Document:

ex10-10.htm

    Exhibit 10.10

    

    

    

    March 31,
2008

    

    

    James R.
Toburen, Trustee

    Sandra K.
Nichols, Trustee

    David L.
Hatfield, Trustee

    MainStreet
Financial Corporation Employee Stock Ownership Trust

    629 W.
State Street

    Hastings,
Michigan 49058

    

    
      	
               
      

            	
              Re:

            	
              Loan Facility from
      Independent Bank (successor to Independent Bank South Michigan) (the
      "Bank")

            

    

    

    Dear
Trustees:

    

    This
letter (the "Letter Agreement") pertains to the credit facility outstanding
from the Bank to MainStreet Financial Corporation Employee Stock Ownership Trust
(the "Borrower") pursuant to a certain Loan and Pledge Agreement,
Promissory Note, and other related documents and agreements dated December 22,
2006, by and between the parties, as the same may be amended, modified,
supplemented, restated, or replaced from time to time (collectively, the "Loan
Documents"), which facility involves a term loan in the original principal
amount of $284,280 (the "Loan").

    

    Conditional
Waiver of Failure to Meet Certain Covenants

    

    The Bank
and the Borrower acknowledge the Loan Documents require MainStreet Financial
Corporation (the "Guarantor") to achieve a consolidated return on assets
(ROA) of greater than 0.00%, measured quarterly in accordance with
generally accepted accounting principles and regulatory
requirements.  The Guarantor has advised the Bank that the Guarantor
failed to achieve a consolidated ROA greater than 0.00% during any quarter of
2007 and is not likely to achieve such required ROA for any quarter in
2008.

    

    In
addition, the Bank and the Borrower acknowledge the Loan Documents require the
Guarantor to maintain consolidated non-accrual loans and ORE of less than 20% of
Tier 1 capital and less than 1.5% of total loans, in each case measured
quarterly in accordance with generally accepted accounting principles and
regulatory requirements.  The Guarantor has advised the Bank that the
Guarantor failed to meet these covenants for one or more quarters in 2007 and
may not achieve these covenants for one or more quarters in 2008.  The
defaults described in this paragraph and in the preceding paragraph are
collectively referred to as the "Defaults."

    

    The
foregoing enumeration of Defaults is without prejudice to the rights of the Bank
to identify further defaults and events of default, whether now existing or
hereafter arising, as and when said defaults become known to the
Bank.

    
      
         

      

      
         

         

      

      
         

        
          

          MainStreet
Financial Corporation Employee Stock Ownership Trust

          March 31,
2008

          Page
2

          

          

        

      

    

    As a
result of the Defaults, the Loan is due and payable in full and the Bank is
entitled to exercise the remedies available to it under the Loan Documents and
applicable law.

    

    The Bank
hereby agrees to refrain and forbear from taking any action to enforce its
remedies with respect to the Defaults upon the following
conditions:

    

    (a)           The
Borrower must remain, in all respects and at all times, in full compliance with
this Letter Agreement;

    

    (b)           Except
for the Defaults, the Borrower and the Guarantor must remain, in all respects
and at all times, in full compliance with each of the Loan Documents, including
(without limitation) the obligation to make all periodic payments on the
Loan as and when due; and

    

    (c)           The
Guarantor must remain, in all respects and at all times, in full compliance
with each of the Business Loan Agreement, Promissory Note, Pledge Agreement and
Irrevocable Proxy, and other related documents and agreements dated June 30,
2005, by and between the Bank and the Guarantor, as the same may be amended,
modified, supplemented, restated, or replaced from time to time (collectively,
the "Guarantor Loan Documents"), except to the extent specifically waived in
that certain letter agreement between the Guarantor and the Bank dated on or
about the same date as this Letter Agreement.

    

    If any of the above conditions are not
met at any time and for any reason, this Letter Agreement and the Bank's
forbearance hereunder shall automatically terminate, without notice to Borrower
or Guarantor and without prejudice to any rights of the Bank.  Without
limiting the generality of the foregoing, in such event, the Bank shall be
entitled to claim and collect damages from the Borrower and Guarantor with
respect to all periods in which any default or event of default existed pursuant
to any of the Loan Documents, including at all times from and after the date of
this Letter Agreement and including with respect to the Defaults.

    

    Notwithstanding the foregoing or
anything to the contrary in this Letter Agreement, this Letter Agreement and the
Bank's forbearance hereunder shall expire automatically and without notice upon
the earlier of:
(i) December 31, 2008; (ii) the occurrence of any default or
event of default under any of the Loan Documents, other than the Defaults listed
above; or (iii) the occurrence of any default or event of default under any
of the Guarantor Loan Documents, except to the extent specifically waived in
that certain letter agreement between the Guarantor and the Bank dated on or
about the same date as this Letter Agreement.  Notwithstanding
anything herein to the contrary, nothing in this Agreement shall be construed so
as to imply any commitment by the Bank to forbear in any respect regarding any
of the Loan Documents at any time on or after December 31,
2008.

    

    The Bank's agreement to forbear
hereunder shall be effective only upon the acceptance and execution of this
Letter Agreement on the part of the Borrower and Guarantor, which
must

    
      
         

      

      
         

         

      

      
         

        
          

          MainStreet
Financial Corporation Employee Stock Ownership Trust

          March 31,
2008

          Page
3

          

          

        

      

    

    occur by
5:00 p.m. (EDT) on March 31st, 2008, or this Letter Agreement will be
null and void and of no force or effect.  The Borrower's and the
Guarantor's execution of this Letter Agreement shall constitute their respective
acknowledgement of the Defaults and the Bank's rights and remedies resulting
therefrom, and shall further constitute the Borrower's and the Guarantor's
acceptance of and agreement to all of the terms and provisions of this Letter
Agreement.

    

    In consideration of the Bank's
agreements set forth in this Letter Agreement, the Borrower and the Guarantor
each hereby:  (a) releases, quits and forever discharges the Bank
and its affiliates, officers, directors, agents (including, without limitation,
its legal representatives), successors and assigns (collectively, the "Bank
Affiliates") of and from any and all actions, causes of action, claims,
demands, damages and liabilities of whatever kind and nature, known and unknown,
which the Borrower or the Guarantor now has, claims or asserts, or might or
could hereafter have, claim or assert, against the Bank or any of the Bank
Affiliates, arising or alleged to arise from any act, omission or neglect of the
Bank or any Bank Affiliate up to and including the date of this Letter
Agreement, with respect to the Loan, the Loan Documents, or any transaction
related thereto; and (b) waives any and all defenses, setoffs, or
counterclaims, of whatever kind and nature, known and unknown, under or with
respect to the Loan, the Loan Documents, or any transaction related thereto and
based upon any act, omission, or neglect of the Bank or any Bank affiliate up to
and including the date of this Letter Agreement.  The Borrower and the
Guarantor each acknowledges that this paragraph, together with all other
provisions of this Letter Agreement, is freely and voluntarily made, without any
duress or coercion and after careful review, with the assistance of legal
counsel, of all of the terms and provisions hereof, and further acknowledges and
agrees that the release and waiver stated in this paragraph shall have been
fully earned upon the Bank's execution of this Letter Agreement, shall not be
subject to rescission or nullification at any time hereafter due to the
occurrence or nonoccurrence of any subsequent event, and (notwithstanding
anything in this Letter Agreement to the contrary) shall survive the
termination of this Letter Agreement and the termination of the Bank's
forbearance hereunder.

    

    INDEPENDENT
BANK

    

    

    By:      
 /s/ C.
Bartholic                                                                    

    Name:   Cheryl
Bartholic                                                                        

    Its:       
Senior Vice
President                                                            

    

    

    
      
         

      

      
         

         

      

      
         

        
          

          MainStreet
Financial Corporation Employee Stock Ownership Trust

          March 31,
2008

          Page
4

          

          

        

      

    

    AGREED AND
ACCEPTED:

    

    MAINSTREET
FINANCIAL CORPORATION EMPLOYEE STOCK OWNERSHIP TRUST

    

    By:      
/s/ James R.
Toburen                                                                       

    Name:  James
R. Toburen

    Its:      
Trustee

    

    By:      
/s/ Sandra K.
Nichols                                                                        

    Name:  Sandra
K. Nichols

    Its:      
Trustee

    

    By:      
/s/ David L.
Hatfield                                                                         

    Name:  David
L. Hatfield

    Its:      
President

    

    

    MAINSTREET
FINANCIAL CORPORATION

    

    

    By:    /s/
David L.
Hatfield                                                                       

    Name:   David
L.
Hatfield                                                                        

    Its:    President                                                            

    

    

    1832163/1ex10-7.htm

    Exhibit
10.7

    

    

    Director
Fee Arrangements for 2008

    

     

    Each
director of Sound Financial, Inc. (the “Company”) also is a director of Sound
Community Bank (the “Bank”).  For 2008, each non-employee director
will receive an annual fee of $12,000, plus a meeting fee of $925 for each Board
Meeting attended for serving on the Bank’s Board of
Directors.  Directors are not compensated for their service on the
Company’s Board of Directors.

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