Exhibit 10.11



 








Exhibit 10.11




Second Amendment to Loan Agreement by and between Western Reserve Bancorp, Inc. and

TCF National Bank, dated June 30, 2005




 









 








SECOND AMENDMENT

TO

LOAN AGREEMENT




     THIS SECOND AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made and entered
into as of the 30th day of June, 2005 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 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 modify the Loan Agreement to (i) extend the
Maturity Date of the existing $3,000,000 revolving line of credit from June 30, 2005 to June 30,
2007, (ii) document the origination of a new $1,000,000 revolving line of credit, and (iii) modify
certain covenants and other terms and conditions set forth in the Loan Agreement.




          C. The Bank has agreed to make said modifications 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) An Amended and Restated Promissory Note in substantially the form of Exhibit A hereto
made payable by Borrower to the order of the Bank in the original principal amount of
$3,000,000.




     (c) A Promissory Note in substantially the form of Exhibit B hereto made payable by
Borrower to the order of the Bank in the original principal amount of $1,000,000.




     (d) 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 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.




     (e) Such other documents or instruments as the Bank may reasonably require.




     Section 2. Amendments.




     (a) Commitment Amount. The first paragraph of the Loan Agreement is hereby amended by
deleting the reference to “in amounts of up to $3,000,000 (the “Commitment”)” and replacing it
with a reference to “in an aggregate amount not to exceed $4,000,000”.




     (b) The Loans. Section 1.1 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:




     1.1 The Loans. Subject to the terms and conditions of this
Agreement, the Bank will make loans (the “Loans”) to the Borrower upon the request
of the Borrower not later than June 30, 2007 (the “Maturity Date”) in aggregate
amounts not to exceed $4,000,000. The Loans shall be made pursuant to two separate
revolving lines of credit as follows: (a) a $3,000,000 revolving line of credit
(“Commitment A”), and (b) a $1,000,000 revolving line of credit (“Commitment B”).
The Borrower shall request each Loan not later than 2:00 p.m. Ann Arbor, Michigan
local time on the date of the requested Loan, and each Loan shall be in an amount of
not less than $100,000. Each request for a Loan shall be made in a writing signed
by two (2) “Authorized Officers” (as that term is defined in the Secretary’s
Certificate delivered to the Bank pursuant to Section 2(c) hereof);
provided, however, that a Loan may be requested via telephone by one (1)
Authorized Officer so long as such request is promptly confirmed in a writing signed
by two (2) Authorized Officers. The Bank shall be entitled to act on the
instructions of anyone identifying himself or herself as an Authorized Officer and
upon the instructions of any other agent or employee authorized or designated by the
Borrower from time to time to request Loans or disbursements of loan proceeds, and
the Borrower shall be bound thereby in the same manner as if the person were
actually so authorized.




     (c) The Notes. Section 1.2 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:




     1.2 The Notes. The Loans made pursuant to Commitment A shall be
evidenced by an amended and restated promissory note in the form of Exhibit
A attached to the Second Amendment to this Agreement (as hereafter amended,
extended, renewed or replaced, “Note A”). The Loans made pursuant to Commitment B
shall be evidenced by a promissory note in the form of Exhibit B attached to
the Second Amendment to this Agreement (as hereafter amended, extended, renewed or
replaced, “Note B”; together with Note A, collectively referred to herein as the
“Notes”). The principal balance of the Loans shall be payable on the earlier of the
Maturity Date or the date that the Loans are accelerated as provided in Section 5.2
(the “Due Date”).




     (d) Interest. Section 1.3 of the Loan Agreement is amended by deleting each
reference to “Note” and replacing it with a reference to “Notes”.




     (e) Payments. Section 1.5 of the Loan Agreement is amended by deleting the
reference to “Note” and replacing it with a reference to “Notes”.



2









 






     (f) Use of Proceeds. Section 1.6 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:




     1.6 Use of Proceeds. Proceeds of the Loans made pursuant to
Commitment A shall be applied by the Borrower solely for the purpose of meeting the
Borrower’s liquidity needs. Proceeds of the Loans made pursuant to Commitment B
shall be applied by the Borrower solely to make capital contributions to Western
Reserve Bank.




     (g) Loan Fee. A new Section 1.7 is hereby added to Section 1 of the
Loan Agreement to read as follows:




     1.7 Loan Fee. The Borrower agrees to pay the Bank a
facility fee in the amount equal to $3,750.00, which fee shall be due and
payable annually during the term of Commitment A on June 30 of each year,
commencing on June 30, 2005, and shall be non-refundable when paid and
wholly earned when received.




     (h) Organization, Standing, Etc. Section 3.1 of the Loan Agreement is amended
by deleting the reference to “Note” and replacing it with a reference to “Notes”.




     (i) Covenants. The preamble of Section 4 of the Loan Agreement is amended by
deleting the reference to “Note” and replacing it with a reference to “Notes”.




     (j) Shareholder List. Subsection (c) of Section 4.3 of the Loan Agreement is amended by deleting
the reference to “90 days” and replacing it with a reference to “60 days”.




     (k) Total Capital Base. Section 4.15 of the Loan Agreement is hereby amended by
deleting the reference to “$7,500,000” and replacing it with a reference to “$9,000,000.”




     (l) Additional Covenants. The following covenants, applicable to the Borrower and each
Subsidiary, are hereby added at the end of Section 4 to read as follows:




     4.18 Deposit Accounts. Maintain one or more deposit
accounts with the Bank with a combined twelve-month average collected
balance of at least $700,000.




     4.19 Annual Cleanup. Notwithstanding anything to the contrary
herein, the Borrower agrees that for a period of thirty (30) consecutive
days during each Loan Year (defined below), the Borrower will cause the
aggregate principal balance of Loans outstanding under Commitment B to be
reduced to $0.00. For purposes of this Section 4.19 the term “Loan
Year” shall mean the period from the effective date of the Second
Amendment to this Agreement (or its anniversary date in a succeeding
calendar year) through the day preceding the anniversary date of the Second
Amendment to this Agreement in the immediately following calendar year.




     (m) Events of Default. Subsection (a) of Section 5.1 of the Loan Agreement is
amended by deleting the reference to “the Note” and replacing it with a reference to “any
Note”. In addition, subsection (c) of Section 5.1 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:



3









 






     (c) The Borrower shall fail to comply with Section 4.7,
4.10, 4.18 or 4.19 hereof;




     (n) Bank’s Right on Default. Section 5.2 of the Loan Agreement is amended (i) by
deleting the first reference to “Note” and replacing it with a reference to “Notes”, and (ii)
by deleting the second reference to “Note” and replacing it with a reference to “Notes (or any
of them)”.




     (o) Binding Effect. Section 6.1 of the Loan Agreement is amended by deleting the
reference to “Note” and replacing it with a reference to “Notes (or any of them)”.




     (p) Governing Law. Section 6.2 of the Loan Agreement is amended by deleting each
reference to “Note” and replacing it with a reference to “Notes”.




     (q) Notices. The Bank’s contact information in Section 6.3 of the Loan Agreement
is amended and restated in its entirety to read as follows: TCF National Bank, 401 E. Liberty
Street, Ann Arbor, Michigan 48104, Attention: Ms. Jenny Meier, Telephone: (248) 470-1635, Fax
No. (248) 740-1642.




     (r) Jurisdiction and Venue. Section 6.7 of the Loan Agreement is amended by
deleting the reference to “Note” and replacing it with a reference to “Notes”.




     (s) Setoff. A new Section 6.9 is hereby added to the end of Section 6 of
the Loan Agreement to read as follows:




     6.9 Security Agreement in Accounts and Setoff. As
additional security for the payment of the obligations described in the Loan
Agreement Loan Documents and any other obligations of the Borrower to the
Bank (or any other holder of the Note) of any nature whatsoever
(collectively, the “Obligations”), the Borrower hereby grants to the
Bank, and any such holder of the Note, a security interest in, a lien on,
and an express contractual right to set off against, each deposit account
and all deposit account balances, cash and any other property of the
Borrower now or hereafter maintained with, or in the possession of, the
Bank, or such holder of the Note. Upon the occurrence of any Event of
Default, the Bank or such holder of the Note may: (a) refuse to allow
withdrawals from any such deposit account; (b) apply the amount of such
deposit account balances and the other assets of the Borrower described
above to the Obligations; and (c) offset any other obligation of the Bank or
such holder of the Note against the Obligations; all whether or not the
Obligations are
then due or have been accelerated and all without any advance or
contemporaneous notice or demand of any kind to the Borrower, such notice
and demand being expressly waived.



          Section 3. 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




4









 







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 Note.




          Section 4. Reaffirmation of Pledge Agreement. The Borrower hereby
reaffirms that the unpaid balance of the Note 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 Lender. 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 5. 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.




          Section 6. 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 7. 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.





5









 








          Section 8. 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 9. 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 10. 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 11. 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 12. 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 13. No Waiver. 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 First Amendment to Loan Agreement 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:
	 	 	 	Senior Vice President
	 
	 	 	 	 	 	 
	BANK:	 	TCF NATIONAL BANK,
	 	 	a national banking association
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/
	 	Dennis J. Gistinger
	 

	 	Printed Name:
	 	 	 	Dennis J. Gistinger
	 

	 	Its:
	 	 	 	Sr. V.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/
	 	Jenny Meier
	 

	 	Printed Name:
	 	 	 	Jenny Meier
	 

	 	Its:
	 	 	 	Commercial Loan Officer






 









 






EXHIBIT A




AMENDED AND RESTATED

PROMISSORY NOTE




	 	 	 
	$3,000,000

	 	June 30, 2005






     FOR VALUE RECEIVED, WESTERN RESERVE BANCORP, INC., an Ohio corporation (the
“Borrower”), promises to pay to the order of TCF NATIONAL BANK (the “Bank”), at its
main office in Minneapolis, Minnesota, the principal amount of all Loans made by the Bank to the
Borrower pursuant to Commitment A under the terms of the Credit Agreement (as hereinafter defined)
and under this Note (each, a “Loan” or collectively the “Loans”). The aggregate
principal amount of all Loans outstanding hereunder shall at no time exceed THREE MILLION DOLLARS
($3,000,000). The Loans shall be payable not later than the Due Date, as defined in the Credit
Agreement.



     The unpaid principal amount of the Loans shall bear interest at the following rates per
year, determined as provided hereinafter (each computed on the basis of the actual number of days
elapsed and a year consisting of 360 days) and payable as follows:




     (a) Subject to subsection (b) below, at the Base Rate in effect from time to time per
annum less 0.75% per annum, payable on the last day of each month of each year; and




     (b) Following the occurrence of an “Event of Default” (as defined in the Credit
Agreement), at the rate per annum otherwise applicable to the Loans plus 4.00%, payable on
demand (the “Default Rate”).



     For purposes of this Note, in addition to terms defined elsewhere and in the Loan Agreement
(as defined below), the term “Base Rate” means the rate of interest established by the Bank
in its sole discretion from time to time as its “prime rate” or “base rate”. The Bank may lend to
its customers at rates that are equal to, greater than, or less than the Base Rate.



     All payments of principal and interest shall be made in immediately available funds in lawful
money of the United States of America.



     The Borrower hereby authorizes the Bank to rely upon the telephone or written instructions of
any person identifying himself or herself as an authorized officer of the Borrower and upon any
signature which the Bank believes to be genuine, and the Borrower shall be bound thereby in the
same manner as if such person were authorized and such signature were genuine.



     This Note is the Note referred to in, and evidences indebtedness incurred under, the letter
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 amended and as it may be further amended, extended, renewed or replaced, the
“Loan Agreement”) between the Borrower and the Bank, to which reference is made for a
statement of the terms and provisions thereof, including those under which the Borrower is
permitted and required to make prepayments and repayments of principal of such indebtedness and
under which such indebtedness may be declared to be immediately due and payable. Certain
capitalized terms used herein shall be defined as in the Loan Agreement.



     In the event that the interest or principal under this Note shall not be paid when due (upon
declaration of an Event of Default or otherwise): (a) the Borrower shall pay all costs of
collection of every



 









 




kind, including but not limited to all reasonable attorneys’ fees, court costs,
and expenses incurred by the Bank in connection with collection or the protection or enforcement of
any rights hereunder whether or not any lawsuit is ever filed, and (b) the Bank or any other holder
of this Note shall have the right to set off the indebtedness evidenced by this Note against any
indebtedness of the Bank or such holder or any deposit of the Borrower with the Bank or such
holder.




     The Borrower hereby waives presentment, demand, notice of dishonor, protest, and all other
demands and notices in connection with this Note. No act of omission or commission of the Bank,
including specifically any failure to exercise any right or remedy, shall be deemed to be a waiver
or release of the same, such waiver or release to be made only in writing signed by the Bank.



     THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT
GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.



     THE BORROWER AND THE BANK (BY ACCEPTANCE HEREOF) EACH HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED
IN CONNECTION HEREWITH AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.



     AT THE OPTION OF THE BANK, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.
IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR
CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE THE BANK,
AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND
VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE
SUCH CASE DISMISSED WITHOUT PREJUDICE.



     This Note supercedes and replaces, but does not evidence repayment of or constitute a novation
with respect to, that certain Promissory Note dated as of May 5, 2003 made payable by the Borrower
to the order of the Bank in the original principal amount of up to $3,000,000.



	 	 	 	 	 
	 	 	WESTERN RESERVE BANCORP, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward J. McKeon
	 

	 	Title:
	 	President/CEO
	 
	 	 	 	 
	 

	 	and	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Cynthia A. Mahl
	 

	 	Title:
	 	Senior V.P.






 









 






EXHIBIT B




PROMISSORY NOTE




	 	 	 
	$1,000,000

	 	June 30, 2005






     FOR VALUE RECEIVED, WESTERN RESERVE BANCORP, INC., an Ohio corporation (the
“Borrower”), promises to pay to the order of TCF NATIONAL BANK (the “Bank”), at its
main office in Minneapolis, Minnesota, the principal amount of all Loans made by the Bank to the
Borrower pursuant to Commitment B under the terms of the Credit Agreement (as hereinafter defined)
and under this Note (each, a “Loan” or collectively the “Loans”). The aggregate
principal amount of all Loans outstanding hereunder shall at no time exceed ONE MILLION DOLLARS
($1,000,000). The Loans shall be payable not later than the Due Date, as defined in the Credit
Agreement.



     The unpaid principal amount of the Loans shall bear interest at the following rates per
year, determined as provided hereinafter (each computed on the basis of the actual number of days
elapsed and a year consisting of 360 days) and payable as follows:




     (a) Subject to subsection (b) below, at the Base Rate in effect from time to time per
annum less 0.75% per annum, payable on the last day of each month of each year; and




     (b) Following the occurrence of an “Event of Default” (as defined in the Credit
Agreement), at the rate per annum otherwise applicable to the Loans plus 4.00%, payable on
demand (the “Default Rate”).



     For purposes of this Note, in addition to terms defined elsewhere and in the Loan Agreement
(as defined below), the term “Base Rate” means the rate of interest established by the Bank
in its sole discretion from time to time as its “prime rate” or “base rate”. The Bank may lend to
its customers at rates that are equal to, greater than, or less than the Base Rate.



     All payments of principal and interest shall be made in immediately available funds in lawful
money of the United States of America.



     The Borrower hereby authorizes the Bank to rely upon the telephone or written instructions of
any person identifying himself or herself as an authorized officer of the Borrower and upon any
signature which the Bank believes to be genuine, and the Borrower shall be bound thereby in the
same manner as if such person were authorized and such signature were genuine.



     This Note is the Note referred to in, and evidences indebtedness incurred under, the letter
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 amended and as it may be further amended, extended, renewed or replaced, the
“Loan Agreement”) between the Borrower and the Bank, to which reference is made for a
statement of the terms and provisions thereof, including those under which the Borrower is
permitted and required to make prepayments and repayments of principal of such indebtedness and
under which such indebtedness may be declared to be immediately due and payable. Certain
capitalized terms used herein shall be defined as in the Loan Agreement.



     In the event that the interest or principal under this Note shall not be paid when due (upon
declaration of an Event of Default or otherwise): (a) the Borrower shall pay all costs of
collection of every kind, including but not limited to all reasonable attorneys’ fees, court costs,
and expenses incurred by the



 









 




Bank in connection with collection or the protection or enforcement of
any rights hereunder whether or not any lawsuit is ever filed, and (b) the Bank or any other holder
of this Note shall have the right to set off the indebtedness evidenced by this Note against any
indebtedness of the Bank or such holder or any deposit of the Borrower with the Bank or such
holder.




     The Borrower hereby waives presentment, demand, notice of dishonor, protest, and all other
demands and notices in connection with this Note. No act of omission or commission of the Bank,
including specifically any failure to exercise any right or remedy, shall be deemed to be a waiver
or release of the same, such waiver or release to be made only in writing signed by the Bank.



     THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT
GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.



     THE BORROWER AND THE BANK (BY ACCEPTANCE HEREOF) EACH HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED
IN CONNECTION HEREWITH AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.



     AT THE OPTION OF THE BANK, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.
IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR
CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE THE BANK,
AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND
VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE
SUCH CASE DISMISSED WITHOUT PREJUDICE.



	 	 	 	 	 
	 	 	WESTERN RESERVE BANCORP, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward J. McKeon
	 

	 	Title:
	 	President/CEO
	 
	 	 	 	 
	 

	 	and	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Cynthia A. Mahl
	 

	 	Title:
	 	Senior V.P.