Exhibit 10.1
AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT is made as of September 16, 2008, by
and between COMMUNITY SHORES BANK CORPORATION, a Michigan corporation, 0000 Xxxx
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 ("BORROWER") and FIFTH THIRD BANK, a
Michigan banking corporation, 000 Xxxx X.X., Xxxxx Xxxxxx, Xxxxxxxx 00000
("LENDER").
Borrower and Lender are parties to a Loan Agreement dated September 7,
2007, ("AGREEMENT"). They want to amend the Agreement.
Borrower and Lender agree as follows:
1. Each capitalized term that this Amendment uses but does not define
has the meaning that the Agreement gives it.
2. Simultaneously with the execution and delivery of this Amendment,
Borrower shall execute and deliver to Lender a Revolving Credit Note in the form
attached to this Amendment as SCHEDULE A ("NEW NOTE"). Effective immediately,
the term "Revolving Credit Note" as used in the Agreement means the New Note,
and from and after the date of this Amendment, all Revolving Credit Loans shall
be evidenced by and payable with interest in accordance with the terms of the
New Note.
3. Section 3.6 of the Agreement is amended, effective immediately, by
changing the date set forth in the first sentence of that section to September
1, 2009.
4. The Agreement is amended, effective immediately, by adding a new
Section 3A reading as follows:
"SECTION 3A. SECURITY.
To secure payment and performance of all Lender Indebtedness:
3.1 Borrower shall execute and deliver to Lender an agreement, in form
and substance satisfactory to Lender, under which Borrower shall grant to
Lender a first-priority, perfected security interest in all of the shares
of the capital stock of Bank that Borrower now owns or acquires in the
future.
3.2 Borrower shall sign and deliver to Lender, and shall cause third
parties to sign and deliver, all financing statements, assignments, and
other documents, agreements and instruments, and shall take all further
actions, and shall cause third parties to take all further actions, that
Lender reasonably requests in connection with the perfection or priority of
the security provided for above."
1
5. Borrower represents and warrants to Lender that (a) Borrower owns
all of the issued and outstanding shares of the capital stock of Bank and (b)
Borrower represents and warrants to Lender that Borrower is not obligated to any
Person, including, without limitation, Bank, on or with respect to any
Indebtedness other than Lender Indebtedness.
6. Simultaneously with the execution and delivery of this Agreement,
Borrower shall pay to Lender a processing fee in the amount of $500.
7. Borrower represents and warrants to Lender that Event of Default
has not occurred.
8. Except as expressly amended by this Amendment, all of the
provisions of the Agreement are ratified and confirmed.
Borrower and Lender have signed this Amendment as of the date stated
above.
COMMUNITY SHORES BANK CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
Its President and Chief Executive
Officer
And by /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Its Chief Financial officer
FIFTH THIRD BANK
By /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx
Its Vice President
2
SCHEDULE A
REVOLVING CREDIT NOTE
Grand Rapids, Michigan
$5,000,000 September 16, 2008
FOR VALUE RECEIVED, the undersigned COMMUNITY SHORES BANK CORPORATION,
a Michigan corporation of Muskegon, Michigan ("BORROWER"), promises to pay to
the order of FIFTH THIRD BANK, a Michigan banking corporation ("LENDER"), at
Lender's main office in Grand Rapids, Michigan, or at any other place that the
holder of this Note designates in writing, the sum of Five Million Dollars
($5,000,000) or any lesser amount that Lender shall have loaned to Borrower
under Section 3 of a certain Loan Agreement dated September 7, 2007, between
Borrower and Lender ("LOAN AGREEMENT"), together with interest (computed on the
basis of a three hundred sixty (360) day year for the actual number of days
elapsed) on the unpaid balance at an annual rate equal to the Index Rate plus 1%
(100 basis points) until maturity and after maturity at an annual rate equal to
the Index Rate plus 3% (300 basis points). Any change in the interest rate on
this Note that is occasioned by a change in the Index Rate shall be effective on
the day of the change in the Index Rate.
"INDEX RATE" means the interest rate that Lender designates from time
to time as its "prime" interest rate. Borrower acknowledges that the rate that
Lender designates as its "prime" interest rate at any given time is not the
lowest rate of interest that is available to Lender's commercial customers at
that time.
The interest on this Note shall be payable quarterly beginning
November 1, 2008, and continuing on the first day of each succeeding February,
May, August and November until the principal is paid in full. The principal of
this Note shall be payable as provided in Section 3 of the Loan Agreement.
If Borrower does not make a payment of interest within ten days after
it is due, then Borrower shall immediately pay to Lender a late charge in an
amount equal to the greater of Fifty Dollars ($50) or 1/10 of 1% of the unpaid
principal balance of this Note on the date the late charge is assessed. This is
in addition to Lender's other rights and remedies for default in payment of
interest when due.
This Note evidences Borrower's indebtedness to Lender by reason of
loans made and to be made from time to time under Section 3 of the Loan
Agreement ("LOANS"). Lender's records shall be prima facie evidence of all loans
and prepayments and of the indebtedness outstanding under this Note at any time.
The holder of this Note shall have all of the rights and powers set forth in the
Loan Agreement as though they were fully set forth in this Note Reference is
made to the Loan Agreement for a statement of the conditions under which the
principal of this Note and accrued interest may become immediately due and
payable without
3
demand. Subject to the preceding sentence, the maturity date of this Note and of
all Loans is September 1, 2009, unless Lender extends it under Section 3 of the
Loan Agreement.
In this Note, "MATURITY" means the time when the entire remaining
unpaid principal balance of this Note is or becomes immediately due and payable.
Except as otherwise provided in the Loan Agreement, the undersigned
waives protest, presentment, demand and notice of nonpayment.
COMMUNITY SHORES BANK CORPORATION
By
-------------------------------------
Xxxxxxx X. Xxxxxxx
Its President and Chief Executive
Officer
And by
---------------------------------
Xxxxxx X. Xxxxx
Its Chief Financial Officer
ATTEST:
-------------------------------------
Xxxxx X. Xxxxxxxx
Its Secretary
4
REVOLVING CREDIT NOTE
Grand Rapids, Michigan
$5,000,000 September 16, 2008
FOR VALUE RECEIVED, the undersigned COMMUNITY SHORES BANK CORPORATION,
a Michigan corporation of Muskegon, Michigan ("BORROWER"), promises to pay to
the order of FIFTH THIRD BANK, a Michigan banking corporation ("LENDER"), at
Lender's main office in Grand Rapids, Michigan, or at any other place that the
holder of this Note designates in writing, the sum of Five Million Dollars
($5,000,000) or any lesser amount that Lender shall have loaned to Borrower
under Section 3 of a certain Loan Agreement dated September 7, 2007, between
Borrower and Lender ("LOAN AGREEMENT"), together with interest (computed on the
basis of a three hundred sixty (360) day year for the actual number of days
elapsed) on the unpaid balance at an annual rate equal to the Index Rate plus 1%
(100 basis points) until maturity and after maturity at an annual rate equal to
the Index Rate plus 3% (300 basis points). Any change in the interest rate on
this Note that is occasioned by a change in the Index Rate shall be effective on
the day of the change in the Index Rate.
"INDEX RATE" means the interest rate that Lender designates from time
to time as its "prime" interest rate. Borrower acknowledges that the rate that
Lender designates as its "prime" interest rate at any given time is not the
lowest rate of interest that is available to Lender's commercial customers at
that time.
The interest on this Note shall be payable quarterly beginning
November 1, 2008, and continuing on the first day of each succeeding February,
May, August and November until the principal is paid in full. The principal of
this Note shall be payable as provided in Section 3 of the Loan Agreement.
If Borrower does not make a payment of interest within ten days after
it is due, then Borrower shall immediately pay to Lender a late charge in an
amount equal to the greater of Fifty Dollars ($50) or 1/10 of 1% of the unpaid
principal balance of this Note on the date the late charge is assessed. This is
in addition to Lender's other rights and remedies for default in payment of
interest when due.
This Note evidences Borrower's indebtedness to Lender by reason of
loans made and to be made from time to time under Section 3 of the Loan
Agreement ("LOANS"). Lender's records shall be prima facie evidence of all loans
and prepayments and of the indebtedness outstanding under this Note at any time.
The holder of this Note shall have all of the rights and powers set forth in the
Loan Agreement as though they were fully set forth in this Note Reference is
made to the Loan Agreement for a statement of the conditions under which the
principal of this Note and accrued interest may become immediately due and
payable without
demand. Subject to the preceding sentence, the maturity date of this Note and of
all Loans is September 1, 2009, unless Lender extends it under Section 3 of the
Loan Agreement.
In this Note, "MATURITY" means the time when the entire remaining
unpaid principal balance of this Note is or becomes immediately due and payable.
Except as otherwise provided in the Loan Agreement, the undersigned
waives protest, presentment, demand and notice of nonpayment.
COMMUNITY SHORES BANK CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
Its President and Chief Executive
Officer
And by /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Its Chief Financial Officer
ATTEST:
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
Its Secretary
2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of September 16, 2008, by and between
COMMUNITY SHORES BANK CORPORATION, a Michigan corporation, of 0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, ("DEBTOR"), and FIFTH THIRD BANK, a Michigan
banking corporation, of 000 Xxxx Xxxxxx, X.X., Xxxxx Xxxxxx, Xxxxxxxx 00000
("SECURED PARTY").
1. GRANT OF SECURITY INTEREST. Debtor grants to Secured Party a security
interest in all shares of the capital stock of Community Shores Bank, a Michigan
banking corporation, that Debtor now owns and acquires in the future and in (1)
all securities, security entitlements and other financial assets, instruments
and other property ("ADDITIONAL PROPERTY") that Debtor at any time receives or
is entitled to receive by reason of any stock dividend, stock split,
recapitalization, reclassification, merger, consolidation, liquidation,
exchange, renewal, redemption, substitution or other transaction regarding the
above-described property or regarding any Additional Property, (2) all
dividends, interest and other distributions that Debtor at any time receives or
is entitled to receive in respect of any of the above-described property or any
Additional Property and (3) all proceeds of the foregoing. The foregoing
properties and proceeds are referred to in this Agreement as "COLLATERAL."
2. INDEBTEDNESS SECURED. Debtor gives this security interest to secure
payment and performance of ALL OBLIGATIONS AND INDEBTEDNESS THAT DEBTOR NOW AND
IN THE FUTURE OWES TO SECURED PARTY, including, but not limited to, all future
advances and all obligations and indebtedness to Secured Party under this
Agreement and under all other security agreements, loan agreements, pledge
agreements, assignments, mortgages, guaranties, notes, leases and other
agreements, instruments and documents, that Debtor has signed or in the future
signs, and all extensions or renewals of such indebtedness and obligations. The
indebtedness and obligations that Debtor now owes to Secured Party include, BUT
ARE NOT NECESSARILY LIMITED TO, the obligations and indebtedness that are
evidenced by the following:
INSTRUMENT, DOCUMENT,
OR AGREEMENT DATE AMOUNT
--------------------- ------------------ ---------------
Loan Agreement September 7, 2007 _______________
Revolving Credit Note September 16, 2008 $5,000,000
This security interest secures all indebtedness and obligations that Debtor now
and in the future owes to Secured Party, regardless of whether any such
indebtedness or obligation is (1) not presently intended or contemplated by
Debtor or Secured Party, (2) indirect, contingent or secondary, (3) unrelated to
the Collateral or to any financing of the Collateral by Secured Party, (4) of a
kind or class that is different from any indebtedness or obligation that Debtor
now owes to Secured Party, (5) now or in the future evidenced by a note or other
document that does not refer to this security interest or this Agreement or (6)
not referred to in this Agreement.
The indebtedness and obligations that this security interest secures
are collectively called the "INDEBTEDNESS."
3. WARRANTIES AND REPRESENTATIONS. Debtor represents and warrants to, and
agrees with, Secured Party as follows:
(a) Debtor is a corporation and is organized and validly existing in
good standing under the laws of the State of Michigan; Debtor has full
power and authority to enter into and perform its obligations under this
Agreement; the signing, delivery and performance of this Agreement have
been duly authorized by all necessary action of Debtor's board of directors
and will not violate Debtor's articles of incorporation or bylaws; and this
Agreement is Debtor's valid and binding obligation, enforceable in
accordance with its terms.
(b) Debtor owns the Collateral and has the unqualified right to
transfer the Collateral to Secured Party. The Collateral is not subject to
any security interest, lien, encumbrance, adverse claim or other claim in
favor of any third party, or to any right or option of any third party to
purchase or acquire any of the Collateral.
(c) Each instrument, security or other financial asset included in the
Collateral is genuine and what it purports to be and has not been
materially altered. Each security included in the Collateral is validly
issued, fully paid and not subject to calls or assessments.
(d) Debtor's address set forth on the first page of this Agreement is
the location of Debtor's chief executive office.
4. AGREEMENTS OF DEBTOR. Debtor agrees that:
(a) Debtor shall promptly sign and deliver to Secured Party all stock
powers, bond powers, assignments, endorsements, powers of attorney,
agreements, instructions to issuers, securities intermediaries and other
parties and other documents that Secured Party from time to time requests
to perfect
Secured Party's security interest in the Collateral or to facilitate
transfer of the Collateral.
(b) Debtor shall not sell, lease, transfer, or assign any Collateral
or any interest in any Collateral or permit any Collateral to be
transferred by operation of law.
(c) Debtor shall pay promptly when due all taxes and assessments upon
the Collateral or for its use or ownership.
(d) Debtor shall furnish to Secured Party all information regarding
the Collateral that Secured Party requests and shall allow Secured Party at
any reasonable time to inspect Debtor's records regarding the Collateral.
(e) Debtor shall promptly deliver to Secured Party all certificates
and other instruments or documents that evidence title or rights to the
Collateral, including certificates and other instruments and documents that
Debtor receives in the future.
(f) Debtor shall immediately notify Secured Party in writing of any
change in Debtor's name, identity or corporate structure and of any change
in the location of Debtor's chief executive office.
5. SECURED PARTY'S RIGHTS.
(a) If Debtor fails to perform any of Debtor's obligations under this
Agreement, then Secured Party may, without giving Debtor notice to or
obtaining the consent of Debtor, perform that obligation on Debtor's
behalf. (This may include, for example, signing stock powers and other
documents described in Paragraph 4(a) above.) To the extent necessary,
Debtor appoints Secured Party as Debtor's agent and attorney-in-fact with
full power and authority to perform those obligations. Debtor shall
reimburse Secured Party on demand for any expense that Secured Party incurs
in performing any obligation and shall pay to Secured Party interest on the
expense, from the date on which Secured Party incurred the expense, at an
annual rate equal to five percent above the rate of interest that Secured
Party designates from time to time as its "prime" interest rate. Secured
Party is not required to perform an obligation that Debtor has failed to
perform. If Secured Party does so, then that will not be a waiver of
Secured Party's right to declare the Indebtedness immediately due and
payable because of Debtor's failure to perform.
(b) With respect to the custody and preservation of Collateral in its
possession, Secured Party's only duty will be to use reasonable care.
Secured Party shall not have any obligation to take any steps necessary to
preserve rights against prior parties. Secured Party shall not have any
duty to sell any
-3-
Collateral even if its value declines. Secured Party shall not have any
obligation to exercise, or to notify Debtor of, any conversion or
redemption rights or to take any similar action with regard to any
Collateral.
6. DEFAULT AND ACCELERATION. If any of the following occurs, then the
Indebtedness shall, at Secured Party's option, become immediately due and
payable, without notice or demand to Debtor:
(a) If an Event of Default, as defined in the Loan Agreement referred
to in Paragraph 2 of this Agreement, occurs.
(b) If the issuer of or obligor on any of the Collateral defaults in
any obligation of the issuer or obligor under the terms of that Collateral
or under any agreement that gives Secured Party control over any of the
Collateral or if any warranty or representation made by the issuer or
obligor in any such agreement shall have been false in any material respect
or if a petition for relief is filed by or against the issuer or obligor
under any chapter of the federal Bankruptcy Code.
(c) If a securities intermediary defaults in the performance of any
obligation under any existing or future agreement that gives Secured Party
control over any Collateral or if any warranty or representation made by
the securities intermediary in any such agreement shall have been false in
any material respect when made or if a petition for relief is filed by or
against such a securities intermediary under any chapter of the federal
Bankruptcy Code.
7. REMEDIES. Secured Party shall have all of the rights and remedies of a
secured party under applicable laws. Without limiting those rights and remedies,
if all or any part of the Indebtedness is not paid at maturity, then:
(a) Secured Party shall have the right, but no obligation, to exercise
and enforce any or all of Debtor's rights and remedies with respect to the
Collateral, including, but not limited to, the right to demand, enforce
payment of, collect and receive all dividends, interest, principal payments
and other sums that are at any time owing with respect to any of the
Collateral and to apply the sums to the Indebtedness in any manner that
Secured Party determines.
(b) Secured Party may sell or otherwise dispose of the Collateral in
any commercially reasonable manner. Any notification that Secured Party is
required to give to Debtor regarding any sale or other disposition of
Collateral shall be considered reasonable if Secured Party mails or
otherwise sends or delivers it to Debtor at least fifteen days before the
sale or other disposition.
-4-
(c) Second Party shall apply the proceeds of any collection or
disposition of Collateral first to Secured Party's attorney fees and
expenses, as provided in Paragraph 8 of this Agreement, and then to the
Indebtedness, in any manner that Secured Party determines, and Debtor shall
be liable for any deficiency remaining.
All rights and remedies of Secured Party shall be cumulative and may
be exercised from time to time.
8. EXPENSES. Debtor shall reimburse Secured Party on demand for all
attorney fees, legal expenses, and other expenses that Secured Party incurs in
protecting and enforcing Secured Party's rights under this Agreement. This
includes fees and expenses incurred in trying to obtain possession of Collateral
from Debtor, a trustee or receiver in bankruptcy or any other person. Secured
Party may apply any proceeds of collection or disposition of Collateral to
Secured Party's reasonable attorney fees, legal expenses and other expenses.
9. AMENDMENTS AND WAIVERS. A provision of this Agreement may not be
modified or waived except by a written agreement signed by Secured Party.
Secured Party shall continue to have all of Secured Party's rights under this
Agreement even if Secured Party does not fully and promptly exercise them on all
occasions.
10. NOTICES. Any notice to Debtor or Secured Party shall be considered to
have been given if and when it is mailed, with postage prepaid, to the
respective address of Debtor or Secured Party appearing on the first page of
this Agreement or if and when it is delivered personally.
11. OTHER. In this Agreement, "MATURITY" of any of the Indebtedness means
the time when that Indebtedness has become due and payable, for whatever reason
(including, for example, acceleration due to default or bankruptcy). This
Agreement shall be binding upon and inure to the benefit of Debtor and Secured
Party and their successors and assigns.
[Remainder of this page intentionally left blank.]
-5-
SECURED PARTY AND DEBTOR EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES
ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION, INCLUDING ANY CLAIM, COUNTERCLAIM,
CROSS-CLAIM OR THIRD-PARTY CLAIM ("CLAIM"), THAT IS BASED UPON, ARISES OUT OF OR
RELATES TO THIS PLEDGE AGREEMENT OR THE INDEBTEDNESS, INCLUDING, WITHOUT
LIMITATION, ANY CLAIM THAT IS BASED UPON, ARISES OUT OF OR RELATES TO ANY ACTION
OR INACTION OF SECURED PARTY IN CONNECTION WITH ANY ACCELERATION OF THE
INDEBTEDNESS OR ANY ENFORCEMENT OF SECURED PARTY'S SECURITY INTEREST IN THE
COLLATERAL.
Debtor and Secured Party have signed this Pledge Agreement as of the
date stated on the first page.
COMMUNITY SHORES BANK CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
Its President & Chief Executive Officer
DEBTOR
FIFTH THIRD BANK
By /s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxx
Its Vice President
SECURED PARTY
-6-
IRREVOCABLE STOCK POWER
COMMUNITY SHORES BANK CORPORATION, a Michigan corporation
("BORROWER"), is the owner of 1,000,000 shares of the common stock, $1.00 par
value, of Community Shores Bank, a Michigan banking corporation ("SUBSIDIARY"),
evidenced by Stock Certificate No. 1 issued to Borrower by Subsidiary
("SHARES").
Borrower has granted to FIFTH THIRD BANK, a Michigan banking
corporation ("BANK"), a security interest in the Shares, pursuant to a Pledge
Agreement dated as of the date of this Stock Power ("PLEDGE AGREEMENT").
Borrower constitutes and appoints Bank as Borrower's attorney-in-fact,
for Borrower and in Borrower's name and behalf, upon the occurrence of an Event
of Default, as defined in a certain Loan Agreement dated as of the date of this
Stock Power between Bank and Borrower, to assign and transfer to Bank, as
pledgee and secured party, the Shares and all other shares of Subsidiary that
Borrower acquires in the future and for that purpose to make and execute all
necessary acts of assignment and transfer.
The powers that Borrower grants to Bank in this Irrevocable Stock
Power are irrevocable and shall continue as long as the Pledge Agreement
continues in effect.
Borrower has executed this Irrevocable Stock Power as of September 16,
2008.
COMMUNITY SHORES BANK CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
Its President & Chief Executive Officer
Attest:
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
It Secretary
