EIGHTH AMENDMENT TO LOAN AGREEMENT AND WAIVER
Exhibit 10.19
EIGHTH AMENDMENT TO LOAN AGREEMENT
AND WAIVER
AND WAIVER
THIS EIGHTH AMENDMENT TO LOAN AGREEMENT AND
WAIVER (this “Amendment”) is made and
entered into as of June 19, 2009 by and between WESTERN RESERVE BANCORP, INC., an Ohio corporation
(the “Borrower”) and TCF NATIONAL BANK, a national banking association (the
“Bank”).
RECITALS:
A. The Borrower and the Bank are parties to a certain letter loan agreement dated as of
May 5, 2003, as amended by a certain First Amendment to Loan Agreement dated as of March 31, 2005,
as further amended by a certain Second Amendment to Loan Agreement dated as of June 30, 2005, as
further amended by a certain Third Amendment to Loan Agreement dated as of July 20, 2006, as
further amended by a certain letter agreement dated as of February 6, 2007, as further amended by a
certain Fifth Amendment to Loan Agreement and Waiver dated as of June 21, 2007, as further amended
by a certain Sixth Amendment to Loan Agreement dated September 28, 2007, and as further amended by
a certain Seventh Amendment to Loan Agreement dated July 18, 2008 (as amended, the “Loan
Agreement”). All capitalized terms not otherwise defined herein shall have the meanings given
to them in the Loan Agreement.
B. The Borrower has requested that the Bank (i) waive non-compliance with certain financial
covenants of the Loan Agreement, (ii) extend the Maturity Date of the existing $3,000,000 revolving
line of credit from July 1, 2010 to July 1, 2011, (iii) extend the Maturity Date of the existing
$2,000,000 revolving line of credit from July 1, 2010 to July 1, 2011, (iv) modify the financial
covenants, and (v) modify certain other terms and provisions set forth in the Loan Agreement, and
the Bank is willing to do so upon the terms and subject to the conditions set forth herein.
C. All said modifications shall be made upon the terms and subject to the conditions herein
set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth,
and for other good and valuable consideration, the nature, receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Conditions Precedent. The effectiveness of all of the amendments and
agreements set forth in this Amendment are subject to condition precedent that the Bank shall have
received all of the following items, each dated such date and in form and substance satisfactory to
the Bank, and each duly executed by all appropriate parties:
(a) This Amendment.
(b) A certificate of the secretary or an assistant secretary of the Borrower,
certifying: (i) the names of the officers of the Borrower authorized to sign this Amendment
and the other documents delivered or to be delivered in connection herewith to which the
Borrower is a party or by which it is bound, (ii) that, except as specifically certified in
such certificate, the Articles of Incorporation and Bylaws of the Borrower have not been
amended, modified, supplemented or restated since the date such documents were last
certified to the Bank, and (iii) a copy of the
resolutions of the Board of Directors of the Borrower authorizing the execution,
delivery and performance by the Borrower of this Amendment and any other documents delivered
or to be delivered in connection herewith to which the Borrower is a party or by which it is
bound, together with all documents evidencing other necessary corporate action.
(c) Such other documents or instruments as the Bank may reasonably require.
Section 2. Waiver. Pursuant to Section 4.16(e) of the Loan Agreement, the
Borrower is required to maintain a ratio of Allowance for loan and lease losses to Non-performing
Loans of not less than 100% at all times after December 31, 2006. The Borrower has advised the
Bank that the actual ratio of Allowance for loan and lease losses to Non-performing Loans as of
March 31, 2009 was 81.36%. The Borrower has requested that the Bank waive its failure to comply
with Section 4.16(e) of the Loan Agreement as of said measurement date. Subject to the
full satisfaction of all of the conditions precedent described in Section 1 above, the Bank
hereby waives the Borrower’s non-compliance with Section 4.16(e) of the Loan Agreement as
of March 31, 2009, and the Bank waives any Event of Default arising from such expressly-described
failure to comply. Except as expressly provided herein, all provisions of the Loan Agreement
remain in full force and effect, and this waiver shall not apply to any other or subsequent failure
to comply with such Section or any other provision of the Loan Agreement.
Section 3. Amendments.
(a) The Loans. Section 1.1 of the Loan Agreement is hereby amended by
deleting the reference to “July 1, 2010” and replacing it with a reference to “July 1,
2011”.
(b) Exemption from Dividends and Distributions Negative Covenant. The
following new sentence is hereby added at the end of Section 4.14 of the Loan
Agreement:
“Notwithstanding the foregoing, the prohibitions and restrictions set
forth in this Section 4.14 shall not apply to any dividends paid
from time to time on any senior preferred stock and/or warrants issued to
and held by the U.S. Department of Treasury (UST) or any other subsequent
shareholders under the Troubled Assets Relief Program (TARP) — Capital
Purchase Program, so long as the issuer of such stock and/or warrants
remains a “Qualifying Financial Institution” under such Program.”
(c) Total Capital Base Covenant. Section 4.15 of the Loan
Agreement is hereby amended by deleting the reference to “$13,500,000” and replacing it with
a reference to “$17,500,000”.
(d) Amendment to Financial Covenant. Section 4.16(e) of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:
“(e) Maintain a ratio of Allowance for loan and lease losses to
Non-performing Loans of not less than 50% at all times.”
(e) Additional Financial Covenant. A new subsection (g) is hereby added
to Section 4.16 of the Loan Agreement to read as follows:
“(g) Maintain a ratio of Allowance for loan and lease losses to Total
Loans and Leases of not less than 1% at all times.”
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(f) Additional Defined Term. The following term is hereby added to the
list of defined terms at the end of Section 4.16 in its appropriate alphabetical
order:
““Total Loans and Leases” means, as of any date of
determination, all loans, leases and other extensions of credit, all as
reported in the most recent Call Report of Western Reserve Bank.”
Section 4. Representations; No Default. The Borrower represents and warrants
that: (a) the Borrower has the power and legal right and authority to enter into this Amendment and
has duly authorized the execution and delivery of this Amendment and other agreements and documents
executed and delivered by the Borrower in connection herewith, (b) neither this Amendment nor the
agreements contained herein contravene or constitute an Event of Default, or an event which with
the giving of notice or passage of time or both would mature into an Event of Default (an
“Unmatured Event of Default”), under the Loan Agreement or a default under any other
agreement, instrument or indenture to which the Borrower is a party or a signatory, or any
provision of the Borrower’s Articles of Incorporation or Bylaws or, to the best of the Borrower’s
knowledge, any other agreement or requirement of law, or result in the imposition of any lien or
other encumbrance on any of its property under any agreement binding on or applicable to the
Borrower or any of its property except, if any, in favor of the Bank, (c) no consent, approval or
authorization of or registration or declaration with any party, including but not limited to any
governmental authority, is required in connection with the execution and delivery by the Borrower
of this Amendment or other agreements and documents executed and delivered by the Borrower in
connection herewith or the performance of obligations of the Borrower herein described, except for
those which the Borrower has obtained or provided and as to which the Borrower has delivered
certified copies of documents evidencing each such action to the Bank, (d) no events have taken
place and no circumstances exist at the date hereof which would give the Borrower grounds to assert
a defense, offset or counterclaim to the obligations of the Borrower under the Loan Agreement or
any of the other Loan Documents (defined below), and (e) there are no known claims, causes of
action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses
(including attorneys’ fees) of any kind, character or nature whatsoever, fixed or contingent, which
the Borrower may have or claim to have against the Bank, which might arise out of or be connected
with any act of commission or omission of the Bank existing or occurring on or prior to the date of
this Amendment, including, without limitation, any claims, liabilities or obligations arising with
respect to the indebtedness evidenced by the Notes.
Section 5. Reaffirmation of Pledge Agreement. The Borrower hereby reaffirms that the
unpaid balance of the Notes and all of the other obligations of the Borrower under the Loan
Agreement are now and shall hereafter continue to be secured by, among other things, a first
priority, perfected security interest in the “Collateral” described in that certain Pledge
Agreement dated May 5, 2003 executed by the Borrower in favor of the Bank. All of the terms,
conditions, provisions, agreements, requirements, promises, obligations, duties, covenants and
representations of the Borrower under such Pledge Agreement and any and all other documents and
agreements entered into with respect to the obligations of the Borrower under the Loan Agreement
(collectively, the “Loan Documents”) are incorporated herein by reference and are hereby
ratified and affirmed in all respects by the Borrower.
Section 6. Affirmation, Further References. The Bank and the Borrower each acknowledge
and affirm that the Loan Agreement, as hereby amended, is hereby ratified and confirmed in
all respects and all terms, conditions and provisions of the Loan Agreement, except as amended
by this Amendment, shall remain unmodified and in full force and effect. All references in any
document or instrument to the Loan Agreement and the Loan Documents are hereby amended and shall
refer to the Loan Agreement and the Loan Documents, as amended by this Amendment.
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Section 7. Merger and Integration, Superseding Effect. This Amendment, from and after
the date hereof, embodies the entire agreement and understanding between the parties hereto and
supersedes and has merged into it all prior oral and written agreements on the same subjects by and
between the parties hereto with the effect that this Amendment, shall control with respect to the
specific subjects hereof and thereof.
Section 8. Severability. Whenever possible, each provision of this Amendment and any
other statement, instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be interpreted in such manner as to be effective, valid and enforceable under the
applicable law of any jurisdiction, but, if any provision of this Amendment or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be
held to be prohibited, invalid or unenforceable under the applicable law, such provision shall be
ineffective in such jurisdiction only to the extent of such prohibition, invalidity or
unenforceability, without invalidating or rendering unenforceable the remainder of such provision
or the remaining provisions of this Amendment or any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto in such jurisdiction, or affecting the
effectiveness, validity or enforceability of such provision in any other jurisdiction.
Section 9. Successors. This Amendment shall be binding upon the Borrower, the Bank
and their respective successors and assigns, and shall inure to the benefit of the Borrower, the
Bank and to the respective successors and assigns of the Bank.
Section 10. Costs and Expenses. The Borrower agrees to reimburse the Bank, upon
execution of this Amendment, for all reasonable out-of-pocket expenses (including attorneys’ fees
and legal expenses of counsel for the Bank) incurred in connection with the Loan Agreement,
including in connection with the negotiation, preparation and execution of this Amendment and all
other documents negotiated, prepared and executed in connection with this Amendment, and in
enforcing the obligations of the Borrower under this Amendment, and to pay and save the Bank
harmless from all liability for, any stamp or other taxes which may be payable with respect to the
execution or delivery of this Amendment.
Section 11. Headings. The headings of various sections of this Amendment have been
inserted for reference only and shall not be deemed to be a part of this Amendment.
Section 12. Counterparts. This Amendment may be executed in several counterparts as
deemed necessary or convenient, each of which, when so executed, shall be deemed an original,
provided that all such counterparts shall be regarded as one and the same document, and any party
to this Amendment may execute any such agreement by executing a counterpart of such agreement.
Section 13. Governing Law. This Amendment shall be governed by the internal laws of
the State of Minnesota, without giving effect to conflict of law principles thereof.
Section 14. No Waiver. Except as expressly provided for above, nothing contained in
this Amendment (or in any other agreement or understanding between the parties) shall constitute a
waiver of, or shall otherwise diminish or impair, the Bank’s rights or remedies under the Loan
Agreement or any of the other Loan Documents, or under applicable law.
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IN WITNESS WHEREOF, the parties hereto have caused this Eighth Amendment to Loan Agreement and
Waiver to be executed as of the day and year first above written.
BORROWER: |
WESTERN RESERVE BANCORP, INC., an Ohio corporation |
|||||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| Printed Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| Its: President & CEO | ||||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||||||
| Printed Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||||||
| Its: Executive Vice President | ||||||||
BANK: |
TCF NATIONAL BANK, a national banking association |
|||||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Printed Name: | ▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Its: Vice President | ||||||||
| By: | /s/ ▇▇▇ ▇. ▇▇▇ | |||||||
| Printed Name: | ▇▇▇ ▇. ▇▇▇ | |||||||
| Its: Senior Vice President | ||||||||
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