EXHIBIT 10.1

 

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (as amended, restated or supplemented or otherwise modified
from time to time, hereinafter called the “Agreement”) made and entered into
this 1st day of October, 2014, (“Effective Date”) by and between FIRST CITIZENS
BANCSHARES, INC., a Tennessee corporation, (hereinafter called “Borrower”) and
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national banking association having
its principal office located in Memphis, Tennessee (“Lender”).

 

W I T N E S S E T H :

 

WHEREAS, the Borrower has requested that Lender provide it with two (2) term
loans, each in the original principal amount of Six Million Dollars
($6,000,000.00), one bearing interest at a fixed rate and one bearing interest
at a floating rate, as more particularly described herein (collectively, the
“Loans”), and Lender has agreed to make the Loans on the terms and conditions
hereinafter set forth;

 

WHEREAS, Borrower and Lender wish to enter into this Loan Agreement to set forth
certain terms of the Loan and to secure the Loan by a pledge of one hundred two
thousand (102,000) shares of common stock of First Citizens National Bank, a
national bank (the “Bank”) which constitutes fifty-one percent (51%) of the
authorized and outstanding shares of the Bank, which is a wholly-owned
subsidiary of Borrower.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements,
covenants and conditions herein contained, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto intending to be legally bound hereby
agree as follows:

 

AGREEMENTS

 

1.         AMOUNT AND TERMS OF BORROWINGS.

1.1        DEFINED TERMS.  ANY CAPITALIZED TERM USED BUT NOT DEFINED IN THE BODY
OF THIS AGREEMENT SHALL HAVE THE MEANING SET FORTH ON APPENDIX A ATTACHED HERETO
AND INCORPORATED HEREIN BY REFERENCE.

1.2        LOANS. 

(A)   LENDER HEREBY AGREES TO LEND, AND BORROWER HEREBY AGREES TO BORROW, UPON
THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT, THE PRINCIPAL SUM OF SIX
MILLION DOLLARS ($6,000,000.00), AS THE "FIXED RATE LOAN", TO BE EVIDENCED BY A
PROMISSORY NOTE (THE “FIXED RATE NOTE”), AS SET FORTH IN EXHIBIT A-1 AND
INCLUDED HEREIN BY REFERENCE.  THE FIXED RATE LOAN SHALL BEAR INTEREST AND BE
PAYABLE IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF THE FIXED RATE NOTE.  THE
FIXED RATE LOAN SHALL EXPIRE AND MATURE, AND THE OUTSTANDING PRINCIPAL BALANCE
OF THE LOAN AND ALL ACCRUED INTEREST THEREON SHALL BE DUE AND PAYABLE, ON THE
MATURITY DATE.

(B)   LENDER HEREBY AGREES TO LEND, AND BORROWER HEREBY AGREES TO BORROW, UPON
THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT, THE PRINCIPAL SUM OF SIX
MILLION DOLLARS ($6,000,000.00), AS THE "FLOATING RATE LOAN", TO BE EVIDENCED BY
A PROMISSORY NOTE (THE “FLOATING RATE NOTE”), AS SET FORTH IN EXHIBIT A-2 AND
INCLUDED HEREIN BY REFERENCE.  THE FLOATING RATE LOAN SHALL BEAR INTEREST AND BE
PAYABLE IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF THE FLOATING RATE NOTE. 
THE FLOATING RATE LOAN SHALL EXPIRE AND MATURE, AND THE OUTSTANDING PRINCIPAL
BALANCE OF THE FLOATING RATE LOAN AND ALL ACCRUED INTEREST THEREON SHALL BE DUE
AND PAYABLE, ON THE MATURITY DATE.

 

 

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1.3       COLLATERAL.  ALL INDEBTEDNESS AND OBLIGATIONS OF BORROWER TO LENDER
UNDER THIS AGREEMENT SHALL BE SECURED BY LENDER’S LIEN AND SECURITY INTEREST IN
THE COLLATERAL.  THE PLEDGING OF SUCH COLLATERAL SHALL BE EVIDENCED BY THE
PLEDGE AGREEMENT.  BORROWER AGREES THAT ALL OF THE RIGHTS OF LENDER WITH REGARD
TO THE PLEDGE AGREEMENT SET FORTH IN THIS AGREEMENT SHALL APPLY TO ANY
MODIFICATION OF, OR SUPPLEMENT TO THIS AGREEMENT EXCEPT TO THE EXTENT AMENDED
THEREBY.

1.4       FUNDING.  THE ADVANCE OF FIXED RATE LOAN AND FLOATING RATE LOAN
PROCEEDS HEREUNDER SHALL BE MADE, UPON BORROWER’S REQUEST, BY DEPOSITING THE
SAME INTO A DEMAND DEPOSIT ACCOUNT WITH LENDER, BY WIRE TRANSFER TO BORROWER’S
ACCOUNT, OR IN ACCORDANCE WITH SUCH OTHER INSTRUCTIONS AS MAY BE AGREED BETWEEN
BORROWER AND LENDER.  THE LOANS TO BORROWER SHALL BE MADE IN ONE SINGLE ADVANCE
OF ALL PRINCIPAL THEREUNDER, WHICH SHALL BE SUBJECT TO THE TERMS AND CONDITIONS
OF THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO SECTIONS 2 AND 3 HEREOF. 

1.5        INCREASED COSTS GENERALLY.

(A)        IF ANY CHANGE IN LAW SHALL:

(I)        IMPOSE, MODIFY OR DEEM APPLICABLE ANY RESERVE, SPECIAL DEPOSIT,
COMPULSORY LOAN, INSURANCE CHARGE OR SIMILAR REQUIREMENT AGAINST ASSETS OF,
DEPOSITS WITH OR FOR THE ACCOUNT OF, OR ADVANCES, LOANS OR OTHER CREDIT EXTENDED
OR PARTICIPATED IN BY, THE LENDER;

(II)       SUBJECT THE LENDER TO ANY TAX OF ANY KIND WHATSOEVER WITH RESPECT TO
THIS AGREEMENT, OR ANY LOAN MADE BY IT, OR CHANGE THE BASIS OF TAXATION OF
PAYMENTS TO SUCH LENDER IN RESPECT THEREOF; OR

(III)      IMPOSE ON THE LENDER ANY OTHER CONDITION, COST OR EXPENSE AFFECTING
THIS AGREEMENT OR THE LOAN MADE BY THE LENDER;

and the result of any of the foregoing shall be to increase the out-of-pocket
cost to the Lender of making, converting to, continuing or maintaining the
Loans, or either of them (or of maintaining its obligations to make the Loans,
or either of them), or to increase the out-of-pocket cost to the Lender of
issuing or maintaining any letter of credit (or of maintaining its obligation to
participate in or to issue any letter of credit), or to reduce the amount of any
sum actually received or receivable by the Lender hereunder (whether of
principal, interest or any other amount) then, upon written request of the
Lender, the Borrower shall promptly pay to the Lender, as the case may be, such
additional amount or amounts as will compensate the Lender, as the case may be,
for such additional out-of-pocket costs incurred or reductions actually
suffered.

(B)       CAPITAL REQUIREMENTS.  IF LENDER REASONABLY DETERMINES THAT ANY CHANGE
IN LAW AFFECTING THE LENDER OR LENDER’S HOLDING COMPANY, IF ANY, REGARDING
CAPITAL REQUIREMENTS, HAS OR WOULD HAVE THE EFFECT OF REDUCING THE RATE OF
RETURN ON THE LENDER’S CAPITAL OR ON THE CAPITAL OF THE LENDER’S HOLDING
COMPANY, IF ANY, AS A CONSEQUENCE OF THIS AGREEMENT, THE COMMITMENT OF THE
LENDER HEREUNDER OR THE LOANS (OR EITHER OF THEM) MADE BY THE LENDER HEREUNDER,
TO A BELOW THAT WHICH THE LENDER OR THE LENDER’S HOLDING COMPANY COULD HAVE
ACHIEVED BUT FOR SUCH CHANGE IN LAW (TAKING INTO CONSIDERATION THE LENDER’S
POLICIES AND THE POLICIES OF THE LENDER’S HOLDING COMPANY WITH RESPECT TO
CAPITAL ADEQUACY), THEN FROM TIME TO TIME UPON WRITTEN REQUEST OF THE LENDER,
THE BORROWER SHALL PROMPTLY PAY TO THE LENDER SUCH ADDITIONAL AMOUNT OR AMOUNTS
AS WILL COMPENSATE THE LENDER OR THE LENDER’S HOLDING COMPANY FOR ANY SUCH
REDUCTION ACTUALLY SUFFERED.

 

 

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(C)       CERTIFICATES FOR REIMBURSEMENT.  A CERTIFICATE OF THE LENDER SETTING
FORTH THE AMOUNT OR AMOUNTS NECESSARY TO COMPENSATE THE LENDER OR ITS HOLDING
COMPANY, AS THE CASE MAY BE, AS SPECIFIED IN THIS SECTION AND DELIVERED TO
BORROWER, SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR.  THE BORROWER SHALL PAY THE
AMOUNT SHOWN AS DUE ON ANY SUCH CERTIFICATE WITHIN TEN (10) DAYS AFTER RECEIPT
THEREOF.

(D)       DELAY IN REQUESTS.  FAILURE OR DELAY ON THE PART OF LENDER TO DEMAND
COMPENSATION PURSUANT TO THIS SECTION SHALL NOT CONSTITUTE A WAIVER OF LENDER’S
RIGHT TO DEMAND SUCH COMPENSATION; PROVIDED THAT THE BORROWER SHALL NOT BE
REQUIRED TO COMPENSATE A LENDER PURSUANT TO THIS SECTION FOR ANY INCREASED COSTS
INCURRED OR REDUCTIONS SUFFERED MORE THAN SIX (6) MONTHS PRIOR TO THE DATE THAT
THE LENDER, AS THE CASE MAY BE, NOTIFIES THE BORROWER OF THE CHANGE IN LAW
GIVING RISE TO SUCH INCREASED COSTS OR REDUCTIONS, AND OF THE LENDER’S INTENTION
TO CLAIM COMPENSATION THEREFOR (EXCEPT THAT IF THE CHANGE IN LAW GIVING RISE TO
SUCH INCREASED COSTS OR REDUCTIONS IS RETROACTIVE, THEN THE 6-MONTH PERIOD
REFERRED TO ABOVE SHALL BE EXTENDED TO INCLUDE THE PERIOD OF RETROACTIVE EFFECT
THEREOF).

2.         USE OF PROCEEDS.

2.1       USE OF LOAN PROCEEDS.  THE PROCEEDS OF THE LOANS SHALL BE USED BY THE
BORROWER FOR THE SOLE PURPOSE OF FUNDING A PORTION OF THE BORROWER'S ACQUISITION
OF SOUTHERN HERITAGE BANCSHARES, INC. (THE "TARGET") AND SOUTHERN HERITAGE BANK
(THE "TARGET BANK" AND SUCH ACQUISITION THE "ACQUISITION").

3.         CONDITIONS TO LOAN CLOSING. 

            The obligation of Lender to extend any loan or credit to Borrower
under this Agreement is subject to the strict satisfaction of each of the
following conditions:

 

3.1      NO DEFAULTS; CERTIFICATE.  BORROWER AND THE BANK SHALL BE IN FULL
COMPLIANCE WITH ALL THE TERMS AND CONDITIONS OF THIS AGREEMENT, AND NO EVENT OF
DEFAULT, NOR ANY EVENT WHICH UPON NOTICE OR LAPSE OF TIME OR BOTH WOULD
CONSTITUTE SUCH AN EVENT OF DEFAULT, SHALL HAVE OCCURRED AND BE CONTINUING.  AT
LENDER’S REQUEST, LENDER SHALL HAVE RECEIVED FROM BORROWER AND THE BANK A
CERTIFICATE, IN FORM AND CONTENT REASONABLY ACCEPTABLE TO LENDER DATED AS OF AND
DELIVERED ON THE DATE OF THE LOANS, CERTIFYING THAT (1) THE REPRESENTATIONS AND
WARRANTIES SET FORTH HEREIN, AND THE EXHIBITS ATTACHED HERETO, ARE ACCURATE,
TRUE AND CORRECT ON AND AS OF SUCH DATE, (2) NEITHER THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT WILL CAUSE OR RESULT IN ANY
VIOLATION OF (OR CREATION OF ANY RIGHT IN THIRD PARTIES UNDER THE PROVISIONS OF)
ANY LAWS RESTRICTING OR OTHERWISE REGULATING THE USE, APPLICATION OR
DISTRIBUTION OF CORPORATE FUNDS AND ASSETS, AND (3) THAT NO EVENT OF DEFAULT,
NOR ANY EVENT WHICH UPON NOTICE OR LAPSE OF TIME OR BOTH WOULD CONSTITUTE SUCH
AN EVENT OF DEFAULT, EXISTS.

 

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3.2      ACCURACY OF REPRESENTATIONS AND WARRANTIES.  AT THE TIME OF THE INITIAL
LOAN DISBURSEMENTS, THE REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN AND IN
ANY OTHER LOAN DOCUMENT SHALL BE TRUE AND CORRECT.

3.3     CORPORATE ACTION AND AUTHORITY.  THE BORROWER SHALL HAVE DELIVERED TO
LENDER: (I) A CERTIFICATE FROM THE SECRETARY OF STATE OF TENNESSEE THAT BORROWER
IS IN GOOD STANDING AND CERTIFICATES FROM THE SECRETARIES OF STATE OF EACH OTHER
STATE IN WHICH THE BORROWER IS REQUIRED TO BE QUALIFIED TO DO BUSINESS,
CERTIFYING THE BORROWER’S GOOD STANDING AS A CORPORATION IN EACH SUCH STATE;
(II) A COPY OF THE RESOLUTIONS PASSED BY THE BORROWER’S AND THE BANK’S BOARDS OF
DIRECTORS AUTHORIZING THE EXECUTION AND DELIVERY OF THE PERFORMANCE OF
BORROWER’S OBLIGATIONS UNDER THE LOAN DOCUMENTS CERTIFIED BY THE SECRETARY OR
ASSISTANT SECRETARY TO BE TRUE AND CORRECT; AND (III) A CERTIFICATE OR
CERTIFICATES, DATED AS OF AND DELIVERED ON THE DATE OF THE EXECUTION OF THIS
AGREEMENT AND SIGNED ON BEHALF OF THE BORROWER AND THE BANK BY THE SECRETARY OR
ASSISTANT SECRETARY, CERTIFYING THE NAMES OF THE OFFICERS AUTHORIZED TO EXECUTE
AND DELIVER THE LOAN DOCUMENTS ON BEHALF OF THE BORROWER AND THE BANK, TOGETHER
WITH THE ORIGINAL, NOT PHOTOCOPIED, SIGNATURES OF EACH OFFICER.  BORROWER SHALL
ALSO DELIVER THE SAME ITEMS SPECIFIED IN (I) ABOVE PERTAINING TO THE BANK FROM
THE APPROPRIATE REGULATORY AGENCY.

3.4      DELIVERY OF NOTES, LOAN AGREEMENT, PLEDGE AGREEMENT, AND STOCK
CERTIFICATES.  AT THE TIME OF THE EXTENSION OF THE LOANS, BORROWER SHALL HAVE
DELIVERED THE LOAN DOCUMENTS.  THE SECURITY INTEREST IN THE COLLATERAL SHALL BE
PRIOR TO ALL OTHER LIENS.

3.5      PROCEEDINGS.  THE LOAN DOCUMENTS, UPON THEIR EXECUTION, AND ALL
PROCEEDINGS IN CONNECTION WITH THE AUTHORIZATION, EXECUTION AND DELIVERY OF AND
THE PERFORMANCE OF THE OBLIGATIONS UNDER THE LOAN DOCUMENTS SHALL BE
SATISFACTORY IN SUBSTANCE AND FORM TO LENDER.

3.6      PAYMENT OF FEES AND EXPENSES.  BORROWER SHALL HAVE PAID, AT OR PRIOR TO
THE DATE OF THE EXTENSION OF THE LOANS, ALL COSTS AND EXPENSES IN ACCORDANCE
WITH SECTION 8.9.

3.7      OTHER WRITINGS.  THE LENDER SHALL RECEIVE SUCH OTHER AGREEMENTS,
INSTRUMENTS, DOCUMENTS, CERTIFICATES, AFFIDAVITS AND OTHER WRITINGS AS LENDER
MAY REASONABLY REQUIRE.

3.8      OPINION OF COUNSEL.  BORROWER SHALL HAVE DELIVERED TO LENDER AT
BORROWER’S EXPENSE, FAVORABLE WRITTEN OPINIONS OF COUNSEL FOR BORROWER DATED AS
OF AND DELIVERED ON THE DATE OF THE EXTENSION OF THE LOAN, IN FORM AND CONTENT
ACCEPTABLE TO LENDER, AS SET FORTH IN EXHIBIT B.

3.9     FINANCIAL STATEMENTS.  PRIOR TO ANY DISBURSEMENT UNDER THE LOANS,
BORROWER SHALL HAVE DELIVERED TO LENDER, TRUE AND EXACT COPIES OF THE CURRENT
FINANCIAL STATEMENTS OF THE BORROWER, THE BANK AND ALL OTHER SUBSIDIARIES, FOR
2013 AND AUDIT REPORT AND OPINION OF  THE BORROWER’S INDEPENDENT ACCOUNTING
FIRM, WITH RESPECT THERETO (IT BEING UNDERSTOOD THAT LENDER IS RELYING UPON SUCH
AUDIT REPORT AND OPINION IN ENTERING INTO THIS LOAN AGREEMENT), THE UNAUDITED
FINANCIAL STATEMENTS OF BORROWER AS OF JUNE 30, 2014 AND THE 2013 F.R. Y-6
ANNUAL REPORT AND F.R. Y-9 PARENT COMPANY ONLY (AND CONSOLIDATED, IF APPLICABLE)
FINANCIAL STATEMENT(S) FILED BY BORROWER WITH THE FEDERAL RESERVE.   

 

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3.10      NO MATERIAL ADVERSE CHANGE.  AT THE TIME THE LOANS ARE FUNDED
HEREUNDER, THERE SHALL HAVE OCCURRED, IN THE REASONABLE OPINION OF LENDER, NO
MATERIAL ADVERSE CHANGES IN THE CONDITION, FINANCIAL OR OTHERWISE, OF BORROWER
OR BANK FROM THAT REFLECTED IN THE FINANCIAL STATEMENTS FURNISHED PURSUANT TO
SECTION 3.9 HEREOF OR FURNISHED TO LENDER FROM TIME TO TIME HEREAFTER AS
REQUIRED HEREIN.

4.          REPRESENTATIONS AND WARRANTIES.

          In order to induce the Lender to enter into this Agreement and to make
the Loans, the Borrower represents and warrants to the Lender (which
representations and warranties shall survive the delivery of the Loan Documents
and the funding of the Loans) that, as of the date hereof and as of the time of
the initial loan disbursements: 

 

4.1        CORPORATE STATUS.  BORROWER IS A CORPORATION DULY ORGANIZED AND
EXISTING UNDER THE LAWS OF THE STATE OF TENNESSEE, IS DULY QUALIFIED TO DO
BUSINESS AND IS IN GOOD STANDING UNDER THE LAWS OF OTHER STATES WHERE THE
BORROWER DOES BUSINESS AND SUCH QUALIFICATION IS REQUIRED, IF ANY, AND HAS THE
CORPORATE POWER AND AUTHORITY TO OWN ITS PROPERTIES AND ASSETS AND CONDUCT ITS
AFFAIRS AND BUSINESS.

4.2        CORPORATE POWER AND AUTHORITY.  BORROWER HAS FULL POWER AND AUTHORITY
TO ENTER INTO THIS AGREEMENT, TO BORROW FUNDS AS CONTEMPLATED HEREIN, TO EXECUTE
AND DELIVER THIS AGREEMENT, THE NOTES AND OTHER LOAN DOCUMENTS EXECUTED AND
DELIVERED BY IT, AND TO INCUR THE OBLIGATIONS PROVIDED FOR HEREIN, ALL OF WHICH
HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION; AND THE OFFICER
EXECUTING EACH OF THE LOAN DOCUMENTS IS DULY AUTHORIZED TO DO SO BY ALL
NECESSARY CORPORATE ACTION.  ANY CONSENTS OR APPROVAL OF SHAREHOLDERS OR
DIRECTORS OF BORROWER REQUIRED AS A CONDITION TO THE EXECUTION, DELIVERY, OR
VALIDITY OF ANY LOAN DOCUMENT HAVE BEEN OBTAINED; AND EACH OF SAID LOAN
DOCUMENTS IS THE VALID, LEGAL, AND BINDING OBLIGATION OF BORROWER ENFORCEABLE IN
ACCORDANCE WITH ITS TERMS.

4.3        NO VIOLATION OF AGREEMENTS OR LAW.  EXCEPT AS WOULD NOT REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, NEITHER BORROWER, BANK, NOR ANY
OTHER SUBSIDIARY OF BORROWER IS IN DEFAULT UNDER ANY INDENTURE, AGREEMENT OR
INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT MAY BE BOUND, NOR IN VIOLATION
OF ANY STATE OR FEDERAL STATUTE, RULE, RULING, OR REGULATION GOVERNING ITS
OPERATIONS AND THE CONDUCT OF ITS BUSINESS, OPERATIONS OR FINANCIAL CONDITION OF
BORROWER, BANK, OR ANY OTHER SUBSIDIARY.  NEITHER THE EXECUTION AND DELIVERY OF
THE LOAN DOCUMENTS NOR THE CONSUMMATION OF THE TRANSACTIONS HEREIN CONTEMPLATED,
OR COMPLIANCE WITH THE PROVISIONS HEREOF WILL RESULT IN THE BREACH OF, OR
CONSTITUTE A DEFAULT UNDER, ANY INDENTURE, MATERIAL AGREEMENT OR OTHER MATERIAL
INSTRUMENT TO WHICH BORROWER IS A PARTY OR BY WHICH IT MAY BE BOUND, OR RESULT
IN THE CREATION OR IMPOSITION OF ANY LIEN, CHARGE OR ENCUMBRANCE UPON ANY OF THE
PROPERTY OF BORROWER, OR VIOLATE ANY PROVISION OF THE CHARTER OR BYLAWS OF
BORROWER, THE BANK OR ANY OTHER SUBSIDIARY.

 

 

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4.4        COMPLIANCE WITH LAW; GOVERNMENT APPROVALS.

(A)           BORROWER HAS COMPLIED AND IS COMPLYING WITH ALL REQUIREMENTS, MADE
ALL APPLICATIONS, AND SUBMITTED ALL REPORTS REQUIRED BY THE BANK HOLDING COMPANY
ACT OF 1956, AS AMENDED, AND ANY REGULATIONS OR RULINGS ISSUED IN CONNECTION
THEREWITH, AND THE TRANSACTION CONTEMPLATED HEREBY WILL NOT VIOLATE ANY SUCH
STATUTES, RULES, RULINGS, OR REGULATIONS NOR WILL THE CONSUMMATION OF SAID
ACTIONS AND TRANSACTIONS CAUSE BORROWER TO BE IN VIOLATION THEREOF.  BORROWER
HAS, IF REQUIRED, MADE ALL FILINGS AND RECEIVED ALL GOVERNMENTAL OR REGULATORY
APPROVALS NECESSARY FOR THE CONSUMMATION OF THE TRANSACTIONS DESCRIBED HEREIN,
INCLUDING WITHOUT LIMITATION THE APPROVAL OF THE BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM.

(B)          BORROWER HAS COMPLIED AND IS COMPLYING WITH ALL OTHER APPLICABLE
STATE OR FEDERAL STATUTES, RULES, RULINGS AND REGULATIONS EXCEPT AS WOULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.  THE BORROWING OF
MONEY AND SAID ACTIONS AND TRANSACTIONS REQUIRED HEREUNDER WILL NOT VIOLATE ANY
OF SUCH STATUTES, RULES, RULINGS, OR REGULATIONS. 

4.5        LITIGATION.  THERE ARE NO ACTIONS, SUITS OR PROCEEDINGS PENDING OR,
TO THE KNOWLEDGE OF THE BORROWER THREATENED AGAINST THE BORROWER, THE BANK OR
ANY OTHER SUBSIDIARY BEFORE ANY COURT, ARBITRATOR OR GOVERNMENTAL OR
ADMINISTRATIVE BODY OR AGENCY WHICH, IF ADVERSELY DETERMINED, WOULD RESULT IN
ANY MATERIAL AND ADVERSE CHANGE IN THE FINANCIAL CONDITION, BUSINESS OPERATION,
OR PROPERTIES OR ASSETS OF THE BORROWER, THE BANK, OR ANY OTHER SUBSIDIARY
EXCEPT AS SET FORTH IN EXHIBIT C. 

4.6        SUPERVISORY ACTION.  NEITHER BORROWER, THE BANK NOR ANY OTHER
SUBSIDIARY IS SUBJECT TO ANY SUPERVISORY ACTION BY ANY FEDERAL OR STATE BANK
REGULATORY AUTHORITY, EXCEPT AS SET FORTH ON SCHEDULE 4.6 ATTACHED HERETO AND
INCORPORATED BY REFERENCE HEREIN. 

4.7       FINANCIAL CONDITION.  THE BALANCE SHEETS AND THE RELATED STATEMENTS OF
INCOME OF BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES AND THE FINANCIAL
REPORTS OF BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES WHICH WILL BE
DELIVERED TO LENDER PURSUANT TO SECTION 3.9 HEREOF ARE, OR WILL BE AS OF THEIR
RESPECTIVE DATES AND FOR THE RESPECTIVE PERIODS STATED THEREIN, COMPLETE AND
CORRECTLY AND FAIRLY PRESENT THE FINANCIAL CONDITION OF BORROWER, THE BANK, AND
THE OTHER SUBSIDIARIES, AND THE RESULTS OF THEIR OPERATIONS, RESPECTIVELY, IN
ALL MATERIAL RESPECTS AS OF THE DATES AND FOR THE PERIODS STATED THEREIN, AND
HAVE BEEN, OR WILL BE AS OF THEIR RESPECTIVE DATES AND FOR THE RESPECTIVE
PERIODS STATED THEREIN, PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES CONSISTENTLY APPLIED THROUGHOUT THE PERIOD INVOLVED AND
CONSISTENT WITH THAT OF THE PRECEDING FISCAL YEAR OR PERIOD, AS THE CASE MAY
BE.  THERE ARE NO MATERIAL LIABILITIES OF THE BORROWER, THE BANK, OR ANY OTHER
SUBSIDIARY NOT INCLUDED IN SUCH FINANCIAL STATEMENTS.  THERE HAS BEEN NO
MATERIAL ADVERSE CHANGE IN THE BUSINESS, PROPERTIES OR CONDITION OF BORROWER,
THE BANK, OR THE OTHER SUBSIDIARIES SINCE THE DATE OF THE FINANCIAL STATEMENT
FURNISHED TO LENDER PURSUANT TO SECTION 3.9 HEREOF.

4.8        TAX LIABILITY.  BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES HAVE
FILED ALL FEDERAL AND STATE INCOME TAX RETURNS AND OTHER MATERIAL TAX RETURNS,
WHICH ARE REQUIRED TO BE FILED BY THEM, AND HAVE PAID ALL TAXES WHICH HAVE
BECOME DUE PURSUANT TO SUCH RETURNS OR PURSUANT TO ANY ASSESSMENTS RECEIVED BY
BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES EXCEPT (A) AS WOULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR IMPOSE A LIEN ON ANY
COLLATERAL OR ANY OTHER MATERIAL ASSETS OF THE BORROWER, THE BANK, AND/OR THE
OTHER SUBSIDIARIES OR (B) AS ARE BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS AND AS TO WHICH ADEQUATE RESERVES HAVE BEEN PROVIDED IN ACCORDANCE
WITH GAAP.

 

 

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4.9        SUBSIDIARIES.  BORROWER HAS NO SUBSIDIARIES AND OWNS STOCK IN NO
CORPORATION OR BANKING ASSOCIATION (OTHER THAN STOCK OF ENTITIES THE ACCOUNTS OF
WHICH WOULD NOT BE CONSOLIDATED WITH THOSE OF THE PARENT IN THE PARENT'S
CONSOLIDATED FINANCIAL STATEMENTS) OTHER THAN THE SUBSIDIARIES LISTED IN EXHIBIT
D. 

4.10      BANK STOCK.  THE COMMON STOCK OF THE BANK OWNED BY BORROWER OR ANY
OTHER SUBSIDIARY OF BORROWER IS DULY AUTHORIZED AND VALIDLY ISSUED BY THE BANK
OR OTHER SUBSIDIARY.  THE TOTAL NUMBER OF SHARES OF COMMON STOCK OF THE BANK AND
EACH OTHER SUBSIDIARY ISSUED AND OUTSTANDING AS OF THE DATE HEREOF  ARE ALL
OWNED BY BORROWER, THE BANK OR OTHER SUBSIDIARIES OF BORROWER.  EXCEPT AS SET
FORTH IN SECTION 6.2 HEREOF OR ON EXHIBIT E, THE STOCK OF THE BANK AND EACH
OTHER SUBSIDIARY IS FREE AND CLEAR OF ALL LIENS, ENCUMBRANCES, SECURITY
INTERESTS; SAID COMMON STOCK IS FULLY PAID AND NON-ASSESSABLE. THERE ARE NO
OUTSTANDING WARRANTS OR OPTIONS TO ACQUIRE ANY COMMON STOCK OF THE BANK AND ANY
OTHER SUBSIDIARY.  THERE ARE NO OUTSTANDING SECURITIES CONVERTIBLE OR
EXCHANGEABLE INTO SHARES OF COMMON STOCK OF ANY SUBSIDIARY; AND THERE ARE NO
RESTRICTIONS ON THE TRANSFER OR PLEDGE OF ANY SHARES OF COMMON STOCK OF ANY
SUBSIDIARY, EXCEPT AS SET FORTH IN SECTION 6.2 HEREOF OR ON EXHIBIT E.  BORROWER
HAS THE RIGHT TO PLEDGE AND TRANSFER THE COLLATERAL AND ASSIGN THE INCOME
THEREFROM WITHOUT OBTAINING THE CONSENT OF ANY OTHER PERSON OR AUTHORITY EXCEPT
AS SET FORTH IN SECTION 6.2 HEREOF OR ON EXHIBIT E; AND THE PLEDGE AGREEMENT
CREATES FOR THE BENEFIT OF LENDER A FIRST LIEN SECURITY INTEREST IN THE
COLLATERAL SUBJECT TO NO OTHER INTERESTS OR CLAIMS.

4.11     TITLE TO ASSETS; LIENS.  BORROWER AND BANK EACH HAVE GOOD AND
MARKETABLE TITLE TO ALL ITS RESPECTIVE PROPERTIES AND ASSETS REFLECTED ON THE
FINANCIAL STATEMENTS REFERRED TO HEREIN, EXCEPT FOR (I) SUCH ASSETS AS HAVE BEEN
DISPOSED OF SINCE SAID DATE AS NO LONGER USED OR USEFUL IN THE CONDUCT OF
BUSINESS OR AS PERMITTED UNDER SECTION 6.6 HEREOF AND (II) ITEMS WHICH HAVE BEEN
AMORTIZED IN ACCORDANCE WITH GAAP APPLIED ON A CONSISTENT BASIS.  THERE ARE NO
LIENS OR ENCUMBRANCES UPON ANY ASSETS OF THE BORROWER, THE BANK OR ANY OTHER
SUBSIDIARIES OTHER THAN AS SET FORTH IN SECTION 6.2 HEREOF OR AS DISCLOSED ON
EXHIBIT E. 

4.12     OPTIONS, WARRANTS, ETC. RELATED TO SHARES.  EXCEPT AS SET FORTH IN
EXHIBIT F, THERE ARE NO OPTIONS, WARRANTS OR OTHER RIGHTS AGREEMENTS OR
COMMITMENTS (INCLUDING CONVERSION RIGHTS AND PREEMPTIVE RIGHTS) OBLIGATING THE
BORROWER, THE BANK, OR ANY SUBSIDIARY TO ISSUE, SELL, PURCHASE OR REDEEM SHARES
OF THE BORROWER, THE BANK, OR ANY OTHER SUBSIDIARY OR SECURITIES CONVERTIBLE TO
SUCH SHARES.

 

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4.13      ENVIRONMENTAL LAWS. 

(A)          EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT, THE BORROWER AND EACH OF ITS SUBSIDIARIES HAVE OBTAINED ALL
PERMITS, LICENSES, AND OTHER AUTHORIZATIONS WHICH ARE REQUIRED UNDER ALL
ENVIRONMENTAL LAWS AND ARE IN COMPLIANCE IN ALL RESPECTS WITH ALL APPLICABLE
ENVIRONMENTAL LAWS.

(B)          ON OR PRIOR TO THE DATE HEREOF, NO NOTICE, DEMAND, REQUEST FOR
INFORMATION, CITATION, SUMMONS, OR ORDER HAS BEEN ISSUED AND, TO THE BEST
KNOWLEDGE OF THE BORROWER, NO COMPLAINT HAS BEEN FILED, NO PENALTY HAS BEEN
ASSESSED, AND NO INVESTIGATION OR REVIEW IS PENDING OR, TO THE BEST OF THE
KNOWLEDGE OF THE BORROWER, THREATENED BY ANY GOVERNMENTAL OR OTHER PERSON WITH
RESPECT TO ANY ALLEGED OR SUSPECTED FAILURE BY THE BORROWER OR ANY OF ITS
SUBSIDIARIES TO COMPLY IN ANY MATERIAL RESPECT WITH ANY ENVIRONMENTAL LAWS.

(C)          THERE ARE NO MATERIAL LIENS ARISING UNDER OR PURSUANT TO ANY
ENVIRONMENTAL LAWS ON ANY OF THE PROPERTY OWNED OR, TO THE BEST KNOWLEDGE OF THE
BORROWER, LEASED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES. 

(D)          THERE ARE NO CONDITIONS EXISTING CURRENTLY OR ANTICIPATED TO EXIST
DURING THE TERM OF THIS AGREEMENT WHICH WOULD REASONABLY BE EXPECTED TO SUBJECT
THE BORROWER OR ANY OF ITS SUBSIDIARIES OR ANY OF THEIR PROPERTY TO ANY MATERIAL
LIEN, DAMAGES, PENALTIES, INJUNCTIVE RELIEF, OR CLEANUP COSTS UNDER ANY
ENVIRONMENTAL LAWS OR WHICH REQUIRE OR ARE LIKELY TO REQUIRE CLEANUP, REMOVAL,
REMEDIAL ACTION, OR OTHER RESPONSES BY THE BORROWER AND ITS SUBSIDIARIES
PURSUANT TO ENVIRONMENTAL LAWS.  

4.14     DISCLOSURE.  THE BORROWER HAS DISCLOSED TO THE LENDER (I) ALL
AGREEMENTS, INSTRUMENTS AND CORPORATE OR OTHER RESTRICTIONS TO WHICH IT, BANK OR
ANY OF THE OTHER SUBSIDIARIES IS SUBJECT, THE TERMINATION OF WHICH COULD
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL AND ADVERSE CHANGE IN THE
FINANCIAL CONDITION, BUSINESS OPERATION, OR PROPERTIES OR ASSETS OF THE
BORROWER, THE BANK  OR ANY OF THE OTHER SUBSIDIARIES AND (II) ALL MATTERS KNOWN
TO IT THAT, INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE EXPECTED TO
RESULT IN A MATERIAL AND ADVERSE CHANGE IN THE FINANCIAL CONDITION, BUSINESS
OPERATION, OR PROPERTIES OR ASSETS OF THE BORROWER, THE BANK OR ANY OF THE OTHER
SUBSIDIARIES.  NO REPORT, FINANCIAL STATEMENT, CERTIFICATE OR OTHER INFORMATION
FURNISHED (WHETHER IN WRITING OR ORALLY) BY OR ON BEHALF OF THE BORROWER TO
LENDER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND THE
NEGOTIATION OF THIS AGREEMENT OR DELIVERED HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT (IN EACH CASE AS MODIFIED OR SUPPLEMENTED BY OTHER INFORMATION SO
FURNISHED) CONTAINS ANY MATERIAL MISSTATEMENT OF FACT OR OMITS TO STATE ANY
MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING; PROVIDED THAT, WITH
RESPECT TO PROJECTED FINANCIAL INFORMATION, THE BORROWER REPRESENTS ONLY THAT
SUCH INFORMATION WAS PREPARED IN GOOD FAITH BASED UPON ASSUMPTIONS BELIEVED TO
BE REASONABLE AT THE TIME. 

4.15      CONTRACTS OR RESTRICTIONS AFFECTING BORROWER AND/OR BANK.  NEITHER
BORROWER NOR BANK IS A PARTY TO ANY AGREEMENT OR INSTRUMENT OR SUBJECT TO ANY
CHARTER OR OTHER CORPORATE RESTRICTIONS MATERIALLY ADVERSELY AFFECTING ITS
BUSINESS, PROPERTIES OR ASSETS, OPERATIONS OR CONDITION (FINANCIAL OR
OTHERWISE).

4.16      NO DEFAULT.  NEITHER BORROWER NOR BANK IS IN DEFAULT IN THE
PERFORMANCE, OBSERVANCE OR FULFILLMENT OF ANY OF THE OBLIGATIONS, COVENANTS, OR
CONDITIONS CONTAINED IN ANY AGREEMENT OR INSTRUMENT TO WHICH IT IS A PARTY,
WHICH WOULD REASONABLY BE EXPECTED TO MATERIALLY AND ADVERSELY AFFECT THE
BUSINESS OR OPERATIONS OF BORROWER OR THE BANK, AS THE CASE MAY BE.

 

 

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4.17      ERISA.  BORROWER AND BANK ARE IN MATERIAL COMPLIANCE WITH ALL
APPLICABLE PROVISIONS OF ERISA AND ALL OTHER LAWS, STATE OR FEDERAL, APPLICABLE
TO ANY EMPLOYEES’ RETIREMENT PLAN MAINTAINED OR ESTABLISHED BY EITHER OF THEM.

4.18     OFAC.  NEITHER THE BORROWER NOR ANY SUBSIDIARY (A) IS AN “ENEMY” OR AN
“ALLY OF THE ENEMY” WITHIN THE MEANING OF SECTION 2 OF THE TRADING WITH THE
ENEMY ACT OF THE UNITED STATES (50 U.S.C. APP. §§ 1 ET SEQ.), AS AMENDED, (B) IS
IN VIOLATION OF (I) THE TRADING WITH THE ENEMY ACT, AS AMENDED, (II) ANY OF THE
FOREIGN ASSETS CONTROL REGULATIONS OF THE UNITED STATES TREASURY DEPARTMENT (31
CFR, SUBTITLE B, CHAPTER V, AS AMENDED) OR ANY ENABLING LEGISLATION OR EXECUTIVE
ORDER RELATING THERETO OR (III) THE PATRIOT ACT OR (C) IS A SANCTIONED PERSON. 
NO PART OF THE PROCEEDS OF THE LOAN HEREUNDER WILL BE USED DIRECTLY OR
INDIRECTLY TO FUND ANY OPERATIONS IN, FINANCE ANY INVESTMENTS OR ACTIVITIES IN
OR MAKE ANY PAYMENTS TO, A SANCTIONED PERSON OR A SANCTIONED COUNTRY.

5.         AFFIRMATIVE COVENANTS.

            Borrower covenants and agrees that, until the Notes together with
interest thereon are paid in full, unless specifically waived by the Lender in
writing, Borrower will, or will cause the Bank and other Subsidiaries to:

 

5.1       BUSINESS AND EXISTENCE; COMPLIANCE WITH LAWS.  PERFORM ALL THINGS
NECESSARY TO PRESERVE AND KEEP IN FULL FORCE AND EFFECT THE EXISTENCE, RIGHTS
AND FRANCHISES OF BORROWER, THE BANK AND THE OTHER SUBSIDIARIES, EXCEPT AS WOULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR AS PERMITTED
UNDER SECTION 6.4 HEREOF, AND TO COMPLY AND CAUSE THE BANK AND THE OTHER
SUBSIDIARIES TO COMPLY IN ALL MATERIAL RESPECTS WITH ALL LOCAL, STATE AND
FEDERAL LAWS AND REGULATIONS APPLICABLE TO BANKS AND BANK HOLDING COMPANIES, AND
ALL LAWS AND REGULATIONS OF THE LOCAL AUTHORITIES, AND THE PROVISIONS AND
REQUIREMENTS OF ALL FRANCHISES, PERMITS, CERTIFICATES OF COMPLIANCE AND APPROVAL
ISSUED BY REGULATORY AUTHORITIES AND OTHER LIKE GRANTS OF AUTHORITY HELD BY THE
BORROWER AND THE BANK, EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT; AND NOTIFY BANK IMMEDIATELY (AND IN DETAIL) OF ANY
ACTUAL OR ALLEGED FAILURE TO COMPLY WITH OR PERFORM, BREACH, VIOLATION OR
DEFAULT UNDER ANY SUCH LAWS OR REGULATIONS OR UNDER THE TERMS OF ANY SUCH
FRANCHISES OR LICENSES, OR GRANTS OF AUTHORITY, THE RESULT OF WHICH WOULD
CONSTITUTE A MATERIALLY ADVERSE EFFECT ON THE BORROWER OR THE BANK, OR THE
OCCURRENCE OR EXISTENCE OF ANY FACTS OR CIRCUMSTANCES WHICH WITH THE PASSAGE OF
TIME, THE GIVING OF NOTICE OR OTHERWISE COULD CREATE SUCH A BREACH, VIOLATION OR
DEFAULT OR COULD OCCASION THE TERMINATION OF ANY SUCH FRANCHISES OR GRANTS OF
AUTHORITY.

5.2       MAINTAIN PROPERTY.  MAINTAIN, PRESERVE, AND PROTECT ALL PROPERTIES
USED OR USEFUL IN THE CONDUCT OF BORROWER’S, THE BANK’S, AND EACH OTHER
SUBSIDIARY’S BUSINESS AND KEEP THE SAME IN GOOD REPAIR, WORKING ORDER AND
CONDITION, EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.

5.3        INSURANCE.  AT ALL TIMES MAINTAIN IN FORCE (I) INSURANCE IN SUCH
AMOUNTS, TO SUCH AN EXTENT AND AGAINST SUCH RISKS, INCLUDING FIRE AND THEFT, AS
IS CUSTOMARY WITH COMPANIES IN THE SAME OR SIMILAR BUSINESS, (II) NECESSARY
WORKMEN’S COMPENSATION INSURANCE, FIDELITY BONDS AND DIRECTORS’ AND OFFICERS’
INSURANCE COVERAGE IN AMOUNTS SATISFACTORY TO LENDER, AND (III) SUCH OTHER
INSURANCE AS MAY BE REQUIRED BY LAW; AND IF REQUIRED BY LENDER, DELIVER TO THE
LENDER A COPY OF THE BONDS AND POLICIES PROVIDING SUCH COVERAGE AND A
CERTIFICATE OF BORROWER’S, THE BANK’S, OR EACH OTHER SUBSIDIARY’S CHIEF
EXECUTIVE OFFICER, AS THE CASE MAY BE, SETTING FORTH THE NATURE OF THE RISKS
COVERED BY SUCH INSURANCE, THE AMOUNT CARRIED WITH RESPECT TO EACH RISK, AND THE
NAME OF THE INSURER.

 

 

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5.4        TAXES AND LIENS.  PAY AND DISCHARGE PROMPTLY ALL TAXES, ASSESSMENTS,
AND GOVERNMENTAL CHARGES OR LEVIES IMPOSED UPON BORROWER, THE BANK, OR EACH
OTHER SUBSIDIARY OR UPON ANY OF THEIR RESPECTIVE INCOME AND PROFITS, OR THEIR
PROPERTIES, REAL, PERSONAL OR MIXED, OR ANY PART THEREOF, BEFORE THE SAME SHALL
BECOME DELINQUENT, EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT; PROVIDED, HOWEVER, THAT BORROWER, THE BANK, AND EACH OTHER
SUBSIDIARY SHALL NOT BE REQUIRED TO PAY AND DISCHARGE OR TO CAUSE TO BE PAID AND
DISCHARGED ANY SUCH TAX, ASSESSMENT, CHARGE, LEVY OR CLAIM SO LONG AS THE AMOUNT
OR VALIDITY THEREOF SHALL BE CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS
AND PROVIDED THAT PROCEDURES SATISFACTORY TO LENDER ARE CARRIED OUT TO PREVENT
FORECLOSURE OF ANY LIEN THEREFROM.

5.5        FINANCIAL REPORTS AND ERISA. 

(A)          FURNISH TO LENDER AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN ONE
HUNDRED TWENTY (120) DAYS AFTER THE END OF EACH CALENDAR YEAR, (1) CONSOLIDATED
AND CONSOLIDATING BALANCE SHEETS OF BORROWER, THE BANK, AND EACH OTHER
SUBSIDIARY, AS OF THE END OF SUCH YEAR AND CONSOLIDATED AND CONSOLIDATING
STATEMENTS OF INCOME OF BORROWER, THE BANK, AND EACH OTHER SUBSIDIARY FOR THE
YEAR THEN ENDED, TOGETHER WITH THE AUDIT REPORT AND OPINION OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS ACCEPTABLE TO THE LENDER WITH RESPECT THERETO, SUCH
AUDIT REPORT AND OPINION SHALL CONTAIN NO "GOING CONCERN" OR SIMILAR EXCEPTIONS
OR QUALIFICATIONS OR ANY QUALIFICATION OR EXCEPTION AS TO THE SCOPE OF SUCH
AUDIT UNACCEPTABLE TO LENDER; (2) PROMPTLY UPON RECEIPT, COPIES OF ALL
MANAGEMENT LETTERS AND OTHER WRITTEN ASSESSMENTS AND RECOMMENDATIONS, FORMAL OR
INFORMAL, SUBMITTED BY THE CERTIFIED PUBLIC ACCOUNTANTS TO BORROWER OR EACH
SUBSIDIARY; (3) A COPY OF BORROWER’S FR Y-9 PARENT COMPANY ONLY (AND
CONSOLIDATED, IF APPLICABLE) FINANCIAL STATEMENT(S) AND (4) A COPY OF BORROWER’S
F.R. Y-6 ANNUAL REPORT PROMPTLY UPON THE FILING OF THE SAME WITH THE FEDERAL
RESERVE BOARD; AND (5) A COPY OF THE BANK’S CALL REPORT PROMPTLY UPON THE FILING
WITH THE APPROPRIATE REGULATORY AGENCY. 

(B)          UPON SENIOR MANAGEMENT OF THE BORROWER OBTAINING KNOWLEDGE THEREOF,
THE BORROWER WILL GIVE WRITTEN NOTICE TO THE LENDER PROMPTLY (AND IN ANY EVENT
WITHIN FIVE (5) BUSINESS DAYS), OF:  (1) ANY EVENT OR CONDITION, INCLUDING, BUT
NOT LIMITED TO, ANY REPORTABLE EVENT, THAT CONSTITUTES, OR MIGHT REASONABLY LEAD
TO, AN ERISA EVENT; (2) WITH RESPECT TO ANY MULTIEMPLOYER PLAN, THE RECEIPT OF
NOTICE AS PRESCRIBED IN ERISA OR OTHERWISE OF ANY WITHDRAWAL LIABILITY ASSESSED
AGAINST THE BORROWER OR ANY OF ITS ERISA AFFILIATES, OR OF A DETERMINATION THAT
ANY MULTIEMPLOYER PLAN IS IN REORGANIZATION OR INSOLVENT (BOTH WITHIN THE MEAN
OF TITLE IV OF ERISA); (3) THE FAILURE TO MAKE FULL PAYMENT ON OR BEFORE THE DUE
DATE (INCLUDING EXTENSIONS) THEREOF OF ALL AMOUNTS WHICH THE BORROWER, THE BANK,
OR ANY OTHER SUBSIDIARY OR ANY ERISA AFFILIATE IS REQUIRED TO CONTRIBUTE TO EACH
PLAN PURSUANT TO ITS TERMS AND AS REQUIRED TO MEET THE MINIMUM FUNDING STANDARD
SET FORTH IN ERISA AND THE CODE WITH RESPECT THERETO; OR (4) ANY CHANGE IN THE
FUNDING STATUS OF ANY PLAN THAT WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT, TOGETHER WITH A DESCRIPTION OF ANY SUCH EVENT OR CONDITION OR A
COPY OF ANY SUCH NOTICE AND A STATEMENT BY THE CHIEF FINANCIAL OFFICER OF THE
BORROWER BRIEFLY SETTING FORTH THE DETAILS REGARDING SUCH EVENT, CONDITION, OR
NOTICE, AND THE ACTION, IF ANY, WHICH HAS BEEN OR IS BEING TAKEN OR IS PROPOSED
TO BE TAKEN BY THE BORROWER WITH RESPECT THERETO.  PROMPTLY UPON REQUEST, THE
BORROWER SHALL FURNISH THE LENDER AND THE LENDERS WITH SUCH ADDITIONAL
INFORMATION CONCERNING ANY PLAN AS MAY BE REASONABLY REQUESTED, INCLUDING, BUT
NOT LIMITED TO, COPIES OF EACH ANNUAL REPORT/RETURN (FORM 5500 SERIES), AS WELL
AS ALL SCHEDULES AND ATTACHMENTS THERETO REQUIRED TO BE FILED WITH THE
DEPARTMENT OF LABOR AND/OR THE INTERNAL REVENUE SERVICE PURSUANT TO ERISA AND
THE CODE, RESPECTIVELY, FOR EACH “PLAN YEAR” (WITHIN THE MEANING OF SECTION
3(39) OF ERISA).

 

 

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(C)          PROMPTLY UPON THE TRANSMISSION THEREOF, COPIES OF ALL MATERIAL
FINANCIAL STATEMENTS, PROXY STATEMENTS, NOTICES, REPORTS AND OTHER
COMMUNICATIONS SENT BY THE BORROWER OR ANY OTHER SUBSIDIARY TO THE SHAREHOLDERS
OF THE BORROWER AND ANY OTHER SUCH COMMUNICATIONS AS MAY BE REQUESTED BY LENDER
AND COPIES OF ANY AND ALL REGULAR OR PERIODIC REPORTS, REGISTRATION STATEMENTS,
PROSPECTUSES OR OTHER WRITTEN COMMUNICATIONS THAT THE BORROWER OR THE BANK OR
ANY OTHER SUBSIDIARY IS OR MAY BE REQUIRED TO FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION OR ANY GOVERNMENTAL DEPARTMENT, BUREAU, COMMISSION OR AGENCY
SUCCEEDING TO THE FUNCTIONS OF THE SECURITIES AND EXCHANGE COMMISSION IF ANY.

(D)          WITH REASONABLE PROMPTNESS, SUCH OTHER FINANCIAL INFORMATION FOR
THE BORROWER OR THE BANK OR ANY OTHER SUBSIDIARY AS LENDER MAY REASONABLY
REQUEST.

5.6       REGULATORY EXAMINATIONS.  (A)  PROMPTLY NOTIFY LENDER OF EVERY
EXAMINATION BY, OR ANY MATERIAL CORRESPONDENCE, REPORT, MEMORANDA OR OTHER
WRITTEN COMMUNICATION FROM OR WITH, ANY FEDERAL OR STATE REGULATORY BODY OR
AUTHORITY, WITH RESPECT TO THE PROPERTIES, LOANS, OPERATIONS AND/OR CONDITION OF
BORROWER, THE BANK, OR ANY OTHER SUBSIDIARY, AND OF THE RECEIPT BY BORROWER, THE
BANK, OR ANY OTHER SUBSIDIARY OF EVERY EXAMINATION OR OTHER REPORT PREPARED BY
SUCH BODY OR AUTHORITY WITH RESPECT THERETO; AND (B) IF REQUIRED BY LENDER,
FULLY AND COMPLETELY ASSIST AND COOPERATE WITH LENDER IN REQUESTING APPROVAL BY
SUCH REGULATORY BODY OR AUTHORITY OF THE FURNISHING TO LENDER OF ANY SUCH
REPORT, AND FURNISH SUCH REPORT TO LENDER IF SUCH APPROVAL IS GIVEN; PROVIDED,
HOWEVER, THAT LENDER SHALL TAKE SUCH STEPS AS MAY BE NECESSARY TO ASSURE THAT
ALL SUCH REPORTS SHALL REMAIN CONFIDENTIAL AND SHALL BE USED BY LENDER SOLELY IN
CONNECTION WITH THE ADMINISTRATION OF THE LOAN IN ACCORDANCE WITH THE PROVISIONS
OF THIS AGREEMENT.

5.7       ADDITIONAL INFORMATION.  FURNISH SUCH OTHER INFORMATION REGARDING THE
OPERATIONS, BUSINESS AFFAIRS AND FINANCIAL CONDITION OF BORROWER, THE BANK, AND
EACH OTHER SUBSIDIARY AS LENDER MAY FROM TIME TO TIME REASONABLY REQUEST,
INCLUDING BUT NOT LIMITED TO TRUE AND EXACT COPIES OF ANY MONTHLY MANAGEMENT
REPORTS TO THEIR RESPECTIVE DIRECTORS, THEIR RESPECTIVE TAX RETURNS, AND ALL
INFORMATION FURNISHED TO SHAREHOLDERS, OR ANY GOVERNMENTAL AUTHORITY, INCLUDING
THE RESULTS OF ANY STOCK VALUATION PERFORMED.

5.8       RIGHT OF INSPECTION.  EXCEPT TO THE EXTENT, IF ANY, PROHIBITED BY
APPLICABLE LAW, PERMIT ANY PERSON DESIGNATED BY LENDER, TO INSPECT ANY OF THE
PROPERTIES, BOOKS AND FINANCIAL AND OTHER REPORTS AND RECORDS OF BORROWER, THE
BANK, AND EACH OTHER SUBSIDIARY, INCLUDING, BUT NOT LIMITED TO, ALL
DOCUMENTATION AND RECORDS PERTAINING TO THE BANK’S LOANS, INVESTMENTS AND
DEPOSITS; AND TO DISCUSS THEIR AFFAIRS; FINANCES AND ACCOUNTS WITH BORROWER’S,
THE BANK’S, AND EACH OTHER SUBSIDIARY’S PRINCIPAL OFFICERS, AT ALL SUCH
REASONABLE TIMES AND AS OFTEN AS LENDER MAY REASONABLY REQUEST.  IF REQUIRED BY
LENDER, BORROWER WILL PAY LENDER LOAN FEES IN AN AMOUNT DETERMINED BY LENDER TO
BE NECESSARY TO COVER THE COSTS OF SUCH INSPECTIONS, INCLUDING A REASONABLE
ALLOWANCE FOR LENDER’S OVERHEAD AS WELL AS OUT-OF-POCKET EXPENSES IN CONNECTION
WITH SUCH INSPECTION.

 

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5.9       NOTICE OF DEFAULT.  AT THE TIME OF BORROWER’S FIRST KNOWLEDGE OR
NOTICE, FURNISH THE LENDER WITH WRITTEN NOTICE OF THE OCCURRENCE OF ANY EVENT OR
THE EXISTENCE OF ANY CONDITION WHICH CONSTITUTES OR UPON WRITTEN NOTICE OR LAPSE
OF TIME OR BOTH WOULD CONSTITUTE AN EVENT OF DEFAULT UNDER THE TERMS OF THIS
LOAN AGREEMENT OR OTHER LOAN DOCUMENTS OR AN EVENT OF DEFAULT OR DEFAULT UNDER
ANY OTHER LOAN DOCUMENTS FOR ANY OTHER LOAN IN EXCESS OF ONE MILLION DOLLARS
($1,000,000.00) TO THE BORROWER, THE BANK, OR ANY OTHER SUBSIDIARY.

5.10     NOTICE OF LITIGATION.  BORROWER SHALL NOTIFY LENDER OF ANY ACTIONS,
SUITS OR PROCEEDINGS INSTITUTED BY ANY PERSON AGAINST THE BORROWER, THE BANK OR
OTHER SUBSIDIARY CLAIMING MONEY DAMAGES OR OTHER MONETARY LIABILITY IN AN AMOUNT
OF ONE MILLION DOLLARS ($1,000,000.00) OR MORE, SAID NOTICE TO BE GIVEN WITHIN
TEN DAYS OF THE FIRST NOTICE TO BORROWER, THE BANK OR SUCH  OTHER SUBSIDIARY, AS
APPLICABLE, OF THE INSTITUTION OF SUCH ACTION, SUIT OR PROCEEDING AND TO SPECIFY
THE AMOUNT OF DAMAGES BEING CLAIMED OR OTHER RELIEF BEING SOUGHT, THE NATURE OF
THE CLAIM, THE PERSON INSTITUTING THE ACTION, SUIT OR PROCEEDING, AND ANY OTHER
SIGNIFICANT FEATURES OF THE CLAIM.

5.11     PERFECTION OF SECURITY INTEREST.  THE BORROWER OR OTHER SUBSIDIARY
SHALL PERFORM SUCH ACTS AS MAY BE NECESSARY, IN THE REASONABLE JUDGMENT OF
LENDER, NOW OR IN THE FUTURE, TO PERFECT OR CONTINUE PERFECTION OF THE SECURITY
INTERESTS GRANTED TO LENDER, OR OTHERWISE PROVIDED FOR, UNDER ANY AND ALL LOAN
DOCUMENTS.

5.12     DIVIDENDS TO BORROWER FROM THE BANK.  BORROWER SHALL CAUSE THE BANK AND
OTHER SUBSIDIARY TO PAY DIVIDENDS OR OTHERWISE MAKE SUCH CASH CONTRIBUTIONS AT
SUCH TIMES AND IN SUCH AMOUNTS, AS IS NECESSARY TO ENABLE BORROWER TO MEET ALL
OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS ON A TIMELY BASIS, INCLUDING THE
PAYMENT, WHEN DUE, OF EACH INSTALLMENT OF INTEREST AND THE PAYMENT OF PRINCIPAL
ON THE LOAN TO THE EXTENT PERMITTED BY LAW INCLUDING APPLICABLE BANK REGULATORY
AGENCY RULES AND REGULATIONS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SHOULD ANY PREPAYMENT, ACCELERATED PAYMENT OR OTHER PAYMENT EVER BE DUE WITH
RESPECT TO THE LOAN, BORROWER SHALL CAUSE THE BANK AND OTHER SUBSIDIARY TO PAY
DIVIDENDS OR OTHERWISE MAKE SUCH ADDITIONAL DISTRIBUTIONS TO THE BORROWER AS
NECESSARY TO ENABLE THE BORROWER TO MAKE SUCH PREPAYMENT, ACCELERATED PAYMENT OR
OTHER PAYMENT, TO THE EXTENT PERMITTED BY LAW INCLUDING APPLICABLE BANK
REGULATORY AGENCY RULES AND REGULATIONS.

5.13     CAPITAL RATIO/EQUITY CAPITAL ADEQUACY. 

(A)          BORROWER AND BANK SHALL MAINTAIN AT ALL TIMES A “WELL CAPITALIZED”
RATING AS REQUIRED BY ANY APPLICABLE REGULATORY AUTHORITY AS SUCH REQUIREMENT
MAY BE REVISED FROM TIME TO TIME. 

(B)          BANK SHALL MAINTAIN AS OF EACH COVENANT COMPLIANCE DATE A TIER 1
LEVERAGE RATIO OF NOT LESS THAN EIGHT PERCENT (8%), WHICH COVENANT SHALL BE
MEASURED AS OF EACH COVENANT COMPLIANCE DATE.

 

 

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5.14     “MODIFIED” TEXAS RATIO.  AS OF EACH COVENANT COMPLIANCE DATE BANK SHALL
MAINTAIN A “MODIFIED” TEXAS RATIO OF NOT MORE THAN 40%, WHICH COVENANT SHALL BE
MEASURED AS OF EACH COVENANT COMPLIANCE DATE.

5.15     RETURN ON AVERAGE ASSETS.  BANK SHALL MAINTAIN AN ANNUALIZED RETURN ON
AVERAGE ASSETS OF AT LEAST 70/100 PERCENT (0.70%) AS OF EACH COVENANT COMPLIANCE
DATE, WHICH COVENANT SHALL BE MEASURED AS OF EACH COVENANT COMPLIANCE DATE.  IN
DETERMINING SUCH ANNUALIZED RETURN, BANK’S EARNINGS WILL BE ANNUALIZED USING ITS
YEAR TO DATE EARNINGS.

5.16     LOAN TO VALUE RATIO.  BORROWER AND BANK SHALL MAINTAIN AT ALL TIMES A
LOAN TO VALUE RATIO OF NOT MORE THAN SEVENTY-FIVE PERCENT (75%).  AS USED
HEREIN, THE TERM "LOAN TO VALUE RATIO" SHALL MEAN THE RATIO THAT (A) THE
THEN-OUTSTANDING AGGREGATE PRINCIPAL BALANCE OF THE LOANS BEARS TO (B) THE
BANK'S TANGIBLE COMMON EQUITY.  SUCH RATIO SHALL BE MEASURED AS OF THE END OF
EACH CALENDAR YEAR.

5.17      LOAN LOSS RESERVES.  WITH RESPECT TO THE BANK, MAINTAIN AT ALL TIMES
LOAN LOSS RESERVES IN AMOUNTS DEEMED ADEQUATE BY ALL FEDERAL AND STATE
REGULATORY AUTHORITIES.

5.18     INDEMNIFICATION.  BORROWER AND BANK SHALL INDEMNIFY THE LENDER, AND
HOLD IT HARMLESS OF AND FROM ANY AND ALL LOSS, COST, DAMAGE OR EXPENSE, OF EVERY
KIND AND NATURE, INCLUDING REASONABLE ATTORNEYS’ FEES, WHICH THE LENDER INCURS
BY REASON OF ANY VIOLATION OF ANY ENVIRONMENTAL LAWS BY BORROWER OR BANK OR BY
ANY PREDECESSORS OR SUCCESSORS TO TITLE TO ANY PROPERTY OF THE BORROWER OR BANK.

5.19     COMPLIANCE CERTIFICATE.  FURNISH LENDER A CERTIFICATE OF COMPLIANCE
DULY CERTIFIED BY THE CHIEF EXECUTIVE OFFICER OF BORROWER WITHIN FORTY-FIVE (45)
DAYS AFTER THE END OF EACH CALENDAR QUARTER STATING THAT BORROWER AND EACH BANK
SUBSIDIARY AND THE BORROWER AND ALL SUBSIDIARIES, AS APPLICABLE, ARE IN
COMPLIANCE WITH ALL TERMS, COVENANTS AND CONDITIONS OF THIS LOAN AGREEMENT AND
ALL RELATED LOAN DOCUMENTS, INCLUDING, BUT NOT LIMITED TO, SECTIONS 5.1 – 5.17
OF THIS AGREEMENT.  SUCH CERTIFICATE OF COMPLIANCE SHALL BE AS SET FORTH IN
EXHIBIT H AND OTHERWISE BE IN FORM AND SUBSTANCE SATISFACTORY TO LENDER.

6.       NEGATIVE COVENANTS. 

         Borrower covenants and agrees with Lender that Borrower shall comply
and cause the Bank and other Subsidiaries to comply with the following negative
covenants unless the prior written consent of Lender shall be obtained, so long
as Borrower may borrow under this Agreement or so long as any indebtedness
remains outstanding under the Loan Documents:

 

6.1       INDEBTEDNESS.  NEITHER BORROWER NOR THE BANK SHALL CREATE, INCUR,
ASSUME OR SUFFER TO EXIST, CONTINGENTLY OR OTHERWISE, ANY INDEBTEDNESS, EXCEPT
FOR THE FOLLOWING INDEBTEDNESS:

(A)          THE INDEBTEDNESS OF BORROWER UNDER THE LOAN DOCUMENTS;

(B)          INDEBTEDNESS OWED BY THE BORROWER TO THE BANK OR ANY OTHER
SUBSIDIARY OR BY THE BANK TO THE BORROWER;

 

 

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(C)          DEBT FOR OPERATING EXPENSES OR OTHERWISE INCURRED BY THE BANK OR
ANY OTHER SUBSIDIARY IN THE ORDINARY COURSE OF BUSINESS;

(D)          PURCHASE MONEY INDEBTEDNESS AND CAPITALIZED LEASE OBLIGATIONS IN AN
AGGREGATE AMOUNT NOT TO EXCEED $500,000 OUTSTANDING AT ANY TIME AND SECURED
SOLELY BY LIENS ON THE ASSETS FINANCED OR LEASED PURSUANT THERETO AND OTHERWISE
PERMITTED UNDER SECTION 6.2 HEREOF;

(E)          UNSECURED INDEBTEDNESS CONSTITUTING OBLIGATIONS OF THE BORROWER OR
ANY SUBSIDIARY OTHER THAN THE BANK UNDER DEBENTURES, INDENTURES, TRUST
AGREEMENTS AND GUARANTEES IN CONNECTION WITH THE ISSUANCE BY SUCH PERSON OF
TRUST PREFERRED SECURITIES EITHER (I) EXISTING ON THE DATE HEREOF OR (II)
INCURRED PURSUANT TO THE ACQUISITION OR ANY OTHER ACQUISITION PERMITTED UNDER
THIS AGREEMENT THAT, IN ANY CASE, DO NOT DILUTE THE COLLATERAL AND THAT
OTHERWISE WOULD NOT REASONABLY BE EXPECTED TO HAVE AN ADVERSE EFFECT UPON THE
PRIORITY, PREFERENCES, OR RIGHTS OF THE COLLATERAL OR THE LENDER'S RIGHTS AND
REMEDIES WITH RESPECT THERETO; 

(F)           UNSECURED INDEBTEDNESS OF THE BORROWER AND THE SUBSIDIARIES IN AN
AGGREGATE AMOUNT OUTSTANDING AT ANY TIME NOT TO EXCEED $500,000; AND

(G)          INDEBTEDNESS AS SET FORTH IN EXHIBIT G AND ANY EXTENSIONS, RENEWALS
AND REPLACEMENTS THEREOF THAT DO NOT INCREASE THE OUTSTANDING PRINCIPAL AMOUNT
THEREOF OR SHORTEN THE MATURITY OR WEIGHTED AVERAGE LIFE THEREOF;

6.2       MORTGAGES, LIENS, ETC.  NEITHER BORROWER NOR THE BANK SHALL CREATE,
ASSUME OR SUFFER TO EXIST ANY MORTGAGE, PLEDGE, LIEN, CHARGE OR OTHER
ENCUMBRANCE OF ANY NATURE WHATSOEVER ON ANY OF ITS ASSETS, NOW OR HEREAFTER
OWNED, EXCEPT FOR:

(A)          LIENS IN FAVOR OF LENDER SECURING PAYMENT OF THE LOANS; AND

(B)          PERMITTED ENCUMBRANCES.

6.3       GUARANTIES.  GUARANTEE OR OTHERWISE IN ANY WAY BECOME OR BE
RESPONSIBLE FOR THE INDEBTEDNESS OR OBLIGATIONS OF ANY OTHER PERSON (OTHER THAN
THE BORROWER, THE BANK OR ANY SUBSIDIARY WITH RESPECT TO INDEBTEDNESS OTHERWISE
PERMITTED BY THIS AGREEMENT), BY ANY MEANS WHATSOEVER, WHETHER BY AGREEMENT TO
PURCHASE THE INDEBTEDNESS OF ANY OTHER PERSON OR AGREEMENT FOR THE FURNISHING OF
FUNDS TO ANY OTHER PERSON THROUGH THE PURCHASE OF GOODS, SUPPLIES OR SERVICES
(OR BY WAY OF STOCK PURCHASE, CAPITAL CONTRIBUTION, ADVANCE OR LOAN) FOR THE
PURPOSE OF PAYING OR DISCHARGING THE INDEBTEDNESS OF ANY OTHER PERSON, OR
OTHERWISE, EXCEPT FOR THE ENDORSEMENT OF NEGOTIABLE INSTRUMENTS BY THE BORROWER
OR BANK IN THE ORDINARY COURSE OF BUSINESS FOR COLLECTION.

6.4       MERGER, DISSOLUTION, ACQUISITION OF ASSETS.  BORROWER SHALL NOT ENTER
INTO, OR PERMIT THE BANK OR ANY OTHER SUBSIDIARY TO ENTER INTO, ANY TRANSACTION
OF MERGER OR CONSOLIDATION, OR ANY REORGANIZATION, RECLASSIFICATION OF STOCK,
READJUSTMENT OR CHANGE IN CAPITAL STRUCTURE; OR ACQUIRE, OR PERMIT ANY
SUBSIDIARY TO ACQUIRE, ALL OF THE STOCK, OR OTHER OWNERSHIP INTEREST, PROPERTY
OR ASSETS OF ANY OTHER PERSON, CORPORATION, PARTNERSHIP OR OTHER ENTITY (OTHER
THAN THE ACQUISITION AND ANY RELATED MERGER OF THE TARGET INTO THE BORROWER
WHERE THE BORROWER IS THE SURVIVING ENTITY, AND ANY SUBSEQUENT MERGER OF THE
TARGET BANK INTO THE BANK WHERE THE BANK IS THE SURVIVING ENTITY, EACH OF WHICH
IS PERMITTED HEREBY); PROVIDED THAT, IF AT THE TIME THEREOF AND IMMEDIATELY
AFTER GIVING EFFECT THERETO ON A PRO FORMA BASIS, NO EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING AND SUBJECT TO THE RESTRICTIONS ON ADDITIONAL
INDEBTEDNESS AND LIENS SET FORTH IN SECTIONS 6.1 AND 6.2 HEREOF, (A) ANY
SUBSIDIARY (OTHER THAN THE BANK) MAY MERGE INTO OR TRANSFER ITS PROPERTY OR
ASSETS TO ANOTHER SUBSIDIARY AND (B) ANY SUBSIDIARY MAY ACQUIRE ALL OF THE STOCK
OR OTHER OWNERSHIP INTERESTS, PROPERTY OR ASSETS OF ANOTHER PERSON IF (I) THE
PURCHASE PRICE FOR ALL SUCH TRANSACTIONS SHALL NOT EXCEED TEN PERCENT (10%) OF
THE CONSOLIDATED ASSETS OF THE BORROWER AND ITS SUBSIDIARIES IN ANY FISCAL YEAR
OF THE BORROWER AND (II) IN THE EVENT SUCH ACQUISITION INVOLVES A MERGER OF THE
ACQUIRED ENTITY WITH AN EXISTING SUBSIDIARY, THE APPLICABLE EXISTING SUBSIDIARY
IS THE SURVIVING ENTITY AFTER CONSUMMATION OF THE TRANSACTION.

 

 

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6.5      SUBSIDIARIES.  EXCEPT AS PERMITTED UNDER SECTION 6.4 HEREOF, BORROWER
SHALL NOT CREATE, ESTABLISH OR ACQUIRE SUBSIDIARIES OR ACQUIRE OR OWN STOCK OR
ANY OTHER INTEREST IN ANY BANK OTHER THAN THE BANK AND THE TARGET BANK, OR
PERMIT THE CREATION, ESTABLISHMENT OR ACQUISITION OF ANY SUCH SUBSIDIARIES BY
ANY OTHER SUBSIDIARY.

6.6       SALE OF STOCK, MERGER, OR ASSET DISPOSITION. 

(A)          BORROWER SHALL NOT SELL, TRANSFER, PLEDGE, ASSIGN, OR OTHERWISE
DISPOSE OF, OR OTHERWISE ENCUMBER, ANY OF THE BORROWER’S STOCK OF THE BANK OR,
EXCEPT AS PERMITTED UNDER SECTION 6.4 HEREOF, THE BORROWER’S OR THE BANK’S OR
ANY OTHER SUBSIDIARY’S COMMON CAPITAL STOCK IN ANY OTHER SUBSIDIARY NOR PERMIT
THE BANK OR ANY OTHER SUBSIDIARY TO ISSUE ADDITIONAL SHARES OF STOCK OR RIGHTS,
OPTIONS OR SECURITIES CONVERTIBLE INTO CAPITAL STOCK OF THE BANK OR ANY OTHER
SUBSIDIARY.

(B)          THE BORROWER WILL NOT, NOR WILL IT PERMIT ANY OF ITS SUBSIDIARIES
TO, MAKE ANY MATERIAL ASSET DISPOSITION EXCEPT IN THE ORDINARY COURSE OF
BUSINESS.

6.7       DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS.  BORROWER SHALL NOT DECLARE
OR PAY ANY DIVIDENDS ON THE STOCK OF BORROWER OR REDEEM ANY STOCK OF BORROWER IF
AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING UNDER THIS AGREEMENT OR ALLOW
THE PAYMENT OF SUCH A DIVIDEND THAT WOULD CREATE AN EVENT OF DEFAULT. THE
PAYMENT OF ANY DIVIDEND OR THE REDEMPTION OF ANY STOCK NOT OTHERWISE PROHIBITED
SHALL IN ALL RESPECTS COMPLY WITH THE RULES AND REGULATIONS OF THE FEDERAL
RESERVE BOARD.

6.8       CAPITAL EXPENDITURES.  BORROWER SHALL NOT MAKE OR BECOME COMMITTED TO
MAKE, OR PERMIT ANY SUBSIDIARY TO MAKE OR TO BECOME COMMITTED TO MAKE, DIRECTLY
OR INDIRECTLY, DURING ANY CALENDAR YEAR, CAPITAL EXPENDITURES WHICH FOR BORROWER
AND THE SUBSIDIARY EXCEED AMOUNTS DEEMED ACCEPTABLE TO APPLICABLE REGULATORY
AUTHORITIES OR WHICH DO NOT REQUIRE REGULATORY APPROVAL.

6.9        RELOCATION.  THE BORROWER SHALL NOT CAUSE OR PERMIT BORROWER OR ANY
SUBSIDIARY TO RELOCATE THEIR PRINCIPAL OFFICE, PRINCIPAL BANKING OFFICE, OR
PRINCIPAL REGISTERED OFFICE WITHOUT THE WRITTEN CONSENT OF LENDER.

 

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6.10     TRANSACTIONS WITH AFFILIATES.  THE BORROWER SHALL NOT, NOR WILL IT
PERMIT ANY OF ITS SUBSIDIARIES TO, ENTER INTO OR PERMIT TO EXIST ANY TRANSACTION
OR SERIES OF TRANSACTIONS WITH ANY OFFICER, DIRECTOR, SHAREHOLDER, SUBSIDIARY OR
AFFILIATE OF SUCH PERSON OR ENTITY OTHER THAN (A) NORMAL COMPENSATION AND
REIMBURSEMENT OF EXPENSES OF OFFICERS AND DIRECTORS AND (B) EXCEPT AS OTHERWISE
SPECIFICALLY LIMITED IN THIS AGREEMENT, OTHER TRANSACTIONS WHICH SATISFY THE
APPLICABLE REQUIREMENTS UNDER SECTION 23A OF THE FEDERAL RESERVE ACT, 12 USC
§371C AND SECTION 23B OF THE FEDERAL RESERVE ACT, 12 USC §371C-1.  FOR PURPOSES
OF THIS AGREEMENT, THE TERM AFFILIATES SHALL HAVE THE SAME MEANING AS SET FORTH
IN APPLICABLE BANK REGULATIONS.

6.11      CHANGE IN MANAGEMENT.  NEITHER THE BORROWER NOR THE BANK SHALL MAKE
ANY CHANGE IN ITS EXECUTIVE MANAGEMENT PERSONNEL WITHOUT PROVIDING LENDER
WRITTEN NOTICE WITHIN TEN (10) DAYS AFTER SUCH CHANGE BECOMES EFFECTIVE. 

6.12      CHARTER OR BY-LAW AMENDMENTS.  NEITHER BORROWER, BANK NOR ANY OTHER
SUBSIDIARY SHALL ADOPT, AMEND OR ENTER INTO, AS APPLICABLE, ANY CHARTER,
ARTICLES OF INCORPORATION, BYLAWS (OR ANY AMENDMENTS THERETO) OR OTHER
PROVISIONS OR AGREEMENTS THAT WOULD REASONABLY BE EXPECTED TO HAVE AN ADVERSE
EFFECT ON THE PRIORITY, PREFERENCES, OR RIGHTS OF THE COLLATERAL OR THE LENDER'S
RIGHTS AND REMEDIES WITH RESPECT THERETO.

6.13      NO DEFAULTS.  BORROWER SHALL NOT PERMIT OR SUFFER THE OCCURRENCE OF
ANY EVENT NOR ALLOW ANY SUBSIDIARY OR OTHER AFFILIATE TO KNOWINGLY PERMIT OR
SUFFER THE OCCURRENCE OF ANY EVENT WHICH CONSTITUTES AN EVENT OF DEFAULT UNDER
ANY INDENTURE OR LOAN AGREEMENT FOR ANY INDEBTEDNESS IN EXCESS OF ONE MILLION
DOLLARS ($1,000,000.00) OR WITH RESPECT TO ANY OTHER MATERIAL INDEBTEDNESS OF
THE BORROWER, THE BANK, OR ANY OTHER SUBSIDIARY.

7.         DEFAULT AND REMEDIES.

7.1       EVENTS OF DEFAULT.  ANY ONE OR MORE OF THE FOLLOWING EVENTS SHALL
CONSTITUTE AN EVENT OF DEFAULT UNDER THE TERMS OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS:

(A)         DEFAULTS IN THE PROMPT PAYMENT AS AND WHEN DUE OF THE PRINCIPAL OF
OR INTEREST ON THE LOANS OR ANY FEES DUE UNDER THIS LOAN AGREEMENT WITHIN TEN
(10) DAYS OF THE DATE WHEN DUE.

(B)         DEFAULT IN COMPLIANCE WITH OR IN THE PERFORMANCE OR OBSERVANCE OF
ANY TERM, COVENANT, OBLIGATION, CONDITION, OR AGREEMENT IN THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT.

(C)         IF ANY REPRESENTATION, WARRANTY OR ANY OTHER STATEMENT MADE OR
DEEMED TO BE MADE BY THE BORROWER HEREIN, IN ANY OTHER LOAN DOCUMENT, OR IN ANY
WRITING, CERTIFICATE, OR REPORT OR STATEMENT AT ANY TIME FURNISHED TO LENDER
PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT SHALL PROVE TO BE FALSE OR
MISLEADING IN ANY MATERIAL RESPECT, AT THE TIME MADE OR FURNISHED.

(D)         BORROWER, THE BANK OR ANY OTHER SUBSIDIARY SHALL FAIL TO PAY WHEN
DUE AND BEFORE THE EXPIRATION OF ANY GRACE PERIOD, ANY DEBT FOR BORROWED MONEY
IN AN AMOUNT GREATER THAN ONE MILLION DOLLARS ($1,000,000) WHICH IT IS PRIMARILY
OBLIGATED TO PAY AS BORROWER, OR IN ANY OTHER CAPACITY, WHETHER SUCH DEBT SHALL
HAVE BECOME DUE BECAUSE OF ACCELERATION OF MATURITY OR OTHERWISE, OTHER THAN
DEBT CREATED BY THE LOAN DOCUMENTS.

 

 

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(E)       AN EVENT OCCURS WHICH CONSTITUTES AN EVENT OF DEFAULT AS DEFINED IN
THE NOTE OR ANY OTHER LOAN DOCUMENT; OR AN EVENT OCCURS WHICH CONSTITUTES AN
EVENT OF DEFAULT (FOLLOWING THE EXPIRATION OF APPLICABLE GRACE, NOTICE OR CURE
PERIODS) UNDER ANY PRESENT OR FUTURE LOAN AGREEMENT BETWEEN LENDER AND BORROWER
FOR ANY OTHER LOAN.

(F)        THE BORROWER, THE BANK, OR ANY OTHER SUBSIDIARY SHALL

  (i)

BE UNABLE OR ADMITS IN WRITING ITS INABILITY TO PAY ITS DEBTS AS THEY BECOME
DUE; OR

  (ii)

FILE A PETITION IN BANKRUPTCY OR FOR REORGANIZATION OR FOR THE ADOPTION OF AN
ARRANGEMENT UNDER THE BANKRUPTCY ACT AS NOW OR IN THE FUTURE AMENDED, OR FILE A
PLEADING ASKING SUCH RELIEF, OR HAVE OR SUFFER TO BE FILED AN INVOLUNTARY
PETITION IN BANKRUPTCY AGAINST IT WHICH IS NOT CONTESTED AND DISCHARGED WITHIN
SIXTY (60) DAYS; OR

  (iii)

MAKE AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS GENERALLY; OR

  (iv)

CONSENT TO THE APPOINTMENT OF A TRUSTEE, CUSTODIAN, OR RECEIVER FOR ALL OR A
MAJOR PORTION OF ITS PROPERTY; OR

  (v)

BE ADJUDICATED BANKRUPT OR INSOLVENT UNDER ANY FEDERAL OR STATE LAW; OR

  (vi)

SUFFER THE ENTRY OF A COURT ORDER UNDER ANY FEDERAL OR STATE LAW APPOINTING A
RECEIVER, CUSTODIAN, OR TRUSTEE FOR ALL OR A MAJOR PART OF ITS PROPERTY OR
ORDERING THE WINDING UP OR LIQUIDATION OF ITS AFFAIRS, OR APPROVING A PETITION
FILED AGAINST IT UNDER THE BANKRUPTCY ACT, AS NOW OR IN THE FUTURE AMENDED; OR

  (vii)

SUFFER THE ENTRY OF A FINAL JUDGMENT FOR THE PAYMENT OF MONEY IN EXCESS OF ONE
MILLION DOLLARS ($1,000,000) AND THE SAME SHALL NOT BE PAID OR OTHERWISE
DISCHARGED OR PROVISION MADE FOR ITS DISCHARGE WITHIN 45 DAYS FROM THE DATE OF
ENTRY THEREOF OR AN APPEAL OR OTHER APPROPRIATE PROCEEDING FOR REVIEW THEREOF
SHALL NOT BE TAKEN WITHIN SAID PERIOD AND A STAY OF EXECUTION PENDING SUCH
APPEAL SHALL NOT BE OBTAINED; OR

  (viii)

SUFFER A WRIT OR WARRANT OF ATTACHMENT OR ANY SIMILAR PROCESS TO BE ISSUED BY
ANY COURT AGAINST ALL OR ANY SUBSTANTIAL PORTION OF ITS PROPERTY.

 

 

 

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(G)       THE ISSUANCE OF ANY SUPERVISORY ACTION AGAINST THE BORROWER, THE BANK
OR OTHER SUBSIDIARIES OR THE BORROWER’S, THE BANK’S OR THE OTHER SUBSIDIARIES’
DIRECTORS, WHETHER TEMPORARY OR PERMANENT, BY OR AT THE REQUEST OF ANY BANK
REGULATORY AGENCY, IN EACH CASE, UNLESS SUCH SUPERVISORY ACTION WOULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; PROVIDED, HOWEVER,
THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT (INCLUDING
WITHOUT LIMITATION SECTION 5.9 HEREOF), BORROWER SHALL NOT BE REQUIRED TO
DISCLOSE THE EXISTENCE OF ANY SUPERVISORY ACTION TO THE EXTENT THAT SUCH
DISCLOSURE IS PROHIBITED BY APPLICABLE LAW OR REGULATION; BUT FURTHER PROVIDED
THAT (I) SECTION 5.9 OF THIS AGREEMENT SHALL NEVERTHELESS REQUIRE BORROWER TO
DISCLOSE TO LENDER THE MAXIMUM AMOUNT OF INFORMATION LEGALLY PERMISSIBLE TO BE
DISCLOSED REGARDING ANY SUCH SUPERVISORY ACTION  AND (II) SUCH SUPERVISORY
ACTION MAY, EVEN IF CONFIDENTIAL, CONSTITUTE AN EVENT OF DEFAULT HEREUNDER IF
LENDER BECOMES AWARE OF SUCH SUPERVISORY ACTION THROUGH OTHER CHANNELS WITHOUT
THE VIOLATION OF APPLICABLE LAW OR REGULATION;

(H)        THERE SHALL OCCUR ANY CHANGE IN CONTROL; OR

(I)         THE FAILURE OF THE BORROWER, THE BANK, OR ANY OTHER SUBSIDIARY, OR
THE BORROWER’S, THE BANK’S, OR ANY OTHER SUBSIDIARY’S DIRECTORS TO COMPLY WITH
THE TERMS OF ANY MEMORANDUM OF UNDERSTANDING OR LETTER AGREEMENT WITH ANY BANK
REGULATORY AGENCY, INCLUDING BUT NOT LIMITED TO ANY APPLICABLE STATE BANK
REGULATORY AGENCY, FEDERAL DEPOSIT INSURANCE CORPORATION, THE OFFICE OF THE
COMPTROLLER OF THE CURRENCY, THE OFFICE OF THRIFT SUPERVISION, AND THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM AND SUCH FAILURE HAS NOT BEEN FULLY
CORRECTED WITHIN THIRTY (30) BUSINESS DAYS OF THE BORROWER’S OR THE BANK’S
AWARENESS OF ITS FAILURE TO COMPLY, OR SUCH LONGER CURE PERIOD AS THE APPLICABLE
MEMORANDUM OF UNDERSTANDING OR LETTER AGREEMENT MAY PROVIDE.

7.2      CURE PROVISIONS.  IF ANY EVENT OF DEFAULT, OTHER THAN A DEFAULT IN
PAYMENT, IS CURABLE AND IF BORROWER HAS NOT BEEN GIVEN A NOTICE OF A BREACH IN
THE SAME PROVISION OF THE NOTE WITHIN THE PRECEDING TWELVE (12) MONTHS, IT MAY
BE CURED IF BORROWER, AFTER RECEIVING WRITTEN NOTICE FROM LENDER DEMANDING CURE
OF SUCH DEFAULT:  (1) CURES THE DEFAULT WITHIN FIFTEEN (15) DAYS; OR (2) IF THE
CURE REQUIRES MORE THAN FIFTEEN (15) DAYS, IMMEDIATELY INITIATES STEPS WHICH
LENDER DEEMS IN LENDER’S REASONABLE DISCRETION TO BE SUFFICIENT TO CURE THE
DEFAULT AND THEREAFTER CONTINUES AND COMPLETES ALL REASONABLE AND NECESSARY
STEPS SUFFICIENT TO PRODUCT COMPLIANCE AS SOON AS REASONABLY PRACTICAL.  

7.3      REMEDIES ON DEFAULT.  UPON THE OCCURRENCE OF AN EVENT OF DEFAULT,
LENDER MAY (I) TERMINATE ALL OBLIGATIONS OF LENDER TO BORROWER, THE BANK, OR ANY
OTHER SUBSIDIARY INCLUDING, WITHOUT LIMITATION, ALL OBLIGATIONS TO LEND MONEY TO
BORROWER UNDER THIS AGREEMENT, (II) DECLARE THE NOTES IMMEDIATELY DUE AND
PAYABLE, WITHOUT PRESENTMENT, DEMAND, PROTEST, NOTICE OF INTENT TO ACCELERATE
AND NOTICE OF ACCELERATION OF THE MATURITY DATE OF THIS NOTES, OR ANY OTHER
NOTICE OF ANY KIND, ALL OF WHICH ARE EXPRESSLY WAIVED, (III) DECLARE IMMEDIATELY
DUE AND PAYABLE FROM BORROWER THE EXPENSES SET FORTH IN SECTION 8.14 HEREOF, AND
(IV) PURSUE ANY REMEDY AVAILABLE TO IT UNDER THIS AGREEMENT, THE NOTES, THE
PLEDGE AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR AVAILABLE AT LAW OR IN EQUITY,
CONCURRENTLY OR SUBSEQUENTLY, IN SUCH ORDER AS THE LENDER MAY ELECT, ALL OF
WHICH REMEDIES SHALL BE CUMULATIVE.

7.4      LIENS; SETOFF BY LENDER.  BORROWER HEREBY GRANTS TO LENDER A CONTINUING
LIEN FOR ALL INDEBTEDNESS OF BORROWER TO LENDER UPON ANY AND ALL OF ITS MONIES,
SECURITIES AND OTHER PROPERTY AND THE PROCEEDS THEREOF, NOW OR HEREAFTER HELD OR
RECEIVED BY OR IN TRANSIT TO LENDER FROM OR FOR BORROWER, AND ALSO UPON ANY AND
ALL DEPOSITS (GENERAL OR SPECIAL, MATURED OR UNMATURED) AND CREDITS OF BORROWER
AGAINST LENDER AT ANY TIME EXISTING. UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT
AS SPECIFIED ABOVE, LENDER IS HEREBY AUTHORIZED AT ANY TIME AND FROM TIME TO
TIME, WITHOUT NOTICE TO BORROWER, THE BANK, OR THE OTHER SUBSIDIARIES, TO SET
OFF, APPROPRIATE, AND APPLY ANY AND ALL ITEMS HEREINABOVE REFERRED TO AGAINST
ANY OR ALL INDEBTEDNESS OF BORROWER TO LENDER UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING.  LENDER SHALL GIVE
WRITTEN NOTICE TO BORROWER OF SUCH SETOFF APPROPRIATION OR APPLICATION AFTER
SUCH SETOFF, APPROPRIATION OR APPLICATION OCCURS.

 

 

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8.         MISCELLANEOUS.

8.1       NO WAIVER.  NO DELAY OR FAILURE ON THE PART OF LENDER OR ON THE PART
OF ANY HOLDER OF THE NOTE IN THE EXERCISE OF ANY RIGHT, POWER OR PRIVILEGE
GRANTED UNDER THIS AGREEMENT, OR UNDER ANY OTHER LOAN DOCUMENT, OR AVAILABLE AT
LAW OR IN EQUITY, SHALL IMPAIR ANY SUCH RIGHT, POWER OR PRIVILEGE OR BE
CONSTRUED AS A WAIVER OF ANY EVENT OF DEFAULT OR ANY ACQUIESCENCE THEREIN. NO
SINGLE OR PARTIAL EXERCISE OF ANY SUCH RIGHT, POWER OR PRIVILEGE SHALL PRECLUDE
THE FURTHER EXERCISE OF SUCH RIGHT, POWER OR PRIVILEGE. NO WAIVER SHALL BE VALID
AGAINST LENDER UNLESS MADE IN WRITING AND SIGNED BY LENDER, AND THEN ONLY TO THE
EXTENT EXPRESSLY SPECIFIED THEREIN.

8.2       NOTICES.  ALL NOTICES AND COMMUNICATIONS PROVIDED FOR HEREUNDER SHALL
BE IN WRITING, DELIVERED BY HAND OR SENT BY FIRST‑CLASS, REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, OR EXPRESS COURIER TO THE FOLLOWING ADDRESSES:

 

                       

  (1) If to Lender:    First Tennessee Bank National Association       165
Madison Avenue       Memphis, Tennessee 38103       Attention:  Correspondent
Services            (2) If to Borrower: First Citizens Bancshares, Inc.      
One First Citizens Place       Dyersburg, Tennessee 38024       Attention: 
Laura Beth Butler

                                               

Any party hereto may change its address for notice purposes by notice to the
other parties in the manner provided herein. Notice shall be deemed given when
hand delivered or first class, certified or registered mail, postage prepaid, or
when delivered by express courier.

 

8.3      GOVERNING LAW.  THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TENNESSEE EXCEPT WITH RESPECT TO INTEREST WHICH SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH APPLICABLE FEDERAL LAWS IN EFFECT FROM TIME TO
TIME.

8.4      SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  ALL REPRESENTATIONS,
WARRANTIES AND COVENANTS CONTAINED HEREIN OR MADE BY OR FURNISHED ON BEHALF OF
BORROWER, THE BANK, OR THE OTHER SUBSIDIARIES IN CONNECTION HEREWITH SHALL
SURVIVE THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND ALL OTHER LOAN
DOCUMENTS AND THE EXTENSION OR FUNDING OF THE LOAN HEREUNDER.

 

 

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8.5       DESCRIPTIVE HEADINGS.  THE DESCRIPTIVE HEADINGS OF THE SEVERAL
SECTIONS OF THIS AGREEMENT ARE INSERTED FOR CONVENIENCE ONLY AND DO NOT
CONSTITUTE A PART OF THIS AGREEMENT.

8.6       SEVERABILITY.  IF ANY PART OF ANY PROVISION CONTAINED IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL BE INVALID OR UNENFORCEABLE UNDER
APPLICABLE LAW, SAID PART SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH INVALIDITY
ONLY, WITHOUT IN ANY WAY AFFECTING THE REMAINING PARTS OF SAID PROVISION OR THE
REMAINING PROVISIONS.

8.7        TIME IS OF THE ESSENCE.  TIME IS OF THE ESSENCE IN INTERPRETING AND
PERFORMING THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS.

8.8        COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH,
TAKEN TOGETHER, SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

8.9       PAYMENT OF COSTS.  BORROWER SHALL PAY, PROMPTLY DEMAND BY LENDER, ALL
REASONABLE OUT-OF-POCKET COSTS, EXPENSES, TAXES AND FEES INCURRED BY LENDER IN
CONNECTION WITH THE PREPARATION, EXECUTION AND DELIVERY OF THIS AGREEMENT AND
ALL OTHER LOAN DOCUMENTS AND THE RECORDING AND FILING AND RERECORDING AND
REFILING THEREOF, INCLUDING, WITHOUT LIMITATION, THE REASONABLE OUT-OF-POCKET
COSTS AND PROFESSIONAL FEES OF COUNSEL FOR LENDER, ANY AND ALL TRANSFER,
MORTGAGE OR OTHER TAXES AND ALL RECORDING COSTS THAT MAY BE PAYABLE.  IN THE
FUTURE, BORROWER SHALL PAY PROMPTLY FOLLOWING WRITTEN DEMAND BY THE LENDER, ALL
SUCH COSTS AND EXPENSES INCURRED BY LENDER, IN CONNECTION THEREWITH.

8.10     SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BIND AND INURE TO THE
BENEFIT OF BORROWER AND LENDER, AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS;
PROVIDED, HOWEVER, BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES SHALL NOT HAVE
ANY RIGHT TO ASSIGN THEIR RIGHTS OR OBLIGATIONS HEREUNDER TO ANY PERSON. 
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, LENDER SHALL HAVE
THE RIGHT, BUT SHALL NOT BE OBLIGATED, TO SELL PARTICIPATION IN THE LOAN MADE
PURSUANT HERETO TO OTHER BANKS, FINANCIAL INSTITUTIONS AND INVESTORS IN
ACCORDANCE WITH SECTION 8.25 HEREOF.

8.11     AMENDMENTS; NO IMPLIED WAIVER.  THIS AGREEMENT MAY BE AMENDED OR
MODIFIED, AND BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES MAY TAKE ANY ACTION
HEREIN PROHIBITED, OR OMIT TO PERFORM ANY ACT HEREIN REQUIRED TO BE PERFORMED BY
IT, ONLY IF BORROWER SHALL OBTAIN THE PRIOR WRITTEN CONSENT OF LENDER TO THAT
SPECIFIC AMENDMENT, MODIFICATION, ACTION OR OMISSION TO ACT, AND NO COURSE OF
DEALING BETWEEN BORROWER, THE BANK, OR THE OTHER SUBSIDIARIES AND LENDER SHALL
OPERATE AS A WAIVER OF ANY RIGHT, POWER OR PRIVILEGE GRANTED TO LENDER UNDER
THIS AGREEMENT OR UNDER ANY OTHER LOAN DOCUMENT, OR AVAILABLE TO LENDER AT LAW
OR IN EQUITY.

8.12     RIGHTS CUMULATIVE.  ALL RIGHTS, POWERS AND PRIVILEGES GRANTED HEREUNDER
SHALL BE CUMULATIVE TO AND SHALL NOT BE EXCLUSIVE OF ANY OTHER RIGHTS, POWERS
AND PRIVILEGES GRANTED BY ANY OTHER LOAN DOCUMENT OR AVAILABLE AT LAW OR IN
EQUITY.

8.13     INDEMNITY.  BORROWER AGREES TO PROTECT, INDEMNIFY AND SAVE HARMLESS
LENDER, AND ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF LENDER, FROM AND
AGAINST ANY AND ALL (I) CLAIMS, DEMANDS AND CAUSES OF ACTION OF ANY NATURE
WHATSOEVER BROUGHT BY ANY PERSON NOT A PARTY TO THIS AGREEMENT AND ARISING FROM
OR RELATED OR INCIDENT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, INCLUDING,
WITHOUT LIMITATION, ANY LIABILITY UNDER FEDERAL OR STATE SECURITIES LAWS ARISING
OUT OF LENDER’S DISPOSITION OF ALL OR PART OF THE COLLATERAL, (II) COSTS AND
EXPENSES INCIDENT TO THE DEFENSE OF SUCH CLAIMS, DEMANDS AND CAUSES OF ACTION,
INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES, AND (III)
LIABILITIES, JUDGMENTS, SETTLEMENTS, PENALTIES AND ASSESSMENTS ARISING FROM SUCH
CLAIMS, DEMANDS AND CAUSES OF ACTION; PROVIDED, HOWEVER, THAT BORROWER DOES NOT
AGREE TO INDEMNIFY LENDER AGAINST LENDER’S OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. THE INDEMNITY CONTAINED IN THIS SECTION SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT.

 

 

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8.14     EXPENSES.  BORROWER AGREES TO PROMPTLY REIMBURSE LENDER FOR (I) ALL
COSTS AND EXPENSES OF COLLECTION OF THE NOTES, INCLUDING REASONABLE ATTORNEYS’
FEES, AND (II) ALL EXPENSES INCURRED BY LENDER IN ACTING ON BEHALF OF BORROWER,
THE BANK OR THE OTHER SUBSIDIARIES IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT OR TO MAINTAIN OR PRESERVE THE VALUE OF THE COLLATERAL, OR LENDER’S
INTEREST THEREIN PURSUANT TO THE PLEDGE AGREEMENT, OR ANY OTHER LOAN DOCUMENT. 
SUCH SUMS SHALL INCLUDE INTEREST AT THE DEFAULT RATE (AS DEFINED IN THE NOTES)
ACCRUING FROM THE DATE LENDER REQUESTS SUCH REIMBURSEMENT UNTIL SUCH AMOUNT IS
PAID.

8.15     USURY.  IT IS THE INTENT OF THE PARTIES HERETO NOT TO VIOLATE ANY
FEDERAL OR STATE LAW, RULE OR REGULATION PERTAINING EITHER TO USURY OR TO THE
CONTRACTING FOR OR CHARGING OR COLLECTING OF INTEREST, AND BORROWER, THE BANK,
AND THE OTHER SUBSIDIARIES, AND LENDER AGREE THAT, SHOULD ANY PROVISION OF THIS
AGREEMENT, OR OF EITHER OF THE NOTES, OR OF ANY OTHER LOAN DOCUMENT OR ANY ACT
PERFORMED HEREUNDER OR THEREUNDER, VIOLATE ANY SUCH LAW, RULE OR REGULATION,
THEN THE EXCESS OF INTEREST CONTRACTED FOR OR CHARGED OR COLLECTED OVER THE
MAXIMUM LAWFUL RATE OF INTEREST SHALL BE APPLIED TO THE OUTSTANDING PRINCIPAL
INDEBTEDNESS DUE TO LENDER BY BORROWER UNDER THIS AGREEMENT, AND IF THE
PRINCIPAL INDEBTEDNESS HAS BEEN PAID IN FULL, ANY REMAINING EXCESS SHALL
FORTHWITH BE PAID TO BORROWER.

8.16     JURISDICTION AND VENUE.  BORROWER, THE BANK, AND THE OTHER
SUBSIDIARIES, AND LENDER AGREE, WITHOUT POWER OF REVOCATION, THAT ANY CIVIL SUIT
OR ACTION BROUGHT AGAINST THEM AS A RESULT OF , OR WHICH RELATES TO, ANY OF
THEIR OBLIGATIONS UNDER THIS AGREEMENT OR UNDER ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT AGAINST THEM, JOINTLY OR SINGLY, IN THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF TENNESSEE, AND BORROWER, THE BANK, THE OTHER
SUBSIDIARIES, AND LENDER IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURT
AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTIONS
THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF SUCH CIVIL
SUIT OR ACTION AND ANY CLAIM THAT SUCH CIVIL SUIT OR ACTION HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM, AND BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES, AND
LENDER AGREE THAT FINAL JUDGMENT IN ANY SUCH CIVIL SUIT OR ACTION SHALL BE
CONCLUSIVE AND BINDING UPON THEM AND SHALL BE ENFORCEABLE AGAINST THEM BY SUIT
UPON SUCH JUDGMENT IN ANY COURT OF COMPETENT JURISDICTION.

8.17     CONSTRUCTION.  SHOULD ANY PROVISION OF THIS AGREEMENT REQUIRE JUDICIAL
INTERPRETATION, THE PARTIES HERETO AGREE THAT THE COURT INTERPRETING OR
CONSTRUING THE SAME SHALL NOT APPLY A PRESUMPTION THAT THE TERMS HEREOF SHALL BE
MORE STRICTLY CONSTRUED AGAINST ONE PARTY BY REASON OF THE RULE OF CONSTRUCTION
THAT A DOCUMENT IS TO BE MORE STRICTLY CONSTRUED AGAINST THE PARTY WHO ITSELF OR
THROUGH ITS AGENTS PREPARED THE SAME, IT BEING AGREED THAT BORROWER, LENDER AND
THEIR RESPECTIVE AGENTS HAVE PARTICIPATED IN THE PREPARATION HEREOF.

 

 

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8.18     HOLIDAYS.  IN ANY CASE WHERE THE DATE FOR ANY ACTION REQUIRED TO BE
PERFORMED UNDER THIS AGREEMENT OR UNDER ANY OTHER LOAN DOCUMENT SHALL BE, IN THE
CITY WHERE THE PERFORMANCE IS TO BE MADE, A SATURDAY, A SUNDAY, A LEGAL HOLIDAY
OR A DAY ON WHICH BANKING INSTITUTIONS ARE AUTHORIZED BY LAW TO CLOSE, THEN SUCH
PERFORMANCE MAY BE MADE ON THE NEXT SUCCEEDING BUSINESS DAY NOT A SATURDAY, A
SUNDAY, A LEGAL HOLIDAY OR A DAY ON WHICH BANKING INSTITUTIONS ARE AUTHORIZED BY
LAW TO CLOSE.    

8.19     ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED
AND DELIVERED CONTEMPORANEOUSLY HEREWITH, TOGETHER WITH THE EXHIBITS ATTACHED
HERETO AND THERETO, CONSTITUTE THE ENTIRE UNDERSTANDING OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF, AND ANY OTHER PRIOR OR CONTEMPORANEOUS
AGREEMENTS, WHETHER WRITTEN OR ORAL, WITH RESPECT THERETO ARE EXPRESSLY
SUPERSEDED HEREBY. THE EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BY BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES WAS NOT BASED UPON ANY FACTS
OR MATERIALS PROVIDED BY LENDER, NOR WAS BORROWER, THE BANK, AND THE OTHER
SUBSIDIARIES INDUCED TO EXECUTE THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY
REPRESENTATION, STATEMENT OR ANALYSIS MADE BY LENDER. IN THE EVENT THAT THE
PROVISIONS OF THIS LOAN AGREEMENT SHALL CONFLICT WITH PROVISIONS OF ANY OF THE
OTHER LOAN DOCUMENTS, THE PROVISIONS OF THIS AGREEMENT SHALL CONTROL.

            This written Loan Agreement represents the final agreement between
the parties and may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements of the parties.  There are no unwritten oral
agreements between the parties.

 

8.20     CONSENT.  BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES HEREBY
REPRESENT AND WARRANT THAT TO THE BEST OF BORROWER’S KNOWLEDGE THERE IS NO
CONSENT FROM ANY LENDER OR CREDITOR NEEDED TO PREVENT BORROWER, THE BANK, OR THE
OTHER SUBSIDIARIES FROM BEING IN DEFAULT BY BORROWER EXECUTING THE NOTES OR
BORROWER, THE BANK, AND THE OTHER SUBSIDIARIES EXECUTING, THIS LOAN AGREEMENT OR
ANY OTHER LOAN DOCUMENT ASSOCIATED WITH THIS LOAN.

8.21          WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

 

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8.22     FURTHER ASSURANCES.  BORROWER AGREES TO FURNISH A CURRENT FINANCIAL
STATEMENT UPON THE REQUEST OF LENDER FROM TIME TO TIME, AND FURTHER AGREES TO
EXECUTE AND DELIVER ALL OTHER INSTRUMENTS AND TAKE SUCH OTHER ACTIONS AS LENDER
MAY FROM TIME TO TIME REASONABLY REQUEST IN ORDER TO CARRY OUT THE PROVISIONS
AND INTENT HEREOF.

8.23     EXECUTION BY BANK.  THE UNDERSIGNED BANK IS JOINING THIS AGREEMENT FOR
THE SOLE PURPOSE OF ACKNOWLEDGING THE PLEDGE OF ITS CAPITAL STOCK PURSUANT TO
THE PLEDGE AGREEMENT. 

8.24     NON-CONTROL.  IN NO EVENT SHALL THE LENDER’S RIGHTS HEREUNDER BE DEEMED
TO INDICATE THAT THE LENDER IS IN CONTROL OF THE BUSINESS, MANAGEMENT OR
PROPERTIES OF THE BORROWER OR THE BANK OR HAS POWER OVER THE DAILY MANAGEMENT
FUNCTIONS AND OPERATING DECISIONS MADE BY THE BORROWER AND THE BANK, ALL SUCH
RIGHTS AND POWERS BEING HEREBY EXPRESSLY RESERVED TO THE BORROWER AND THE BANK.

8.25     ASSIGNMENTS AND PARTICIPATIONS.  LENDER MAY SELL OR OFFER TO SELL THE
LOANS, OR EITHER OF THEM, OR INTERESTS THEREIN TO ONE OR MORE ASSIGNEES OR
PARTICIPANTS; PROVIDED THAT, SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, ANY SUCH SALE OR ASSIGNMENT SHALL BE SUBJECT TO BORROWER'S
REASONABLE CONSENT THERETO, BUT PROVIDED FURTHER THAT (A) IF BORROWER DOES NOT
PROVIDE A WRITTEN RESPONSE TO LENDER WITHIN TEN (10) DAYS OF BORROWER'S RECEIPT
OF LENDER'S WRITTEN REQUEST, BORROWER SHALL BE DEEMED TO HAVE CONSENTED TO SUCH
SALE, ASSIGNMENT, OR PARTICIPATION AND (B) BORROWER'S CONSENT SHALL NOT BE
REQUIRED IN CONNECTION WITH A SALE OR ASSIGNMENT IN CONNECTION WITH A MERGER OR
SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF LENDER OR A SALE OF ALL OR
SUBSTANTIALLY ALL OF THE LENDER'S CORRESPONDENT BANKING / BANK HOLDING COMPANY
LOANS.  BORROWER SHALL EXECUTE, ACKNOWLEDGE AND DELIVER ANY AND ALL INSTRUMENTS
REASONABLY REQUESTED BY LENDER IN CONNECTION THEREWITH, AND TO THE EXTENT, IF
ANY, SPECIFIED IN ANY SUCH ASSIGNMENT OR PARTICIPATION, SUCH ASSIGNEE(S) OR
PARTICIPANT(S) SHALL HAVE THE SAME RIGHTS AND BENEFITS WITH RESPECT TO THE
APPLICABLE LOAN DOCUMENTS AS SUCH PERSON(S) WOULD HAVE IF SUCH PERSON(S) WERE
LENDER HEREUNDER.  LENDER MAY DISSEMINATE ANY INFORMATION IT NOW HAS OR
HEREAFTER OBTAINS PERTAINING TO THE LOANS, OR EITHER OF THEM, INCLUDING ANY
SECURITY FOR THE LOANS, OR EITHER OF THEM, BORROWER, BANK, ANY OTHER SUBSIDIARY,
ANY OF BORROWER’S, BANK’S, OR ANY OTHER SUBSIDIARY’S PRINCIPALS, OR ANY
GUARANTOR, IF ANY, TO ANY ACTUAL OR PROSPECTIVE ASSIGNEE OR PARTICIPANT, TO
LENDER’S AFFILIATES, TO ANY REGULATORY BODY HAVING JURISDICTION OVER LENDER, TO
ANY ACTUAL OR PROSPECTIVE COUNTERPARTY (OR ITS ADVISORS) TO ANY SWAP OR
DERIVATIVE TRANSACTION RELATING TO LENDER AND THE LOAN, OR TO ANY OTHER PARTY AS
NECESSARY OR APPROPRIATE IN LENDER’S REASONABLE JUDGMENT.

8.26     ELECTRONIC TRANSMISSION OF DATA.  LENDER AND BORROWER AGREE THAT
CERTAIN DATA RELATED TO THE  LOANS (INCLUDING CONFIDENTIAL INFORMATION,
DOCUMENTS, APPLICATIONS AND REPORTS) MAY BE TRANSMITTED ELECTRONICALLY,
INCLUDING TRANSMISSION OVER THE INTERNET TO THE PARTIES, THE PARTIES’
AFFILIATES, AGENTS AND REPRESENTATIVES, AND OTHER PERSONS INVOLVED WITH THE
SUBJECT MATTER OF THIS AGREEMENT.  BORROWER ACKNOWLEDGES AND AGREES THAT (A)
THERE ARE RISKS ASSOCIATED WITH THE USE OF ELECTRONIC TRANSMISSION AND THAT
LENDER DOES NOT CONTROL THE METHOD OF TRANSMITTAL OR SERVICE PROVIDERS, (B)
LENDER HAS NO OBLIGATION OR RESPONSIBILITY WHATSOEVER AND ASSUMES NO DUTY OR
OBLIGATION FOR THE SECURITY, RECEIPT OR THIRD PARTY INTERCEPTION OF ANY SUCH
TRANSMISSION, AND (C) BORROWER AND BANK WILL RELEASE, HOLD HARMLESS AND
INDEMNIFY LENDER FROM ANY CLAIM, DAMAGE OR LOSS, INCLUDING THAT ARISING IN WHOLE
OR PART FROM LENDER’S STRICT LIABILITY OR SOLE, COMPARATIVE OR CONTRIBUTORY
NEGLIGENCE, WHICH IS RELATED TO THE ELECTRONIC TRANSMISSION OF DATA.

 

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8.27     USA PATRIOT ACT.  THE LENDER HEREBY NOTIFIES THE BORROWER AND ANY
GUARANTOR THAT PURSUANT TO THE REQUIREMENTS OF THE PATRIOT ACT, IT IS REQUIRED
TO OBTAIN, VERIFY AND RECORD INFORMATION THAT IDENTIFIES THE BORROWER, WHICH
INFORMATION INCLUDES THE NAME AND ADDRESS OF THE BORROWER AND OTHER INFORMATION
THAT WILL ALLOW LENDER TO IDENTIFY THE BORROWER IN ACCORDANCE WITH THE PATRIOT
ACT.

8.28     NO INFERENCE OF EXTENSION PAST MATURITY DATE.  NOTWITHSTANDING ANY
OTHER PROVISION HEREIN, THE TERMS, CONDITIONS, AND REQUIREMENTS PROVIDED FOR
HEREIN THAT WOULD, BY THEIR EXPRESS TERMS, BE APPLICABLE TO TIME PERIODS AFTER
THE MATURITY DATE OF THE NOTES, ARE NOT TO BE INTERPRETED AS AN INFERENCE THAT
THE LENDER HAS AGREED TO ANY EXTENSION, AUTOMATIC OR OTHERWISE, TO THE EXTENSION
OF THE MATURITY DATE.  THE LENDER HAS NOT AGREED AND IS UNDER NO OBLIGATION TO
EXTEND THE MATURITY DATE OF THE NOTES, OR EITHER OF THEM.

           

Signature page follows.

 

 

 

 

 

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Signature Page to Loan Agreement

 

WITNESS the hand and seal of the parties hereto through their duly authorized
officers as of the date first above written.

 

LENDER:

 

FIRST TENNESSEE BANK NATIONAL

ASSOCIATION

 

By:  /s/ Jeff Agee                                           

Printed Name:  Jeff Agee                              

Title:  Chief Executive Officer                         

 

 

BORROWER:

 

FIRST CITIZENS BANCSHARES, INC.

 

 

By:  /s/ Jeff Agee                                           

Printed Name:  Jeff Agee                              

Title:  Chief Executive Officer                         

 

 

The undersigned Bank executes this Loan Agreement for the sole purpose of
acknowledging the pledge of its Capital Stock under the Pledge Agreement.

 

BANK:

 

FIRST CITIZENS NATIONAL BANK

 

 

By:  /s/ Patrick Wredling                                

Printed Name:  Patrick Wredling                   

Title:  V.P. and Relationship Mgr.                 

 

 

 

 

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                                                            LIST OF EXHIBITS

 

EXHIBIT A-1

 

EXHIBIT A-2

FIXED RATE NOTE

 

FLOATING RATE NOTE

 

EXHIBIT B

BORROWER’S COUNSEL’S OPINION

 

EXHIBIT C

ACTIONS, SUITS, OR OTHER PROCEEDINGS PENDING OR THREATENED AGAINST OR AFFECTING
BORROWER OR ANY SUBSIDIARY

 

EXHIBIT D

SUBSIDIARIES OF BORROWER

 

EXHIBIT E

LIENS

 

EXHIBIT F

OPTIONS, WARRANTS OR OTHER RIGHTS AGREEMENTS OR COMMITMENTS (INCLUDING
CONVERSION RIGHTS AND PREEMPTIVE RIGHTS) OBLIGATING BORROWER OR ANY SUBSIDIARY
TO ISSUE, SELL, PURCHASE OR REDEEM SHARES OR SECURITIES CONVERTIBLE TO SHARES

 

EXHIBIT G

INDEBTEDNESS NOT AUTHORIZED IN SECTION 6.1

 

EXHIBIT H

COMPLIANCE CERTIFICATE

 

APPENDIX A

DEFINITIONS

 

SCHEDULE 4.6

SUPERVISORY ACTION(S)

 

                                                                       

H-1

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APPENDIX A

 

DEFINITIONS

 

“Affiliate” shall have the same meaning assigned to it in applicable bank
regulations.

 

“Asset Disposition” shall mean the disposition (including the sale, lease or
transfer) of any or all of the assets (including without limitation any common
or preferred stock of the Bank or any other Subsidiary) of the Borrower or any
of its Subsidiaries whether by sale, lease, transfer or otherwise.

“Average Assets” shall mean the year-to-date average of total assets of Bank.

 

“Bank Regulatory Authority” shall mean the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, and all other relevant bank regulatory authorities (including,
without limitation, relevant state bank regulatory authorities).

 

“Call Report” shall mean the Bank’s Quarterly Report of Condition and Income.

 

“Capital Stock” shall mean any and all shares, interests, participations or
other equivalents (however designated) of capital stock or equity, whether now
outstanding or issued after the date hereof, including all common stock,
preferred stock, partnership interests and limited liability company member
interests.

 

“Change in Control” means, at any time after the date hereof, (a) the
acquisition by any Person (other than the Borrower's employee stock ownership
plan if the Borrower obtains appropriate governmental approvals), or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the U.S. Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 25% or more of the outstanding shares of voting stock
of the Borrower on a fully diluted basis or (b) the Borrower shall cease to own
one hundred percent (100%) of the outstanding shares of voting stock of the
Bank.

 

“Change in  Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty by any Governmental Entity, (b) any change in any law, rule,
regulation or treaty or in the administration, interpretation, implementation or
application thereof, in each case, by any Governmental Entity or (c) the making
or issuance of any request, rule, guideline or directive (whether or not having
the force of law) by any Governmental Entity; provided that notwithstanding
anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (ii) all requests, rules,
regulations, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.

 

 

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“Collateral” shall mean one hundred two thousand (102,000) shares of the common
stock of the Bank.

           

“Covenant Compliance Date” shall mean the last day of each fiscal quarter of the
Borrower.

 

 

“Environmental Laws” shall mean all federal, state, and local laws, including
statutes, regulations, ordinances, codes, rules, and other governmental
restrictions and requirements, relating to the discharge of air pollutants,
water pollutants, or process waste water or otherwise relating to the
environment or hazardous substances or the treatment, processing, storage,
disposal, release, transport, or other handling thereof, including, but not
limited to, the federal Solid Waste Disposal Act, the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and Recovery Act, the
federal Hazardous Materials Transportation Act, the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, the federal
Toxic Substances Control Act, regulations of the Nuclear Regulatory Agency, and
regulations of any state department of natural resources or state environmental
protection agency, in each case as now or at any time hereafter in effect.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time. 
References to sections of ERISA shall be construed also to refer to any
successor sections.

 

“ERISA Affiliate” means an entity which is under common control with the
Borrower within the meaning of Section 4001(a)(14) of ERISA, or is a member of a
group which includes the Borrower and which is treated as a single employer
under Sections 414(b) or (c) of the Code.

 

“ERISA Event” means (i) with respect to any Plan, the occurrence of a Reportable
Event or the substantial cessation of operations (within the meaning of Section
4062(e) of ERISA); (ii) the withdrawal by the Borrower, the Bank, or any other
Subsidiary or any ERISA Affiliate from a Multiple Employer Plan during a plan
year in which it was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii) the
distribution of a notice of intent to terminate or the actual termination of a
Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of
proceedings to terminate or the actual termination of a Plan by the PBGC under
Section 4042 of ERISA; (v) any event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any plan; (vi) the complete or partial withdrawal of the
Borrower or any of its Subsidiaries or any ERISA Affiliate from a Multiemployer
Plan; (vii) the conditions for imposition of a lien under Section 302(f) of
ERISA exist with respect to any Plan; or (viii) the adoption of an amendment to
any Plan requiring the provision of security to such Plan pursuant to Section
307 of ERISA.

 

 

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“Event of Default” shall have the meaning assigned to such term in Section 7.1
of this Agreement.

 

“GAAP” shall mean generally accepted accounting principles applied on a
consistent basis, maintained throughout the period involved.

 

“Governmental Entity” means the United States, any State, and/or any political
subdivision, department, agency or instrumentality of any of the foregoing.

 

“Local Authorities” means individually and collectively the state and local
governmental authorities which govern the business and operations owned or
conducted by the Borrower or its Subsidiaries.

 

“Loan Documents” shall mean the Note, the Agreement, the Pledge Agreement, stock
certificates issued to Borrower evidencing the shares pledged pursuant to the
Pledge Agreement, stock powers with respect to such shares pledged as Collateral
and any and all other documents, instruments or agreements evidencing, securing,
guaranteeing or otherwise related to or delivered in connection with the Loan.

 

"Material Adverse Effect" shall mean a material and adverse change in or a
material adverse effect on (i) the condition (financial or otherwise), business
operation, properties, assets, liabilities (actual and contingent), or results
of operations of the Borrower, the Bank, or any other Subsidiary, taken as a
whole, (ii) the ability of the Borrower to perform its obligations under the
Loan Documents, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Lender under the Loan Documents.

 

“Maturity Date” shall mean October 1, 2019.

 

"Modified’ Texas Ratio” shall mean a fraction, expressed as a percentage, where
the numerator is Non-Performing Assets, and where the denominator is the sum of
Bank’s Tier 1 Capital plus the entire balance of Bank’s loan loss reserve, all
determined on a basis satisfactory to Lender.

 

“Multiple Employer Plan” shall mean a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.

 

“Non-Performing Assets” shall mean the sum of (1) all Non-Performing Loans and
(2) Other Real Estate Owned listed in Call Reports and other such assets
acquired through foreclosure or other realization upon collateral or
rearrangement or satisfaction of Indebtedness. 

 

“Non-Performing Loans” shall mean the sum of (1) all loans classified internally
or by a Bank Regulatory Authority as non-accrual plus (2) loans past due by 90
days or more plus (3) loans for which the obligee has reduced the agreed
interest rate, reduced the principal or interest obligation, extend the
maturity, applied interest payments to reduce principal, capitalized interest,
or otherwise renegotiated the terms of the obligation based upon the actual or
asserted inability of the obligor(s) of such loans to perform their obligations
pursuant to the agreements with the obligee prior to such modification or
renegotiation; provided, however, that (a) loans for which the Borrower or the
Bank has taken additional collateral satisfactory to it and therefore is
prepared to make additional loan advances or any other loans which have been
restructured and are performing in a manner satisfactory to the Borrower and (b)
any portion of a Non-Performing Loan that is guaranteed by the United States
government or an agency thereof in a manner acceptable to Lender shall not be
included in the definition of Non-Performing Loans (but any un-guaranteed
portion of a Non-Performing Loan covered by item (b) above shall be included as
a Non-Performing Loan).   

 

 

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“Notes” shall mean the Fixed Rate Note and the Floating Rate Note, collectively,
together with any and all renewals, modifications, extensions and replacements
thereof.

 

“Patriot Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)), as amended.

 

“Permitted Encumbrances” shall mean and include: (a) liens for taxes,
assessments or similar governmental charges not in default or being contested in
good faith by appropriate proceedings; (b) workmen’s, vendors’, mechanics’ and
materialmen’s liens and other liens imposed by law incurred in the ordinary
course of business, and easements, zoning restrictions and encumbrances which
are not substantial in character or amount and do not materially detract from
the value or interfere with the intended use of the properties subject thereto
and affected thereby; (c) liens in respect of pledges or deposits under social
security laws, workmen’s compensation laws, unemployment insurance or similar
legislation and in respect of pledges or deposits to secure bids, tenders,
contracts (other than contracts for the payment of money), leases or statutory
operations; (d) liens on investment securities used to secure government, public
and trust deposits; (e) liens on any Subsidiary's portfolio of fully disbursed,
one-to-four family residential mortgages, commercial mortgages, farm mortgages,
second mortgages and multi-family residential mortgages to the extent pledged as
collateral for FHLB advances and contingent borrowing purposes; (f) liens,
charges and encumbrances incidental to the conduct of the business of the
Subsidiaries incurred in the ordinary course of business and consistent with
past practices; (g) repurchase agreements, reverse repurchase agreements and
other similar transactions entered into by any Subsidiary in the ordinary course
of its banking, deposit or trust business; and (h) such other liens and
encumbrances to which Lender shall consent in writing, if any.

 

“Person” means an individual, partnership, corporation, limited liability
company, trust, unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof, joint stock company, or
non-incorporated organization, or any other entity of any kind whatsoever.

 

 

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“Plan” means any employee benefit plan (as defined in Section 3(3) of ERISA)
which is covered by ERISA and with respect to which the Borrower, the Bank, or
any other Subsidiary or any ERISA Affiliate is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an “employer”
within the meaning of Section 3(5) of ERISA.

 

“Pledge Agreement” shall mean that certain Pledge and Security Agreement
executed by Borrower for the benefit of Lender dated of even date with this Loan
Agreement, pledging the Collateral.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the notice requirement has been
waived by regulation.

 

“Sanctioned Country” means a country subject to a sanctions program identified
on the list maintained by OFAC and available at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx,
or as otherwise published from time to time.

 

“Sanctioned Person” means (a) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,
or as otherwise published from time to time, or (b) (i) an agency of the
government of a Sanctioned Country, (ii) an organization controlled by a
Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by the U.S. Department of
Treasury’s Office of Foreign Assets Control.

 

“Subsidiaries” or individually “Subsidiary” shall mean any corporation other
than Borrower in an unbroken chain of corporations beginning with the Borrower
with each of the corporations or the Bank other than the last corporation in the
unbroken chain owning fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations or the Bank and
are more specifically listed in Exhibit D attached hereto.

 

“Supervisory Action” shall mean and include the issuance by or at the behest of
any Bank Regulatory Authority of a letter agreement, memorandum of understanding
(regardless of whether consented or agreed to by the party to whom it is
addressed), cease and desist order, injunction, directive, restraining order,
formal agreement, notice of charges, or civil money penalties, against Borrower,
the Bank, or any other Subsidiary or the directors or officers of any of them,
whether temporary or permanent.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of  the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement, together with
any related schedule and confirmation, as amended, supplemented, superseded or
replaced from time to time.

 

 

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“Tier 1 Capital” shall have the meaning included in Appendix A to Title 12, Code
of Federal Regulations, Part 225, Capital Adequacy Guidelines for Bank Holding
Companies.

 

“Tier 1 Leverage Ratio” shall have the meaning and be calculated as set forth in
Appendix D to Title 12, Code of Federal Regulations, Part 225, Capital Adequacy
Guidelines for Bank Holding Companies. 

 

“United States” means the government of the United States of America or any
department, agency, division or instrumentality thereof.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE 4.6

 

SUPERVISORY ACTION(S)

 

None.