EXHIBIT 10.3
Final Conformed Copy
PLACEMENT AGREEMENT
among
MERCANTILE BANK CORPORATION,
MERCANTILE BANK CAPITAL TRUST I
and
SUNTRUST CAPITAL MARKETS, INC.
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Dated as of September 16, 2004
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Mercantile Bank Corporation
$16,000,000 Series A Preferred Securities
$16,000,000 Series B Preferred Securities
Series A and Series B Floating Rate Preferred Securities
(Liquidation Amount $1,000 per Preferred Security)
PLACEMENT AGREEMENT
----------------------
September 16, 2004
SunTrust Capital Markets, Inc.
000 Xxxxxxxxx Xxxxxx, X.X.
24th Floor, Mail Code 3950
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Mercantile Bank Corporation, a Michigan corporation (the "Company"), and
its financing subsidiary, Mercantile Bank 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 Initial
Closing (as defined in Section 2.3.1 hereof) SIXTEEN MILLION ($16,000,000)
DOLLARS of the Trust's Series A 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 2.18% (the "Series A Preferred Securities"), and at the
Subsequent Closing (as defined in Section 2.3.1 hereof) SIXTEEN MILLION
($16,000,000) DOLLARS of the Trust's Series B 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 2.18% (the "Series B Preferred
Securities" and together with the Series A Preferred Securities, the "Preferred
Securities"), to STI Investment Management, Inc., a Delaware corporation (the
"Purchaser"), pursuant to the terms of the Preferred Securities Subscription
Agreements entered into, or to be entered into on or prior to each Closing Date
(as defined in Section 2.3.1 hereof), between the Offerors and the Purchaser
(each a "Subscription Agreement" and collectively, the "Subscription
Agreements"), the form of which is attached hereto as Exhibit A and incorporated
herein by this reference.
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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 date hereof and executed and
delivered by the Company and Wilmington Trust Company, 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 Company of its Series A and Series B common
securities (the "Common Securities"), and shall be used by the Trust to purchase
THIRTY TWO MILLION NINE HUNDRED NINETY THOUSAND ($32,990,000) DOLLARS in
principal amount of the Series A and Series B 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 Wilmington Trust Company, as property trustee
(the "Property Trustee"), Wilmington Trust Company, as Delaware trustee (the
"Delaware Trustee"), the Administrative Trustees named therein and the Company,
to be dated as of the date hereof 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 date hereof, between the Company and Wilmington Trust
Company, 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 Agreements 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
Subsequent 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
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arrange for the sale to the Purchaser of each series of Preferred Securities at
a purchase price equal to $1,000 per Preferred Security. The aggregate purchase
price of each series of Preferred Securities shall be SIXTEEN MILLION
($16,000,000) DOLLARS (the "Purchase Price"), which Purchase Price is equal to
100% of the stated liquidation amount of a given series of Preferred Securities.
2.2 Subscription. The Offerors hereby agree to evidence their acceptance
of the subscription by countersigning a copy of the Subscription Agreements and
returning the same to the Placement Agent.
2.3 Closing and Delivery of Payment.
2.3.1 Closing; Closing Date. The initial closing (the "Initial Closing")
for the sale and purchase of the Series A Preferred Securities by the Offerors
to the Purchaser shall occur at the offices of Powell, Goldstein, Xxxxxx &
Xxxxxx LLP, or such other place as the parties hereto shall agree at 11:00 a.m.
(eastern time) on September 16, 2004, or such other later date as the parties
may designate (the date and time of delivery and payment for the Series A
Preferred Securities being herein called the "Initial Closing Date"). The
subsequent closing (the "Subsequent Closing") for the sale and purchase of the
Series B Preferred Securities by the Offerors to the Purchaser shall occur at
the offices of Powell, Goldstein, Xxxxxx & Xxxxxx LLP, or such other place as
the parties hereto shall agree at 11:00 a.m. (eastern time) on or prior to
December 15, 2004, or such other later date as the parties may designate (the
date and time of delivery and payment for the Series B Preferred Securities
being herein called the "Subsequent Closing Date", the Initial Closing Date and
the Subsequent Closing Date each being, a "Closing Date"). Each series of
Preferred Securities shall be transferred and delivered to the Purchaser against
the payment of the Purchase Price (as defined in the applicable Subscription
Agreement) to the Offerors in immediately available funds on the applicable
Closing Date to a U.S. account designated in writing by the Company at least two
(2) business days prior to such Closing Date.
2.3.2 Delivery. Delivery of each series of 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 applicable
Closing Date. The Company and the Trust agree to have each series of Preferred
Securities available for inspection and checking by the Purchaser in Atlanta,
Georgia not later than 1:00 P.M., eastern time, on the business day prior to the
applicable Closing Date.
2.4 Placement Agent's Fees and Expenses.
2.4.1 Placement Agent's Compensation. The Company shall not be required to
pay a placement fee or commission to the Placement Agent in connection with the
transactions contemplated hereby.
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) (i) all costs and
expenses incident to the authorization, issuance, sale and delivery of the
Preferred Securities and any taxes payable in connection therewith; and (ii) 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
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agent appointed under the Operative Documents, including the fees and
disbursements of counsel for such trustees, which fees shall not exceed $3,000
in administrative fees annually with respect to all Preferred Securities issued
under the Trust and legal fees and disbursements of $1,500 for each of the
Initial and Subsequent Closings; provided, that the Company shall be entitled to
a reimbursement by the Placement Agent on each Closing Date for up to $1,500 in
legal fees incurred in connection with the closing of the transactions
contemplated hereby. The acceptance and administrative fees will be fixed for
the life of the trust so long as there is no event of default or other event in
which the trustee has the right to retain counsel. In such a case, those fees
and expenses will be billed at the trustee's cost.
2.4.3 Reimbursement of Expenses. If the sale of any 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
9 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 transaction contemplated
by this Agreement. 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.
Section 3. Closing Conditions. The obligations of the parties under this
Agreement on each 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 each series of Preferred Securities:
3.2 Opinions of Counsel. On each Closing Date, the Placement Agent shall
have received the following favorable opinions, each dated as of the applicable
Closing Date: (a) from Xxxxxxxxx Xxxxxx PLLC, counsel for the Offerors,
addressed to the Purchaser, the Placement Agent and the Indenture Trustee in
substantially the form set forth on Exhibit B-1 attached hereto and incorporated
herein by this reference, (b) from Powell, Goldstein, Xxxxxx & Xxxxxx LLP,
special tax counsel for the Placement Agent and Purchaser, addressed to the
Placement Agent and Purchaser in substantially the form set forth on Exhibit B-2
attached hereto and incorporated herein by this reference, (c) 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-3 attached hereto and
incorporated herein by this reference, and (d) from Xxxxxxxx Xxxxxx & Finger,
P.A., 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-4 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.
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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 as of the applicable 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 applicable Closing Date with the same effect as if made
on such 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 such 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 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 to be purchased on such Closing Date.
3.5 Delivery of Operative Documents. Each of the Operative Documents shall
have been duly authorized, executed and delivered by each party thereto, and
copies thereof shall have been delivered to the Company, the Trust, the
Purchaser and the Placement Agent.
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 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 each 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
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Subsequent 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 each Closing Date as follows with respect to the
Securities to be issued and sold and the transactions to be entered into on the
applicable Closing Date:
4.1 Representations and Warranties of the Company and the Trust.
(a) 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.
(b) 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.
(c) 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)").
(d) 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.
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(e) 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.
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 each 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,
reorganization, moratorium and other 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.
4.4 Guarantee Agreement and the Indenture. Each of the Guarantee and the
Indenture has been duly authorized by the Company and, on each 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,
reorganization, moratorium and other 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 each Closing Date to the
Purchaser in accordance with this Agreement and the Subscription Agreements, in
the case of the Preferred Securities, and to the Company in accordance with the
Common Securities Subscription Agreements between the Company and the Trust,
dated as of the applicable 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,
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enforceable against the Trust in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other 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 each 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 each 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 Agreements between the Company and the
Trust, each dated as of the applicable 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, reorganization, moratorium and
other 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, reorganization, moratorium and other 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
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")
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or (iii) require the consent, approval, authorization or order of any court or
Governmental Entity, other than such as have been previously obtained. 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. Each of the Company's significant
subsidiaries listed in Schedule 1 (as defined in Section 1-02 of Regulation S-X
under the Securities Act) (the "Subsidiaries") 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 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
Subsidiary to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect.
4.11 Government Licenses and Regulatory Compliance. 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 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 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 the 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 Property. Each of the Company and its subsidiaries owns or leases all
such properties as are necessary to the conduct of its operations as presently
conducted and 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 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
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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.
4.13 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.
4.14 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 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, threatened.
4.15 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
June 30, 2004 with respect to the Initial Closing and September 30, 2004 with
respect to the Subsequent Closing (in each case, 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, except as described in Schedule
4.15(a), 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
11
accordance with GAAP consistently applied throughout the periods
involved (except as otherwise noted therein).
(b) The Company's report on FRY-9C, dated June 30, 2004 (the
"FRY-9C") with respect to the Initial Closing and September 30, 2004 with
respect to the Subsequent Closing, 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.
(c) Since the respective dates of the Financial Statements,
Interim Financial Statements and the FRY-9C, there has not been 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.
(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.
4.16 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-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. 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.
4.17 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
12
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.
4.18 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, threatened against or affecting
the Trust or the Company or any of the Subsidiaries, except for such actions,
suits or proceedings that, if adversely determined, could not, singly or in the
aggregate, reasonably be expected to materially adversely affect the
consummation of the transactions contemplated by the Operative Documents or to
have a Material Adverse Effect.
4.19 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.
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
of the date hereof and as of each Closing Date as follows with respect to the
Securities to be issued and sold and transactions to be entered into on the
applicable Closing Date:
5.1 Organization, Standing and Qualification. The Placement Agent is a
corporation, validly existing and in good standing under the laws of the state
of Tennessee, with 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 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 to take all actions necessary on its
part to consummate the transactions contemplated hereby, 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, reorganization, moratorium and other
13
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
representative of the Placement Agent has engaged, or will engage, in any form
of "general solicitation or general advertising" (within the meaning of
Regulation D under the Securities Act) or in any "directed selling efforts"
(within the meaning of Regulation S 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 "accredited investors"
(within the meaning of Rule 501 of Regulation D), (ii) in an offshore
transaction complying with Rule 903 of Regulation S or (iii) in any other manner
that does not require registration of the Preferred Securities under the
Securities Act. 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 will 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
Company or the Trust, as applicable.
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 Subsequent Closing Date, the Offerors shall
use their best efforts to cause their representations and warranties contained
in Section 4 hereof to be true as of the applicable Closing Date, after giving
effect to the transactions contemplated by this Agreement, as if made on and as
of such 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) 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 (ii) make offers or
sales of any such Security, or solicit offers to buy any such Security,
14
under any circumstances that would require the registration of any of such
Securities under the Securities Act.
6.3 Use of Proceeds. The Trust shall use the proceeds from the sale of the
Preferred Securities and the Common Securities solely to purchase the Junior
Subordinated Notes from the Company.
6.4 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.
6.5 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 Placement Agent), (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.
6.6 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 6.6 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.
6.7 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
15
referenced in such Annex, which certificate and financial statements shall be so
furnished by the Company and the Trust not later than fifty (50) days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than one hundred (100) days after the end of each fiscal
year of the Company during which the Junior Subordinated Notes are outstanding.
Section 7. Indemnification & Contribution.
7.1 Indemnification.
7.1.1 The Company and the Trust agree jointly and severally to indemnify
and hold harmless the Placement Agent, the Purchaser, the Placement Agent's
affiliates (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 (whether oral or written) or
documents furnished or made available to the Purchaser or the Placement Agent by
or on behalf of the Company, the Trust, or their respective representatives
pursuant to the due diligence request form provided by the Placement Agent in
connection with the transactions contemplated by the Operative Documents, or
(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
in light of the circumstances under which they were made, 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, without permitting any duplicate recovery.
7.1.2 The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 7.1.1 above.
7.1.3 Promptly after receipt by an Indemnified Party under this Section 7
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 7, 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 7.1.1 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 7.1.1 above.
The indemnifying party shall be entitled to appoint counsel at the indemnifying
party's expense to represent the Indemnified Party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the Indemnified
Party.
16
Notwithstanding the indemnifying party's election to appoint counsel to
represent the Indemnified Party in an action, the Indemnified Party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the Indemnified Party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the Indemnified Party and the indemnifying party and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of the institution of such action, or (iv) the indemnifying party
shall authorize the Indemnified Party to employ separate counsel at the expense
of the indemnifying party. 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 or contribution may be sought
hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim or action) 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. An Indemnified Party will
not, without the prior written consent of the indemnifying parties, 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 or contribution may be sought hereunder (whether or not the
Indemnified Parties are actual or potential parties to such claim or action).
7.1.4 In the event that the indemnity provided in Sections 7.1.1, 7.1.2 or
7.1.3 is unavailable to or insufficient to hold harmless an Indemnified Party
for any reason, the Company, the Trust and the Placement Agent agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company, the Trust and the
Placement Agent may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Trust on the one hand and
by the Placement Agent on the other from the offering of the Securities;
provided, however, that in no case shall the Placement Agent be responsible for
any amount in excess of any purchase discount or commission applicable to the
Preferred Securities purchased hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, the
Trust and the Placement Agent shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Trust on the one hand and of the Placement Agent on
the other in connection with the statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. Benefits
received by the Company and the Trust shall be deemed to be equal to the total
net proceeds from the offering (before deducting expenses) received by it, and
benefits received by the Placement Agent shall be deemed to be equal to the
total amount of any commission specified in Section 2.4.1. Relative fault shall
be determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company and the
Trust on the one hand or the Placement Agent on the other, the intent of the
parties and their relative knowledge,
17
access to information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Trust and the Placement Agent agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 7.1.4, 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. For purposes of this Section 7, the Purchaser, each person
who controls the Placement Agent or the Purchaser within the meaning of either
the Securities Act or the Exchange Act and each director, officer, employee and
agent of the Placement Agent or the Purchaser shall have the same rights to
contribution as the Placement Agent, and each person who controls the Company
within the meaning of either the Securities Act or the Exchange Act, each
officer and director of the Company and each Administrator of the Trust shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this Section 7.1.4.
Section 8. Rights and Responsibilities of Placement Agent.
8.1 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.
8.2 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 9. 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 either series of Preferred
Securities, if prior to such time (i) there has occurred any Material Adverse
Effect, or (ii) trading in any of the Company's securities shall have been
suspended by the SEC or the exchange upon which the Company's securities are
traded, if any, or trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established on such exchange, (ii) a banking moratorium shall have been declared
either by federal or Michigan authorities, or (iii) there shall have occurred
any outbreak or escalation of hostilities, 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 judgment,
impracticable or inadvisable to proceed with the offering or delivery of the
Preferred Securities.
18
Section 10. Miscellaneous.
10.1 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 10.1.
10.2 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, N.E., 24th Floor
Mail Code 3950
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Trust Preferred
with a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx
Sixteenth Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx
19
if to the Offerors, to:
Mercantile Bank Corporation
0000 Xxxxx Xxxxxx Xxxxxx XX
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000 ) 000-0000
Telephone: (000) 000-0000
Attention: Chief Financial Officer
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.
10.3 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 7 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.
10.4 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.
10.5 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.
10.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
10.7 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW.
10.8 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
20
connection with the transaction contemplated by this Agreement, supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
10.9 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.
10.10 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 controlling persons, and will survive delivery of and payment for
the Preferred Securities. The provisions of Sections 2.4 and 7 shall survive the
termination or cancellation of this Agreement.
Signatures appear on the following page
21
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,
MERCANTILE BANK CORPORATION
By: /s/ XXXXXX X. XXXXXXX, XX.
---------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Chairman and Chief Executive Officer
MERCANTILE BANK CAPITAL TRUST I
By: Mercantile Bank Corporation, as
Depositor
By: /s/ XXXXXX X. XXXXXXX, XX.
------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Chairman and Chief Executive Officer
CONFIRMED AND ACCEPTED
as of the date first set forth above
SUNTRUST CAPITAL MARKETS, INC.,
as Placement Agent
By: /s/ XXXXX X. XXXXXXXX
---------------------------------
Xxxxx X. Xxxxxxxx
Managing Director
22
Schedule 1
List of Significant Subsidiaries
Mercantile Bank of West Michigan
Mercantile Bank Mortgage Company, LLC
23
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
PREFERRED SECURITIES SUBSCRIPTION AGREEMENT
[date], 2004
THIS PREFERRED SECURITIES SUBSCRIPTION AGREEMENT (this "Agreement") made
among Mercantile Bank Capital Trust I (the "Trust"), a statutory trust created
under the Delaware Statutory Trust Act (12 Del. C. Section 3801, et seq.),
Mercantile Bank Corporation, a Michigan corporation, with its principal offices
located at 0000 Xxxxx Xxxxxx Xxxxxx XX, Xxxxxxx, Xxxxxxxx 00000 (the "Company"
and, together with the Trust, the "Offerors"), STI Investment Management, Inc.
(the "Purchaser"), and SunTrust Capital Markets, Inc. (as to Sections 1.2, 1.3
and Article III).
RECITALS:
A. The Trust desires to issue SIXTEEN Million ($16,000,000) Dollars of its
Series [A][B] Floating Rate Preferred Securities (the "Series [A][B]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, Wilmington Trust Company, as Property
trustee, Wilmington Trust Company, as Delaware trustee, the administrative
trustees named therein and the Holders (as defined therein), which Series [A][B]
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 Wilmington Trust
Company, as Guarantee Trustee (the "Guarantee"); and
B. The proceeds from the sale of the Series [A][B] Preferred Securities
will be combined with the proceeds from the sale by the Trust to the Company of
its Series [A][B] Common Securities, and will be used by the Trust to purchase
an equivalent amount of Series [A][B] Floating Rate Junior Subordinated Notes of
the Company (the "Series [A][B] Notes") to be issued by the Company pursuant to
an indenture (the "Indenture") to be executed by the Company and Wilmington
Trust Company, 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 Series [A][B] Preferred Securities at a price equal to
$1,000 per Preferred Security (the "Purchase Price"), which Purchase Price is
equal to sixteen Million ($16,000,000) Dollars, and the Trust agrees to sell
such Series [A][B] Preferred Securities to the Purchaser for said Purchase
Price. The rights and preferences of the Series [A][B] Preferred Securities are
set forth in the Trust Agreement. The closing of the sale and purchase of the
Series [A][B] Preferred Securities by the Offerors to the Purchaser shall occur
on [CLOSING DATE],
A-1
or such other later date 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 September 16, 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 Subject to the provisions of Section 2 hereof, the Purchaser may
resell the Series [A][B] Preferred Securities to a subsequent purchaser (any
such purchaser from the Purchaser being referred to hereinafter as a "Subsequent
Purchaser"). Upon transfer of the Series [A][B] 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 the Series [A][B]
Preferred Securities, the Series [A][B] Notes and the Guarantee (i) have not
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 Series
[A][B] 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 Series [A][B] 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 understands
that no public market exists for any of the Series [A][B] Preferred Securities,
and that it is unlikely that a public market will ever exist for the Series
[A][B] Preferred Securities.
A-2
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 Series
[A][B] 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 The Purchaser represents and warrants that it was not formed solely
for the purpose of investing in the Series [A][B] Preferred Securities, and
additional capital or similar contributions were not specifically solicited from
any person owning a beneficial interest in it for the purpose of enabling it to
purchase any Series [A][B] Preferred Securities. The Purchaser is not a (i)
partnership, (ii) common trust fund or (iii) special trust, pension, profit
sharing or other retirement trust fund or plan in which the partners,
beneficiaries or participants, as applicable, may designate the particular
investments to be made or the allocation of any investment among such partners,
beneficiaries or participants, and it agrees that it shall not hold the Series
[A][B] Preferred Securities for the benefit of any other person and shall be the
sole beneficial owner thereof for all purposes and that it shall not sell
participation interests in the Series [A][B] Preferred Securities or enter into
any other arrangement pursuant to which any other person shall be entitled to a
beneficial interest in the distribution on the Series [A][B] Preferred
Securities. The Series [A][B] Preferred Securities purchased directly or
indirectly by the Purchaser constitute an investment of no more than 40% of its
assets.
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 Series [A][B] 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.
A-3
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: Mercantile Bank Corporation
0000 Xxxxx Xxxxxx Xxxxxx XX
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Fax: (000 ) 000-0000
To the Purchaser: SunTrust Capital Markets, Inc.
000 Xxxxxxxxx Xxxxxx, X.X.
24th Floor, Mail Code 3950
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Trust Preferred
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 Series [A][B] 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 DELAWARE, 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.
A-4
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.
By: _______________________________
Name:
Title:
MERCANTILE BANK CORPORATION
By: ___________________________________________
Name:
Title:
MERCANTILE BANK CAPITAL TRUST I
By: Mercantile Bank Corporation, as
Depositor
By: ___________________________________________
Name:
Title:
SUNTRUST CAPITAL MARKETS, INC.
(for purposes of the rights and obligations in
Sections 1.2, 1.3 and Article III only)
By: ___________________________________________
Name:
Title:
X-0
XXXXXXX X-0
FORM OF COMPANY COUNSEL OPINION
[CLOSING DATE]
SunTrust Capital Markets, Inc.
000 Xxxxxxxxx Xxxxxx, XX
24th Floor, Mail Code 3947
Xxxxxxx, Xxxxxxx 00000
STI Investment Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Ladies and Gentlemen:
We have acted as counsel to Mercantile Bank Corporation (the "Company"), a
Michigan corporation in connection with a certain Placement Agreement, dated
September 16, 2004, (the "Placement Agreement"), between the Company and
Mercantile Bank Corporation (the "Trust"), on one hand, and SunTrust Capital
Markets, Inc. (the "Placement Agent"), on the other hand. Pursuant to the
Placement Agreement, and subject to the terms and conditions stated therein, the
Trust will issue and sell to STI Investment Management, Inc. (the "Purchaser"),
$16,000,000 aggregate principal amount of Series [A][B] Floating Rate Preferred
Securities (liquidation amount $1,000.00 per capital security) (the "Preferred
Securities"), which Preferred Securities are guaranteed on a subordinated basis
by the Company to the extent set forth in the Guarantee Agreement dated
September 16, 2004, between the Company and the Guarantee Trustee named therein
(the "Guarantee Agreement"). The Trust is purchasing, with the proceeds of the
Preferred Securities and 495 Series [A][B] Common Securities (the "Common
Securities"), $16,495,000 aggregate principal amount of Series [A][B] Floating
Rate Junior Subordinated Notes due 2034 (the "Junior Subordinated Notes") of the
Company issued pursuant to an Indenture dated as of September 16, 2004 (the
"Indenture"), between the Company and Wilmington Trust Company, as indenture
trustee (the "Indenture Trustee").
Capitalized terms used herein and not otherwise defined shall have the
same meaning ascribed to them in the Placement Agreement.
The law covered by the opinions expressed herein is limited to the law of
the United States of America and of the State of Michigan.
B-1-1
We have made such investigations of law as, in our judgment, were
necessary to render the following opinions. We have also reviewed (a) the
Company's Articles of Incorporation, as amended, and its Bylaws, as amended; and
(b) such corporate documents, records, information and certificates of the
Company and its subsidiaries, certificates of public officials or government
authorities and other documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed. As to certain facts material to
our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in connection
with the above-referenced transaction, of officers and other representatives of
the Company and its subsidiaries and the Trust after discussing the contents
thereof with such officers. We have not made any independent investigation as to
the existence of actions, suits, investigations or proceedings, if any, pending
or threatened against the Company or any of its subsidiaries, and we have not
conducted any independent search of any public records in connection with our
rendering our opinions set forth herein.
In rendering the opinions expressed below, we have assumed, without
verification (i) the genuineness of the signatures on all documents that we have
examined, (ii) the authenticity of all documents submitted to us as originals,
(iii)the conformity with authentic original documents of all documents submitted
to us as copies, and (iv) the legal capacity of all natural persons. We have
assumed (except to the extent set forth in our opinions below as to the Company)
(a) that all parties to, or that have otherwise executed, the Operative
Documents have been duly organized or formed, as the case may be, and are in
good standing under the laws of their respective jurisdictions of organization
or formation, as the case may be, and have full power, corporate or other, to
enter into and perform all obligations thereunder and (b) the due authorization
by all requisite action, corporate or otherwise, and execution delivery by such
persons of such documents.
Based upon and subject to the foregoing and the further qualifications set
forth below, we are of the opinion as of the date hereof that:
1. The Company is validly existing and in good standing under the laws of
the State of Michigan and is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended. Each of the Subsidiaries is
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of the Company and the Subsidiaries has full corporate power
and authority to own or lease its properties and to conduct its business as such
business is currently conducted in all material respects.
2. The issuance, sale and delivery of the Preferred Securities and the
Junior Subordinated Notes in accordance with the terms and conditions of the
Placement Agreement and the other Operative Documents have been duly authorized
by all necessary actions of the Company. The issuance, sale and delivery of the
Junior Subordinated Notes by the Company and the issuance, sale and delivery of
the Preferred Securities and Common Securities by the Trust do not give rise to
any preemptive rights to subscribe for or to purchase any shares of capital
stock or equity securities of the Company under the Articles of Incorporation or
Bylaws of the Company or, to our knowledge, under any agreement or other
instrument to which the Company is a party or by which the Company may be bound.
B-1-2
3. The Company has all requisite corporate power to enter into and perform
its obligations under the Placement Agreement and the Subscription Agreement of
even date herewith relating to the Preferred Securities (the "Subscription
Agreement"), and the Placement Agreement and the Subscription Agreement have
been duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms.
4. Each of the Indenture, the Trust Agreement and the Guarantee Agreement
has been duly authorized, executed and delivered by the Company. Each of the
Indenture and the Guarantee Agreement constitutes a valid and legally binding
obligation of the Company enforceable against the Company in accordance with its
terms.
5. The Junior Subordinated Notes have been duly authorized for issuance by
the Company, and the Junior Subordinated Note issued and delivered by the
Company to the Trust on this date has been duly executed and delivered by the
Company and, assuming due authentication by the Indenture Trustee under the
Indenture, is entitled to the benefits of the Indenture and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.
6. The execution, delivery and performance of the Placement Agreement and
the other Operative Documents and the consummation of the transactions
contemplated by the Placement Agreement and the other Operative Documents do not
and will not conflict with, result in the creation or imposition of any material
lien, claim, charge, encumbrance or restriction upon any property or assets of
the Company or the Subsidiaries pursuant to, or constitute a material breach or
violation of, or constitute a material default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of (i) the
articles of incorporation or charter, bylaws or other governing documents of the
Company or the Subsidiaries, or (ii) to our knowledge, any material contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license or any other agreement or instrument known to us to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or (iii) any order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
known to us having jurisdiction over the Company or the Subsidiaries or any of
their respective properties which, in each case, is material to the Company and
the Subsidiaries on a consolidated basis.
7. Except for filings, registrations or qualifications that may be
required by applicable securities laws, no authorization, approval, consent or
order of, or filing, registration or qualification with, any person (including
without limitation, any court, governmental body or authority) is required under
the laws of the State of Michigan in connection with the offer and sale of the
Preferred Securities as contemplated by the Placement Agreement and the other
Operative Documents.
B-1-3
8. To our knowledge, (i) neither the Company nor any of the Subsidiaries
is in breach or violation of, or default under, with or without notice or lapse
of time or both, its Articles of Incorporation or Charter, Bylaws or other
governing documents, and (ii) no action, suit or proceeding is pending or
threatened against the Company or any of the Subsidiaries, before or by any
court or governmental official, commission, board or other administrative
agency, authority or body, or any arbitrator, wherein an unfavorable decision,
ruling or finding could reasonably be expected to have a material adverse effect
on the consummation of the transactions contemplated by the Placement Agreement
and the other Operative Documents or the issuance and sale of the Preferred
Securities as contemplated therein or the condition (financial or otherwise),
earnings, affairs, business, or results of operations of the Company and its
subsidiaries on a consolidated basis.
9. Assuming the accuracy of the representations of the Company, the
Placement Agent and the Purchaser in the respective Operative Documents, it is
not necessary in connection with the offering, sale and delivery of the
Preferred Securities, the Junior Subordinated Notes and the Guarantee Agreement
(or the Guarantee) to the Purchaser pursuant to the Subscription Agreement to
register the same under the Securities Act of 1933, as amended, under the
circumstances contemplated in the Placement Agreement and the Subscription
Agreement.
10. Neither the Company nor the Trust is or after giving effect to the
offering and sale of the Preferred Securities and the consummation of the
transactions described in the Placement Agreement will be, an "investment
company" or an entity "controlled" by an "investment company," in each case
within the meaning of the Investment Company Act of 1940, as amended.
Our opinions set forth herein are limited by the following exceptions and
qualifications:
(A) The opinions expressed in the first two sentences of numbered
paragraph 1 of this Opinion Letter are based solely upon certain certificates
and confirmations issued by the applicable governmental officer or authority
with respect to each of the Company and the Subsidiaries.
(B) As used in paragraph 1 of this Opinion Letter, the term "in good
standing" shall mean (i) when used in connection with a corporation, that all
filings and registrations required to have been made by such corporation under
the [STATE BUSINESS CORPORATION CODE] have been made and that all filing fees
that are due and payable in connection therewith have been paid, and (ii) when
used in connection with a bank, that all filings and registrations required to
have been made by such bank under the [APPLICABLE FINANCIAL CODE] have been made
and that all filing fees that are due and payable in connection therewith have
been paid.
(C) We have assumed for purposes of this Opinion Letter that all the
documents as to which we have opined with respect to enforceability constitute
the legal, valid and binding obligations of the parties thereto other than the
Company.
B-1-4
(D) Our opinions regarding the legality, validity, binding effect or
enforceability of each of the Placement Agreement and Subscription Agreement are
subject to and limited by: (i) bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the rights of creditors, generally; (ii)
the effect of general principles of equity, whether applied by a court of law or
equity, including the discretionary nature of equitable remedies; (iii) the
possible unenforceability, as contrary to public policy, of provisions regarding
indemnities for violations of securities laws; and (iv) the possible
unavailability of certain remedies in the case of a non-material breach.
(E) Our opinions regarding the legality, validity, binding effect or
enforceability of each of the Indenture, the Trust Agreement, the Guarantee
Agreement and the Junior Subordinated Notes are subject to and limited by: (i)
bankruptcy, insolvency, moratorium, reorganization or other laws affecting the
rights of creditors, generally; and (ii) the effect of general principles of
equity, whether applied by a court of law or equity, including the discretionary
nature of equitable remedies.
With respect to any matters indicated herein to be limited to our
knowledge (or words to like effect), the opinions set forth herein with respect
to such matters are specifically limited to the actual knowledge which attorneys
who are members of or are employed by this firm have obtained solely in
connection with the representation of the Company with respect to the offering
of the Preferred Securities and the other transactions contemplated by the
Placement Agreement.
With respect to the foregoing opinions, we do not express any opinions as
to the laws of the state of New York and have assumed, with your approval and
without rendering any opinion to such effect, that to the extent applicable, the
laws of the State of New York are substantively identical to the laws of the
State of Michigan which would apply, without regard to conflict of law
provisions, were the matter in question governed by the laws of Michigan. We
express no opinion as to matters of choice of law (including the enforceability
of any choice of law provisions in any agreement).
This opinion is rendered to you solely pursuant to Section 3.2(a) of the
Placement Agreement. As such, it may be relied upon by you or by a Subsequent
Purchaser as defined in Section 3.2 of the Placement Agreement only and may not
be used or relied upon by any other person for any purpose whatsoever without
our prior written consent.
Very truly yours,
XXXXXXXXX XXXXXX PLLC
B-1-5
EXHIBIT B-2
FORM OF TAX COUNSEL OPINION
Pursuant to Section 3.2(c) of the Placement Agreement, Xxxxxx Xxxxxxxxx
LLP counsel for the Placement Agent and Purchaser, shall deliver an opinion to
the following effect:
Mercantile Bank Corporation
0000 Xxxxx Xxxxxx Xxxxxx XX
Xxxxxxx, Xxxxxxxx 00000
SunTrust Capital Markets, Inc.
000 Xxxxxxxxx Xxxxxx, XX
24th Floor, Mail Code 3950
Xxxxxxx, Xxxxxxx 00000
STI Investment Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to SunTrust Capital Markets, Inc. (the "Placement
Agent"), a Tennessee corporation, and STI Investment Management, Inc. (the
"Purchaser"), a Delaware corporation, in connection with the Purchaser's
purchase of $16,000,000 Series [A][B] Floating Rate Preferred Securities
(liquidation amount $1,000 per capital security) (the "Preferred Securities") to
be issued by Mercantile Bank Capital Trust I (the "Trust"). The Preferred
Securities represent undivided beneficial ownership interests in $16,495,000 in
aggregate principal amount of Series [A][B] Floating Rate Junior Subordinated
Notes due 2034 (the "Junior Subordinated Notes") of Mercantile Bank Corporation
(the "Company"). This opinion letter is furnished pursuant to Section 3.2(b) of
the Placement Agreement dated September 16, 2004, between the Company, the Trust
and the Placement Agent.
In arriving at the opinions expressed below we have examined executed
copies of (i) the Amended and Restated Trust Agreement of the Trust dated the
date hereof (the "Trust Agreement") and (ii) the Junior Subordinated Indenture
relating to the issuance of the Junior Subordinated Notes dated the date hereof
(the "Indenture") (together, the "Operative Documents"). In addition, we have
relied on the representations of the Company contained in its letter dated as of
the date hereof and delivered to us in connection with the issuance of our
opinions expressed below. We have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
and records submitted to us as originals, the conformity to original documents
and records of all documents and records submitted to us as copies, and the
truthfulness of all statements of facts contained therein. We have also made
such investigations of law and fact as we have deemed appropriate as a basis for
the opinion expressed below.
B-2-1
Based upon and subject to the foregoing and such further qualifications as
set forth below, it is our opinion that, under current law and assuming the
performance of the Operative Documents in accordance with the terms described
therein:
1. the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association that is
taxable as a corporation, and
2. the Junior Subordinated Notes will be treated for United States
federal income tax purposes as indebtedness of the Company.
Our opinion is based on the U.S. Internal Revenue Code of 1986, as
amended, Treasury regulations promulgated thereunder, and administrative and
judicial interpretations thereof, all as of the date hereof and all of which are
subject to change, possibly on a retroactive basis. In rendering this opinion,
we are expressing our views only as to the federal income tax laws of the United
States of America. In rendering this opinion, we make no undertaking to advise
you of the effect of changes in matters of law or fact occurring subsequent to
the date hereof.
This opinion is rendered to you solely pursuant to Section 3.2(b) of the
Placement Agreement. As such, it may be relied upon by you and by any Subsequent
Purchaser as defined in Section 3.2 of the Placement Agreement only and may not
be used or relied upon by any other person for any purpose whatsoever without
our prior written consent.
Very truly yours,
POWELL, GOLDSTEIN, XXXXXX & XXXXXX LLP
B-1-2
EXHIBIT B-3
FORM OF DELAWARE COUNSEL TRUST OPINION
Pursuant to Section 3.2(c) of the Placement Agreement, and with respect to
each series of Preferred Securities, Common Securities, and Junior Subordinated
Notes to be issued in accordance therewith, 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-3-1
(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-3-2
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(d) of the Placement Agreement, and with respect to
each series of Preferred Securities, Common Securities, and Junior Subordinated
Notes to be issued in accordance therewith, Xxxxxxxx, Xxxxxx & Finger, P.A.,
special counsel for the Guarantee Trustee, the Property Trustee and the
Indenture Trustee, shall deliver an opinion to the effect that:
(1) Wilmington Trust Company (the "Bank") has been duly incorporated and
is validly existing in good standing as a Delaware banking corporation under the
laws of the State of Delaware and has the power and authority to enter into, and
to take all action required of it under, the Transaction Documents.
(2) The Transaction Documents have been duly authorized, executed and
delivered by the Trustee, the Property Trustee and the Guarantee Trustee and
each constitutes a legal, valid and binding obligation of the Trustee, the
Property Trustee and the Guarantee Trustee enforceable against them in
accordance with their respective terms, except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally, as such laws would
apply in the event of a bankruptcy, insolvency or reorganization or similar
occurrence affecting the Trustee the Property Trustee and the Guarantee Trustee
and (ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(3) The Securities have been duly authenticated and delivered by the
Trustee.
(4) The Preferred Securities have been duly authenticated and delivered by
the Property Trustee.
(5) The execution and delivery of each of the Transaction Documents by the
Trustee, the Property Trustee and the Guarantee and the performance by them of
their respective terms do not conflict with or result in a violation of (A) any
law or regulation of the United States of America or the State of Delaware
governing the banking or trust powers of the Bank, or (B) the charter or By-laws
of the Bank.
(6) No approval, authorization or other action by, or filing with, any
governmental authority of the United States of America or the State of Delaware
having jurisdiction over the banking or trust powers of the Bank is required in
connection with the execution and delivery by the Trustee, the Property Trustee
and the Guarantee Trustee of the Transaction Documents or the performance by the
Trustee, the Property Trustee and the Guarantee Trustee of the terms of the
Transaction Documents, other than the filing of the Certificate of Trust.
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 governing the banking and trust powers of the Bank 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-4-1
Annex F
Annex 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 September 16, 2004, among Mercantile Bank Corporation (the
"Company"), Mercantile Bank 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/THRIFT 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 _____________%
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:
Mercantile Bank Corporation
0000 Xxxxx Xxxxxx Xxxxxx XX
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
F-2
Financial Definitions
BANK HOLDING COMPANY
CORRESPONDING FRY-9C OR LP LINE ITEMS WITH LINE ITEM
REPORT ITEM CORRESPONDING SCHEDULES DESCRIPTION OF CALCULATION
----------------------- -------------------------------------------------------- --------------------------------------------------
Tier 1 Risk Weighted BHCK7206 Tier 1 Risk Ratio: Core Capital (Tier 1)/
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+ Schedules HC-C, HC-M & HC-N Estate+Other Nonaccrual & Repossessed
Assets)/Total Loans+Foreclosed Real Estate
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHDM3210-BHCK3163)/(BHCK2170-BHCK3163)
Tangible Common (Equity Capital - Goodwill)/(Total Assets -
Equity as a Schedule XX Xxxxxxxx)
Percentage of
Tangible Assets
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHCK3123+BHCK3128)/(BHCK5525-
BHCK3506+BHCK5526-BHCK3507)
Ratio of Reserves to Total Loan Loss and Allocated Transfer Risk
Non-Performing Loans Schedules HC & HC-N & HC-R Reserves/ Total Nonperforming Loans (Nonaccrual
+ Restructured)
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHCK4635-BHCK4605)/(BHCK3516)
Ratio of Net Net charge offs for the period as a percentage
Charge-Offs to Loans Schedules HC-B & HC-K of average loans.
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHCK4340/BHCK3368)
Return on Average Net Income as a percentage of Assets.
Assets (annualized) Schedules HI & HC-K
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+
BHCK3401+BHCKB985)
Net Interest Margin (Net Interest Income Fully Taxable Equivalent,
(annualized) Schedules HI Memorandum and HC-K if available/Average Earning Assets)
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHCK4093)/(BHCK4519+BHCK4079)
Efficiency Ratio (Non-interest Expense)/(Net Interest Income
Schedule HI Fully Taxable Equivalent, if available, plus
Non-interest Income)
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHCKB528+BHCK5369)/(BHCK2170)
Ratio of Loans to Total Loans & Leases (Net of Unearned Income &
Assets Schedule XX Xxxxx of Reserve)/Total Assets
----------------------- -------------------------------------------------------- --------------------------------------------------
(BHCKB528+BHCK5369)/(BHDM6631+BHDM6636
+BHFN6631+BHFN6636)
Ratio of Loans to Total Loans & Leases (Net of Unearned Income &
Deposits Schedule XX Xxxxx of Reserve)/Total Deposits (Includes
Domestic and Foreign Deposits)
1
(BHCK2170)
Total Assets The sum of total assets. Includes cash and
Schedule HC balances due from depository institutions;
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
DISCLOSURE SCHEDULES
SCHEDULE 4.15(a)
FINANCIAL STATEMENTS
On August 16, 2004, the Company, gave notice of its intent to redeem in
full on September 17, 2004 the $16,000,000 Junior Subordinated Debentures Due
2029 of the Company.
1
