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EXHIBIT 10.23
PLACEMENT AGREEMENT
AMONG
COMMUNITY SHORES BANK CORPORATION,
COMMUNITY SHORES CAPITAL TRUST I
AND
SUNTRUST CAPITAL MARKETS, INC.
----------------
Dated as of December 17, 2004
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Community Shores Bank Corporation
$4,500,000 Preferred Securities
Floating Rate Preferred Securities
(Liquidation Amount $1,000 per Preferred Security)
PLACEMENT AGREEMENT
December 17, 2004
SunTrust Capital Markets, Inc.
303 Peachtree Street, NE
24th Floor, Mail Code 3950
Atlanta, Georgia 30308
Ladies and Gentlemen:
Community
Shores Bank Corporation, a Michigan corporation (the
"Company"),
and its financing subsidiary, Community
Shores Capital Trust I, a Delaware
statutory trust (the "Trust," and
hereinafter together with the Company, the
"Offerors"), hereby confirm their agreement
(this "Agreement") with you as
placement agent (the "Placement Agent"), as
follows:
Section 1. Issuance and Sale of
Securities.
1.1
Introduction.
The Offerors propose to issue and sell at the Closing
(as defined in Section 2.3.1 hereof) FOUR
MILLION FIVE HUNDRED THOUSAND
($4,500,000) DOLLARS of the Trust's
Floating Rate Preferred Securities, with a
liquidation amount of $1,000 per preferred
security, bearing a variable rate of
interest per annum, reset quarterly, equal
to LIBOR (as defined in the Indenture
(as defined below)) plus 2.05% (the
"Preferred Securities"), to STI Investment
Management, Inc., a Delaware corporation
(the "Purchaser"), pursuant to the
terms of the Preferred Securities
Subscription Agreement entered into, or to be
entered into on or prior to the Closing
Date (as defined in Section 2.3.1
hereof), between the Offerors and the
Purchaser (the "Subscription Agreement"),
the form of which is attached hereto as
Exhibit A and incorporated herein by
this reference.
1.2
Operative
Agreements. The Preferred Securities shall be fully and
unconditionally guaranteed on a
subordinated basis by the Company with respect
to distributions and amounts payable upon
liquidation, redemption or repayment
(the "Guarantee") pursuant and subject to
the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of
the Closing Date and executed and
delivered by the Company and Deutsche Bank
Trust Company Americas, as guarantee
trustee (the "Guarantee Trustee"), for the
benefit from time to time of the
holders of the Preferred Securities. The
entire proceeds from the sale by the
Trust to the holders of the Preferred
Securities shall be combined with the
entire proceeds from the sale by the Trust
to the
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Company of its common securities (the
"Common Securities"), and shall be used by
the Trust to purchase FOUR MILLION SIX
HUNDRED FORTY THOUSAND ($4,640,000)
DOLLARS in principal amount of the Floating
Rate Junior Subordinated Notes (the
"Junior Subordinated Notes") of the
Company. The Preferred Securities and the
Common Securities of the Trust shall be
issued pursuant to an Amended and
Restated Trust Agreement among Deutsche
Bank Trust Company Americas, as property
trustee (the "Property Trustee"), the
Administrative Trustees named therein and
the Company, to be dated as of the Closing
Date and in substantially the form
heretofore delivered to the Placement Agent
(the "Trust Agreement"). The Junior
Subordinated Notes shall be issued pursuant
to an Indenture (the "Indenture"),
to be dated as of the Closing Date, between
the Company and Deutsche Bank Trust
Company Americas, as indenture trustee (the
"Indenture Trustee"). The documents
identified in this Section 1.2 and in
Section 1.1 are referred to herein as the
"Operative Documents." The Preferred
Securities, the Common Securities and the
Junior Subordinated Notes are collectively
referred to as the "Securities." All
other capitalized terms used but not
defined in this Agreement shall have the
meanings ascribed to them in the
Indenture.
1.3
Rights of
Purchaser. The Preferred Securities shall be offered and
sold by the Trust directly to the Purchaser
without registration of any of the
Preferred Securities, the Junior
Subordinated Notes or the Guarantee under the
Securities Act of 1933, as amended (the
"Securities Act"), or any other
applicable securities laws in reliance upon
exemptions from the registration
requirements of the Securities Act and
other applicable securities laws. The
Offerors agree that this Agreement shall be
incorporated by reference into the
Subscription Agreement and the Purchaser
shall be entitled to each of the
benefits of the Placement Agent and the
Purchaser under this Agreement and shall
be entitled to enforce obligations of the
Offerors under this Agreement as fully
as if the Purchaser were a party to this
Agreement. The Offerors and the
Placement Agent have entered into this
Agreement to set forth their
understanding as to their relationship and
their respective rights, duties and
obligations.
1.4
Legends. Upon
original issuance thereof, and until such time as the
same is no longer required under the
applicable requirements of the Securities
Act, the Preferred Securities and Junior
Subordinated Notes certificates shall
each contain a legend as required pursuant
to any of the Operative Documents.
Section 2. Purchase of Preferred
Securities.
2.1
Exclusive
Rights; Purchase Price. From the date hereof until the
Closing Date (which date may be extended by
mutual agreement of the Offerors and
the Placement Agent), the Offerors hereby
grant to the Placement Agent the
exclusive right to arrange for the sale to
the Purchaser of the Preferred
Securities at a purchase price equal to
$1,000 per Preferred Security. The
aggregate purchase price shall be FOUR
MILLION FIVE HUNDRED THOUSAND
($4,500,000) DOLLARS (the "Purchase
Price"), which Purchase Price is equal to
100% of the stated liquidation amount of
the Preferred Securities.
2.2
Subscription.
The Offerors hereby agree to evidence their acceptance
of the subscription by countersigning a
copy of the Subscription Agreement and
returning the same to the Placement
Agent.
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2.3
Closing and
Delivery of Payment.
2.3.1
Closing; Closing Date. The closing (the "Closing") for the sale
and
purchase of the Preferred Securities by the
Offerors to the Purchaser shall
occur at the offices of Thacher Proffitt
& Wood LLP, Two World Financial Center,
New York, New York 10281, or such other
place as the parties hereto shall agree
at 11:00 a.m. (New York time) on December
17, 2004, or such other later date
(not later than January 14, 2005) as the
parties may designate (such date and
time of delivery and payment for the
Preferred Securities being herein called
the "Closing Date"). The Preferred
Securities shall be transferred and delivered
to the Purchaser against the payment of the
Purchase Price (as defined in the
Subscription Agreement) to the Offerors in
immediately available funds on the
Closing Date to a U.S. account designated
in writing by the Company at least two
(2) business days prior to the Closing
Date.
2.3.2
Delivery. Delivery of the Preferred Securities shall be made at
such
location, and in such names and
denominations, as the Purchaser shall designate
at least two (2) business days in advance
of the Closing Date. The Company and
the Trust agree to have the Preferred
Securities available for inspection and
checking by the Purchaser in New York, New
York not later than 1:00 P.M., New
York time, on the business day prior to the
Closing Date.
2.4
Placement
Agents' Fees and Expenses.
2.4.1
Placement Agents' Compensation. The Offerors shall use the
proceeds
from the sale of the Preferred Securities,
together with the proceeds from the
sale of the Common Securities, to purchase
the Junior Subordinated Notes.
Because the proceeds from the sale of the
Preferred Securities shall be used to
purchase the Junior Subordinated Notes from
the Company, the Company shall pay
an aggregate of $0.00 for each $1,000 of
principal amount of Junior Subordinated
Notes sold to the Trust (excluding the
Junior Subordinated Notes related to the
Common Securities purchased by the Company)
(the "Commission"). Such amount
shall be delivered to the Placement Agent
or such other person designated by the
Placement Agent on the Closing Date. The
Placement Agent shall be responsible
for the following expenses: (i) rating
agency costs and expenses and (ii) any
fee payable to the Company's introducing
agent; provided, that such introducing
agent has an agreement with the Placement
Agent, but excluding the fees and
expenses set forth in Section 2.4.2
hereof.
2.4.2
Costs and Expenses. The Company hereby covenants and agrees that
it
shall pay or cause to be paid (directly or
by reimbursement) all costs and
expenses incident to the performance of the
obligations of the Offerors under
this Agreement, whether or not the
transactions contemplated herein are
consummated or this Agreement is
terminated, including (i) all costs and
expenses incident to the authorization,
issuance, sale and delivery of the
Preferred Securities and any taxes payable
in connection therewith; (ii) the
fees and expenses of qualifying the
Preferred Securities under the securities
laws of the several jurisdictions as
provided in Section 6.4; (iii) the fees and
expenses of the counsel, the accountants
and any other experts or advisors
retained by the Company or the Trust, which
counsel fees and expenses incurred
in connection with the closing of the
transactions contemplated hereby, in an
amount up to $10,000, shall be reimbursed
by the Purchaser on the Closing Date;
(iv) the fees and all reasonable expenses
of the Guarantee Trustee, the Property
Trustee, the Delaware Trustee, the
Indenture Trustee and any other trustee or
paying agent appointed under the Operative
Documents, except
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for any acceptance fee and annual
administrative fees of any such Trustee, which
shall be paid by the Purchaser; and (v) the
fees and disbursements of counsel
for the Guarantee Trustee, the Property
Trustee, the Delaware Trustee, the
Indenture Trustee and any other trustee or
paying agent appointed under the
Operative Documents, except such fees that
are incurred in connection with the
closing of the transactions contemplated
hereby, which shall be paid by the
Purchaser.
2.4.3
Reimbursement of Expenses. If the sale of the Preferred
Securities
provided for in this Agreement is not
consummated because any condition set
forth in Section 3 to be satisfied by
either the Company or the Trust is not
satisfied, because this Agreement is
terminated pursuant to Section 10 or
because of any failure, refusal or
inability on the part of the Company or the
Trust to perform all obligations and
satisfy all conditions on its part to be
performed or satisfied hereunder other than
by a reason of a default by this
Agreement, the Company will reimburse the
Placement Agent upon demand for all
reasonable out-of-pocket expenses
(including the fees and expenses of each of
the Placement Agent's or Purchaser's
counsel) that shall have been incurred by
the Placement Agent or Purchaser in
connection with the proposed purchase and
sale of the Preferred Securities. The
Company shall not in any event be liable
to the Placement Agent or Purchaser for the
loss of anticipated profits from the
transactions contemplated by this
Agreement.
2.5 Failure to Close. If any of
the conditions to the Closing specified
in this Agreement shall not have been
fulfilled to the satisfaction of the
Placement Agent or if the Closing shall not
have occurred on or before 11:00
a.m. (New York time) on January 14, 2005,
then each party hereto,
notwithstanding anything to the contrary in
this Agreement, shall be relieved of
all further obligations under this
Agreement without thereby waiving any rights
it may have by reason of such
nonfulfillment or failure; provided, however, that
the obligations of the parties under
Sections 2.4, and 8 shall not be so
relieved and shall continue in full force
and effect.
Section 3. Closing Conditions. The
obligations of the parties under this
Agreement on the Closing Date are subject
to the following conditions:
3.1
Accuracy of
Representations and Warranties. The representations and
warranties contained in this Agreement, and
the statements of the Offerors made
in any certificates pursuant to this
Agreement, shall be accurate as of the date
of delivery of the Preferred
Securities:
3.2
Opinions of
Counsel. On the Closing Date, the Placement Agent shall
have received the following favorable
opinions or certificate, as the case may
be, each dated as of the Closing Date: (a)
from Thacher Proffitt & Wood LLP,
special counsel for the Placement Agent and
Purchaser and addressed to the
Placement Agent and Purchaser in
substantially the form set forth on Exhibit B-1
attached hereto and incorporated herein by
this reference, (b) an Officers'
Certificate, addressed to the Purchaser and
the Placement Agent in substantially
the form set forth on Exhibit B-2 attached
hereto and incorporated herein by
this reference, (c) from Thacher Proffitt
& Wood LLP, special tax counsel for
the Placement Agent and Purchaser and
addressed to the Placement Agent and
Purchaser in substantially the form set
forth on Exhibit B-3 attached hereto and
incorporated herein by this reference, (d)
from Richards Layton & Finger, P.A.,
special Delaware counsel to the Placement
Agent and Purchaser and addressed to
the Purchaser, the Placement Agent and the
Offerors, in substantially the form
set forth on Exhibit B-4 attached
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hereto and incorporated herein by this
reference, (e) from White & Case LLP,
special counsel to the Indenture Trustee,
the Property Trustee and the Guarantee
Trustee and addressed to the Purchaser, the
Placement Agent and the Offerors, in
substantially the form set forth on Exhibit
B-5 attached hereto and incorporated
herein by this reference, and (f) from
Richards Layton & Finger, P.A., special
Delaware counsel to the Placement Agent and
Purchaser and addressed to the
Purchaser, the Placement Agent and the
Offerors, in substantially the form set
forth on Exhibit B-6 attached hereto and
incorporated herein by this reference.
Each opinion addressed to the Purchaser
shall state that the first entity, if
any, to which the Purchaser transfers any
of the Preferred Securities (each, a
"Subsequent Purchaser") shall be entitled
to rely on such opinion.
3.3
Officer's
Certificate. The Company shall have furnished to the
Placement Agent and the Purchaser a
certificate of the Company, signed by the
Chief Executive Officer, President or an
Executive Vice President and by the
Chief Financial Officer, Treasurer or
Assistant Treasurer of the Company, and
the Trust shall have furnished to the
Placement Agent and the Purchaser a
certificate of the Trust, signed by an
Administrative Trustee of the Trust, in
each case dated the Closing Date, and, in
the case of the Company, as to 3.3.1
and 3.3.2 below and, in the case of the
Trust, as to 3.3.1 below:
3.3.1 the
representations and warranties in this Agreement are true and
correct on and as of the Closing Date with
the same effect as if made on the
Closing Date, and the Company and the Trust
have complied with all the
agreements and satisfied all the conditions
on either of their part to be
performed or satisfied at or prior to the
Closing Date; and
3.3.2
since the date of the Interim Financial Statements (as defined
below), there has been no material adverse
change in the condition (financial or
other), earnings, business, prospects or
assets of the Company and its
subsidiaries, whether or not arising from
transactions occurring in the ordinary
course of business.
3.4
No Subsequent
Change. Subsequent to the execution of this Agreement,
there shall not have been any change, or
any development involving a prospective
change, in or affecting the condition
(financial or other), earnings, business,
prospects or assets of the Company and its
subsidiaries, whether or not
occurring in the ordinary course of
business, the effect of which is, in the
Placement Agent's or Purchaser's judgment,
so material and adverse as to make it
impractical or inadvisable to proceed with
the purchase of the Preferred
Securities.
3.5
Purchase
Permitted by Applicable Laws; Legal Investment. The
purchase of and payment for the Preferred
Securities as described in this
Agreement and pursuant to the Subscription
Agreement shall (a) not be prohibited
by any applicable law or governmental
regulation, (b) not subject the Purchaser
or the Placement Agent to any penalty or,
in the reasonable judgment of the
Purchaser and the Placement Agent, other
onerous conditions under or pursuant to
any applicable law or governmental
regulation, and (c) be permitted by the laws
and regulations of the jurisdictions to
which the Purchaser and the Placement
Agent are subject.
3.6
Consents and
Permits. The Company and the Trust shall have received
all consents, permits and other
authorizations, and made all such filings and
declarations, as may be required from any
person or entity pursuant to any law,
statute, regulation or rule (federal,
state, local and foreign), or pursuant to
any agreement, order or decree to which the
Company or the
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Trust is a party or to which either is
subject, in connection with the
transactions contemplated by this
Agreement.
3.7
Information.
Prior to or on the Closing Date, the Offerors shall
have furnished to the Placement Agent, the
Purchaser and their respective
counsel such further information,
certificates, opinions and documents as the
Placement Agent, Purchaser or their
respective counsel may reasonably request.
If any of
the conditions specified in this Section 3 shall not have been
fulfilled when and as required in this
Agreement, or if any of the opinions,
certificates and documents mentioned above
or elsewhere in this Agreement shall
not be reasonably satisfactory in form and
substance to the Placement Agent, the
Purchaser or their respective counsel, this
Agreement and all the Placement
Agent's obligations hereunder may be
canceled at, or any time prior to, the
Closing Date by the Placement Agent. Notice
of such cancellation shall be given
to the Offerors in writing or by telephone
or facsimile confirmed in writing.
Each
certificate signed by any trustee of the Trust or any officer of
the
Company and delivered to the Placement
Agent, Purchaser or their respective
counsel in connection with the Operative
Documents and the transactions
contemplated hereby and thereby shall be
deemed to be a representation and
warranty of the Trust and/or the Company,
as the case may be, and not by such
trustee or officer in any individual
capacity.
Section 4. Representations and Warranties of
the Offerors. The Offerors jointly
and severally represent and warrant to the
Placement Agent and the Purchaser as
of the date hereof and as of the Closing
Date as follows:
4.1
Representations
and Warranties of the Company and the Trust. The
Company and the Trust jointly and severally
represent and warrant to, and agree
with the Placement Agent and Purchaser, as
follows:
(a) Securities
Laws Matters:
(i) Neither the
Company nor the Trust, nor any of their
"Affiliates" (as defined in Rule 501(b) of
Regulation D under the Securities Act
("Regulation D")), nor any person acting on
any of their behalf (except for the
Placement Agent, as to which neither the
Company nor the Trust make any
representation) has, directly or
indirectly, made offers or sales of any
security, or solicited offers to buy any
security, under circumstances that
would require the registration under the
Securities Act of any of the
Securities.
(ii) Neither the
Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or
their behalf (except for the
Placement Agent, as to which neither the
Company nor the Trust make any
representation) has (i) offered for sale or
solicited offers to purchase the
Securities, (ii) engaged in any form of
general solicitation or general
advertising (within the meaning of
Regulation D) in connection with any offer or
sale of any of the Securities, or (iii)
engaged in any "directed selling
efforts" within the meaning of Regulation S
under the Securities Act
("Regulation S") with respect to the
Securities.
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(iii) The Securities (i) are not and have not been listed on a
national securities exchange registered
under section 6 of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), or quoted on a U.S.
automated interdealer quotation system and
(ii) are not of an open-end
investment company, unit investment trust
or face-amount certificate company
that are, or are required to be, registered
under section 8 of the Investment
Company Act of 1940, as amended (the
"Investment Company Act"), and the
Securities otherwise satisfy the
eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act
("Rule 144A(d)(3)").
(iv) Neither the
Company nor the Trust is, and, immediately
following consummation of the transactions
contemplated hereby and the
application of the net proceeds therefrom,
neither the Company nor the Trust
will be, an "investment company" or an
entity "controlled" by an "investment
company," in each case within the meaning
of section 3(a) of the Investment
Company Act.
(v) Neither the
Company nor the Trust has paid or agreed to
pay to any person or entity, directly or
indirectly, any fees or other
compensation for soliciting another to
purchase any of the Securities, except
for the Commission and/or any fee payable
to the Company's introducing agent;
provided, that such introducing agent has
an agreement with the Placement Agent.
4.2
Standing and
Qualification of the Trust. The Trust has been duly
created and is validly existing in good
standing as a statutory trust under the
Delaware Statutory Trust Act, 12 Del. C.
section 3801, et seq. (the "Statutory
Trust Act") with all requisite power and
authority to own property and to
conduct the business it transacts and
proposes to transact and to enter into and
perform its obligations under the Operative
Documents to which it is a party.
The Trust is duly qualified to transact
business as a foreign entity and is in
good standing in each jurisdiction in which
such qualification is necessary,
except where the failure to so qualify or
be in good standing would not have a
material adverse effect on the condition
(financial or otherwise), earnings,
business, prospects or assets of the Trust,
whether or not occurring in the
ordinary course of business. The Trust is
not a party to, or otherwise bound by,
any agreement other than the Operative
Documents. The Trust is, and under
current law will continue to be, classified
for federal income tax purposes as a
grantor trust and not as an association or
publicly traded partnership taxable
as a corporation.
4.3
Trust Agreement.
The Trust Agreement has been duly authorized by the
Company and, on the Closing Date specified
in Section 2.3.1, will have been duly
executed and delivered by the Company and
the Administrative Trustees of the
Trust, and, assuming due authorization,
execution and delivery by the Property
Trustee and the Delaware Trustee, will be a
legal, valid and binding obligation
of the Company and the Administrative
Trustees, enforceable against them in
accordance with its terms, subject to
applicable bankruptcy, insolvency and
similar laws affecting creditors' rights
generally and to general principles of
equity. Each of the Administrative Trustees
of the Trust is an employee of the
Company or one of its subsidiary banks and
has been duly authorized by the
Company to execute and deliver the Trust
Agreement. To the knowledge of the
Administrative Trustees, the Trust is not
in violation of any provision of the
Statutory Trust Act.
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4.4
Guarantee
Agreement and the Indenture. Each of the Guarantee and the
Indenture has been duly authorized by the
Company and, on the Closing Date, will
have been duly executed and delivered by
the Company, and, assuming due
authorization, execution and delivery by
the Guarantee Trustee, in the case of
the Guarantee, and by the Indenture
Trustee, in the case of the Indenture, will
be a legal, valid and binding obligation of
the Company enforceable against it
in accordance with its terms, subject to
applicable bankruptcy, insolvency and
similar laws affecting creditors' rights
generally and to general principles of
equity.
4.5
Preferred
Securities and Common Securities. The Preferred Securities
and the Common Securities have been duly
authorized by the Trust and, when
issued and delivered against payment
therefor on the Closing Date to the
Purchaser in accordance with this Agreement
and the Subscription Agreement, in
the case of the Preferred Securities, and
to the Company in accordance with the
Common Securities Subscription Agreement
between the Company and the Trust,
dated as of the Closing Date, in the case
of the Common Securities, will be
validly issued, fully paid and
nonassessable and will represent undivided
beneficial interests in the assets of the
Trust entitled to the benefits of the
Trust Agreement, enforceable against the
Trust in accordance with their terms,
subject to applicable bankruptcy,
insolvency and similar laws affecting
creditors' rights generally and to general
principles of equity. The issuance of
the Securities is not subject to preemptive
or other similar rights. On the
Closing Date, all of the issued and
outstanding Common Securities will be
directly owned by the Company free and
clear of any pledge, security interest,
claim, lien or other encumbrance (each, a
"Lien").
4.6
Junior
Subordinated Notes. The Junior Subordinated Notes have been
duly authorized by the Company and, on the
Closing Date, will have been duly
executed and delivered to the Indenture
Trustee for authentication in accordance
with the Indenture and, when authenticated
in the manner provided for in the
Indenture and delivered to the Trust
against payment therefor in accordance with
the Junior Subordinated Note Subscription
Agreement between the Company and the
Trust, dated as of the Closing Date, will
constitute legal, valid and binding
obligations of the Company entitled to the
benefits of the Indenture enforceable
against the Company in accordance with
their terms, subject to applicable
bankruptcy, insolvency and similar laws
affecting creditors' rights generally
and to general principles of equity.
4.7
Placement
Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and
the Trust and constitutes the legal,
valid and binding obligation of the Company
and the Trust, enforceable against
the Company and the Trust in accordance
with its terms, subject to applicable
bankruptcy, insolvency and similar laws
affecting creditors' rights generally
and to general principles of equity.
4.8
Defaults.
Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior
Subordinated Notes, nor the purchase of the
Junior Subordinated Notes by the Trust, the
execution and delivery of and
compliance with the Operative Documents by
the Company or the Trust, the
consummation of the transactions
contemplated herein or therein, or the use of
the proceeds therefrom, (i) will conflict
with or constitute a breach of, or a
default under, the Trust Agreement or the
charter or bylaws of the Company or
any subsidiary of the Company or any
applicable law, statute, rule, regulation,
judgment, order, writ or decree of any
government, governmental authority,
agency or instrumentality or court,
domestic or foreign, having jurisdiction
over the Trust, or the Company or any of
its subsidiaries, or their respective
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properties or assets (collectively,
"Governmental Entities"), (ii) will conflict
with or constitute a violation or breach
of, or a default or Repayment Event (as
defined below) under, or result in the
creation or imposition of any Lien upon
any property or assets of the Trust, the
Company or any of the Company's
subsidiaries pursuant to any contract,
indenture, mortgage, loan agreement,
note, lease or other agreement or
instrument to which (A) the Trust, the Company
or any of its subsidiaries is a party or by
which it or any of them may be
bound, or (B) any of the property or assets
of any of them is subject, or any
judgment, order or decree of any court,
governmental authority or arbitrator,
except, in the case of this clause (ii),
for such conflicts, breaches,
violations, defaults, Repayment Events (as
defined below) or Liens which (X)
would not, singly or in the aggregate,
adversely affect the consummation of the
transactions contemplated by the Operative
Documents and (Y) would not, singly
or in the aggregate, have a material
adverse effect on the condition (financial
or otherwise), earnings, business,
liabilities, prospects and assets (taken as a
whole) or business prospects of the Company
and its subsidiaries taken as a
whole, whether or not occurring in the
ordinary course of business (a "Material
Adverse Effect") or (iii) require the
consent, approval, authorization or order
of any court or Governmental Entity. As
used herein, a "Repayment Event" means
any event or condition which gives the
holder of any note, debenture or other
evidence of indebtedness (or any person
acting on such holder's behalf) the
right to require the repurchase, redemption
or repayment of all or a portion of
such indebtedness by the Trust or the
Company or any of its subsidiaries prior
to its scheduled maturity.
4.9
Organization,
Standing and Qualification of the Company. The Company
has been duly incorporated and is validly
existing as a corporation in good
standing under the laws of Michigan, with
all requisite corporate power and
authority to own, lease and operate its
properties and conduct the business it
transacts and proposes to transact, and is
duly qualified to transact business
and is in good standing as a foreign
corporation in each jurisdiction where the
nature of its activities requires such
qualification, except where the failure
of the Company to be so qualified would
not, singly or in the aggregate, have a
Material Adverse Effect.
4.10
Subsidiaries of the
Company. The Company has no subsidiaries that
are material to its business, financial
condition or earnings other than those
subsidiaries listed in Schedule 4.10
attached hereto (the "Significant
Subsidiaries"). Each Significant Subsidiary
has been duly organized and is
validly existing and in good standing under
the laws of the jurisdiction in
which it is chartered or organized, with
all requisite power and authority to
own its properties and conduct the business
it transacts and proposes to
transact. Each Significant Subsidiary is
duly qualified to transact business and
is in good standing as a foreign entity in
each jurisdiction where the nature of
its activities requires such qualification,
except where the failure of any such
Significant Subsidiary to be so qualified
would not, singly or in the aggregate,
have a Material Adverse Effect.
4.11
Government Licenses.
Each of the Trust, the Company and each of its
subsidiaries hold all necessary approvals,
authorizations, orders, licenses,
certificates and permits (collectively,
"Government Licenses") of and from
Governmental Entities necessary to conduct
its respective business as now being
conducted, and neither the Trust, the
Company nor any of the Company's
subsidiaries has received any notice of
proceedings relating to the revocation
or modification of any such Government
License, except where the failure to be
so licensed or approved or the receipt of
an unfavorable decision, ruling or
finding, would not, singly or in the
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aggregate, have a Material Adverse Effect;
all of the Government Licenses are
valid and in full force and effect, except
where the invalidity or the failure
of such Government Licenses to be in full
force and effect, would not, singly or
in the aggregate, have a Material Adverse
Effect; and the Company and its
subsidiaries are in compliance with all
applicable laws, rules, regulations,
judgments, orders, decrees and consents,
except where the failure to be in
compliance would not, singly or in the
aggregate, have a Material Adverse
Effect.
4.12
Stock. All of the
issued and outstanding shares of capital stock of
the Company and each of its subsidiaries
are validly issued, fully paid and
nonassesssable; except as disclosed on
Schedule 4.12 attached hereto, all of the
issued and outstanding capital stock of
each subsidiary of the Company is owned
by the Company, directly or through
subsidiaries, free and clear of any Lien,
claim or equitable right; and none of the
issued and outstanding capital stock
of the Company or any subsidiary was issued
in violation of any preemptive or
similar rights arising by operation of law,
under the charter or by-laws of such
entity or under any agreement to which the
Company or any of its subsidiaries is
a party.
4.13
Property. Each of the
Trust, the Company and each subsidiary of the
Company has good and marketable title to
all of its respective real and personal
properties, in each case free and clear of
all Liens and defects, except as
disclosed on Schedule 4.13 attached hereto,
and except for those that would not,
singly or in the aggregate, have a Material
Adverse Effect; and all of the
leases and subleases under which the Trust,
the Company or any subsidiary of the
Company holds properties are in full force
and effect, except where the failure
of such leases and subleases to be in full
force and effect would not, singly or
in the aggregate, have a Material Adverse
Effect and none of the Trust, the
Company or any subsidiary of the Company
has any notice of any claim of any sort
that has been asserted by anyone adverse to
the rights of the Trust, the Company
or any subsidiary of the Company under any
such leases or subleases, or
affecting or questioning the rights of such
entity to the continued possession
of the leased or subleased premises under
any such lease or sublease, except for
such claims that would not, singly or in
the aggregate, have a Material Adverse
Effect.
4.14
Conflicts,
Authorizations and Approvals. Neither the Company nor any
of its subsidiaries is (i) in violation of
its respective charter, bylaws or
similar organizational documents or (ii) in
default in the performance or
observance of any obligation, agreement,
covenant or condition contained in any
contract, indenture, mortgage, loan
agreement, note, lease or other agreement or
instrument to which either the Company or
any such subsidiary is a party or by
which it or any of them may be bound or to
which any of the property or assets
of any of them is subject, except, in the
case of clause (ii), where such
default would not, singly or in the
aggregate, have a Material Adverse Effect.
No filing with, or authorization, approval,
consent, license, order,
registration, qualification or decree of,
any Governmental Entity, other than
those that have been made or obtained, is
necessary or required for the
performance by the Trust or the Company of
their respective obligations under
the Operative Documents, as applicable, or
the consummation by the Trust and the
Company of the transactions contemplated by
the Operative Documents.
4.15
Holding Company
Registration and Deposit Insurance. The Company is
duly registered (i) as a bank holding
company, and has filed an effective
election with the Federal Reserve Bank of
Chicago to be a financial holding
company, under the Bank Holding Company
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Act of 1956, as amended (the "Bank Holding
Company Act"), and the regulations of
the Board of Governors of the Federal
Reserve System (the "Federal Reserve,")
and the deposit accounts of the Company's
subsidiary depository institutions are
insured by the Federal Deposit Insurance
Corporation ("FDIC") to the fullest
extent permitted by law and the rules and
regulations of the FDIC, and no
proceeding for the termination of such
insurance are pending or, to the
knowledge of the Company or the Trust after
due inquiry, threatened.
4.16
Financial
Statements.
(a) The audited
consolidated financial statements (including the
notes thereto) and schedules of the Company
and its consolidated subsidiaries at
and for the fiscal year ended December 31,
2003 (the "Financial Statements") and
the interim unaudited consolidated
financial statements of the Company and its
consolidated subsidiaries at and for the
quarter ended September 30, 2004 (the
"Interim Financial Statements") provided to
the Placement Agent are the most
recently available audited and unaudited
consolidated financial statements of
the Company and its consolidated
subsidiaries, respectively, and fairly present
in all material respects, in accordance
with U.S. generally accepted accounting
principles ("GAAP"), the financial position
of the Company and its consolidated
subsidiaries, and the results of operations
and changes in financial condition
as of the dates and for the periods therein
specified, subject, in the case of
Interim Financial Statements, to year-end
adjustments (which are expected to
consist solely of normal recurring
adjustments). Such consolidated financial
statements and schedules have been prepared
in accordance with GAAP consistently
applied throughout the periods involved
(except as otherwise noted therein).
(b) The
Company's report on FRY-9C, dated September 30 ,2004 (the
"FRY-9C"), provided to the Placement Agent
is the most recently available such
report, and the information therein fairly
presents in all material respects the
financial position of the Company and its
subsidiaries. None of the Company or
any of its subsidiaries has been requested
by a Governmental Entity to
republish, restate or refile any regulatory
or financial report.
(c) Since the
respective dates of the Financial Statements,
Interim Financial Statements and the
FRY-9C, there has not been (A) any material
adverse change or development with respect
to the condition (financial or
otherwise), earnings, business, assets or
business prospects of the Company and
its subsidiaries, taken as a whole, whether
or not occurring in the ordinary
course of business or (B) any dividend or
distribution of any kind declared,
paid or made by the Company on any class of
its capital stock other than regular
quarterly dividends on the Company's common
stock.
(d) The
accountants of the Company who certified the Financial
Statements are independent public
accountants of the Company and its
subsidiaries within the meaning of the
Securities Act and the rules and
regulations of the Securities and Exchange
Commission ("SEC") thereunder.
4.17
Regulatory Enforcement
Matters. None of the Trust, the Company nor
any of its subsidiaries, nor any of their
respective officers, directors,
employees or representatives, is subject or
is party to, or has received any
notice from any Regulatory Agency (as
defined below) that any of them will
become subject or party to any
investigation with respect to, any
cease-and-
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desist order, agreement, civil monetary
penalty, consent agreement, memorandum
of understanding or other regulatory
enforcement action, proceeding or order
with or by, or is a party to any commitment
letter or similar undertaking to, or
is subject to any directive by, or has been
a recipient of any supervisory
letter from, or has adopted any board
resolutions at the request or suggestion
of, any Regulatory Agency that, in any such
case, currently restricts in any
material respect the conduct of their
business or that in any material manner
relates to their capital adequacy, their
credit policies, their management or
their business (each, a "Regulatory
Action"), nor has the Trust, the Company or
any of its subsidiaries been advised by any
Regulatory Agency that it is
considering issuing or requesting any such
Regulatory Action; and there is no
unresolved violation, criticism or
exception by any Regulatory Agency with
respect to any report or statement relating
to any examinations of the Trust,
the Company or any of its subsidiaries,
except where such unresolved violation,
criticism or exception would not, singly or
in the aggregate, have a Material
Adverse Effect. If the Company is a bank
holding company that is subject to the
Bank Holding Company Act, it is a
"well-run" bank holding company that satisfies
the criteria of the Federal Reserve's
regulations at 12 C.F.R. section
225.14(c). Each of the Company's
subsidiaries that is a depository institution,
the accounts of which are insured by the
FDIC (i) is "well-capitalized" within
the meaning of 12 U.S.C. section 1831o and
applicable implementing regulations
thereunder; and (ii) is not, and has not
been notified by any Regulatory Agency
that it is, in "troubled condition" within
the meaning of 12 U.S.C. section
1831i and applicable implementing
regulations thereunder. As used herein, the
term "Regulatory Agency" means any federal
or state agency charged with the
supervision or regulation of depositary
institutions or holding companies of
depositary institutions, or engaged in the
insurance of depositary institution
deposits, or any court, administrative
agency or commission or other
governmental agency, authority or
instrumentality having supervisory or
regulatory authority with respect to the
Trust, the Company or any of its
subsidiaries.
4.18
No Undisclosed
Liabilities. None of the Trust, the Company nor any
of its subsidiaries has any material
liability, whether known or unknown,
whether asserted or unasserted, whether
absolute or contingent, whether accrued
or unaccrued, whether liquidated or
unliquidated, and whether due or to become
due, including any liability for taxes (and
there is no past or present fact,
situation, circumstance, condition or other
basis for any present or future
action, suit, proceeding, hearing, charge,
complaint, claim or demand against
the Company or its subsidiaries that could
give rise to any such liability),
except for (i) liabilities set forth in the
Financial Statements or the Interim
Financial Statements and (ii) normal
fluctuations in the amount of the
liabilities referred to in clause (i) above
occurring in the ordinary course of
business of the Trust, the Company and all
of its subsidiaries since the date of
the most recent balance sheet included in
such Financial Statements.
4.19
Litigation. There is
no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court,
domestic or foreign, now pending or,
to the knowledge of the Company or the
Trust after due inquiry, threatened
against or affecting the Trust or the
Company or any of the Company's
subsidiaries, except for such actions,
suits or proceedings that, if adversely
determined, would not, singly or in the
aggregate, adversely affect the
consummation of the transactions
contemplated by the Operative Documents or have
a Material Adverse Effect; and the
aggregate of all pending legal or
governmental proceedings to which the Trust
or the Company or any of its
subsidiaries is a party or of which any of
their respective properties or assets
is subject, including ordinary routine
litigation incidental to the business,
are not expected
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to result in a Material Adverse Effect.
4.20
No Labor Disputes. No
labor dispute with the employees of the Trust,
the Company or any of its subsidiaries
exists or, to the knowledge of the
executive officers of the Trust or the
Company, is imminent, except those which
would not, singly or in the aggregate, have
a Material Adverse Effect.
4.21
Filings with the SEC.
The documents of the Company filed with the
SEC in accordance with the Exchange Act,
from and including the commencement of
the fiscal year covered by the Company's
most recent Annual Report on Form
10-KSB, at the time they were filed by the
Company with the SEC (collectively,
the "1934 Act Reports"), complied and will
comply in all material respects with
the requirements of the Exchange Act and
the rules and regulations of the SEC
thereunder (the "1934 Act Regulations"),
and, at the date of this Agreement and
on the Closing Date, do not and will not
include an untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary to make the statements therein,
in the light of the circumstances
under which they were made, not misleading;
and other than such instruments,
agreements, contracts and other documents
as are filed as exhibits to the
Company's Annual Report on Form 10-KSB,
Quarterly Reports on Form 10-QSB or
Current Reports on Form 8-K, there are no
instruments, agreements, contracts or
documents of a character described in Item
601 of Regulation S-K promulgated by
the SEC to which the Company or any of its
subsidiaries is a party. The Company
is in compliance, in all material respects,
with all currently applicable
requirements of the Exchange Act that were
added by the Sarbanes-Oxley Act of
2002.
4.22
Deferral of Interest
Payments on Junior Subordinated Notes. The
Company has no present intention to
exercise its option to defer payments of
interest on the Junior Subordinated Notes
as provided in the Indenture. The
Company believes that the likelihood that
it would exercise its rights to defer
payments of interest on the Junior
Subordinated Notes as provided in the
Indenture at any time during which the
Junior Subordinated Notes are outstanding
is remote because of the restrictions that
would be imposed on the Company's
ability to declare or pay dividends or
distributions on, or to redeem, purchase,
acquire or make a liquidation payment with
respect to, any of the Company's
capital stock and on the Company's ability
to make any payments of principal,
interest or premium on, or repay,
repurchase or redeem, any of its debt
securities that rank pari passu in all
respects with or junior in interest to
the Junior Subordinated Notes.
4.23
Information. The
information provided by the Company and the Trust
pursuant to this Agreement does not, as of
the date hereof, and will not, as of
the Closing Date, contain any untrue
statement of a material fact or omit to
state any material fact necessary to make
the statements therein, in the light
of the circumstances under which they were
made, not misleading.
Section 5. Representations and Warranties
of the Placement Agent. The Placement
Agent represents and warrants to, and
agrees with, the Company and the Trust as
follows:
5.1
Organization,
Standing and Qualification. The Placement Agent is
duly organized, validly existing and in
good standing under the laws of the
state of Delaware, with
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full power and authority to own, lease and
operate its properties and conduct
its business as currently being conducted.
The Placement Agent is duly qualified
to transact business as a foreign
corporation and is in good standing in each
other jurisdiction in which it owns or
leases property or conducts its business
so as to require such qualification and in
which the failure to so qualify
would, individually or in the aggregate,
have a material adverse effect on the
condition (financial or otherwise),
earnings, business, prospects or results of
operations of the Placement Agent.
5.2
Power and
Authority. The Placement Agent has all r
