Exhibit 10.1
 
SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (the “Agreement”) is made on March 20,
2013, between FIFTH THIRD BANK, a Michigan banking corporation, whose address is
111 Lyon Street N.W., Grand Rapids, Michigan 49503 (“Lender”), and Community
Shores Bank Corporation, a Michigan Corporation, whose address is 1030 West
Norton Avenue, Muskegon, Michigan 49441 (“Borrower”).

FACTS

A.           Borrower is indebted to Lender pursuant to the terms of the
following documents, instruments and agreements:

(1) Loan Agreement dated September 7, 2007, evidencing a  revolving line of
credit in the amount of $5,000,000.00 between Borrower and Lender, as amended by
an Amendment to Loan Agreement dated September 16, 2008, and Second Amendment to
Loan Agreement dated December 18, 2009, which Second Amendment to Loan Agreement
converted the credit facility to a term loan  (collectively, the “Loan
Agreement”).
 
(2) Revolving Credit Note dated September 7, 2007, in the original principal
amount of $5,000,000.00, given by Borrower to Lender (the “First Revolving
Note”).
 
(3)  Revolving Credit Note dated September 16, 2008, in the original principal
amount of $5,000,000.00, given by Borrower to Lender (the “Second Revolving
Note”).
 
(4) Promissory Note dated December 18, 2009, in the original principal amount of
$5,000,000.00, given by Borrower to Lender (the “Note” and together with the
First Revolving Note and the Second Revolving Note, the “Notes”);
 
(5) Pledge Agreement dated September 16, 2008 pursuant to which Borrower granted
Lender a security interest in all the capital stock of Community Shores Bank, a
Michigan banking corporation (the “Pledge”).
 
B.           The indebtedness, including principal and accrued interest,
evidenced and secured by the Loan Agreement, the Notes, and Pledge and any and
all related documents, instruments and agreements (collectively, the “Loan
Documents”) is $5,799,166.66 as of February 13, 2013, with interest accruing
after that date at a daily rate equivalent to six percent (6.0%) per annum (the
“Indebtedness”).

C.           Subject to the terms of this Agreement and in consideration of
Borrower’s full and timely performance under this Agreement, Lender is willing
to accept the sum of $500,000.00 (the “Settlement Payment”) in full satisfaction
of the Indebtedness.

AGREEMENTS

The parties agree that the above facts are accurate and further agree as
follows:
 
 
 

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1. Acknowledgements.  Borrower acknowledges and confirms that: (a)  each and
every one of the Loan Documents is valid, has been properly executed, and is
enforceable according to its terms; (b) the Indebtedness is presently due and
owing without defense, counterclaim or setoff of any kind or nature and
represents the binding obligation of Borrower to Lender; and (c) Lender has the
right to exercise all of its rights and remedies under the Loan Documents and
applicable law, subject only to the terms of this Agreement and Borrower’s full
and timely performance.
 
2. Representations and Warranties.  (a) Borrower represents and warrants for the
protection and benefit of Lender and its agents, employees, successors and
assigns, that: (i) with the exception of any approvals necessary under the
Written Agreement by and between Borrower and the Federal Reserve Bank of
Chicago (the “FRBC”) dated December 16, 2010, there are no actions or
proceedings which are pending, or to the knowledge of Borrower threatened, which
might prevent Borrower from fully and timely performing this Agreement; (ii)
this Agreement is being given freely and voluntarily, and absolutely and
unconditionally; (iii) no fraud, coercion or duress has been attempted or done
by the Lender or its agents or employees; and (iv) Borrower has been advised by
counsel of its choosing concerning this Agreement (b)  Lender represents and
warrants for the protection and benefit of Borrower and its agents, employees,
successors and assigns, that: (i) Lender is the sole legal and beneficial owner
of the Loan Documents; and (ii) Lender has not assigned or otherwise transferred
any interest in the Indebtedness or Loan Documents to any third party.
 
3. Closing; Settlement Payment; Release of Collateral.  The closing of this
transaction (the “Closing”) shall occur on a date and at a time and place
mutually acceptable to Lender and Borrower (the “Closing Date”) following
receipt by Borrower of the approval by the FRBC of this Agreement pursuant to
paragraph 11 below, provided that the Closing Date shall occur not later than
[insert date 60 days after date of this Agreement].  At the Closing, Borrower
shall pay the Settlement Payment to Lender in full, collected and immediately
available funds, and Lender shall deliver either (a) original Stock Certificate
No. 1 for 1,000,000 shares of the Common Stock of Community Shores Bank, a
Michigan banking corporation issued in the name of the Community Shores Bank
Corporation; or (b) a statement of lost certificate in form of the attached
Exhibit A . Subject to Lender’s receipt of the Settlement Payment and Borrower’s
full compliance with the terms of this Agreement, Lender authorizes Borrower to:
(a) complete and file UCC termination statements in respect of any UCC financing
statements filed by Lender with respect to the Indebtedness; and (b) mark the
Loan Documents “paid in full” or such other designation as may be appropriate to
reflect Lender’s acceptance of the Settlement Payment in full satisfaction of
Borrower’s obligations under  the Notes.

4.  Release of Borrower.  Effective upon payment of the Settlement Payment, and
subject to the terms of this Agreement, Lender releases and discharges Borrower
from further liability for the Indebtedness and forever releases and discharges
Borrower and its officers, directors, employees, shareholders, affiliates,
agents, and successors and assigns (the “Borrower Releasees”), from any and all
liability, claims, demands, equitable relief, damages, costs, expenses, and
causes of action of every kind or nature which Lender now has or which Lender
may have in the future, whether known or unknown, based on representations,
promises, conduct, actions or inactions or any other circumstance of any kind
occurring prior to or on the date of execution of this Agreement, that arise
from, or are related to (a) the Indebtedness; and (b) the Loan Documents
(collectively, the “Note  Claims”). For the avoidance of doubt, this Agreement
is a comprehensive release and discharge of the Note Claims and shall be
liberally and expansively construed in favor of the Borrower Releasees to effect
that intent.   .
 
 
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5. Release of Lender.  Borrower forever releases and discharges Lender and its
officers, directors, employees, shareholders, affiliates, agents, and successors
and assigns (the “Lender Releasees”), from any and all liability, claims,
demands, equitable relief, damages, costs, expenses, and causes of action of
every kind or nature which Borrower now has or which Borrower may have in the
future, whether known or unknown, based on representations, promises, conduct,
actions or inactions or any other circumstance of any kind occurring prior to or
on the date of execution of this Agreement, including, without limitation,
Lender’s administration of the Loan Documents and the negotiation and execution
of this Agreement (collectively, the “Borrower Claims”).  For the avoidance of
doubt, this Agreement is a comprehensive, global release and discharge of all
Borrower Claims and shall be liberally and expansively construed in favor of the
Lender Releasees to effect that intent.
 
6. Reservations.  Nothing in paragraphs 4 or 5 shall operate to release, waive
or otherwise discharge any obligation, right or remedy, or otherwise impair or
affect any right of either party: (a) under this Agreement; (b) with respect to
parties’ correspondent banking relationship.
 
7. Assignment.  Borrower represents and warrants that none of the Borrower
Claims have been previously, or in the future will be, assigned, conveyed or
transferred in any fashion to any other person or entity.  Borrower agrees to
defend, indemnify and hold harmless Lender from and against any and all claims,
damages, or liabilities, including reasonable attorney fees, sustained by Lender
as a result of the breach of any representation and warranty in this Agreement
by Borrower.
 
8. Disclaimer of Relationships.  Nothing in this Agreement, nor any document
executed pursuant to this Agreement, nor any act of Lender, or its agents or
employees, shall be construed by Borrower or any third party, to create any
relationship of third party beneficiary, principal and agent, limited or general
partnership, or joint venture, or of any association or relationship whatsoever
between Lender and Borrower.
 
9. Waiver of Jury.  BORROWER AND LENDER, AFTER CONSULTING OR HAVING THE
OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHT EACH OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  NEITHER BORROWER NOR
LENDER SHALL SEEK TO CONSOLIDATE (BY COUNTER-CLAIM OR OTHERWISE) ANY SUCH ACTION
IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 
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10. Knowing Execution.  Each of the parties acknowledges that they have read
this Agreement, understands its terms, and has had all the time desired to
review and consider it.
 
11. Approval of FRBC.                                           This Agreement
is subject to approval by the FRBC.  Borrower agrees to give notice of this
Agreement and submit it to the FRBC for review and action promptly after
execution of this Agreement.  Such approval by the FRBC shall be in form and
substance reasonably satisfactory to Lender. In the event that: (a) such
approval is not given by the FRBC, this Agreement shall be null and void and of
no legal effect; or (b) such approval is not given by the FRBC within sixty (60)
days of execution of this Agreement, Lender, in Lender’s sole discretion, may
terminate this Agreement and this Agreement shall be null and void and of no
legal effect.
 
12. Reinstatement of Indebtedness.  If the Settlement Payment, or any part of
the Settlement Payment, is set aside, rescinded, recovered, or required to be
returned by Lender for any reason, including, without limitation, the
bankruptcy, insolvency, or reorganization of any person: (a) the Indebtedness
shall for all purposes be reinstated to the extent of any such amount returned;
and (b) in the case of the bankruptcy, receivership or other reorganization of
Borrower, the Indebtedness shall be reinstated in full for purposes of any claim
or defense of Lender in any such proceeding.
 
13. Notices.  All notices to be given pursuant to this Agreement shall be in
writing and shall be deemed served when hand delivered or mailed by first class
Mail, postage prepaid, upon: (a) Borrower, to the attention of Heather D.
Brolick, President and Chief Executive Officer, at the address listed on page 1
of this Agreement, Telephone: (231) 780-1845, Fax: (231) 780-1860; E-mail:
Hbrolick@communityshores.com; and (b) Lender, to the attention of Francelle
Fulton, Vice President, Special Assets Group, Fifth Third Bank, 1000 Town
Center, MD JTWN2C, Southfield, Michigan, 48075;  Telephone: (248) 603-0141; Fax:
(248) 603-0655. E-mail: francelle.fulton@53.com
 
14. Binding Effect.  This Agreement shall be binding upon the parties and their
respective officers, directors, employees, owners, members, shareholders,
managers, affiliates, agents, representatives and attorneys, and successors and
assigns.
 
15. Severability.  If any provision of this Agreement as applied to any party or
to any circumstance shall be adjudged to be illegal, invalid or unenforceable
for any reason, such illegality, invalidity or unenforceablility shall not
affect the validity or enforceability of the remainder of this Agreement,
provided that Lender may elect to specifically enforce the provisions of this
Agreement remaining in effect or to rescind this Agreement in its
entirety.  Upon rescission of this Agreement, the Loan Documents and all of the
Lender’s rights under them shall be reinstated in their entirety and shall be
deemed to have been in effect throughout the period of time during which this
Agreement may have been effective.
 
16. Entire Agreement.  This Agreement constitutes the entire agreement between
the parties with respect to the subject matter of this Agreement.  The
provisions of this Agreement shall supersede all prior and contemporaneous oral
agreements, communications and understandings between the parties with respect
to the subject matter of this Agreement.
 
 
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17. Modification.  This Agreement shall not be amended, altered or modified
unless done so in writing, signed by the party or such party’s duly authorized
representative against whom such modification is sought to be enforced.
 
18. Applicable Law.  The terms and conditions of this Agreement shall be
governed, construed, interpreted and enforced in accordance with the laws of the
State of Michigan.
 
19. No Reliance upon Representations.  Borrower and Lender each acknowledge and
agree that, except as expressly set forth in this Agreement, the effectiveness
of this Agreement and the release and discharge contained in it are not
dependent or conditioned in any way upon the accuracy of any prior
understandings or perceptions that either party may have, or any assumptions
that either party may have made, correctly or incorrectly, in electing to enter
into this Agreement.  The parties each further acknowledge and affirm that,
except as expressly set forth in this Agreement, they are not relying upon any
statements, representations, opinions or promises made by the other in electing
to enter into this Agreement.
 
20. Headings.  The headings used herein have been used for the convenience of
the parties and are not to be used in construing this Agreement.
 
21. Negotiated Agreement.  This Agreement is the product of negotiation and the
rule of construction that an Agreement is to be construed against its drafters
is not applicable.
 
22.  Counterparts.  This Agreement may be executed in any number of
counterparts, all of which will be considered a single document.  Such
counterpart execution may be by facsimile or electronic mail copy which each
party is entitled to rely upon as an original signature for any and all
purposes.
 
In witness whereof, the parties have signed this Agreement as of the day and
year first above written.
 

 
FIFTH THIRD BANK
 
 
 
By: /s/ Francelle Fulton
Francelle Fulton
Its:  Vice President
       Special Assets Group
 
 
 
     
COMMUNITY SHORES BANK CORPORATION
 
By: /s/ Heather D. Brolick
       Heather D. Brolick
Its:  President and CEO, signed on behalf of Community Shores Bank Corporation
   

 
 
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