Exhibit 10.19
EIGHTH AMENDMENT TO LOAN AGREEMENT
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.

 

 

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(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.
[Remainder of page intentionally left blank;
signature page follows]

 

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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/ Edward J. McKeon                  
 
      Printed Name:   Edward J. McKeon    
 
      Its:  President & CEO    
 
                    By:   /s/ Cynthia A. Mahl                  
 
      Printed Name:   Cynthia A. Mahl    
 
      Its:   Executive Vice President    
 
               
BANK:
  TCF NATIONAL BANK,
a national banking association    
 
                    By:   /s/ John Jagels                  
 
      Printed Name:   John Jagels    
 
      Its:  Vice President    
 
                    By:   /s/ Guy J. Rau                  
 
      Printed Name:   Guy J. Rau    
 
      Its:   Senior Vice President    

 

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