Exhibit 10.19

 

EXECUTION VERSION

 

SECOND AMENDMENT

 

to

 

LOAN AGREEMENT

 

between

 

U.S. BANK NATIONAL ASSOCIATION

 

and

 

TALMER BANCORP, INC.

 

Second Amendment: Dated as of March 26, 2015

First Amendment: Dated as of December 19, 2014

Original Loan Agreement: Dated as of December 20, 2013

 

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SECOND AMENDMENT TO
LOAN AGREEMENT

 

This SECOND AMENDMENT TO LOAN AGREEMENT (this “Second Amendment”) is dated as of
March 26, 2015, and is made by and between TALMER BANCORP, INC., a Michigan
corporation (“Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association (“Lender”).

 

R E C I T A L S

 

A.                                    Borrower is a bank holding company that
owns 100% of the issued and outstanding capital stock of TALMER BANK AND TRUST,
a Michigan chartered state bank, and TALMER WEST BANK, a Michigan chartered
state bank.  Talmer Bank maintains its principal banking offices in Troy,
Michigan and Talmer West maintains its principal banking offices in Ann Arbor,
Michigan.

 

B.                                    Borrower and Lender are party to a Loan
Agreement dated as of December 20, 2013 (as amended by that certain First
Amendment to Loan Agreement dated December 19, 2014, collectively, the “Original
Agreement”).

 

C.                                    The parties hereto desire to amend and
modify the Original Agreement in accordance with the terms and subject to the
conditions set forth in this Second Amendment.

 

D.                                    Capitalized terms not otherwise defined in
this Second Amendment shall have the meanings respectively ascribed to them in
the Original Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements herein contained, the parties hereto hereby agree as follows:

 

A G R E E M E N T

 

SECTION 1.                            AMENDMENTS TO THE ORIGINAL AGREEMENT.

 

1.1                               Recitals (Recital B).  Recital B of the
Original Agreement is hereby amended and restated in its entirety to read as
follows:

 

“B.                        Borrower has requested that Lender provide it with a
revolving credit facility (the “Loan”) in the maximum principal amount of
$50,000,000 (the “Maximum Principal Amount”).”

 

1.2                               Definitions (Section 1.1).  The defined term
“Maturity Date” in Section 1.1 of the Original Agreement is hereby amended and
restated in its entirety to read as follows:

 

““Maturity Date” means December 18, 2015 in accordance with terms and
requirements of Section 2.3.”

 

1.3                               Payments and Maturity Date (Section 2.3). 
Section 2.3 of the Original Agreement shall be amended in its entirety to read
as follows:

 

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“2.3                  Payments and Maturity Date.  On the Maturity Date, all
sums due and owing under this Agreement and the other Transaction Documents with
respect to the Loan shall be repaid in full.  Except for the conversion option
set forth below, Borrower acknowledges and agrees that Lender has not made any
commitments, either express or implied, to extend the terms of the Loan past the
Maturity Date.  Lender acknowledges that the Loan is a revolving credit facility
and Borrower may borrow, repay and re borrow principal amounts under the Loan in
accordance with the terms of the Transaction Documents.  Notwithstanding the
foregoing, provided that (i) no Event of Default or Unmatured Event of Default
has occurred and is continuing as of the date of the written notice contemplated
below, (ii) no Event of Default or Unmatured Event of Default would exist
immediately after the effectiveness of the conversion option contemplated below
and (iii) the outstanding principal amount of the Loan exceeds $10,000,000 as of
the date of the written notice contemplated below, Borrower may elect (by
written notice delivered to Lender at least three (3) Business Days prior to the
Maturity Date), subject to Lender’s approval (which shall not be unreasonably
withheld or delayed) after Lender receives Borrower’s written notice, to convert
the then outstanding principal amount of the Loan (or such portion of the
outstanding principal amount of the Loan elected by Borrower in the foregoing
written notice, in all cases, in an amount not less than $10,000,000 or integral
multiples of $1,000,000 in excess thereof) to a term loan subject to the
following: (a) such term loan shall mature and all outstanding amounts relating
to such term loan shall become due and payable no later than two years after the
Maturity Date; (b) all interest and installment payments of principal (assuming
for amortization purposes only, a five year maturity with equal quarterly
payments of principal) on such term loan shall be paid quarterly; and
(c) Borrower shall deliver to, or for the benefit of, Lender, in substance and
form satisfactory to Lender, all agreements, instruments, certificates,
affidavits, schedules, resolutions, opinions, notes, and/or other documents as
may be requested by Lender in its sole discretion.”

 

1.4                               Material Transactions (Section 5.2.5). 
Effective as of December 20, 2013, Section 5.2.5 of the Original Agreement shall
be amended in its entirety to read as follows:

 

“5.2.5         Capital Stock Matters.  Except for repurchases or redemptions of
capital stock or other outstanding securities that do not result in an Event of
Default or Unmatured Event of Default, Borrower shall not, nor shall it cause,
permit or allow any Subsidiary to, redeem any of its capital stock or other
outstanding securities.”

 

1.5                               Exhibit B.  Exhibit B to the Original
Agreement shall be amended and restated in its entirety with the Note that is
attached as Exhibit A to this Second Amendment.

 

1.6                               Exhibit D.  Exhibit D to the Original
Agreement shall be amended to replace Annex A to such Exhibit with the form of
Annex A that is attached as Exhibit B to this Second Amendment.

 

SECTION 2.                            REPRESENTATIONS AND WARRANTIES.  Borrower
hereby represents and warrants to Lender as of the date hereof as follows:

 

2

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(i)                                     No Event of Default or Unmatured Event
of Default has occurred and is continuing, and no Event of Default or Unmatured
Event of Default would result from the amendments contemplated hereby.

 

(ii)                                  The execution, delivery and performance by
Borrower of this Second Amendment have been duly authorized by all necessary
corporate and other action and do not and will not require any registration
with, consent or approval of, or notice to or action by any Person (including
any Governmental Agency) in order to be effective and enforceable.

 

(iii)                               This Second Amendment and the other
Transaction Documents (as amended by this Second Amendment) constitute the
legal, valid and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms.

 

(iv)                              All representations and warranties of Borrower
in the Original Agreement are true and correct in accordance with the standards
and requirements set forth in Section 3.3.3 of the Original Agreement.

 

(v)                                 Borrower’s obligations under the Original
Agreement and under the other Transaction Documents are not subject to any
defense, counterclaim, set-off, right to recoupment, abatement or other claim.

 

SECTION 3.                            ADDITIONAL TERMS.

 

3.1                               Acknowledgement of Indebtedness under
Agreement.  Borrower acknowledges and confirms that, as of the date hereof,
Borrower is indebted to Lender, without defense, setoff, or counterclaim, in the
aggregate principal amount of Twenty Million Dollars ($20,000,000) under the
Original Agreement.

 

3.2                               The Agreement.  On and after the Effective
Date: (i) each reference in the Original Agreement to “this Agreement,”
“hereunder,” “hereof,” “herein,” or words of like import shall mean and be a
reference to the Original Agreement as amended hereby, (b) each reference to the
Original Agreement in all Transaction Documents shall mean and be a reference to
the Original Agreement, as amended hereby, and (c) this Second Amendment shall
be deemed a “Transaction Document” for the purposes of the Original Agreement.

 

3.3                               Second Amendment and Original Agreement to be
Read Together.  This Second Amendment supplements and is hereby made a part of
the Original Agreement, and the Original Agreement and this Second Amendment
shall from and after the Effective Date be read together and shall constitute
one agreement. Except as otherwise set forth herein, the Original Agreement
shall remain in full force and effect.

 

3.4                               Acknowledgements.  Borrower acknowledges that
(i) it has been advised by counsel of its choice of law with respect to this
Second Amendment, the Original Agreement, the other Transaction Documents and
the transactions contemplated hereby and thereby, (ii) any waiver of Borrower
set forth herein has been knowingly and voluntarily made, and (iii) the
obligations of Lender hereunder shall be strictly construed and shall be
expressly subject to Borrower’s compliance in all respects with the terms and
conditions of the Original Agreement.

 

3

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3.5                               No Waiver.  The execution, delivery and
effectiveness of this Second Amendment shall not operate as a waiver of any
Event of Default (including without limitation any Event of Default existing on
the date hereof), nor operate as a waiver of any right, power or remedy of
Lender (including without limitation any rights, powers or remedies of Lender
with respect to any Event of Default existing on the date hereof), nor
constitute a waiver of, or consent to any departure from, any provision of the
Original Agreement, or any of the other Transaction Documents.

 

3.6                               No Novation.  The terms and conditions of the
Original Agreement are amended as set forth in this Second Amendment.  It is
expressly understood and acknowledged that nothing in this Second Amendment
shall be deemed to cause or otherwise give rise to a novation of the
indebtedness contemplated in the agreement.  All “Borrower’s Liabilities” under
the Original Agreement shall in all respects be continuing and this Second
Amendment shall not be deemed to evidence or result in a novation or repayment
and re-borrowing of such “Borrower’s Liabilities.”

 

SECTION 4.                            CONDITIONS PRECEDENT.  The amendments set
forth in SECTION 1 above shall become effective as of the date (the “Effective
Date”) on which each of the following conditions shall have been satisfied:
(i) Lender shall have received a fully executed Second Amendment and the Note
attached as Exhibit A to this First Amendment; (ii) Lender shall have received
payment from Borrower, in immediately available funds, of an amount equal to
$75,000, which amount shall represent an incremental facility fee and shall be
fully earned when paid and shall not be refunded for any reason; (iii) Lender
shall have received payment from Borrower, in immediately available funds, of an
amount sufficient to reimburse Lender for all reasonable out-of-pocket costs,
fees and expenses incurred by Lender, or for which Lender has become obligated,
in connection with the negotiation, preparation and consummation of the Original
Agreement and Second Amendment, including but not limited to, reasonable
attorneys’ fees and expenses; (iv) a copy, certified by the Secretary or
Assistant Secretary of Borrower, of its Board of Directors’ resolutions
authorizing the execution, delivery, and performance, respectively, of this
Second Amendment, the Note attached as Exhibit A to this Second Amendment and
any other documents to be executed, delivered, or performed in connection with
this Second Amendment; and (v) a written opinion of Borrower’s counsel,
addressed to Lender, in a form reasonably satisfactory to Lender and its
counsel.

 

SECTION 5.                            RELEASE.  Borrower, for itself and its
successors and assigns, does hereby fully, finally and unconditionally release
and forever discharge, and agrees to hold harmless, Lender and each of its
equity holders and affiliates, and their respective agents, advisors, managers,
parents, subsidiaries, attorneys, representatives, employees, officers and
directors, and the successors, assigns, heirs and representatives of each of the
foregoing, from any and all debts, claims, counterclaims, setoffs, obligations,
damages, costs, attorneys’ fees and expenses, suits, demands, liabilities,
actions, proceedings and causes of action, in each case whether known or
unknown, contingent or fixed, direct or indirect and of whatever kind, nature or
description, and whether in law or in equity, under contract, tort, statute or
otherwise, that Borrower has heretofore had or now or hereafter can, shall or
may have by reason of any act, omission or thing whatsoever done or omitted to
be done on or prior to the Effective Date arising out of, connected with or
related in any way to this Second Amendment, the Original Agreement,

 

4

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the other Transaction Documents, the transactions described therein, the Loan,
Lender’s administration thereof, or the financing or banking relationships of
Borrower with Lender.

 

SECTION 6.                            Miscellaneous.  This Second Amendment may
be executed in any number of counterparts, all of which taken together shall
constitute one and the same amendatory instrument and any of the parties hereto
may execute this Second Amendment by signing any such counterpart.  This Second
Amendment shall be governed by, and construed in accordance with, the internal
laws of the State of New York.

 

[Remainder of Page Intentionally Left Blank]

 

5

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
duly executed and delivered as of the day and year first above written.

 

 

TALMER BANCORP, INC.

 

 

 

 

 

By:

/s/ David T. Provost

 

 

Name:

David T. Provost

 

 

Title:

Chief Executive Officer

 

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Peter G. Caliguiri

 

 

Name:

Peter G. Caligiuri

 

 

Title:

Vice President

 

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EXHIBIT A

 

PROMISSORY NOTE

 

$50,000,000.00

 

New York, New York

 

 

Restatement Date: March 26, 2015

 

FOR VALUE RECEIVED, the undersigned, TALMER BANCORP, INC., a Michigan
corporation (“Borrower”), promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION, a national banking association, or the holder hereof from time to
time (“Lender”), at such place as may be designated in writing by Lender, the
principal sum of FIFTY MILLION AND NO/100THS DOLLARS ($50,000,000.00) (or so
much thereof that has been advanced and remains outstanding), with interest
thereon as hereinafter provided.  It is contemplated that there will be advances
and payments under this note (this “Note”) from time to time, but no advances or
payments under this Note (including payment in full of the unpaid balance of
principal hereof prior to maturity) shall affect or impair the validity or
enforceability of this Note as to future advances hereunder.  This Note is
issued pursuant to the terms of that certain Loan Agreement of even date
herewith by and between Borrower and Lender as amended, restated, supplemented
or modified from time to time (the “Loan Agreement”).  All capitalized terms
used but not defined herein shall have the respective meanings ascribed to them
in the Loan Agreement.

 

Interest shall accrue on all sums as advanced and outstanding from time to time
under this Note and Loan Agreement as set forth in the Loan Agreement.  Such
interest shall be due and payable as set forth in the Loan Agreement.

 

The outstanding principal balance of this Note, together with all accrued and
unpaid interest, shall be due and payable on the Maturity Date.  Additional
principal payments shall be made in accordance with the provisions of the Loan
Agreement.

 

This Note is issued pursuant to the terms of the Loan Agreement.  If a Default
or an Event of Default shall occur and be continuing, the principal of this Note
together with all accrued interest thereon may, at the option of the holder
hereof, immediately become due and payable on demand in accordance with the
terms of the Loan Agreement; provided, however, that if any document related to
this Note provides for automatic acceleration of payment of sums owing
hereunder, all sums owing hereunder shall be automatically due and payable in
accordance with the terms of that document.

 

Unless otherwise provided in the Loan Agreement, all payments on account of the
indebtedness evidenced by this Note shall be first applied to the payment of
costs and expenses of Lender which are due and payable, then to past-due
interest on the unpaid principal balance and the remainder to principal.

 

This Note may be prepaid only upon those terms and conditions set forth in the
Loan Agreement.

 

From and after the Maturity Date, or such earlier date as all sums owing on this
Note become due and payable by acceleration or otherwise, or after the
occurrence of a Default or an

 

A-1

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Event of Default, and as otherwise provided in the Loan Agreement, interest
shall be computed on all amounts then due and payable under this Note at the
Default Rate as provided in the Loan Agreement.

 

If any attorney is engaged by Lender to enforce or defend any provision of this
Note or any of the other Transaction Documents, or as a consequence of any
Default or Event of Default, with or without the filing of any legal action or
proceeding, then Borrower shall pay to Lender immediately upon demand all
attorneys’ fees and expenses, together with interest thereon from the date of
such demand until paid at the rate of interest applicable to the principal
balance owing hereunder as if such unpaid attorneys’ fees and expenses had been
added to the principal.

 

No previous waiver and no failure or delay by Lender or Borrower in acting with
respect to the terms of this Note or any of the other Transaction Documents
shall constitute a waiver of any breach, default or failure of condition under
this Note, the Loan Agreement or any of the other Transaction Documents.  A
waiver of any term of this Note or any of the other Transaction Documents or of
any of the obligations secured thereby must be made in writing and shall be
limited to the express written terms of such waiver.  In the event of any
inconsistencies between the terms of this Note and the terms of any other
document related to the Loan evidenced by this Note, the terms of this Note
shall prevail.

 

Except as otherwise provided in the Loan Agreement, Borrower expressly waives
presentment, demand, notice of dishonor, notice of default or delinquency,
notice of acceleration, notice of protest and nonpayment, notice of costs,
expenses or losses and interest thereon, notice of late charges, and diligence
in taking any action to collect any sums owing under this Note or in proceeding
against any of the rights or interests in or to properties securing payment of
this Note.  In addition, Borrower expressly agrees that this Note and any
payment coming due hereunder may be extended from time to time without in any
way affecting the liability of any such party hereunder.

 

Time is of the essence with respect to every provision hereof.  This Note shall
be construed and enforced in accordance with the laws of the State of New York,
except to the extent that federal laws preempt the laws of the State of New
York, and all persons and entities in any manner obligated under this Note
consent to the jurisdiction of any Federal or State court having situs in New
York, New York and having proper venue, and also consent to service of process
by any means authorized by New York or Federal law.  Any reference contained
herein to attorneys’ fees and expenses shall be deemed to be to reasonable fees
and expenses and to include all reasonable fees and expenses of third-party
attorneys and the reasonable fees and expenses of any other experts or
consultants.

 

All agreements between Borrower and Lender (including, without limitation, this
Note and the Loan Agreement, and any other documents securing all or any part of
the indebtedness evidenced hereby, if any) are expressly limited so that in no
event whatsoever shall the amount paid or agreed to be paid to Lender exceed the
highest lawful rate of interest permissible under applicable law.  If, from any
circumstances whatsoever, fulfillment of any provision hereof, the Loan
Agreement or any other documents securing all or any part of the indebtedness
evidenced hereby at the time performance of such provisions shall be due, shall
involve exceeding the limit of validity prescribed by law which a court of
competent jurisdiction may deem applicable

 

A-2

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hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the
highest lawful rate of interest permissible under such applicable laws, and if,
for any reason whatsoever, Lender shall ever receive as interest an amount which
would be deemed unlawful under such applicable law, such interest shall be
automatically applied to the payment of the principal of this Note (whether or
not then due and payable) and not to the payment of interest or refunded to
Borrower if such principal has been paid in full.

 

Any notice which either party hereto may be required or may desire to give
hereunder shall be governed by the notice provisions of the Loan Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

A-3

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EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT THAT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF
BORROWER OR LENDER.  BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE
SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER
WITH SUCH LEGAL COUNSEL.  BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND
UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS
BEEN REVIEWED BY BORROWER AND BORROWER’S COUNSEL AND IS A MATERIAL INDUCEMENT
FOR LENDER TO ENTER INTO THE TRANSACTION DOCUMENTS, (c) THIS WAIVER SHALL BE
EFFECTIVE AS TO EACH OF THE TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED
THEREIN AND (d) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

 

IN WITNESS WHEREOF, the undersigned has executed this Note or caused this Note
to be executed by its duly authorized representative as of the date first above
written.

 

 

TALMER BANCORP, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

A-4

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EXHIBIT B

 

ANNEX A

 

TO

 

QUARTERLY COMPLIANCE CERTIFICATE

A.

 

Risk-Based and Leveraged Capital Adequacy Guidelines. (Sections 7.1 and 7.2)

 

 

(as of the fiscal quarter ending                   , 201    )

 

 

 

1.

 

Borrower

 

 

(FRB Capital Guidelines)

 

                        In Compliance

 

                          Not In Compliance

 

 

 

2.

 

Subsidiary Banks -

 

 

(Talmer Bank - FDIC Capital Guidelines)

 

                        In Compliance

 

                          Not In Compliance

 

 

(Talmer West - FDIC Capital Guidelines)

 

                        In Compliance

 

                          Not In Compliance

 

 

 

 

 

[minimum capital category required: “well capitalized”]

 

 

[minimum required total risk-based capital ratio: Borrower / 13%]

 

 

[minimum required total risk-based capital ratio: Talmer Bank / 14%]

 

 

[minimum required total risk-based capital ratio: Talmer West / 12%]

 

 

[minimum required leverage capital ratio:

 

 

Borrower, Talmer Bank and Talmer West / 9% or greater as required by FRB or
FDIC]

 

 

 

B.

 

Maximum Nonperforming Assets. (Section 7.3)

 

 

(as of the fiscal quarter ending                   , 201    )

 

 

 

1.

 

Total Nonperforming Assets

 

$                        

 

 

 

2.

 

Tangible Primary Capital

 

$                        

 

 

 

3.

 

NPAs divided by Primary Capital [B.1 divided by B.2]

 

                        %

 

 

 

 

 

[maximum permitted - 23%]

 

 

 

 

 

C.

 

Minimum Reserves to Nonperforming Loans. (Section 7.4)

 

 

(as of the fiscal quarter ending                   , 201    )

 

 

 

1.

 

Allowance for Loan and Leases Losses

 

$                        

 

 

 

2.

 

Nonperforming Loans

 

$                        

 

 

 

3.

 

ALLL divided by NPLs [C.1 divided by C.2]

 

                        %

 

 

 

 

 

[minimum required ALLL: 55% of NPLs]

 

B-1

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D.

 

Minimum Liquidity. (Section 7.5)

 

 

 

 

 

Liquid Assets

 

$                        

 

 

 

 

 

[minimum required Liquid Assets - $7,500,000]

 

 

 

E.

 

Minimum Fixed Charge Coverage Ratio. (Section 7.6)

 

 

(as of the fiscal quarter ending                   , 201    )

 

 

 

1.

 

Net Income of Borrower (on a consolidated basis)

 

$                        

 

 

 

2.

 

Amount of Goodwill Amortized by Borrower

 

$                        

 

 

 

3.

 

Cash distributions or declarations by Borrower

 

$                        

 

 

 

4.

 

Interest Expense (contractually due)

 

$                        

 

 

 

5.

 

[E.1. plus E.2. plus E.4. minus E.3.]

 

$                        

 

 

 

6.

 

Interest Expense (contractually due)

 

$                        

 

 

 

7.

 

Required Principal Payments

 

$                        

 

 

 

8.

 

Imputed Principal Amount on Loan

 

$10,000,000

 

 

 

9.

 

[E.6. plus E.7. plus E.8.]

 

$                        

 

 

 

10.

 

Fixed Charge Coverage Ratio [E.5. divided by E.9.]

 

           to 1.00

 

 

 

 

 

[minimum required fixed charge coverage ratio (rolling four quarter basis -
1.75x to 1.00]

 

B-2

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