hereof may be unenforceable as against public policy, and except to the extent
that such enforceability may be limited by bankruptcy laws, insolvency laws, or
other laws affecting the enforcement of creditors’ rights generally, or the
rights of creditors of financial institutions insured by the FDIC (including the
laws relating to the rights of the contracting parties to equitable
remedies).
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b. The
Registration Statement has heretofore become effective under the 1933 Act as of
May 9, 2008; no stop order of the Commission preventing or suspending the use of
any Preliminary Prospectus or Permitted Free Writing Prospectus or the
effectiveness of the Registration Statement has been issued, and no proceedings
for such purpose have been instituted or, to the knowledge of the Company after
due inquiry, are contemplated by the Commission; the Registration Statement
complied when it became effective, complies as of the date hereof and, as
amended or supplemented, at each time a subscription agreement of funds are
submitted by prospective investors to the Company during the Offering period
(each such time referred to as a “time of delivery”), at each Closing Date and
at all times during which a prospectus is required by the 1933 Act to be
delivered (whether physically or through compliance with Rule 172 under the 1933
Act or any similar rule) in connection with any sale of Shares, will comply, in
all material respects, with the requirements of the 1933 Act; each Preliminary
Prospectus complied, at the time it was filed with the Commission, and complies
as of the date hereof, in all material respects, with the requirements of the
1933 Act; at no time during the period that begins on the earlier of the date of
such Preliminary Prospectus and the date such Preliminary Prospectus was filed
with the Commission and ends at the Closing Time (as defined herein) did or will
any Preliminary Prospectus, as then amended or supplemented, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and at no time during such period did or will any
Preliminary Prospectus, as then amended or supplemented, together with any
combination of one or more of the then issued Permitted Free Writing
Prospectuses, if any, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; the
Prospectus will comply, as of its date, the date that it is filed with the
Commission, each time of delivery, each Closing Date and at all times during
which a prospectus is required by the 1933 Act to be delivered (whether
physically or through compliance with Rule 172 under the 1933 Act or any similar
rule) in connection with any sale of Shares, in all material respects, with the
requirements of the 1933 Act (including, without limitation, Section 10(a)
of the ▇▇▇▇ ▇▇▇); at no time during the period that begins on the earlier of the
date of the Prospectus and the date the Prospectus is filed with the Commission
and ends at the later of the Closing Time and the end of the period during which
a prospectus is required by the 1933 Act to be delivered (whether physically or
through compliance with Rule 172 under the 1933 Act or any similar rule) in
connection with any sale of Shares did or will the Prospectus, as then amended
or supplemented, include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; at no time during
the period that begins on the date of such Permitted Free Writing Prospectus and
ends at the time of purchase did or will any Permitted Free Writing Prospectus
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that
neither the Company nor the Bank make any representation or warranty with
respect to any statement contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus
in reliance upon and in conformity with information concerning the Agent and
furnished in writing by or on behalf of the Agent to the Company expressly for
use in the Registration Statement, such Preliminary Prospectus, the Prospectus
or such Permitted Free Writing Prospectus, as applicable. All
Permitted Free Writing Prospectuses were preceded by, or accompanied with, a
statutory prospectus meeting the requirements of Section 10(a) of the 1933
Act as required by Rule 164 under the 1933 Act.
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c. Prior
to the execution of this Agreement, the Company has not, directly or indirectly,
offered or sold any Shares by means of any “prospectus” (within the meaning of
the ▇▇▇▇ ▇▇▇) or used any “prospectus” (within the meaning of the ▇▇▇▇ ▇▇▇) in
connection with the offer or sale of the Shares, in each case other than the
Preliminary Prospectuses and the Permitted Free Writing Prospectuses, if any;
the Company has not, directly or indirectly, prepared, used or referred to any
Permitted Free Writing Prospectus except in compliance with Rules 164 and 433
under the 1933 Act; assuming that such Permitted Free Writing Prospectus is so
sent or given after the Registration Statement was filed with the Commission
(and after such Permitted Free Writing Prospectus was, if required pursuant to
Rule 433(d) under the 1933 Act, filed with the Commission), the sending or
giving, by any the Agent, of any Permitted Free Writing Prospectus will satisfy
the provisions of Rule 164 or Rule 433 of the 1933 Act (without reliance on
subsections (b), (c) and (d) of Rule 164); each of the Preliminary
Prospectuses is a prospectus that, other than by reason of Rule 433 or Rule 431
under the 1933 Act, satisfies the requirements of Section 10 of the 1933
Act, including a price range where required by rule; neither the Company nor the
Agent is disqualified, by reason of subsection (f) or (g) of Rule 164
under the 1933 Act, from using, in connection with the offer and sale of the
Shares, “free writing prospectuses” (as defined in Rule 405 under the ▇▇▇▇ ▇▇▇)
pursuant to Rules 164 and 433 under the 1933 Act; the Company is not an
“ineligible issuer” (as defined in Rule 405 under the ▇▇▇▇ ▇▇▇) as of the
eligibility determination date for purposes of Rules 164 and 433 under the 1933
Act with respect to the offering of the Shares contemplated by the Registration
Statement; the parties hereto agree and understand that the content of any and
all road shows related to the Offering is solely the property of the
Company.
d. No
Blue Sky Application will include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided, however, that
neither the Company nor the Bank makes any representation or warranty with
respect to any statement contained in a Blue Sky Application in reliance upon
and in conformity with information concerning the Agent and furnished in writing
by or on behalf of the Agent to the Company expressly for use in the Blue Sky
Application.
e. The
Applications, when they will have been approved on a preliminary basis by the
MOFIS and the FDIC, and at all times subsequent thereto until the final Closing
Date, will comply as to form in all material respects with all applicable rules
and regulations of the Regulatory Agencies (except as modified or waived in
writing by the applicable Regulatory Agencies). The Applications do not include
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, in
light of the circumstances under which they were made, not
misleading.
f. No
order has been issued by the Commission or any of the Regulatory Agencies (and
hereinafter reference to the FDIC shall include the Deposit Insurance Fund), or
any state regulatory authority, preventing or suspending the use of any
Preliminary Prospectus, Permitted Free Writing Prospectus, or the Prospectus and
no action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Offering or any of the
Applications is, to the knowledge of the Company, pending or
threatened.
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g. The
Offering has been duly authorized and approved by the Board of Directors of the
Company, and, following the first Closing Date, the Company and the Bank will
have completed all conditions precedent to the Offering specified in the
Applications and approvals from the Regulatory Agencies, and the offer and sale
of the Shares will have been conducted in all material respects in compliance
with all applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the Offering imposed
upon the Company or the Bank by the Regulatory Agencies, the Commission or any
regulatory authority, and in the manner described in the Registration Statement,
the Preliminary Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any. At each Closing Date, to the knowledge of the Company and
the Bank, no person will have sought to obtain review of the preliminary action
of the Regulatory Agencies in approving the Applications pursuant to any
applicable state or federal statute or regulation.
h. The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Michigan, and has corporate power
and authority, subject to receipt of final approval from the Regulatory Agencies
and the Federal Reserve, to own, lease or operate its properties and to conduct
its business as described in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if
any, and to enter into and perform its obligations under this Agreement; upon
receipt of final approvals from the Regulatory Agencies, the Bank will be duly
organized and validly existing under Michigan law and regulations promulgated by
the MOFIS, with power and authority to own or lease its properties and conduct
its business as described in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if
any; the Company and the Bank will not conduct business in any jurisdiction
other than the State of Michigan.
i. Except
for the Bank, the Company does not own equity interests of any other business
entities.
j. The
financial statements included in the Registration Statement, any Preliminary
Prospectuses, the Prospectus or any Permitted Free Writing Prospectuses,
together with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations, shareholders’ equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified; such
financial statements have been prepared in conformity with generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Registration Statement, any Preliminary Prospectuses, the Prospectus or any
Permitted Free Writing Prospectuses present fairly in accordance with GAAP the
information required to be stated therein.
k. Since
the respective dates as of which information is given in the Registration
Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any, except as otherwise stated therein, (i) there
has been no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company and the
Bank considered as one enterprise, whether or not arising in the ordinary course
of business (a “Material Adverse Effect”), (ii) there have been no
transactions entered into by the Company or the Bank, other than those in the
ordinary course of business, which are material with respect to the Company and
the Bank considered as one enterprise, and (iii) there has been no dividend
or distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
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l. Each
of the Company and the Bank has good and marketable title to all real property
and good title to all other properties owned by it, in each case free and clear
of all mortgages, pledges, liens, security interests, restrictions, defects or
encumbrances of any kind except such as (i) are described in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free
Writing Prospectus, or (ii) do not singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by either the Company or the Bank; and any real
property and buildings held under lease by either the Company or the Bank are
held by it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by either the Company or the
Bank.
m. The
Company has an authorized capitalization as set forth in the Registration
Statement, the Preliminary Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any; all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description of the capital stock of the Company
contained in the Registration Statement, the Preliminary Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any; no holder of
securities of the Company will be subject to personal liability by reason of
being such a holder; there are no preemptive or other similar rights to
subscribe for or to purchase any securities of the Company; except as described
in the Registration Statement, there are no warrants, options or other rights to
purchase any securities of the Company; neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement give rise to any rights for or relating to the registration of any
securities of the Company with respect to such filing, offering or
sale.
n. The
Shares have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued and
fully paid and nonassessable and will conform to the description of the Shares
contained in the Registration Statement, the Preliminary Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any;
o. The
issuance and sale of the Shares being issued at each Closing Date by the Company
and the performance of this Agreement and the consummation by the Company of the
other transactions herein contemplated will not conflict with or result in a
breach or violation of any terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or the Bank is a party or by which any of the
property or assets of the Company or the Bank is bound or to which any of the
property or assets of the Company or the Bank is subject, nor will such action
result in any violation of the provisions of the Articles of Incorporation or
Association, as amended, or Bylaws, as amended, of the Company or the Bank or
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or the Bank or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issuance and sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or qualifications as may be
required under the 1933 Act and under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Agent.
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p. There
is no action, suit, proceeding, inquiry or investigation before or brought by
any court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company or the Bank, threatened, against or affecting
the Company or the Bank, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in this Agreement or the
performance by the Company or the Bank of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
or the Bank is a party or of which any of their respective property or assets is
the subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
q. The
Company and the Bank own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, “Intellectual
Property”) necessary to carry on the businesses now operated by them, and
neither the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or the Bank therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
r. BKD,
LLP, which has certified certain financial statements and supporting schedules
of the Company included in the Registration Statement, the Preliminary
Prospectus, the Prospectus and the Free Writing Prospectuses containing an audit
report, are independent public accountants as required by the 1933 Act and the
rules and regulations of the Commission thereunder.
s. All
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)) established, maintained or
contributed to by the Company or the Bank (except any such plan for which the
principal sponsor or plan administrator is an affiliate other than the Company
or the Bank) comply in all material respects with the requirements of ERISA and
no employee pension benefit plan (as defined in Section 3(2) of ERISA) has
incurred or assumed an “accumulated funding deficiency” within the meaning of
Section 302 of ERISA or has incurred or assumed any material liability (other
than for the payment of premiums) to the Pension Benefit Guaranty
Corporation.
10
t. The
Company has timely filed all necessary federal, state and foreign income,
franchise and excise tax returns and has paid all taxes shown thereon as due,
and there is no tax deficiency that has been or, to the knowledge of the
Company, might be asserted against the Company that might have a Material
Adverse Effect.
u. The
Company is not in violation of any federal or state law, regulation, or treaty
relating to the storage, handling, transportation, treatment or disposal of
hazardous substances (as defined in 42 U.S.C. Section 9601) or hazardous
materials (as defined by any federal or state law or regulation) or other waste
products, which violation may have a Material Adverse Effect; the Company has
received all permits, licenses or other approvals as may be required of it under
applicable federal and state environmental laws and regulations to conduct its
business as described in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if
any, and the Company is in compliance in all material respects with the terms
and conditions of any such permit, license or approval; the Company has not
received any notices or claims that it is a responsible party or a potentially
responsible party in connection with any claim or notice asserted pursuant to 42
U.S.C. Section 9601 et seq. or any state superfund law; and the disposal of all
of the Company’s hazardous substances, hazardous materials and other waste
products has been lawful.
v. No
material relationship, direct or indirect, exists between or among the Company
or the Bank, on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company or the Bank on the other hand, that is
required by the 1933 Act, or by the rules and regulations under such Act to be
described in the Registration Statement, the Preliminary Prospectuses, or the
Prospectus, that is not so described.
w.
Neither the Company nor the Bank has taken and neither of such entities will
take, directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
x. Each
of the Company and, upon formation, the Bank holds and is operating in
compliance, in all material respects, with all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and orders
of any governmental or self-regulatory body required for the conduct of its
business as presently being conducted (“licenses”) and all licenses are valid
and in full force and effect; and each of the Company, and upon formation, the
Bank, is, or will be, in compliance, in all material respects, with all laws,
regulations, orders and decrees applicable to it.
y. Each
of the Company, and upon formation, the Bank, maintains insurance of the types
and in the amounts that are reasonable or required for the business operated by
it, all of which insurance is in full force and effect.
11
z. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
aa. There
is no document or contract of a character required to be described in the
Registration Statement, the Preliminary Prospectuses, or the Prospectus or to be
filed as an exhibit to the Registration Statement which is not described or
filed as required. All such contracts to which the Company or the Bank is a
party constitute valid and binding agreements of the Company or the Bank and are
enforceable against the Company or the Bank, as applicable, in accordance with
the terms thereof, except as may be limited by bankruptcy, insolvency,
fraudulent transfer or other similar laws affecting the rights and remedies of
creditors generally and subject to general principles of equity, and except to
the extent that any such contract contains provisions for indemnification for
liabilities under the ▇▇▇▇ ▇▇▇.
bb. The
Bank upon formation will be in compliance in all material respects with all
applicable laws administered by and regulations of the FDIC, the MOFIS, and any
other bank regulatory authority with jurisdiction over the Bank, the failure to
comply with which would have a Material Adverse Effect.
cc. The
Company has not distributed, nor will it distribute, prior to the Closing Time
any prospectus (as defined under the ▇▇▇▇ ▇▇▇) in connection with the Offering
and sale of the Shares other than the Registration Statement, any Preliminary
Prospectuses, the Prospectus, any Permitted Free Writing Prospectuses or other
materials, if any, permitted by the 1933 Act, including Rule 134 promulgated
thereunder.
4. Delivery and
Payment.
An escrow procedure has been
established which complies with Commission Rule 15c2-4, promulgated under the
Exchange Act, with First Tennessee Bank N.A. as escrow agent (the “Escrow
Agent”).
The Company and the Agent shall
promptly transmit all funds received from subscribers to the Escrow Agent by
noon of the next business day following receipt thereof. The Company and the
Agent shall jointly direct the Escrow Agent to make payment for Shares sold
hereunder by wire transfer or certified or bank cashier’s check drawn to the
order of the Company in next day funds. Such payment is to be made at the
offices of First Tennessee Bank, N.A., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
at 10:00 a.m. local time, on each Closing Date or at another time and place
agreed to by the Agent and the Company. The time of each such payment
is referred to as the “Closing Time.” The Company shall direct the
Escrow Agent to deliver payment of the fees due to the Agent pursuant to Section
2 hereof (less any portion thereof previously paid to the Agent) to the Agent by
wire transfer or certified or bank cashier’s check drawn to the order of the
Agent in next day funds, to the Agent on the Closing Date.
12
5. Covenants of the Company and
the Bank. The Company hereby covenants, and agrees to cause
the Bank to covenant upon formation, to the Agent as follows:
a. The
Company has filed the Registration Statement with the Commission. The
Company will not, at any time before or after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment the Agent or its counsel shall reasonably object.
b. The
Bank has filed the Applications with the Regulatory Agencies. The
Company has filed, or will file, an application (the “Holding Company
Application”) with the Board of Governors of the Federal Reserve System (the
“Federal Reserve”) to acquire the stock of the Bank in accordance with the Bank
Holding Company Act of 1956, as amended, and the rules and regulations
promulgated thereunder (the “BHCA”).
c. The
Company will use its best efforts to cause any post-effective amendment to the
Registration Statement to be declared effective by the Commission and any
amendment to an Application to be approved by the Regulatory Agencies, and will
immediately upon receipt of any information concerning the events listed below
notify the Agent (i) when the Registration Statement, as amended, has become
effective; (ii) when an Application or the Holding Company Application, as
amended, has been approved by a Regulatory Agency or the Federal Reserve; (iii)
of the receipt of any comments from the Commission, the Regulatory Agencies, the
Federal Reserve or any other governmental agency with respect to the Offering or
the transactions contemplated by this Agreement; (iv) of any request by the
Commission, a Regulatory Agency, the Federal Reserve or any other governmental
entity for any amendment or supplement to the Registration Statement; (v) of the
issuance by the Commission, a Regulatory Agency, or any other governmental
agency of any order or other action suspending the Offering or the use of the
Registration Statement, the Preliminary Prospectuses, the Prospectus or the
Permitted Free Writing Prospectuses, if any, or any other filing of the Company
and the Bank under applicable regulations or other applicable law, or the threat
of any such action; (vi) of the issuance by the Commission, any Regulatory
Agency, the Federal Reserve or any state authority of any stop order suspending
the effectiveness of the Registration Statement or of the initiation or threat
of initiation or threat of any proceedings for that purpose; or (vii) of the
occurrence of any event mentioned in paragraph (f) below. The Company
will make every reasonable effort to prevent the issuance by the Commission, any
Regulatory Agency, the Federal Reserve or any state authority of any such order
and, if any such order shall at any time be issued, to obtain the lifting
thereof at the earliest possible time.
d. The
Company will deliver to the Agent and to its counsel conformed copies of each of
the following documents, with all exhibits: (i) the Applications and
the Holding Company Application, as originally filed and of each amendment or
supplement thereto, and (ii) the Registration Statement, as originally filed and
each amendment thereto. Further, the Company will deliver such
additional copies of the foregoing documents to counsel to the Agent as may be
required for any FINRA filings. The Company will also deliver to the
Agent such number of copies of the Prospectus, as amended or supplemented, as
the Agent may reasonably request.
13
e. The
Company and the Bank will comply in all material respects with any and all
terms, conditions, requirements and provisions with respect to the Offering and
the transactions contemplated thereby imposed by the Commission, by applicable
state law and regulations, and by the 1933 Act, the Exchange Act and the rules
and regulations of the Commission promulgated under such statutes, to be
complied with prior to or subsequent to any Closing Date; and when the
Prospectus is required to be delivered, the Company and the Bank will comply in
all material respects, at their own expense, with all material requirements
imposed upon them by the Regulatory Agencies, the Federal Reserve, the
Commission, by applicable state law and regulations and by the 1933 Act, the
Exchange Act and the rules and regulations of the Commission promulgated under
such statutes, in each case as from time to time in force, so far as necessary
to permit the continuance of sales or dealing in the Shares during such period
in accordance with the provisions hereof and the Prospectus.
f. If any
event relating to or affecting the Company or the Bank shall occur, as a result
of which it is necessary, in the reasonable opinion of counsel for the Company
or the Bank or for the Agent, to amend or supplement the Registration Statement,
any Preliminary Prospectus, the Prospectus or any Permitted Free Writing
Prospectus in order to make them not misleading in light of the circumstances
existing at the time of its use, the Company will, at its expense, forthwith
prepare, file with the Commission and the Regulatory Agencies, and furnish to
the Agent, a reasonable number of copies of an amendment or amendments of, or a
supplement or supplements to, the Registration Statement, any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing Prospectus (in form and
substance satisfactory to counsel for the Agent after a reasonable time for
review) which will amend or supplement the Registration Statement, Preliminary
Prospectus, Prospectus or any Permitted Free Writing Prospectus so that as
amended or supplemented it will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time, not
misleading. For the purpose of this subsection, the Company will
furnish such information with respect to itself and the Bank as the Agent may
from time to time reasonably request.
g. The
Company will endeavor in good faith, in cooperation with the Agent, to register
or to qualify the Shares for offering and sale under the applicable securities
laws of the jurisdictions in which the Offering will be conducted; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify to do business in any jurisdiction in which it is not so
qualified. In each jurisdiction where any of the Shares shall have
been registered or qualified as above provided, the Company will make and file
such statements and reports in each year as are or may be required by the laws
of such jurisdictions.
h. The
Company and the Bank and each of the directors and officers of the Company and
the Bank will not sell or issue, contract to sell or otherwise dispose of, for a
period of 180 days after the date hereof, without the Agent’s prior written
consent, which consent shall not be unreasonably withheld, any Shares other than
in connection with any plan or arrangement described in the
Prospectus.
i. For
the period of three years from the date of this Agreement, the Company will
furnish to the Agent, upon request, a copy of (i) each report of the Company
mailed to holders of Shares if such report is not immediately available on the
Commission’s ▇▇▇▇▇ website, and (ii) from time to time, such other publicly
available information concerning the Company and the Bank as the Agent may
reasonably request.
14
j. The
Company and the Bank will use the net proceeds from the sale of the Shares in
the manner set forth in the Prospectus under the caption “Use of Proceeds,” and
will file such reports with the Commission with respect to the sale of the
Shares and the application of the proceeds therefrom as may be required by Rule
463 under the 1933 Act.
k. Prior
to the Closing Date, the Company will inform the Agent of any event or
circumstances of which it is aware as a result of which (i) the Registration
Statement, any Preliminary Prospectus, the Prospectus, any Permitted Free
Writing Prospectus, or the Applications and the Holding Company Application as
then supplemented or amended, would include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading, or (ii) the information in the Applications would no
longer be true, correct and complete in all material respects.
l. The
Company will distribute the Prospectus or other offering materials in connection
with the Offering only as set forth in the Prospectus, and only in accordance
with the 1933 Act and the Exchange Act and the rules and regulations promulgated
under such statutes, and the laws of any state in which the Shares are qualified
for sale.
m. The
Company will furnish to its shareholders such reports as may be required under
Section 15(d) of the Exchange Act.
n. The
Company will timely file such reports pursuant to the Exchange Act as are
necessary in order to make generally available to its security holders as soon
as practicable an earning statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
o. The
Company will maintain appropriate arrangements with the Escrow Agent for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares in the Offering as described in the Prospectus until the
Closing Date and satisfaction of all conditions precedent to the release of the
Company’s obligation to refund payments received from persons subscribing for or
ordering Shares in the Offering as described in the Prospectus.
p. The
Company and the Bank will take such actions and furnish such information as are
reasonably requested by the Agent in order for the Agent to ensure compliance
with FINRA Rule 2790 “Restrictions on the Purchase and Sale of Initial Equity
Public Offerings of Equity Securities.”
q. The
Company and the Bank will conduct their businesses in compliance in all material
respects with all applicable federal and state laws, rules, regulations,
decisions, directives and orders including, all decisions, directives and orders
of the Commission, the MOFIS, the FDIC and the Federal Reserve.
r. The
Company will not amend the terms of the Offering without notifying the Agent
prior thereto.
15
s. The
Company will not deliver the Shares until the Company and the Bank have
satisfied or caused to be satisfied each condition set forth in Section 7
hereof, unless such condition is waived in writing by the Agent.
t. The
Company will cause the Bank upon formation to duly and validly execute and
deliver to the Agent an Assumption Agreement in the form of Appendix 3 attached
hereto as soon as practicable after the Bank has the legal capacity to enter
contracts under applicable federal and state law.
6. Payment of
Expenses. The Company covenants and agrees, and agrees to
cause the Bank to covenant and agree upon formation with the Agent that it will
pay or cause to be paid the following actual and accountable expenses: (i) the
fees, disbursements and expenses of counsel and accountants to the Company and
the Bank in connection with the registration of the Shares under the 1933 Act
and all other expenses in connection with the preparation, printing and filing
of the Registration Statement, each Preliminary Prospectus, the Prospectus, each
Permitted Free Writing Prospectus and any amendments or supplements thereto, and
the mailing and delivering of copies thereof to the Agent and dealers; (ii) the
cost of printing or reproducing this Agreement, the Blue Sky Survey, any dealer
agreements and any other documents in connection with the offering, purchase,
sale and delivery of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering and sale under state securities laws as
provided in Section 5(g) hereof, provided that it is contemplated that the
Bank’s counsel shall address legal matters related to the qualification of the
Shares under applicable state securities laws and complete the Blue Sky Survey;
(iv) the filing fees incident to securing any required review by FINRA of the
terms of the sale of the Shares; (v) the cost of preparing stock certificates;
(vi) all expenses related to road shows; (vii) the costs or expenses of any
transfer agent or registrar; (viii) all reasonable out-of-pocket fees and
expenses of the Agent, including the reasonable fees and expenses of counsel for
the Agent related to the Offering and not otherwise specifically provided for in
this Section 6; (ix) the expenses associated with the use of on-site
consultants, which will not exceed $7,000 per month for the use of one
consultant, or $10,000 per month for the use of two consultants; and (x) all
other costs and expenses incident to the performance of the Agent’s obligations
hereunder which are not otherwise specifically provided for in this
Section.
7. Conditions to Obligations of
the Agent. The obligations of the Agent hereunder and the occurrence of
the Closing of the Offering are subject, in its discretion, to the condition
that all representations and warranties and other statements of the Company are,
at and as of the commencement of the Offering and at and as of the applicable
Closing Date, true and correct in all material respects and the condition that
the Company shall have performed in all material respects all of its obligations
hereunder theretofore to be performed, and the following additional
conditions:
a. No
Prospectus or amendment or supplement to the Registration Statement or the
Prospectus shall have been filed to which the Agent shall have objected in
writing.
b. The
Registration Statement and any registration statement required to be filed,
prior to the sale of the Shares, under the 1933 Act pursuant to Rule 424(b)
shall have been filed and shall have become effective under the 1933
Act.
16
c.
(i) No stop order with respect to the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings initiated
under Section 8(d) or 8(e) of the 1933 Act; (ii) the Registration
Statement and all amendments thereto shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading; (iii) none of the Preliminary
Prospectuses or the Prospectus, and no amendment or supplement thereto, shall
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; (iv) no Disclosure Package, and
no amendment or supplement thereto, shall include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; and (v) none of the Permitted Free Writing Prospectuses, if
any, shall include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
▇. ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, shall have furnished to the Agent
its written opinion, dated as of each Closing Date, in form and substance
satisfactory to the Agent to the effect that:
i. The
Company is a corporation duly organized and validly existing and in good
standing under the laws of the State of Michigan, with corporate power and
authority to own its properties and to conduct its business as described in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
Permitted Free Writing Prospectus, and to such counsel’s knowledge is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business requires such qualification and in which the
failure to qualify would have a material adverse effect on the financial
condition, earnings, capital, properties or business affairs of the
Company.
ii. Upon
receipt of final approval of the MOFIS, the Bank will be a duly organized and
validly existing Michigan state banking association with full power and
authority to own its properties and to conduct its business as described in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
Permitted Free Writing Prospectus and to enter into this Agreement and perform
its obligations hereunder; the activities of the Bank as described in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
Permitted Free Writing Prospectus are permitted by the rules, regulations and
practices of the Regulatory Agencies and the Federal Reserve; the issuance and
sale of the capital stock of the Bank to the Company has been duly and validly
authorized by all necessary corporate action on the part of the Company and the
Bank and, upon payment therefore as described in the Prospectus, will be validly
issued, fully paid and nonassessable; and will be owned of record and
beneficially by the Company, free and clear of any mortgage, pledge, lien,
encumbrance, claim or restriction.
17
iii. Upon
receipt of final FDIC approval, the deposit accounts of the Bank will be insured
by the FDIC up to the maximum amount allowed by law and to such counsel’s
knowledge no proceedings for the termination or revocation of such insurance are
pending or threatened.
iv. Upon
the completion of the Offering, the authorized, issued and outstanding capital
stock of the Company and the Bank will be as set forth in the Registration
Statement, the Preliminary Prospectus, and the Prospectus under the caption
“Capitalization,” (and any similar sections or information, if any, contained in
any Permitted Free Writing Prospectus) and no shares of Common Stock or attached
warrants have been or will be issued and outstanding prior to the Closing Date,
other than as set forth in the Prospectus; the Shares of the Company to be
subscribed for in the Offering have been duly and validly authorized for
issuance, and when issued and delivered by the Company pursuant to the plan of
distribution against payment of the consideration calculated as set forth in the
plan of distribution, will be fully paid and nonassessable; and the issuance of
the Shares is not subject to preemptive rights.
v. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company and the Bank; and this Agreement constitutes a
valid, legal and binding obligation of each of the Company and the Bank,
enforceable in accordance with its terms, except to the extent that the
provisions of Section 8 hereof may be unenforceable as against public policy,
and except to the extent that such enforceability may be limited by bankruptcy
laws, insolvency laws, or other laws affecting the enforcement of creditors’
rights generally, or the rights of creditors of financial institutions insured
by the FDIC (including the laws relating to the rights of the contracting
parties to equitable remedies).
vi.
Subject to the satisfaction of the conditions to the Regulatory Agencies’
approval of the Applications and the Federal Reserve’s approval of the Holding
Company Application, no further approval, registration, authorization, consent
or other order of any federal regulatory agency, public board or body is
required in connection with the execution and delivery of this Agreement, the
offer, sale and issuance of the Shares and the consummation of the
Offering.
vii. The
Applications, as filed with the Regulatory Agencies, have been granted
preliminary approval by the Regulatory Agencies. The Federal Reserve
has issued its preliminary order of approval under the BHCA, and the purchase by
the Company of all of the issued and outstanding capital stock of the Bank has
been authorized by the Federal Reserve and no action has been taken, or to such
counsel’s knowledge is pending or threatened, to revoke any such authorization
or approval.
viii. The
Registration Statement has been declared effective under the 1933 Act, no stop
order suspending the effectiveness of the Registration Statement has been
issued, and to the best of such counsel’s knowledge no proceedings for that
purpose have been instituted or threatened.
18
ix. The
consummation of the Offering and the transactions contemplated thereunder will
have no material tax consequences to the Company, the Bank or any person
subscribing for Shares in the Offering.
x. The
terms and provisions of the Shares conform to the description thereof contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
Permitted Free Writing Prospectus and such description describes in all material
respects the rights of the holders thereof, the information in the Registration
Statement, any Preliminary Prospectus, and the Prospectus under the
caption “Articles of Incorporation” (and any similar sections or information, if
any, contained in any Permitted Free Writing Prospectus) to the extent that it
constitutes matters of law or legal conclusions has been prepared by such
counsel and is accurate in all material respects; and the forms of certificates
proposed to be used to evidence the Shares are in due and proper
form.
xi. At
the time each of the Applications and the Holding Company Application was
approved, such Application and Holding Company Application (as amended or
supplemented) complied as to form in all material respects with the requirements
of the Regulatory Agencies, the Federal Reserve and all applicable laws, rules
and regulations and decisions and orders of the Regulatory Agencies, except as
modified or waived in writing by the Regulatory Agencies and the Federal
Reserve, (other than the financial statements, notes to financial statements,
financial tables and other financial and statistical data included therein as to
which counsel need express no opinion and other than compliance with state
securities or Blue Sky laws as to which such counsel need express no
opinion). To such counsel’s knowledge, no person has sought to obtain
regulatory or judicial review of the final action of the Regulatory Agencies
approving the Applications and the Holding Company Application.
xii. The
Registration Statement complied when it became effective at the time of purchase
of any Shares and as of the Closing Date, with the requirements of the 1933 Act;
each Preliminary Prospectus complied, at the time it was filed with the
Commission, and complies as of the date hereof, in all material respects, with
the requirements of the 1933 Act.
xiii. To
the best of such counsel’s knowledge, there are no legal or governmental
proceedings pending, or threatened (A) asserting the invalidity of this
Agreement or (B) seeking to prevent the Offering.
xiv. The
information in the Registration Statement, the Preliminary Prospectus and the
Prospectus under the caption “Supervision and Regulation” (and any similar
sections or information, if any, contained in any Permitted Free Writing
Prospectus), to the extent that it constitutes matters of law, summaries and
supervision of legal matters, documents or proceedings, or legal conclusions,
has been prepared by such counsel and is accurate in all material respects
(except as to the financial statements and other financial data included therein
as to which such counsel need express no opinion).
19
xv. To
the best of counsel’s knowledge, the Company and the Bank have obtained all
material licenses, permits and other governmental authorizations (including
preliminary approval from the MOFIS) required for the conduct of their
respective businesses as described in the Registration Statement, the
Preliminary Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, except where the failure to obtain such
licenses, permits and other governmental authorizations would not have a
material adverse effect on the financial condition of the Company or the Bank
considered as one enterprise, or on the earnings, capital, properties or
business affairs of the Company or the Bank considered as one enterprise, and
all such licenses, permits and other governmental authorizations (including
preliminary approval from the MOFIS), are in full force and effect and the
Company and the Bank are in all material respects complying
therewith.
xvi.
Neither the Company nor the Bank is in violation of its Articles of
Incorporation or its Articles of Association, as applicable, or its Bylaws,
respectively, or to the best of such counsel’s knowledge, in violation of any
material obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it or its property may be bound, which
violation would have a material adverse effect on the financial condition of the
Company or the Bank considered as one enterprise, or on the earnings, capital,
properties or business affairs of the Company and the Bank considered as one
enterprise; the execution and delivery of this Agreement by the Company and the
Bank, the incurrence of the obligations herein set forth and the consummation of
the transactions contemplated herein, will not materially conflict with,
constitute a material breach of, or default under, or result in the creation or
imposition of any material lien, charge or encumbrance upon any property or
assets of the Company or the Bank which are material to their business
considered as one enterprise, pursuant to any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company or the Bank
is a party or by which any of them may be bound, or to which any of the property
or assets of the Company or the Bank is subject. In addition, such
action will not result in any material violation of the provisions of the
certificate of incorporation or bylaws of the Company or the Bank or any
material violation of any applicable law, act, regulation or to such counsel’s
knowledge, order or court order, writ, injunction or decree.
xvii. To
the best of counsel’s knowledge, the Company and the Bank are not in violation
in any material respect of any directive from any Regulatory Agency to make any
material change in the method of conducting their business.
20
e. The
letter of Hunton & ▇▇▇▇▇▇▇▇ LLP in form and substance to the effect
that:
i. In
addition, during the preparation of the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if
any, Hunton & ▇▇▇▇▇▇▇▇ LLP participated in conferences with certain officers
of and other representatives of the Bank and the Company, counsel to the Agent,
representatives of the independent public accountants for the Bank and the
Company and representatives of the Agent at which the contents of the
Registration Statement, the Preliminary Prospectuses, the Prospectus and the
Permitted Free Writing Prospectuses, if any, and related matters were discussed
and, although Hunton & ▇▇▇▇▇▇▇▇ LLP are not passing upon and do not assume
the accuracy of the statements contained in the Registration Statement, the
Preliminary Prospectuses, the Prospectus or the Permitted Free Writing
Prospectuses, on the basis of the foregoing without independent verification
(relying as to materiality as to factual matters on certificates of officers and
other factual representations by the Bank and the Company), nothing has come to
the attention of Hunton & ▇▇▇▇▇▇▇▇ LLP that caused Hunton & ▇▇▇▇▇▇▇▇ LLP
to believe that the Registration Statement (other than the financial statements
and schedules, the notes thereto and the auditors’ report thereon and the other
financial and accounting data included therein, or omitted therefrom, and the
exhibits thereto), at the time of the filing of the Prospectus with the
Commission (which you have been informed is at or prior to the time of first
sale of the Shares by the Company) included an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or that the
Prospectus (other than the financial statements and schedules, the notes thereto
and the auditors’ report thereon and the other financial and accounting data
included therein, or omitted therefrom, and the exhibits thereto), as of its
date and as of the date of counsel’s opinion, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or that any Preliminary Prospectus
or Permitted Free Writing Prospectus (other than the financial statements and
schedules, the notes thereto and the auditors’ report thereon and the other
financial and accounting data included therein, or omitted therefrom, and the
exhibits thereto), as of the date of first sale, included an untrue statement of
a material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
ii. The
opinion shall be limited to matters governed by the laws of the United States or
the State of Michigan. In rendering such opinion, such counsel may
rely (A) as to matters involving the application of laws of any jurisdiction
other than the United States or Michigan, to the extent such counsel deems
proper and specified in such opinion, upon the opinion of other counsel of good
standing, as long as such other opinion indicates that the Agent may rely on the
opinion, and (B) as to matters of fact, to the extent such counsel deems proper,
on certificates of responsible officers of the Company and the Bank and public
officials; provided copies of any such opinion(s) or certificates of public
officials are delivered to you together with the opinion to be rendered
hereunder by special counsel to the Company and the Bank. The opinion
of such counsel for the Company shall state that it has no reason to believe
that you are not justified in relying thereon.
21
Where any
of the foregoing opinions refers to the knowledge of counsel, such counsel may
state that their opinion is limited to the actual knowledge of attorneys
actively involved in the transactions contemplated by this agreement or in the
preparation of the opinion letter required by this subsection (f).
f. At the
time of the execution of this Agreement, the Agent shall have received from BKD,
LLP a letter dated
such date, in form and substance satisfactory to the Agent containing statements
and information of the type ordinarily included in accountants’ “comfort
letters” to underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if
any.
g. At the
Closing Date, the Agent shall have received from BKD, LLP a letter, dated as of
Closing Date, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (f) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to the Closing Date.
h. At the
Closing Date, the Agent shall receive a certificate of the Chief Executive
Officer and Chief Financial Officer of each of the Company and the Bank (if the
Bank is formed as such time), dated the Closing Date, to the effect that (i)
they have carefully examined the Prospectus and, as of its date, the date it was
filed with the Commission, and the applicable Closing Date, the Prospectus did
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (ii) there has not
been, since the respective dates as of which information is given in the
Prospectus, any material adverse change in the financial condition or in the
management, earnings, capital, properties, business prospects or business
affairs of the Company or the Bank, considered as one enterprise, whether or not
arising in the ordinary course of business; (iii) the representations and
warranties contained in Section 3 of this Agreement are true and correct with
the same force and effect as though made at and as of the Closing Date; (iv) the
Company and the Bank have complied in all material respects with all material
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date including the conditions contained in this
Section 7; (v) no stop order has been issued or, to their knowledge, is
threatened, by the Commission, a Regulatory Agency, the Federal Reserve or any
other governmental body; (vi) no order suspending the Offering, the acquisition
of all of the shares of the Bank by the Company or the effectiveness of the
Prospectus has been issued and to the their knowledge, no proceedings for any
such purpose have been initiated or threatened by any Regulatory Agency, the
Federal Reserve or any other federal or state authority; and (vii) to the their
knowledge, no person has sought to obtain regulatory or judicial review of the
action of the MOFIS, the FDIC or the Federal Reserve in granting preliminary
approval of the Applications or the Holding Company Application.
22
i. The
Company or the Bank shall not have sustained since the date of the latest
audited financial statements included in the Registration Statement and the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in the Registration Statement and the Prospectus, and since
the respective dates as of which information are given in the Registration
Statement and the Prospectus, there shall not have been any material change in
the long-term debt of the Company or the Bank or any material change, or any
development, involving a prospective material change in or affecting the general
affairs of the management, financial position, shareholders’ equity (deficit) or
results of operations of the Company or the Bank, otherwise than as set forth in
or contemplated by the Registration Statement and the Prospectus, the effect of
which, in any such case described above, is in the Agent’s reasonable judgment
sufficiently material and adverse as to make it impracticable or inadvisable to
proceed with the Offering or the delivery of the Shares on the terms and in the
manner contemplated in the Prospectus.
j. Prior
to and at each Closing Date: (i) in the reasonable opinion of the
Agent, there shall have been no material adverse change in the management,
financial condition or in the earnings, capital, properties or business affairs
of the Company or the Bank independently, or of the Company and the Bank,
considered as one enterprise, from that as of the latest dates as of which such
condition is set forth in the Prospectus, except as referred to therein; (ii)
there shall have been no material transaction entered into by the Company and
the Bank, considered as one enterprise, from the latest date as of which the
financial condition of the Company or the Bank is set forth in the Prospectus
other than transactions referred to or contemplated therein; (iii) the Company
or the Bank shall not have received from the MOFIS, the Federal Reserve or the
FDIC any direction (oral or written) to make any material change in the method
of conducting their respective businesses with which it has not complied in all
material respects (which direction, if any, shall have been disclosed to the
Agent) and which would reasonably be expected to have a Material Adverse Effect;
(iv) neither the Company nor the Bank shall have been in default (nor shall an
event have occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement or instrument
relating to any material outstanding indebtedness; (v) no action, suit or
proceedings, at law or in equity or before or by any federal or state
commission, board or other administrative agency, shall be pending or, to the
knowledge of the Company or the Bank, threatened against the Company or the Bank
or affecting any of their properties wherein an unfavorable decision, ruling or
finding would reasonably be expected to have a Material Adverse Effect; and (vi)
the Shares have been qualified or registered for offering and sale under the
securities or blue sky laws of the jurisdictions as to which the Company and the
Agent shall have agreed.
k. At or
prior to the Closing Date, the Agent shall receive (i) a copy of the letters
from the MOFIS and the FDIC granting preliminary approval of the Applications,
(ii) a copy of the order from the Commission declaring the Registration
Statement effective, (iii) a certificate of good standing from the State of
Michigan evidencing the good standing of the Company and (iv) a copy of the
letter from the Federal Reserve granting preliminary approval of the Holding
Company Application.
23
l.
Subsequent to the date hereof, there shall not have occurred any of the
following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or FINRA or by order of the Commission or any other governmental authority; (ii)
a general moratorium on the operations of commercial banks or other
federally-insured financial institutions or general moratorium on the withdrawal
of deposits from commercial banks or other federally-insured financial
institutions declared by either federal or state authorities; (iii) the
engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if the effect
of any of (i) through (iv) herein, in the Agent’s reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offering or the delivery of the
Shares on the terms and in the manner contemplated in the Registration Statement
and the Prospectus.
m. FINRA
shall have confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the terms of this Agreement and Agent’s
compensation hereunder.
n. Prior
to or at the Closing Date, the Company shall, or shall have caused the Bank to,
deliver the Assumption Agreement duly executed by the Bank to the Agent as
contemplated by Section 5(t) hereof.
8. Indemnification and
Contribution.
a. The
Company agrees to indemnify and hold harmless the Agent and each person, if any,
who controls the Agent within the meaning of Section 15 of the 1933 Act or
Section 20 of the Exchange Act, and their respective members, partners,
directors, officers, employees, agents and controlling persons (the Agent and
each such person being an “Indemnified Party”) from and against any and all
loss, claim, damage, judgment, assessment, cost and other liability (each a
“Claim”), joint or several, to which such Indemnified Party may become subject
under any applicable federal or state law, or otherwise, and related to or
arising out of any transaction contemplated by this Agreement or the engagement
of the Agent pursuant to, and the performance by the Agent of the services
contemplated by this Agreement and will reimburse any Indemnified Party for all
reasonable fees and expenses (including reasonable counsel fees and expenses) as
they are incurred in connection with the investigation of, preparation for, or
defense of any pending or threatened claim or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party and whether or not
such claim, action or proceeding is initiated or brought by or on behalf of the
Company or the Bank. The Company will not be liable under the foregoing
indemnification and reimbursement provisions to the extent that any Claim is
found in a final judgment by a court of competent jurisdiction to have resulted
from an Indemnified Party’s willful misconduct, bad faith or gross negligence or
the breach of this Agreement. The Company also agrees that no
Indemnified Party will have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company or its security holders or
creditors related to or arising out of the engagement of the Agent pursuant to,
or the performance by the Agent of the services contemplated by, this Agreement
except to the extent that any Claim is found in a final judgment by a court of
competent jurisdiction to have resulted from an Indemnified Party’s willful
misconduct, bad faith or gross negligence or the breach of this
Agreement.
24
b. If the
indemnification of an Indemnified Party provided for in this Agreement is for
any reason held unenforceable (other than for a reason provided in the prior
paragraph), the Company agrees to contribute to the Claims for which such
indemnification is held unenforceable (i) in such proportion as is
appropriate to reflect the relative benefits to the Company, the Bank and its
security holders, on the one hand, and the Agent, on the other hand, of the
transaction as contemplated (whether or not the transaction is consummated) or
(ii) if (but only if) the allocation provided for in clause (i) is for
any reason held unenforceable, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the
relative fault of the Company or the Bank on the one hand, and the Agent, on the
other hand, as well as any other relevant equitable considerations; provided,
however, that, to the extent permitted by applicable law, in no event will the
Indemnified Parties be required to contribute an aggregate amount in excess of
the aggregate fees actually paid to the Agent under this Agreement.
c. The
Company agrees that, without the Agent’s prior written consent, which consent
will not be unreasonably withheld, it will not settle, compromise or consent to
the entry of any judgment in any pending or threatened claim, action, or
proceeding in respect of which indemnification could be sought under the
indemnification provisions of this Agreement, whether or not the Agent or any
other Indemnified Party is an actual or threatened party to such claim, action,
or proceeding, unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising out
of such claim, action or proceeding. The Company shall not be liable
for any settlement of any litigation or proceeding effected without its
consent.
d. Upon
receipt by an Indemnified Party of actual notice of a Claim as to which
indemnification may be sought hereunder, such Indemnified Party shall promptly
notify the Company of the nature and basis of the Claim. In addition,
an Indemnified Party shall promptly notify the Company after any action is
commenced against the Indemnified Party (by way of service with a summons or
other legal process) and shall transmit a copy to the business address of the
Company. The Company may, and shall, if requested by any Indemnified
Party, assume the defense of any Claim against such Indemnified Party in respect
of which indemnity may be sought hereunder, including, without limitation, the
employment of counsel reasonably satisfactory to such Indemnified Party and the
payment of the fees and expenses of such counsel and necessary experts, in which
event the Company shall not be liable for the fees and expenses of any other
counsel retained by such Indemnified Party in connection with such litigation or
proceeding.
e. The
reimbursement, indemnity and contribution obligations of the Company under the
preceding paragraphs shall be in addition to any liability that the Company may
otherwise have, and shall be binding upon and inure to the benefit of the
successors, assigns, heirs and personal representatives of any Indemnified
Party.
f. In the
event that an Indemnified Party is requested or required to appear as a witness
in any action brought by or on behalf of or against the Company or any affiliate
of the Company in a transaction contemplated by this Agreement in which such
Indemnified Party is not named as a defendant, the Company agrees to reimburse
the Agent for all reasonable expenses incurred by it in connection with such
Indemnified Party’s appearing and preparing to appear as such a witness,
including, without limitation, the reasonable fees and disbursements of its
legal counsel.
25
9. Representations and
Indemnities to Survive. All representations, warranties and
agreements contained in this Agreement or in certificates of officers of the
Company or the Bank submitted pursuant hereto, shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation (or any statement as to the results thereof) made by or on behalf
of the Agent, or any controlling person of the Agent, or the Company, or the
Bank or any officer or director or controlling person of the Company or the
Bank, and shall survive delivery of and payment for the
Shares.
10. Termination and Payment of
Expenses. This Agreement shall
become effective on the date hereof and shall terminate on the scheduled
expiration date of the Offering, or when the maximum offering is attained (and
there is a Closing), as set forth in the Registration Statement. This Agreement
may be extended upon the mutual written agreement of the Agent and the Company.
However, this Agreement may be terminated at any time, whether at the end of its
term or otherwise, at the option of the Agent or the Company upon thirty (30)
days written notice to the other; provided that, in such event,
if the Offering is completed, at the Closing of the Offering, the Agent shall be
paid its commissions up to and through the date of termination of this Agreement
pursuant to Section 2(b), and at any Closing, the closing conditions set forth
in Section 7 shall be followed by the parties. Under all
circumstances, the Company will reimburse the Agent for all actual and
accountable out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred by the Agent in making preparations for the purchase, sale
and delivery of the Shares not so delivered, and as described in Section 2(c) of
this Agreement and the Agent shall retain the fees due pursuant to Section 2(a)
and 2(d), if applicable, but the Company shall then be under no further
liability to the Agent except as provided in Section 6 and Section 8
hereof.
11. Notices. All
statements, requests, notices and agreements hereunder shall be in writing and
shall be sufficient in all respects if delivered or sent by reliable courier,
first class mail, or facsimile transmission to:
|
|
Agent:
|
Commerce
Street Capital, LLC
|
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
Corporate Finance Department
|
With
a copy to:
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇ LLP
|
▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
J. ▇▇▇▇▇▇▇ ▇▇▇▇
|
|
Company:
|
Grand
River Commerce, Inc.
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
|
|
With
a copy to:
|
Hunton
& ▇▇▇▇▇▇▇▇ LLP
|
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
|
|
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
26
Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
12. Successors. This
Agreement shall be binding upon, and inure solely to the benefit of, the Agent
and the Company, and, upon the execution and delivery of the Assumption
Agreement, to the Bank, and to the extent provided in Sections 8 and 9 hereof;
the officers and directors of the Company and each person who controls the
Company, or the Agent, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this agreement. No purchaser of any of the Shares from the
Agent shall be deemed a successor or assign by reason merely of such
purchase.
13. Time of the
Essence. Time shall be of the essence in this
Agreement.
14. Business
Day. As used herein, the term “business day” shall mean any
day when the Commission’s office in Washington, D.C. is open for
business.
15. Applicable
Law. THIS AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO THOSE LAWS
RELATING TO CHOICE OF LAW) APPLYING TO CONTRACTS ENTERED INTO AND TO BE
PERFORMED WITHIN THE STATE OF TEXAS. VENUE FOR ANY CAUSE OF ACTION
ARISING FROM THIS AGREEMENT WILL LIE IN DALLAS COUNTY, TEXAS.
16. Captions. The
captions included in this Agreement are included solely for convenience of
reference and shall not be deemed to be a part of this Agreement.
17. Counterparts. This
Agreement may be executed by any one or more of the parties in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
18. Pronouns. All
pronouns used herein shall be deemed to refer to the masculine, feminine or
neuter gender as the context requires.
27
If the
foregoing is in accordance with your understanding, please sign and return to us
two counterparts hereof, and upon the acceptance hereof by you, this Agreement
and such acceptance hereof shall constitute a binding agreement between
us.
Very
truly yours,
Grand
River Commerce, Inc.
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
|
Title:
|
Chief
Executive Officer
|
Accepted
as of the date hereof at Dallas, Texas:
Commerce
Street Capital, LLC
|
By:
|
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
|
Title:
|
Managing
Director
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28
EXHIBIT
A
ENGAGEMENT
LETTER
November
18, 2008
▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
and CEO
Grand
River Commerce, Inc.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Dear ▇▇.
▇▇▇▇▇▇▇,
In
accordance with our recent conversations, Commerce Street Capital, LLC (“CSC”),
a Texas corporation and registered as a broker or dealer under the Securities
Exchange Act of 1934, (the “Exchange Act”), is pleased to submit this engagement
letter in connection with the offering (the “Offering”) of shares of common
stock (“Common Shares”) of Grand River Commerce, Inc., a Michigan corporation
(the “Company”) and proposed holding company to Grand River Bank (In
Organization), currently in process of being organized by as a Michigan
state-chartered commercial bank (the “Bank”) to prospective
investors. This letter is intended to address certain specifics of
CSC’s role as consultant to the Company and serving as the Company’s sales agent
in the Offering. The Company acknowledges that CSC will act as the
principal sales agent for the Offering on a “best efforts” basis only, and not
pursuant to any “firm commitment,” and that CSC may engage a sponsoring dealer
to assist with the Offering; provided that any such engagement shall not
increase CSC’s fees due under Section 4 of this engagement letter.
In
connection with the Offering, CSC proposes to assist management and the Board of
Directors of the Company and the Bank on (i) the evaluation and refinement, as
need be, of the Company’s plan for the execution of the Offering as well as to
assist the Company’s management in maximizing the use of the Company’s computer
database that will enhance the ability of the Company’s management and directors
to gauge the progress of the Offering on a daily basis, (ii) how best to
coordinate all aspects of the Company’s sales efforts, including assistance as
to sales techniques which have been successful in other stock offerings, and
(iii) facilitating retirement account purchases of Common Shares through the
various types of retirement accounts that potential investors may
have. The Company assures CSC that its board of directors has been
and will remain active in the Offering process and its management team will be
present each day (subject to typical days off) during the Offering to lead the
Offering process, including the guidelines discussed in Attachment
A.
The
following generally address certain matters related to the
Offering.
|
1)
|
The
Offering consists of a minimum of $15,000,000 and a maximum of $20,000,000
of Common Shares to be sold by the Company at a price of $10.00 per
share.
|
|
2)
|
The
Common Shares offered have been and will be registered by the Company
under the Securities Act of 1933 (the “Securities Act”) on the appropriate
registration statement, as it may be amended (the “Registration
Statement”). The Company agrees that the Registration Statement
(a) complies with the applicable provisions of the (i) Securities Act and
the rules and regulations promulgated thereunder, (ii) to the extent
applicable, the Exchange Act and the rules and regulations promulgated
thereunder, (iii) law promulgated by the Company’s and the Bank’s
regulators, and (b) shall not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made,
misleading.
|
|
3)
|
The
Company has caused to be established appropriate procedures to ensure
that, prior to the issuance of the Common Shares, subscription funds are
held in a separate escrow account and not in the Company’s or the Bank’s
general funds.
|
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4)
|
As
compensation for CSC’s services, CSC will be paid the following fees and
reimbursed for its expenses as
follows:
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(a)
|
Consulting
Fees. The Company will pay CSC consulting fees as
follows:
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|
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(i)
|
an
initial cash consulting fee equal to $20,000 payable upon CSC’s receipt
and delivery to the Company of a “no objection” notice (the “No Objection
Notice”) from the Financial Institutions Regulatory Authority (“FINRA”) in
connection with the Offering;
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|
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(ii)
|
on
the later of (x) the date of receipt of the No Objection Notice or (y) the
date when CSC’s personnel begin working onsite at the Company (the
“Commencement Date”), an additional cash consulting fee equal to $20,000
prorated from the Commencement Date through the remainder of the month in
which the Commencement Date occurs;
and
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|
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(iii)
|
on
the first day of the month after the month in which the Commencement Date
occurs and for each month thereafter, monthly consulting fees of $20,000
(due at the commencement of each month) for the term of CSC’s engagement
hereunder.
|
Consulting
fees will be invoiced by Agent in accordance with the above timeframes and will
be due and payable immediately upon receipt.
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|
(b)
|
Commission
Fees. If the offering is successful (the Company raises
at least the minimum or, with the consent of the bank regulatory
authorities, such lesser amount as needed for the Bank to commence
operations), the Company agrees to pay CSC at each closing (“Closing”) at
which subscriptions for Common Shares are accepted by the Company and the
subscription funds are released from escrow, a commission fee equal to (i)
5.0% of the gross proceeds from the Offering from subscriptions received
from investors who are not introduced to the Company by CSC (excluding (x)
subscriptions received from persons who are directors, officers and
organizers of the Company prior to the date of CSC’s receipt of the No
Objection Notice and (y) subscriptions from investors for which all funds
are held in escrow prior to date of CSC’s receipt of the No Objection
Notice), and (ii) 6.0% of the gross proceeds from subscriptions received
from investors introduced to the Company by CSC (which investors shall be
documented in writing prior to the Closing); provided, however, that the
fee paid at the Closing will be reduced by the aggregate of the consulting
fees paid to CSC pursuant to paragraph 4(a)
above.
|
29
|
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(c)
|
The
Company agrees to reimburse reasonable expenses of CSC in connection with
this agreement. These expenses will be presented to the Company at regular
intervals. Attachment B, a part of this engagement letter, defines the
reimbursement policy to be followed. Without prior written consent of the
Company, total expenses per month associated with the use of on-site
consultants will not exceed $7,000 for the use of one on-site consultant
and not to exceed $10,000 for the use of two on-site
consultants. Notwithstanding any other provision of this
agreement, the Company will pay all third party expenses, including
marketing and advertising, catering and facilities, printing and
reproduction, and legal costs (including blue sky registrations and NASD
Rule 2710 filings); provided, however, if CSC is unable to obtain the No
Objection Notice within 90 days of filing with FINRA despite the
reasonable efforts of the Company to assist CSC to obtain such notice and
assuming that this engagement letter is not terminated by the Company
prior to the end of such 90 day period, then the Company will not be
obligated to reimburse CSC for the fees set forth in this
sentence.
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|
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(d)
|
If
the Company elects to engage CSC as a “sponsoring dealer” in any state,
the Company shall pay CSC an additional engagement fee of $10,000 for the
first state and a fee of $2,500 for each additional state requiring a
sponsoring dealer.
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5)
|
Regardless
of whether the proposed Offering is consummated, the Company agrees to
indemnify and hold harmless CSC and its controlling persons,
representatives and agents in accordance with Attachment C which is
incorporated herein by this reference and made a part
hereof.
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6)
|
It
is understood that the proceeds of the Offering will be used to support
the future growth and for general corporate purposes of the Company, all
as disclosed by the Company in the Registration
Statement.
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|
7)
|
The
Company and its counsel shall qualify or register the Common Shares for
sale under the securities laws of such states and other jurisdictions as
may be reasonably necessary, in the mutually agreed opinion of the Company
and CSC. CSC and its counsel will assist the Company and its
counsel in this process. The Company will pay the fees and
expenses of CSC’s counsel in connection with such
efforts.
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30
|
8)
|
The
Registration Statement and every aspect of the Offering must be
satisfactory in form and substance to the Company, CSC and their
respective counsel. The Company will likely need to supplement
the Registration Statement to disclose the engagement of
CSC. The Company will include in the subscription agreement
such provisions as CSC may reasonably request in order to elicit, from
each investor, information necessary to determine the suitability of an
investment by each investor in the
Company.
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9)
|
The
Company and CSC will enter into a mutually acceptable Agency Agreement on
the Commencement Date. The Agency Agreement will contain, among
other provisions customary in such agreements, provisions consistent with
this letter and satisfactory to the parties, including the
following:
|
|
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(a)
|
representations
and warranties, covenants and conditions, which are customary and
appropriate for a registered offering of
securities;
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(b)
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an
agreement by the Company to pay all expenses incident to the performance
of its obligations under the agreement, including, among others, the SEC
and FINRA filing fees (including fees related to the Agency Agreement),
the fees and expenses of the Company’s counsel, the fees and expenses of
the independent public accountants for the Company, the cost of preparing,
printing and filing the Registration Statement, the cost of furnishing
reasonable quantities thereof to CSC, and to pay the out-of-pocket
expenses of CSC as described in paragraph 4 above even if the Offering is
not completed;
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(c)
|
an
agreement by the Bank to become a party to the Agency Agreement upon
formation; and
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|
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(d)
|
the
agreement of the Company and the Bank to indemnify and hold harmless CSC
and its controlling persons, representatives and agents from all expenses,
losses, claims, actions, damages or liabilities incurred in connection
with any claim made against the Company, the Bank or CSC, as the case may
be, concerning any matters contemplated by this letter, including against
liabilities based upon alleged misstatements in and alleged omissions from
the Registration Statement, and appropriate provisions for contribution in
the event this indemnity undertaking is found to be unenforceable in form
and substance satisfactory to our attorneys; provided, however, that such
indemnity will not exceed the scope of the indemnity set forth in
Attachment C.
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10)
|
The
Company acknowledges and agrees that the Offering is a sophisticated
enterprise and that CSC has been engaged solely with respect to the
matters set forth herein. In such capacity, CSC shall act as an
independent contractor and CSC’s duties hereunder are contractual and
shall be owed solely to the Company. Each party disclaims any
intention to impose a fiduciary duty on the
other.
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31
|
11)
|
This
engagement letter shall terminate automatically without any action of the
parties hereto upon the execution of the Agency Agreement. This
engagement letter may be terminated by either the Company or CSC upon 30
days written notice to the other party, or immediately by CSC upon written
to the Company if the results of CSC’s due diligence investigation are
unsatisfactory to CSC in its sole discretion. In the event this
engagement letter terminates as provided in this paragraph 11, the Company
shall promptly reimburse all outstanding expenses of CSC, if required, as
provided in paragraph 4(c).
|
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12)
|
This
engagement letter shall be governed by and construed in accordance with
the laws of the State of Texas, without regard to the conflicts of law
provisions thereof.
|
The
purpose of this letter is to set forth the terms of the proposed Offering as
mutually understood and, except for the agreement as to the payment of expenses
and indemnification contained in paragraphs 4(c) and 5 above, respectively is
not to be construed as a binding contract or commitment on the part of any party
hereto.
If
this letter sets forth correctly the understanding of the Company, please sign
and return to us one copy of this letter.
We are looking forward to working on
the Offering with you.
(Signatures
on following page)
32
Sincerely,
Commerce
Street Capital, LLC
|
By:
|
|
|
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
| Senior Vice President |
Accepted
and Agreed to:
Grand
River Commerce, Inc. /
Grand
River Bank (In Organization)
|
By:
|
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| President and CEO |
|
Date:
|
|
33
SCHEDULE
A
Free
Writing Prospectus, dated October 16, 2008
APPENDIX
1
Fee
Payment Dates
|
February
23, 2009
|
-
|
$20,000
|
|
|
February
23, 2009
|
-
|
$20,000
(prorated)
|
|
|
March
1, 2009
|
-
|
$20,000
|
|
|
April
1, 2009
|
-
|
$20,000
|
And
$20,000 for each subsequent monthly period extending beyond April 1,
2009.
2
APPENDIX
2
REIMBURSEMENT
POLICY
MEALS
Up to
$350 per week per person with receipts
attached to expense reports.
MILEAGE/AIRFARE
$.585 per
mile on direct business related travel with personal cars. All mileage is to be
logged on a daily basis on expense reports. Local travel to and from the Bank’s
office is not reimbursable. When traveling by air, the lowest cost available
will be used.
LODGING
The
lowest cost alternative to the Bank will be used commensurate with safety and
cleanliness for personnel.
3
APPENDIX
3
ASSUMPTION
AGREEMENT
This Assumption Agreement (the
“Agreement”) is made and entered into as of the __ day of ______ 2009, by and
among Grand River Commerce, Inc., a Michigan corporation (the “Company”), Grand
River Bank, a Michigan banking association in organization (the “Bank”) and
Commerce Street Capital, LLC (the “Agent”).
RECITALS
WHEREAS, the Company and the Agent have
entered into that certain Agency Agreement, dated February 23, 2009 (the “Agency
Agreement”), pursuant to which the Agent agreed to serve as the sales agent in
the offering (the “Offering”) of up to 2,000,000 shares of common stock (the
“Shares”) of the Company. Terms with their initial letter capitalized
and not otherwise defined herein have the meanings given them in the Agency
Agreement;
WHEREAS, the Bank now has the legal
authority and capacity to enter into legally binding contracts and desires to
assume the agreements, covenants, representations, warranties and obligations of
the Company and the Bank with respect to the Agency Agreement and the other
agreements and documents contemplated thereby and the transactions contemplated
thereby (the “Obligations”); and
WHEREAS, Section 5(t) of the Agency
Agreement provides that it is a condition precedent to the Bank’s ability to
consummate the Offering that the Bank assume the Obligations and duly and
validly execute and deliver this Agreement to the Agent.
AGREEMENT
NOW, THEREFORE, for and in
consideration of the foregoing and of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, do undertake, promise, covenant and agree as
follows:
ARTICLE
I
ASSUMPTION
1.01.
Assumption. The
Company and the Bank hereby jointly and severally agree and acknowledge that
each of the Company and the Bank shall be subject to all of the Obligations on
the terms and conditions set forth in the Agency Agreement and shall be bound by
the terms and conditions of the Agency Agreement and the other agreements and
documents contemplated thereby, such that Agent will have the same rights
against the Company and the Bank, in the aggregate, that Agent would have
enjoyed under the Agency Agreement had the Bank had the legal capacity to sign
and been an original signatory thereto.
1.02. Further
Assurances. Each of the Company and the Bank further agrees to
execute such additional documents as the Bank or the Agent may reasonably
request to transfer and assign the Obligations and the Agency Agreement and to
carry out the intent of this Agreement.
1.03. No Release of
Liability. The Company and the Bank hereby acknowledge and
agree that neither (a) the assignment by the Company to the Bank of any of its
rights or obligations under the Agency Agreement nor (b) the execution and
delivery of this Agreement effects a release of any liability or obligation of
the Company to the Agent under the Agency Agreement except to the extent of
actual satisfaction and performance by the Bank of its liabilities and
obligations pursuant to this Agreement.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE BANK AND THE COMPANY
2.01. Representations and
Warranties of the Bank. In addition to the representations
made by the Bank in the Agency Agreement, the Bank hereby represents and
warrants to the Agent that the Bank has all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement and to carry out the provisions and conditions hereof. The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated have been duly and validly authorized by
all necessary corporate action on the part of the Bank and this Agreement has
been validly executed and delivered by the Bank and is the valid, legal and
binding agreement of the Bank enforceable in accordance with its terms, except
to the extent that such enforceability may be limited by bankruptcy laws,
insolvency laws, or other laws affecting the enforcement of creditors’ rights
generally, or the rights of creditors of financial institutions insured by the
FDIC (including the laws relating to the rights of the contracting parties to
equitable remedies).
2.02. Representations and
Warranties of the Company. In addition to the representations
made by the Company in the Agency Agreement, the Company hereby represents and
warrant to the Agent that the Company has all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement and to carry out the provisions and conditions hereof. The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated have been duly and validly authorized by
all necessary corporate action on the part of the Company and this Agreement has
been validly executed and delivered by the Company and is the valid, legal and
binding agreement of the Company enforceable in accordance with its terms,
except to the extent that such enforceability may be limited by bankruptcy laws,
insolvency laws, or other laws affecting the enforcement of creditors’ rights
generally.
ARTICLE
III
MISCELLANEOUS
3.01. Entire
Agreement. This Agreement, the Agency Agreement, and the other
agreements, documents, schedules, exhibits and instruments contemplated by the
Agency Agreement constitute the full understanding of the parties, 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 supersede any and all prior agreements, whether written or oral, that may
exist between the parties 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 is 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.
2
3.02. Multiple
Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in multiple counterparts, each of which will be deemed
an original, and all counterparts hereof so executed by the parties hereto,
whether or not such counterpart will bear the execution of each of the parties
hereto, will be deemed to be, and is to be construed as, one and the same
Agreement. A facsimile transmission of a signed counterpart of this
Agreement is sufficient to bind the party or parties whose signature(s) appear
thereon.
3.03. Governing
Law. THIS
AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS (WITHOUT REGARD TO THOSE LAWS RELATING TO CHOICE OF LAW) APPLYING
TO CONTRACTS ENTERED INTO AND TO BE PERFORMED WITHIN THE STATE OF
TEXAS. VENUE FOR ANY CAUSE OF ACTION ARISING FROM THIS AGREEMENT WILL
LIE IN DALLAS COUNTY, TEXAS.
3.04. Ratification. Except
as otherwise expressly provided by this Agreement, all of the terms and
conditions of the Agency Agreement are hereby ratified and shall remain
unchanged and continue in full force and effect. Without limiting the
foregoing, nothing in this Agreement shall constitute a waiver or release by the
Agent of any of its rights or entitlements under the Agency
Agreement.
[Signatures
Follow]
3
IN WITNESS WHEREOF, the
Company, the Bank and the Agent have caused this Assumption Agreement to be
executed by their duly authorized officers as of the date first above
written.
| GRAND RIVER COMMERCE, INC. | |||
|
By:
|
/s/ | ||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer | |||
| GRAND RIVER BANK | |||
|
By:
|
/s/ | ||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer | |||
| COMMERCE STREET CAPITAL, LLC | |||
|
By:
|
/s/ | ||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Director | |||
4
APPENDIX
4
ATTACHMENT
A TO ENGAGEMENT LETTER
Management/Director
Responsibilities
Time
Period - Following the Commencement Date:
UDirector
Responsibilities
|
|
1.
|
Participate
in the process.
|
|
|
2.
|
Proactive
in arranging one-on-one and group
meetings.
|
|
|
3.
|
Encourage
people to attend lunch and dinner
functions.
|
|
|
4.
|
Promptly
returning phone calls from the CSC onsite
consultant.
|
UManagement
Responsibilities
|
|
1.
|
Same
as Director Responsibilities under 1-4
above.
|
|
|
2.
|
Support
CSC on a day-to-day basis.
|
|
|
3.
|
Be
present at the Company/Bank office every business
day.
|
|
|
4.
|
Prepare
and deliver presentations.
|
|
|
5.
|
Actively
call and work prospects/contacts.
|
|
|
6.
|
Prepare
all collateral material, including, folders, stationery, postage reply
envelopes, advertisements and tombstones (if appropriate) and a website
(if appropriate).
|
|
|
7.
|
Provide
any lists of investors that have been previously developed by the
directors and officers and that have not subscribed for shares by date of
receipt of the No Objection
Notice.
|