Exhibit 1.1
2,700,000 SHARES
DEARBORN BANCORP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
November __, 2006
Oppenheimer & Co. Inc.
Howe Barnes Hoefer & Arnett, Inc.
c/o Oppenheimer & Co. Inc.
300 River Place
Suite 400
Detroit, MI 48207
Dear Sirs:
The undersigned, Dearborn Bancorp, Inc., a Michigan corporation (the
"Company"), hereby confirms its agreement with Oppenheimer & Co. Inc.
("Oppenheimer") and Howe Barnes Investments, Inc. (collectively, the
"Underwriters") as follows:
1. INTRODUCTION.
(a) The Company proposes to issue and sell to the Underwriters,
jointly and not severally, 2,700,000 shares (the "Firm Stock") of the
Company's common stock (the "Common Stock"). In addition, solely for the
purpose of covering over-allotments, the Company proposes to grant to the
Underwriters the option to purchase an additional 405,000 shares of Common
Stock (the "Additional Stock"). The Firm Stock and the Additional Stock are
sometimes collectively referred to herein as the "Stock." The Stock is more
fully described in the Prospectus referred to below.
(b) As is also more fully described in the Prospectus referred to
below, the Company has entered into a definitive agreement dated as of
September 14, 2006 (the "Definitive Agreement"), to acquire Fidelity
Financial Corporation of Michigan, a Michigan corporation, including its
subsidiary Fidelity Bank ("Fidelity"). The consummation of the transactions
contemplated by the Definitive Agreement (the "Fidelity Acquisition") are
to occur subsequent to the Closing Date as defined herein.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-137542),
as amended by Amendment No. 1 thereto, including any related preliminary
prospectus, under the Securities Act of 1933, as amended (the "Act"). The
Company and the transaction contemplated hereby meet all of the
requirements and comply with all of the conditions for registering the
Stock with the Commission on a registration statement on Form S-3. Except
as the context may otherwise require, such registration statement, as
amended, on file with the Commission at the time the registration statement
became effective (including the prospectus, financial statements,
schedules, exhibits, and all other documents incorporated by reference
therein or filed as a part thereof) collectively are herein called the
"Registration Statement," and the prospectus, in the form filed with the
Commission pursuant to Rule 424(b) of the General Rules and Regulations of
the Commission under the Act (the "Regulations"), is herein called the
"Prospectus." The term "Preliminary Prospectus" means each prospectus
included in such Registration Statement before it became effective under
the Act and any prospectus filed by the Company with the consent of
Oppenheimer pursuant to Rule 424(a) of the Regulations. Reference made
herein to any Preliminary Prospectus or to the Prospectus shall be deemed
to refer to and include any documents incorporated by reference therein and
any document attached as an exhibit thereto, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be. The term
"Disclosure Package" means (i) the Preliminary Prospectus, (ii) the
Prospectus, (iii) each issuer free writing prospectuses as defined in Rule
433 of the Securities Act (each, an "Issuer Free Writing Prospectus"), if
any, and (iv) a schedule indicating the number of shares of Stock being
sold and the price at which the Stock will be sold to the public. As of
__:00 [a/p]m (Detroit Time) on the date of this Agreement (the "Initial
Sale Time"), the Disclosure Package did not contain any untrue statement of
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Disclosure Package based upon and in
conformity with written information furnished to the Company by either
Underwriter specifically for use therein, it being understood and agreed
that the only such information furnished by or on behalf of the
Underwriters consists of the information described as such in Section 9
hereof. No statement of material fact included in the Prospectus has been
omitted from the Disclosure Package available at the Initial Sale Time and
no statement of a material fact included in the Disclosure Package
available at the Initial Sale Time that is required to be included in the
Prospectus has been omitted therefrom.
(b) Each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the completion of the public offer and sale of
the Stock or until any earlier date on which the Company notified or
notifies the Underwriters as set forth in Section 5(b), (i) did not, does
not and will not include any information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement or
the Prospectus, including any document incorporated by reference therein
that has not been superseded or modified, and (ii) when taken together with
the Preliminary Prospectus preceding or accompanying such Issuer Free
Writing Prospectus, did not, does not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
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circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from any Issuer Free
Writing Prospectus based upon and in conformity with written information
furnished to the Company by either Underwriter specifically for use
therein, it being understood and agreed that the only such information
furnished by either Underwriter consists of the information described as
such in Section 9 hereof.
(c) Each Preliminary Prospectus, at the time of filing thereof,
contained all material statements which were required to be stated therein
in accordance with the Act and the Regulations, and conformed in all
material respects with the requirements of the Act and the Regulations, 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; provided that the documents filed as an exhibit to
the Registration Statement are subject to subparagraph (h), below. 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. The Commission has not issued any order
suspending or preventing the use of any Preliminary Prospectus. The
Registration Statement at the time it became effective and the Prospectus
at the time it is filed with the Commission pursuant to Rule 424(b) of the
Regulations and on the Closing Date as defined herein, as then amended or
supplemented, will contain all material statements which are required to be
stated therein, respectively, in accordance with the Act and the
Regulations and will conform to the requirements of the Act and the
Regulations, and the Registration Statement, the Disclosure Package and the
Prospectus will not, on such dates (as then amended or supplemented),
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; provided, however, that no representations or
warranties under this paragraph (b) are made with respect to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company by you with respect to the Underwriters expressly
for use in connection with any Preliminary Prospectus, the Registration
Statement, the Disclosure Package or Prospectus, or any amendment thereof
or supplement thereto.
(d) Each of the Company and the subsidiaries of the Company as listed
on Schedule II hereto (collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation or trust in good
standing under the laws of the jurisdiction of its organization, with all
requisite corporate or trust power and authority, as the case may be, and
all necessary authorizations, consents, approvals, orders, licenses,
grants, certificates, and permits of and from all governmental regulatory
officials and bodies, to own their properties and to conduct their
businesses as described in the Prospectus, or are subject to no material
liability or disability by reason of the failure to have any such
authorization, consent, approval, order, license, grant, certificate or
permit, and the Company has all such power, authority, authorizations,
consents, approvals, orders, licenses, certificates, and permits
appropriate or desirable to enter into this Agreement and to carry out the
provisions and conditions hereof and the transactions contemplated hereby.
The Company and each of the Subsidiaries are duly qualified to
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transact business in all jurisdictions in which the conduct of their
business requires such qualification. The Company and the Subsidiaries own,
or possess adequate rights to use, all patents, trademarks, service marks,
copyrights, trademarks, trade secrets and rights necessary for the conduct
of their businesses as described in the Prospectus and none of them has
received any notice and is not otherwise aware of any conflict with the
asserted rights of others, and the Company knows no basis therefor.
(e) The Subsidiaries are the only subsidiaries, direct or indirect, of
the Company. The outstanding shares of capital stock of each of the
Subsidiaries that is a corporation have been duly authorized and validly
issued, are fully paid and nonassessable, except to the extent shares of
capital stock of Community Bank of Dearborn, a Michigan banking corporation
(the "Bank"), may be deemed assessable under 12 U.S.C. Section 1831o, or
Sections 3803 or 3807 of the Michigan Banking Code, and, to the extent set
forth in Schedule II hereto, are owned by the Company or another Subsidiary
free and clear of all liens, encumbrances and equities and claims; and no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares
of capital stock or other ownership interests in the Subsidiaries are
outstanding.
(f) The Company and its Subsidiaries have good and marketable title in
fee simple to, or valid and enforceable leasehold estates in, all items of
real and personal property which are stated in the Registration Statement
and Prospectus to be owned or leased by them, in each case free and clear
of all liens, encumbrances, claims, security interests and defects, other
than those which are referred to in the Registration Statement and the
Prospectus, other than the security interest of the Federal Home Loan Bank
of Indianapolis, and other than those which do not have a material adverse
effect on the business, condition or prospects of the Company and the
Subsidiaries, taken as a whole. Upon the consummation of the Fidelity
Acquisition, the Company or its Subsidiaries will have good and marketable
title in fee simple to, or valid and enforceable leasehold estates in, all
items of real and personal property to be owned or leased by them, in each
case free and clear of all liens, encumbrances, claims, security interests
and defects, other than those which are referred to in the Registration
Statement and the Prospectus and other than those which do not have a
material adverse effect on the business, condition or prospects of the
Company and the Subsidiaries, taken as a whole.
(g) There is no litigation or governmental proceeding pending or
threatened against, or involving the assets, properties or business of, or
the franchises, permits, grants, approvals, orders, or licenses of, the
Company or the Subsidiaries which might in the aggregate materially and
adversely affect the value or the operations of any such properties,
business or assets of the Company and the Subsidiaries, taken as a whole,
or the Fidelity Acquisition or the properties, business or assets to be
acquired thereby, except as referred to in the Registration Statement and
the Prospectus.
(h) The documents incorporated by reference in the Registration
Statement and the Prospectus, when they were filed with the Commission,
conformed in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder, and none
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of such documents contained or, except as modified or superseded by the
Prospectus, contains an untrue statement of a material fact or omitted or,
except as modified or superseded by the Prospectus, omits or will omit to
state a material fact therein or necessary to make the statements therein
not misleading.
(i) Except as otherwise disclosed in the notes thereto or the reports
thereon, the combined consolidated financial statements and related
schedules of the Company and the Subsidiaries filed with the Commission as
part of the Registration Statement and the Prospectus fairly present the
financial position and the consolidated results of operations of the
Company and the Subsidiaries at the respective dates and for the respective
periods to which they apply; such financial statements and related
schedules have been prepared in conformity with generally accepted
accounting principals, consistently applied throughout the periods
involved; and all adjustments necessary for a fair presentation of results
for such periods have been made. The summary financial and statistical data
included or incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and such data have
been compiled on a basis consistent with the financial statements presented
therein and the books and records of the company
(j) Crowe Chizek and Company LLC, whose reports with respect to the
Company and the Subsidiaries are filed with the Commission as a part of the
Registration Statement and the Prospectus, are independent certified public
accountants as required by the Act and the Regulations.
(k) There has been no material adverse change in the condition,
prospects or business of the Company and the Subsidiaries taken as a whole,
financial or otherwise, from that on the latest dates as of which such
condition, prospect or business is set forth in the Registration Statement
and the Prospectus except as referred to therein nor, to the Company's
knowledge, has there been any material adverse change in the condition,
prospects or business of Fidelity, financial or otherwise, from that on the
latest dates as of which such condition, prospect or business is set forth
in the Registration Statement and Prospectus except as set forth therein;
and the capitalization, prospects and the business of the Company conform
to the descriptions thereof contained in the Registration Statement and the
Prospectus.
(l) No default exists, and no event has occurred which, with notice or
lapse of time, or both, would constitute a default or result in an
acceleration in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or
credit agreement or any other material agreement, understanding or
instrument to which the Company or one of the Subsidiaries is a party or by
which any of them or any of their properties may be bound or affected
(including, without limitation, any agreement or instrument filed as an
exhibit to the Registration Statement or to any document incorporated by
reference in the Registration Statement), except for any such breaches or
defaults which, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Company and the
Subsidiaries taken as a whole or prevent the sale of the Stock by the
Company to the Underwriters in accordance with this Agreement or the
Company's
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compliance with, or performance of its obligations under, the terms and
provisions of this Agreement (any of such effects, a "Material Adverse
Effect").
(m) Neither the Company nor any of the Subsidiaries is in violation of
(i) any term or provision of its articles of incorporation, bylaws or
declaration of trust, as applicable, or (ii) any franchise, license, grant,
permit, judgment, decree, order, statute, rule or regulation, except for,
in the case of this clause (ii), any such violations which, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
(n) The Company has full corporate power and authority to enter into
and perform the Definitive Agreement, subject to only requisite regulatory
approvals. The consummation of the transactions contemplated thereby have
been duly authorized by requisite corporate action taken by the Company and
the Definitive Agreement has been duly executed by the Company.
(o) None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, the compliance with
the terms and provisions hereof, the execution and delivery of the
Definitive Agreement and the consummation of the transactions therein
contemplated will (i) conflict with, result in a breach of, or constitute a
default under any of the terms, provisions or conditions of, (A) the
articles of incorporation or bylaws of the Company or the articles of
incorporation, bylaws or declaration of trust, as applicable, of any of the
Subsidiaries or (B) any material agreement or instrument to which any of
them is a party or by which any of them is bound (including, without
limitation, any agreement or instrument filed as an exhibit to the
Registration Statement or to any document incorporated by reference in the
Registration Statement) or (ii) violate any franchise, license, permit,
grant, judgment, decree, order, statute, rule or regulation of any
government, governmental instrumentality or court, except for, in the case
of clauses (i)(B) or (ii), any such conflicts, breaches, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(p) The consummation of the Fidelity Acquisition will not constitute a
default under, or result in the acceleration of, any indenture, mortgage,
deed of trust, note, bank loan or credit agreement or any other agreement,
understanding or instrument to which the Company or any of the Subsidiaries
is a party or by which any of them or any of their properties may be bound
or affected.
(q) The Company has authorized capital stock as set forth in the
Prospectus. No preferred stock has been authorized by the Company. All of
the issued shares of Common Stock of the Company are duly and validly
authorized, issued and outstanding, fully paid and nonassessable, and free
of preemptive rights, and the Stock, when issued and delivered in
accordance with this Agreement, will be duly and validly authorized, issued
and outstanding, fully paid and nonassessable, and free of preemptive
rights. The Company's Common Stock and other securities conform to all
statements in relation thereto contained in the Registration Statement and
the Prospectus.
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(r) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, neither the
Company nor any of the Subsidiaries, has (i) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed
money, other than in the ordinary course of business, (ii) entered into any
transaction not in the ordinary course of business that is required to be
disclosed in the Registration Statement and Prospectus, (iii) entered into
any transaction with an affiliate of the Company required to be disclosed
in the Registration Statement and Prospectus, or (iv) declared or paid any
dividend on its shares of capital stock. The Company and the Subsidiaries
have no material contingent obligations which are not disclosed in the
Company's financial statements which are included in the Registration
Statement and Prospectus.
(s) The Company has obtained from all of its executive officers and
directors their written agreement that for a period of 90 days from the
date of this Agreement they will not, without your prior written consent,
sell, contract to sell or grant any option for the sale of or otherwise
dispose of, directly or indirectly, of any shares of Common Stock of the
Company (or any securities convertible into or exercisable for such shares
of Common Stock) owned by them, except as provided in the Registration
Statement and except for bona fide gifts to persons who agree in writing
with you to be bound by this clause.
(t) No person holds a right (which has not been waived, in writing),
to (i) require or participate in the registration under the Act of the
Stock to be affected by the Registration Statement, or (ii) require any
other registration statement to be filed in connection with any capital
stock of the Company within 90 days from the date of this Agreement without
your prior written consent.
(u) This Agreement has been duly and validly authorized, executed and
delivered by the Company.
(v) Neither the Company nor any of the Subsidiaries is involved in any
labor dispute which would reasonably be expected to have a Material Adverse
Effect and no such dispute is threatened.
(w) The Company and the Subsidiaries have filed all Federal, state,
local and foreign tax returns which are required to be filed by any of them
or have requested extensions thereof and have paid all taxes shown on such
returns and all assessments received by any of them to the extent that the
same have become due. All tax liabilities have been adequately provided for
in the financial statements of the Company, and the Company does not know
of any actual or proposed additional material tax assessments except as
described in the Registration Statement and the Prospectus.
(x) Except for the order of the Commission declaring the Registration
Statement effective and permits and similar authorizations required under
the securities or Blue Sky laws of certain jurisdictions, no consent,
authorization, or approval is required from any Federal, state or local
governmental agency or body in connection with
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this Agreement and the transactions contemplated hereby other than such
consents, authorizations or approvals as have been obtained.
(y) None of the Company, the Subsidiaries or any officer, director or
employee of the Company or the Subsidiaries has made any payment of funds
of the Company or any of the Subsidiaries or purchased any property with
funds of the Company or any of the Subsidiaries in a manner prohibited by
law, and no funds of the Company or any of the Subsidiaries or property
purchased with funds of the Company or any of the Subsidiaries have been
set aside to be used for any payment prohibited by law. There are no
affiliations or associations between any member of the National Association
of Securities Dealers, Inc. (the "NASD") and any of the Company's officers,
directors or 5% or greater security holders, except as set forth in the
Registration Statement.
(z) The Company has submitted a Notification Form: Listing of
Additional Shares, relating to the Stock, with Nasdaq.
(aa) Neither the Company nor any of the Subsidiaries 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 Company's Common Stock in
order to facilitate the sale or resale of the Stock. The Company
acknowledges that the Underwriters may engage in passive market making
transactions in the Common Stock in accordance with Regulation M under the
Exchange Act.
(bb) Except as disclosed on Schedule III, neither the Company nor any
of the Subsidiaries owns any shares of stock or any securities of any
corporation, except debt securities acquired in the ordinary course of
business, or has any equity interest in any firm, partnership, association
or other entity.
(cc) The Company, for the past two years, has filed all reports, proxy
statements and other information, and all amendments to previously filed
reports, proxy statements and other information, required to be filed by it
pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
(dd) The Company is not and will not immediately 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 (the
"1940 Act"), as amended.
(ee) The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to material assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
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(ff) The Company and each of its Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as it believes is
adequate for the conduct of their respective businesses and the value of
their respective properties; and neither the Company nor any of the
Subsidiaries has any reason to believe that any of them will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business.
(gg) The Company and each Subsidiary, and each of their respective
"pension plans" (as defined in the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA")), are in compliance in all material
respects with all currently applicable provisions of ERISA; no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Company or any Subsidiary would
have any liability; neither the Company nor any of its Subsidiaries has
incurred, and neither the Company nor any of its Subsidiaries expects to
incur, liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension
plan" for which the Company or any Subsidiary would ---- have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(hh) (i) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-14 under the Exchange
Act); (ii) such disclosure controls and procedures are designed so that
information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is accumulated and communicated to the
Company's management, including its principal executive officer and its
principal financial officer, as appropriate, to allow timely decisions
regarding disclosure; and (iii) such disclosure controls and procedures are
effective in all material respects to perform the functions for which they
were established.
(ii) Since the date of the filing of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006, the Company's auditors and
the audit committee of the Company have not been advised of (i) any
significant deficiencies in the design or operation of internal controls
which could adversely affect the Company's ability to record, process,
summarize and report financial data nor any material weaknesses in internal
controls; and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls.
(jj) Since the date of the filing of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
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(kk) The chief executive officer and the chief financial officer of
the Company have made all certifications required by the Sarbanes-Oxley Act
of 2002 (the "Sarbanes-Oxley Act") and any related rules and regulations
promulgated by the Commission, and the statements contained in any such
certification are complete and correct; the Company is otherwise in
compliance in all material respects with all applicable effective
provisions of the Sarbanes-Oxley Act.
3. PURCHASE, SALE AND DELIVERY OF THE STOCK. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the Underwriters,
jointly and not severally, and the Underwriters, jointly and not severally,
agree to purchase from the Company, the Firm Stock at the purchase price of
[$_____] per share as set forth in Schedule I.
Payment for the Firm Stock shall be made by wire transfer to an account
specified by the Company upon delivery of the Firm Stock to you for the account
of the Underwriters. Such delivery and payments shall be made at 10:00 A.M.,
Detroit Time, on the third business day following the date of this Agreement or
at such other time as shall be agreed upon among us. The hour and date of such
delivery and payment are herein called the "Closing Date."
In addition, on the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
grants to the Underwriters the option to purchase, severally and not jointly, up
to 405,000 shares of the Additional Stock as may be necessary to cover
over-allotments, at the same purchase price to be paid by the Underwriters to
the Company for the Firm Stock as set forth in the first paragraph of this
Section 3, and in the proportion set forth in Schedule I. The option may be
exercised at any time (but not more than once) on or before the thirtieth day
following the effective date of the Registration Statement by written notice by
Oppenheimer to the Company. Such notice shall set forth the aggregate number of
shares of Additional Stock as to which the options are being exercised, the name
or names in which the shares of Additional Stock are to be registered, the
denominations in which the Additional Stock are to be issued, and the date and
time, as reasonably determined by you, when the Additional Stock is to be
delivered (such date and time being herein sometimes referred to as the
"Additional Closing Date"); provided, however, that the Additional Closing Date
shall not be earlier than the Closing Date nor earlier than the second business
day after the date on which the option shall have been exercised nor later than
the eighth business day after the day on which the option shall have been
exercised.
Payment for the Additional Stock shall be made by wire transfer to an
account specified by the Company upon delivery of the Additional Stock to you.
The Company shall not be obligated to sell or deliver any shares of Firm
Stock or Additional Stock except upon tender of payment by you for all the Firm
Stock or Additional Stock, as the case may be, agreed to be purchased by you
hereunder.
4. OFFERING. The Underwriters are to make a public offering of the Stock as
soon, on or after the effective date of the Registration Statement, as you deem
it advisable so to do. During the offering, the Stock is to be offered to the
public at the public offering price set forth on the cover page of the
Prospectus (such price being herein called the "public offering price").
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After completion of the offering, you may from time to time thereafter increase
or decrease the public offering price to such extent as you may determine.
5. COVENANTS OF THE COMPANY.
The Company covenants that it will:
(a) Notify you immediately, and confirm the notice in writing, (i) of
the issuance by the Commission of any stop order or of the initiation, or
the threatening, of any proceedings for that purpose, and (ii) 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 Act, comply so far as it is able with all requirements imposed
upon it by the Act, as now and hereafter amended, and by the Regulations,
as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Stock in accordance with the
provisions hereof and the Prospectus. If at any time when a prospectus
relating to the Stock is required to be delivered under the Act any event
shall have occurred as a result of which, in the opinion of counsel for the
Company or counsel for the Underwriters, the Registration Statement or the
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
the Prospectus to comply with the Act, the Company will notify you promptly
and prepare and file with the Commission an appropriate amendment or
supplement in form satisfactory to you. If at any time following the
issuance of an Issuer Free Writing Prospectus there occurred or occurs an
event or development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information contained in
the Registration Statement or any other registration statement relating to
the Stock or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made or prevailing at the time such event or development
occurs or condition exists, not misleading, the Company will promptly
notify you and will promptly amend or supplement such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission. The cost of preparing, filing and delivering copies of such
amendment or supplement shall be paid by the Company, unless such untrue
statement or omission is made in reliance upon and in conformity with the
written information furnished to the Company by you with respect to the
Underwriters expressly for use in connection with the Registration
Statement or the Prospectus.
(c) Deliver to each of the Underwriters such number of copies of each
Preliminary Prospectus as it may reasonably request and deliver to
Oppenheimer two
11
signed copies of the Registration Statement, including exhibits, and all
post-effective amendments thereto and deliver to you such number of copies
of the Prospectus, the Registration Statement and supplements and
amendments thereto, if any, as you may reasonably request for the purposes
contemplated by the Act.
(d) Endeavor in good faith, in cooperation with you, at or prior to
the time the Registration Statement becomes effective, to qualify the Stock
for offering and sale under the securities laws relating to the offering or
sale of the Stock in such jurisdictions as you may reasonably designate;
provided that no such qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to service of
general process or taxation or be required to qualify to do business as a
foreign corporation where it is not now so qualified. In each jurisdiction
where such qualification shall be affected, the Company will, unless you
agree that such action is not at the time necessary or advisable, file and
make statements or reports at such times as may reasonably be required by
the laws of such jurisdiction. The Company will, from time to time, prepare
and file such statements, reports and other documents as are or may be
required to continue any such qualifications in effect for so long a period
as Oppenheimer may reasonably request for distribution of the Stock.
(e) Make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full
calendar month following the effective date of the Registration Statement
(as defined in Rule 158(c) of the Regulations), an earning statement of the
Company (which need not be certified by independent certified public
accountants unless required by the Act or the Regulations, but which shall
satisfy the provisions of Section 11(a) of the Act including, Rule 158 of
the Regulations).
(f) For a period of 90 days after the date of this Agreement, not
issue, sell, contract to sell, grant any option for the sale of or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company (or securities convertible into or exercisable for such Common
Stock) other than the Firm Stock and Additional Stock (if applicable) being
sold by the Company without the prior written consent of Oppenheimer, other
than options and Common Stock granted and/or issued to officers, directors
or employees from time to time in the ordinary course of business pursuant
to employment agreements and stock option or stock bonus plans currently in
effect.
(g) For a period of three years from the effective date of the
Registration Statement furnish you with the following:
(i) as soon as practicable after they have been sent to
shareholders of the Company or filed with the Commission, three copies
of each annual and interim financial and other report or
communications sent by the Company to its shareholders or filed with
the Commission; and
(ii) such additional documents and information with respect to
the Company as you may from time to time reasonably request, including
without limitation, information to comply with Rule 15c2-11 of the
Exchange Act Rules,
12
to the extent legally permissible and will not give rise to an
obligation by the Company to make a public disclosure of the
information.
(h) Apply the net proceeds from the offering received by it in the
manner set forth under "Use of Proceeds" in the Prospectus.
(i) Furnish to you as early as practicable prior to the Closing Date,
but not later than two full business days prior thereto, a copy of the
latest available unaudited interim consolidated financial statements of the
Company and the Subsidiaries which have been read by the Company's
independent public accountants as stated in their letters to be furnished
pursuant to Section 7(f) hereof.
(j) Not file any amendment or supplement to the Registration Statement
or the Prospectus after the effective date of the Registration Statement to
which you shall reasonably object in writing after being furnished a copy
thereof and a reasonable opportunity to review the copy.
(k) Use every reasonable effort to effect the listing of the Common
Stock, including, without limitation, the Firm Stock and the Additional
Stock, on the Nasdaq Global Market (the "Market") as promptly as
practicable and to the extent required by the Market.
(l) Comply with all registration, filing and reporting requirements of
the Act or the Exchange Act which may be applicable to the Company or any
of the Subsidiaries so as to permit the completion of the distribution of
the Stock as contemplated by this Agreement.
(m) Not invest, or otherwise use, the proceeds received by the Company
from its sale of the Stock in such a manner as would require the Company or
any of the Subsidiaries to register as an investment company under the 1940
Act.
(n) For a period of two years from the date hereof, the Company will
maintain a transfer agent while the Stock is publicly traded.
(o) For a period of two years from the date hereof, the Company will
not take, directly or indirectly, any action designed to cause or result
in, or that has constituted or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any securities of the
Company.
(p) The Company represents that it has not made, and agrees that,
unless it obtains the prior written consent of the Underwriters, it will
not make any offer relating to the Stock that would constitute an Issuer
Free Writing Prospectus or that would otherwise constitute a "free writing
prospectus" (as defined in Rule 405 of the Securities Act) required to be
filed by the Company with the Commission or retained by the Company under
Rule 433 of the Securities Act. Any such free writing prospectus consented
to by the Underwriters is hereinafter referred to as a "Permitted Free
Writing Prospectus". The Company agrees that (i) it has treated and will
treat, as the case may be, each Permitted Free Writing Prospectus as an
Issuer Free Writing Prospectus, and (ii) has
13
complied and will comply, as the case may be, with the requirements of
Rules 164 and 433 of the Securities Act applicable to any Permitted Free
Writing Prospectus, including in respect of timely filing with the
Commission, legending and record keeping.
6. PAYMENT OF EXPENSES. The Company hereby agrees to pay all expenses in
connection with (i) the preparation, printing, filing and mailing of the
Registration Statement and the Prospectus and the printing and mailing of this
Agreement and related documents, including the cost of all copies thereof and of
any Issuer Free Writing Prospectus, the Preliminary Prospectus and of the
Prospectus and any amendments thereof or supplements thereto supplied to you in
quantities as hereinabove stated, (ii) the printing, engraving, issuance,
transfer and delivery of the Stock, including any transfer or other taxes
payable thereon, (iii) the qualification of the Stock under state securities or
Blue Sky laws, including the costs of printing and mailing the "Blue Sky Survey"
and disbursements and fees of counsel in connection therewith, (iv) the filing
fee payable to the NASD, and (v) the listing of the Firm Stock and the
Additional Stock on the Market. Notwithstanding anything to the contrary
contained above, upon completion of the offering, the Company shall not have any
obligation for the fees and disbursements of counsel for the Underwriters or for
any out-of-pocket expenses incurred by the Underwriters relating to the
Registration Statement, including but not limited to road shows, syndicate
expenses, sales literature and advertising; provided, however that the Company
will be responsible for all of its own out-of-pocket expenses, including
transportation, meals and lodging, incurred in connection with the road shows or
other selling efforts.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Stock, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of the Closing Date (with this and every
other reference to the "Closing Date" in this Section 7 deemed to refer to the
Closing Date or the Additional Closing Date, as applicable), to the performance
by the Company of its obligations hereunder and to the following 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 such later
date and time as shall be consented to in writing by you, and, at the
Closing Date, no stop order shall have been issued or proceedings therefor
initiated or threatened by the Commission.
(b) At the Closing Date, you shall have received the opinion of
Dickinson Wright PLLC, counsel for the Company, dated the Closing Date,
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 organized and validly
existing as a corporation in good standing under the laws of the State
of Michigan, (B) has full corporate power and authority to own its
properties and to conduct its business as described in the
Registration Statement and the Prospectus, and (C) to such counsel's
knowledge, is not qualified to transact business in any jurisdiction
other than the State of Michigan;
14
(ii) each of the Subsidiaries (A) is a corporation or trust
organized and validly existing and in good standing under the laws of
the state of its organization, (B) has full corporate or trust power
and authority to own its respective properties and conduct its
respective business as described in the Registration Statement and the
Prospectus, (C) to such counsel's knowledge, is not qualified to
transact business in any jurisdiction other than the state of its
organization, and (D) to such counsel's knowledge, the Company has no
directly or indirectly held subsidiary other than the Subsidiaries;
(iii) the Company and/or the Bank is the registered holder of all
of the outstanding capital stock or ownership interests, as
applicable, of the Subsidiaries as described in the Prospectus and, to
such counsel's knowledge, any and all such shares of stock or
ownership interests so owned are validly issued and outstanding, fully
paid and nonassessable except to the extent shares of capital stock of
the Bank may be deemed assessable under 12 U.S.C. Section 1831o, or
Sections 3803 and 3807 of the Michigan Banking Code, and are owned
free and clear of any liens, encumbrances or other claims or
restrictions whatsoever other than the security interest of the
Federal Home Loan Bank of Indianapolis;
(iv) the Company has authorized capital stock as set forth in the
Prospectus; the Stock has been duly and validly authorized for
issuance by the Company and, when issued and delivered in exchange for
the Company's receipt of the consideration therefor as contemplated by
this Agreement, will be validly issued, fully paid and nonassessable;
and the Stock conforms to the description thereof contained under the
caption "Description of Common Stock" in the Registration Statement
and the Prospectus;
(v) the statements contained under the captions "Business" and
"Description of Common Stock" 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, or regulatory requirements, or refer to compliance with
law or to statements of law or legal conclusions, are correct in all
material respects;
(vi) the certificates evidencing the Stock are in the form
approved by the Board of Directors of the Company and the certificates
evidencing the Stock comply with the articles of incorporation and the
bylaws of the Company and the laws of the State of Michigan;
(vii) this Agreement and the Definitive Agreement have been duly
authorized, executed and delivered by the Company, and is a valid and
binding agreement of the Company enforceable in accordance with its
terms;
(viii) there are, to such counsel's knowledge, (A) no contracts
or other documents applicable to the Company or any of the
Subsidiaries or to which the Company or any of the Subsidiaries is a
party which are required to be filed as exhibits to the Registration
Statement other than those filed as exhibits thereto,
15
and (B) no legal or governmental proceedings pending or threatened
against, or involving the assets, properties or business of, the
Company or any of the Subsidiaries which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect, except as disclosed and properly described in the Registration
Statement and the Prospectus;
(ix) the execution and delivery of this Agreement and the
Definitive Agreement, the sale of the Stock by the Company to the
Underwriters in accordance with this Agreement and the Company's
compliance with, or performance of its obligations under, the terms
and provisions of this Agreement and the Definitive Agreement will not
(A) result in a breach of any of the terms and provisions or
conditions of, or constitute a default (or an event which with notice
or lapse of time, or both, would constitute a default or acceleration)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon the Stock being sold by the Company hereunder or any
property or asset of the Company pursuant to the terms of any material
agreement or instrument known to such counsel (including, without
limitation, any agreement or instrument filed as an exhibit to the
Registration Statement or to any document incorporated by reference in
the Registration Statement) to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries may be bound or to which any of the properties or assets
of the Company or any of the Subsidiaries is subject, except for any
such breaches or defaults which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect,
(B) result in any violation of the provisions of the articles of
incorporation, bylaws or declaration of trust, as applicable, of the
Company or any of the Subsidiaries, or (C) to such counsel's
knowledge, result in any violation of any statute or any order, rule,
or regulation applicable to the Company or any of the Subsidiaries of
any court or of any Federal, state, local or other regulatory
authority or other governmental body having jurisdiction over the
Company or any of the Subsidiaries, except for, in the case of this
clause (C), any such violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect;
(x) no consent, approval, authorization or order of any court or
governmental agency or body, is required to be obtained by the Company
or any of the Subsidiaries in connection with the execution and
delivery of this Agreement or the sale of the Stock by the Company to
the Underwriters in accordance with this Agreement and the Company's
compliance with, or performance of its obligations under, the terms
and provisions of this Agreement, except the registration under the
Act of the Stock and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Act or
state securities or Blue Sky laws;
(xi) to such counsel's knowledge, (A) neither the Company nor any
of the Subsidiaries is in breach of, or in default (nor has an event
occurred which, with notice or lapse of time or both, would constitute
a default or acceleration) under the terms and provisions or
conditions of, any indenture, mortgage, deed of
16
trust, bank loan or credit agreement or any other material agreement
or instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their properties or assets may
be bound or affected (including, without limitation, any agreement or
instrument filed as an exhibit to the Registration Statement or to any
document incorporated by reference in the Registration Statement),
except for any such breaches or defaults which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect, and (B) neither the Company nor any of the Subsidiaries is in
violation of any term or provision of (i) its articles of
incorporation, bylaws or declaration of trust, as applicable, or (ii)
any franchise, license, grant, permit, judgment, decree, order,
statute, rule or regulation, except as referred to in the Prospectus
and except for, in the case of clause (ii), any such violations which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect;
(xii) the Registration Statement and the Prospectus and any
amendments or supplements thereto (other than the financial
statements, and other financial and statistical data included therein
or any statements or omissions made in reliance upon and in conformity
with written information furnished to the Company by the Underwriters
expressly for use in connection therewith, as to which no opinion need
be rendered) comply as to form in all material respects with the
requirements of the Act and the Regulations; and
(xiii) that such counsel has received oral confirmation by the
staff of the Securities and Exchange Commission that the Registration
Statement has become effective under the Act, and, to such counsel's
knowledge, no proceedings for a stop order are pending or threatened
under the Act.
In addition, such counsel shall state that, although such counsel is
not passing upon the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Disclosure Package and the
Prospectus (except to the extent stated in paragraph (ix)), no facts have
come to the attention of such counsel that lead them to believe that either
the Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Disclosure Package or the Prospectus, as of their
respective dates, or any supplements thereto, as of their respective dates,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no view with respect to the
financial statements, schedules and other financial and statistical data
included therein).
Further, with respect to paragraph (ix), such counsel can also state
that it has assumed that the Underwriters, dealers, brokers and agents
offering and selling the Stock are duly registered and licensed in all
relevant jurisdictions to make such offers and sales, and that such persons
have complied with all relevant laws and regulations regarding sales
17
practices and delivery of prospectuses in connection with such offers and
sales. Further, with respect to paragraph (ix)(C), such counsel can also
state that it has assumed no material misstatements or omissions of fact
have been made in connection with the offer or sale of the Stock.
In rendering the foregoing opinion, such counsel may rely as to
matters not governed by Federal law or the laws of the State of Michigan on
opinions of legal counsel satisfactory to such counsel and upon which, in
such counsel's opinions, you are justified in relying, and as to matters of
fact upon certificates of public officials and officers of the Company.
Copies of all such opinions and certificates shall be furnished to your
counsel on the Closing Date. Such counsel's opinions may be qualified to
the extent that: (i) enforcement of any of the documents mentioned therein
may be limited by Title 11 of the United States Code and other applicable
bankruptcy, insolvency, reorganization or other laws affecting or limiting
the rights of creditors (including, without limitation, laws pertaining to
the avoidance and/or recovery of preferences or fraudulent conveyances),
and to the discretionary nature of specific performance, injunctive relief
and other equitable remedies, including the appointment of a receiver; (ii)
enforcement thereof may be subject to general principles of equity
(regardless of whether such enforceability is considered to be in equity or
at law); (iii) such counsel may express no opinion as to any provisions
purporting to obligate any party to pay attorneys' fees or other costs of
collection or relating to indemnification against liabilities arising under
Federal or state securities laws; (iv) no opinion is expressed with respect
to any provision in this Agreement authorizing the exercise of "self-help"
remedies, to any provisions constituting a waiver of statutory or
constitutional rights or exculpating a person or entity from liability for
negligence or other misconduct or with respect to the authorization of any
person to reimbursement of expenses (including attorneys' fees) in excess
of an amount deemed reasonable; and (v) the opinions of such counsel are
not intended and shall not be construed to be an opinion on choice of law
or conflicts of law, and such counsel may assume that the law of the State
of Michigan and the federal law of the United States shall govern all
matters which are the subject of this opinion.
(c) On or prior to the Closing Date, you shall have been furnished
such documents, certificates and opinions as you may require for the
purpose of enabling you to review the matters referred to in subsection (b)
of this Section 7, and in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions herein
contained.
(d) Prior to the Closing Date, (i) there shall have been no material
adverse change in the condition or prospects or the business activities,
financial or otherwise, of the Company, the Subsidiaries and Fidelity from
that as of the latest date as of which such condition is set forth in the
Registration Statement and the Prospectus; (ii) there shall have been no
material transaction, not in the ordinary course of business, entered into
by the Company or Fidelity from the latest date as of which the financial
condition of the Company is set forth in the Registration Statement and the
Prospectus, other than transactions referred to or contemplated therein or
to which you have given your written consent; (iii) neither the Company nor
any of the Subsidiaries shall be in default (nor shall an event have
occurred which, with notice or lapse of time, or both, would constitute a
default or acceleration) under any provision of any agreement,
understanding
18
or instrument relating to any outstanding indebtedness to which the Company
or one of the Subsidiaries is a party or by which any of them or their
properties may be bound or affected, which default could materially and
adversely affect the business, operations, prospects or financial condition
or income of the Company and the Subsidiaries, taken as a whole; (iv) no
material amount of the assets of the Company and the Subsidiaries shall
have been pledged or mortgaged, except as set forth in the Registration
Statement and the Prospectus; (v) no action, suit or proceeding, at law or
in equity, shall have been pending or threatened against the Company, any
of the Subsidiaries or Fidelity or affecting any of their properties,
assets or businesses before or by any court or Federal, state or other
commission, board or other administrative agency having jurisdiction over
the Company, any of the Subsidiaries or Fidelity wherein an unfavorable
decision, ruling or finding could materially adversely affect the business,
operations, prospects or financial condition or income of the Company, the
Subsidiaries and Fidelity, taken as a whole, except as set forth in the
Registration Statement and the Prospectus; (vi) neither the Company nor any
of the Subsidiaries shall have been involved in any labor dispute nor, to
the knowledge of the Company, shall any dispute be threatened which could
have a material adverse effect on the Company and the Subsidiaries, taken
as a whole; and (vii) no stop order shall have been issued under the Act
with respect to the Stock and no proceedings therefor shall have been
initiated or threatened by the Commission.
(e) At the Closing Date, you shall have received a certificate of the
President and the principal financial officer of the Company, dated the
Closing Date, to the effect that the conditions set forth in subsection (d)
above have been satisfied and as to the accuracy, as of the Closing Date,
of the representations and warranties of the Company set forth in Section 2
hereof.
(f) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, addressed to the Underwriters and in form
and substance satisfactory to you in all respects (including the
non-material nature of the changes or decreases, if any, referred to in
clause (iii) below), from Crowe Chizek and Company LLC, dated as of the
date of this Agreement and as of the Closing Date:
(i) confirming that they are independent public accountants with
respect to the Company and the Subsidiaries within the meaning of the
Act and the applicable published Regulations and stating that the
answer to Item 10 of the Registration Statement is correct insofar as
it relates to them;
(ii) stating that, in their opinion, the consolidated financial
statements and schedules of the Company audited by them and the
selected financial data to the extent derived from financial
statements examined by them included in the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Regulations;
(iii) stating that, on the basis of procedures (but not an
examination made in accordance with generally accepted auditing
standards) which included a reading of the latest available unaudited
interim consolidated financial statements
19
of the Company and the Subsidiaries (with an indication of the date of
the latest available unaudited interim consolidated financial
statements), a reading of the latest available minutes of the meetings
of the shareholders and boards of directors of the Company and the
Subsidiaries and committees of such boards and inquiries to certain
officers, trustees, and other employees of the Company and the
Subsidiaries responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their
attention that would cause them to believe that (A) the unaudited
consolidated financial statements of the Company and the Subsidiaries
included in the Registration Statement and the Prospectus (i) do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Regulations, or (ii) were not fairly presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and the
Prospectus, (B) at a specified date not more than five business days
prior to the date of such letter, there was any change in the capital
stock or long-term debt of the Company or decrease in shareholders'
equity of the Company and the Subsidiaries as compared with the
amounts shown on the consolidated balance sheet of the Company
included in the Registration Statement and the Prospectus, other than
as set forth in or contemplated by the Registration Statement and the
Prospectus or, if there was any change or decrease, setting forth the
amount of such change or decrease, and (C) during the period from
January 1, 2006, to a specified date not more than the five business
days prior to the date of such letter, there was any decrease in net
interest income, net income or income per share of the Company, as
compared with the corresponding period beginning January 1, 2005,
other than as set forth in or contemplated by the Registration
Statement and the Prospectus, or, if there was any such decrease,
setting forth the amount of such decrease; and
(iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and income and other
financial information pertaining to the Company set forth in the
Disclosure Package and the Prospectus, which have been specified by
you prior to the date of this Agreement, to the extent that such
amounts, numbers, percentages and information may be derived from the
general accounting records of the Company and the Subsidiaries, and
excluding any questions requiring an interpretation by legal counsel,
with the results obtained from the application of specific readings,
inquiries and other appropriate procedures (which procedures do not
constitute an audit in accordance with generally accepted auditing
standards) set forth in the letter, and found them to be in agreement.
(g) All proceedings taken in connection with the sale of the Stock as
herein contemplated shall be reasonably satisfactory in form and substance
to you and to counsel for you, and you shall have received from said
counsel for you a favorable opinion, dated as of the Closing Date, with
respect to such of the matters set forth under subsection (b) of this
Section 7, and with respect to such other related matters arising after the
date of execution hereof, as you may reasonably require.
20
(h) No order suspending the sale of the Stock prior to the Closing
Date in any jurisdiction designated by you pursuant to subsection (d) of
Section 5 hereof shall have been issued on the Closing Date, and no
proceedings for that purpose shall have been instituted or to your
knowledge or that of the Company shall be contemplated.
(i) The NASD, upon review of the terms of the public offering of the
Stock, shall have indicated in writing that the NASD has no objections with
respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(j) The Stock shall have been duly listed, subject to notice of
issuance, on the Market, to the extent required by the Market.
Any certificate signed by the president or chief financial officer of
the Company and delivered to you or to counsel for you shall be deemed a
representation and warranty by the Company to you as to the statements made
therein. If any condition to your obligations hereunder to be fulfilled
prior to or at the Closing Date is not so fulfilled, you may terminate this
Agreement or, if you so elect, waive any such conditions which have not
been fulfilled or extend the time for their fulfillment.
8. REPRESENTATIONS OF THE UNDERWRITERS. The Underwriters represent and
warrant to the Company that the information furnished to the Company in writing
by the Underwriters expressly for use in the Registration Statement, any Issuer
Free Writing Prospectus or the Prospectus does not, and any amendments thereof
or supplements thereto thus furnished will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Company
acknowledges that the statements relating to the terms of the offering by the
Underwriters under the caption "Underwriting" in any Preliminary Prospectus and
the Prospectus constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in any Preliminary Prospectus and the
Prospectus.
9. INDEMNIFICATION.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriters, and each person, if any, who
controls any of them within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim,
damage and expense whatsoever (including but not limited to any and all
expense whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, or any claim whatsoever) arising out of
or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained (x) in any Preliminary Prospectus, the Registration
Statement, the Disclosure Package, any Issuer Free Writing Prospectus or
the Prospectus (as from time to time amended and supplemented) or (y) in
any application or other document (in this Section 9 collectively called
"application") executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order
to qualify the Stock under the securities laws thereof or filed with the
Commission, the Market or any securities exchange, or (ii) the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not
21
misleading, provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration
Statement, the Disclosure Package, any Issuer Free Writing Prospectus, the
Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by the
Underwriters specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
If any action or proceeding (including any governmental investigation)
is brought against either of the Underwriters or any controlling person in
respect of which indemnity may be sought against the Company pursuant to
the foregoing paragraph, such indemnified party shall promptly notify in
writing the party or parties against whom indemnification is to be sought
of the institution of such action and the Company shall assume the defense
of such action, including the employment of counsel (satisfactory to the
indemnified party) and payment of expenses. The indemnified party shall
have the right to employ its or their own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the
indemnified party unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
action or the Company shall not have employed counsel to have charge of the
defense of such action, or counsel for such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it
or them which are different from or additional to those available to the
Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the Company
(it being understood, however, that the Company shall not, in connection
with any one such action or proceeding, be liable for the fees and expenses
of more than one separate firm of attorneys, together with appropriate
local counsel, at any time for all such indemnified parties, which firm
shall be designated in writing by you). Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written
consent. The Company agrees promptly to notify Oppenheimer of the
commencement of any litigation or proceedings against the Company, any of
its officers or directors in connection with the issue and sale of the
Stock or in connection with such Preliminary Prospectus, Registration
Statement, the Disclosure Package, any Issuer Free Writing Prospectus or
the Prospectus, or any amendment or supplement thereof, or any such
application.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, each of the directors of the Company, each of the officers of the
Company who shall have signed the Registration Statement and each other
person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act to the same extent as the
foregoing indemnity from the Company to the Underwriters, but only with
respect to statements or omissions, or alleged statements or omissions, if
any, made in any Preliminary Prospectus, Registration Statement, the
Disclosure Package, any Issuer Free Writing Prospectus or the Prospectus,
or any amendment or supplement thereto, or any application in reliance
upon, and in conformity with, written information furnished to the Company
by such Underwriter expressly for
22
use in any Preliminary Prospectus, the Registration Statement, the
Disclosure Package, any Issuer Free Writing Prospectus or the Prospectus or
any amendment or supplement thereto or in any application, as the case may
be. In case any action shall be brought against the Company, or any other
person so indemnified, based on any Preliminary Prospectus, the
Registration Statement, the Disclosure Package, any Issuer Free Writing
Prospectus or the Prospectus or any amendment or supplement thereto or any
application, and in respect of which indemnity may be sought against either
Underwriter, such Underwriter shall have the rights and duties given to the
Company, and the Company, and each other person so indemnified shall have
the rights and duties given to the Underwriters, by the provisions of
subsection (a) above. This indemnity will be in addition to any liability
which either Underwriter may otherwise have.
(c) No indemnification provided for in (a) or (b) above shall be
available to any party who shall fail to give notice as provided in such
sections if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially
prejudiced by the failure to give such notice, but the failure to give such
notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for
contribution or otherwise than on account of the provisions of (a) or (b)
above. Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred.
(d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Stock.
If, however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
23
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation or
by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), the Underwriters shall not be required
to contribute any amount in excess of the amount by which the total price
at which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act or Section 10(b) of the Exchange Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentations.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date, and such representations, warranties and
agreements of the Underwriters and the Company, including the indemnity and
contribution agreements contained in Section 9 hereof, shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of either Underwriter or any controlling person, or by or on behalf of
the Company or any controlling person, and shall survive termination of this
Agreement and/or delivery of the Stock to the Underwriters. In addition, the
covenants contained in Section 5 hereof, the agreements contained in this
Section 10 and in Sections 6, 11, 13 and 14 hereof and the indemnity and
contribution agreements contained in Section 9 hereof shall survive termination
of this Agreement, whether before or after the Closing Date.
11. TERMINATION.
(a) Oppenheimer (on behalf of the Underwriters) shall have the right
to terminate this Agreement at any time prior to the Closing Date if: any
domestic or international event or act or occurrence has materially
disrupted, or in your opinion will in the immediate future materially
disrupt, securities markets; or if trading in securities is suspended
generally on the New York Stock Exchange, the American Stock Exchange or
the Market or price limitations are imposed (other than limitations on
hours or numbers of days of trading) for securities on either such
Exchange; or if any statute, regulation, rule or order of any court or
other governmental authority has been enacted, published, decreed or
otherwise promulgated will, in your reasonable judgment, materially and
adversely affect or may materially and adversely affect the business or
operations of the Company; there is any outbreak or escalation of
hostilities or declaration of war or national emergency or other national
or international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the
United States would, in your reasonable judgment, make it impracticable or
inadvisable to market the
24
Stock or to enforce contracts for the sale of the Stock; or if a banking
moratorium has been declared by a state or federal authority; or if a
moratorium in foreign exchange trading by major international banks or
persons has been declared; or if the Company shall have sustained a
material or substantial 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 your opinion,
make it inadvisable to proceed with the delivery of the Stock; or if there
shall have been such material change in the condition, business operations
or prospects of the Company or the market for its and similar securities as
in your judgment would make it inadvisable to proceed with the offering,
sale and delivery of the Stock; or if the Company shall have failed to
comply with any of the provisions of this Agreement on its part to be
performed on or before the Closing Date; or if any of the material
conditions, agreements, representations or warranties in this Agreement
shall not have been fulfilled within the respective times herein provided.
(b) If Oppenheimer elects to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11,
the Company shall be notified promptly by Oppenheimer by telephone or
facsimile, confirmed by letter. If the Company elects to prevent this
Agreement from becoming effective, Oppenheimer shall be notified promptly
by the Company by telephone or facsimile, confirmed by letter.
(c) 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 either Underwriter (other than for obligations
assumed in Section 5 hereof), and no Underwriter shall be under any
liability to the Company; provided, however, that if this Agreement is
terminated by Oppenheimer 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 reason provided in subparagraph
(a) 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 $100,000 in aggregate amount incurred by them in connection with the
proposed purchase and sale of the Stock or in contemplation the performing
its obligations hereunder.
Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Section 9 shall not be in any way affected by such election
or termination or failure to carry out the terms of this Agreement or any
part hereof.
25
12. NOTICES. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to you, shall be mailed,
delivered or telegraphed and confirmed to the Underwriters care of Oppenheimer &
Co. Inc., 300 River Place, Suite 400, Detroit, Michigan 48207, Attention: Jason
D. Janosz, with a copy to Donald J. Kunz, Esq., Honigman Miller Schwartz and
Cohn, 2290 First National Building, Detroit, Michigan 48226; if sent to the
Company shall be mailed, delivered or telegraphed and confirmed to Dearborn
Bancorp, Inc., 1360 Porter Street, Dearborn, Michigan 48124, Attention:
President, with a copy to Verne C. Hampton II, Esq., Dickinson Wright PLLC, 500
Woodward Avenue, Suite 4000, Detroit, Michigan 48226-3425.
13. PARTIES. This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Underwriters, the Company, and the controlling persons,
directors and officers referred to in Section 9 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
14. CONSTRUCTION. 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 Wayne 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 Wayne County (Michigan) Circuit Court.
26
If the foregoing correctly sets forth the understanding among the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
DEARBORN BANCORP, INC.
By:
------------------------------------
Jeffrey L. Karafa
Its: Vice-President and Treasurer
Accepted as of the date first
above written.
OPPENHEIMER & CO. INC.,
By:
---------------------------------
Jason D. Janosz
Its: Senior Vice President
HOWE BARNES HOEFER & ARNETT INC.,
By:
---------------------------------
[ ]
-------------------------------
Its: [ ]
------------------------------
27
SCHEDULE I
Oppenheimer & Co. Inc. [_______]
Howe Barnes Investments Inc. [_______]
----------
Total 2,7000,000
28
SCHEDULE II
Dearborn Bancorp Trust I, a Delaware statutory trust which is 100% owned by the
Company.
Community Bank of Dearborn, a Michigan banking corporation which is 100% owned
by the Company (the "Bank").
Community Bank Mortgage, Inc., a Michigan corporation which is 100% owned by the
Bank.
Community Bank Audit Services, Inc., a Michigan corporation which is 100% owned
by the Bank.
Community Bank Insurance Agency, Inc., a Michigan corporation which is 100%
owned by the Bank.
29
SCHEDULE III
Community Bank Insurance Agency, Inc., a Subsidiary, owns 8.74% of Michigan
Bankers Title of East Michigan, LLC.
30