SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission file number: 333-45755
MACATAWA BANK CORPORATION
(Exact name of small business issuer as specified in its charter)
MICHIGAN 38-3391345
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 E. Main Street, Zeeland, Michigan 49464
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (616) 748-9491
-----------
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ___ No _X_
The number of shares outstanding of each of the issuers classes of common stock,
as of the latest practicable date: 2,435,125 shares of the Company's Common
Stock (no par value) were outstanding as of May 13, 1998.
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
<PAGE>
INDEX
Page
Number(s)
Part I. Financial Information (unaudited):
Item 1.
Consolidated Financial Statements 3
Notes to Consolidated Financial Statements 7
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Part II. Other Information
Item 1.
Legal Proceedings 14
Item 2.
Changes in Securities and Use of Proceeds 14
Item 3.
Defaults Upon Senior Securities 14
Item 4.
Submission of Matters to a Vote of Securities Holders 14
Item 5.
Other Information 14
Item 6.
Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE>
Part I Financial Information (unaudited)
MACATAWA BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1998 (unaudited) and December 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
March 31, December 31,
1998 1997
------------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks ........................... $ 921,564 $ 415,120
Federal funds sold ................................ 4,000,000 --
Short-term investments ............................ 0 7,000,000
------------ ------------
Cash and cash equivalents ....................... 4,921,564 7,415,120
Securities available for sale, at fair value ...... 13,944,743 2,000,400
Total loans ....................................... 13,862,761 497,704
Allowance for loan losses ......................... (208,000) (7,500)
------------ ------------
13,654,761 490,204
Premises and equipment - net ...................... 1,438,621 681,807
Accrued interest receivable ....................... 186,526 38,532
Organizational costs .............................. 60,627 66,139
Other assets ...................................... 237,598 29,991
------------ ------------
Total Assets .................................... $ 34,444,440 $ 10,722,193
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing ............................. $ 2,165,944 $ 245,812
Interest-bearing ................................ 24,717,914 2,466,411
------------ ------------
Total ......................................... 26,883,858 2,712,223
Accrued expenses and other liabilities ............ 150,517 37,963
------------ ------------
Total liabilities ............................... 27,034,375 2,750,186
Shareholders' equity
Preferred stock, no par value, 500,000 shares
authorized; no shares issued and outstanding
Common stock, no par value, 9,500,000 shares
authorized; 940,125 shares issued and outstanding
as of March 31, 1998, and December 31, 1997 ..... 8,137,268 8,137,268
Retained deficit .................................. (690,733) (165,525)
Net realized appreciation on securities available
for sale, net of tax of $136 .................... (36,470) 264
------------ ------------
Total shareholders' equity .................... 7,410,065 7,972,007
------------ ------------
Total liabilities and shareholders' equity $ 34,444,440 $ 10,722,193
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENT OF INCOME
Three months ended March 31, 1998
(unaudited)
- -------------------------------------------------------------------------------
<TABLE>
Three Months
ended
March 31, 1998
(unaudited)
<S> <C>
Interest Income
Loans, including fees .......................... $ 145,511
Securities ..................................... 197,961
---------
Total interest income ........................ 343,472
Interest expense
Deposits ....................................... 138,344
Other .......................................... 39
--------
Total interest expense ....................... 138,383
Net interest income ............................... 205,089
Provision for loan losses ......................... 200,500
Net interest income after provision for loan losses 4,589
Noninterest income ................................ 3,441
Noninterest expense
Salaries and benefits .......................... 292,398
Occupancy expense of premises .................. 29,295
furniture and equipment expense ................ 29,364
Legal and professional fees .................... 34,564
Advertising .................................... 26,615
Supplies ....................................... 24,474
Other expense .................................. 96,528
---------
Total noninterest expenses ................... 533,238
Loss before federal income tax .................... (525,208)
Federal income tax ................................ 0
Net loss .......................................... (525,208)
Basic and diluted loss per share .................. (.56)
Average shares outstanding ........................ 940,125
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended March 31, 1998
(unaudited)
- -------------------------------------------------------------------------------
<TABLE>
Three Months
ended
March 31, 1998
(Unaudited)
<S> <C>
Cash flows from operating activities
Net loss .............................................. $ (525,208)
Adjustments to reconcile net loss to net
cash from operating activities
Depreciation and amortization ..................... 25,273
Provision for loan losses ......................... 200,500
Net change in
Organizational costs ......................... 5,512
Accrued interest receivable and other assets . (355,601)
Accrued expenses and other liabilities ....... 131,477
------------
Net cash from operating activities ...... (518,047)
Cash flows from investing activities
Net increase in loans ................................. (13,365,057)
Purchase of
Securities available for sale ....................... (14,000,000)
Maturities and calls of securities available for sale 2,000,000
Premises and equipment .............................. (782,087)
------------
Net cash from investing activities ................ (26,147,144)
Cash flows from financing activities
Net increase in deposits .............................. 24,171,635
------------
Net cash from financing activities ................ 24,171,635
------------
Net change in cash and cash equivalents .................. (2,493,556)
Cash and cash equivalents at beginning of period ......... 7,415,120
------------
Cash and cash equivalents at end of period ............... $ 4,921,564
============
Supplemental disclosures of cash flow information
Cash paid during the period for Interest ............ $ 87,005
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
MACATAWA BANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Three months ended March 31, 1998
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
Accumulated
Other Total
Common Retained Comprehensive Shareholders'
Stock Deficit Income Equity
<S> <C> <C> <C> <C>
Balance, December 31, 1997 $8,137,268 $ (165,525) $ 264 $7,972,007
Net loss for three months ended
March 31, 1998 (unaudited) (525,208) (525,208)
Other comprehensive income, net of tax:
Unrealized gains/losses on securities (36,734) (36,734)
----------
Other comprehensive income (36,734)
----------
Comprehensive Income (561,942)
---------- ------------ ----------- ----------
Balance, March 31, 1998 $8,137,268 $ (690,733) $ (36,470) $7,410,065
========== ============ =========== ==========
</TABLE>
6
<PAGE>
MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and December 31, 1997
- -------------------------------------------------------------------------------
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1998, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's Registration Statement on Form SB-2 containing audited financial
statements for the period from May 21, 1997 (date of inception), through
December 31, 1997.
NOTE 2 COMPUTATION OF EARNINGS PER SHARE
Basic earnings (loss) per share is based on net income (loss) divided by
the weighted average number of shares outstanding during the period.
NOTE 3 PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Macatawa Bank Corporation (the "Company), and its wholly-owned subsidiary,
Macatawa Bank (the "Bank"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
NOTE 4 INITIAL PUBLIC OFFERING
Subsequent to March 31, 1998, the Company completed its initial public
offering on April 7, 1998. The Company issued 1,495,000 shares of common stock
in the initial public offering, resulting in net proceeds to the Company of
approximately $14,100,000, subject to further adjustment based upon the final
actual expenses incurred.
NOTE 5 COMPARATIVE DATA
The Company became the bank holding company for Macatawa Bank on February
23, 1998, when all of the Bank's outstanding common stock was converted into all
of the outstanding stock of the Company and all of the Bank's shareholders
became all of the Company's shareholders. The Bank had commenced its application
process for regulatory approval on May 21, 1997, completed its common stock sale
on November 7, 1997, and opened for operations on November 25, 1997. Comparable
statements of income and cash flows for the three months ended March 31, 1997,
have not been presented since the Company had not been incorporated and did not
have operations during that period.
7
<PAGE>
MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and December 31, 1997
- -------------------------------------------------------------------------------
NOTE 6 - SECURITIES
The amortized cost and fair values of securities were as follows:
Available for Sale
<TABLE>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
<S> <C> <C> <C> <C>
March 31, 1998 (Unaudited)
U.S. Treasury securities and
obligations of U.S. Government
corporation and agencies $14,000,000 $ 0 $ (55,257) $13,944,743
=========== ============ =============== ===========
December 31, 1997
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 2,000,000 $ 400 $ 0 $ 2,000,400
=========== ============ =============== ===========
</TABLE>
Contractual maturities of debt securites at March 31, 1998, were as follows. No
held-to-maturity securities existed at March 31, 1998. Expected maturities may
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
Available-for-Sale Securities
Amortized Fair
Cost Values
<S> <C> <C>
Due from 1999 to 2002 $6,000,000 $5,981,080
Due from 2003 to 2007 8,000,000 7,963,663
------------- -------------
$14,000,000 $13,944,743
============= =============
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
8
<PAGE>
MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and December 31, 1997
- -------------------------------------------------------------------------------
NOTE 7 - LOANS
Loans are as follows:
<TABLE>
March 31 December 31,
1998 1997
(Unaudited)
<S> <C> <C>
Commercial $5,748,561 $ 130,000
Mortgage 4,808,988 207,245
Consumer 3,305,212 160,459
----------- ---------
13,862,761 497,704
Allowance for loan losses (208,000) (7,500)
----------- ---------
$13,654,761 $ 490,204
=========== ===========
</TABLE>
Activity in the allowance for loan losses is as follows:
<TABLE>
Period from
Three May 21,
months (date of inception)
ended through
March 31, December 31,
1998 1997
(Unaudited)
<S> <C> <C>
Balance at beginning of period $ 7,500 $ 0
Provision charged to operating expense 200,500 7,500
----------- ----------
Balance at end of period $ 208,000 $ 7,500
========== ==========
</TABLE>
- ------------------------------------------------------------------------------
(Continued)
9
<PAGE>
MACATAWA BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and December 31, 1997
- -------------------------------------------------------------------------------
NOTE 8 - PREMISES AND EQUIPMENT - NET
Premises and equipment are as follows:
<TABLE>
Accumulated Carrying
Cost Depreciation Value
<S> <C> <C> <C>
March 31, 1998 (unaudited)
Building and improvements $ 663,192 $ (3,893) $ 659,299
Furniture and equipment 806,473 (27,151) 779,322
------------ ------------ -------------
$1,469,665 $ (31,044) $ 1,438,621
December 31, 1997
Building and improvements $ 196,761 $ (1,055) $ 195,706
Furniture and equipment 490,815 (4,714) 486,101
------------ ------------- --------------
$ 687,576 $ (5,769) $ 681,807
=========== =========== ============
</TABLE>
NOTE 9 - DEPOSITS
Deposits are summarized as follows:
<TABLE>
March 31, December 31,
1998 1997
<S> <C> <C>
Noninterest-bearing demand deposit accounts $ 2,165,945 $ 245,812
Money market accounts 11,718,915 1,173,742
NOW and Super NOW accounts 5,496,999 628,653
Savings accounts 1,166,443 146,973
Certificates of deposit 6,335,556 517,043
------------- ------------
$26,883,858 $2,712,223
============= ============
</TABLE>
- -------------------------------------------------------------------------------
(Continued)
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Macatawa Bank Corporation (the "Company") is a Michigan corporation and is
the bank holding company for Macatawa Bank (the "Bank"). The Bank commenced
operations on November 25, 1997. The Bank is a Michigan chartered bank with
depository accounts insured by the Federal Deposit Insurance Corporation. The
Bank provides a full range of commercial and consumer banking services,
primarily in the communities of Holland and Zeeland, Michigan, as well as the
surrounding market area primarily located in Ottawa County, Michigan.
The Company's plan of operation has been to establish its management team
within the first few months of its operations. Management believes that it has
been successful in establishing its management team and that it can administer
the Company's growth for the next two to three years, with the addition of
branch managers, tellers and other staff personnel at any new branches that are
opened. Management believes that it will hire approximately eight full time
equivalent employees for each additional branch that is opened.
The Company's plan of operation also includes seeking out and considering
locations for additional branches in its market area. Management believes that
multiple branches make the Bank more convenient to its customers and assist the
Bank in attracting additional depositors and borrowers. Management anticipates
that the Company will add three to four branches in 1998 in addition to the
Bank's existing Zeeland main office, Holland branch office and Holland loan
processing branch office, although there can be no assurance that such proposed
branches will be added. The Bank has purchased a bank branch facility in
Jenison, Michigan for approximately $355,000, and anticipates spending
approximately $440,000 on leasehold improvements, furniture, fixtures and
equipment for that facility. In addition, the Bank has leased a bank branch
facility located in south Holland, and anticipates spending approximately
$315,000 on leasehold improvements, furniture, fixtures and equipment for that
facility. The Bank has applied for branch approval for the south Holland and
Jenison facilities, and anticipates that these branches will be open for
business within the next three to six months, assuming receipt of the necessary
regulatory approvals.
In addition, the Bank has purchased real estate and has agreed to purchase
an adjacent parcel located at the corner of Washington and State Streets in
Zeeland, Michigan, where the Bank proposes to build a full service branch
office, subject to the receipt of the necessary regulatory approvals. The Bank
has also agreed to purchase, for a purchase price of $135,000, undeveloped real
estate located at 26 Lakewood Boulevard in Holland, Michigan, where the Bank
proposes to open a branch office, subject to receipt of the necessary zoning and
regulatory approvals. The Bank has leased undeveloped real estate located at
16th Street and Waverly in Holland, Michigan, where the Bank proposes to build a
full service branch office, subject to receipt of the necessary zoning and
regulatory approvals.
Financial Condition
Total assets of the Company increased by $23,722,247 or 221% to $34,444,440
at March 31, 1998, from $10,722,193 at December 31, 1997. The increase in assets
is primarily attributable to the Bank continuing to attract customer deposits.
The first quarter of 1998 was the Company's first full quarter of operations,
and the number of deposit accounts increased from 465 at December 31, 1997, to
3,619 deposit accounts at March 31, 1998. In addition, subsequent to March 31,
1998, the Company completed an initial public offering of common stock completed
on April 7, 1998, which resulted in net proceeds to the Company of approximately
$14,100,000 and an increase in total assets. The Company anticipates that the
Bank's assets will continue to increase during 1998, which will be the Bank's
first full year of operations.
11
<PAGE>
Cash and cash equivalents, which includes federal funds sold and short-term
investments, decreased $2,493,556 or 34% to $4,921,564 at March 31, 1998, from
$7,415,120 at December 31, 1997. The decrease is the result of the increase in
the investment and loan portfolios since December 31, 1997.
Securities available for sale increased $11,944,343 or 597% to $13,944,743
at March 31, 1998 from $2,000,400 at December 31, 1997. The increase is the
result of the investment of customer deposits that have been obtained since
December 31, 1997.
The allowance for loan losses as of March 31, 1998 was $208,000,
representing approximately 1.5% of gross loans outstanding, compared to $7,500
at December 31, 1997. Macatawa Bank has not experienced any credit losses as of
March 31, 1998.
Bank premises and equipment increased by $756,814 or 111% to $1,438,621 at
March 31, 1998 from $681,807 at December 31, 1997. The increase resulted from
the purchase of the real estate for the proposed Zeeland branch office, as well
as additional furniture, fixtures and equipment necessary to operate the Bank
branches.
Other assets increased by $207,607 from $29,991 at December 31, 1997, to
$237,598 at March 31, 1998. This increase is a result of deferred costs
associated with the Company's initial public offering of common stock which was
completed on April 7, 1998.
Deposits increased by $24,171,634 or 891% to $26,883,857 at March 31, 1998,
from $2,712,223 at December 31, 1997. This was the result of deposits being
obtained from new customers of the Bank.
Results of Operations
The net loss for the three month period ended March 31, 1998, was $525,203.
As of December 31, 1997, the Company had a retained deficit of $165,525, and as
of March 31, 1998, the Company had a retained deficit of $690,733. The retained
deficit and net losses are primarily the result of provisions for loan losses,
wages paid to employees, and fees and expenses incurred in forming the Company
and applying for regulatory approval for the Bank's existing and proposed
branches. Management believes that the Company will generate a net loss for 1998
as a result of expenditures made to build its management team and open its main
office and branch facilities, together with the time needed to more effectively
utilize its capital and generate loan interest and fee income by making
additional loans. Management believes that the expenditures made in 1997 and
1998 will create the infrastructure and lay the foundation for future growth and
profitability in subsequent years.
Interest income was $343,477 for the three month period ended March 31,
1998, related to interest income on securities and loans interest earning
deposits. Interest expense was $138,383 for the three month period ended March
31, 1998 related to interest incurred on interest bearing deposits.
The Company has an allowance for loan losses of approximately 1.5% of total
loans at March 31, 1998. The provision for loan losses for the three month
period ended March 31, 1998 was $200,500. This amount was provided as a result
of the increase in the total loan portfolio. Management believes the current
loan loss reserve is adequate.
Other income of $3,441 for the three month period ended March 31, 1998
consisted of income from deposit service charges and other miscellaneous fees.
The main components of other expenses were primarily salaries and benefits.
Other expense for the three month period ended March 31, 1998 was $240,842,
consisting primarily of occupancy and equipment expenses, legal and accounting
fees, marketing expenses, insurance and supplies.
12
<PAGE>
Liquidity and Capital Resources
The Company obtained its initial equity capital in a private placement by
the Bank to investors in November, 1997. Subsequent to March 31, 1998, the
Company raised additional equity capital in its initial public offering
completed April 7, 1998. The Company's plan of operation for the next twelve
months does not contemplate the need to raise additional capital during that
period. Management believes that its current capital and liquidity will provide
the Company with adequate capital to support its expected level of deposit and
loan growth and to otherwise meet its cash and capital requirements for at least
the next two or three years.
Recent Regulatory Developments
Various bills have been introduced in the Congress that would allow bank
holding companies to engage in a wider range of nonbanking activities, including
greater authority to engage in securities and insurance activities. While the
scope of permissible nonbanking activities and the conditions under which the
new powers could be exercised varies among the bills, the expanded powers
generally would be available to a bank holding company only if the bank holding
company and its bank subsidiaries remain well- capitalized and well-managed. The
bills also impose various restrictions on transactions between the depository
institution subsidiaries of bank holding companies and their non-bank
affiliates. These restrictions are intended to protect the depository
institutions from the risks of the new nonbanking activities permitted to such
affiliates. At this time, the Company is unable to predict whether any of the
pending bills will be enacted and, therefore, is unable to predict the impact
such legislation may have on the operations of the Company and the Bank.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project" or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse affect on the
operations and future prospects of the Company and the subsidiaries include, but
are not limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
the Company's market area and accounting principles, policies and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Company and its business, including additional
factors that could materially affect the Company's financial results, is
included in the Company's filings with the Securities and Exchange Commission.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Securities Holders.
Effective January 26, 1998, the sole shareholder of the Company voted all
ten shares of the Company's issued and outstanding common stock in favor of and
approved the Company's Amended and Restated Articles of Incorporation, the Stock
Compensation Plan and the Directors' Stock Option Plan. Effective February 18,
1998, the sole shareholder of the Company voted all ten shares of the Company's
issued and outstanding common stock in favor of increasing the number of
directors to seven and elected Ms. Dalman, Mr. Koetje and Mr. Hansen as
directors. Subsequently on February 23, 1998, the Macatawa Bank became a wholly
owned subsidiary of the Company pursuant to a Consolidation Agreement filed with
and approved by the Federal Reserve Board and the Michigan Financial
Institutions Bureau.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -
10.1 Lease Agreement dated March 19, 1998, between Macatawa Bank (the
lessee) and Geenen DeKock Properties, L.L.C. (the lessor)
concerning real property located at 16th Street and Waverly in
Holland, Michigan.
27 Financial Data Schedule
(EDGAR version only)
(b) Reports on Form 8K - None.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1998, to be signed on its behalf by the
undersigned, thereunto duly authorized.
MACATAWA BANK CORPORATION
/s/ Benj. A. Smith, III
Benj. A. Smith, III
Chairman and Chief Executive Officer
/s/ Philip J. Koning
Philip J. Koning
Treasurer and Secretary
(Principal Accounting Officer)
DATE: May 14, 1998
15
<PAGE>
Exhibit 10.1
L E A S E
THIS LEASE is made this 19th day of March, 1998, by and between GEENEN
DEKOCK PROPERTIES, L.L.C., a Michigan limited liability company of 400 136th
Avenue, Suite 205, Holland, MI 49424 ("LESSOR"), and MACATAWA BANK a Michigan
Banking Corporation of 51 East Main Avenue, Zeeland, MI 49464 ("LESSEE"),
WITNESSETH:
1. LEASED PREMISES
LESSOR, in consideration of the rents and covenants herein specified, does
hereby let and lease the premises on which a Building is to be constructed on
the Northeast Comer of 16th Street and Waverly Avenue, in the City of Holland,
Ottawa County, Michigan as shown on the attached Exhibit A. (the "Premises").
The Premises are a portion of a larger parcel which may be owned by LESSOR. In
all events LESSEE shall share the curb cuts on both 16th Street and Waverly
Avenue with the adjoining buildings to be constructed on the larger parcel.
2. PROJECT COSTS.
LESSOR and LESSEE have agreed that the Land Cost of the Premises is
$295,000.00 and that the cost of the building and other improvements, including
site cost (including the two curb cuts, site engineering, general construction
trades, construction financing fees, interest and general conditions), is
estimated at $530,000.00 on the basis of the information furnished by LESSEE to
LESSOR. The LESSOR shall construct the building according to building plans and
specification provided by LESSEE to LESSOR and attached as Exhibit B. The
building and other improvements will be constructed on a cost plus basis with A.
C. Geenen Construction Company acting as General Contractor with an
administrative fee of 10%. LESSEE may name subcontractors to bid each project
contract for the building, and LESSOR shall have the right to actively
participate in the construction process. The actual construction budget and bids
shall be approved by LESSOR and LESSEE prior to commencement of construction.
The agreed upon Land Cost, the actual cost of the building and improvements and
a developer's sweat-equity of $82,500.00 shall control in determining rent and
option to purchase as provided below.
<PAGE>
3. FINANCING OF LAND, BUILDING AND IMPROVEMENTS.
LESSEE agrees to finance the entire cost of the Land, Building and
Improvements to the Premises and LESSOR agrees to use LESSEE for such financing.
During the construction period, advances to General Contractor shall be made by
LESSEE in accordance with standard practices for construction financing. All
interest will be accumulated and added to the principal balance financed by
LESSEE with the first payment to be due and payable at the commencement of the
term of the Lease. It is anticipated that the permanent financing shall be on
the basis of a 20 year amortization and term, with interest at the rate of EIGHT
(8%) PERCENT per annum, provided that if the LESSEE shall exercise its Option to
Purchase, the balance of the loan must be repaid in full at the time of closing
of the Sale to LESSEE.
4. COMMENCEMENT AND ENDING DAY OF TERM
The term of this LEASE and LESSEE's obligation to pay rent shall commence
on the date that the Premises and the Building and other improvements thereon,
constructed as provided in Paragraph 2 of this Lease, are delivered by LESSOR to
LESSEE ready for occupancy, and an occupancy permit has been obtained, but in
all events no later than January 10, 1999.
The term of this LEASE shall end on the last day of the last day of the
last month of the TWENTIETH (20th) lease year of the lease term, as the term
"lease year' is hereinafter defined, unless sooner terminated as herein
provided.
5. LEASE YEAR DEFINED
The term "lease year" as used herein shall mean a TWELVE (12) consecutive
MONTH period. The first lease year shall begin on the date of occupancy if such
day is the 1st day of a calendar month, otherwise it shall commence on the lst
day of the 1st calendar month after the commencement date of the lease. The
period between the date LESSEE opens for business and the lst day of the next
calendar month, if any, shall be defined as a "partial lease year."
6. BASIC ANNUAL RENT
LESSEE shall pay LESSOR as basic annual rent during the term of this LEASE
the following:
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A. An amount equal to the monthly charge, principle and interest for
financing the total project cost provided in Paragraph 2 of this Lease
(exclusive of developers sweat equity) through LESSEE.
B. The sum of EIGHT HUNDRED TWENTY-FIVE (825.00) DOLLARS per month
representing the monthly interest on developers sweat-equity.
C. An amount equal to FIFTEEN (15%) PERCENT of the total of the
monthly amounts as provided in subparagraphs A and B each month during the
FIFTH through the TENTH lease years, increasing to THIRTY (30%) of such
monthly amounts each month during the ELEVENTH through the TWENTIETH lease
years.
Rent payments shall be made in advance on the first day of each month
during the entire term of the Lease.
7. SET-OFF; OBLIGATION TO SURVIVE; APPLICATION OF PAYMENTS
A. Any rent due under this LEASE shall be paid by LESSEE when due
without any set off, deduction, abatement, reduction or counterclaim
whatsoever. LESSEE's obligation to pay rent that is accrued and unpaid
hereunder shall survive the expiration or termination of the lease term.
B. Payments received from LESSEE shall be applied by LESSOR as
follows: First, to any late charges due; then to accrued interest; then to
other charges due and unpaid, then to additional rent, then to base rent.
C. Notwithstanding anything herein to the contrary, LESSEE expressly
reserves that right to offset amounts owed and then due and payable by
LESSEE to LESSOR hereunder by amounts owed and then due and payable by
LESSOR to LESSEE under any promissory note or loan agreement between LESSOR
and LESSEE with reference to the financing of the Premises.
8. OPTION TO PURCHASE
At the conclusion of the THIRD lease year, LESSEE shall have the option to
purchase the Premises, including the Building and all improvements, for an
amount equal to the total of (i) the Land Cost (ii) the Building and other
improvements cost as determined in accordance with Paragraph 2 and (iii) the
developers equity of EIGHTY TWO THOUSAND
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FIVE HUNDRED ($82,500.00) DOLLARS, all in cash at closing. To be effective, this
option must be exercised no later than THIRTY (30) days prior to the end of the
THIRD lease year of the term of the Lease. If LESSEE elects to purchase this
Premises as provided hereunder, this LEASE shall terminate effective the date of
closing of such purchase.
In the event that LESSEE shall exercise the option to purchase: (i) closing
shall take place within 30 days after its exercise, or the 5th day of January,
2002, whichever event occurs later; (ff) LESSOR shall provide LESSEE with a
Title Insurance policy in a sum equal to the purchase price showing that LESSEE
shall acquire title to the Premises free and clear of all liens and encumbrances
and subject only to easements which do not adversely effect LESSEE'S use and
occupancy of the Premises; (iii) if one is not already in existence, LESSOR or
the then owner of the adjoining premises and LESSEE shall enter into a
reciprocal easement for the sharing of any driveways and curb cuts which are
then in fact being shared by the Premises and the adjoining premises; and (iv)
the conveyance to LESSEE shall be by Warranty Deed.
9. USE AND OCCUPANCY
A. LESSEE may use and occupy the Premises as a Bank Office, drive in,
and ATM and related retail uses only, subject also to the following
prohibited uses:
1) any use not involving the retail sale of goods or services,
2) any use which would constitute an offensive, noisy, or
dangerous business,
3) any use which would overload the Premises or which will in any
manner injure, vibrate or shake said Premises,
4) any use which will increase the rate of fire insurance or
liability underwriting upon the Premises over that which is applicable
for its intended use,
5) any use for conducting fire, bankruptcy, going out of
business, or auction sales,
6) any use which would constitute a nuisance,
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7) any use in violation of the applicable Zoning Ordinances or
any other applicable ordinance of the governing municipality or the
applicable statutes, regulations or ordinances of any other
governmental unit.
B. LESSEE agrees that the LESSEE's business shall be established and
conducted in a first-class manner, in accordance with accepted business
practices.
C. LESSEE shall not use, store, generate, treat, or dispose on the
Premises any hazardous substance (except for normal and customary amounts
of hazardous substances that are used in the operation of a bank) without
the prior written consent of LESSOR, which consent may be granted or
withheld in LESSOR's sole discretion. For purposes of this paragraph, the
term 'hazardous substance' means any substance the manufacture, use,
treatment, storage, transportation, or disposal of which is regulated by
any law having as its object the protection of public health, natural
resources, or the environment, including, by way of illustration only and
not as a limitation, the Resource Conservation and Recovery Act; the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980 as amended by the Superfund Amendments and Reauthorization Act of
1986; the Toxic Substances Control Act; the Federal Water Pollution Control
Act; and the Clean Air Act.
D. LESSEE shall indemnify, defend, and hold harmless LESSOR from and
against all loss, liability, damage, and expense, including costs
associated with administrative and judicial proceedings and any attorney
fees, suffered or incurred by LESSOR on account of (i) LESSEE's failure to
comply with any of the aforementioned Acts or with any other environmental,
health, safety, or sanitary law, code, ordinance, rule, regulation, or any
interpretation or order of any regulatory or administrative authority with
respect thereto; (ii) any release of oil or hazardous material or substance
on, upon, into, or from the Premises by LESSEE; and (iii) any and all
damage to natural resources or real property and/or harm or injury to
persons resulting or alleged to have resulted from such failure to comply
and/or release of oil or hazardous material or substances.
E. LESSEE shall promptly supply to LESSOR a copy of the reports of any
environmental audit or investigation undertaken on the Premises or adjacent
property, all notices, demands, inquiries, or claims received from any
person or entity as a result of contamination or pollution alleged to be on
or emanating from the Premises or adjacent property, and any reports or
applications for licenses, permits, or approvals submitted by or on behalf
of LESSEE to any environmental regulatory agency affecting the Premises or
adjacent property.
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10. RIGHT TO INSPECT
LESSOR and its agents shall have free access to the Premises during all
reasonable business hours and upon reasonable notice to LESSEE (notice waived
only in case of emergency such as fire, theft, damage due to other natural
causes such as windstorm, hail, rain and snow) for the purpose of examining the
same and to ascertain if they are in good repair, to make reasonable repairs
which the LESSOR may be required to make hereunder, and to exhibit the same to
prospective purchasers or lessees.
11. QUIET ENJOYMENT
LESSOR agrees that upon payment of the rental and performance of the
covenants herein provided, LESSEE shall and may peacefully and quietly have and
hold the Premises during the term hereof.
12. MAINTENANCE OF PREMISES
A. LESSOR shall maintain the roof, the structural members, and the
exterior walls of the building of which the Premises is a part, in good and
safe condition for the term of this LEASE, except for damage caused by
LESSEE, its agents, employees, licensees, and invitees, which is neither
covered by insurance or of a nature which is normally covered by an "all
risk of direct physical loss" insurance policy. LESSOR shall also be
responsible for during the first year of the Lease for any and all repairs
and replacements of the building and related improvements necessitated by
faulty construction.
B. Except as provided in Paragraph 12.A, LESSEE shall decorate,
maintain, and make all necessary replacements and repairs to the Premises
[including glass breakage, including but not limited to damage caused by
vandalism and break- ins] and keep the Premises and all improvements in the
same condition as the date it takes possession, including the electrical,
the plumbing, and the heating, ventilating and air conditioning (HVAC)
systems, reasonable wear and tear excepted, and damage by fire or other
casualty also excepted only to the extent that such damage is insurable
under an "all risks of direct physical loss" insurance policy. LESSEE will
be responsible for routine preventive maintenance to the HVAC system and
shall provide LESSOR with proof of such preventive maintenance, or in the
alternative LESSOR may contract for such service and LESSEE will the be
responsible to reimburse LESSOR for the cost thereof. LESSEE shall also be
responsible for all maintenance, repairs and replacements to all driveways,
parking areas, sidewalks,
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landscaping, drainage, and lighting facilities on the Premises. LESSEE
shall also be responsible for compliance with all federal, state and local
laws (i.e., such as the requirement of the ADA, except by reason of the
construction of the Premises not being in conformity with the plans and
specifications, which shall be the responsibility of LESSOR.
C. LESSEE shall operate and keep the Premises in a clean and sanitary
condition according to all applicable laws and codes.
D. LESSEE shall make no structural change or alteration to the
Premises without first obtaining the written consent of LESSOR, which
consent shall not be unreasonably withheld, delayed or conditioned, and
LESSEE shall have the right to make such non-structural alterations in and
about the Premises as LESSEE may determine desirable in connection with its
business operation under this LEASE.
13. DAMAGE TO PREMISES
In the event that the Premises are damaged by reason of fire windstorm, or
any other element or casualty, the same (exclusive of LESSEE's improvements and
trade fixtures) shall be repaired as rapidly as possible by LESSOR; provided,
however, that the rent shall abate in proportion to the extent to which LESSEE's
occupancy and use of said Premises is reduced by such damage until the same
shall be put in tenantable condition. Further provided, however, that LESSEE
shall be responsible in all events for all damage caused by LESSEE, its agents,
employees, invitees and licensees, which is neither covered by insurance nor of
a nature which is normally covered by an all risks of direct physical loss
insurance policy. Further provided, however, that if the Premises are totally
destroyed or damaged as to not be capable of repair in the exercise of due
diligence within ONE HUNDRED TWENTY (120) DAYS from the date of said damage,
then either LESSOR or LESSEE may elect to terminate the LEASE forthwith, and
rent shall be prorated to the date of damage or destruction.
14. CONDEMNATION
In the event of condemnation or the taking of the entire Premises or such
portion thereof as may render the same no longer suitable for LESSEE to continue
occupation of the Premises, then this LEASE shall terminate as of the date of
taking and rent and all other payments required to be made under this LEASE
shall be prorated to said date. In the event of a partial taking not
sufficiently serious to make said Premises no longer suitable to LESSEE, rent
shall only abate to the extent of such taking. LESSOR and LESSEE shall each
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have the right to file any claim against such condemning or taking authority and
each shall have the right to receive an award based on its respective interest
in the Premises. LESSOR and LESSEE shall assist each other in the preparation
and filing and prosecution of any claim based on condemnation or taking.
15. INSOLVENCY
In the event a receiver is appointed for the business of LESSEE, or in the
event that LESSEE makes a general assignment for the benefit of its creditors,
or if LESSEE takes or suffers any action under any insolvency or bankruptcy act,
the same shall constitutes default under the terms of this LEASE.
16. UTILITIES
A. HEATING, AIR CONDITIONING AND VENTILATING. LESSEE shall pay for all
electricity and gas used in the operation of the Heating, Air Conditioning
and Ventilating system serving the Premises, for each month during the term
of this LEASE.
B. ELECTRICITY, WATER AND SEWER. LESSEE shall pay for all electricity,
gas, water and sewer service used in the Premises.
17. INSURANCE
A. LESSEE shall carry and keep in full force and effect, at its
expense, a policy or policies of public liability insurance with respect to
the Premises and the business of LESSEE and any subtenant or assignee, in
which both LESSEE and LESSOR shall be named insureds with limits of
liability not less than $2,000,000 for injury or death to one or more
persons, and $500,000 with respect to damage to property. LESSEE shall
furnish LESSOR with certificates evidencing that such insurance is in
effect, stating that LESSOR shall be notified in writing 30 days prior to
cancellation, material change, or non-renewal of insurance.
B. LESSEE shall carry and keep in full force and effect at its expense
insurance for fire and extended coverage, insuring for the full insurable
value of LESSEE's work, LESSEE's leasehold improvements, merchandise, trade
fixtures, furnishings, operating equipment and personal property including
wallcoverings, carpeting, and drapes.
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C. LESSEE shall carry and keep in full force and effect an "all risks
of direct physical loss' property insurance policy in an amount equal to
100% of the replacement cost thereof, from time to time, for the exterior
walls, roof, floor, foundations, structural elements, heating and cooling
fixtures, and any and all items attached to the Premises. LESSEE shall
furnish LESSOR with certificates evidencing that such insurance is in
effect, stating that LESSOR shall be notified in writing 30 days prior to
cancellation, material change, or non-renewal of insurance.
D. LESSEE shall maintain worker's compensation insurance covering all
of its employees to at least the statutory limit set forth under Michigan
law.
E. LESSEE shall observe all reasonable regulations and requirements of
underwriters concerning the use and condition of the Premises, tending to
reduce fire hazard and insurance rates, and shall not permit or allow any
rubbish or waste products to accumulate on said Premises.
F. Anything in this LEASE to the contrary notwithstanding, it is
agreed that each party and its successors and assigns (including any person
or entity who may become subrogated to any of its rights) (the Releasing
Party) hereby releases the other party and its successors and assigns (the
Released Party) from liability which the Released Party would, but for this
paragraph, have had to the Releasing Party during the term of this LEASE,
resulting from the occurrence of any accident or occurrence or casualty (i)
which is normally covered by a fire and extended coverage policy, or an all
risks of direct physical loss policy, or (ii) covered by any other
insurance being carried by the Releasing Party at the time of such
occurrence.
18. TAXES
LESSOR shall make every reasonable effort to have the Premises separately
assessed, in which event, LESSEE shall pay the entire tax bill for the Premises
before the due date therefor and shall furnish LESSOR with proof of payment
thereof.
In the event that LESSOR is unable to have the Premises separately
assessed, LESSEE shall pay to LESSOR on presentment of the statement therefor
its share of all taxes assessments, excises and/or surcharges against the entire
land, buildings and improvements for the Tax Parcel of which the Premises is a
part, that are payable to any lawful authority during each lease year
(hereinafter taxes). The share to be paid by LESSEE shall be based on the City
Assessors Card for the Land occupied by the Premises, the Building on the
Premises and the Improvements on the Premises.
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Notwithstanding anything in this paragraph to the contrary, all costs and
expenses incurred by LESSOR during negotiations for or contests of the amount of
taxes shall be included within the term "taxes." In the event a refund is
obtained, LESSOR shall issue a credit to LESSEE for same, such portion to be
based on the percentage of the original taxes paid by LESSEE from which the
refund is derived.
19. COMMON AREAS
The only common areas will be the access driveways in the event that LESSOR
shall own other premises adjacent to the Premises which shall be shared with the
other premises owned by LESSOR, in which event such access driveways shall be
maintained by LESSEE as part of its Premises.
20. ASSIGNABILITY
LESSEE will not assign, sublet or part with the possession of the whole or
any part of the Premises without the consent in writing of LESSOR, which consent
will not be unreasonably withheld, delayed or conditioned. In the event that
this LEASE is in fact assigned or sublet, then in all events the rent and other
charges paid by the assignee or sublessee subsequent to the assignment or
sublease during the remainder of the term of the LEASE and of any renewal term
shall be the rate specified in this agreement, and all rent shall be payable to
LESSOR. Provided, however, that the assignee or sublessee shall at the time of
the assignment or sublease specifically assume the obligation to pay the rent
and other charges. In this connection, in the event of a sublease, the sublease
must contain the following language:
___________________ ("Sublessee") understands that the Lease between
GEENEN DEKOCK PROPERTIES, L.L.C. ("Lessor") and MACATAWA BANK (Lessee')
permits this sublease only in the event that Sublessee incurs
contractual liability directly to Lessor for rent and all other charges
provided for under the terms of the Lease. By the execution of this
Sublease, Sublessee accepts the Lessee's assignment of liability for
rent and all other charges provided for under the terms of the Lease
during the term of this Sublease and any extension or renewal hereof.
This Sublease does not release Lessee from liability to Lessor for rent
and all other charges due under the Lease."
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21. LESSEE'S WORK
After the Building and improvements have been constructed on the Premises
in accordance with Paragraph 2 of this Lease and turned over to LESSEE in
accordance with Paragraph 3 of this Lease, LESSEE shall have the right to occupy
the Premises for LESSEE's work.
LESSEE shall be responsible for placing the Premises in operational order,
installing trade fixtures, floor covering, wallcovering, any special lighting,
and other improvements upon taking possession of the Premises.
All alterations, decorations, additions, improvements, including floor
covering and/or carpeting, and all fixtures installed or placed within the
Premises, other than LESSEE's trade fixtures, shall be deemed to have been
attached to the Premises and to have become the property of LESSOR upon such
attachment and shall not be altered or removed without the prior written consent
of LESSOR, which consent shall not be unreasonably withheld, delayed or
conditioned. LESSEE shall not change or alter the exterior of the Premises.
LESSEE may make interior structural changes or alterations to the Premises with
the prior written consent of LESSOR, which shall not be unreasonably withheld.
22. TERMINATION, SURRENDER OF POSSESSION
LESSEE shall fail or refuse to remove all personal property and trade
fixtures from the Premises upon the expiration or termination of this LEASE, the
parties hereto agree and stipulate that LESSOR may, at is election: (i) treat
such failure or refusal as an offer by LESSEE to transfer title to such property
to LESSOR, in which event the title thereto shall thereupon pass under this
LEASE as a bill of sale; or (ii) treat such failure or refusal as conclusive
evidence, on which LESSOR shall be entitled to rely absolutely, that LESSEE has
forever abandoned such property. In either event, LESSOR may, with or without
accepting title thereto, keep or remove, store, destroy, discard, or otherwise
dispose of all or any part of such property in any manner that LESSOR shall
choose without incurring liability to LESSEE or to any other person. In no event
that LESSOR ever become or be charged with the duties of a bailee of any
property of LESSEE. The failure of LESSEE to remove any property from the
Premises shall forever bar LESSEE from bringing any action or asserting any
liability against LESSOR with respect to any property which LESSEE fails to
remove.
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23. HOLDING OVER
LESSEE acknowledges that its holding over beyond the time of the
termination or expiration of this LEASE will cause LESSOR additional expense. If
LESSEE shall remain in possession of the Premises, or any part thereof, after
the termination or expiration of this LEASE, LESSEE shall acquire no rights with
respect to the Premises. LESSEE shall, however, pay LESSOR, as liquidated
damages, 150% of the amount of rent which would have been due for a like period
of occupancy during the term hereof. The provisions of this clause shall not
operate as a waiver by LESSOR of any right it may otherwise have.
24. EVENTS OF DEFAULT
The term "Event of Default" shall mean, whenever used herein, any one or
more of the following events: (a) failure by LESSEE to pay the basic rents or
any other payments required to be paid hereunder at the times specified, which
payment remains unpaid for a period of FIFTEEN (15) DAYS after written notice of
the failure to make timely payment of the same is duly delivered by LESSOR to
LESSEE either in person or by first-class mail, postage prepaid, addressed to
LESSEE at the address shown on the first page of this LEASE; (b) failure by
LESSEE to observe and perform any other covenant, condition, undertaking or
agreement herein on its part to be observed or performed, for the period of 30
days after the notice thereof is duly delivered by LESSOR to LESSEE either in
person or by first-class mail, postage prepaid, addressed to LESSEE at the
aforesaid address; (c) failure by LESSEE promptly to lift any execution,
garnishment or attachment of such consequences as will impair the LESSEE's
ability to carry out LESSEE's obligations under this LEASE.
25. DIES UPON EVENT OF DEFAULT
Whenever any Event of Default shall have occurred and be continuing, the
LESSOR may take one or more of the following remedial steps:
A. may declare all installments of rent payable for the remainder of
the term of this LEASE to be immediately due and payable, whereupon the
same shall become immediately due and payable.
B. may re-enter and take possession of the Premises without
terminating this LEASE and may sublet the Premises for the account of
LESSEE, holding LESSEE liable for the difference between the rent and other
amounts payable by LESSEE hereunder, including but not limited to all costs
and expenses incurred by
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LESSOR in re-entering, possession, and subleasing the Premises and
equipment, and the rent received under such subleasing.
C. may terminate the LEASE with LESSEE, exclude the LESSEE from
possession of the Premises, and use its best efforts to lease to another
lessee at same terms and conditions for the account of LESSEE holding
LESSEE liable for all rents and other payments due up to the effective date
of such termination.
D. may take whatever action at law or in equity as may appear
necessary or desirable to collect the rent when due and thereafter to
become due or to enforce performance and observance of any obligation,
agreement or covenant of LESSEE hereunder.
E. may, as reasonably deemed necessary from time to time (but shall
not be required to remodel, improve and repair the Premises in order to
better lease or relet the same and all costs and expenses thereof shall
become a debt due by LESSEE to LESSOR and it shall be entitled to
reimbursement from the first revenues or rentals received thereafter from
any subleasing or reletting.
F. may declare the LEASE forfeited and void, and retain whatever may
have been paid on the Premises and all improvements that may have been made
thereto together with any additions and accretions thereto, and consider
and treat the LESSEE as a tenant holding over without permission, and take
immediate possession of the Premises and the LESSEE and each and every
other occupant remove and put out. A notice of forfeiture giving LESSEE at
least 15 days to pay any moneys required to be paid hereunder or to cure
other material breaches of this LEASE shall be served on LESSEE as provided
by statute, prior to the institution of any proceedings to recover
possession of the Premises.
26. INTEREST
Any amount due LESSOR from LESSEE under this LEASE which is not paid within
7 days after its due date shall bear interest at 2% over the prime rate charged
by MACATAWA BANK, from the date due until paid; provided, however, the payment
of any such interest shall not excuse or cure the default upon which such
interest accrued. Further provided that, if the interest hereinabove provided is
at any time in excess of the maximum legal rate permitted to be charged under
Michigan law, the rate of interest shall in fact be the maximum legal rate so
chargeable under Michigan law.
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27. SUBORDINATION TO MORTGAGES
LESSEE agrees to execute any instrument to evidence subordination of this
LEASE to any mortgage from time to time as may be required by LESSOR, provided
that in the event of subordination, the mortgagee underneath such mortgage shall
acknowledge the validity of this LEASE, agree to provide for its continuance,
and shall recognize all of LESSEE's rights hereunder, so long as the LESSEE is
not in default hereunder.
28. ESTOPPEL AGREEMENT
LESSOR and LESSEE shall, each without charge at anytime and from time to
time, within 10 days after request by the other party, certify by written
instrument, duly executed, acknowledged and delivered to any mortgagee, assignee
of any mortgagee or purchaser, or any proposed assignee or sublessee of LESSOR
or any other person, firm or corporation specified by LESSOR and LESSEE:
A. That this LEASE is unmodified and in full force and effect (or, if
there has been modification, that the same is in full force and effect as
modified and stating the modifications);
B. Whether or not there are then existing any setoffs or defenses
against the enforcement of any of the agreements, terms, covenants or
conditions hereof upon the part of the LESSOR or LESSEE, as the case may
be, to be performed or complied with (and, if so, specifying the same); and
C. The dates, if any, to which the rental(s) and other charges
hereunder have been paid in advance.
29. LESSOR DEFINED
The term "LESSOR" as used in this LEASE means only the owner or the
mortgagee in possession for the time being of the Premises, or the owner of a
lease of the land of the Premises, and/or the buildings and improvements
thereon, so that in the event of and upon any assignment, sale or demise of
LESSOR's interest in the Premises, LESSOR shall be and hereby is entirely freed
and relieved of all obligations of LESSOR hereunder, except obligations accrued
prior to the effective date of such assignment, provided that the assignee,
purchaser, or LESSEE assumes and agrees to observe and perform all obligations
of LESSOR hereunder, and provided further that the then LESSEE is given notice
of such assignment, sale or lease. It is specifically understood and agreed that
there shall be no
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personal liability on LESSOR in respect to any of the covenants, conditions or
provisions of this LEASE and in the event of a breach or default by LESSOR of
any of its obligations under this LEASE, LESSEE shall look solely to the equity
of the LESSOR in the Premises for the satisfaction of LESSEE's remedies and
claims for damages.
30. BUILDING SIGN. LESSEE shall place and maintain an identification sign
on the front of the Premises. The sign shall in all respects be in conformance
with all applicable signage ordinance requirements. A drawing of said sign shall
be submitted to LESSOR for approval prior to installation and the name, address
and telephone number of the sign company constructing the sign shall also be
furnished to LESSOR. If LESSEE shall make alterations in any signage during the
term of this Lease or any extension or renewal thereof, LESSEE shall be
responsible for all repairs caused by such change in signage. Upon vacating the
Premises, LESSEE shall remove all of its signs on the building and shall repair
all damage caused by or resulting from such removal.
31. NEGATIVE COVENANT
LESSOR will not sell nor lease any portion of the premises adjoining the
Premiss to a Bank or other financial institution, in the event that LESSOR shall
at any time own the adjoining premises.
32. NOTICES
All notices to the parties hereto as may be required by this LEASE
agreement shall be in writing and may be delivered or sent by Outclass mail,
postage prepaid, to the parties at the addresses shown upon the first page
hereof, or at such other address as may be furnished by the party in writing to
the other party, from time to time.
33. TEMPORARY FACILITY
In the event that LESSEE shall request that LESSOR furnish a temporary
facility, LESSOR will work with LESSEE to provide a suitable facility if at all
possible. All costs associated with such temporary facility will be promptly
paid by LESSEE.
34. BINDING EFFECT
This agreement shall be governed by the laws of the State of Michigan and
shall be binding on the parties hereto, their heirs, personal representatives,
successors and assigns.
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The captions in this agreement are for convenience only and shall not be
considered as part of this agreement or in any way limiting or amplifying its
terms or provisions.
Signed the day and year first above written.
GEENEN DEKOCK PROPERTIES, L.L.C. MACATAWA BANK
A Michigan limited liability company a Michigan Banking Corporation
by THE CHARLES A. GREEN TRUST
by /s/ Philip Koning
by_________________________________ President
Charles A. Geenen, Trustee
by THE DOUGLAS DEKOCK TRUST by___________________________
___________________________
by /s/ Douglas DeKock
Douglas DeKock, Trustee
Members, LESSOR LESSEE
::ODMA\PCDOCS\GRR\156206\1
16
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information from SEC Form 10-QSB and is
qualified in it entirety by reference to such financial information.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 921,564
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,944,743
<INVESTMENTS-CARRYING> 13,944,743
<INVESTMENTS-MARKET> 13,944,743
<LOANS> 13,862,761
<ALLOWANCE> 208,000
<TOTAL-ASSETS> 34,444,440
<DEPOSITS> 26,883,858
<SHORT-TERM> 0
<LIABILITIES-OTHER> 150,517
<LONG-TERM> 0
0
0
<COMMON> 8,137,268
<OTHER-SE> (727,203)
<TOTAL-LIABILITIES-AND-EQUITY> 34,444,440
<INTEREST-LOAN> 145,511
<INTEREST-INVEST> 197,961
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 343,472
<INTEREST-DEPOSIT> 138,344
<INTEREST-EXPENSE> 138,383
<INTEREST-INCOME-NET> 205,089
<LOAN-LOSSES> 200,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 533,238
<INCOME-PRETAX> (525,208)
<INCOME-PRE-EXTRAORDINARY> (525,208)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (525,208)
<EPS-PRIMARY> (.56)
<EPS-DILUTED> (.56)
<YIELD-ACTUAL> 3.97
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 7,500
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 208,000
<ALLOWANCE-DOMESTIC> 208,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
