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EXHIBIT 1
1,100,000 SHARES
COMMUNITY SHORES BANK CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
__________, 1998
Xxxxx Capital Markets,
a division of First Chicago Capital Markets, Inc.
As Representative of the Underwriters named in Schedule I hereto
Xxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Community Shores Bank Corporation, a Michigan corporation (the
"Company"), proposes to issue and sell 1,100,000 shares (the "Firm Shares") of
its authorized but unissued Common Stock (the "Common Stock") to the
Underwriters named in Schedule I hereto (the "Underwriters") for which Xxxxx
Capital Markets, a division of First Chicago Capital Markets, Inc., is acting as
a representative ("Xxxxx" or the "Representative"). In addition, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
165,000 shares (the "Optional Shares") to cover over-allotments. The Firm Shares
and the Optional Shares are called, collectively, the "Shares."
1. SALE AND PURCHASE OF THE SHARES.
(a) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to issue and sell to
each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule
I hereto at a purchase price of $______ per Share, except as set forth
in Section 1(b) below.
(b) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to the terms and
conditions of, this Agreement, the policies of the National Association
of Securities Dealers, Inc. (the "NASD"), and pursuant to directions
from the Company, Xxxxx will offer to sell to each of the persons
listed on Exhibit A (who may purchase alone or with
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family members to the extent permitted by the Free-Riding and
Withholding Interpretation (the "Interpretation") under the Rules of
Fair Practice of the NASD) the number of Shares set forth opposite
their respective names on Exhibit A. To the extent such persons (alone
or with such family members) offer to buy such Shares, Xxxxx agrees to
purchase up to 300,000 of such Shares at a purchase price of $______
per Share. The parties agree that the securities purchased and sold
under this subparagraph shall constitute "issuer directed securities"
sold to the issuer's employees or directors or other persons under the
Interpretation.
(c) On the basis of the representations, warranties and
agreements of the Company contained in, and subject to the terms and
conditions of, this Agreement, the Company grants to the Underwriters
an option to purchase all or any part of the Optional Shares at a price
per Share of $____. The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the price set forth in this
paragraph, that portion of the number of Optional Shares as to which
such option shall have been exercised (to be adjusted by Xxxxx so as to
eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum
number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule
I hereto and the denominator of which is the maximum number of Optional
Shares that all of the Underwriters are entitled to purchase hereunder.
The over-allotment option may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time or times on or before
12:00 noon, Detroit time, on the day before the Firm Shares Closing
Date (as defined in Section 2 below), and only once at any time after
that date and within 30 days after the Effective Date (as defined in
Section 4 below), in each case upon written or transmitted facsimile
notice, or verbal notice confirmed by transmitted facsimile, written or
telegraphic notice, by Xxxxx to the Company no later than 12:00 noon,
Detroit time, on the day before the Firm Shares Closing Date or at
least three but not more than five full business days before the
Optional Shares Closing Date (as defined in Section 2 below), as the
case may be, setting forth the number of Optional Shares to be
purchased and the time and date (if other than the Firm Shares Closing
Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company of the Firm Shares to
Xxxxx for the accounts of the several Underwriters and payment of the purchase
price by wire transfer or certified or official bank check payable in
immediately available funds to the Company, shall take place at the offices of
Xxxxxxxxx Xxxxxx PLLC, 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
at 10:00 a.m., Detroit time, at such time and date, not later than the third
(or, if the Firm Shares are priced, as contemplated by Rule 15c6-1(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after 4:30
p.m., Washington, D.C. time, the fourth) full business day following the first
date that any of the Shares are released by the Underwriters for sale to the
public, as Xxxxx shall designate by at least 48 hours prior notice
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to the Company (the "Firm Shares Closing Date"); provided, however, that if the
Prospectus (as defined in Section 4 below) is at any time prior to the Firm
Shares Closing Date recirculated to the public, the Firm Shares Closing Date
shall occur upon the later of the third or fourth, as the case the may be, full
business day following the first date that any of the Shares are released by the
Underwriters for sale to the public or the date that is 48 hours after the date
that the Prospectus has been so recirculated.
To the extent the option with respect to the Optional Shares
is exercised, delivery by the Company of the Optional Shares, and payment of the
purchase price by wire transfer or certified or official bank check payable in
immediately available funds to the Company, shall take place at the offices of
Xxxxxxxxx Xxxxxx PLLC specified above at the time and on the date (which may be
the Firm Shares Closing Date) specified in the notice referred to in Section
1(c) (such time and date of delivery and payment are called the "Optional Shares
Closing Date"). The Firm Shares Closing Date and the Optional Shares Closing
Date are called, individually, a "Closing Date" and, collectively, the "Closing
Dates."
Certificates representing the Firm Shares shall be registered
in such names and shall be in such denominations as Xxxxx shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
the Optional Shares, on the day of notice of exercise of the option as described
in Section 1(c), and shall be made available to Xxxxx for checking and
packaging, at such place as is designated by Xxxxx, at least one full business
day before the Closing Date.
3. PUBLIC OFFERING. The Company understands that the Underwriters
propose to make a public offering of the Shares, as set forth in and pursuant to
the Prospectus, as soon after the Effective Date as Xxxxx xxxxx advisable. The
Company hereby confirms that the Underwriters and dealers have been authorized
to distribute each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Underwriters and
agrees with the Underwriters as follows:
(a) The Company has carefully prepared in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities
Act") and the rules and regulations adopted by the Securities and
Exchange Commission (the "Commission") thereunder (the "Rules"), a
registration statement on Form SB-2 (No. 333-63769), including a
preliminary prospectus, and has filed with the Commission the
registration statement and such amendments thereof as may have been
required to the date of this Agreement. Copies of such registration
statement (including all amendments thereof) and of the related
preliminary prospectus have heretofore been delivered by the Company to
you. The term "preliminary prospectus" means any preliminary prospectus
(as defined in Rule 430 of the Rules) included at any time as a part of
the registration statement. The
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registration statement as amended (including any supplemental
registration statement under Rule 462(b) or any amendment under Rule
462(c) of the Rules) at the time and on the date it becomes effective
(the "Effective Date"), including the prospectus, financial statements,
schedules, exhibits, and all other documents incorporated by reference
therein or filed as a part thereof, is called the "Registration
Statement;" provided, however, that "Registration Statement" shall also
include all Rule 430A Information (as defined below) deemed to be
included in such Registration Statement at the time such Registration
Statement becomes effective as provided by Rule 430A of the Rules. The
term "Prospectus" means the Prospectus as filed with the Commission
pursuant to Rule 424(b) of the Rules or, if no filing pursuant to Rule
424(b) of the Rules is required, means the form of final prospectus
included in the Registration Statement at the time such Registration
Statement becomes effective. The term "Rule 430A Information" means
information with respect to the Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules. Reference made herein to
any preliminary prospectus or to the Prospectus shall be deemed to
refer to and include any document attached as an exhibit thereto or
incorporated by reference therein, as of the date of such preliminary
prospectus or the Prospectus, as the case may be. The Company will not
file any amendment of the Registration Statement or supplement to the
Prospectus to which Xxxxx shall reasonably object in writing after
being furnished with a copy thereof.
(b) Each preliminary prospectus, at the time of filing
thereof, contained all material statements which were required to be
stated therein in accordance with the Securities Act and the Rules, and
conformed in all material respects with the requirements of the
Securities Act and the Rules, and did not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
Commission has not issued any order suspending or preventing the use of
any preliminary prospectus. When the Registration Statement shall
become effective, when the Prospectus is first filed pursuant to Rule
424(b) of the Rules, when any post-effective amendment of the
Registration Statement shall become effective, when any supplement to
or pre-effective amendment of the Prospectus is filed with the
Commission and at each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply with the applicable provisions of the Securities Act and the
Exchange Act and the respective rules and regulations of the Commission
thereunder, and neither the Registration Statement nor the Prospectus,
nor any amendment thereof or supplement thereto, will contain any
untrue statement of a material fact or will omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representation or warranty as to the information contained in the
Registration
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Statement or the Prospectus or any amendment thereof or supplement
thereto in reliance upon and in conformity with information furnished
in writing to the Company by the Underwriters, specifically for use in
connection with the preparation thereof.
(c) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed with the
Commission as exhibits to the Registration Statement.
(d) Xxxxx, Xxxxxx & Company, LLP, whose report is filed with
the Commission as part of the Registration Statement, are, and during
the periods covered by their report were, independent public
accountants as required by the Securities Act and the Rules.
(e) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Michigan. Community Shores Bank, a Michigan banking corporation (the
"Bank"), has become a body corporate under the Michigan Banking Code of
1969 (the "Banking Code") and is currently limited to the transaction
of only such business as is incidental and necessarily preliminary to
its organization. Neither the Company nor the Bank has any properties
or conducts any business outside of the State of Michigan which would
require either of them to be qualified as a foreign corporation or
bank, as the case may be, in any jurisdiction outside of Michigan.
Neither the Company nor the Bank has any directly or indirectly held
subsidiary. The Company has all power, authority, authorizations,
approvals, consents, orders, licenses, certificates and permits needed
to enter into, deliver and perform this Agreement and to issue and sell
the Shares.
(f) The application for permission to organize the Bank (the
"FIB Application") was approved by the Commissioner of the Financial
Institutions Bureau for the State of Michigan (the "Commissioner") on
September 30, 1998, pursuant to Order No. BT-0612-98-10, as amended on
November 20, 1998, subject to certain conditions specified in the Order
and supplemental correspondence from the Commissioner dated the same
date. The Order and supplemental correspondence from the Commissioner
are collectively referred to in this Agreement as the "FIB Order." All
conditions contained in the FIB Order have been satisfied, except those
conditions relating to paid-in capital of the Bank, maintenance of
capital ratios and valuation reserves, the Certificate of Paid-In
Capital and Surplus, completion of the Commissioner's preopening
investigation and the issuance by the Commissioner of a certificate to
commence business. The application to the Federal Deposit Insurance
Corporation (the "FDIC") to become an insured depository institution
under the provisions of the Federal Deposit Insurance Act (the "FDIC
Application") was approved by order of the FDIC dated October 30, 1998
(the "FDIC Order"), as amended on December 3, 1998, subject to certain
conditions specified in the Order. All conditions contained in the FDIC
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Order required to be satisfied before the date of this Agreement have
been satisfied The Company's application to become a bank holding
company and acquire all issued capital stock of the Bank (the "Bank
Holding Company Application") under the Bank Holding Company Act of
1956, as amended, was approved on November 5, 1998 (the "Federal
Reserve Board Approval"), subject to certain conditions specified in
the Federal Reserve Board Approval. All conditions in the Federal
Reserve Board Approval required to be satisfied before the date of this
Agreement have been satisfied. Each of the FIB Application, FDIC
Application, and Bank Holding Company Application, at the time of their
respective filings, contained all required information and such
information was complete and accurate in all material respects. Other
than the remaining conditions to be fulfilled under the FIB Order, FDIC
Order and the Federal Reserve Board Approval specified above, no
authorization, approval, consent, order, license, certificate or permit
of and from any federal, state, or local governmental or regulatory
official, body, or tribunal, is required for the Company or the Bank to
commence and conduct their respective businesses and own their
respective properties as described in the Prospectus, except such
authorizations, approvals, consents, orders, licenses, certificates, or
permits as are not material to the commencement or conduct of their
respective businesses or to the ownership of their respective
properties.
(g) The financial statements of the Company and any related
notes thereto, included in the Registration Statement and the
Prospectus, present fairly the financial position of the Company as of
the date of such financial statements and for the period covered
thereby. Such statements and any related notes have been prepared in
accordance with generally accepted accounting principals applied on a
consistent basis and certified by the independent accountants named in
subsection 4(d) above. No other financial statements are required to be
included in the Prospectus or the Registration Statement.
(h) The Company owns adequate and enforceable rights to use
any patents, patent applications, trademarks, trademark applications,
service marks, copyrights, copyright applications and other similar
rights (collectively, "Intangibles") necessary for the conduct of the
material aspects of its business as described in the Prospectus and the
Company has not infringed, is infringing, or has received any notice of
infringement of, any Intangible of any other person.
(i) The Company has a valid and enforceable fee simple
interest in the real property located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxx
Xxxx, Xxxxxxxx, which is as described in the Prospectus, and is free
and clear of all liens, encumbrances, claims, security interests and
defects except those which would not materially adversely affect the
operation of the businesses of the Company and the Bank.
(j) There are no litigation or governmental or other
proceedings or investigations pending before any court or before or by
any public body or board or threatened against the Company or the Bank
and to the best of the Company's
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knowledge, there is no reasonable basis for any such litigation,
proceedings or investigations, which would have a material adverse
effect on commencement or conduct of the respective businesses of the
Company or the Bank or the ownership of their respective properties.
(k) The Company and Bank have filed all federal, state, and
local tax returns required to be filed by them and paid all taxes shown
due on such returns as well as all other material taxes, assessments
and governmental charges which have become due; no material deficiency
with respect to any such return has been assessed or proposed.
(l) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has
not been any material adverse change in the condition (financial or
other), business, properties or prospects of the Company.
(m) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default, in the
due performance and observance of any material term, covenant or
condition, by the Company, the Bank or, to the best of the Company's
knowledge, any other party, of any lease, indenture, mortgage, note or
any other agreement or instrument to which the Company or the Bank is a
party or by which either of them or either of their businesses may be
bound or affected, except such defaults or events as are not material
to the commencement or conduct of their respective businesses or
ownership of their respective properties.
(n) Neither the Company nor the Bank is in violation of any
term or provision of the articles of incorporation or bylaws of the
Company or the Bank. Neither the Company nor the Bank is in violation
of, nor is either of them required to take any action to avoid any
material violation of, any franchise, license, permit, judgment,
decree, order, statute, rule or regulation.
(o) Neither the execution, delivery or performance of this
Agreement by the Company nor the consummation of the transactions
contemplated hereby (including, without limitation, the issuance and
sale by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision of, or
constitute a default (or an event which with notice or lapse of time,
or both, would constitute a default) under, or require any consent
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or the Bank
pursuant to the terms of, any lease, indenture, mortgage, note or other
agreement or instrument to which the Company or the Bank is a party or
by which either of them or either of their businesses may be bound or
affected, or any franchise, license, permit, judgment,
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decree, order, statute, rule or regulation or violate any provision of
the articles of incorporation or bylaws of the Company or the Bank,
except those which are immaterial in amount or effect.
(p) The Company has authorized capital stock as set forth in
the Prospectus. One share of Common Stock of the Company is issued and
outstanding, which will be redeemed at or promptly following the
Closing if permitted by applicable law. No shares of preferred stock
are issued and outstanding. The issuance, sale and delivery of the
Shares have been duly authorized by all necessary corporate action by
the Company and, when issued, sold and delivered against payment
therefor pursuant to this Agreement, will be duly and validly issued,
fully paid and nonassessable and none of them will have been issued in
violation of any preemptive or other right. Upon issuance, sale, and
delivery thereof against payment therefor, all of the capital stock of
the Bank will be duly authorized and validly issued, fully paid and
nonassessable and will be owned by the Company, free and clear of all
liens, encumbrances and security interests (subject to the provisions
of the Banking Code, including, without limitation, Sections 77 and 201
of the Banking Code). There is no outstanding option, warrant or other
right calling for the issuance of, and no binding commitment to issue,
any share of stock of the Company or the Bank or any security
convertible into or exchangeable for stock of the Company or the Bank,
except for stock options described in the Registration Statement (the
"Stock Options") under the 1998 Employee Stock Option Plan (the "Stock
Option Plan"). The Common Stock, the Shares and the Stock Options
conform to all statements in relation thereto contained in the
Registration Statement and the Prospectus.
(q) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, neither the
Company nor the Bank has (1) issued any securities or incurred any
material liability or obligation, direct or contingent, (2) entered
into any material transaction, or (3) declared or paid any dividend or
made any distribution on any of their stock, except liabilities,
obligations, and transactions reasonably expected based on the
disclosures in the Prospectus, and redemption of one share of Common
Stock for $10 at or promptly following the Closing if permitted by
applicable law.
(r) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal, valid and
binding agreement and obligation of the Company.
(s) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus.
(t) Neither the Company, nor the Bank, nor, to the Company's
knowledge any director, officer, agent, employee or other person
associated with the Company or the Bank, acting on behalf of the
Company or the Bank, has used
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any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(u) Neither the Company nor the Bank nor any affiliate of
either of them has taken, and they will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common
Stock in order to facilitate the sale or resale of any of the Shares.
(v) No transaction has occurred between or among the Company
or the Bank and any of their officers, directors, organizers or the
Company's shareholder or any affiliate or affiliates of any such
officer, director, organizer, or shareholder, that is required to be
described in and is not described in the Prospectus.
(w) The Company is not and will not after the offering be an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(x) The Company has obtained from all of its executive
officers and directors their written agreement that (i) for a period of
150 days from the date of the Effective Date, they will not offer to
sell, sell, transfer, contract to sell, or grant any option for the
sale of or otherwise dispose of, directly or indirectly, any shares of
Common Stock of the Company (or any securities convertible into or
exercisable for such shares of Common Stock), except for (1) the
exercise of Stock Options under the Stock Option Plan or (2) gifts of
Common Stock (or other securities) to a donee or donees who agree in
writing to be bound by this clause, and (ii) for a period of three
months from the date of the Effective Date, they will not sell,
transfer, assign, pledge, or hypothecate any shares of Common Stock
acquired under Paragraph l(b), above, except with respect to Xxxx X.
Xxxxxxx who may resell one share of Common Stock to the Company.
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation of
the Underwriters to purchase the Shares shall be subject to the accuracy of the
representations and warranties of the Company in this Agreement as of the date
of this Agreement and as of the Firm Shares Closing Date or Optional Shares
Closing Date, as the case may be, to the accuracy of the statements of Company
officers made pursuant to the provisions of this Agreement, to the performance
by the Company of its obligations under this Agreement, and to the following
additional terms and conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M., Detroit time, on the date of this Agreement or on
such later date
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and time as shall be consented to in writing by Xxxxx; if the filing of
the Prospectus, or any supplement thereto, is required pursuant to Rule
424(b) of the Rules, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules; at
each Closing Date, if any, no stop order shall have been issued or
proceedings therefor initiated or threatened by the Commission; and any
request of the Commission for inclusion of additional information in
the Registration Statement, or otherwise, shall have been complied with
to the reasonable satisfaction of Xxxxx.
(b) At each Closing Date, the Underwriters shall have received
the favorable opinion of Xxxxxxxxx Xxxxxx PLLC, counsel for the
Company, dated the Firm Shares Closing Date or the Optional Shares
Closing Date, as the case may be, addressed to the Underwriters and in
form and scope reasonably satisfactory to counsel for the Underwriters
to the effect that:
(i) The Company (A) is a corporation existing and in
good standing under the laws of the State of Michigan, and (B)
is not required to be qualified to do business in any
jurisdiction outside Michigan. The Bank (X) has become a body
corporate under the Banking Code and is currently limited to
the transaction of only such business as is incidental and
necessarily preliminary to its organization, and (Y) is not
required to be qualified to do business in any jurisdiction
outside Michigan.
(ii) Each of the Company and the Bank has full
corporate power and authority and all material authorizations,
approvals, orders, licenses, certificates and permits of and
from all governmental bank regulatory officials and bodies
necessary to own its properties and to commence and conduct
its business as described in the Registration Statement and
Prospectus, including, without limitation, the FIB Order, the
FDIC Order and the Federal Reserve Board Approval, subject to
the fulfillment of the conditions with respect to the FIB
Order, the FDIC Order and the Federal Reserve Board Approval
all as described in Section 4(f) above, except for such
authorizations, approvals, orders, licenses, certificates and
permits as are not material to the ownership of their
properties or commencement or conduct of their businesses;
(iii) The Company has authorized capital stock as set
forth in the Prospectus and, prior to the Closing, had one
share of Common Stock issued and outstanding; the Shares have
been duly and validly authorized and issued and upon receipt
by the Company of payment therefor in accordance with the
terms of this Agreement will be fully paid and nonassessable
and are not and will not be subject to, preemptive rights; the
Shares and the other capital stock and Stock Options of the
Company conform in all material respects to the descriptions
thereof contained in the Registration Statement and the
Prospectus;
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(iv) To such counsel's knowledge, after due inquiry,
the Company has no directly or indirectly held subsidiary;
(v) the certificates evidencing the Shares are in the
form approved by the Board of Directors of the Company, comply
with the bylaws and the articles of incorporation of the
Company, comply as to form and in all other material respects
with applicable legal requirements;
(vi) this Agreement has been duly and validly
authorized, executed and delivered by the Company, and is the
legal, valid and binding agreement and obligation of the
Company enforceable in accordance with its terms, except (a)
as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating
to or affecting enforcement of creditors' rights or by general
equity principles (including requirements of reasonableness
and good faith in the exercise of rights and remedies),
whether applied by a court of equity or a court of law in an
action at law or in equity, or by the discretionary nature of
specific performance, injunctive relief, and other equitable
remedies, including the appointment of a receiver, and (b),
with respect to provisions relating to indemnification and
contribution, to the extent they are held by a court of
competent jurisdiction to be void or unenforceable as against
public policy or limited by applicable laws or the policies
embodied in them;
(vii) the Company is conveying to the Underwriters
good and valid title to the Shares that are issued in their
name, free and clear of any adverse claims, except to the
extent the Underwriters have notice of any adverse claim;
(viii) to the best of such counsel's knowledge, after
due inquiry, there are (A) no contracts or other documents
which are required to be filed as exhibits to the Registration
Statement other than those filed as exhibits thereto, (B) no
legal or governmental proceedings pending or threatened
against the Company or the Bank, and (C) no statutes or
regulations applicable to the Company or the Bank, or
certificates, permits, grants or other consents, approvals,
orders, licenses or authorizations from regulatory officials
or bodies, which are required to be obtained or maintained by
the Company or the Bank and which are of a character required
to be disclosed in the Registration Statement and Prospectus
which have not been so disclosed;
(ix) the statements in the Registration Statement and
the Prospectus, insofar as they are descriptions of corporate
documents, stock option plans, contracts, or agreements or
descriptions of laws, regulations,
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or regulatory requirements, or refer to compliance with law or
to statements of law or legal conclusions, are correct in all
material respects;
(x) to the best of such counsel's knowledge, after
due inquiry, the execution, delivery and performance of this
Agreement, the consummation of the transactions herein
contemplated and the compliance with the terms and provisions
hereof by the Company will not give rise to a right to
terminate or accelerate the due date of any payment due under,
or conflict with or result in a breach of any of the terms or
provisions of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a
default) under, or require any consent under, or result in the
execution or imposition of any lien, charge or encumbrance
upon any properties or assets of the Company or the Bank
pursuant to the terms of, any lease, indenture, mortgage, note
or other agreement or instrument to which the Company or the
Bank is a party or by which either of them or either of their
properties or businesses is or may be bound or affected, nor
will such action result in any violation of the provisions of
the articles of incorporation or bylaws of the Company or the
Bank or any statute or any order, rule, or regulation
applicable to the Company or the Bank of any court or any
federal, state, local or other regulatory authority or other
governmental body, the effect of which, in any such case,
would be expected to be materially adverse to the Company or
the Bank;
(xi) to the best of such counsel's knowledge, after
due inquiry, no consent, approval, authorization or order of
any court or governmental agency or body, domestic or foreign,
is required to be obtained by the Company in connection with
the execution and delivery of this Agreement or the sale of
the Shares to the Underwriters as contemplated by this
Agreement, except those which have been obtained;
(xii) to the best of such counsel's knowledge, after
due inquiry, (A) neither the Company nor the Bank is in breach
of, or in default (and no event has occurred which, with
notice or lapse of time, or both, would constitute a default)
under, any lease, indenture, mortgage, note, or other
agreement or instrument to which the Company or the Bank, as
the case may be, is a party; (B) neither the Company nor the
Bank is in violation of any term or provision of either of
their articles of incorporation or bylaws, or of any
franchise, license, grant, permit, judgment, decree, order,
statute, rule or regulation; and (C) neither the Company nor
the Bank has received any notice of conflict with the asserted
rights of others in respect of Intangibles necessary for the
commencement or conduct of its business, the effect of which,
in any such case, would be expected to be materially adverse
to the Company or the Bank;
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(xiii) the Registration Statement and the Prospectus
and any amendments or supplements thereto (other than the
financial statements as to which no opinion need be rendered)
comply as to form with the requirements of the Securities Act
and the Rules in all material respects; and
(xiv) the Registration Statement is effective under
the Securities Act, and, to the best of such counsel's
knowledge, after due inquiry, no proceedings for a stop order
are pending or threatened under the Securities Act.
In rendering the foregoing opinion, such counsel may rely upon
certificates of public officials (as to matters of fact and law) and
officers of the Company (as to matters of fact), and include
qualifications in its opinion as are reasonably acceptable to the
Underwriters. Copies of all such certificates shall be furnished to
counsel to the Underwriters on the Closing Date.
In addition, such counsel shall state that they have
participated in conferences with officers of the Company and
representatives of the Underwriters at which the contents of the
Registration Statement and Prospectus and related matters were
discussed and although such counsel did not independently verify the
accuracy or completeness of the statements made in the Registration
Statement and Prospectus and does not assume any responsibility for the
accuracy or completeness of the statements in the Registration
Statement and Prospectus, on the basis of the foregoing, nothing has
come to the attention of such counsel that would lead them to believe
that the Registration Statement or Prospectus, as amended or
supplemented, if amended or supplemented, contains any untrue statement
of a material fact or omits a material fact required to be stated
therein or necessary to make the statements therein not misleading;
except that such statement may exclude financial statements, financial
data, and statistical information included in the Registration
Statement and Prospectus.
(c) On or prior to each Closing Date, the Underwriters shall
have been furnished such documents, certificates and opinions as they
may reasonably require for the purpose of enabling them to review the
matters referred to in subsection (b) of this Section 5, and in order
to evidence the accuracy, completeness or satisfaction of the
representations, warranties or conditions herein contained.
(d) Prior to each Closing Date, (i) there shall have been no
material adverse change in the condition or prospects, financial or
otherwise, of the Company or the Bank; (ii) there shall have been no
material transaction, not in the ordinary course of business, entered
into by the Company or the Bank except as set forth in the Registration
Statement and Prospectus, other than transactions referred to or
contemplated therein or to which the Representative has given its
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written consent; (iii) neither the Company nor the Bank shall be in
default (nor shall an event have occurred which, with notice or lapse
of time, or both, would constitute a default) under any provision of
any material agreement, understanding or instrument relating to any
outstanding indebtedness that is material in amount; (iv) no action,
suit or proceeding, at law or in equity, shall be pending or threatened
against the Company or the Bank before or by any court or Federal,
state or other commission, board or other administrative agency having
jurisdiction over the Company or the Bank, as the case may be, which is
expected to have a material adverse effect on the Company or the Bank;
and (v) no stop order shall have been issued under the Securities Act
and no proceedings therefor shall have been initiated or be threatened
by the Commission.
(e) At each Closing Date, the Underwriters shall have received
a certificate signed by the Chairman of the Board, and the President or
Secretary of the Company dated the Firm Shares Closing Date or Optional
Shares Closing Date, as the case may be, to the effect that the
conditions set forth in subsection (d) above have been satisfied and as
to the accuracy, as of the Firm Shares Closing Date or the Optional
Shares Closing Date, as the case may be, of the representations and
warranties of the Company set forth in Section 4 hereof.
(f) At or prior to each Closing Date, the Underwriters shall
have received a "blue sky" memorandum of Xxxxxxxxx Xxxxxx PLLC, counsel
for the Company, addressed to the Underwriters and in form and scope
reasonably satisfactory to the Underwriters, concerning compliance with
the blue sky or securities laws of the states listed in Exhibit B
attached to this Agreement.
(g) All proceedings taken in connection with the sale of the
Shares as herein contemplated shall be reasonably satisfactory in form
and substance to the Underwriters and to counsel for the Underwriters,
and the Underwriters shall have received from counsel for the
Underwriters a favorable opinion, dated as of each Closing Date, with
respect to such of the matters set forth under subsections (b) (i),
(iii), (vi), and (xiv) of this Section 5, and with respect to such
other related matters as the Underwriters may reasonably require, if
the failure to receive a favorable opinion with respect to such other
related matters would cause the Underwriters to deem it inadvisable to
proceed with the sale of the Shares.
(h) There shall have been duly tendered to the Underwriters
certificates representing all the Shares agreed to be sold by the
Company on the Firm Shares Closing Date or the Optional Shares Closing
Date, as the case may be.
(i) No order suspending the sale of the Shares prior to each
Closing Date, in any jurisdiction listed in Exhibit B, shall have been
issued on the Firm Shares Closing Date or the Optional Shares Closing
Date, as the case may be, and
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no proceedings for that purpose shall have been instituted or, to the
Underwriters' knowledge or that of the Company, shall be contemplated.
(j) The NASD, upon review of the terms of the public offering
of the Shares, shall not have objected to the Underwriters'
participation in the same.
If any condition to the Underwriters' obligations hereunder to
be fulfilled prior to or at the Firm Shares Closing Date or the Optional Shares
Closing Date, as the case may be, is not so fulfilled, the Representative may
terminate this Agreement pursuant to Section 9(c) hereof or, if the
Representative so elects, waive any such conditions which have not been
fulfilled or extend the time of their fulfillment.
6. COVENANTS.
The Company covenants and agrees that it will:
(a) Use its best efforts to cause the Registration Statement
to become effective and will notify the Representative immediately, and
confirm the notice in writing, (i) when the Registration Statement and
any post-effective amendment thereto becomes effective, (ii) of the
issuance by the Commission of any stop order or of the initiation, or
the threatening, of any proceedings for that purpose and (iii) of the
receipt of any comments from the Commission. The Company will make
every reasonable effort to prevent the issuance of a stop order, and,
if the Commission shall enter a stop order at any time, the Company
will make every reasonable effort to obtain the lifting of such order
at the earliest possible moment.
(b) During the time when a prospectus is required to be
delivered under the Securities Act, comply so far as it is able with
all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules, as from time to time in force, so
far as necessary to permit the continuance of sales of or dealings in
the Shares. If at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act any event shall have
occurred as a result of which, in the reasonable opinion of counsel for
the Company or counsel for the Underwriters, the Registration Statement
or Prospectus as then amended or supplemented includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend or
supplement the Registration Statement or Prospectus to comply with the
Securities Act, the Company will notify the Representative promptly and
prepare and file with the Commission an appropriate amendment or
supplement in form satisfactory to the Representative. The cost of
preparing, filing and delivering copies of such amendment or supplement
shall be paid by the Company.
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(c) Deliver to the Underwriters such number of copies of each
preliminary prospectus as may reasonably be requested by the
Underwriters and, as soon as the Registration Statement, or any
amendment or supplement thereto, becomes effective, deliver to the
Underwriters three signed copies of the Registration Statement,
including exhibits, and all post-effective amendments thereto and
deliver to the Underwriters such number of copies of the Prospectus,
the Registration Statement and supplements and amendments thereto, if
any, without exhibits, as the Underwriters may reasonably request.
(d) Endeavor in good faith, in cooperation with the
Underwriters and their counsel, at or prior to the time the
Registration Statement becomes effective, to qualify the Shares for
offering and sale under the securities laws relating to the offering or
sale of the Shares of the states listed in Exhibit B. In each
jurisdiction where such qualification shall be effected, the Company
will, unless the Representative agrees that such action is not at the
time necessary or advisable, file and make such statements or reports
at such times as are or may reasonably be required by the laws of such
jurisdiction. The Company will advise the Representative promptly of
the suspension of the qualification of the Shares for offering, sale or
trading in any jurisdiction, or any initiation or threat of any
proceeding for such purpose, and in the event of the issuance of any
order suspending such qualification, the Company, with the cooperation
of Representative, will use all reasonable efforts to obtain the
withdrawal thereof.
(e) Furnish its security holders as soon as practicable an
earnings statement (which need not be certified by independent
certified public accountants unless required by the Securities Act or
the Rules) covering a period of at least twelve months beginning after
the effective date of the Registration Statement, which shall satisfy
the provisions of Section 11(a) of the Securities Act and the Rules
thereunder.
(f) For a period of five years from the Effective Date,
furnish to its shareholders annual audited and quarterly unaudited
consolidated financial statements with respect to the Company including
balance sheets and income statements.
(g) For a period of five years from the Effective Date,
furnish to the Representative the following:
(i) at the time they have been sent to shareholders of the
Company or filed with the Commission three copies of each
annual, quarterly, interim, or current financial and other
report or communication sent by the Company to its
shareholders or filed with the Commission;
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(ii) as soon as practicable, three copies of every press
release and every material news item and article in respect of
the Company or the affairs of the Company which was released
by the Company;
(iii) all other information reasonably requested by the
Representative with respect to the Company to comply with Rule
15c2-11 of the Rules and Section 4 of Schedule H of the NASD
By-Laws; and
(iv) such additional documents and information with
respect to the Company and its affairs as the Representative
may from time to time reasonably request.
(h) Acquire all of the Bank's outstanding capital stock, free
and clear of all liens, encumbrances, or other claims or restrictions
whatsoever (other than imposed by Sections 77 and 201 of the Banking
Code), for not less than $8,000,000 from the proceeds of the offering
and, in all other material respects, apply the net proceeds from the
offering in the manner set forth under "Use of Proceeds" in the
Prospectus.
(i) Not file any amendment or supplement to the Registration
Statement or Prospectus after the effective date of the Registration
Statement to which the Representative shall reasonably object in
writing after being furnished a copy thereof.
(j) Timely file with the Commission reports on Form SR (if
applicable) containing the information required by that Form in
accordance with the provisions of Rule 463 of the Regulation under the
Act.
(k) Comply with all registration, filing and reporting
requirements of the Securities Act or the Exchange Act, which may from
time to time be applicable to the Company.
(l) Cause the proper submission of the Certificate of Paid-In
Capital and Surplus, give advance written notice to the Commissioner of
the Bank's projected opening date, and in all other respects use
reasonable efforts to comply with the requirements of, and satisfy the
conditions of, the FIB Order, the FDIC Order and the Federal Reserve
Board Approval, which are required to be complied with prior to the
Bank commencing the business of banking; provided, however, that it
shall not be a breach of this Section 6(l) for the Company or the Bank
to fail to maintain any specified level of capital, surplus, capital
ratio, valuation reserve or financial or operating performance after
the Bank has commenced the business of banking or to fail to satisfy
any such requirement or condition if such failure is waived or
performance of such requirement or condition is accepted as sufficient
by the FIB, the FDIC, and/or the Federal Reserve Board, as applicable.
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(m) Pay, or reimburse if paid by the Underwriters, whether or
not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement,
including those relating to (1) the preparation, printing, filing and
delivery of the Registration Statement, including all exhibits thereto,
each preliminary prospectus, the Prospectus, all amendments of and
supplements to the Registration Statement and the Prospectus, and the
photocopying of the Underwriting Agreement and related agreements
including, without limitation, the Dealer Agreement; (2) the issuance
of the Shares and the preparation and delivery of certificates for the
Shares to the Underwriters; (3) the registration or qualification of
the Shares for offer and sale under the securities or "blue sky" laws
of the various jurisdictions referred to in Exhibit B, including the
fees and disbursements of counsel in connection with such registration
and qualification and the preparation and printing of preliminary,
supplemental, and final blue sky memoranda; (4) the furnishing
(including costs of shipping and mailing) to the Underwriters of copies
of each preliminary prospectus, the Prospectus and all amendments of or
supplements to the Prospectus, and of the several documents required by
this Section to be so furnished; (5) the filing requirements and fees
of the NASD in connection with its review of the terms of the public
offering and the underwriting; (6) the furnishing (including costs of
shipping and mailing) of copies of all reports and information required
by Section 6(g); (7) all transfer taxes, if any, with respect to the
sale and delivery of the Shares by the Company to the Underwriters; (8)
the inclusion of the Shares on the OTC Bulletin Board; and (9) the
Underwriters' out-of-pocket expenses, including without limitation,
road show expenses and legal fees of counsel to the Underwriters (such
out-of-pocket expenses and legal fees payable by the Company shall not
exceed $40,000). Upon a successful completion of the offering, the
Underwriters will credit the out-of-pocket and legal fee reimbursement
described in Section 6(m)(9) against the underwriting discount.
(n) Not, without the prior written consent of the
Representative, sell, contract to sell or grant any option for the sale
of or otherwise dispose of, directly or indirectly, or register with
the Commission, any shares of Common Stock of the Company (or any
securities convertible into or exercisable for such shares of Common
Stock) within 150 days after the date of the Prospectus, except as
provided in this Agreement and except for grants and exercises of Stock
Options under the Stock Option Plan as described in the Prospectus.
(o) For not less than 3 fiscal years after the Effective Date,
unless the Representative shall otherwise consent in writing, (i)
timely file with the Commission all reports required by Section 15(d)
of the Exchange Act and not seek suspension of the duty to file such
reports, and (ii) not less frequently than annually prepare a proxy
statement and annual report which conform substantially to the
requirements of Commission Regulation 14A and distribute such proxy
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statement and annual report to record and beneficial owners
substantially in the manner which would be required by Commission
Regulation 14A if applicable.
(p) Use its best efforts to cause itself and the Bank to
commence their businesses as described in the Prospectus not later than
March 1, 1999.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Underwriters and each person, if any, who controls the Underwriters
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they 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 arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or
any amendment thereof or supplement thereto, or arise out of or are
based upon 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; provided, however, that such indemnity shall
not inure to the benefit of the Underwriters (or any person controlling
the Underwriters) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares in the public offering
to any person by the Underwriter if such untrue statement or omission
or alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Underwriters specifically for use therein. The Company shall not be
liable hereunder to the Underwriters (or any controlling person
thereof) to the extent that any loss, claim, damage or other liability
incurred by the Underwriters arises from the Underwriters' fraudulent
act or omission.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company and each officer of the
Company to the same extent as the foregoing indemnity from the Company
to the Underwriters, but only insofar as such losses, claims, damages
or liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment thereof or supplement thereto, in reliance upon and
in conformity with information
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furnished in writing to the Company by such Underwriter specifically
for use therein; provided, however, that the obligation of each
Underwriter to indemnify the Company (including any controlling person,
director or officer thereof) hereunder shall be limited to the total
price at which the Shares purchased by such Underwriter hereunder were
offered to the public. The Underwriters shall not be liable hereunder
to the Company (including any controlling person, director or officer
thereof) to the extent that any loss, claim, damage or other liability
incurred by the Company arises from a fraudulent act or omission by the
Company.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of
all papers served, but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it from
any liability that it may have to any indemnified party otherwise than
under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses, except as provided below and except for
the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (1) the employment of counsel
by such indemnified party has been authorized in writing by the
indemnifying parties, (2) the indemnified party shall have reasonably
concluded that, because of the existence of different or additional
defenses available to the indemnified party or of other reasons, there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party) or that,
under the circumstances, it is otherwise appropriate, or (3) the
indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claims effected without its written
consent.
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8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) or 7(b) is due in accordance with its terms but for any reason is
held to be unavailable, the Company and the Underwriters shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received from other persons), to which the
Company and the Underwriters may be subject, in such proportion so that the
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount appearing on the front cover page of the Prospectus
bears to the public offering price appearing thereon and the Company is
responsible for the balance; provided, however, that (a) in no case shall the
Underwriters be responsible for any amount in excess of the underwriting
discount applicable to the Shares purchased by the Underwriters hereunder and
(b) no person found 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, each person, if any, who controls the Underwriters within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as the Underwriters, and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act, each
officer and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (a) and (b) of this
Section. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section, notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent.
In any proceeding relating to the Registration Statement, any
preliminary prospectus, the Prospectus or any supplement thereto or amendment
thereof, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of any court in Michigan, agrees that
process issuing from such court may be served upon him or it by any other
contributing party and consents to the service of such process and agrees that
any other contributing party may join him or it as an additional defendant in
any such proceeding in which such other contributing party is a party.
9. TERMINATION. This Agreement may be terminated by the
Representative by notifying the Company at any time:
(a) before the earliest of (1) 11:00 a.m., Detroit time, on
the business day following the Effective Date, (2) the time of release
by Xxxxx for publication of the first newspaper advertisement with
respect to the Shares and (3) the time
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when the Shares are first generally offered by the Underwriters to
dealers by letter or telegram;
(b) at or before any Closing Date if, in the judgment of the
Representative, payment for and delivery of the Shares is rendered
impracticable or inadvisable because (1) additional material
governmental restrictions, not known to be in force and effect when
this Agreement is signed, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been
generally established on the New York Stock Exchange, on the American
Stock Exchange or on the over-the-counter market, or trading in
securities generally shall have been suspended on either such Exchange
or on the over-the-counter market or a general banking moratorium shall
have been established by federal, New York or Michigan authorities, (2)
a war or other calamity shall have occurred or shall have accelerated
to such an extent as to affect adversely the marketability of the
Shares, (3) the Company or the Bank shall have sustained a material
loss by fire, flood, accident, hurricane, earthquake, theft, sabotage
or other calamity or malicious act, which, whether or not said loss
shall have been insured, will in the Representative's opinion, make it
inadvisable to proceed with the offering of the Shares, (4) the FIB
Order, the FDIC Order, or the Federal Reserve Board Approval shall have
been withdrawn or materially altered, or notice shall have been
received to the effect that any of such approvals will not be received,
or, if received, will be subject to conditions that the Company would
not be able to fulfill in a reasonable time in the Representative's
reasonable opinion, (5) in the Representative's reasonable opinion it
is not probable that the Company and Bank will be able to commence
business before March 1, 1999, for any reason, or (6) there shall have
been such material change in the condition, business operations or
prospects of the Company or the market for the Shares or similar
securities as in the Representative's judgment would make it
inadvisable to proceed with the offering of the Shares; or
(c) at or before any Closing Date, if any of the conditions
specified in Section 5 or any other agreements, representations or
warranties of the Company in this Agreement shall not have been
fulfilled when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, except as
otherwise provided in this Agreement, the Company shall not be under any
liability to the Underwriters (other than for obligations assumed in Section 6
hereof), and the Underwriters shall not be under any liability to the Company;
provided, however, that if this Agreement is terminated by the Underwriters
because of any failure, refusal or inability on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
for any reasons provided in subparagraphs (b) (other than (b)(6)) and (c) above,
the Company will reimburse the Underwriters for all accountable out-of-pocket
expenses (including, without limitation, road show expenses and fees and
disbursements of counsel to the Underwriters) up to a maximum of $40,000
(including the $20,000 advance below) incurred by it in connection with the
proposed
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purchase and sale of the Shares or in contemplation of performing its
obligations hereunder. The Underwriters acknowledge receipt of a $20,000 advance
from the Company. If this Agreement is terminated for any reason, the
Underwriters shall be entitled to retain such advance as reimbursement for their
accountable out-of-pocket expenses; provided, however, in the event that the
accountable out-of-pocket expenses to be reimbursed under this paragraph are
less than $20,000, the Underwriters shall pay such difference to the Company. If
this Agreement is not terminated, the $20,000 shall be credited at closing
against the underwriting discount.
10. DEFAULT BY UNDERWRITER.
(a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a
Closing Date, the Representative may in its discretion arrange for any
of the Underwriters or another party or other parties to purchase such
Shares on the terms contained herein. If within thirty-six hours after
such default by any Underwriter the Representative does not arrange for
the purchase of such Shares, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another
party or parties satisfactory to the Representative to purchase such
Shares on such terms. In the event that, within the respective
prescribed periods, the Representative notifies the Company that it has
so arranged for the purchase of such Shares, or the Company notifies
the Representative that it has so arranged for the purchase of such
Shares, the Representative or the Company shall have the right to
postpone such Closing Date for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to
the Registration Statement or the Prospectus which in the
Representative's opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
the Representative and the Company as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased does not
exceed one-tenth of the aggregate number of all the Shares to be
purchased at such Closing Date, then the Company shall have the right
to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such
Closing Date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of
Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made, but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
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(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by the
Representative and the Company as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased exceeds
one-tenth of the aggregate number of all the Shares to be purchased at
such Closing Date, or if the Company shall not exercise the right
described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Optional
Shares Closing Date, the obligations of the Underwriters to purchase
and of the Company to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the
Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Sections 7 and 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability
for its default.
11. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement shall be
deemed to be representations, warranties and agreements at the Closing Dates,
and such representations, warranties and agreements of the Company, including,
without limitation, the payment and reimbursement agreements contained in
Section 6 hereof and the indemnity and contribution agreements contained in
Sections 7 and 8 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Underwriters or any
controlling person and shall survive termination of this Agreement and/or
delivery of the Shares to and payment for the Shares by the Underwriters
pursuant to this Agreement. In addition, the covenants contained in Section 6
hereof, the agreements contained in this Section 11 and in Sections 7, 8 and 9
shall survive termination of this Agreement and/or delivery of the Shares to and
payment for the Shares by the Underwriters pursuant to this Agreement.
12. MISCELLANEOUS. This Agreement has been and is made for the benefit
of the Underwriters, the Company and their respective successors and assigns,
and, to the extent expressed herein, for the benefit of persons controlling the
Underwriters or the Company, and directors and certain officers of the Company,
and their respective successors and assigns, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of
this Agreement. The term "successors and assigns" shall not include any
purchaser of Shares from the Underwriters merely because of such purchase.
If any action or proceeding shall be brought by the Underwriters or
the Company in order to enforce any right or remedy under this Agreement, the
Underwriters and the Company hereby consent to, and agree that they will submit
to, the jurisdiction of the courts of the State of Michigan and of any Federal
court sitting in the State of Michigan.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph, if subsequently confirmed in
writing, to the Underwriters, care of Xxxxx, at Xxx Xxxxxxxx, Xxxxxxx, Xxxxxxxx
00000 (facsimile No. (000) 000-0000) (with a
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copy to Xxxxxx X. Xxxx, Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, 0000 Xxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxx, Xxxxxxxx 00000 (facsimile No. (000) 000-0000)); and to the
Company at 0000 Xxxxxx Xxxxxx, Xxxxxxxxx Xxxx, Xxxxxxxx 49441,(facsimile No.
(000)000-0000), Attention: Xxxx X. Xxxxxxx, Chairman of the Board, President
and Chief Executive Officer (with a copy to Xxxxxx X. Xxxxxxxx, Xxxxxxxxx
Xxxxxx PLLC, 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000
(facsimile No. (000) 000-0000)).
The laws of the State of Michigan shall govern this Agreement,
its construction, and the determination of any rights, duties or remedies of the
parties arising out of or relating to this Agreement. The parties acknowledge
that the United States District Court for the Eastern District of Michigan or
the Michigan Circuit Court for the County of Xxxxx shall have exclusive
jurisdiction over any case or controversy arising out of or relating to this
Agreement and that all litigation arising out of or relating to this Agreement
shall be commenced in the United States District Court for the Eastern District
of Michigan or in the Xxxxx County (Michigan) Circuit Court.
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Please confirm that the foregoing correctly sets forth the agreement
between us.
Very truly yours,
COMMUNITY SHORES BANK CORPORATION
By: __________________________________
Xxxx X. Xxxxxxx
Its: Chief Executive Officer
Confirmed by Xxxxx on behalf
of each of the Underwriters,
XXXXX CAPITAL MARKETS,
a division of First Chicago Capital Markets, Inc.
By: _________________________________
Xxxx X. Xxxxxxxx
Managing Director
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SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Shares to be Maximum Option
Underwriter Purchased Exercised
----------- --------------- ------------------
Xxxxx Capital Markets
--------- -------
Total 1,100,000 165,000
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EXHIBIT A
---------
Number Relationship
of of Person to
Name Shares to the Company
---- ------ --------------
Xxxxx X. Xxxxxxxx 5,500 Officer
Xxxxx X. Xxxxx 20,000 Director
Xxxx X. Xxxxxx 27,500 Director
Xxxxxxx X. Xxxxxxx 2,500 Officer
Xxxx X. Xxxx 15,000 Organizer
Xxxx X. Xxxxxxx 25,000 Director
Xxxxxx X. Xxxxxxxxxx 25,000 Director
Xxxxxx X. Xxxxxxxx 15,000 Director
Xxxxx X. Xxxxx 75,000 Director
Xxxxxxx X. Xxxxxx 15,000 Organizer
Xxxxxxx X. Xxxxxxxxx 25,600 Director
Xxxxxx X. Xxxxxxx 25,700 Director
Xxxx X. Xxxx 40,000 Director
Xxxx X. Xxxxxxx 10,300 Director and Officer
Xxxxxx X. Xxxxxx 6,100 Officer
Xxx X. Xxxxxx 2,500 Director
---------
335,700
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EXHIBIT B
---------
States
Florida
Illinois
Indiana
Kentucky
Michigan
Missouri
New Jersey
New York
Ohio
Wisconsin
