Exhibit-10.56
(M&I BANK LOGO) [c26634c2663401.gif]

     
 
  M&I Marshall & Ilsley Bank
 
  770 North Water Street
 
  Milwaukee, Wl 53202-3509
 
  414 765-7700
mibank.com  
 
  March 31, 2008

Ms. JoAnn S. Lilek
Executive Vice President & CFO
Midwest Banc Holdings, Inc.
501 West North Avenue
Melrose Park, IL 60160
Dear Ms. Lilek:
This letter agreement (the “Agreement”) is made and entered into as of this 31st
day of March, 2008, by and between Midwest Banc Holdings, Inc. (the “Borrower”)
and M&I Marshall & Ilsley Bank (the “Lender”). This Agreement replaces a letter
agreement dated September 28, 2007
The terms of this Agreement will apply (except as otherwise provided herein) so
long as any obligation is owed to Lender or Lender has any outstanding
commitment to lend to Borrower, under the terms and conditions of any promissory
note or other agreement between Borrower and Lender. Currently, those agreements
include, without limitation: (a) a revolving credit promissory note (or
“Revolving Loan”) in the maximum principal amount of $25,000,000.00; (b) a term
note in the original principal amount of $75,000,000.00, which is being amended
to be in the principal amount of $55,000,000.00; and (c) a “Subordinated Term
Note” in the principal amount of $15,000,000.00.

  1.   While any amount is owed by Borrower to Lender or Lender has any
commitment to advance any credit to Borrower, Lender shall have received the
following “Loan Documents,” in form and substance satisfactory to Lender:

  (i)   a promissory note as to each loan;     (ii)   a pledge or security
agreement granting to Lender a first priority security interest in 100% of the
capital stock of Midwest Bank and Trust Company (“Midwest Bank); and     (iii)  
physical possession of each stock certificate representing such stock a blank,
signed irrevocable stock power for each stock certificate, and such other
documents as may be necessary to take, maintain and perfect a first priority
security interest in all capital stock of Midwest Bank.

      (Subsections (ii) and (iii) above shall not apply to the Subordinated Term
Note.)     2.   Borrower shall furnish to Lender, as soon as available, such
financial information respecting Borrower or Midwest Bank as Lender from time to
time requests, and without request furnish to Lender:

 

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(i) Within 120 days after the end of each fiscal year of Borrower, a balance
sheet of Borrower as of the close of such fiscal year and related statements of
income and retained earnings and cash flow for such year all in reasonable
detail and satisfactory in scope to Lender, prepared in accordance with
generally accepted accounting principles applied on a consistent basis, audited
by an independent certified public accountant, selected by Borrower and
acceptable to Lender.
(ii) Within 45 days after the end of each fiscal quarter, a balance sheet of
Borrower as of the end of such quarter and related statements of income and
retained earnings and cash flow for the period from the beginning of the fiscal
year to the end of such quarter, prepared in accordance with generally accepted
accounting principles applied on a consistent basis, subject to normal year-end
adjustments, certified by a financial representative of Borrower.
(iii) Copies of all quarterly Federal Financial Institution Examination Council
Form 031 (“Call Reports”) required of Midwest Bank no later than the due date by
which those Call Reports are required by the regulating agencies to be filed,
prepared in accordance with agency requirements, certified by chief financial
representative of Bank.
(iv) Within 45 days after the end of each fiscal quarter, grid price monitoring
will be required.

  3.   Borrower shall timely perform and observe the following financial
covenant(s), all calculated in accordance with generally accepted accounting
principles applied on a consistent basis.

(i) Midwest Bank shall maintain at all times a ratio of non-performing loans to
Total Loans of not greater than 3.00%, tested quarterly at the end of each
calendar quarter. “Non-performing Loans” means loans outstanding which are not
accruing interest, have been classified as renegotiated pursuant to guidelines
established by the Federal Financial Institutions Examination council or are
90 days or more past due in the payment of any principal or interest. “Total
Loans” means the sum of loans and direct lease financings, net of unearned
income by Midwest Bank.
(ii) Midwest Bank must report a positive net profit, tested quarterly, at each
calendar quarter end, but excluding charges related to acquisitions.
(iii) Midwest Bank must remain “well capitalized” within the meaning of the
Federal Deposit Insurance Act at 12 USC 1831o and the regulations thereunder
applicable to Midwest Bank.

  4.   Neither Borrower nor Midwest Bank shall merge into or consolidate with
any other business enterprise and no other business enterprise shall merge into
or with the Borrower or Midwest Bank, without prior written consent of Lender.
(But this provision shall not apply to the Subordinated Term Note.)

 

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  5.   Neither Borrower nor Midwest Bank shall become subject to any adverse
regulatory action (including, without limitation, any written agreement for
corrective action, a memorandum of understanding which limits in any way the
ability of Midwest Bank to pay dividends to Borrower or a cease and desist
order).     6.   The Revolving Loan is intended for use as working capital. Such
Loan shall not be used for the purpose of acquiring another financial
institution or enterprise unless approved by Lender (the request for approval
may be made following the announcement of a definitive agreement).     7.   All
outstanding debt is immediately due on the sale of the stock of Midwest Bank or
Borrower, or of substantially all of the assets of either.     8.   In the event
of a known or intended change in or departure of any executive management of
Borrower, Borrower shall promptly notify Lender of the same and provide Lender
with a reasonably acceptable succession plan within 90 days thereafter.     9.  
Borrower debt other than that owed to Lender shall never be greater than
$2,000,000 (principal) without prior written approval of Lender (excluding trust
preferred indebtedness or other indebtedness that is subordinate (in accordance
with SR 92-37 issued by the FRB on October 15, 1992) to the claims of creditors
of Borrower with respect to the following: (a) borrowed and purchased money;
(b) similar obligations arising from off-balance-sheet guaranties and
direct-credit substitutes; and (c) obligations associated with derivative
products such as interest-rate and foreign exchange-rate contracts, commodity
contracts, and similar arrangements), which approval will not be unreasonably
withheld (but this provision shall not affect the Subordinated Term Note).

A breach or failure of performance in any term or condition in this Agreement
shall constitute an additional event of default under each of the Loan Documents
(subject however to a 10 day cure period for payment defaults and a 30 day cure
period for non-payment defaults), and Lender may then, at its option (except, as
to the Subordinated Term Note which has its own acceleration provisions),
declare the notes due and payable, and may pursue all remedies available to it
under the Loan Documents or otherwise.
The undersigned shall pay and reimburse Lender for all expenses incurred by it
in protecting or enforcing its rights under the Loan Documents or this
Agreement, including without limitation, costs of administration and costs of
collection before and after judgment, including reasonable attorney’s fees and
legal expenses.
In the case of any ambiguity or conflict between this Agreement and any Loan
Document, this Agreement will govern (except, however as to the Subordinated
Term Note, as to which, in the event of any inconsistency, that Note shall
control).

 

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Please confirm your acknowledgment and acceptance of the terms and conditions of
this Agreement by signing and dating below.

                      Very truly yours,       Accepted and Agreed: March 31,
2008     M&I Marshall & Ilsley Bank       Midwest Banc Holdings, Inc.    
 
                   
By:
  /s/ John J. Kadlac
 
      By:   /s/ JoAnn S. Lilek
 
    John J. Kadlac, VP/Senior RM       Title:   JoAnn S. Lilek, EVP/CFO    
 
                   
By:
Title:
  /s/ Allen J. Wolf
 
Sr. VP                

 

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FIRST AMENDMENT TO NOTE
(M&I/Midwest Banc Holdings $75,000,000.00 Note)
(M&I Loan No. 37956985-10001)
     M&I Marshall & Ilsley Bank (“Lender”) and Midwest Banc Holdings, Inc.
(“Borrower”) are parties to a September 28, 2007 Promissory Note in the face
amount of $75,000,000.00 (copy attached) (the “Note”). The parties wish to amend
that Note according to this First Amendment. Therefore, the parties agree as
follows:

  1.   Upon signing hereof, Borrower shall pay down the Note (including with the
proceeds of a separate $15,000,000.00 loan being made by Lender to Borrower
simultaneously herewith) so that the total principal outstanding on the Note
shall then be $55,000,000.00. Upon that pay down, wherever in the Note reference
is made to $75,000,000.00 (in numbers or words) the Note shall be considered to
be amended to read “$55,000,000.00.”     2.   The exhibit to the Note (titled
“Applicable Margin”) is replaced in its entirety by the “Applicable Margin”
exhibit attached to this First Amendment.     3.   The section labeled
“Prepayment” in the Note (paragraph 4 on page 1) is replaced by the following:  
      Prepayments. The Borrower may at its option, at any time, prepay this
Note, in part; provided, however, that the Borrower may not prepay this Note in
its entirety, so long as any portion of that certain Subordinated Term Note
dated as of March 31, 2008 by the Borrower in favor of the Lender in the initial
principal amount of $15,000,000.00 (U.S. Dollars) (as amended from time to time,
the “Subordinated Term Note”) remains outstanding, unless this Note has been
accelerated by the Bank.     4.   As amended hereby, the Note is ratified.

Dated: March 31, 2008

                      MIDWEST BANC HOLDINGS, INC.       M&I MARSHALL & ILSLEY
BANK    
 
                   
By:
  /s/ JoAnn S. Lilek
 
JoAnn S. Lilek,       By:   /s/ John J. Kadlac
 
Title: John J. Kadlac, VP/ Senior RM    
 
  Executive Vice President                
 
  Chief Financial Officer       By:   /s/ Allen J. Wolf
 
Title: Sr. VP    

 

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     As provided in the “Variable Interest Rate” paragraph in the Note, interest
on this Note, will vary based on changes in the One-Month LIBOR Rate (the
“Index”). The interest rate will also vary based upon the Borrower’s “Return on
Assets” (as defined below) and the following “Applicable Margin” (which shall be
added to the Index to determine the interest rate under this Note):

          If Borrowers Return On Assets Is:   The Applicable Margin Is:
(a) Not greater than .5% for two consecutive calendar quarters
    1.55 %  
(b) Greater than .5% but less than or equal to 1.04% for two consecutive
calendar quarters
    1.40 %  
(c) Greater than 1.04% for two consecutive calendar quarters
    1.25 %

Dated: March 31, 2008

            MIDWEST BANC HOLDINGS, INC.
      By:   /s/ JoAnn S. Lilek         JoAnn S. Lilek,        Executive Vice
President
Chief Financial Officer     

M&I/Midwest Banc Holdings
Exhibit to First Amendment to Note
For Loan No. 37956985-10001

 

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SUBORDINATED TERM NOTE

 
THIS SUBORDINATED TERM NOTE IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY FEDERAL AGENCY.
 

      $15,000,000.00   Chicago, Illinois     March 31, 2008

     FOR VALUE RECEIVED, the undersigned MIDWEST BANC HOLDINGS, INC. (the
“Borrower”), promises to pay to the order of M&I MARSHALL & ILSLEY BANK (the
“Bank”), at its office in Milwaukee, WI, the principal sum of Fifteen Million
and 00/100 Dollars ($15,000,000.00) plus interest, all as provided below.
     1. Interest. The unpaid principal balance outstanding from time-to-time
shall bear interest before maturity (whether by acceleration or lapse of time)
at a variable rate equal to the One-Month LIBOR rate (as defined below) plus 350
basis points, which rate will change as of the first day of each month if the
One-Month LIBOR Rate changes.
     (a) “One-Month LIBOR Rate” means the annual rate equal to the rate at which
U.S. dollar deposits are offered on the first day of each calendar month on or
about 9 a.m. Milwaukee, Wisconsin time (rounded upwards, if necessary, to the
nearest 1/16 of 1%) as determined by the British Bankers Association and
reported by a major news service selected by Lender (such as Reuters, Bloomberg
or Moneyline Telerate).
     (b) If the One-Month LIBOR Rate is not provided or reported on the first
day of a month because, for example, it is a weekend or holiday or for another
reason, the One- Month LIBOR Rate for that month shall be established as of the
next preceding day on which the One-Month LIBOR Rate is provided and reported by
the selected news service.
     (c) Interest will be computed for the actual number of days principal is
unpaid, based on a year of 360 days.
     2. Payment Schedule. Borrower shall make monthly payments of interest only
on the 30th day of each consecutive calendar month, beginning on April 30, 2008,
plus a final

 

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payment of all remaining unpaid principal and any unpaid interest on March  
    , 2018 or earlier if accelerated pursuant to section 8 below.
     3. Late Payment Fee. If any payment is not made on or before its due date,
the Bank may collect a delinquency charge of 5% of the unpaid amount. Collection
of the late payment fee shall not be deemed to be a waiver of the Bank’s right
to declare a default hereunder or accelerate this Note.
     4. Default Interest Rate. Principal amounts remaining unpaid after the
maturity thereof, whether at fixed maturity or by reason of default and
acceleration of maturity, shall bear interest from and after maturity until paid
at a rate of 3% per annum plus the rate of interest otherwise payable hereunder.
     5. Maximum Rate. In no event will the interest rate hereunder exceed that
permitted by applicable law. If any interest or other charge is finally
determined by a court of competent jurisdiction to exceed the maximum amount
permitted by law, the interest or charge shall be reduced to the maximum
permitted by law, and the Bank may credit any excess amount collected against
the balance due or refund the amount to the Borrowers.
     6. Prepayment. This Note may be prepaid in full or in part at any time
without premium. Prepayments of less than all the outstanding amount of this
Note shall be applied to principal.
     7. Application of Payments. Payments due under this Note shall be made in
lawful money of the United States, and the Bank is authorized to apply payments
received from Borrower to any obligation owed Bank by Borrower unless Borrower
specifies in writing the obligation to which a payment should be applied.
However payments applied to this Note shall be applied by the Bank first to
interest, then to other costs, fees and charges due hereunder and last to
principal. Bank is authorized to deduct and withdraw payments due under this
Note from any account of Borrower at Bank.
     8. Default Acceleration. The following are “Events of Default” hereunder:
(a) Borrower fails to pay any amount when due under this Note; (b) any default
or failure of performance occurs under a letter loan agreement dated
contemporaneously herewith as it may be amended, modified or restated (the
“Letter Agreement”); (c) any default or failure of performance occurs under any
other note or agreement between Borrower and Bank; and (d) Borrower becomes the
subject of any bankruptcy, or receivership proceedings (voluntary or
involuntary). Upon the occurrence of the Event of Default specified in
(d) above, and only

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upon that occurrence, this Note and indebtedness evidenced hereby may, at
Lender’s option, be accelerated, and the entire amount owed is then due. Bank’s
receipt of any payment on this Note after the occurrence of an event of default
shall not constitute a waiver of the default or of Bank’s rights and remedies
upon such default.
     9. Security. This Note is not secured.
     10. Rights of Bank. Without affecting the liability of Borrower, any
indorser, or any surety, Bank may, without notice, accept partial payments or
agree not to sue any party or guarantor liable on it. Without affecting the
liability of any indorser or surety, Bank may from time to time, without notice,
renew or extend the time for any payment.
     11. Costs and Fees; Indemnity. Borrower agrees to pay all costs of
collection before and after judgment, including reasonable attorneys’ fees
(including those incurred in successful defense or settlement of any
counterclaim brought by Borrower or incident to any action or proceeding
involving Borrower brought pursuant to the United States Bankruptcy Code or
other insolvency proceedings) and waive presentment, protest, demand and notice
of dishonor. Borrower agrees to indemnify and hold harmless Bank, its directors,
officers, employees and agents, from and against any and all claims, damages,
judgments, penalties, and expenses, including reasonable attorneys’ fees,
arising directly or indirectly from credit extended under this Note or the
activities of Borrower. This indemnity shall survive payment of this Note.
Borrower acknowledge that Bank has not made any representations or warranties
with respect to, and that Bank does not assume any responsibility to Borrower
for, the collectability or enforceability of this Note or the financial
condition of Borrower.
     12. Interpretation. This Note and the credit advanced hereunder are for
business purposes. This Note is intended by Borrower and Bank as a final
expression of this Note and as a complete and exclusive statement of its terms,
there being no conditions to the enforceability of this Note. This Note may not
be supplemented or modified except (a) by a Letter Agreement between the parties
dated contemporaneously herewith, as it may be amended or (b) by another writing
signed by both Borrower and Bank. This Note benefits Bank, its successors and
assigns, and binds Borrower and Borrower’s successors and assigns. The validity,
construction and enforcement of this Note are governed by the internal laws of
Wisconsin. Invalidity or unenforceability of any provision of this Note shall
not affect the validity or enforceability of any other provisions of this Note.
     13. Venue; Jurisdiction. Borrower consents that venue for any legal
proceeding

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relating to collection of this Note shall be, at Bank’s option, the Milwaukee
County, Wisconsin Circuit Court, or the Federal District Court for the Eastern
District of Wisconsin. Borrower agrees and consents to the personal jurisdiction
of any such Courts and agrees that venue in such Courts is not inconvenient for
Borrower.
     14. Waiver of Jury Trial. BORROWER AND BANK HEREBY BOTH WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE, THE
CREDIT AGREEMENT, OR ANY RELATED LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, OR
ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWER AND BANK EACH
REPRESENT TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY
GIVEN.
     15. Subordination. The rights of Bank to the principal sum hereunder or any
part hereof and to any accrued interest thereon shall remain subject and
subordinate (in accordance with SR 92-37 issued by the FRB on October 15, 1992)
to the claims of creditors of Borrower with respect to the following (“Senior
Indebtedness”): (a) borrowed and purchased money; (b) similar obligations
arising from off-balance-sheet guaranties and direct-credit substitutes; and
(c) obligations associated with derivative products such as interest-rate and
foreign exchange-rate contracts, commodity contracts, and similar arrangements
(clauses (a), (b) and (c) expressly exclude trade accounts payable and accrued
liabilities under Trust Preferred Indebtedness of Borrower, as defined below,
with respect to which the rights of Bank are not subordinate). Upon dissolution
or liquidation of Borrower, no payment of principal, interest or premium
(including post-default interest) shall be due and payable under the terms of
this Note until all Senior Indebtedness (which expressly exclude trade accounts
payable and accrued liabilities of Borrower) shall have been paid in full.
     As used herein, “Trust Preferred Indebtedness” means indebtedness incurred
in connection with, or relating to, any trust preferred securities caused to be
issued by, or reflected in the consolidated financial statements of Borrower,
including the subordinated indebtedness evidenced by any junior subordinated
debentures relative thereto.
     16. Defect in Terms. It is the intent of Borrower and Bank that this Note
be treated as Tier 2 Capital of Borrower in accordance with the rules and
regulations of the Federal Reserve Board (“FRB”) in effect on the date hereof.
In the event the FRB notifies Borrower that this Note does not constitute Tier 2
Capital of Borrower due to a defect in the terms of this Note, the parties shall
negotiate in good faith to cure such defect by amending this Note.

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     17. Captions. All descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of this Note.

          MIDWEST BANC HOLDINGS, INC.
      By:   /s/ JoAnn S. Lilek         JoAnn S. Lilek        Executive Vice
President and
Chief Financial Officer       

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