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 ”).
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.
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:
(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.
(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.
(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-per
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