Document:

EXHIBIT 4.3

 

FIRST AMENDED

SETTLEMENT AND RELEASE AND STOCK AND WARRANT ISSUANCE

AGREEMENT

This First Amended Settlement and Release and Stock and Warrant Issuance Agreement (hereinafter “Amended Agreement”) is made and entered into by and among the law firms of Nickens, Keeton, Lawless, Farrell & Flack LLP, through Thomas Farrell, and Moulton & Meyer, LLP, through Cynthia R. Levin Moulton, counsel for the majority of Plaintiffs in the Entire Action (defined below), Macatawa Bank Corp. and Macatawa Bank and Richard Deardorff.

DEFINITIONS

For purposes of this Agreement, these terms are defined as follows:

Adamson – Steven M. Adamson, et al. v. Macatawa Bank Corp. and Macatawa Bank, Case No. CIV-06-1267-T, Western District of Oklahoma.

Amended Agreement – This First Amended Settlement and Release and Stock and Warrant Issuance Agreement, together with all exhibits as amended. To the extent that any exhibit is not amended herewith, the original exhibit is still in force.

Bailey – Frank V. Bailey, et al. v. Macatawa Bank Corp. and Macatawa Bank, Case No. 3:06-CV-2193-D, Northern District of Texas.

Bank – Macatawa Bank Corp. and Macatawa Bank, collectively.

Bank’s Counsel – Warner Norcross & Judd LLP, through William K. Holmes.

Deardorff – Richard Deardorff, individually.

Elkins – Eddie Elkins, et al. v. Macatawa Bank Corp., Case No. 3:07-CV-109-M, Western District of Oklahoma.

Entire Action – Collectively, the State Litigation and the Federal Litigation.

Escrow Agent – Bank of America. N.A.

Federal Insurance Company – An insurance company that issued Policy No. 70234721 to Macatawa Bank Corp.

Federal Litigation – The following cases that were consolidated in a multi-district action pending in the United States District Court for the Western District of Michigan currently styled  In Re Trade Partners, Inc. Investor Litigation , Case No. 1:07-MD-1846-RHB:

 

Forrest Jenkins, et al. v. Macatawa Bank Corp. et al. v. Sherry Tedaldi, et al., Case No. 1:03-CV-321, Western District of Michigan (“Jenkins”);  James Lee and Rose Marie Myers, et al. v. Macatawa Bank Corp. and Macatawa Bank , Case No. CV 06 8009 R (CTx), Central District of California (“Myers”);  Steven M. Adamson, et al. v. Macatawa Bank Corp. and Macatawa Bank , Case No. CIV-06-1267-T, Western District of Oklahoma (“Adamson”);  Frank V. Bailey, et al. v. Macatawa Bank Corp. and Macatawa Bank , Case No. 3:06-CV-2193-D, Northern District of Texas (“Bailey”); and  Eddie Elkins, et al. v. Macatawa Bank Corp. , Case No. 3:07-CV-109-M, Western District of Oklahoma (“Elkins”).

 

Final Settlement Date – Ten (10) business days after the satisfaction of the last condition set forth in 1 of this Agreement (or ten (10) business days after the Bank’s election to proceed under 2.a.ii. if conditions set forth in 1.c. and/or 1.d. are not satisfied), or April 30, 2009, whichever is earlier.

 

Jenkins – Forrest Jenkins, et al. v. Macatawa Bank Corp., et al. v. Sherry Tedaldi, et al., Case No. 1:03-CV-321, Western District of Michigan.

Insurers – Collectively Progressive Casualty Insurance Company and Federal Insurance Company.

Michigan Agent – Richard Hohenstein, who is appointed as resident agent for all settling Plaintiffs who reside outside of the United States of America to receive Warrants from the Special Master pursuant to 3 of this Agreement. Plaintiffs shall pay the costs of such Michigan Agent.

Myers – James Lee and Rose Marie Myers, et al. v. Macatawa Bank Corp. and Macatawa Bank, Case No. CV 06 8009 R (CTx), Central District of California.

Parties – Plaintiffs, the Bank, and Deardorff.

Plaintiffs – the individuals and entities that are listed as “Plaintiffs” in the State Litigation and the Federal Litigation. All Plaintiffs in the Entire Action whose claims have not previously been dismissed are listed on Exhibit A to this Agreement.

Plaintiffs’ Counsel – Nickens, Keeton, Lawless, Farrell & Flack LLP, through Thomas Farrell, and Moulton & Meyer, LLP, through Cynthia R. Levin Moulton.

Progressive Casualty Insurance Company – An insurance company that issued Policy No. 1155551-10 to Grand Bank Financial Corporation.

Receiver – Bruce W. Kramer, under appointment by the United States District Court for the Western District of Michigan.

Release – The Agreement to Settle and Conditional Release of All Claims against the Bank and Deardorff in the forms attached as Exhibits G and H to this Agreement, as applicable.

Securities Act – The Securities Act of 1933, as amended; 15 USC 77a, et. seq.

Settlement Fund – The Consideration collectively referred to in 3.a. of this Agreement.

Second Settlement Hearing – A second hearing to be held by the United States District Court for the Western District of Michigan and the Kent County Circuit Court, respectively, no later than February 27, 2009, to satisfy the requirements of Section 3(a)(10) of the Securities Act, pursuant to SEC Staff Bulletin Number 3A(CF) dated June 18, 2008 and to confirm that the Warrants are exempt from registration under Section 3(a)(10) of the Securities Act, as more fully described in 1.b. of this Agreement.

Second Settlement Hearing Order – An Amended Order entered by the applicable Courts in the Federal Litigation and the State Litigation confirming the fairness of the exchange of the Warrants to be issued for Plaintiffs’ claims, and acknowledging that the Warrants are exempt from registration under Section 3(a)(10) of the Securities Act, as more fully described in 1.b. of this Agreement.

Special Master – The individual or entity appointed by the Court in the Federal Litigation and the State Litigation pursuant to 3.b. of this Agreement, who shall have the duties described in Exhibits K and L to this Agreement.

State Litigation – The consolidated cases currently styled William A. Giese, et al., v Macatawa Bank and Macatawa Bank Corp., Kent County Circuit Court Case No. 06-11707-CZ, pending in the Kent County Circuit Court, Grand Rapids, Michigan.

Third- Party/Counter-defendants – Brokers (also known as Sales Associates) who sold Trade Partners, Inc.‘s investments to Plaintiffs, and others who received commissions from Trade Partners, Inc. The Third-Party/Counter-defendants in the Entire Action are listed on Exhibit B to this Agreement.

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Warrants – Warrants to purchase common stock of Macatawa Bank Corp., as more fully described in 3.a.iv. of the Agreement.

RECITALS

A.            Numerous Plaintiffs commenced the Jenkins, Myers, Adamson, Bailey and Elkins suits against the Bank in various United States District Courts. In addition, Plaintiffs in  Jenkins  also sued Deardorff. These cases were consolidated in the Federal Litigation.

B.            Numerous additional Plaintiffs commenced the State Litigation in Kent County, Michigan.

C.            Thomas Farrell, of the law firm of Nickens, Keeton, Lawless, Farrell & Flack LLP, and Cynthia R. Levin Moulton, of the law firm of Moulton & Meyer, LLP, represent a majority of the Plaintiffs in the Entire Action.

D.            The Bank filed Third-Party Complaints and Counterclaims in every case of the Entire Action against the Third-Party/Counter-defendants.

E.            The Bank has denied all material allegations against it in the Entire Action.

F.            In an attempt to amicably resolve the differences between the Parties in this matter, Plaintiffs’ Counsel, the Bank, and Deardorff mutually agree as follows:

TERMS AND CONDITIONS

1.            Conditions Precedent To Be Satisfied Before Parties’ Obligations Pursuant to Paragraph 3 Take Effect. For the obligations and requirements set forth in 3 of this Agreement to become binding and take effect, all the conditions set forth in this paragraph must be satisfied:

 

a.            Plaintiffs’ Counsel and the Bank’s Counsel have filed stipulations requesting the entry of orders to stay all proceedings and all discovery activities from the responsible judges in the Entire Action, i.e., the Honorable Robert Holmes Bell and the Honorable Dennis B. Leiber, and such orders are pending. The Stipulated Orders as filed in the Federal Litigation and the State Litigation are attached as Exhibits C and D, respectively. 

 

b.            No later than February 27, 2009, the Parties will conduct a Second Settlement Hearing pursuant to SEC Staff Bulletin No. 3A(CF) dated June 18, 2008, in the United States District Court for the Western District of Michigan and the Kent County Circuit Court. The Parties hereto intend that the Warrants will be exempt from registration under Section 3(a)(10) of the Securities Act. As a result: (i) the Second Settlement Hearing shall include a hearing on the fairness of the terms and conditions of the exchange of the Warrants to be issued for the Plaintiffs’ claims that are released pursuant hereto; (ii) all Persons to whom any Warrants are to be issued shall be sent a notice of the Second Settlement Hearing and the right to be heard at that hearing to their last known address known by Plaintiffs’ Counsel and to their counsel of record in the Entire Action in the form attached as Exhibits E and F; (iii) the Court will be advised prior to the hearing that registration of the Warrants under the Securities Act will not be required by virtue of the approval of this Agreement and the issuance of the Warrants; and (iv) in the Second Settlement Hearing, the Court shall enter an Amended Settlement Hearing Order approving the fairness of the exchange of Warrants to be issued for Plaintiffs’ claims.

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c.            No later than April 30, 2009, ninety-eight percent (98%) of the total number of Plaintiffs in the Entire Action must agree to settle this matter based on the terms stated herein. This ninety-eight percent (98%) must include one hundred percent (100%) of all Plaintiffs represented by Attorney Dennis Boxeur (i.e., Eddie Elkins, his family members, and trusts held for their benefit) and they must agree to settle this matter based on the terms stated herein. All Plaintiffs consenting to settle and completely release the Bank and Deardorff must indicate their agreement by signing the Release in the form attached as Exhibit G or H, as applicable, and return it to the Special Master no later than April 30, 2009. The Release must be signed before a notary or the equivalent in the particular Plaintiff’s jurisdiction. Plaintiffs’ Counsel will distribute the Release to each Plaintiff and request that the Plaintiff sign the Release and return it to the Special Master who shall deliver to the Bank’s Counsel an original of each signed Release. Between the date of the entry of the last Settlement Hearing Order and April 30, 2009, Plaintiffs’ Counsel will give the Bank’s Counsel a report every Friday on the total number of Plaintiffs who have consented, the identities of those Plaintiffs, and the total dollar amount of the allocation to the Plaintiffs who have consented. 

 

d.            No later than April 30, 2009, ninety-eight percent (98%) of the total dollar amount of the claims in the Entire Action must be resolved as a result of Plaintiffs who have signed a Release. For purposes of this paragraph, the total dollar amount of the claims is the total amount of any Plaintiff’s claims as approved by the Receiver, minus the amounts which have been refunded (or are to be refunded) to them by the Receiver as of October 3, 2008. 

 

e.            No later than the Final Settlement Date, both Federal Insurance Company and Progressive Casualty Insurance Company pay amounts due to the Escrow Agent and the Bank under their separate settlement agreement with the Bank. 

 

f.            The Bank’s Counsel and Plaintiffs’ Counsel shall be reasonably satisfied that no securities registration is required in any country other than the United States, except that a failure of this condition does not permit a party to void this Agreement under § 2 below if the amount of claims or number of Plaintiffs involved is de minimis to the entire Agreement, as determined by the Mediator.

 

	
2.

	
Effect Of Failure Of A Condition Precedent Set Forth In Paragraph 1.

 

a.            Upon failure of any condition(s) (a) through (f) in 1 set forth above, the Bank has the option to: 

 

i.            Void this Agreement and proceed with litigation in the Entire Action; or 

 

ii.            Settle with those Plaintiffs who choose to accept the Terms of this Agreement and sign the Release, but decrease the total consideration set forth in 3.a. below by the percentage that the dollars allocated by the Special Master to the non-settling Plaintiffs bears to the total of all allocations. The Bank’s election of this option must be exercised within 10 business days following the Bank’s receipt of notice that the conditions set forth in 1.c and/or 1.d. have not been met. Plaintiffs’ Counsel agrees to use their best efforts to cause Plaintiffs to accept the settlement described herein with such efforts to commence within 5 days after the Court approval described in 1.b. Plaintiffs’ Counsel shall not communicate any offers to sell or transfer Warrants until after the issuance of the Second Settlement Hearing Order, and shall not communicate any offers to sell or transfer Warrants in any state that requires registration of the Warrants until after registration in those States has occurred. The Bank reserves the right, at any time, to seek an order requiring attendance at a settlement conference of any non-settling Plaintiffs.

 

b.            Upon failure of conditions a., b., e. or f. in 1 set forth above or upon the failure of the Bank to perform any of the terms set forth in 3.a. below, Plaintiffs’ Counsel has the option to void this Agreement and proceed with litigation.

 

3.            Terms. In the event that the conditions set forth in 1 are met, or the Bank agrees to settle the claims with the Plaintiffs who choose to accept the Terms and sign the Release pursuant to 2.a.ii. above, the following Terms shall apply:

 

a.            Subject to the conditions set forth herein, the Bank agrees to pay, or cause to be paid, to the Special Master on or before the Final Settlement Date the following for distribution to Plaintiffs who have signed and returned to the Bank the Release as set forth in 1.c.:

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i.            Five Million Seven Hundred Fifty Thousand Dollars ($5,750,000) in cash, including Four Hundred Twenty-Five Thousand Dollars ($425,000) from Federal and Five Hundred Twenty-Five Thousand Dollars ($525,000) from Progressive. In addition to One Million Eight Hundred Thousand Dollars ($1,800,000) of this settlement that the Bank has already placed in an interest-bearing escrow account with the Escrow Agent, the Bank will place another Three Million Dollars ($3,000,000) into that same account no later than 2 business days after Plaintiffs’ counsel have executed this Amended Agreement. A Copy of the Escrow Agreement is attached as Exhibit I. In the event the settlement is concluded, Plaintiffs shall receive all interest earned from the escrow account funds that exceed the charges of the Escrow Agent. In the event the settlement is voided for failure of conditions set forth herein, the Bank will receive this amount plus all interest from the escrow account that exceed the charges of the Escrow Agent. 

 

ii.            Amounts the Bank collects in settlements from Third-Party Defendants/Counter-defendants, up to Two Hundred Fifty Thousand Dollars ($250,000). In the event that the Bank does not collect $250,000 in settlements from Third-Party Defendants/Counter-defendants by the Final Settlement Date, the Bank will make up the shortfall in cash. 

 

iii.            One Million Five Hundred Thousand (1,500,000) Warrants, exercisable at a strike price of Nine Dollars ($9.00) per share. The Warrants will be exercisable for a period of five years to acquire common stock of Macatawa Bank Corp. on the terms set forth in the Warrant Agreement. The form of Warrant Agreement is attached as Exhibit L and will be executed and delivered in substantially the form thereof on the Final Settlement Date. 

 

iv.            The Warrants shall be duly and validly issued, fully paid, non-assessable and free from all liens and encumbrances, and the Parties stipulate and request the Courts to find and order that the Warrants are exempt from registration under Section 3(a)(10) of the Securities Act in the Amended Settlement Hearing Order.

 

The Warrants shall be issued by the Bank’s transfer agent on the Final Settlement Date and delivered to the Special Master for distribution to settling Plaintiffs as required in 3.b., below, and pursuant to the Stipulated Orders appointing the Special Master, attached as Exhibits J and K, respectively. As to any settling Plaintiffs who reside outside of the United States of America, their Warrants shall be delivered to the Michigan Agent on their behalf by the Special Master.

 

v.            By the Final Settlement Date, the Bank’s Counsel will provide an opinion that the securities to be distributed pursuant to 3.a.iii. are, as to the United States, either registered or exempt from registration in the United States, and that there are no restrictions on transfer or resale of such securities under United States securities laws other than such restrictions as may apply to affiliates or underwriters of Macatawa Bank Corp 

 

vi.            The Bank will cooperate with the Special Master and the Michigan Agent to assist them in delivering the Warrants to Plaintiffs. 

 

vii.            The Bank hereby represents and warrants as of the date hereof and as of the Final Settlement Date (unless a different particular date or period is specified) that: 

 

(1)            The Warrants and the common stock issuable upon exercise of the Warrants have been duly and validly authorized for issuance, offer and sale pursuant to this Amended Agreement and the Warrant Agreement. The Warrants and the common stock issuable upon exercise of the Warrants, when issued and delivered against payment of the consideration therefor in accordance with this Amended Agreement or the Warrant Agreement, as applicable, will be validly issued, fully paid and non-assessable Warrants and Common Stock, free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever.

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(2)            On or prior to the Final Settlement Date, the Common Stock issuable upon exercise of the Warrants will have been listed for trading on the NASDAQ Global Select Market. 

 

(3)            Macatawa Bank is a banking corporation and Macatawa Bank Corp. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Michigan. The Bank has all requisite corporate power and authority to enter into this Amended Agreement and, with respect to Macatawa Bank Corp., the Warrant Agreement and consummate the transactions contemplated by this Amended Agreement and the Warrant Agreement. Each Amended Agreement and Warrant Agreement has been duly and validly authorized, executed and delivered on behalf of Macatawa Bank and/or Macatawa Bank Corp. and is a valid and binding agreement of Macatawa Bank and/or Macatawa Bank Corp. enforceable against it in accordance with its terms, subject as to enforceability to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and, with respect to rights to indemnity and contribution, to any state, federal or foreign law or any public policy underlying any such law. 

 

(4)            The execution and delivery of this Amended Agreement and the Warrant Agreement, the issuance of the Warrants to be sold by Macatawa Bank Corp. hereunder, the sale of the common stock issuable under the Warrants, and the consummation of the transactions contemplated hereby and by the Warrant Agreement, will not conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, any material agreement or instrument to which the Bank is a party or by which it is bound or the charter, bylaws or other organizational documents of the Bank nor result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Bank or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material, bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Bank is a party or by which it is bound or to which any of the property or assets of the Bank is subject, nor conflict with, or result in a violation of any United States federal or state law, administrative regulation, ordinance or other of any court or governmental agency, arbitration panel or authority applicable to the Bank. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body is required for the valid issuance of the Warrants or the common stock issuable under the Warrants, other than such as have been made or obtained, except for registration or exemption under United States federal and state securities laws. 

 

(5)            Upon issuance, the Warrants are either registered or exempt from registration under the United States securities laws. 

 

(6)            After issuance, there are no restrictions on transfer or resale of the Warrants under the United States securities laws other than such restrictions as may apply to affiliates or underwriters of Macatawa Bank Corp..

 

 

b.            Plaintiffs’ Counsel has submitted a stipulated order in both the State Litigation and the Federal Litigation for appointment of a Special Master to allocate the Settlement Fund to settling Plaintiffs, and that Special Master will make a determination of the division of the Settlement Fund under this Amended Agreement as soon as reasonably possible. The allocation of the Special Master shall be provided to the Bank’s Counsel. The Stipulated Orders appointing the Special Master in the State Litigation and the Federal Litigation are attached as Exhibits J and K, respectively. 

 

i.            The Bank, Deardorff, and the Insurers shall have no liability, obligation or responsibility for the administration of the Settlement or the distribution of the Settlement Fund, except for the funding obligations as set forth herein.

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ii.            No Person shall have any claim against the Special Master, Plaintiffs’ Counsel, the Bank, Deardorff, the Insurers, or their respective counsel, based on distributions made substantially in accordance with this Agreement. 

 

iii.          The Special Master shall have the duties as already established in the Stipulated Order Appointing the Special Master, attached as Exhibits J and K.

 

c.            The Parties agree to effect by stipulation the dismissal of the Entire Action, with prejudice and without costs, except as to non-settling Plaintiffs and except as to contribution claims against Third-Party/Counter-defendants. The Stipulation and Order of Dismissal to be submitted in the State Litigation and Federal Litigation are attached as Exhibits M and N, respectively. 

 

d.            Settling Plaintiffs agree to cooperate as reasonably necessary in the Bank’s pursuit of settlements with Third-Party/Counter-defendants.

 

4.            No Admission of Liability. Nothing contained herein and no action taken by any Party with respect to this Agreement shall be construed as an admission by any Party, person or entity of any act of wrongdoing or any liability of any kind, all such liability and wrongdoing being expressly denied.

5.            Assignment of Claims. Each Plaintiff will represent and warrant in the Release that he or she or it has not assigned any claim that he or she or it had or may have against the Bank or its affiliates, parents, subsidiaries, predecessors, divisions, directors, officers, shareholders, employees, agents, attorneys, and successors and assigns, including but not limited to those claims set forth in the Entire Action.

6.            Complete Agreement. This Amended Agreement and the Warrant Agreement represent the final and complete agreement between the Parties with respect to the subject matter, and supersedes and replaces the earlier Final Settlement Agreement, memorializing the Contingent Settlement Agreement dated October 6, 2008. There shall be no modifications or amendments to this Amended Agreement unless they are in writing, signed by all Parties.

7.            Lack of Reliance. Each Party to this Amended Agreement acknowledges that no other party, person, or entity has made any promise, representation, or warranty, either expressly or by implication, that is not expressly contained in this Amended Agreement. Each Party to this Amended Agreement on behalf of themselves and their respective heirs and assigns, acknowledge and agree that in entering into this Amended Agreement and the agreements contemplated hereby, they have not relied, and are not relying, on information, statements, assurances, representations or warranties (written or oral) provided or made by or on behalf of the Bank with respect to the present or future value or related attributes of the Bank, or the Warrants.

8.            Full Knowledge and Volition. All Parties have read this Amended Agreement, understand this Amended Agreement, and have signed this Amended Agreement of their own free act and volition. Additionally, all Parties confirm that they have secured the necessary authorization to sign this document on behalf of the parties for whom they are signing. This Amended Agreement was mutually negotiated and will not be construed against any party as the drafter.

9.            Counterparts. This Amended Agreement may be executed in counterparts, and the counterparts, when properly executed by all Parties and attached hereto, will constitute a fully executed and complete binding contract. Any signature transmitted electronically to another Party shall constitute, and shall have the same force and effect as, an original signature.

10.            Applicable Law. This Amended Agreement, and any amendments hereto, shall be governed by, construed and enforced in accordance with the laws of the State of Michigan, without regard to principles of conflicts of laws.

 

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11.            Forum Selection. Disputes arising out of this Amended Agreement before the Final Settlement Date shall go to the Mediator first, who shall attempt to facilitate an amicable resolution and then to United States Magistrate Judge Joseph G. Scoville. Disputes arising out of this Amended Agreement after the Final Settlement Date, and any amendments hereto, are to be decided only by the Circuit Court for the County of Kent, State of Michigan, U.S.A.

[signatures appear on the following page]

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Signature page to the Amended Settlement and Release Agreement.

ACKNOWLEDGED AND AGREED:

	
 

	
 

	
NICKENS, KEETON, LAWLESS,

	
 

	
 

	
 

	
  FARRELL & FLACK LLP

	
 

	
 

	
 

	
 

	
 

	
Date: January 30, 2009

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Thomas M. Farrell

	
 

	
 

	
 

	
 

	
Thomas M. Farrell

	
 

	
 

	
 

	
MOULTON & MEYER, LLP

	
 

	
 

	
 

	
 

	
 

	
Date: January 30, 2009

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Cynthia R. Levin Moulton

	
 

	
 

	
 

	
 

	
Cynthia R. Levin Moulton

	
 

 

	
Date: _____________, 2009

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	
 

	
Richard Deardorff

	
 

 

	
 

	
 

	
MACATAWA BANK CORP.

	
 

	
 

	
 

	
 

	
 

	
Date: January 30, 2009

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Jon W. Swets

	
 

	
 

	
 

	
 

	
Its: Chief Financial Officer

	
 

 

	
 

	
 

	
MACATAWA BANK

	
 

	
 

	
 

	
 

	
 

	
Date: January 30, 2009

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Jon W. Swets

	
 

	
 

	
 

	
 

	
Its: Chief Financial Officer

	
 

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Exhibit A:

	
 

	
List of Plaintiffs

	
Exhibit B:

	
 

	
List of Third-Party Defendants/Counter-defendants

	
Exhibit C:

	
 

	
Stipulated Order to Stay Federal Litigation

	
Exhibit D:

	
 

	
Stipulated Order to Stay State Litigation

	
Exhibit E:

	
 

	
Notice of Settlement Hearing (Federal Litigation)

	
Exhibit F:

	
 

	
Notice of Settlement Hearing (State Litigation)

	
Exhibit G:

	
 

	
Agreement to Settle and Conditional Release (US)

	
Exhibit H:

	
 

	
Agreement to Settle and Conditional Release (Foreign)

	
Exhibit I:

	
 

	
Escrow Agreement

	
Exhibit J:

	
 

	
Stipulated Order Appointing Special Master (State Litigation)

	
Exhibit K:

	
 

	
Stipulated Order Appointing Special Master (Federal Litigation)

	
Exhibit L:

	
 

	
Warrant Agreement

	
Exhibit M:

	
 

	
Stipulated Order Dismissing State Litigation

	
Exhibit N:

	
 

	
Stipulated Order Dismissing Federal Litigation

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WARRANT AGREEMENT

THIS WARRANT AGREEMENT (this “Agreement”) is entered into as of the _______ day of _________________, 2009, by and between  MACATAWA BANK CORPORATION , a Michigan corporation (the “Company”), and  REGISTRAR AND TRANSFER COMPANY , a New Jersey corporation (the “Warrant Agent”).

RECITALS

A.            The Company is a defendant in a lawsuit pending in the United States District Court for the Western District of Michigan (the “District Court”), entitled  In re Trade Partners, Inc. Investor Litigation , Case No. 1:07-MD-1846-RHB (the “Federal Litigation”).

B.            The Company is a defendant in a lawsuit pending in the Kent County Circuit Court in Grand Rapids, Michigan (the “Circuit Court”), entitled  Giese et al v. Macatawa Bank Corp et al,  Case No. 06-11707-CZ (the “State Litigation”).

C.            The parties to the Federal Litigation and the State Litigation have settled the dispute and entered into that certain First Amended Settlement and Release and Stock and Warrant Issuance Agreement, dated January 30, 2009 (the “Settlement Agreement”).

D.            As part of the transactions to be consummated pursuant to the Settlement Agreement, the Company has issued warrants for the purchase of One Million Five Hundred Thousand (1,500,000) shares of common stock, no par value, of the Company (each, a “Warrant”).

E.            The Company wishes the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, division, transfer, exchange and exercise of the Warrants.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged, the parties agree as follows:

1.                   DEFINITIONS

1.1            “Business Day” shall mean a day other than (a) a Saturday or Sunday, (b) any day on which banking institutions located in Holland, Michigan are required or authorized by law or by local proclamation to close or (c) any day on which the Nasdaq Stock Market is closed.

1.2            “Common Stock” shall mean the shares of the Company's common stock, no par value.

1.3            “Commercially Reasonable Best Efforts,” when used with respect to any obligation to be performed or term or provision to be complied with under this Agreement, shall mean such efforts as a prudent Person seeking the benefits of such performance or compliance would make, use, apply or exercise to preserve, protect or advance its rights or interests. Such efforts do not require the Person whose performance or compliance is required under this Agreement to incur a material financial cost or a substantial risk of material liability unless such cost or liability (i) is specifically contained in this Agreement or the Settlement Agreement, (ii) would customarily be incurred in the course of performance of or compliance with the relevant obligation, term or provision, (iii) is caused by or results from the wrongful act or negligence of the Person whose performance or compliance is required hereunder, or (iv) is not excessive or unreasonable in view of the rights or interests to be preserved, protected or advanced.

1.4            “Effective Date” means the first date on which the Company’s Registration Statement is declared effective by the SEC.

 

1.5            “Exercise Period” shall mean the period commencing on the later of (a) the date the Warrants are issued to the initial Holders and (b) the Effective Date and ending at 5:00 p.m., Holland, Michigan time, on the fifth (5th) anniversary of the later of (a) or (b), as such period may be extended pursuant to the terms hereof.

1.6            “Exercise Price” shall mean the purchase price for each Warrant Share and shall be Nine Dollars ($9.00) per share, as adjusted from time to time pursuant to Sections 8.1 and 8.2 hereof.

1.7            “Holders” are the registered owners of the Warrants.

1.8            “Market” shall mean the Nasdaq Stock Market. If the Common Stock is no longer authorized for quotation on the Nasdaq Stock Market, the Market shall be the principal national securities exchange or quotation system on which the Common Stock is quoted or listed or admitted to trading or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the over-the-counter market.

1.9            “Material Information” is material nonpublic information concerning the Company, its subsidiaries, or its or their current or prospective business, financial condition, results of operations or prospects.

1.10          “Person” shall mean a natural person, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company, limited liability partnership, government or any agency or political subdivision thereof or any other entity or organization.

1.11          “Qualifying Prospectus” shall mean a prospectus contained in a Registration Statement that satisfies all legal requirements.

1.12          “Registration Statement” shall mean a registration statement relating to the issuance by the Company of the Warrant Shares to the Holders upon exercise of the Warrants pursuant hereto.

1.13          “SEC” shall mean the United States Securities and Exchange Commission, or any successor governmental agency or authority thereto.

1.14          “Securities Act” shall mean the Securities Act of 1933, as amended.

1.15          “Trading Price,” as of any date, shall mean the dollar weighted average trading price per share for all round lot transactions in the Common Stock on the Market for the twenty (20) trading days ending two (2) days prior to that date.

1.16          “Warrant Shares” are the shares of Common Stock or other securities deliverable upon exercise of a Warrant.

2.                   FORM OF WARRANT; EXECUTION; REGISTRATION

2.1            Form of Warrant; Execution of Warrants. The certificates evidencing the Warrants (the “Warrant Certificates”) shall be in the form attached to this Agreement. The Warrant Certificates shall be signed on behalf of the Company by its Chief Executive Officer, Chief Financial Officer, President or one of its Vice Presidents. The signature of any such officer on the Warrant Certificates may be manual or by facsimile. Each Warrant Certificate shall be dated the date it is countersigned by the Warrant Agent pursuant to Section 2.3.

2.2            Registration. The Warrant Certificates shall be numbered and shall be registered on the books of the Company maintained at the principal office of the Warrant Agent initially in Cranford, New Jersey (or such other place in the continental United States as the Warrant Agent shall from time to time notify the Company and the Holders in writing) (the “Warrant Register”) as they are issued. The Company and the Warrant Agent shall be entitled to treat the registered owner of any Warrant as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other person.

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2.3            Countersignature of Warrants. The Warrant Certificates shall be countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. Warrant Certificates may be countersigned, however, by the Warrant Agent and may be delivered by the Warrant Agent notwithstanding that the persons whose manual or facsimile signatures appear thereon as proper officers of the Company shall have ceased to be such officers at the time of such countersignature, issuance or delivery. The Warrant Agent shall, upon written instructions of the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary of the Company, countersign, issue and deliver Warrant Certificates entitling the Holders thereof to purchase not more than an aggregate of One Million Five Hundred Thousand (1,500,000) Warrant Shares (subject to adjustment pursuant to Section 8) and shall countersign, issue and deliver Warrant Certificates as otherwise provided in this Agreement.

3.                   TRANSFER AND EXCHANGE OF WARRANTS

3.1            Transfer and Exchange. Subject to the terms of this Agreement, the Warrant Agent shall initially countersign, register in the Warrant Register, and deliver Warrants in accordance with the written instructions of the Company. Subject to the terms of this Agreement and the receipt of such documentation as the Warrant Agent may reasonably require, the Warrant Agent shall thereafter from time to time register the transfer of any outstanding Warrants upon the Warrant Register upon surrender of the Warrant Certificate or Certificates evidencing such Warrants duly endorsed or accompanied (if so required by it) by a written instrument or instruments of transfer in form reasonably satisfactory to the Warrant Agent (which may be in the form attached to this Agreement), duly executed by the registered Holder or Holders thereof, by the duly appointed legal representative of the Holders, or by a duly authorized attorney. Subject to the terms of this Agreement, each Warrant Certificate may be exchanged for another Warrant Certificate or Certificates entitling the Holder to purchase a like aggregate number of Warrant Shares as the Warrant Certificate or Certificates surrendered then entitles such Holder to purchase. Any Holder desiring to exchange a Warrant Certificate or Certificates shall make such request in writing delivered to the Warrant Agent, and shall surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by a written instrument or instruments in form reasonably satisfactory to the Warrant Agent, the Warrant Certificate or Certificates to be so exchanged. Upon registration of transfer or exchange, the Company shall issue and the Warrant Agent shall countersign and deliver by certified mail a new Warrant Certificate or Certificates to the persons entitled thereto.

3.2            No Service Charges. No service charge shall be made for any exchange or registration of transfer of a Warrant Certificate or of Warrant Certificates, but the Company may require payment of a sum sufficient to cover any stamp tax or other tax or other governmental charge that is imposed in connection with any such exchange or registration of transfer pursuant to Section 5.

3.3            Acceptance of Terms. By accepting the initial delivery, transfer or exchange of Warrants, each Holder shall be deemed to agree to the terms of this Agreement as it may be in effect from time to time, including any amendments or supplements duly adopted in accordance with Section 12.3. A copy of this Agreement may be obtained by a Holder without cost upon written request to the Company at its principal office or to the Warrant Agent.

4.                   TERM OF WARRANTS; EXERCISE OF WARRANTS; REGISTRATION OF WARRANT SHARES

4.1            Term of Warrants. Subject to the terms of this Agreement, each Holder shall have the right, which may be exercised on any Business Day during the Exercise Period, to receive from the Company the number of Warrant Shares which the Holder may at the time be entitled to purchase upon exercise of such Warrants and payment of the Exercise Price then in effect for such Warrant Shares. The Warrant Shares issued to a Holder upon exercise of its Warrants shall be duly authorized, validly issued, fully paid and non-assessable and shall not have been issued in violation of or subject to any preemptive rights. Each Warrant not exercised prior to the expiration of the Exercise Period shall become void, and all rights under such Warrant and under this Agreement shall cease as of the expiration of the Exercise Period, provided, however, that if the Exercise Period ends during a suspension pursuant to Section 4.3, the Exercise Period shall be extended for an additional period of time equal to the longer of the period of such suspension during the Exercise Period and twenty (20) Business Days after the date on which the Warrant Agent sends notice to the Holders of the expiration of such suspension period.

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4.2                Exercise of Warrants.

(a)            During the Exercise Period, except as such may be suspended from time to time as set forth in Section 4.3, each Holder may exercise from time to time some or all of the Warrants evidenced by its Warrant Certificate(s) by: (i) surrendering to the Company at the principal office of the Warrant Agent such Warrant Certificate(s) with written notice (in the form attached to this Agreement) duly completed and signed, which signature shall be guaranteed by an eligible guarantor institution (a bank, savings and loan association or credit union with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, and (ii) paying to the Warrant Agent for the account of the Company the aggregate Exercise Price for the number of Warrant Shares in respect of which such Warrants are exercised. Warrants shall be deemed exercised on the date such Warrant Certificate(s) are surrendered to the Warrant Agent and tender of payment of the aggregate Exercise Price is made. Payment of the aggregate Exercise Price shall be made (1) by wire transfer of immediately available funds to the Warrant Agent for the account of the Company, (2) by certified or official bank check or checks payable to the order of the Company (any such payments under subsections (1) or (2) shall be made in lawful money of the United States of America), or (3) by surrender to the Warrant Agent of the right to receive a number of Warrant Shares, calculated to the nearest one one-hundredth of a share, pursuant to the formula below. In the event that a Holder elects to make payment of the aggregate Exercise Price by surrender of the right to receive Warrant Shares as provided in subsection (3) of the preceding sentence, the number of Warrant Shares issuable to such Holder shall be calculated as follows:

	
 

	
X =  Y(A-B)

     A

 

Where:     X =

 

 

  Y =

 

  A =

 

  B =

	
 

 

 

the number of Warrant Shares to be issued to such Holder upon exercise (subject to Section 9);

 

the total number of Warrant Shares purchasable pursuant to the Warrant being exercised (or, if such Warrant is being exercised only in part, the number of Warrant Shares for which it is being exercised);

 

the Trading Price of a share of Common Stock determined as of the date of exercise; and

 

the then-current Exercise Price.

(b)            In the event that less than all of the Warrants evidenced by a Warrant Certificate are exercised, the Holder thereof shall be entitled to receive a new Warrant Certificate or Certificates as specified by such Holder evidencing the remaining Warrant or Warrants, and the Warrant Agent is hereby irrevocably authorized by the Company to countersign, issue and deliver the required new Warrant Certificate or Certificates evidencing such remaining Warrant or Warrants pursuant to Section 4.2 and Section 3 of this Agreement. The Company, whenever requested by the Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly executed on behalf of the Company for such purpose.

(c)            Upon the exercise of any Warrants in accordance with this Agreement, the Company shall cause the Warrant Agent, on the Company’s behalf, to issue and deliver with all reasonable dispatch, to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate or certificates for the number of full Warrant Shares issuable upon the exercise of such Warrants and shall take or cause the Warrant Agent to take such other actions as are necessary to complete the exercise of the Warrants (including, without limitation, payment of any cash with respect to fractional interests required under Section 9). The certificate or certificates representing such Warrant Shares shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date the Warrants are exercised.

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(d)            Upon delivery of the Warrant Shares issuable upon exercise of a Warrant in accordance herewith and of any required new Warrant Certificates, the Company shall direct the Warrant Agent by written order to cancel the Warrant Certificates surrendered upon exercise. Such canceled Warrant Certificates shall then be disposed of by the Warrant Agent in a manner permitted by applicable laws and satisfactory to the Company in accordance with its written instructions to the Warrant Agent. The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all amounts received by the Warrant Agent upon exercise of such Warrants.

(e)            The Warrant Agent shall keep copies of this Agreement and any notices given or received pursuant to this Agreement available for inspection by the Holders during normal business hours at its office. The Company shall, at its sole expense, supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may reasonably request.

4.3                Registration of Warrant Shares; Suspension of Exercise Period.

(a)            The Company shall use its Commercially Reasonable Best Efforts to (i) file under the Securities Act, within thirty (30) days of the date hereof, the Registration Statement, (ii) cause such Registration Statement to be declared effective by the SEC within ninety (90) days of the date hereof and (iii) keep such Registration Statement effective at all times during the Exercise Period, and will make such number of Qualifying Prospectuses available to Holders as they shall reasonably request. No shares of Common Stock shall be issued, and the right to exercise all Warrants shall be suspended, for all periods during which there is not an effective Registration Statement and/or there is not a Qualifying Prospectus available to Holders. The Company shall promptly notify the Warrant Agent of any such suspension, and the Warrant Agent shall have no duty, responsibility or liability in respect of any shares of Common Stock issued or delivered prior to its receipt of such notice. The Company shall promptly notify the Warrant Agent of the termination of any such suspension, and the Company shall cause the Warrant Agent to notify the Holders of the termination of such suspension promptly following notice to the Warrant Agent by the Company. Should the ability of the Holders to exercise the Warrants be suspended for more than an aggregate of sixty (60) days in any three hundred sixty five (365) day period pursuant to this Section 4.3(a), the Exercise Period shall be extended by the aggregate number of days in such suspension period(s) in excess of sixty (60) days. The Company represents and warrants that the issuance of the Warrants is exempt from registration pursuant to Section 3(a)(10) of the Securities Act.

(b)            Notwithstanding the foregoing, the Company shall have the right, exercisable by giving written notice of the exercise of such right to the Warrant Agent, at any time and from time to time, to suspend the Exercise Period or delay filing for a period not in excess of 60 calendar days during any consecutive three hundred sixty-five (365) day period beginning on the date on which such notice is given, or such shorter period of time as may be specified in such notice or in a subsequent notice delivered by the Company to such effect, if (i) the Company is, in its good faith judgment, in possession of Material Information, (ii) such Material Information would, in the judgment of the Company’s board of directors (after consultation with counsel), need to be disclosed so as to permit the Warrant Shares to be sold in compliance with law, and (iii) disclosure of such Material Information would, in the good faith judgment of the Company (after consultation with counsel), be adverse to its interests. Should the ability of the Holders to exercise the Warrants be suspended for more than an aggregate of sixty (60) days in any three hundred sixty five (365) day period pursuant to this Section 4.3(b), the Exercise Period shall be extended by the aggregate number of days in such suspension period(s) in excess of sixty (60) days.

5.                  PAYMENT OF TAXES

The Company will pay all documentary stamp and other like taxes, if any, attributable to the initial issuance and delivery of the Warrants and the initial issuance and delivery of the Warrant Shares upon the exercise of Warrants. However, the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer of the Warrants or involved in the issuance or delivery of any Warrant Shares in a name other than that of the Holder of the Warrants being exercised, and the Warrant Agent shall not register any such transfer or issue or deliver any Warrant Certificate(s) or Warrant Shares unless or until the persons requesting the registration or issuance shall have (i) paid to the Warrant Agent for the account of the Company the amount of such tax, if any, (ii) established to the reasonable satisfaction of the Company that such tax, if any, has been paid, or (iii) delivered to the Company an opinion of legal counsel that no such tax is due.

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6.                    LOST OR STOLEN WARRANT CERTIFICATES

In the event that any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company shall issue, and the Warrant Agent shall countersign and deliver, a replacement Warrant Certificate representing an equivalent right or interest. The Holder must submit evidence reasonably satisfactory to the Company and the Warrant Agent of such loss, theft or destruction of such Warrant Certificate and an indemnity or bond, if requested by the Company or the Warrant Agent, also reasonably satisfactory to them. An applicant for such a substitute Warrant Certificate shall also comply with such other reasonable procedures as the Company or the Warrant Agent may reasonably require. The Company and Warrant Agent may charge the Holder for their expenses in replacing a Warrant Certificate.

7.                   RESERVATION OF WARRANT SHARES

7.1            Reservation of Common Stock. The Company shall at all times keep reserved out of its authorized Common Stock, free of all preemptive rights, a number of shares of Common Stock sufficient to provide for the exercise of the rights of purchase represented by the outstanding Warrants. The transfer agent for the Common Stock and every subsequent or other transfer agent for any shares of the Company’s capital stock issuable upon the exercise of the Warrants (each, a “Transfer Agent”) will be and are hereby irrevocably authorized and directed at all times to reserve such number of authorized shares of Common Stock as shall be required for such purpose. The Company will keep a copy of this Agreement on file with each Transfer Agent. The Company will supply its Transfer Agent with duly executed stock certificates for such purposes and will itself provide or otherwise make available any cash which may be payable as provided in Section 9. The Company will furnish to its Transfer Agent a copy of all notices of adjustments, and certificates related thereto, transmitted to each Holder. The Company will give the Warrant Agent prompt notice of any change in any Transfer Agent or any change of address of any Transfer Agent.

7.2            Corporate Actions. Before taking any action which would cause an adjustment pursuant to Section 8 reducing the Exercise Price, the Company will take any and all corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares at the Exercise Price as so adjusted.

8.                   ADJUSTMENT OF WARRANT SHARES AND EXERCISE PRICE.

8.1            Adjustments. The Warrant Shares purchasable upon the exercise of each Warrant and the Exercise Price shall be subject to adjustment as follows:

(a)            Adjustment for Change in Capital Stock. Subject to Section 8.1(b), in case the Company shall (i) pay a dividend on its outstanding shares of Common Stock in shares of Common Stock or make a distribution of shares of Common Stock on its outstanding shares of Common Stock, (ii) make a distribution on its outstanding shares of Common Stock in shares of its capital stock other than Common Stock, (iii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iv) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (v) issue, by reclassification of its shares of Common Stock, other securities of the Company (including any such reclassification in connection with a consolidation or merger in which the Company is the surviving entity) (each, an “Adjustment Event”), then the number of Warrant Shares purchasable upon exercise of each Warrant immediately prior to the Adjustment Event shall be adjusted so that the Holder of each Warrant shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which such Holder would have owned or have been entitled to receive upon the happening of the Adjustment Event had such Warrant been exercised in full immediately prior to the happening of such Adjustment Event or any record date with respect to such Adjustment Event. If a Holder is entitled to receive shares of two or more classes of capital stock of the Company pursuant to the foregoing sentence upon exercise of Warrants, the allocation of the adjusted Exercise Price between such classes of capital stock shall be determined reasonably and in good faith by the Board of Directors of the Company. After such allocation, the exercise privilege and the Exercise Price with respect to each class of capital stock shall thereafter be subject to adjustment on terms substantially identical to those applicable to Common Stock in this Section 8. An adjustment made pursuant to this Section 8.1(a) shall become effective immediately after the record date for such Adjustment Event or, if none, immediately after the effective date of such Adjustment Event. Such adjustment shall be made successively whenever an Adjustment Event occurs.

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(b)            Minimum Adjustment. No adjustment in the number of Warrant Shares purchasable by a Holder pursuant to Section 8.1(a) shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the number of Warrant Shares purchasable upon the exercise of each Warrant. The amount by which any adjustment is not made by reason of this subsection shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest one-hundredth of a Warrant Share.

(c)            Adjustment in Exercise Price. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant is adjusted pursuant to Section 8.1(a), the Exercise Price payable for each Warrant Share immediately prior to such adjustment shall be adjusted (to the nearest cent) by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of Warrant Shares purchasable upon the exercise of each Warrant immediately prior to the Adjustment Event and the denominator of which shall be the number of Warrant Shares purchasable immediately after the Adjustment Event.

8.2            Notice of Adjustment. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant or the Exercise Price of Warrant Shares is adjusted, the Company shall cause the Warrant Agent promptly to mail to each Holder, at the sole expense of the Company, by first class mail, postage prepaid, notice of such adjustment or adjustments and shall deliver to the Warrant Agent a certificate of an officer of the Company setting forth: (a) the number of Warrant Shares purchasable upon the exercise of each Warrant and the Exercise Price for each Warrant Share after such adjustment, (b) a brief statement of the facts requiring such adjustment, and (c) the computations by which such adjustment was made. The Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same, from time to time, to any Holder requesting an inspection of such certificate during reasonable business hours.

8.3                Merger or Consolidation.

(a)            In case of any consolidation or merger of the Company into another entity, or any sale of all or substantially all assets of the Company (collectively, a “Reorganization”), the Company or such successor entity shall on or before the date of consummation of the Reorganization (the “Closing Date”), at its option, either:

(i)            deliver to the Warrant Agent a notice of redemption (the “Redemption Notice”), which shall be binding on the Company and on all Holders, and redeem all Warrants by payment, in cash, to each Holder of an amount equal to the excess, if any, of (A) the value of the consideration that each such Holder would have been entitled to receive upon the consummation of the Reorganization had such Holder exercised all of such Holder’s Warrant(s) immediately prior to such Reorganization, over (B) the aggregate Exercise Price that would have been payable by each such Holder upon any such exercise immediately prior to such Reorganization, such payments to be made within ten (10) Business Days of the Closing Date; or

(ii)            execute and deliver to the Warrant Agent an agreement, which shall be binding on the Holders, that each Holder shall have the right thereafter upon payment of the Exercise Price in effect immediately prior to such action (after giving effect to any applicable adjustments) to purchase upon exercise of each Warrant the kind and amount of shares and other securities and property (including cash) which such Holder would have owned or have been entitled to receive upon the consummation of the Reorganization had such Warrant been exercised immediately prior to such Reorganization. The Company shall at its sole expense mail, by first class mail, postage prepaid, to each Holder notice of the execution of any such agreement. Such agreement shall provide for adjustments, which shall be substantially identical to the adjustments provided for in this Section 8.

(b)            In the event the Company delivers a Redemption Notice, any right to exercise a Warrant shall terminate at 5:00 p.m., Holland, Michigan time, on the Closing Date. On and after the Closing Date, the Holders of the Warrants shall have no further rights except to receive, upon surrender of the Warrant, the Redemption Price, without interest.

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(c)            The Company shall not merge or consolidate with or into any other entity, unless the successor entity (if not the Company) shall expressly assume, by supplemental agreement reasonably satisfactory in form and substance to the Warrant Agent in its sole judgment and executed and delivered to the Warrant Agent, the performance and observance of each and every covenant and condition of this Agreement to be performed and observed by the Company. The provisions of this Section 8.3 shall similarly apply to successive consolidations or mergers.

8.4            Other Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions, then the Company’s Board of Directors will in good faith make an appropriate adjustment in the Exercise Price and the number or type of Warrant Shares so as to protect the rights of the Holders.

8.5            Statement on Warrants. Irrespective of any adjustments in the Exercise Price or the number or kind of securities purchasable upon the exercise of the Warrants, Warrants previously issued may continue to express the same Exercise Price and number and kind of Warrant Shares as are stated in the Warrants when initially issued.

8.6            No Impairment. The Company shall not, for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms and provisions of this Agreement, amend its Articles of Incorporation or engage in any reclassification, reorganization, consolidation, merger, dissolution, liquidation, issue, sale or exchange of securities or any other voluntary action.

9.                   FRACTIONAL INTERESTS

Neither the Company nor the Warrant Agent shall be required to issue fractional Warrant Shares on the exercise of Warrants. If more than one Warrant shall be exercised at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Warrants so exercised. If any fraction of a Warrant Share would, except for the provisions of this Section 9, be issuable on the exercise of any Warrant, the Company shall pay an amount in cash equal to the Trading Price for one share of Common Stock on the date the Warrant Certificate is presented for exercise, multiplied by such fraction.

10.                NO RIGHTS AS STOCKHOLDERS

10.1            No Rights. Nothing contained in this Agreement or in any of the Warrants shall be construed as conferring upon the Holders or their transferees the right to vote, to receive dividends, to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or any other matter, or to receive any rights whatsoever as stockholders of the Company.

10.2            Notice of Certain Events. In the event the Company shall:

(a)            authorize the issuance to all holders of shares of Common Stock of rights, options or warrants to subscribe for or purchase shares of Common Stock or any other subscription rights, options or warrants;

(b)            authorize the distribution to all holders of shares of Common Stock of securities or assets (other than cash dividends);

(c)            effect any Reorganization, any reclassification or change of Common Stock issuable upon exercise of the Warrants (other than a change in par value or as a result of a subdivision or combination of outstanding shares of Common Stock), or a tender offer or exchange offer for shares of Common Stock; or

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(d)            effect a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then the Company shall cause to be filed with the Warrant Agent and shall cause to be given to each Holder at its address appearing on the Warrant Register, at least twenty (20) calendar days prior to the applicable record date hereinafter specified, or promptly in the case of events for which there is no record date, by first class mail, postage prepaid, a written notice stating (x) the date as of which the Holders of record of shares of Common Stock entitled to receive any such rights, options, warrants or distribution are to be determined, (y) the initial expiration date set forth in any tender offer or exchange offer for shares of Common Stock, or (z) the date on which any such reclassification, Reorganization, dissolution, liquidation or winding up is expected to become effective or consummated, as well as the date as of which it is expected that Holders of record of shares of Common Stock shall be entitled to exchange such shares for securities or other property, if any, deliverable upon such reclassification, Reorganization, dissolution, liquidation, or winding up. The failure to give the notice required by this Section 10.2 or any defect therein shall not affect the legality or validity of any distribution, right, option, warrant, reclassification, Reorganization, dissolution, liquidation, winding up or action, or the vote upon any of the foregoing.

11.               WARRANT AGENT

11.1            Appointment. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the terms and conditions of this Agreement, and the Warrant Agent hereby accepts such appointment. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the terms and conditions set forth in this Agreement.

11.2            Rights and Duties of Warrant Agent.

(a)            Agent for the Company. In acting under this Agreement and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any obligation or relationship or agency or trust for or with any of the Holders or beneficial owners of Warrants.

(b)            Counsel. The Warrant Agent may consult with counsel satisfactory to it (who may be counsel to the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder in respect of any action taken, suffered or omitted by it in good faith and in accordance with the opinion or the advice of such counsel.

(c)            Documents. The Warrant Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it in reliance upon any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties.

(d)            No Implied Obligations. The Warrant Agent shall be obligated to perform only such duties as are specifically set forth in this Agreement and in the Warrant Certificates, and no implied duties or obligations of the Warrant Agent shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained in this Agreement or in the Warrant Certificates.

(e)            Not Responsible for Adjustments or Validity of Stock. The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to conduct any review or investigation to determine whether any facts exist that may require an adjustment of the number of Warrant Shares or other property issuable upon exercise of each Warrant or the Exercise Price, with respect to the nature or extent of any adjustment when made, or with respect to the method employed in making such adjustment. The Warrant Agent shall not be accountable with respect to the validity or value of any shares of Common Stock or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates upon the surrender of any Warrant Certificate for the purpose of exercise or upon any adjustment.

11.3            Other Transactions in Securities of the Company. The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or any other securities of the Company, acquire a pecuniary interest in any transaction in which the Company may be interested, contract with or lend money to the Company and otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other Person.

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11.4            Compensation and Indemnity. The Company agrees that the Warrant Agent is entitled, from time to time, to reasonable compensation for its services as mutually agreed and to reimbursement for all reasonable out-of-pocket expenses incurred by it, including the reasonable compensation and expenses of the Warrant Agent’s agents and counsel. The Company shall indemnify the Warrant Agent against any loss, liability or expense, including reasonable attorneys’ fees, incurred by it without negligence, willful misconduct, or bad faith on its part arising out of or in connection with the acceptance or performance of its duties under this Agreement. The Warrant Agent shall notify the Company promptly of any claim for which it may seek indemnity. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Warrant Agent through willful misconduct, negligence or bad faith. The Company’s payment obligations pursuant to this Section 11.4 shall survive the termination of this Agreement.

11.5            Instructions from Company. The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties from the Chairman of the Board, the President, a Vice President, the Treasurer or the Secretary of the Company, and to request from such officers advice or instructions in connection with its duties. The Warrant Agent shall not be liable for any action taken, suffered or omitted by it in good faith in accordance with instructions of any such officer or officers, provided such instructions are not in contravention of this Agreement.

11.6            Successor Warrant Agent.

(a)            Resignation and Removal. Upon sixty (60) days’ prior written notice, the Warrant Agent may resign at any time, and such notice shall specify the date on which the resignation shall become effective. The Warrant Agent may be removed at any time by the Company upon sixty (60) days’ prior written notice, which notice shall specify the date on which the removal shall become effective. Notwithstanding the foregoing, no resignation or removal shall take effect until the appointment by the Company of a successor Warrant Agent and the acceptance of such appointment by such successor Warrant Agent.

(b)            Appointment of Successor. In the event that the Warrant Agent shall resign or be removed, shall become insolvent, shall consent to the appointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator (or other similar official) of the Warrant Agent or its property or affairs, shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, a successor Warrant Agent shall be appointed by the Company. Any successor Warrant Agent shall be a bank or trust company, in good standing, incorporated under the laws of the United States of America or any state thereof, and having at the time of its appointment as Warrant Agent a combined capital and surplus of at least $100,000,000.

(c)            Successor To Expressly Assume Duties. Any successor Warrant Agent shall execute, acknowledge and deliver to its predecessor and to the Company an instrument accepting such appointment, and upon the delivery of such instrument, the successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the rights and obligations of such predecessor with like effect as if originally named as Warrant Agent under this Agreement, and the predecessor Warrant Agent, upon payment of its charges and disbursements then unpaid, shall become obligated to transfer, deliver and pay over all monies, securities and other property on deposit with or held by such predecessor as Warrant Agent. Upon the appointment of a successor Warrant Agent, the successor Warrant Agent shall mail, by first class mail, postage prepaid, to each Holder, written notice of such removal or resignation of the predecessor Warrant Agent and the name and address of the successor Warrant Agent.

(d)            Successor by Merger. Any corporation or entity into which the Warrant Agent may be merged or consolidated, any corporation or entity resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all of its assets and business shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties to this Agreement, provided that the successor Warrant Agent is eligible for appointment as a successor Warrant Agent under the provisions of this Section 11.6. If at the time a successor Warrant Agent is appointed any of the Warrant Certificates shall have been countersigned but not delivered, any such successor Warrant Agent may adopt the countersignature of the original Warrant Agent and deliver such Warrant Certificates so countersigned, and all such Warrant Certificates shall be fully valid and effective as provided in this Agreement.

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(e)            Name Change. If the name of the Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignatures under its prior name and deliver such Warrant Certificates so countersigned, and all such Warrant Certificates shall be fully valid and effective as provided in this Agreement.

12.                MISCELLANEOUS

12.1            Notices.

(a)            Any notice pursuant to this Agreement shall be in writing addressed to the relevant address set forth below or such other relevant address as may be specified in writing by the relevant party. A notice shall be deemed properly made: (i) upon personal delivery, (ii) five (5) days after deposit in the mail, postage prepaid, first class mail, or (iii) one (1) day after deposit with a recognized overnight courier, postage prepaid.

	
 

	
 

	
If to the Company:

	
 

	
 

	
Macatawa Bank Corporation

10753 Macatawa Drive

Holland, Michigan 49424

Attn: Chief Financial Officer

Facsimile: (616) 494-7644

	
 

	
 

	
If to the Warrant Agent:

	
 

	
 

	
Registrar and Transfer Company

10 Commerce Drive

Cranford, New Jersey 07016

Attn: Daniel Flynn

Facsimile: (908) 497-2310

(b)            Any notice pursuant to this Agreement by the Company or the Warrant Agent to the Holders shall be in writing and shall be delivered to such Holders at their respective addresses in the Warrant Register. The address of each Holder shall be as provided in the Warrant Register. Any Holder may change its address by notice to the Company and the Warrant Agent given in accordance with this Section 12.1. Failure to provide notice to a Holder or any defect in such notice shall not affect its sufficiency with respect to other Holders. If a notice is mailed in the manner provided by this Section 12, it is duly given, whether or not the addressee receives it.

12.2            Cancellation of Warrants. In the event the Company shall purchase or otherwise acquire Warrants, such Warrants shall be delivered to the Warrant Agent and be cancelled by it and retired. The Warrant Agent shall cancel any Warrant Certificate surrendered for exchange, substitution, transfer or exercise in whole or in part.

12.3            Supplements and Amendments. The Company and the Warrant Agent may from time to time supplement or amend this Agreement, the Warrants and the Warrant Certificates without approval of any Holder, in order to: (a) cure any ambiguity or correct or supplement any provision contained in the Agreement, the Warrants and the Warrant Certificates that may be defective or inconsistent with any other provision in such documents, (b) comply with the requirements of any national securities exchange or the Market, or (c) make any other changes to this Agreement, the Warrants and the Warrant Certificates that (i) the Company and the Warrant Agent may deem necessary or desirable, (ii) shall not be inconsistent with the provisions of this Agreement, the Warrants and the Warrant Certificates, and (iii) shall not adversely affect the rights of any Holder. Any other supplement or amendment to this Agreement, the Warrants and the Warrant Certificates may be made with the approval of the Holders of a majority of the then outstanding Warrants, provided, however, that no such supplement or amendment shall, without the written consent of each Holder affected thereby, (w) shorten the Exercise Period for any Warrant, (x) increase the Exercise Price payable pursuant to any Warrant, (y) modify the provisions of this Section 12.3 or (z) increase the obligations of any Holder or otherwise disproportionately adversely affect the rights of any Holder. The Company shall give or cause the Warrant Agent to give prompt notice to all Holders of any supplement or amendment pursuant to this Section 12.3.

11

12.4            Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of the Company or the Warrant Agent and their respective successors.

12.5            Applicable Law. The terms and conditions of this Agreement and the Warrants shall be governed, construed, interpreted, and enforced in accordance with the domestic laws of the State of Michigan, without regard to its conflict of laws principles.

12.6            Benefits of this Agreement. Nothing in this Agreement shall be construed to give any person or corporation other than the Company, the Warrant Agent and the Holders any legal or equitable right, remedy or claim under this Agreement. This Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent, their respective assigns and the Holders.

12.7            Execution in Counterparts. This Agreement may be executed in multiple counterparts, which, when taken together, shall constitute one and the same instrument.

12.8            Captions. The captions of the sections and subsections of this Agreement have been inserted for convenience only and shall have no substantive effect.

(Signatures appear on the following page.)

12

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

	
 

	
COMPANY:

	
 

	 		
	
 

	
Macatawa Bank Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
Name:

	
 

	
 

	 	Title:	                                       	

 

 

	
 

	
WARRANT AGENT:

	
 

	 		
	
 

	
Registrar and Transfer Company

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
Name:

	
 

	
 

	 	Title:	                           	

 

Signature Page to the Warrant Agreement

 

TO BE IN THE FORM OF A BANKNOTE CERTIFICATE

CUSIP No. _________

THIS WARRANT IS GOVERNED BY AND SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE WARRANT AGREEMENT. A COPY OF THE WARRANT AGREEMENT MAY BE OBTAINED UPON REQUEST FROM MACATAWA BANK CORPORATION OR THE WARRANT AGENT .

Warrant to Purchase Common Stock of Macatawa Bank Corporation

This Warrant (the “Warrant”) is issued to _____________________________, or his, her or its registered assigns (the “holder”) by Macatawa Bank Corporation, a Michigan corporation (the “Company”), on ___________________, 2009 (the “Warrant Issue Date”). This Warrant is issued pursuant to that certain Warrant Agreement, dated __________, 2009 (the “Warrant Agreement”), between the Company and Registrar and Transfer Company, a New Jersey corporation (the “Warrant Agent”) and in furtherance of that certain Settlement and Release and Stock and Warrant Issuance Agreement, dated  [November 26, 2008] , in settlement of the lawsuit pending in the United States District Court for the Western District of Michigan, entitled  In re Trade Partners, Inc. Investor Litigation , Case No. 1:07-MD-1846-RHB, and the lawsuit pending in the Kent County Circuit Court in Grand Rapids, Michigan, entitled  Giese et al. v. Macatawa Bank Corp et al.,  Case No. 06-11707-CZ.

1.            Definitions. All capitalized terms not defined herein shall have the meanings ascribed to them in the Warrant Agreement.

2.            Purchase Shares. Subject to the terms and conditions hereinafter set forth, the holder is entitled, upon surrender of this Warrant to the Warrant Agent, to purchase from the Company up to __________________________________ (_________) fully paid and non-assessable shares of the Company’s Common Stock. The number of shares of Common Stock issuable pursuant to this Section 2 shall be subject to adjustment pursuant to Section 8 of the Warrant Agreement.

3.            Exercise Price. The purchase price for each Warrant Share shall be $9.00 per share, as adjusted from time to time pursuant to Section 8 of the Warrant Agreement (the “Exercise Price”). All payments shall be made in lawful money of the United States of America by certified or official bank check or checks payable to the order of the Company or by wire transfer.

4.            Exercise Period. This Warrant shall be exercisable, in whole or in part, on any Business Day, from and after the later of (a) ____________, 2009 and (b) the Effective Date of the Registration Statement and until 5:00 p.m., Holland, Michigan time, on the fifth anniversary of the later of (a) or (b), as such period may be extended pursuant to the terms of the Warrant Agreement (the “Exercise Period”).

5.            Method of Exercise. While this Warrant remains outstanding and during the Exercise Period, the holder may exercise, in whole or in part, the purchase rights evidenced hereby. Such exercise shall be effected by: (a) the surrender of this Warrant, together with a duly executed copy of the form of Notice of Election (attached to this Warrant), to the Warrant Agent at its principal offices; and (b) the payment to the Warrant Agent for the account of the Company of an amount equal to the aggregate Exercise Price for the number of Warrant Shares being purchased in any manner permitted in the Warrant Agreement.

6.            Certificates for Warrant Shares. Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Warrant Shares so purchased shall be issued as soon as practicable thereafter (with appropriate restrictive legends, if applicable), and in any event within thirty (30) days of the delivery of the Notice of Election. In case the holder shall exercise this Warrant with respect to less than all of the Warrant Shares that may be purchased under this Warrant, the Company shall execute a new warrant in the form of this Warrant for the balance of such Warrant Shares and deliver such new warrant to the holder of this Warrant.

 

 

7.            No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares, the Company shall make a cash payment for such fractional shares or scrip on the basis of the Trading Price determined as of the date of exercise.

8.            No Shareholder Rights. Prior to exercise of this Warrant, the holder shall not be entitled to any rights of a shareholder with respect to the Warrant Shares, including (without limitation) the right to vote such Warrant Shares, receive dividends or other distributions thereon, exercise preemptive rights or be notified of shareholder meetings, and such holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company. However, nothing in this Section 8 shall limit the right of the holder to be provided the notices required under the Warrant Agreement.

9.            Transfers of Warrant, Subject to compliance with applicable federal and state securities laws, this Warrant and all rights (but only with all related obligations) under this Warrant are transferable in whole or in part by the holder. The transfer shall be recorded on the books of the Company upon (a) the surrender of this Warrant, properly endorsed, or as otherwise provided for in Section 3 of the Warrant Agreement, to the Warrant Agent at its principal offices, and (b) the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the holders one or more appropriate new warrants.

10.            Successors and Assigns. The terms and provisions of this Warrant and the Warrant Agreement shall inure to the benefit of, and be binding upon, the Company and the holders hereof and their respective successors and assigns.

11.            Amendments and Waivers. Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the holder. Any waiver or amendment effected in accordance with this Section shall be binding upon each holder of any Warrant Shares purchased under this Warrant at the time outstanding (including securities into which such Warrant Shares have been converted), each future holder of all such Warrant Shares, and the Company.

12.            Notices. All notices required under this Warrant shall be deemed to have been given or made for all purposes (a) upon personal delivery, (b) five (5) days after deposit in the mail, postage prepaid, first class mail, or (c) one (1) day after deposit with a recognized overnight courier, postage prepaid. Notices to the Company shall be sent to 10753 Macatawa Drive, Holland, Michigan 49424 (or at such other place as the Company shall notify the holder hereof in writing). Notices to the holder shall be sent to the address of the holder in the Warrant Register. Notices to the Warrant Agent shall be sent to 10 Commerce Drive, Cranford, New Jersey 07016, Attn: Dan Flynn (or such other address as the Warrant Agent shall indicate in a notice to the Company and the holder).

13.            Captions. The section and subsection headings of this Warrant are inserted for convenience only and shall not constitute a part of this Warrant in construing or interpreting any provision hereof.

14.            Governing Law. The terms and conditions of this Warrant shall be governed, construed, interpreted, and enforced in accordance with the domestic laws of the State of Michigan, without regard to its conflict of laws principles.

15.            Warrant Agreement. This Warrant is governed by and subject to the terms and conditions contained in the Warrant Agreement. In the event of a conflict between the provisions of the Warrant Agreement and this Warrant, the provisions of the Warrant Agreement shall govern. A copy of the Warrant Agreement may be obtained at no cost upon request from the Company at its principal office or from the Warrant Agent.

2

IN WITNESS WHEREOF, the Company and the Warrant Agent have caused this Warrant to be executed by their duly authorized officers.

 

	
 

	
COMPANY:

	
 

	 		
	
 

	
Macatawa Bank Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
Name:

	
 

	
 

	 	Title:	      	

 

 

	
 

	
WARRANT AGENT:

	
 

	 		
	
 

	
Registrar and Transfer Company

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
Name:

	
 

	
 

	 	Title:	     	

3

MACATAWA BANK CORPORATION

WARRANT NOTICE OF EXERCISE

	
To:

	
Registrar and Transfer Company

10 Commerce Drive

Cranford, New Jersey 07016

1.            The undersigned hereby elects to purchase ___________________ shares of Common Stock of Macatawa Bank Corporation, a Michigan corporation (the “Company”), pursuant to the terms of the attached Warrant and the Warrant Agreement referenced in such Warrant. To the extent the undersigned is not exercising this Warrant in full, please reissue and return to the undersigned a new Warrant to purchase the remaining number of shares of Common Stock.

2.            Payment of the Exercise Price per share required under such Warrant accompanies this notice in the amount of $__________________ by means of:

	
 

	
_____

	
wire transfer of immediately available funds to the Warrant Agent for the account of the Company,

	
 

	
_____

	
certified or official bank check or checks to the order of the Company, or

	
 

	
_____

	
surrender of the right to receive Warrant Shares having an aggregate Trading Price determined as of the date hereof equal to the aggregate Exercise Price.

 

	
Signature:

	
 

	
 

	
Name in Which Shares Are to be Registered:

	
	
 

	
 

	
 

	
 

	
 

	
	
Print Name:

	
 

	
 

	
Print Name:

	
 

	
	
 

	
 

	
 

	
 

	
 

	
	
SSN:

	

	
 

	
SSN:

	
 

	
	 					
	Address:	   		Address:	   	
	 					
	    	    		   	   	
	 					
	Date:	    				

 

Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

Signature Guaranteed by: ___________________________________

MACATAWA BANK CORPORATION

WARRANT TRANSFER

To: Registrar and Transfer Company

10 Commerce Drive

Cranford, New Jersey 07016

For value received, the undersigned hereby sells, assigns and transfers unto ________________________________ the right to purchase _________________________________________ (____________) shares of Common Stock, no par value, of Macatawa Bank Corporation, a Michigan corporation (the “Corporation”) pursuant to the attached Warrant and does hereby irrevocably constitute and appoint Registrar and Transfer Company as the undersigned’s attorney-in-fact, with full power of substitution, to transfer the Warrant, or such portion as is transferred hereby, on the books of the Corporation. The undersigned requests that the Registrar and Transfer Company issue to the transferee a Warrant certificate evidencing such transfer and to issue to the undersigned a new Warrant evidencing the right to purchase Common Stock for the balance not so transferred, if any.

 

	
Signature:

	
 

	
 

	
Name in Which Shares Are to be Registered:

	
	
 

	
 

	
 

	
 

	
 

	
	
Print Name:

	
 

	
 

	
Print Name:

	

	
	
 

	
 

	
 

	
 

	
 

	
	
SSN:

	
   

	
 

	
SSN:

	
   

	
	 					
	Address:	   		Address:		
	 					
	  	  		  	   	
	 					
	Date:	  				

 

Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-l5 of the Securities Exchange Act of 1934, as amended.

Signature Guaranteed by: _________________________________________

 

#10531644Exhibit 10.24

 

 

 

 

 

 

 

 

 

 

 

 

Loan Facility Agreement

 

 

 

CBD Energy Limited

 

ACN 010 966 793

 

 

 

Wind Farm Financing Pty Limited

 

ACN 165 836 760

 

 

    	 

    	 

    

 

Contents

 

Clause

 

	Number Heading	Page

 

	Recital	4

 

	Operative provisions	4

 

	1Definitions and Interpretation	4
	 	 
	1.1Definitions	4
	 	 
	1.2Interpretation	8
	 	 
	1.3Document or agreement	9
	 	 
	2Condition precedent	9
	 	 
	3Facility & purpose	9
	 	 
	3.1Facility	9
	 	 
	3.2Purpose	10
	 	 
	3.3Drawdowns	10
	 	 
	4Interest on the Principal Outstanding and fees	10
	 	 
	4.1Interest	10
	 	 
	4.2Fees	10
	 	 
	5Repayment	10
	 	 
	5.1Repayment Date	10
	 	 
	5.2Voluntary prepayment	10
	 	 
	5.3Miscellaneous	11
	 	 
	6Payments under the Facility	11
	 	 
	6.1Manner	11
	 	 
	6.2Payment to be made on Business Day	11
	 	 
	6.3Appropriation where insufficient moneys available	11
	 	 
	7Representations and Warranties	11
	 	 
	7.1Representations and warranties	11
	 	 
	7.2Repetition and reliance	12
	 	 
	8Undertakings	12
	 	 
	9Events of Default	13
	 	 
	9.1Events of Default	13
	 	 
	9.2Consequences	14

 

    	Page 2

    	 

    

 

	10Indemnities	14
	 	 
	11Expenses	14
	 	 
	12Stamp Duties and GST	14
	 	 
	12.1Stamp duties	14
	 	 
	12.2GST	15
	 	 
	13Set-Off	15
	 	 
	14Waivers, Remedies Cumulative	15
	 	 
	15Severability of Provisions	15
	 	 
	16Survival of Obligations	15
	 	 
	17Moratorium Legislation	16
	 	 
	18Assignments	16
	 	 
	18.1Assignment by Borrower	16
	 	 
	18.2Assignment by Lender	16
	 	 
	19Notices	16
	 	 
	20Governing Law and Jurisdiction	17
	 	 
	21Counterparts	17
	 	 
	22Confidential information	17

 

    	Page 3

    	 

    

 

	Date	13 March 2014
	 	 
	 	 
	Parties	 

 

		Name	CBD Energy Limited ACN 010 966 793 (Borrower)

 

		Name	Wind Farm Financing Pty Limited ACN 165 836 760 (Lender)

 

Recital

 

The Borrower has requested the
Lender provide the Borrower with the Facility under which a cash advance of an aggregate amount equal to the Commitment may be
made available for the purpose set out in clause 3.2.

 

Operative provisions

 

		1	Definitions and Interpretation

 

		1.1	Definitions

 

The following definitions apply unless the context
requires otherwise:

 

A$ or Dollar means
the lawful currency of the Commonwealth of Australia.

 

Advance means the advance
made or to be made under clause 3 of this Agreement.

 

Authorisation means any
consent, approval, authorisation, certificate, consent, exemption, filing, licence, permit, notarisation, notice, registration
or waiver, however described, and any renewal of or variation to any of them, and includes any requirement of any Government Agency
having jurisdiction in connection with the activities contemplated by a Finance Document.

 

Authorised Officer means,
for a party, a director, administrator, receiver, receiver & manager, liquidator or secretary of a party or any employee of
that party whose title includes the word “Manager”, “President”, or “Director”, and includes
a person acting in any of those capacities or any other person nominated by that party by notice to the other parties to be an
Authorised Officer.

 

Beneficiary has the meaning
given to that term in the Security Trust Deed.

 

Business Day means a weekday
on which banks are open in Sydney.

 

Commitment means A$2,000,000.

 

Controller has the same
meaning given to that term in the Corporations Act.

 

Convertible Note Facility Agreement
means the Convertible Note Facility Agreement dated 30 May 2012 originally between, among others, the Borrower and Partners For
Growth III, L.P, as amended from time to time and most recently pursuant to the Global Amending Deed.

 

    	Page 4

    	 

    

 

Corporations Act means
the Corporations Act 2001 (Cth).

 

Drawdown Date means the
date on which an Advance is or is to be provided under this Agreement.

 

Event of Default means
any of the events specified in clause 8.

 

External Administrator
means an administrator, Controller, trustee, provisional liquidator, liquidator or any other person (however described) holding
or appointed to an analogous office or acting in an analogous capacity.

 

Facility means the secured
facility provided by the Lender to the Borrower by way of the Advances.

 

Finance Documents means:

 

		(a)	this Agreement;

 

		(b)	any other document agreed by the Lender and the Borrower to be a Finance Document for the purposes of this Agreement.

 

Financial Indebtedness
means any debt or other monetary liability in respect of moneys borrowed or raised or any financial accommodation including under
or in connection with any:

 

		(a)	bank bill, debenture, bond, note or loan stock or other similar instrument;

 

		(b)	acceptance or documentary credit;

 

		(c)	receivable sold or discounted (otherwise than on a non-recourse basis);

 

		(d)	agreement for the deferral of a purchase price or other payment in relation to the acquisition of any asset or service;

 

		(e)	finance, capital or operating lease, hire purchase, credit sale or conditional sale agreement;

 

		(f)	agreement for the payment of capital or premium on the redemption of any preference shares;

 

		(g)	any guarantee, suretyship, letter of credit, letter of comfort or any other obligation to provide funds for the payment or
discharge of, to indemnify any person against the consequences of default in the payment of or to be responsible for, any debt
or monetary liability of another person or the assumption of any responsibility or obligation in respect of the insolvency or the
financial condition of any other person;

 

		(h)	obligation to deliver goods or provide services paid for in advance by a financier; or

 

		(i)	other amount raised under any other transaction having the commercial effect of a borrowing,

 

irrespective whether the debt
or liability, is present or future, actual, prospective, contingent, is at any time ascertained or unascertained or is owed or
incurred alone or severally or jointly or both with any other person.

 

Government Agency means
any government or any governmental, semi-governmental or judicial entity or authority. It also includes any self-regulatory organisation
established under statute or any stock exchange.

 

    	Page 5

    	 

    

 

GST means any goods and
services or similar tax, together with any related interest, penalties, fines or other charge.

 

Insolvency Event means,
in respect of a person:

 

		(a)	an order is made, or the person passes a resolution or takes any other steps, for its winding up;

 

		(b)	an application is made for its winding up and, if the application is capable of being set aside is not set aside within 30
days of being made;

 

		(c)	any of the following occurs:

 

		(i)	an External Administrator is appointed or any steps are taken to appoint an External Administrator; or

 

		(ii)	a resolution is passed to appoint an External Administrator,

 

to the person or any asset of the person;

 

		(d)	a Security Interest is enforced, or becomes capable of being enforced against an asset of the person;

 

		(e)	a distress, execution, attachment or other process is levied, issued against or enforced upon an asset of the person;

 

		(f)	the person:

 

		(i)	suspends payment of its debts generally;

 

		(ii)	is unable, or states that it is unable, to pay its debt when they fall due;

 

		(iii)	takes any action seeking protection from creditors or bankruptcy; or

 

		(iv)	is presumed by law to be insolvent;

 

		(g)	the person enters into or takes any step to enter into any compromise or arrangement with, or assignment for the benefit of,
any of its members or creditors;

 

		(h)	the person implements a merger, demerger or scheme of arrangement with any person;

 

		(i)	if a registered corporation under the Corporations Act, the person is deregistered, or any steps are taken to deregister the
person under the Corporations Act unless the Borrower satisfies the Lender that such steps are frivolous or vexatious;

 

		(j)	any analogous event, circumstance, matter or thing,

 

unless, in the case of paragraphs (a), (b), (c),
d, (g), (h) or (i) it occurs as part of a solvent reconstruction with the prior written approval of the Lender.

 

Money Owing means the aggregate
of the Principal Outstanding and all other debts and monetary liabilities of the Borrower, under or in connection with the Finance
Documents, in any capacity and irrespective of whether the debts or liabilities are present or future, are actual, prospective
or contingent or are at any time ascertained or unascertained.

 

Permitted Financial Indebtedness
means:

 

		(a)	Financial Indebtedness owed under the Finance Documents;

 

		(b)	Financial Indebtedness owed to a Beneficiary under a Transaction Document;

 

		(c)	Financial Indebtedness permitted under a Transaction Document; and

 

		(d)	any Financial Indebtedness incurred with the prior written approval of the Lender.

 

    	Page 6

    	 

    

 

Permitted Security Interest
means:

 

		(a)	any Security Interest contained in any Transaction Document;

 

		(b)	a Security Interest permitted under a Transaction Document;

 

		(c)	any Security Interest otherwise permitted by the Lender in writing.

 

		(d)	

 

PPS Act means the Personal
Property Securities Act 2009 (Cth).

 

PPS Law means:

 

		(a)	the PPS Act;

 

		(b)	any regulations made at any time under the PPS Act;

 

		(c)	any provision of the PPS Act or regulations referred to in paragraph (b);

 

		(d)	any amendment to any of the above, made at any time; or

 

		(e)	any amendment made at any time to any other legislation as a consequence of a PPS Law referred to in paragraphs a. to d. above.

 

Prepayment Date has the
meaning given to that term in clause 5.2.

 

Principal Outstanding means
the total principal amount of all outstanding Advances.

 

Related Body Corporate
has the meaning given to that term under the Corporations Act.

 

Repayment Date means the
earlier to occur of:

 

		(a)	the date of receipt of funds from any equity fundraising; and

 

		(b)	15 May 2014,

 

or such later date agreed between
the Lender and the Borrower.

 

Security has the meaning
given to that term in section 761A of the Corporations Act and includes a unit or other interest in a trust, partnership or joint
venture.

 

Security Trust Deed means
the Security Trust Deed dated 31 May 2012 originally between, among others, the Borrower and Partners For Growth III, L.P..

 

Security Interest means:

 

		(a)	a security interest under the PPS Law, a mortgage, pledge, lien, charge (fixed or floating), caveat, assignment by way of security,
hypothecation, title retention arrangement, preferential right, trust arrangement or other arrangement (including any set-off,
sale and repurchase agreement or flawed-asset arrangement) having the same or equivalent commercial effect as a grant of security;
or

 

		(b)	an agreement to create or give any arrangement referred to in paragraph (a) of this definition.

 

    	Page 7

    	 

    

 

Tax includes any tax, levy,
impost, deduction, charge, rate, duty, compulsory loan or withholding which is levied or imposed by a Government Agency, and any
related interest, penalty, charge, fee or other amount.

 

Transaction Document has
the meaning given to the term “Finance Document” in the Security Trust Deed.

 

		1.2	Interpretation

 

Headings are for convenience only and do not affect
interpretation. The following rules apply unless the context requires otherwise:

 

		(a)	The singular includes the plural, and the converse also applies.

 

		(b)	A gender includes all genders.

 

		(c)	Where a word or phrase is defined, its other grammatical forms have a corresponding meaning.

 

		(d)	A reference to a person, corporation, trust, partnership, unincorporated body or other entity includes any of them.

 

		(e)	A reference to a clause, annexure or schedule is a reference to a clause of, or annexure or schedule to, this Agreement.

 

		(f)	A reference to a party to this Agreement or another agreement or document includes the party's successors and permitted substitutes
or assigns.

 

		(g)	A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision
substituted for it and a regulation or statutory instrument issued under it.

 

		(h)	A reference to writing includes email, a facsimile transmission and any means of reproducing words in a tangible and permanently
visible form.

 

		(i)	A reference to conduct includes an omission, statement or undertaking, whether or not in writing.

 

		(j)	The meaning of terms is not limited by specific examples introduced by includes, including, or for example, or similar expressions.

 

		(k)	A reference to an asset includes any real or personal, present or future, tangible or intangible property or asset (including
intellectual property) and any right, interest, revenue or benefit in, under or derived from the property or asset.

 

		(l)	An Event of Default subsists until it has been waived in writing by the Lender.

 

		(m)	All references to time are to Sydney, New South Wales time.

 

		(n)	A reference to a term used in the defined term “Permitted Security Interest” and defined in the PPS Law has the
same meaning it has in the PPS Law.

 

    	Page 8

    	 

    

 

		1.3	Document or agreement

 

		(a)	A reference to:

 

		(i)	an agreement includes a Security Interest, guarantee, undertaking, deed, agreement or legally enforceable arrangement whether
or not in writing; and

 

		(ii)	a document includes an agreement (as so defined) in writing or a certificate, notice, instrument or document.

 

		(b)	A reference to a specific agreement or document includes it as amended, novated, supplemented or replaced from time to time,
except to the extent prohibited by this Agreement.

 

		2	Condition precedent

 

The Lender is not obliged to fund the first Advance
unless it has received the following documents and information (in form and substance satisfactory to the Lender):

 

		(a)	(Finance Documents) an original of this agreement duly executed by all parties (other than the Lender) and:

 

		(i)	where applicable duly stamped or, if not duly stamped, evidence satisfactory to the Lender that they will be duly stamped;
and

 

		(ii)	if required to be registered, in registrable form together with all executed documents necessary to register them;

 

		(b)	(recognition as a New Finance Document) evidence that this agreement has been recognised as a “New Finance Document”
under and in accordance with the terms of the Security Trust Deed;

 

		(c)	(consent) evidence that:

 

		(i)	the Noteholders (as that term is defined under the Convertible Note Facility Agreement) have consented to the Borrower’s
entry into this agreement; and

 

		(ii)	the relevant Beneficiaries have consented to the recognition of this agreement as a “New Finance Document” under
the Security Trust Deed;

 

		(d)	(establishment fee) payment to the Lender of the fee referred to in clause 4.2; and

 

		(e)	(drawdown notice) a notice referred to in and in accordance with clause 3.3.

 

		3	Facility & purpose

 

		3.1	Facility

 

Subject to this Agreement the Lender makes available
a short term secured loan facility in an aggregate amount equal to the Commitment to the Borrower.

 

    	Page 9

    	 

    

 

		3.2	Purpose

 

The Borrower must apply the proceeds of all Advances
towards the working capital requirements of the Borrower.

 

		3.3	Drawdowns

 

		(a)	The Borrower must provide written notice to the Lender requesting an Advance no later than two Business Days (or such other
period agreed to by the Lender) prior to the Business Day on which the Advance will be required to be made available.

 

		(b)	The first drawdown will be for $1,000,000 on execution of this agreement.

 

		(c)	The Lender will only Advance funds under the drawdown request in clause 3.3(a) if the Lender is satisfied, in its sole discretion,
that the Borrower is advancing towards an equity fundraising.

 

		(d)	On the last day of the Availability Period the undrawn portion of the Commitment will be automatically cancelled. The Borrower
will not have any claim against the Lender because of any cancellation.

 

		4	Interest on the Principal Outstanding and fees

 

		4.1	Interest

 

		(a)	If any Money Owning remains outstanding after the Repayment Date, interest accrues from day to day up to the date of actual
payment on the Money Owing at the rate of 15% per annum.

 

		(b)	Interest on the Facility is calculated on a daily basis on a year of 365 days.

 

		(c)	Interest is payable in arrears on the last day of each month.

 

		4.2	Fees

 

The Borrower must pay to the Lender a fee of 5%
of drawn funds on the Repayment Date.

 

		5	Repayment

 

		5.1	Repayment Date

 

The Borrower must repay the Money Owing on or prior
to the Repayment Date.

 

		5.2	Voluntary prepayment

 

		(a)	The Borrower may prepay all or any part of the Principal Outstanding, provided that the Lender has received at least 10 Business
Days' prior notice from the Borrower specifying the proposed date (Prepayment Date) and amount of the prepayment.

 

		(b)	The Borrower must prepay the Principal Outstanding on the Prepayment Date together with all unpaid interest accrued to the
Prepayment Date in respect of that prepaid amount and all other amounts owing under clause 10.

 

		(c)	A notice given under clause 5.2(a) may not be withdrawn or revoked.

 

    	Page 10

    	 

    

 

		5.3	Miscellaneous

 

The Commitment is reduced and cancelled by any amount
of Principal Outstanding prepaid or repaid under this clause 5 and accordingly an amount prepaid or repaid under may not be redrawn.

 

		6	Payments under the Facility

 

		6.1	Manner

 

The Borrower must make all payments under the Facility
to the Lender in Dollars and in cleared funds and without set-off, counterclaim or other deduction.

 

		6.2	Payment to be made on Business Day

 

If any payment is due on a day which is not a Business
Day, the due date will be the next Business Day in the same calendar month or, if none, the preceding Business Day.

 

		6.3	Appropriation where insufficient moneys available

 

The Lender may appropriate amounts it receives among
amounts due as it sees fit. This will override any appropriation made by the Borrower.

 

		7	Representations and Warranties

 

		7.1	Representations and warranties

 

The Borrower represents and warrants to the Lender
that:

 

		(a)	Status: it is a corporation validly existing under the laws of the place of its incorporation specified in this Agreement.

 

		(b)	Power: it has the power to enter into and perform its obligations under each Finance Document, to carry out the transactions
contemplated by the Finance Documents and to carry on its business as now conducted or contemplated.

 

		(c)	Corporate authorisations: it has taken all necessary corporate action to authorise the entry into and performance of
each Finance Document and to carry out the transactions contemplated by the Finance Documents.

 

		(d)	Documents binding: each Finance Document is a valid and binding obligation enforceable in accordance with its terms,
subject to any necessary stamping and registration and subject to equitable principles.

 

		(e)	No Security Interests: no Security Interest subsists over any of its assets other than a Permitted Security Interest.

 

		(f)	Solvency: it is solvent and able to pay all its debts as and when they become due and payable.

 

    	Page 11

    	 

    

 

		(g)	No contravention: its execution of, exercise of rights, or performance of obligations under, the Finance Documents will
not:

 

		(i)	contravene any law to which it or its property is subject or any order of any Government Agency binding on it or any of its
property;

 

		(ii)	contravene its constitutional documents or any Authorisation applicable to it or require any such Authorisation to be obtained;

 

		(iii)	contravene any undertaking or instrument binding on it or any of its property.

 

		(h)	No failure to disclose: it has fully disclosed in writing to the Lender all information (and provided copies of all
relevant documents) material to:

 

		(i)	the Finance Documents

 

		(ii)	its business, operation, property, assets, condition (financial or otherwise) or prospects;

 

		(iii)	in its reasonable opinion, the Lender’s assessment of the nature and amount of risk undertaken by the Lender in connection
with the Finance Documents; and

 

		(iv)	in its reasonable opinion, the Lender’s interests, rights and benefits (present and future) under the Finance Documents,

 

and all such information and documents provided remain
true, accurate and complete in all respects.

 

		7.2	Repetition and reliance

 

		(a)	The representations and warranties given under this Agreement:

 

		(i)	survive the execution of each Finance Document; and

 

		(ii)	are repeated by the Borrower on each day which any Money Owing remains outstanding with reference to the facts and circumstances
subsisting at that date.

 

		(b)	The Borrower acknowledges that the Lender has entered into each Finance Document and agreed to provide the Facility in reliance
on the representations and warranties provided under this Agreement.

 

		8	Undertakings

 

		(a)	Authorisations: The Borrower must obtain and maintain in full force and effect all Authorisations and filings required
under any law:

 

		(i)	for the conduct or otherwise in connection with its business and its property;

 

		(ii)	to enable it to perform its obligations under each Finance Document to which it is expressed to be a party; and

 

		(iii)	for the validity, enforceability or admissibility in evidence of each such Finance Document.

 

    	Page 12

    	 

    

 

		(b)	maintenance of status and Authorisation: The Borrower must:

 

		(i)	do all things necessary to maintain its corporate existence; and

 

		(ii)	comply with all laws (including all applicable Authorisations).

 

		(c)	change of business: The Borrower must not:

 

		(i)	cease all or any material part of its business;

 

		(ii)	carry on any business or other activity, other than the business carried on as at the date of this agreement and any activity
which is complementary to that business.

 

		(d)	constitutional documents: The Borrower must not agree to any amendment of its constitutional documents.

 

		(e)	negative pledge: The Borrower must not create or agree to create or permit to subsist any Security Interest over any
part of its assets, other than a Permitted Security Interest.

 

		9	Events of Default

 

		9.1	Events of Default

 

Each of the following is an Event of Default (whether
or not it is in the control of the Borrower):

 

		(a)	Obligations under the Finance Documents: the Borrower fails:

 

		(i)	to pay an amount due and owing by it under the Finance Documents when due; or

 

		(ii)	to comply with any of its other obligations under a Finance Document and, if capable of being remedied, it continues unremedied
for 10 Business Days after the earlier of:

 

		(A)	receipt by the Borrower of a notice from the Lender identifying the failure to comply; or

 

		(B)	the Borrower becoming aware of the failure to comply;

 

		(b)	misrepresentation: a statement, representation or warranty made by or on behalf of the Borrower in a Finance Document,
or in a document provided in connection with a Finance Document, is incorrect or misleading when made or repeated

 

		(c)	misleading conduct: the Borrower engages in misleading or deceptive conduct in connection with information it provides
to the Lender under or in connection with the Finance Documents;

 

		(d)	Insolvency Event: an Insolvency Event occurs in relation to the Borrower;

 

		(e)	Cross default: all or any part of the Borrower's other indebtedness, whether secured or unsecured, is not paid when
due or is declared (or capable of being declared) to be due and payable prior to their scheduled maturity date.

 

    	Page 13

    	 

    

 

		9.2	Consequences

 

In addition to any other rights provided by law,
for so long as an Event of Default has occurred and is subsisting the Lender may do all or any of the following in relation to
the Facility:

 

		(a)	by notice to the Borrower declare all sums actually or contingently owing under the Facility immediately due and payable; and

 

		(b)	by notice to the Borrower cancel the Commitment.

 

		10	Indemnities

 

The Borrower indemnifies the Lender against any
loss, cost, liability or expense (including reasonable legal costs on a full indemnity basis) (otherwise than by reason of the
Lender’s fraud, negligence or wilful misconduct) which the Lender (or any officer or employee of the Lender on behalf of
the Lender) incurs as a result of or in connection with:

 

		(a)	any Event of Default or breach of any Finance Document;

 

		(b)	any exercise or attempted exercise of any right, power or remedy under any Finance Document or any failure to exercise any
right, power or remedy;

 

		(c)	the Advance not being provided for any reason (including failure to fulfil a condition precedent but excluding default by the
Lender);

 

		(d)	the Lender acting in connection with the Finance Documents in good faith on instructions purporting to originate from the offices
of the Borrower or to be given by an Authorised Officer of the Borrower.

 

		11	Expenses

 

The Borrower shall reimburse the Lender on a full
indemnity basis for all costs and expenses in relation to:

 

		(a)	the Finance Documents and the transactions contemplated in it; and

 

		(b)	the actual or contemplated enforcement of, or actual or contemplated exercise, preservation or consideration of any rights,
powers or remedies under, the Finance Documents,

 

including in each case reasonable legal and other
professional advisors' costs and expenses.

 

		12	Stamp Duties and GST

 

		12.1	Stamp duties

 

		(a)	The Borrower shall pay or reimburse the Lender for all stamp, transaction, registration and similar Taxes (including fines
and penalties) on or in relation to the execution, delivery, performance or enforcement of the Finance Documents or any payment,
receipt or other transaction contemplated by the Finance Documents.

 

		(b)	The Borrower shall indemnify the Lender against any liability resulting from delay or omission to pay those Taxes except to
the extent the liability results from failure by the relevant Lender to pay any Tax after having been put in funds (with all necessary
documents) at least 5 Business Days before the due date for lodgement.

 

    	Page 14

    	 

    

 

		12.2	GST

 

		(a)	All payments to be made by the Borrower under or in connection with the Finance Documents have been calculated without regard
to GST.

 

		(b)	If all or part of any such payment is the consideration for a taxable supply for GST purposes then, when the Borrower makes
the payment:

 

		(i)	it must pay to the Lender an additional amount equal to that payment (or part) multiplied by the appropriate rate of GST (currently
10%); and

 

		(ii)	the Lender will promptly provide to the Borrower a tax invoice complying with the relevant GST legislation.

 

		(c)	Where under this Agreement the Borrower is required to reimburse or indemnify for an amount, the Borrower will pay the relevant
amount (including any sum in respect of GST) less any GST input tax credit the Lender determines that it is entitled to claim in
respect of that amount.

 

		13	Set-Off

 

The Lender may apply any credit balance in any currency
(whether or not matured) in any account of the Borrower with the Lender towards satisfaction of any sum then due and payable by
the Borrower to the Lender under or in relation to the Finance Documents.

 

		14	Waivers, Remedies Cumulative

 

		(a)	No failure to exercise and no delay in exercising any right, power or remedy under a Finance Document operates as a waiver.
Nor does any single or partial exercise of any right, power or remedy preclude any other or further exercise of that or any other
right, power or remedy.

 

		(b)	The rights, powers and remedies provided to the Lender in the Finance Documents are in addition to, and do not exclude or limit,
any right, power or remedy provided by law.

 

		15	Severability of Provisions

 

Any provision of a Finance Document which is prohibited
or unenforceable in any jurisdiction is ineffective as to that jurisdiction to the extent of the prohibition or unenforceability.
That does not invalidate the remaining provisions of a Finance Document nor affect the validity or enforceability of that provision
in any other jurisdiction.

 

		16	Survival of Obligations

 

Each indemnity, reimbursement or similar obligation
in a Finance Document:

 

		(a)	is a continuing, separate and independent obligation;

 

		(b)	is payable on demand; and

 

		(c)	survives termination or discharge of the Finance Documents and repayment of the Principal Outstanding.

 

    	Page 15

    	 

    

 

		17	Moratorium Legislation

 

To the extent permitted by law, a provision of a
law is excluded if it does or may, directly or indirectly:

 

		(a)	lessen or vary in any other way a party's obligations under a Finance Document; or

 

		(b)	delay, curtail or prevent or adversely affect in any other way the exercise by the Lender of any of its rights, remedies or
powers under a Finance Document.

 

		18	Assignments

 

		18.1	Assignment by Borrower

 

The Borrower may not assign or transfer any of its
rights or obligations under this Agreement.

 

		18.2	Assignment by Lender

 

The Lender may assign or transfer any of its rights
or obligations under this Agreement at any time.

 

		19	Notices

 

All notices, requests, demands, consents, approvals,
agreements or other communications to or by a party to this Agreement:

 

		(a)	must be in writing signed by an Authorised Officer of the sender; and

 

		(b)	will be taken to be given or made when delivered, received or left at the address or fax number of the recipient shown or to
any other address or fax number which the recipient may have notified to the sender:

 

		(i)	in the case of the Borrower, as follows:

 

		(A)	Address: Suite 2, Level 2, 53 Cross Street, Double Bay NSW 2028

 

		(B)	Facsimile number: + 61 2 9363 9955

 

		(C)	Attention: The Company Secretary

 

and

 

		(ii)	in the case of the Lender, as follows:

 

		(A)	Address: First Floor, 160 Pitt Street Mall, Sydney NSW 2000

 

		(B)	Facsimile number: +61 2 9233 1025

 

		(C)       	Attention: Ian Bloodworth

 

    	Page 16

    	 

    

 

If delivery or receipt is on a day on which business
is not generally carried on in the place to which the communication is sent or is later than 4 pm (local time), it will be taken
to have been given or made at the commencement of business on the next day on which business is generally carried on in that place.

 

		20	Governing Law and Jurisdiction

 

This Agreement is governed by the laws of New South
Wales. Each party submits to the non-exclusive jurisdiction of courts exercising jurisdiction there.

 

		21	Counterparts

 

This Agreement may be executed in any number of
counterparts. All counterparts together will be taken to constitute one instrument.

 

		22	Confidential information

 

The parties must not disclose to any person:

 

		(a)	any Finance Document; or

 

		(b)	any information about any other party,

 

except:

 

		(c)	in respect of the Lender in connection with a permitted assignment or novation under this Agreement, where the disclosure is
made on the basis that the recipient of the information will comply with this clause 22 in the same way that the Lender is required
to do;

 

		(d)	to any professional or other adviser consulted by it in relation to any of its rights or obligations under the Finance Documents;

 

		(e)	to the Reserve Bank of Australia, the Australian Taxation Office or any Government Agency requiring disclosure of the information;

 

		(f)	in connection with the enforcement of its rights under the Finance Documents;

 

		(g)	where the information is already in the public domain, or where the disclosure would not otherwise breach any duty of confidentiality;

 

		(h)	if required by law; or

 

		(i)	otherwise with the prior written consent of the other party.

 

    	Page 17

    	 

    

 

Executed as an agreement in Sydney

 

The Lender

 

 

 

	
        Executed by Wind Farm Financing Pty Limited ACN 165
        836 760 in accordance with section 127 of the Corporations Act 2001 (Cth) by:

         

         

        /s/ Wind Farm Financing Pty Limited
	
        )

         

        )

         

        ) 
	 
	Signature of director	 	Signature of director/company secretary
	 	 	 
	Name (print)	 	Name (print)

 

 

The Borrower

 

	
        Executed by CBD Energy Limited ACN 010 966 793 in
        accordance with section 127 of the Corporations Act 2001 (Cth) by:

         

         

         

        

        /s/ Gerard P. McGowan
	
        )

         

        )

         

        ) 

         
	
         

         

         

         

         
/s/ Richard J Pillinger
	Signature of director	 	Signature of company secretary
	Gerard P. McGowan	 	Richard J Pillinger
	Name (print)	 	Name (print)

 

    	Page 18

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