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
----------------
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.
000 Xxxxxxxxx Xxxxxx, XX
24th Floor, Mail Code 3950
Xxxxxxx, Xxxxxxx 00000
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 Xxxxxxx Xxxxxxxx & Xxxx 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 Xxxxxxx Xxxxxxxx & 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 Xxxxxxx Xxxxxxxx & Xxxx 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 Xxxxxxxx Xxxxxx & 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 Xxxxxxxx Xxxxxx & 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
11
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-
12
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
13
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 Xxxxxxxx-Xxxxx 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
14
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 requisite power and
authority to enter into this Agreement, and this Agreement has been duly and
validly authorized, executed and delivered by the Placement Agent and
constitutes the legal, valid and binding agreement of the Placement Agent,
enforceable against the Placement Agent in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity and except as any indemnification
or contribution provisions thereof may be limited under applicable securities
laws.
5.3 General Solicitation. Neither the Placement Agent, nor any of the
Placement Agent's affiliates, nor any person acting on the Placement Agent's or
the Placement Agent's Affiliate's behalf has engaged, or will engage, in any
form of "general solicitation or general advertising" (within the meaning of
Regulation D under the Securities Act) in connection with any offer or sale of
the Preferred Securities.
5.4 Purchaser. The Placement Agent has made such reasonable inquiry as
is necessary to determine that the Purchaser is acquiring the Preferred
Securities for its own account, the Purchaser does not intend to distribute the
Preferred Securities in contravention of the Securities Act or any other
applicable securities laws.
5.5 Qualified Purchasers. The Placement Agent has not offered or sold,
and will not arrange for the offer or sale of, the Preferred Securities except
(i) to those the Placement Agent reasonably believes are institutional
"accredited investors" (within the meaning of subparagraph (a)(1), (2), (3) or
(7) of Rule 501 of Regulation D) or (ii) in an offshore transaction complying
with Rule 903 of Regulation S. In connection with each such sale, the Placement
Agent has taken or will take reasonable steps to ensure that the Purchaser is
aware that (a) such sale is being made in reliance on an exemption under the
Securities Act and (b) future transfers of the Preferred Securities may not be
made except in compliance with applicable securities laws.
5.6 Offering Circulars. Neither the Placement Agent nor its
representatives will include any nonpublic information about the Company, the
Trust or any of their affiliates in any registration statement, prospectus,
offering circular or private placement memorandum used in connection with any
purchase of Preferred Securities without the prior written consent of the Trust
and the Company.
Section 6. Covenants of the Offerors. The Offerors covenant and agree with the
Placement Agent and the Purchaser as follows:
6.1 Compliance with Representations and Warranties. During the period
from the date of this Agreement to the Closing Date, the Offerors shall use
their best efforts and take all
15
action necessary or appropriate to cause their representations and warranties
contained in Section 4 hereof to be true as of the Closing Date, after giving
effect to the transactions contemplated by this Agreement, as if made on and as
of the Closing Date.
6.2 Sale and Registration of Securities. Neither the Company nor the
Trust will, nor will either of them permit any of its Affiliates to, nor will
either of them permit any person acting on its or their behalf (other than the
Placement Agent and the Purchaser) to, directly or indirectly, (i) resell any
Preferred Securities that have been acquired by any of them, (ii) sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would or could be integrated
with the sale of the Preferred Securities in any manner that would require the
registration of the Securities under the Securities Act or (iii) make offers or
sales of any such Security, or solicit offers to buy any such Security, under
any circumstances that would require the registration of any of such Securities
under the Securities Act.
6.3 Lock Up. Neither the Company nor the Trust will, until one hundred
eighty (180) days following the Closing Date, without the Purchaser's prior
written consent, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any Preferred Securities or
other securities of the Trust other than as contemplated by this Agreement or
(ii) any other securities convertible into, or exercisable or exchangeable for,
any Preferred Securities or other securities of the Trust.
6.4 Qualification of Securities. The Company and the Trust will arrange
for the qualification of the Preferred Securities for sale under the laws of
such jurisdictions as the Placement Agent may designate and will maintain such
qualifications in effect so long as required for the sale of the Preferred
Securities. The Company or the Trust, as the case may be, will promptly advise
the Placement Agent of the receipt by the Company or the Trust, as the case may
be, of any notification with respect to the suspension of the qualification of
the Preferred Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
6.5 Use of Proceeds. The Trust shall use the proceeds from the sale of
the Preferred Securities and the Common Securities to purchase the Junior
Subordinated Notes from the Company.
6.6 Investment Company. So long as any of the Securities are
outstanding, (i) the Securities shall not be listed on a national securities
exchange registered under section 6 of the Exchange Act or quoted in a U.S.
automated interdealer quotation system, (ii) neither the Company nor the Trust
shall be an open-end investment company, unit investment trust or face-amount
certificate company that is, or is required to be, registered under section 8 of
the Investment Company Act, and, the Securities shall otherwise satisfy the
eligibility requirements of Rule 144A(d)(3) and (iii) neither of the Offerors
shall engage, or permit any subsidiary to engage, in any activity which would
cause it or any subsidiary to be an "investment company" under the provisions of
the Investment Company Act.
6.7 Solicitation and Advertising. Neither the Company nor the Trust
will, nor will either of them permit any of their Affiliates or any person
acting on their behalf to (other than the
16
Placement Agents), (i) engage in any "directed selling efforts" within the
meaning of Regulation S under the Securities Act or (ii) engage 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.
6.8 Compliance with Rule 144A(d)(4) under the Securities Act. So long as
any of the Securities are outstanding and are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, the Offerors will, during
any period in which they are not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, or the Offerors are not exempt from such reporting
requirements pursuant to and in compliance with Rule 12g3-2(b) under the
Exchange Act, provide to each holder of such restricted securities and to each
prospective purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser in
connection with any proposed transfer, any information required to be provided
by Rule 144A(d)(4) under the Securities Act, if applicable. The information
provided by the Offerors pursuant to this Section 6.8 will not, at the date
thereof, contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Company and the
Trust are required to register under the Exchange Act, such reports filed in
compliance with Rule 12g3-2(b) shall be sufficient information as required
above. This covenant is intended to be for the benefit of the Purchaser, the
holders of the Securities, and the prospective purchasers designated by such
holders, from time to time, of the Securities.
6.9 Reports. Each of the Company and the Trust shall furnish to (i) the
Placement Agent, (ii) the Purchaser and any subsequent holder of the Securities,
and (iii) any beneficial owner of the Securities reasonably identified to the
Company and the Trust (which identification may be made by either such
beneficial owner or by the Purchaser), a duly completed and executed certificate
in the form attached hereto as Annex F, including the financial statements
referenced in such Annex, which certificate and financial statements shall be so
furnished by the Company and the Trust not later than forty-five (45) days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than ninety (90) days after the end of each fiscal year of
the Company.
Section 7. Covenants of the Placement Agent. The Placement Agent covenants and
agrees with the Offerors that, during the period from the date of this Agreement
to the Closing Date, the Placement Agent shall use its best efforts and take all
action necessary or appropriate to cause its representations and warranties
contained in Section 5 to be true as of the Closing Date, after giving effect to
the transactions contemplated by this Agreement, as if made on and as of the
Closing Date. The Placement Agent further covenants and agrees not to engage in
hedging transactions with respect to the Preferred Securities unless such
transactions are conducted in compliance with the Securities Act.
Section 8. Indemnification & Contribution.
8.1 Indemnification.
17
8.1.1 The Company and the Trust agree jointly and severally to indemnify
and hold harmless the Placement Agent, the Purchaser, the Placement Agent's
affiliates, a Subsequent Purchaser (collectively, the "Indemnified Parties") and
the Indemnified Parties' respective directors, officers, employees and agents
and each person who "controls" the Indemnified Parties within the meaning of
either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any information or documents furnished
or made available to the Purchaser or the Placement Agent by or on behalf of the
Company, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (iii) the breach or alleged breach of any representation, warranty
or agreement of either Offeror contained herein, and agrees to reimburse each
such Indemnified Party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which the Company or the Trust may otherwise have.
8.1.2 Promptly after receipt by an Indemnified Party under this Section 8
of notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, promptly notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve the indemnifying party from liability under Section 8.1.1 above unless
and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in Section 8.1.1 above.
The Placement Agent shall be entitled to appoint counsel to represent the
Indemnified Party in any action for which indemnification is sought. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the Indemnified Party) also be counsel to the
Indemnified Party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all Indemnified Parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. An
indemnifying party will not, without the prior written consent of the
Indemnified Parties, which consent shall not be unreasonably withheld or
delayed, settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not the
Indemnified Parties are actual or potential parties to such claim, action, suit
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising out
of such claim, action, suit or proceeding.
8.2 Contribution.
8.2.1 In order to provide for just and equitable contribution in
circumstances under which the indemnification provided for in Section 8.1 hereof
is for any reason held to be
18
unenforceable for the benefit of an Indemnified Party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such Indemnified Party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Offerors, on the one hand, and the Placement Agent, on
the other hand, from the offering of the Securities or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above, but also the relative fault of the Offerors, on the one hand, and the
Placement Agent, on the other hand, in connection with the statements, omissions
or breaches, which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
8.2.2 The relative benefits received by the Offerors, on the one hand, and
the Placement Agent, on the other hand, in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities (before deducting expenses)
received by the Offerors and the Commission received by the Placement Agent bear
to the aggregate of such net proceeds and Commission.
8.2.3 The Offerors and the Placement Agent agree that it would not be just
and equitable if contribution pursuant to this Section 8.2 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8.2.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an Indemnified Party and referred to above in this Section 8.2 shall
be deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement, omission or alleged omission or breach or
alleged breach.
8.2.4 Notwithstanding any provision of this Section 8 to the contrary, the
Placement Agent shall not be required to contribute any amount in excess of the
amount of the Commission.
8.2.5 No person guilty of fraudulent misrepresentation (within the meaning
of section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
8.2.6 For purposes of this Section 8.2, the Placement Agent, each person,
if any, who controls the Placement Agent within the meaning of section 15 of the
Securities Act or section 20 of the Exchange Act and the respective partners,
directors, officers, employees and agents of the Placement Agent or any such
controlling person shall have the same rights to contribution as the Placement
Agent, while each officer and director of the Company, each trustee of the Trust
and each person, if any, who controls the Company within the meaning of section
15 of the Securities Act or section 20 of the Exchange Act shall have the same
rights to contribution as the Offerors.
8.3 Additional Remedies. The indemnity and contribution agreements
contained in this Section 8 are in addition to any liability that the Offerors
may otherwise have to any
19
Indemnified Party.
8.4 Additional Indemnification. The Company shall indemnify and hold
harmless the Trust against all loss, liability, claim, damage and expense
whatsoever, as due from the Trust under Sections 8.1 through 8.3 hereof.
Section 9. Rights and Responsibilities of Placement Agent.
9.1 Reliance. In performing its duties under this Agreement, the
Placement Agent shall be entitled to rely upon any notice, signature or writing
which it shall in good faith believe to be genuine and to be signed or presented
by a proper party or parties. The Placement Agent may rely upon any opinions or
certificates or other documents delivered by the Offerors or their counsel or
designees to either the Placement Agent or the Purchaser.
9.2 Rights of Placement Agent. In connection with the performance of its
duties under this Agreement, the Placement Agent shall not be liable for any
error of judgment or any action taken or omitted to be taken unless the
Placement Agent was grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agent to expend or risk its own funds or
otherwise incur any financial liability on behalf of the Purchaser in connection
with the performance of any of its duties hereunder. The Placement Agent shall
be under no obligation to exercise any of the rights or powers vested in it by
this Agreement.
Section 10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Placement Agent, by notice given to the Company and
the Trust prior to delivery of and payment for the Preferred Securities, if
prior to such time (i) a downgrading shall have occurred in the rating accorded
the Company's debt securities or preferred stock by any "nationally recognized
statistical rating organization," as that term is used by the SEC in Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company's debt securities or preferred
stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser at
least $4,500,000 stated liquidation value of Preferred Securities, (iii) the
Company or any of its subsidiaries that is an insured depository institution
shall cease to be "adequately-capitalized" within the meaning of 12 U.S.C.
Section 1831 and applicable regulations adopted thereunder, or any formal
administrative or judicial action is taken by any appropriate federal banking
agency against the Company or any such insured subsidiary for unsafe and unsound
banking practices, or violations of law, (iv) a suspension or material
limitation in trading in securities generally shall have occurred on the New
York Stock Exchange, (v) a suspension or material limitation in trading in any
of the Company's securities shall have occurred on the exchange or quotation
system upon which the Company's securities are traded, if any, (vi) a general
moratorium on commercial banking activities shall have been declared either by
federal or Michigan authorities or (vii) there shall have occurred any outbreak
or escalation of hostilities, or declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the Placement Agent's or Purchaser's judgment,
impracticable or inadvisable to proceed with the offering or delivery of the
Preferred Securities.
20
Section 11. Miscellaneous.
11.1 Disclosure Schedule. The term "Disclosure Schedule," as used herein,
means the schedule, if any, attached to this Agreement that sets forth items the
disclosure of which is necessary or appropriate as an exception to one or more
representations or warranties contained in Section 4 hereof. The Disclosure
Schedule shall be arranged in paragraphs corresponding to the section numbers
contained in Section 4. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the immediately preceding sentence, the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein unless the representation or warranty has to do with the
existence of the document or other item itself. Information provided by the
Company in response to any due diligence questionnaire shall not be deemed part
of the Disclosure Schedule and shall not be deemed to be an exception to one or
more representations or warranties contained in Section 4 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.
11.2 Notices. All communications hereunder will be in writing and
effective only on receipt, and will be mailed, delivered by hand or courier or
sent by facsimile and confirmed:
If to the Placement Agent, to:
SunTrust Capital Markets, Inc.
000 Xxxxxxxxx Xxxxxx, XX
24th Floor, Mail Code 3950
21
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
with a copy to:
Xxxxxxx Xxxxxxxx & Wood LLP
Two World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
if to the Offerors, to:
Community Shores Bank Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Chief Financial Officer
All such notices and communications shall be deemed to have been duly
given (i) at the time delivered by hand, if personally delivered, (ii) five
business days after being deposited in the mail, postage prepaid, if mailed,
(iii) when answered back, if telexed, (iv) the next business day after being
telecopied, or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next-day delivery. From and after the
Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agent, the Company, and their respective counsel, may change their respective
notice addresses, from time to time, by written notice to all of the foregoing
persons.
11.3 Parties in Interest, Successors and Assigns. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person other than
the parties hereto and the affiliates, directors, officers, employees, agents
and controlling persons referred to in Section 8 hereof and their successors,
assigns, heirs and legal representatives, any right or obligation hereunder.
None of the rights or obligations of the Company or the Trust under this
Agreement may be assigned, whether by operation of law or otherwise, without the
Placement Agent's prior written consent. The rights and obligations of the
Placement Agent and Purchaser under this Agreement may be assigned by such party
without the Company's or the Trust's consent; provided that the assignee assumes
the obligations of such party under this Agreement.
11.4 Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement by
each of the parties hereto.
22
11.5 Counterparts and Facsimile. This Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument. This Agreement may be executed by any
one or more of the parties hereto by facsimile.
11.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.7 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW).
11.8 Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR
AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY
BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE
COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT.
11.9 Entire Agreement. This Agreement, together with the Operative
Documents and the other documents delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, together with the Operative Documents and the other
documents delivered in connection with the transaction contemplated by this
Agreement, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
11.10 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Placement Agent's and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.
11.11 Survival. The respective agreements, representations, warranties,
indemnities and other statements of the Company and the Trust and their
respective officers or trustees and of the Placement Agent set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Placement Agent, the Purchaser,
the Company or the Trust or any of their respective officers, directors,
trustees or
23
controlling persons, and will survive delivery of and payment for the Preferred
Securities. The provisions of Sections 2.4 and 8 shall survive the termination
or cancellation of this Agreement.
Signatures appear on the following page
24
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.
Very truly yours,
COMMUNITY SHORES BANK CORPORATION
By: _____________________________
Name:
Title:
COMMUNITY SHORES CAPITAL TRUST I
By: Community Shores Bank
Corporation, as Depositor
By: _____________________________
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first set forth above
SUNTRUST CAPITAL MARKETS, INC.,
as Placement Agent
By: ________________________________
Name:
Title:
25
SCHEDULE 4.10
TO THE PLACEMENT AGREEMENT AMONG COMMUNITY SHORES BANK CORPORATION,
COMMUNITY SHORES CAPITAL TRUST I, AND SUNTRUST CAPITAL MARKETS, INC.
List of Significant Subsidiaries
Community Shores Bank
Community Shores Mortgage Company
26
SCHEDULE 4.12
TO THE PLACEMENT AGREEMENT AMONG COMMUNITY SHORES BANK CORPORATION,
COMMUNITY SHORES CAPITAL TRUST I, AND SUNTRUST CAPITAL MARKETS, INC.
The Company has pledged 100% of the issued and outstanding capital stock
of its wholly-owned subsidiary, Community Shores Bank (the "Bank"), as
collateral for a $5,000,000 Revolving Loan Facility ("Credit Facility") with
LaSalle Bank National Association, as Lender. As of September 30, 2004 and
December 15, 2004, approximately $3,200,000 remained outstanding on the Credit
Facility, which has a maturity date of August 1, 2005.
27
SCHEDULE 4.13
TO THE PLACEMENT AGREEMENT AMONG COMMUNITY SHORES BANK CORPORATION,
COMMUNITY SHORES CAPITAL TRUST I, AND SUNTRUST CAPITAL MARKETS, INC.
The Company has pledged 100% of the issued and outstanding capital stock
of its wholly-owned subsidiary, Community Shores Bank (the "Bank"), as
collateral for a $5,000,000 Revolving Loan Facility ("Credit Facility") with
LaSalle Bank National Association, as Lender. As of September 30, 2004 and
December 15, 2004, approximately $3,200,000 remained outstanding on the Credit
Facility, which has a maturity date of August 1, 2005.
The Bank has pledged securities and loans to the Federal Home Loan Bank of
Indianapolis (the "FHLBI") to secure repayment of borrowings from the FHLBI. As
of September 30, 2004 and December 15, 2004, the Bank had outstanding borrowings
from the FHLBI of approximately $6,000,000; and as of September 30, 2004, the
market value of the securities and book value of the loans pledged to secure the
outstanding borrowings aggregated approximately $9,539,958.
28
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
PREFERRED SECURITIES SUBSCRIPTION AGREEMENT
[date], 2004
THIS PREFERRED SECURITIES SUBSCRIPTION AGREEMENT (this "Agreement") made
among Community Shores Capital Trust I (the "Trust"), a statutory trust created
under the Delaware Statutory Trust Act (12 Del. C. Section 3801, et seq.),
Community Shores Bank Corporation, a Michigan corporation, with its principal
offices located at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (the
"Company" and, together with the Trust, the "Offerors"), STI Investment
Management, Inc., a Delaware corporation (the "Purchaser"), and SunTrust Capital
Markets, Inc. (as to Sections 1.2, 1.3 and Article III).
RECITALS:
A. The Trust desires to issue FOUR MILLION FIVE HUNDRED THOUSAND
($4,500,000) DOLLARS of its Floating Rate Preferred Securities (the "Preferred
Securities"), liquidation amount $1,000 per Preferred Security, representing an
undivided beneficial interest in the assets of the Trust (the "Offering"), to be
issued pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement") by and among the Company, Deutsche Bank Trust Company Americas, as
Property Trustee (the "Property Trustee"), the administrative trustees named
therein and the Holders (as defined therein), which Preferred Securities are to
be guaranteed by the Company with respect to distributions and payments upon
liquidation, redemption and otherwise pursuant to the terms of a Guarantee
Agreement between the Company and Deutsche Bank Trust Company Americas, as
Guarantee Trustee (the "Guarantee"); and
B. The proceeds from the sale of the Preferred Securities will be
combined with the proceeds from the sale by the Trust to the Company of its
Common Securities, and will be used by the Trust to purchase an equivalent
amount of Floating Rate Junior Subordinated Notes of the Company (the "Notes")
to be issued by the Company pursuant to an indenture (the "Indenture") to be
executed by the Company and Deutsche Bank Trust Company Americas, as Indenture
Trustee; and
C. In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:
Article I
PURCHASE AND SALE OF PREFERRED SECURITIES
1.1 Upon the execution of this Agreement, the Purchaser hereby agrees to
purchase from the Trust Preferred Securities at a price equal to $1,000 per
Preferred Security (the "Purchase Price"), which Purchase Price is equal to FOUR
MILLION FIVE HUNDRED THOUSAND MILLION ($4,500,000) DOLLARS, and the Trust agrees
to sell such Preferred
A-1
Securities to the Purchaser for said Purchase Price. The rights and preferences
of the Preferred Securities are set forth in the Trust Agreement. The closing of
the sale and purchase of the Preferred Securities by the Offerors to the
Purchaser shall occur on December 17, 2004, or such other later date (not later
than January 14, 2005) as the parties may designate (the "Closing Date") The
Purchase Price is payable in immediately available funds on the Closing Date.
The Offerors shall provide the Purchaser payment instructions no later than two
(2) days prior to the Closing Date.
1.2 The Placement Agreement, dated as of December 17, 2004 (the
"Placement Agreement"), among the Offerors and the Placement Agent identified
therein (the "Placement Agent") includes certain representations and warranties,
covenants and conditions to closing and certain other matters governing the
Offering. The Placement Agreement is hereby incorporated by reference into this
Agreement, and the Purchaser shall be entitled to each of the benefits of the
Placement Agent and the Purchaser under the Placement Agreement and shall be
entitled to enforce the obligations of the Offerors under such Placement
Agreement as fully as if the Purchaser were a party to such Placement Agreement.
1.3 The Purchaser is purchasing the Preferred Securities in its capacity
as a warehouse lender, and Purchaser may resell the Preferred Securities to a
subsequent purchaser (any such purchaser from the Purchaser being referred to
hereinafter as a "Subsequent Purchaser"). Upon transfer of the Preferred
Securities to a Subsequent Purchaser, the Subsequent Purchaser shall be entitled
to each of the benefits of the Placement Agent and the Purchaser under the
Placement Agreement and this Agreement, and shall be entitled to enforce the
obligations of the Offerors under the Placement Agreement and this Agreement, as
fully as if the Subsequent Purchaser were a party to the Placement Agreement and
this Agreement.
Article II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1 The Purchaser understands and acknowledges that none of Preferred
Securities, the Notes nor the Guarantee (i) have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities law, (ii) are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act and (iii) may
not be offered, sold, pledged or otherwise transferred by the Purchaser except
in compliance with the registration requirements of the Securities Act or any
other applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.
2.2 The Purchaser represents and warrants that it is purchasing the
Preferred Securities for its own account and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of the Securities
Act or other applicable securities laws, subject to any requirement of law that
the disposition of its property be at all times within its control and subject
to its ability to resell such Preferred Securities pursuant to an effective
registration statement under the Securities Act or under Rule 144A or any other
exemption from registration available under the Securities Act or any other
applicable securities law. The Purchaser
A-2
understands that no public market exists for any of the Preferred Securities,
and that it is unlikely that a public market will ever exist for the Preferred
Securities.
2.3 The Purchaser represents and warrants that (a) it has consulted with
its own legal, regulatory, tax, business, investment, financial and accounting
advisers in connection herewith to the extent it has deemed necessary; (b) it
has had a reasonable opportunity to ask questions of and receive answers from
officers and representatives of the Offerors concerning their respective
financial condition and results of operations and the purchase of the Preferred
Securities and any such questions have been answered to its satisfaction; (c) it
has had the opportunity to review all publicly available records and filings
concerning the Offerors and it has carefully reviewed such records and filings
that it considers relevant to making an investment decision; and (d) it has made
its own investment decisions based upon its own judgment, due diligence and
advice from such advisers as it has deemed necessary and not upon any view
expressed by the Offerors or the Placement Agent.
2.4 The Purchaser represents and warrants that it is an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7)
of Rule 501 of Regulation D under the Securities Act.
2.5 RESERVED.
2.6 The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
hereby, and it has full right and power to subscribe for Preferred Securities
and perform its obligations pursuant to this Agreement.
2.7 The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or
required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.
2.8 The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.
Article III
MISCELLANEOUS
3.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:
To the Offerors: Community Shores Bank Corporation
A-3
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
To the Purchaser: STI Investment Management, Inc.
c/o SunTrust Capital Markets, Inc.
000 Xxxxxxxxx Xxxxxx, XX
24th Floor, Mail Code 0000
X-0
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.
3.2 This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
3.3 Upon the execution and delivery of this Agreement by the Purchaser,
this Agreement shall become a binding obligation of the Purchaser with respect
to the purchase of Preferred Securities as herein provided.
3.4 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
3.5 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
3.6 This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
3.7 In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Offerors' and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.
Signatures appear on the following page
A-5
IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day
and year first written above.
STI Investment Management, Inc., as Purchaser
By: _________________________________________
Name:
Title:
COMMUNITY SHORES BANK CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
COMMUNITY SHORES CAPITAL TRUST I
By: Community Shores Bank
Corporation, as Depositor
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
SUNTRUST CAPITAL MARKETS, INC.
(for purposes of the rights and
obligations in Sections 1.2, 1.3
and Article III only)
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Managing Director
X-0
XXXXXXX X-0
FORM OF XXXXXXX XXXXXXXX & WOOD LLP OPINION
Pursuant to Section 3.2(a) of the Placement Agreement, Xxxxxxx Xxxxxxxx &
Xxxx LLP, special counsel for the Placement Agent and Purchaser, shall deliver
an opinion to the effect that:
(i) the Company and each Significant Subsidiary is validly existing as a
corporation in good standing under the laws of the jurisdiction in which
it is chartered or organized; the Company has corporate power and
authority to (a) execute and deliver, and to perform its obligations
under, the Operative Documents to which it is a party and (b) issue and
perform its obligations under the Notes;
(ii) neither the issue and sale of the Common Securities, the Preferred
Securities or the Junior Subordinated Notes, nor the purchase by the Trust
of the Junior Subordinated Notes, nor the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust nor
the consummation of the transactions contemplated thereby will constitute
a breach or violation of the Trust Agreement or the charter or by-laws of
the Company;
(iii) the Amended and Restated Trust Agreement has been duly authorized,
executed and delivered by the Company and duly executed and delivered by
the Administrative Trustees;
(iv) each of the Guarantee and the Indenture has been duly authorized, executed
and delivered by the Company and, assuming it has been duly authorized,
executed and delivered by the Guarantee Trustee and the Indenture Trustee,
respectively, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity;
(v) the Junior Subordinated Notes have been duly authorized and executed by
the Company and delivered to the Indenture Trustee for authentication in
accordance with the Indenture and, when authenticated in accordance with
the provisions of the Indenture and delivered to the Trust against payment
therefor, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture and 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;
(vi) the Trust is not, and, following the issuance of the Preferred Securities
and the consummation of the transactions contemplated by the Operative
Documents and the application of the proceeds therefrom, the Trust will
not 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;
(vii) assuming (a) the accuracy of the representations and warranties, and
compliance with the agreements contained in the Placement Agreement and
(b) that the Preferred Securities are sold in a manner contemplated by,
and in accordance with the Placement Agreement, Subscription Agreement and
the Amended and Restated Trust Agreement, it is not
B-1-1
necessary in connection with the offer, sale and delivery of the
Preferred Securities by the Trust to the Purchaser, to register any of
the Securities under the Securities Act or to require qualification of
the Indenture under the Trust Indenture Act of 1939, as amended;
(viii) the Placement Agreement and Subscription Agreement have been duly
authorized, executed and delivered by the Company; and
(ix) the Subscription Agreement has been duly executed and delivered by the
Administrative Trustees.
In rendering such opinions, such counsel may (A) state that its opinion
is limited to the laws of the State of New York, the Delaware General
Corporation Law and the federal laws of the United States; (B) as to matters
involving the application of laws of any jurisdiction other than the State of
New York and the Delaware General Corporation Law or the federal laws of the
United States, (i) rely, to the extent deemed proper and specified in such
opinion, upon the opinion of other counsel of good standing believed to be
reliable and who are satisfactory to the Purchaser or (ii) assume such law is
substantially similar to the law of the State of New York and, (C) as to matters
of fact, rely to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.
X-0-0
XXXXXXX X-0
FORM OF COMPANY COUNSEL OPINION
OR OFFICERS' CERTIFICATE
Pursuant to Section 3.2(b) of the Placement Agreement, [General] counsel
for the Company shall deliver an opinion, or the Company shall provide an
Officers' Certificate, to the effect that:
(i) all of the issued and outstanding shares of capital stock of each
Significant Subsidiary are owned of record by the Company, and the
issuance of the Preferred Securities and the Common Securities is not
subject to any contractual preemptive rights known to such
[counsel/officer];
(ii) no consent, approval, authorization or order of any court or governmental
authority is required for the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, the purchase by the
Trust of the Junior Subordinated Notes, the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust or the
consummation of the transactions contemplated in the Operative Documents,
except such approvals (specified in such [opinion/certificate]) as have
been obtained;
(iii) to the knowledge of such [counsel/officer], there is no action, suit or
proceeding before or by any government, governmental instrumentality,
arbitrator or court, domestic or foreign, now pending or threatened
against or affecting the Trust or the Company or any Significant
Subsidiary that could adversely affect the consummation of the
transactions contemplated by the Operative Documents or could have a
Material Adverse Effect;
(iv) the Company is duly registered as a bank holding company under the Bank
Holding Company Act and the regulations thereunder of the Federal Reserve
Board, and the deposit accounts of the Company's banking subsidiary are
insured by the 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 such person's knowledge, threatened;
(v) The execution, delivery and performance of the Operative Documents, as
applicable, by the Company and the Trust and the consummation by the
Company and the Trust of the transactions contemplated by the Operative
Documents, as applicable, (a) will not result in any violation of the
charter or bylaws of the Company, the charter or bylaws of the Bank, the
Amended and Restated Trust Agreement or the Certificate of Trust, and (b)
will not conflict with, or result in a breach of any of the terms or
provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge and encumbrance upon any assets
or properties of the Company or any Significant Subsidiary under, (A) any
agreement, indenture, mortgage or instrument that the Company or any
Significant Subsidiary of the Company is a party to or by which it may be
bound or to which any of its assets or properties may be subject, or (B)
any existing applicable law,
B-2-1
rule or administrative regulation [for General Counsel only: except that I
express no opinion with respect to the securities laws of the State of
Delaware] of any court or governmental agency or authority having
jurisdiction over the Company or any Significant Subsidiary of the Company
or any of their respective assets or properties, except in case of (b),
where any such violation, conflict, breach, default, lien, charge or
encumbrance, would not have a material adverse effect on the assets,
properties, business, results of operations or financial condition of the
Company and its subsidiaries, taken as whole.
All terms used but not defined herein shall have the meanings assigned to
them in the Placement Agreement. A Subsequent Purchaser shall be entitled to
rely on this [opinion/certificate].
[Applies only to in-house counsel opinion] [In rendering such opinions,
such counsel may (A) state that the above is limited to the laws of the States
of [Jurisdiction of bar admission], (B) rely as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the Company and
public officials.]
X-0-0
XXXXXXX X-0
FORM OF TAX COUNSEL OPINION
Pursuant to Section 3.2(c) of the Placement Agreement, Xxxxxxx Xxxxxxxx &
Xxxx LLP, special tax counsel for the Placement Agent and Purchaser, shall
deliver an opinion to the effect that:
(i) the Trust will be classified for United States federal income tax purposes
as a grantor trust and not as an association or a publicly traded
partnership taxable as a corporation; and
(ii) for United States federal income tax purposes, the Junior Subordinated
Notes will constitute indebtedness of the Company.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of New York and the federal laws of the United
States and (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials.
X-0-0
XXXXXXX X-0
FORM OF DELAWARE COUNSEL TRUST OPINION
Pursuant to Section 3.2(d) of the Placement Agreement, Xxxxxxxx, Xxxxxx
& Finger, P.A., special Delaware counsel for the Placement Agent and Purchaser,
shall deliver an opinion to the effect that:
(i) the Trust has been duly created and is validly existing in good standing
as a statutory trust under the Delaware Statutory Trust Act, and all
filings required under the laws of the State of Delaware with respect to
the creation and valid existence of the Trust as a statutory trust have
been made;
(ii) under the Delaware Statutory Trust Act and the Amended and Restated
Trust Agreement, the Trust has the trust power and authority (A) to own
property and conduct its business, all as described in the Amended and
Restated Trust Agreement, (B) to execute and deliver, and to perform its
obligations under, each of the Placement Agreement, the Subscription
Agreement, the Common Securities Subscription Agreement, the Junior
Subordinated Note Subscription Agreement and the Preferred Securities
and the Common Securities and (C) to purchase and hold the Junior
Subordinated Notes;
(iii) under the Delaware Statutory Trust Act, the certificate attached to the
Amended and Restated Trust Agreement as Exhibit C is an appropriate form
of certificate to evidence ownership of the Preferred Securities; the
Preferred Securities have been duly authorized by the Trust Agreement
and, when issued and delivered against payment of the consideration as
set forth in the Subscription Agreement, the Preferred Securities will
be validly issued and (subject to the qualifications set forth in this
paragraph) fully paid and nonassessable and will represent undivided
beneficial interests in the assets of the Trust; the holders of the
Preferred Securities will be entitled to the benefits of the Amended and
Restated Trust Agreement and, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware; and such counsel may
note that the holders of the Preferred Securities may be obligated,
pursuant to the Amended and Restated Trust Agreement, to (A) provide
indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Preferred
Securities certificates and the issuance of replacement Preferred
Securities certificates and (B) provide security or indemnity in
connection with requests of or directions to the Property Trustee to
exercise its rights and remedies under the Amended and Restated Trust
Agreement;
(iv) the Common Securities have been duly authorized by the Trust Agreement
and, when issued and delivered by the Trust to the Company against
payment therefor as described in the related Amended and Restated Trust
Agreement and the related Common Securities Subscription Agreement, will
be validly issued and fully paid and will represent undivided beneficial
interests in the assets of the Trust entitled to the benefits of the
Trust Agreement;
B-4-1
(v) under the Delaware Statutory Trust Act and the Amended and Restated
Trust Agreement, the issuance of the Preferred Securities and the
Common Securities is not subject to preemptive or other similar rights;
(vi) under the Delaware Statutory Trust Act and the Amended and Restated
Trust Agreement, the execution and delivery by the Trust of the
Placement Agreement, the Subscription Agreement, the Common Securities
Subscription Agreement and the Junior Subordinated Note Subscription
Agreement, and the performance by the Trust of its obligations
thereunder, have been duly authorized by all necessary trust action on
the part of the Trust;
(vii) the Amended and Restated Trust Agreement constitutes a legal, valid and
binding obligation of the Company and the Trustees, and is enforceable
against the Company and the Trustees, in accordance with its terms
subject, as to enforcement, to the effect upon the Amended and Restated
Trust Agreement of (a) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance or
transfer and other similar laws relating to or affecting the rights and
remedies of creditors generally, (b) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether
considered and applied in a proceeding in equity or at law), and (c)
the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution;
(viii) the issuance and sale by the Trust of the Preferred Securities and the
Common Securities, the purchase by the Trust of the Junior Subordinated
Notes, the execution, delivery and performance by the Trust of the
Placement Agreement, the Subscription Agreement, the Common Securities
Subscription Agreement and the Junior Subordinated Note Subscription
Agreement, the consummation by the Trust of the transactions
contemplated by the Placement Agreement and Subscription Agreement and
compliance by the Trust with its obligations thereunder do not violate
(a) any of the provisions of the Certificate of Trust or the Amended
and Restated Trust Agreement or (b) any applicable Delaware law, rule
or regulation;
(ix) no filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Delaware court or
Delaware governmental authority or Delaware agency is necessary or
required solely in connection with the issuance and sale by the Trust
of the Common Securities or the Preferred Securities, the purchase by
the Trust of the Junior Subordinated Notes, the execution, delivery and
performance by the Trust of the Placement Agreement, the Subscription
Agreement, the Common Securities Subscription Agreement and the Junior
Subordinated Note Subscription Agreement, the consummation by the Trust
of the transactions contemplated by the Placement Agreement and the
Subscription Agreement and compliance by the Trust with its obligations
thereunder; and
(x) the holders of the Preferred Securities (other than those holders who
reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by
B-4-2
the State of Delaware solely as a result of their participation in the
Trust and the Trust will not be liable for any income tax imposed by
the State of Delaware.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and (B) rely as to matters of fact,
to the extent deemed proper, on certificates of responsible officers of the
Company and public officials.
X-0-0
XXXXXXX X-0
FORM OF TRUSTEE COUNSEL OPINION
Pursuant to Section 3.2(e) of the Placement Agreement, White & Case,
special counsel for the Guarantee Trustee, the Property Trustee and the
Indenture Trustee, shall deliver an opinion to the effect that:
(i) Deutsche Bank Trust Company Americas, is a New York banking corporation
with trust powers duly organized and validly existing in good standing
under the laws of the State of New York with all necessary corporate power
and authority to execute, deliver and perform its obligations under the
terms of the Guarantee, the Amended and Restated Trust Agreement and the
Indenture;
(ii) the execution, delivery and performance by Deutsche Bank Trust Company
Americas of the Guarantee, the Amended and Restated Trust Agreement and
the Indenture have been duly authorized by all necessary corporate action
on the part of Deutsche Bank Trust Company Americas, each of the
Guarantee, the Amended and Restated Trust Agreement and the Indenture has
been duly executed and delivered by Deutsche Bank Trust Company Americas,
and each of the Guarantee and the Indenture constitutes the legal, valid
and binding obligation of Deutsche Bank Trust Company Americas enforceable
against Deutsche Bank Trust Company Americas in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity;
(iii) the execution, delivery and performance of the Guarantee, the Amended and
Restated Trust Agreement and the Indenture by Deutsche Bank Trust Company
Americas do not conflict with or constitute a breach of (A) the articles
of association or by-laws of Deutsche Bank Trust Company Americas or (B)
any law or regulation of the United States of America or the State of New
York governing the banking or trust powers of Deutsche Bank Trust Company
Americas;
(iv) no consent, approval or authorization of, or registration with or notice
to, any governmental authority or agency of the United States of America
governing the banking or trust powers of Deutsche Bank Trust Company
Americas is required for the execution, delivery or performance by it of
the Guarantee, the Amended and Restated Trust Agreement or the Indenture;
(v) the Junior Subordinated Notes have been duly authenticated and delivered
by Deutsche Bank Trust Company Americas; and
(vi) The Preferred Securities have been duly authenticated and delivered by
Deutsche Bank Trust Company Americas.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of New York and the federal laws of the United
States and (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials.
X-0-0
XXXXXXX X-0
FORM OF DELAWARE TRUSTEE COUNSEL OPINION
Pursuant to Section 3.2(f) of the Placement Agreement, Xxxxxxxx, Xxxxxx &
Finger, P.A., counsel for the Placement Agent and Purchaser, shall deliver an
opinion to the effect that:
(i) Deutsche Bank Trust Company Delaware is duly incorporated and validly
existing as a Delaware banking corporation under the laws of the State of
Delaware with trust powers and with its principal place of business in the
State of Delaware;
(ii) Deutsche Bank Trust Company Delaware has the corporate power and authority
to execute, deliver and perform its obligations under, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of, the Amended and Restated Trust Agreement and to consummate
the transactions contemplated thereby;
(iii) The Amended and Restated Trust Agreement has been duly authorized,
executed and delivered by Deutsche Bank Trust Company Delaware and
constitutes a legal, valid and binding obligation of Deutsche Bank Trust
Company Delaware, and is enforceable against Deutsche Bank Trust Company
Delaware, in accordance with its terms subject as to enforcement, to the
effect upon the Trust Agreement of (a) applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, fraudulent conveyance or
transfer and similar laws relating to or affecting the rights and remedies
of creditors generally, (b) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and applied
in a proceeding in equity or at law), and (c) the effect of applicable
public policy on the enforceability of provisions relating to
indemnification or contribution;
(iv) The execution, delivery and performance by Deutsche Bank Trust Company
Delaware of the Amended and Restated Trust Agreement do not conflict with
or result in a violation of (A) articles of association or by-laws of
Deutsche Bank Trust Company Delaware or (B) any law or regulation of the
State of Delaware or the United States of America governing the banking or
trust powers of Deutsche Bank Trust Company Delaware or, to our knowledge,
without independent investigation, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or
other agreement or instrument to which Deutsche Bank Trust Company
Delaware is a party or by which it is bound or, to our knowledge, without
independent investigation, of any judgment or order applicable to Deutsche
Bank Trust Company Delaware; and
(v) No approval, authorization or other action by, or filing with, any
governmental authority of the State of Delaware or the United States of
America governing the banking and trust powers of Deutsche Bank Trust
Company Delaware is required
B-6-1
in connection with the execution and delivery by Deutsche Bank Trust
Company Delaware of the Amended and Restated Trust Agreement or the
performance by Deutsche Bank Trust Company Delaware of its obligations
thereunder, except for the filing of the Certificate of Trust with the
Secretary of State of the State of Delaware, which Certificate of Trust
has been filed with the Secretary of State of the State of Delaware.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and the federal laws of the United
States and (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials.
B-6-2
Annex F
EXHIBIT F
OFFICER'S CERTIFICATE
The undersigned, the [Chief Financial Officer] [Treasurer] [Executive Vice
President] hereby certifies, pursuant to Section 6.9 of the Placement Agreement,
dated as of December 17, 2004, among Community Shores Bank Corporation (the
"Company"), Community Shores Capital Trust I (the "Trust") and SunTrust Capital
Markets, Inc. that, as of [date], [20__], the Company had the following ratios
and balances:
BANK HOLDING COMPANY
As of [Quarterly Financial Dates], 2004
Tier 1 Risk Weighted Assets __________ %
Ratio of Double Leverage __________ %
Non-Performing Assets to Loans and OREO __________ %
Tangible Common Equity as a Percentage of Tangible Assets __________ %
Ratio of Reserves to Non-Performing Loans __________ %
Ratio of Net Charge-Offs to Loans __________ %
Return on Average Assets (annualized) __________ %
Net Interest Margin (annualized) __________ %
Efficiency Ratio __________ %
Ratio of Loans to Assets __________ %
Ratio of Loans to Deposits __________ %
Double Leverage (exclude trust preferred as equity) __________ %
Total Assets $ __________
Year to Date Income $ __________
* A table describing the quarterly report calculation procedures is provided on
page __
[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended [date], 20__.]
[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated
financial statements (including the balance sheet and income statement) of the
Company and its consolidated subsidiaries for the fiscal quarter ended [date],
20__.]
F-1
Annex F
The financial statements 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 date, and for the [___
quarter interim] [annual] period ended [date], 20__, and such financial
statements have been prepared in accordance with GAAP consistently applied
throughout the period involved (expect as otherwise noted therein).
IN WITNESS WHEREOF, the undersigned has executed this Officer's
Certificate as of this _____ day of _____________, 20__.
_________________________________
Name:
Title:
Community Shores Bank Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
F-2
FINANCIAL DEFINITIONS
BANK HOLDING COMPANY
Corresponding FRY-9C or LP Line Items with
Report Item Line Item corresponding Schedules Description of Calculation
--------------------- --------------------------------------------------------- ------------------------------------------------
Tier 1 Risk BHCK7206 Tier 1 Risk Ratio: Core Capital (Tier 1)/
Weighted Assets Schedule HC-R Risk-Adjusted Assets
Ratio of Double (BHCP0365)/(BCHCP3210) Total equity investments in subsidiaries divided
Leverage Schedule PC in the LP by the total equity capital. This field is
calculated at the parent company level.
"Subsidiaries" include bank, bank holding
company, and non-bank subsidiaries.
Non-Performing Assets (BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744)/ Total Nonperforming Assets (NPLs+Foreclosed Real
to Loans and OREO (BHCK2122+BHCK2744) Estate+Other Nonaccrual & Repossessed
Schedules HC-C, HC-M & HC-N Assets)/Total Loans+Foreclosed Real Estate
Tangible Common (BHDM3210-BHCK3163)/(BHCK2170-BHCK3163) (Equity Capital - Goodwill)/(Total Assets -
Equity as a Goodwill)
Percentage of Schedule HC
Tangible Assets
Ratio of Reserves to (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507) Total Loan Loss and Allocated Transfer Risk
Non-Performing Loans Reserves/Total Nonperforming Loans (Nonaccrual
Schedules HC & HC-N & HC-R + Restructured)
Ratio of Net (BHCK4635-BHCK4605)/(BHCK3516) Net charge offs for the period as a percentage
Charge-Offs to Loans of average loans.
Schedules HC-B & HC-K
Return on Average (BHCK4340/BHCK3368) Net Income as a percentage of Assets.
Assets (annualized)
Schedules HI & HC-K
Net Interest Margin (BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+BHCKB985) (Net Interest Income Fully Taxable Equivalent,
(annualized) if available/Average Earning Assets)
Schedules HI Memorandum and HC-K
Efficiency Ratio (BHCK4093)/(BHCK4519+BHCK4079) (Non-interest Expense)/(Net Interest Income
Fully Taxable Equivalent, if available, plus
Schedule HI Non-interest Income)
Ratio of Loans to (BHCKB528+BHCK5369)/(BHCK2170) Total Loans & Leases (Net of Unearned Income &
Assets Gross of Reserve)/Total Assets
Schedule HC
Ratio of Loans to (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636) Total Loans & Leases (Net of Unearned Income &
Deposits Gross of Reserve)/Total Deposits (Includes
Schedule HC Domestic and Foreign Deposits)
1
Total Assets (BHCK2170) The sum of total assets. Includes cash and
balances due from depository institutions;
Schedule HC securities; federal funds sold and securities
purchased under agreements to resell; loans
and lease financing receivables; trading
assets; premises and fixed assets; other real
estate owned; investments in unconsolidated
subsidiaries and associated companies;
customer's liability on acceptances outstanding;
intangible assets; and other assets.
2
