fourthamendmenttalmer121







EXECUTION VERSION      KE 38898002.3   FOURTH AMENDMENT      to      LOAN AGREEMENT         between         U.S. BANK NATIONAL ASSOCIATION      and      TALMER BANCORP, INC.                                       Fourth Amendment: Dated December 18, 2015   Third Amendment: Dated as of June 30, 2015   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        





 







         FOURTH AMENDMENT TO    LOAN AGREEMENT   This FOURTH AMENDMENT TO LOAN AGREEMENT (this “Fourth Amendment”)   is dated as of December 18, 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.    Talmer Bank maintains its principal banking offices in Troy, 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, that certain Second Amendment to Loan Agreement dated March 26, 2015 and that certain   Third Amendment to Loan Agreement dated June 30, 2015, 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 Fourth Amendment.   D. Capitalized terms not otherwise defined in this Fourth 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 A).  The first two sentences of Recital A of the Original   Agreement are hereby amended and restated in their entirety to read as follows:   “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 that is not a member of the Federal Reserve (“Talmer Bank” or the “Subsidiary   Bank”).  Talmer Bank maintains its principal banking offices in Troy, Michigan.”   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 17, 2016 in accordance with terms and requirements   of Section 2.3.”     





 







   2      1.3 Definitions (Section 1.1).  The defined term “Subsidiary Banks” in Section 1.1 of   the Original Agreement is hereby amended and restated in its entirety to read as follows:   ““Subsidiary Bank” has the meaning ascribed to such term in the recitals hereto.”   In addition, the reference to “Subsidiary Banks”, “each Subsidiary Bank” and “any Subsidiary   Bank”, as applicable, in the Original Agreement, including in Sections 1.1, 3.2, 4.1, 4.4.1, 7.2,   and 9.21 of the Original Agreement, shall be read to refer to the Subsidiary Bank.   1.4 Definitions (Section 1.1).  The defined term “Talmer West” is hereby deleted.   1.5 The Loan (Section 2.1).  The second sentence in Section 2.1 of the Original   Agreement shall be amended in its entirety to read as follows:   “Interest on each advance hereunder shall accrue at an annual rate equal to 1.75% plus   the one-month LIBOR rate quoted by Lender from Reuters Screen LIBOR01 Page or any   successor thereto, which shall be that one-month LIBOR rate in effect two New York   Banking Days prior to the Reprice Date, adjusted for any reserve requirement and any   subsequent costs arising from a change in government regulation, such rate to be reset   monthly on each Reprice Date.”   1.6 Facility Fee (Section 2.4).  The second sentence in Section 2.4 of the Original   Agreement shall be amended in its entirety to read as follows:   “Borrower shall pay Lender a fee equal to 0.30% (thirty basis points) per annum   (computed on the basis of a 360-day year, actual days elapsed) on the average daily   unused amount of the Loan, which fee shall be calculated on a quarterly basis by Lender   and shall be due and payable by Borrower on each March 31, June 30, September 30 and   December 31, commencing on December 31, 2015.  Such fees shall be fully earned when   paid and shall not be refunded for any reason.”   1.7 Capitalization (Section 7.1).  Section 7.1 of the Original Agreement shall be   amended in its entirety to read as follows:   “Borrower (on a consolidated basis) shall maintain, and cause each depository institution   Subsidiary to maintain, such capital as shall be necessary to permit (a) Borrower to   qualify as “well capitalized” and (b) the each depository institution Subsidiary to qualify   as “well capitalized” and to permit each depository institution Subsidiary to declare   dividends at the discretion of its board of directors, each in accordance with the rules,   regulations and applicable guidance of its respective primary federal regulator, as in   effect from time to time and consistent with the financial information and reports filed   with the appropriate Governmental Agency as contemplated in Section 6 hereof.”   1.8 Risk-Based and Leverage Capital Ratios (Section 7.2).  The first sentence of   Section 7.2 of the Original Agreement shall be amended in its entirety to read as follows:   “Borrower shall cause each depository institution Subsidiary to maintain a “Total Risk-   Based Capital Ratio” (Total Capital divided by Total Risk Based Assets) equal to or in     





 







   3      excess of twelve percent (12%) as measured as of the last day of each fiscal quarter of the   applicable depository institution Subsidiary.”   1.9 Nonperforming Assets to Tangible Capital (Section 7.3).  Section 7.3 of the   Original Agreement shall be amended in its entirety to read as follows:   “Borrower shall cause the Subsidiary Bank to maintain, as of the last day of each fiscal   quarter of the Subsidiary Bank, a ratio of Nonperforming Assets to Tangible Primary   Capital (Nonperforming Assets divided by Tangible Primary Capital) of not more than   25%.  For purposes of this Agreement, (i) “Nonperforming Assets” shall mean the sum   of all other real estate owned and repossessed assets, non-accrual loans and loans on   which any payment is 90 or more days past due but which continue to accrue interest held   by any depository institution Subsidiary, Borrower or any other Subsidiary (but excluding   all such loans and other assets that also are (A) expressly guaranteed by a U.S.   government entity such as Ginnie Mae or any other similar organization and (B) troubled   debt restructurings (so long as the TDR continues to accrue interest)), (ii) “Tangible   Primary Capital” shall mean, as reported by the Subsidiary Bank on Schedule RC of its   quarterly filing with the applicable primary federal regulator, the total amount of (A) the   total equity capital, plus (B) the Allowance for Loan Losses, plus, (C) without   duplication, mortgage servicing rights, minus (D) all intangibles and (iii) “Allowance for   Loan Losses” shall mean the amount of such balance sheet account of the Subsidiary   Bank which, in all cases, shall be derived from the quarterly reports filed with the   applicable primary federal regulator and shall be consistent with the financial information   and reports contemplated in Section 6 hereof.”   1.10 Reserves to Nonperforming Loans (Section 7.4).  Section 7.4 of the Original   Agreement shall be amended in its entirety to read as follows:   “Borrower shall cause the Subsidiary Bank to maintain, as of the last day of each   calendar quarter, a ratio of the Allowances for Loan Losses of the Subsidiary Bank to   Nonperforming Loans (Allowance for Loan Losses divided by Nonperforming Loans) of   not less than 40%.  For purposes of this Agreement, “Nonperforming Loans” shall mean   the sum of all non-accrual loans and loans on which any payment is 90 or more days past   due but which continue to accrue interest held by any depository institution Subsidiary,   Borrower or any other Subsidiary (but excluding all such loans that also are (i) expressly   guaranteed by a U.S. government entity such as Ginnie Mae or any other similar   organization and (ii) troubled debt restructurings (so long as the TDR continues to accrue   interest)) which, in all cases, shall be derived from the quarterly reports filed with the   applicable primary federal regulator and shall be consistent with the financial information   and reports contemplated in Section 6 hereof.”   1.11 Minimum Fixed Charge Coverage Ratio (Section 7.6).  Section 7.6 of the Original   Agreement shall be amended in its entirety to read as follows:   “Minimum Return on Average Assets. Borrower shall cause Subsidiary Bank to   maintain, as measured as of the last day of each fiscal quarter of Borrower on a rolling   four quarter basis for the trailing 12-month period ending on the last day of such fiscal     





 







   4      quarter (the “Measurement Period”), an annual return on Average Total Assets of at   least 0.6%.  The covenant set forth in this Section 7.6 shall be calculated quarterly   beginning with the Measurement Period ending December 31, 2015, shall be derived   from the quarterly report filed by the Subsidiary Bank with its primary federal regulator   and shall be consistent with the financial information and reports contemplated in Section   6 of this Agreement.  For purposes of this Agreement, “Average Total Assets” shall   have the definition provided in, and shall be determined in accordance with, the rules and   regulations of the primary federal regulator of the Subsidiary Bank and shall be the same   as the number as the Subsidiary Bank uses to calculate its leverage capital ratio in the   financial information and reports contemplated in Section 6 of this Agreement.”   1.12 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 A to this Fourth   Amendment.”   SECTION 2. REPRESENTATIONS AND WARRANTIES.  Borrower hereby   represents and warrants to Lender as of the date hereof as follows:   (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 Fourth   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 Fourth Amendment and the other Transaction Documents (as   amended by this Fourth 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 Thirty Million Dollars ($30,000,000) under   the Original Agreement.     





 







   5      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, (ii) each   reference to the Original Agreement in all Transaction Documents shall mean and be a reference   to the Original Agreement, as amended hereby, and (iii) this Fourth Amendment shall be deemed   a “Transaction Document” for the purposes of the Original Agreement.   3.3 Fourth Amendment and Original Agreement to be Read Together.  This Fourth   Amendment supplements and is hereby made a part of the Original Agreement, and the Original   Agreement and this Fourth 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 Fourth 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.   3.5 No Waiver. The execution, delivery and effectiveness of this Fourth   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 Fourth Amendment.  It is expressly understood and acknowledged that nothing   in this Fourth 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 Fourth 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   Fourth Amendment; (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 Fourth Amendment and any other documents to be executed, delivered, or   performed in connection with this Fourth Amendment; and (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 which have been or will be invoiced to Borrower, in connection     





 







   6      with the negotiation, preparation and consummation of this Fourth Amendment, including but   not limited to, reasonable attorneys’ fees and expenses.   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 Fourth Amendment, the Original Agreement,   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 Fourth 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 Fourth Amendment by signing any   such counterpart.  This Fourth 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]     





 







    





 







   A-1      EXHIBIT A   ANNEX A      TO      QUARTERLY COMPLIANCE CERTIFICATE         A. Minimum Capital.  (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 Bank -    (Talmer Bank - FDIC Capital Guidelines)   In Compliance   Not In Compliance        [minimum capital category required for Borrower and Talmer Bank: “well capitalized”]    [minimum required total risk-based capital ratio: Talmer Bank / 12%]          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 - 25%]         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: 40% of NPLs]        





 







   A-2      D. Minimum Liquidity.  (Section 7.5)       Liquid Assets       $        [minimum required Liquid Assets - $7,500,000]         E. Minimum Return on Average Assets. (Section 7.6)    (as of the fiscal quarter ending _________, 201__)      1. Aggregate Net Income of Talmer Bank for the last for fiscal quarters $    2. Average of the Average Total Assets as of the last day of each of     the last four fiscal quarters (as used to calculate the leverage     capital ratio of Talmer Bank     $    3. Return on Average Assets [E.1. divided by E.2.]    ______        [minimum required return on average assets (rolling four quarter basis > 0.60]