Exhibit 10.1

EXECUTION VERSION

 

 

 

TERM LOAN AGREEMENT

 

dated as of April 26, 2013

 

among

 

BNC BANCORP,

as Borrower

 

and

 

SYNOVUS BANK,

as Lender

 

 

 

 

 

 

TABLE OF CONTENTS

 

      Page         Article I   DEFINITIONS; CONSTRUCTION 1         Section 1.1.
  Definitions 1 Section 1.2.   Accounting Terms and Determination 18 Section
1.3.   Terms Generally 18         Article II   AMOUNT AND TERMS OF THE TERM LOAN
19         Section 2.1.   Term Loan Commitment 19 Section 2.2.   Procedure for
Borrowing Term Loan 19 Section 2.3.   Funding of Borrowing 19 Section 2.4.  
Interest Elections. 19 Section 2.5.   Repayment and Prepayments of Term Loan. 20
Section 2.6.   Interest on Term Loan. 23 Section 2.7.   Fees 23 Section 2.8.  
Computation of Interest and Fees 23 Section 2.9.   Inability to Determine
Interest Rates 24 Section 2.10.   Evidence of Indebtedness 24 Section 2.11.  
Illegality 24 Section 2.12.   Increased Costs. 24 Section 2.13.   Funding
Indemnity 25 Section 2.14.   Taxes. 26 Section 2.15.   Payments Generally. 26  
      Article III   CONDITIONS PRECEDENT TO EFFECTIVENESS AND BORROWING 27      
  Section 3.1.   Conditions To Effectiveness and Borrowing 27         Article IV
  REPRESENTATIONS AND WARRANTIES 29         Section 4.1.   Existence; Power 29
Section 4.2.   Organizational Power; Authorization 29 Section 4.3.  
Governmental Approvals; No Conflicts 30 Section 4.4.   Financial Statements 30
Section 4.5.   Litigation Matters and Enforcement Actions 30 Section 4.6.  
Compliance with Laws and Agreements 31 Section 4.7.   Investment Company Act 31
Section 4.8.   Taxes 31 Section 4.9.   Margin Regulations 31 Section 4.10.  
ERISA 31 Section 4.11.   Disclosure 32 Section 4.12.   Subsidiaries 32 Section
4.13.   Dividend Restrictions; Other Restrictions 33

 

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Section 4.14.   Capital Measures 33 Section 4.15.   Ownership of Property 33
Section 4.16.   Patriot Act 34 Section 4.17.   Solvency 34 Section 4.18.   Labor
Relations 34 Section 4.19.   Regulatory Matters 34 Section 4.20.   SEC Reports
35 Section 4.21.   Accounting Controls and Disclosure Controls 35 Section 4.22.
  Foreign Corrupt Practices Act 36 Section 4.23.   Money Laundering Laws 36
Section 4.24.   OFAC 37         Article V   AFFIRMATIVE COVENANTS 37        
Section 5.1.   Financial Statements and Other Information 37 Section 5.2.  
Notices of Material Events 40 Section 5.3.   Existence; Conduct of Business 40
Section 5.4.   Compliance with Laws, Etc 41 Section 5.5.   Payment of
Obligations 41 Section 5.6.   Books and Records 41 Section 5.7.   Visitation,
Inspection, Etc 41 Section 5.8.   Maintenance of Properties; Insurance 41
Section 5.9.   Use of Proceeds 42 Section 5.10.   Further Assurances 42        
Article VI   FINANCIAL COVENANTS 42         Section 6.1.   Regulatory Capital 42
        Article VII   NEGATIVE COVENANTS 43         Section 7.1.   Indebtedness
43 Section 7.2.   Negative Pledge 44 Section 7.3.   Fundamental Changes 45
Section 7.4.   Restricted Payments 45 Section 7.5.   Restrictive Agreements 46
Section 7.6.   Investments, Etc 46 Section 7.7.   Transactions with Affiliates
47 Section 7.8.   Hedging Transactions 47 Section 7.9.   Amendment to Material
Documents 47 Section 7.10.   Sale and Leaseback Transaction 47 Section 7.11.  
Accounting Changes 47 Section 7.12.   Unsafe and Unsound Practices 48 Section
7.13.   Most Favored Lender Status 48         Article VIII   EVENTS OF DEFAULT
48         Section 8.1.   Events of Default 48

 

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Article IX   MISCELLANEOUS 51         Section 9.1.   Notices. 51 Section 9.2.  
Waiver; Amendments. 53 Section 9.3.   Expenses; Indemnification. 54 Section 9.4.
  Successors and Assigns. 55 Section 9.5.   Governing Law; Jurisdiction; Consent
to Service of Process. 56 Section 9.6.   WAIVER OF JURY TRIAL 57 Section 9.7.  
Right of Setoff 57 Section 9.8.   Counterparts; Integration 58 Section 9.9.  
Survival 58 Section 9.10.   Severability 58 Section 9.11.   Confidentiality 59
Section 9.12.   Waiver of Effect of Corporate Seal 59 Section 9.13.   Patriot
Act 59 Section 9.14.   Independence of Covenants 59 Section 9.15.   No Advisory
or Fiduciary Relationship 60

 

Schedules

 

Schedule 4.12 - Subsidiaries Schedule 7.1 - Outstanding Indebtedness Schedule
7.6 - Investments

 

Exhibits

 

Exhibit A - Form of Assignment and Acceptance Agreement Exhibit B - Form of Term
Note Exhibit 2.2 - Form of Notice of Borrowing Exhibit 2.4 - Form of Notice of
Continuation/Conversion Exhibit 3.1(b)(iii) - Form of Secretary’s Certificate
Exhibit 3.1(b)(vi) - Form of Officer’s Certificate Exhibit 5.1(c) - Form of
Compliance Certificate

 

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TERM LOAN AGREEMENT

 

THIS TERM LOAN AGREEMENT (this “Agreement”) is made and entered into as of April
26, 2013, by and among BNC BANCORP, a North Carolina corporation (the
“Borrower”), and SYNOVUS BANK, as Lender (the “Lender”).

 

WITNESSETH:

 

WHEREAS, the Borrower has requested that the Lender, and the Lender has agreed
subject to the terms and conditions of this Agreement to, establish a term loan
facility in an aggregate initial principal amount of $30,000,000;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Borrower and the Lender agree as follows:

 

Article I          DEFINITIONS; CONSTRUCTION

 

Section 1.1.          Definitions. In addition to the other terms defined
herein, the following terms used herein shall have the meanings herein specified
(to be equally applicable to both the singular and plural forms of the terms
defined):

 

“Acquisition” shall mean any transaction or a series of related transactions for
the purpose of, or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of any Person, (b) the acquisition of greater than 50% of the Capital
Stock, partnership interest, membership interest or other equity interests of
any Person, or otherwise causing a Person to become a Subsidiary, or (c) a
merger or consolidation of, or any other combination with, another Person (other
than a Person that is a Subsidiary).

 

“Additional Covenant” shall mean any affirmative or negative covenant or similar
restriction applicable to the Borrower or any of its Subsidiaries (regardless of
whether such provision is labeled or otherwise characterized as a covenant) the
subject matter of which either (i) is similar to that of any covenant in
Articles V, VI or VII of this Agreement, or related definitions in Section 1.1
of this Agreement, but contains one or more percentages, amounts or formulas
that is more restrictive than those set forth herein or more beneficial to the
holder or holders of the Indebtedness of the Borrower or its Subsidiaries
created or evidenced by the document in which such covenant or similar
restriction is contained (and such covenant or similar restriction shall be
deemed an Additional Covenant only to the extent that it is more restrictive or
more beneficial) or (ii) is different from the subject matter of any covenant in
Articles V, VI or VII of this Agreement, or related definitions in Section 1.1
of this Agreement. 

 

 

 

 

“Additional Default” shall mean any provision contained in any document or
instrument creating or evidencing Indebtedness of the Borrower or any of its
Subsidiaries which permits the holder or holders of such Indebtedness to
accelerate (with the passage of time or giving of notice or both) the maturity
thereof or otherwise requires the Borrower or any of its Subsidiaries to
purchase such Indebtedness prior to the stated maturity thereof and which either
(i) is similar to any Default or Event of Default contained in Article VIII of
this Agreement, or related definitions in Section 1.1 of this Agreement, but
contains one or more percentages, amounts or formulas that is more restrictive
or has a shorter grace period than those set forth herein or is more beneficial
to the holder or holders of such other Indebtedness (and such provision shall be
deemed an Additional Default only to the extent that it is more restrictive or
more beneficial) or (ii) is different from the subject matter of any Default or
Event of Default contained in Article VIII of this Agreement, or related
definitions in Section 1.1 of this Agreement.

 

“Administrative Questionnaire” shall mean, with respect to the Lender, an
administrative questionnaire in the form prepared by the Lender and submitted to
the Lender.

 

“Affiliate” shall mean, as to any Person, any other Person that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, such Person.

 

“Anti-Terrorism Laws” has the meaning given to such term in Section 4.16.

 

“Approved Fund” shall mean any Person (other than a natural Person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business and that is administered or managed by (i) the Lender, (ii) an
Affiliate of the Lender or (iii) an entity or an Affiliate of an entity that
administers or manages the Lender.

 

“Asset Sale” has the meaning given to such term in Section 2.5(d).

 

“Assignment and Acceptance” shall mean an Assignment and Acceptance entered into
by the Lender and an assignee, in the form of Exhibit A attached hereto.

 

“Bank of North Carolina” shall mean Bank of North Carolina, a state bank
chartered in the State of North Carolina and wholly-owned Subsidiary of the
Borrower.

 

“Base Rate” shall mean the highest of: (i) the prevailing rate of interest, on a
per annum basis, described in the Eastern Edition of The Wall Street Journal as
the prime lending rate, as in effect from time to time, (ii) the Federal Funds
Rate, as in effect from time to time, plus one-half of one percent (0.50%) per
annum and (iii) LIBOR determined on a daily basis for an Interest Period of one
(1) month, plus one percent (1.00%) per annum. The Lender’s prime lending rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Lender may make commercial loans or other
loans at rates of interest at, above or below the Lender’s prime lending rate.
Each change in the any of the rates described above in this definition shall be
effective from and including the date such change is announced as being
effective.

 

“Base Rate Borrowing” shall mean the Borrowing of the Term Loan (or portion
thereof) as a Base Rate Loan.

 

“Base Rate Loan” shall mean the Term Loan (or any portion thereof) to the extent
it is accruing interest at the Base Rate.

 

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“Base Rate Margin” shall mean 3.50% per annum.

 

“Borrower SEC Documents” shall have the meaning set forth in Section 4.20
hereof.

 

“Borrowing” shall mean a borrowing consisting of the Term Loan (or portion
thereof) of the same Type, made, converted or continued on the same date and, in
the case of Eurodollar Loans, as to which a single Interest Period is in effect.

 

“Business Day” shall mean (i) any day other than a Saturday, Sunday or other day
on which commercial banks in Columbus, Georgia are authorized or required by law
to close and (ii) if such day relates to a continuation of, a payment or
prepayment of principal or interest on, or an Interest Period for, a Eurodollar
Loan or a notice with respect thereto, any day on which dealings in Dollars are
carried on in the London interbank market.

 

“Call Report” shall mean, with respect to each Financial Institution Subsidiary,
the “Consolidated Reports of Condition and Income” (FFIEC Form 031 or 041 or any
successor form of the Federal Financial Institutions Examination Council).

 

“Capital Stock” means any and all shares, equity interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
including any preferred interests and preferred shares, partnership interests
and membership interests, and any and all warrants, rights or options to
purchase or other arrangements or rights to acquire any of the foregoing.

 

“Capital Lease Obligations” of any Person shall mean all obligations of such
Person to pay rent or other amounts under any lease (or other arrangement
conveying the right to use) of real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital lease obligations on a balance sheet of such Person under GAAP, and the
amount of such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.

 

“Cash” means money, currency or a credit balance in any Deposit Account, in each
case, owned by the Borrower or its Subsidiaries, but only to the extent the
foregoing is not subject to any Lien.

 

“Change in Control” shall mean (a) with respect to the Borrower, the occurrence
of one or more of the following events: (i) any sale, lease, exchange or other
transfer (in a single transaction or a series of related transactions) of all or
a material portion of the assets of the Borrower to any Person or “group”
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder in effect on the date hereof),
(ii) the acquisition of ownership, directly or indirectly, beneficially or of
record, by any Person or “group” (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof) of: (x) 25.0% or more of the outstanding shares
of the Voting Stock of the Borrower and/or (y) other Capital Stock of the
Borrower representing 25.0% or more of the economic interests of the Borrower,
(iii) occupation of a majority of the seats (other than vacant seats) on the
board of directors of the Borrower by Persons who were neither (A) nominated by
the Borrower’s board of directors as constituted as of the Closing Date or
(B) appointed by directors so nominated after the Closing Date, or (b) the
Borrower shall own, directly or indirectly, less than 100% of the Voting Stock
of any Financial Institution Subsidiary.

 

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“Change in Law” shall mean (i) the adoption of any applicable law, rule or
regulation after the date of this Agreement, (ii) any change in any applicable
law, rule or regulation, or any change in the interpretation or application
thereof, by any Governmental Authority after the date of this Agreement, or
(iii) compliance by the Lender with any request, guideline or directive (whether
or not having the force of law) of any Governmental Authority made or issued
after the date of this Agreement; provided, however, that notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules,
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.

 

“Closing Date” shall mean the date on which the conditions precedent set forth
in Section 3.1 have been satisfied or waived in accordance with the terms of
this Agreement.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended an in effect
from time to time.

 

“Compliance Certificate” shall mean a certificate from the Chief Financial
Officer or the President of the Borrower in the form of, and containing the
certifications set forth in, the certificate attached hereto as Exhibit 5.1(c).

 

“Contractual Obligation” of any Person shall mean any provision of any security
issued by such Person or of any agreement, instrument or undertaking under which
such Person is obligated or by which it or any of the property in which it has
an interest is bound.

 

“Control” shall mean the power, directly or indirectly, to direct or cause the
direction of the management and policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. The terms
“Controlling”, “Controlled by”, and “under common Control with” have meanings
correlative thereto.

 

“Default” shall mean any condition or event that, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

 

“Default Interest” shall have the meaning set forth in Section 2.6(b).

 

“Deposit Account” means a demand, time, savings, passbook or like account with a
bank, savings and loan association, credit union or like organization, other
than an account evidenced by a negotiable certificate of deposit.

 

“Dollar(s)” and the sign “$” shall mean lawful money of the United States of
America.

 

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“Employee Benefit Plan” shall have that meaning as defined in Section 3(3) of
ERISA and for which the Borrower or an ERISA Affiliate maintains, contributes to
or has an obligation to contribute to on behalf of participants who are or were
employed by the Borrower or its ERISA Affiliates or on behalf of beneficiaries
of such participants.

 

“Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
the management, Release or threatened Release of any Hazardous Material or to
health and safety matters.

 

“Environmental Liability” shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental investigation and
remediation, costs of administrative oversight, fines, natural resource damages,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) any actual or alleged violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) any actual or
alleged exposure to any Hazardous Materials, (d) the Release or threatened
Release of any Hazardous Materials or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute including any regulations
promulgated thereunder.

 

“ERISA Affiliate” shall mean any trade or business (whether or not
incorporated), which, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for the purposes of
Section 303 of ERISA and Section 430 of the Code, is treated as a single
employer under Section 414 of the Code.

 

“ERISA Event” shall mean with respect to the Borrower or any ERISA Affiliate,
(i) any “reportable event”, as defined in Section 4043 of ERISA with respect to
a Plan (other than an event for which the 30-day notice period is waived); (ii)
the failure to make required contributions when due to a Multiemployer Plan or
Plan or the imposition of a Lien in favor of a Plan under Section 430(k) of the
Code or Section 303(k) of ERISA; (iii) the filing pursuant to Section 412(c) of
the Code or Section 302(c) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (iv) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, or the imposition of an Lien in favor of
the PBGC under Title IV of ERISA; (v) the receipt from the PBGC or a plan
administrator appointed by the PBGC of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (vi)
any other event or condition that might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan or for the imposition
of liability under Section 4069 or 4212(c) of ERISA; (vii) the incurrence of any
liability with respect to the withdrawal or partial withdrawal from any Plan
including the withdrawal from a Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA, or a cessation of operations that is treated as such a
withdrawal under Section 4062(e) of ERISA; (viii) or the incurrence of any
Withdrawal Liability with respect to any Multiemployer Plan; (ix) the receipt of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent (within the
meaning of Section 4245 of ERISA) or in reorganization (within the meaning of
Section 4241 of ERISA), or in “critical” status (within the meaning of Section
432 of the Code or Section 305 of ERISA); or (x) a determination that a Plan is,
or is reasonably expected to be, in “at risk” status (within the meaning of
Section 430 of the Code or Section 303 of ERISA).

 

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“Eurodollar” when used in reference to the Term Loan, refers to the Term Loan
bearing interest at a rate determined by reference to LIBOR.

 

“Eurodollar Borrowing” shall mean the Borrowing of the Term Loan (or any portion
thereof) as a Eurodollar Loan.

 

“Eurodollar Loan” shall mean the Term Loan to the extent it is accruing interest
based on LIBOR.

 

“Event of Default” shall have the meaning provided in Article VIII.

 

“Excluded Taxes” shall mean with respect to the Lender or any other recipient of
any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of the Lender, in which its applicable lending office is
located, and (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the Lender
is located.

 

“FCPA” shall have the meaning set forth in Section 4.22 hereof.

 

“FDIC” shall mean the Federal Deposit Insurance Corporation.

 

“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the next 1/100th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers, as published by the
Federal Reserve Bank of New York on the next succeeding Business Day or if such
rate is not so published for any Business Day, the Federal Funds Rate for such
day shall be the average rounded upwards, if necessary, to the next 1/100th of
1% of the quotations for such day on such transactions received by the Lender
from three Federal funds brokers of recognized standing selected by the Lender.

 

“Financial Institution Subsidiary” shall mean each of (a) those Financial
Institution Subsidiaries set forth on Schedule 4.12 and designated as a
“Financial Institution Subsidiary” and (b) each other Subsidiary hereafter
formed or acquired that is a regulated financial institution.

 

“Fiscal Quarter” shall mean each fiscal quarter (including the fiscal quarter at
the fiscal year-end) of the Borrower and its Subsidiaries.

 

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“Fiscal Year” shall mean each fiscal year of the Borrower and its Subsidiaries.

 

“FRB” shall mean the Board of Governors of the Federal Reserve System.

 

“FR Y-9C Report” shall mean the “Consolidated Financial Statements for Bank
Holding Companies (FR Y-9C)” submitted by the Borrower as required by
Section 5(c) of the Bank Holding Company Act (12 U.S.C. 1844) and
Section 225.5(b) of Regulation Y (12 CFR 225.5(b)), or any successor or similar
replacement report.

 

“FR Y-9LP Report” shall mean the “Parent Company Only Financial Statements for
Large Bank Holding Companies (FR Y-9LP)” submitted by the Borrower as required
by Section 5(c) of the Bank Holding Company Act (12 U.S.C. 1844) and Section
225.5(b) of Regulation Y (12 CFR 225.5(b)), or any successor or similar
replacement report.

 

“GAAP” shall mean generally accepted accounting principles in the United States
applied on a consistent basis and subject to the terms of Section 1.2.

 

“Governmental Authority” shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government, including without limitation, the FRB, the FDIC and any other
federal or state agency charged with the supervision or regulation of depositary
institutions or holding companies of depositary institutions (as used herein,
including any trust company subsidiaries whether or not they take deposits), or
engaged in the insurance of depositary institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the
Borrower and/or any of its Subsidiaries.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedging Obligations” of any Person shall mean any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired under (i) any and all Hedging Transactions, (ii)
any and all cancellations, buy backs, reversals, terminations or assignments of
any Hedging Transactions and (iii) any and all renewals, extensions and
modifications of any Hedging Transactions and any and all substitutions for any
Hedging Transactions.

 

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“Hedging Transaction” of any Person shall mean (a) any transaction (including an
agreement with respect to any such transaction) now existing or hereafter
entered into by such Person that is a rate swap transaction, swap option, basis
swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap or option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction, currency
swap transaction, cross-currency rate swap transaction, currency option, spot
transaction, credit protection transaction, credit swap, credit default swap,
credit default option, total return swap, credit spread transaction, repurchase
transaction, reverse repurchase transaction, buy/sell-back transaction,
securities lending transaction, or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
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.

 

“Indebtedness” of any Person shall mean, without duplication (i) all obligations
of such Person for borrowed money, (ii) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (iii) all obligations
of such Person in respect of the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business;
provided, that for purposes of Section 8.1(f), trade payables overdue by more
than 90 days shall be included in this definition except to the extent that any
of such trade payables are being disputed in good faith and by appropriate
measures), (iv) all obligations of such Person under any conditional sale or
other title retention agreement(s) relating to property acquired by such Person,
(v) all obligations of such Person under capital leases and all monetary
obligations of such Person under Synthetic Leases, (vi) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances or similar extensions of credit, (vii) all guarantees by such Person
of Indebtedness of others, (viii) all Indebtedness of a third party secured by
any Lien on property owned by such Person, whether or not such Indebtedness has
been assumed by such Person, (ix) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any
Capital Stock of such Person, (x) all Hedging Obligations of such Person; and
(xi) all obligations of such Person in respect of any trust preferred
securities, preferred equity or other types of hybrid capital securities issued
by such Person. For purposes of determining the amount of attributed
Indebtedness from Hedging Obligations, the “principal amount” of any Hedging
Obligations at any time shall be the Net Mark-to-Market Exposure of such Hedging
Obligations.

 

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

 

“Interest Period” shall mean, in the case of a Eurodollar Loan, a period of one,
two or three months, provided that:

 

(i)          the initial Interest Period for the Term Loan shall commence on the
Closing Date and each Interest Period occurring thereafter in respect of the
Term Loan shall commence on the day on which the next preceding Interest Period
expires;

 

(ii)         if any Interest Period would otherwise end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless such Business Day falls in another calendar month, in which
case such Interest Period would end on the next preceding Business Day;

 

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(iii)        any Interest Period which begins on the last Business Day of a
calendar month or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period shall end on the last
Business Day of such calendar month;

 

(iv)        no Interest Period may extend beyond the Maturity Date; and

 

(v)         there may be no more than three Interest Periods for the Term Loan
outstanding at the same time.

 

“Investments” shall have the meaning set forth in Section 7.6 hereof.

 

“Lender” shall have the meaning assigned to such term in the opening paragraph
of this Agreement.

 

“LIBOR” shall mean, for any applicable Interest Period with respect to the Term
Loan, that rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) that is equal to the quotient of:

 

(i)          the greater of: (A) 1.00% per annum and (B) the rate per annum for
deposits in Dollars for a period equal to such Interest Period appearing on
Reuters Screen LIBOR01 Page (or any successor page), or such similar service as
determined by the Lender that displays the British Bankers’ Association Interest
Settlement Rates for deposits in Dollars as of 11:00 a.m. (London, England time)
on the day that is two Business Days prior to the first day of the Interest
Period, or if such page or service shall cease to be available, such other page
or such other service (as the case may be) for the purpose of displaying British
Bankers’ Association Interest Settlement Rates for Dollars as the Lender, in its
discretion, shall select; provided, that if the Lender determines that the
relevant foregoing sources are unavailable for the relevant Interest Period,
LIBOR shall mean the rate of interest determined by the Lender to be the average
(rounded upward, if necessary, to the nearest 1/100th of 1%) of the rates per
annum at which deposits in Dollars are offered to the Lender two (2) Business
Days preceding the first day of such Interest Period by leading banks in the
London interbank market as of 10:00 a.m. (New York, New York time) for delivery
on the first day of such Interest Period and for the number of days comprised
therein, divided by

 

(ii)         a percentage equal to 1.00 minus the maximum reserve percentages
(including any emergency, supplemental, special or other marginal reserves)
expressed as a decimal (rounded upward to the next 1/100th of 1%) in effect on
any day for the applicable Interest Period to which the Lender is subject with
respect to a Eurodollar Loan pursuant to regulations issued by the Board of
Governors of the Federal Reserve System with respect to eurocurrency funding
(currently referred to as “eurocurrency liabilities” under Regulation D). A
Eurodollar Loan shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to the Lender
under Regulation D. This percentage will be adjusted automatically on and as of
the effective date of any change in any reserve percentage.

 

- 9 -

 

 

“Lien” shall mean any mortgage, pledge, security interest, lien (statutory or
otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement,
or other arrangement having the practical effect of the foregoing or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement and any capital lease having the same economic effect as any
of the foregoing).

 

“Loan Documents” shall mean, collectively, this Agreement, the Term Note, and
any and all other instruments, agreements, documents and writings executed in
connection with any of the foregoing.

 

“Material Adverse Effect” shall mean, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences whether or not related, a material
adverse change in, or a material adverse effect on, (i) the business, results of
operations, financial condition, assets, liabilities or prospects of the
Borrower and of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform any of its material obligations under the
Loan Documents, (iii) the rights and remedies of the Lender under any of the
Loan Documents or (iv) the legality, validity or enforceability of any of the
Loan Documents.

 

“Maturity Date” shall mean April 26, 2018.

 

“Money Laundering Laws” shall have the meaning set forth in Section 4.23 hereof.

 

“Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of
ERISA.

 

“Net Cash Proceeds” shall mean (a) with respect to any sale or disposition by
the Borrower or any of its Subsidiaries of assets, the amount of cash proceeds
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on behalf
of the Borrower or its Subsidiaries, in connection therewith after deducting
therefrom only (i) the amount of any Indebtedness secured by any Lien permitted
by Section 7.2 hereof on any asset (other than (A) Indebtedness owing to the
Lender under this Agreement or the other Loan Documents and (B) Indebtedness
assumed by the purchaser of such asset) which is required to be, and is, repaid
in connection with such sale or disposition, (ii) reasonable fees, commissions,
and expenses related thereto and required to be paid by the Borrower or such
Subsidiary in connection with such sale or disposition and (iii) taxes paid or
payable to any taxing authorities by the Borrower or such Subsidiary in
connection with such sale or disposition, in each case, to the extent, but only
to the extent, that the amounts so deducted are, at the time of receipt of such
cash, actually paid or payable to a Person that is not an Affiliate of the
Borrower or any of its Subsidiaries, and are properly attributable to such
transaction; and (b) with respect to the issuance or incurrence of any
Indebtedness by the Borrower or any of its Subsidiaries, or the issuance by the
Borrower or any of its Subsidiaries of any shares of its Capital Stock, the
aggregate amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment or disposition of
deferred consideration) by or on behalf of the Borrower or such Subsidiary in
connection with such issuance or incurrence, after deducting therefrom only: (i)
reasonable fees, commissions, and expenses related thereto and required to be
paid by the Borrower or such Subsidiary in connection with such issuance or
incurrence, and (ii) taxes paid or payable to any taxing authorities by the
Borrower or such Subsidiary in connection with such issuance or incurrence, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate of the Borrower or any of its Subsidiaries, and are
properly attributable to such transaction.

 

- 10 -

 

 

“Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash
payments or proceeds received by the Borrower or any of its Subsidiaries (a)
under any casualty, business interruption or “key man” insurance policies in
respect of any covered loss thereunder, or (b) as a result of the taking of any
assets of the Borrower or any of its Subsidiaries by any Person pursuant to the
power of eminent domain, condemnation or otherwise, or pursuant to a sale of any
such assets to a purchaser with such power under threat of such a taking, minus
(ii) (a) any actual and reasonable costs incurred by the Borrower or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
the Borrower or such Subsidiary in respect thereof, and (b) any bona fide direct
costs incurred in connection with any sale of such assets as referred to in
clause (i)(b) of this definition to the extent paid or payable to
non-Affiliates, including income taxes payable as a result of any gain
recognized in connection therewith.

 

“Net Mark-to-Market Exposure” of any Person shall mean, as of any date of
determination with respect to any Hedging Obligation, the excess (if any) of all
unrealized losses over all unrealized profits of such Person arising from such
Hedging Obligation. “Unrealized losses” shall mean the fair market value of the
cost to such Person of replacing the Hedging Transaction giving rise to such
Hedging Obligation as of the date of determination (assuming the Hedging
Transaction were to be terminated as of that date), and “unrealized profits”
means the fair market value of the gain to such Person of replacing such Hedging
Transaction as of the date of determination (assuming such Hedging Transaction
were to be terminated as of that date).

 

“Notice of Borrowing” shall have the meaning as set forth in Section 2.2.

 

“Notice of Conversion/Continuation” shall mean the notice given by the Borrower
to the Lender in respect of the conversion or continuation of the Term Loan as
provided in Section 2.4(b).

  

“Obligations” shall mean all indebtedness, obligations, liabilities and other
amounts owing by the Borrower to the Lender and, only with respect to Hedging
Transactions, any Affiliate of the Lender, pursuant to or in connection with
(a) this Agreement or any other Loan Document, including without limitation, all
principal, interest (including any interest accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency, reorganization or
like proceeding relating to the Borrower, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), all reimbursement
obligations under letters of credit, all Hedging Obligations of the Borrower,
fees, expenses, indemnification and reimbursement payments, costs and expenses
(including all fees and expenses of counsel to the Lender incurred pursuant to
this Agreement or any other Loan Document), whether direct or indirect, absolute
or contingent, liquidated or unliquidated, now existing or hereafter arising
hereunder or thereunder, together with all renewals, extensions, modifications
or refinancings thereof and (b) any agreement governing the provision to the
Borrower or any Subsidiary of treasury or cash management services.

 

- 11 -

 

  

“OFAC” shall have the meaning set forth in Section 4.24 hereof.

 

“Other Real Estate Owned” shall mean the sum of real estate acquired in
satisfaction of debts through foreclosure (as determined by reference to the
line item “foreclosed assets” under “Selected Financial Data” (Non-performing
assets) in the Borrower’s most recent Form 10-Q or 10-K, as applicable).

 

“Other Taxes” shall mean any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made by, or on behalf of, the Borrower hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Documents.

 

“Participant” shall have the meaning set forth in Section 9.4(d).

 

“Payment Office” shall mean the office of the Lender located at 3280 Peachtree
Rd NE, Suite 500, Atlanta, Georgia 30305, Attention: Vickie Summey.

 

, or such other location as to which the Lender shall have given written notice
to the Borrower.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA, and any successor entity performing similar functions.

 

“Permitted Acquisition” means any Acquisition by the Borrower or any Subsidiary,
whether by purchase, merger or otherwise, of all or substantially all of the
assets of, the Capital Stock of, or a business line or unit or a division of,
any Person; provided that:

 

(a)          at the time of such acquisition and after giving effect thereto, no
Default or Event of Default shall have occurred or would result (on a pro forma
basis) from the making or consummation of such Acquisition;

 

(b)          all transactions in connection therewith shall be consummated, in
all material respects, in accordance with all applicable laws and in conformity
with all applicable governmental authorizations and all such necessary and
appropriate authorizations and approvals from all applicable Governmental
Authorities having jurisdiction over the Borrower and any applicable Financial
Institution Subsidiary shall have been obtained and shall be in full force and
effect;

 

(c)          in the case of the acquisition of Capital Stock, all of the Capital
Stock acquired or otherwise issued by such Person or any newly formed, direct or
indirect, Subsidiary of the Borrower in connection with such Acquisition shall
be owned 100% by the Borrower or its Subsidiaries;

 

- 12 -

 

 

(d)          the Lender shall receive at least fifteen Business Days’ prior
written notice of such proposed Acquisition, which notice shall include a
reasonably detailed description of such proposed Acquisition;

 

(e)          (i) such acquisition shall only involve a business permitted in
accordance with Section 7.3(c), and which business would not subject the Lender
to regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or any other Loan Documents and (ii)
substantially all of the operations of which are located in the United States;

 

(f)          without the prior written consent of the Lender, which consent
shall not be unreasonably delayed, denied or withheld, no additional
Indebtedness or other liabilities shall be incurred or assumed in connection
with such acquisition, except ordinary course trade payables and accrued
expenses;

 

(g)          the Acquisition shall have been approved by the board of directors
or other governing body or controlling Person of the Person acquired or the
Person from whom such assets or division is acquired;

 

(h)          the total assets of the Person or series of related Persons to be
acquired in any Acquisition or series of related Acquisitions shall not exceed,
without the prior written consent of the Lender, an amount equal to
(A) $200,000,000 per Acquisition (or series of related Acquisitions), (B) when
taken together with the total assets acquired by the Borrower and its
Subsidiaries for all Acquisitions consummated in any fiscal year, $350,000,000
per such fiscal year, or (C) when taken together with the total assets acquired
by the Borrower and its Subsidiaries for all Acquisitions consummated during the
term of this Agreement, $1,000,000,000;

 

(i)          the business and assets acquired in such acquisition shall be free
and clear of all Liens (other than Permitted Liens);

 

(j)          concurrently with delivery of the notice referred to in clause (d)
of this definition, the Borrower shall have delivered to the Lender, in form and
substance reasonably satisfactory to the Lender, a certificate of a Responsible
Officer of the Borrower to the effect that (i) each of (x) such Person, (y) the
Borrower and (z) the Subsidiaries of the Borrower, taken as a whole, will be
Solvent upon the consummation of the Acquisition, (ii) the Borrower and its
Subsidiaries have completed their due diligence investigation with respect to
such Acquisition, which investigation was conducted in a manner similar to that
which would have been conducted by a prudent purchaser of a comparable business
and the results of which investigation shall be delivered to the Lender upon its
reasonable request and (iii) the Borrower will be, after giving pro forma effect
to the proposed Acquisition, in compliance with the covenants set forth in
Section 6.1 hereof, together with the calculations thereof demonstrating such
compliance;

 

(k)          at least fifteen Business Days prior (or such alternative date
acceptable to the Lender) to the date of such Acquisition, the Lender shall have
received, in form and substance reasonably satisfactory to the Lender, copies of
the acquisition agreement and related agreements and instruments, and all
opinions, certificates, lien search results, copies of all environmental reports
and memoranda related thereto to the extent prepared in connection with such
acquisition and other documents related thereto reasonably requested by the
Lender; and

 

- 13 -

 

 

(l)          the Borrower shall have delivered to the Lender copies of all such
financial statements and other financial information related to the Person or
the assets to be acquired as the Lender shall reasonably request, which shall in
any event include: (i) all financial statements and financial information
regarding the Person or assets to be acquired that have been received by, or
prepared for, the Borrower in connection with such proposed Permitted
Acquisition and (ii) internally-prepared financial statements with respect to
such Person or assets for the most recently-ended four fiscal quarters, which
shall, in each case, be reasonably satisfactory in form and substance to the
Lender.

 

In the case of any Acquisition by the Borrower or any Subsidiary in which the
Borrower or such Subsidiary acquires, directly or indirectly, fifty percent
(50%) or more of the voting stock any Person that is a regulated financial
institution, such acquired Person shall become a Financial Institution
Subsidiary for purposes of this Agreement. In the event the proposed Acquisition
does not satisfy one or more of the above criteria, but the Lender nevertheless,
in its sole discretion, consents to such Acquisition, such Acquisition shall
constitute a “Permitted Acquisition” and be included in the calculations set
forth in clause (h) hereof and other applicable provisions hereof.

 

“Permitted Encumbrances” shall mean

 

(i)          Liens imposed by law for taxes not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP;

 

(ii)         statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
being maintained in accordance with GAAP;

 

(iii)        pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations and Liens arising by statute in connection with
worker’s compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar charges,
good faith cash deposits in connection with tenders, contracts or leases to
which the Borrower or any of its Subsidiaries is a party or other cash deposits
in any such foregoing case that is required to be made in the ordinary course of
business, provided in each case that the obligation is not for borrowed money
and that the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate proceedings which prevent enforcement of
the matter under contest and adequate reserves have been established therefor;

 

- 14 -

 

 

 

(iv)        deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

 

(v)         judgment and attachment Liens not giving rise to an Event of Default
or Liens created by or existing from any litigation or legal proceeding that are
currently being contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with GAAP;

 

(vi)        easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or materially interfere with the
ordinary conduct of business of the Borrower and its Subsidiaries taken as a
whole;

 

(vii)       Liens, charges and encumbrances incidental to the conduct of the
business of the Financial Institution Subsidiaries incurred in the ordinary
course of business and consistent with past practices;

 

(viii)      Liens to secure public funds or other pledges of funds required by
law to secure deposits; and

 

(ix)         repurchase agreements, reverse repurchase agreements and other
similar transactions entered into by any Financial Institution Subsidiary in the
ordinary course of its banking, deposit or trust business;

 

provided, that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.

 

“Permitted Financial Institution Subsidiary Indebtedness” means obligations
incurred by any Financial Institution Subsidiary in the ordinary course of
business in such circumstances as may be incidental or usual in carrying on the
banking or trust or mortgage business of a bank, thrift, trust company, or
mortgage company incurred in accordance with applicable laws and regulations and
safe and sound practices, including obligations incurred in connection with: (a)
any deposits with or funds collected by such Subsidiary; (b) the endorsement of
instruments for deposit or collection in the ordinary course of business, (c)
any bankers acceptance credit of such Subsidiary; (d) any check, note,
certificate of deposit, money order, traveler’s check, draft or bill of exchange
issued, accepted or endorsed by such Subsidiary or letter of credit issued by
such Subsidiary; (e) any discount with, borrowing from, or other obligation to,
any Federal Reserve Bank or any Federal Home Loan Bank; (f) any agreement made
by such Subsidiary to purchase or repurchase securities, loans or Federal funds
or any interest or participation in any thereof; (g) any guarantee, indemnity or
similar obligation incurred by such Subsidiary in the ordinary course of its
banking or trust business and consistent with past practices; (h) any
transaction in the nature of an extension of credit, whether in the form of a
commitment or otherwise, undertaken by such Subsidiary for the account of a
third party with the application of the same banking considerations and legal
lending limits that would be applicable if the transaction were a loan to such
party; (i) any transaction in which such Subsidiary acts solely in the fiduciary
or agency capacity; (j) other short-term liabilities similar to those enumerated
in clauses (a) and (f) above, including United States Treasury tax and loan
borrowings, (k) any Hedging Obligations or other obligations or liabilities
relating to Hedging Transactions entered into by such Subsidiary in connection
with facilitating the hedging risk of a customer of such Subsidiary or another
Financial Institution Subsidiary, but excluding any Hedging Obligations or other
obligations or liabilities relating to Hedging Transactions entered into for
speculative purposes or that are speculative in nature, (l) any Indebtedness of
one Financial Institution Subsidiary to another Financial Institution Subsidiary
and (m) any Indebtedness of such Subsidiary relating to letters of credit issued
or confirmed by a third party financial institution for the account of such
Subsidiary for the ultimate account of such Subsidiary’s customer.

 

- 15 -

 

 

“Person” shall mean any individual, partnership, firm, corporation, association,
joint venture, limited liability company, trust or other entity, or any
Governmental Authority.

 

“Plan” shall mean any Employee Benefit Plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate either (i) maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them
(or on behalf of beneficiaries of such participants) or (ii) is (or, if such
plan were terminated, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA or a “contributing sponsor” (as
defined in ERISA Section 4001(a)(13)).

 

“Qualified Plan” shall mean an Employee Benefit Plan that is intended to be
tax-qualified under Section 401(a) of the Code.

 

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time, and any
successor regulations.

 

“Regulatory Agreement” shall have the meaning set forth in Section 4.19 hereof.

 

“Release” means any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.

 

“Responsible Officer” shall mean any of the president, the chief executive
officer, the chief operating officer, the chief financial officer, the treasurer
or a managing director of the Borrower or such other representative of the
Borrower as may be designated in writing by any one of the foregoing with the
consent of the Lender; and, with respect to the financial covenants only, the
chief financial officer, controller or the treasurer of the Borrower.

 

“RICO Related Law” shall mean the Racketeer Influenced and Corrupt Organizations
Act of 1970 or any other federal, state or local law for which forfeiture of
assets is a potential penalty.

 

- 16 -

 

 

“Sarbanes-Oxley Act” shall have the meaning set forth in Section 4.21 hereof.

 

“Series A Perpetual Preferred Stock” shall mean the Fixed Rate Cumulative
Perpetual Preferred Stock, Series A, liquidation preference $1,000.00 per share,
of Borrower.

 

“Solvent” shall have the meaning set forth in Section 4.17.

 

“Subsidiary” shall mean, with respect to any Person (the “parent”), any
corporation, partnership, joint venture, limited liability company, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, partnership, joint venture, limited liability company,
association or other entity (i) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power, or in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, Controlled or held, or (ii) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless
otherwise indicated, all references to “Subsidiary” under this Agreement shall
mean a Subsidiary of the Borrower.

 

“Synthetic Lease” of any Person shall mean (a) a lease designed to have the
characteristics of a loan for federal income tax purposes while obtaining
operating lease treatment for financial accounting purposes, or (b) an agreement
for the use or possession of property creating obligations that are not required
to appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person would be characterized by a court of competent
jurisdiction as indebtedness of such Person.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Term Loan” shall have the meaning set forth in Section 2.1.

 

“Term Loan Commitment” shall mean the obligation of the Lender to make a Term
Loan hereunder on the Closing Date in a principal amount not exceeding
$30,000,000.

 

“Term Note” shall mean a promissory note of the Borrower payable to the order of
the Lender in the principal amount of $30,000,000, in substantially the form of
Exhibit B.

 

“Total Loans” shall mean for the Borrower on a consolidated basis the line item
“Loans” set forth on the Borrower’s consolidated balance sheet delivered
pursuant to Section 5.1(a) and Section 5.1(b) (and, for the avoidance of doubt,
shall exclude loans held for sale).

 

“Type”, when used in reference to the Term Loan, refers to whether the rate of
interest on the Term Loan is determined by reference to LIBOR or the Base Rate.

 

“Voting Stock” shall mean shares of Capital Stock entitled to vote generally in
the election of directors.

 

- 17 -

 

 

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

 

Section 1.2.          Accounting Terms and Determination. Unless otherwise
defined or specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP as in effect from time to time, applied on a basis
consistent (except for such changes approved by the Borrower’s independent
public accountants) with the most recent audited consolidated financial
statement of the Borrower delivered pursuant to Section 5.1(a) (or, if no such
financial statements have been delivered, on a basis consistent with the audited
consolidated financial statements of the Borrower and its Subsidiaries last
delivered to the Lender in connection with this Agreement); provided, that if
the Borrower notifies the Lender that the Borrower wishes to amend any covenant
in Article VI to eliminate the effect of any change in GAAP on the operation of
such covenant (or if the Lender notifies the Borrower that the Lender wishes to
amend Article VI for such purpose), then the Borrower’s compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Lender. Notwithstanding any other provision contained herein, all terms
of an accounting or financial nature used herein shall be construed, and all
computations of amounts and ratios referred to herein shall be made, without
giving effect to any election under Accounting Standards Codification Section
825-10 to value any Indebtedness or other liabilities of the Borrower or any
Subsidiary at “fair value”, as defined therein.

 

Section 1.3.          Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”. In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including” and the word “to” means “to but excluding”. Unless the context
requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as it was originally executed or as it
may from time to time be amended, restated, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and permitted assigns, (iii) the words
“hereof”, “herein” and “hereunder” and words of similar import shall be
construed to refer to this Agreement as a whole and not to any particular
provision hereof, (iv) all references to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles, Sections, Exhibits and
Schedules to this Agreement; (v) all references to a specific time shall be
construed to refer to Columbus, Georgia time, unless otherwise indicated; and
(vi) any reference to any law or regulation herein shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented
from time to time. To the extent that any of the representations and warranties
contained in Article IV under this Agreement is qualified by “Material Adverse
Effect”, then the qualifier “in any material respect” contained in Section
8.1(c) shall not apply. Unless otherwise expressly provided herein, all
references to dollar amounts shall mean Dollars.

 

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Article II           AMOUNT AND TERMS OF THE TERM LOAN

 

Section 2.1.          Term Loan Commitment. Subject to the terms and conditions
set forth herein, including, without limitation, satisfaction of the conditions
set forth in Section 3.1, the Lender agrees to make a single term loan (the
“Term Loan”) to the Borrower in a principal amount equal to the Term Loan
Commitment on the Closing Date.

 

Section 2.2.          Procedure for Borrowing Term Loan. The Borrower shall give
the Lender written notice of its request for the Borrowing substantially in the
form of Exhibit 2.2 attached hereto (the “Notice of Borrowing”) prior to 11:00
a.m. on, in the case such Borrowing is a Eurodollar Borrowing, the date that is
three (3) Business Days prior to the date of the Borrowing or, in the case such
Borrowing is a Base Rate Borrowing, the date of such Borrowing. The Notice of
Borrowing shall be irrevocable and shall specify: (i) the date of the Borrowing
(which shall be a Business Day), (ii) the Type of such Borrowing, (iii) the
duration of the Interest Period applicable thereto in the case of a Eurodollar
Borrowing and (iv) the account of the Borrower to which the proceeds of the Term
Loan should be credited. With respect to the conversion or continuation of any
portion of the Term Loan, such conversion or continuation shall be in an
aggregate principal amount of no less than $2,000,000 or a larger multiple of
$1,000,000.

 

Section 2.3.          Funding of Borrowing. Subject to the terms and conditions
herein, the Lender will make the proceeds of the Term Loan available to the
Borrower on the Closing Date by promptly crediting the proceeds thereof by the
close of business on such date, to an account maintained by the Borrower with
the Lender or at the Borrower’s option, by effecting a wire transfer of such
amounts to an account designated by the Borrower to the Lender as set forth in
the Notice of Borrowing.

 

Section 2.4.          Interest Elections.

 

(a)          Each Borrowing initially shall be of the Type specified in the
applicable Notice of Borrowing, and in the case of a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Notice of Borrowing.
Thereafter, the Borrower may elect to convert such Borrowing into a different
Type or to continue such Borrowing, and in the case of a Eurodollar Borrowing,
may elect Interest Periods therefor, all as provided in this Section 2.4.

 

(b)          To make an election pursuant to this Section 2.4, the Borrower
shall give the Lender prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing substantially in the form of Exhibit 2.4
attached hereto (a “Notice of Conversion/Continuation”) that is to be converted
or continued, as the case may be, (x) prior to 11:00 a.m. one Business Day prior
to the requested date of a conversion into a Base Rate Borrowing and (y) prior
to 11:00 a.m. three Business Days prior to a continuation of or conversion into
a Eurodollar Borrowing. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify (i) the Borrowing to which such Notice of
Conversion/Continuation applies and if different options are being elected with
respect to different portions thereof, the portions thereof that are to be
allocated to each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) shall be specified for each
resulting Borrowing); (ii) the effective date of the election made pursuant to
such Notice of Conversion/Continuation, which shall be a Business Day, (iii)
whether the resulting Borrowing is to be a Base Rate Borrowing or a Eurodollar
Borrowing; and (iv) if the resulting Borrowing is to be a Eurodollar Borrowing,
the Interest Period applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of “Interest Period”. If
any such Notice of Conversion/Continuation requests a Eurodollar Borrowing but
does not specify an Interest Period, the Borrower shall be deemed to have
selected an Interest Period of one month. The principal amount of any resulting
Borrowing shall satisfy the minimum borrowing amount for Eurodollar Borrowings
and Base Rate Borrowings set forth in Section 2.2.

 

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(c)          If, on the expiration of any Interest Period in respect of any
Eurodollar Borrowing, the Borrower shall have failed to deliver a Notice of
Conversion/ Continuation, then, unless such Borrowing is repaid as provided
herein, the Borrower shall be deemed to have elected to convert such Borrowing
to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, a
Eurodollar Borrowing if a Default or an Event of Default exists, unless the
Lender shall have otherwise consented in writing. No conversion of any
Eurodollar Loans shall be permitted except on the last day of the Interest
Period in respect thereof.

 

Section 2.5.          Repayment and Prepayments of Term Loan.

 

(a)          The Borrower unconditionally promises to pay to the Lender the then
unpaid principal amount of the Lender’s Term Loan in installments in the
principal amount set forth below and payable on the dates set forth below (and
on such other date(s) and in such other amounts as may be required from time to
time pursuant to this Agreement):

 

Installment Date  Aggregate Principal Amount  June 30, 2013  $375,000  September
30, 2013  $375,000  December 31, 2013  $375,000  March 31, 2014  $375,000  June
30, 2014  $562,500  September 30, 2014  $562,500  December 31, 2014  $562,500 
March 31, 2015  $562,500  June 30, 2015  $937,500  September 30, 2015  $937,500 
December 31, 2015  $937,500  March 31, 2016  $937,500  June 30, 2016  $937,500 
September 30, 2016  $937,500  December 31, 2016  $937,500  March 31, 2017 
$937,500  June 30, 2017  $1,125,000  September 30, 2017  $1,125,000  December
31, 2017  $1,125,000 

 

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Further, to the extent not previously paid, the entire outstanding principal
balance of the Term Loan shall be due and payable (together with accrued and
unpaid interest thereon) on the Maturity Date. Once repaid, no portion of the
Term Loan may be reborrowed.

 

(b)          During the periods after the Closing Date set forth below, the
Borrower may only voluntarily prepay the Term Loan, in whole or in part, at the
prices (expressed as percentages of principal amount of the Term Loan to be
prepaid) set forth below, plus accrued and unpaid interest, if any, to the date
of prepayment:

 

Period  Percentage  From the Closing Date to and including April 30, 2014 
 102.00% From May 1, 2014 to and including April 30, 2015   101.00% From May 1,
2015 and thereafter   100.00%

  

The Borrower acknowledges and agrees that the amount payable by it in connection
with the voluntary prepayment of the Term Loan is a reasonable calculation of
the Lender’s lost profits in view of the difficulties and impracticality of
determining actual damages resulting from the prepayment of the Term Loan.
Notwithstanding the foregoing, this Section 2.5(b) shall not be applicable to
any prepayments required pursuant to clauses (d), (e), (f) and (g) of this
Section 2.5.

 

(c)          All voluntary prepayments of the Term Loan pursuant to paragraph
(b) hereof shall be preceded by irrevocable written notice to the Lender no less
than three (3) Business Days prior to any such prepayment. Each prepayment
notice shall be irrevocable and shall specify the proposed date of such
prepayment and the principal amount of the Term Loan to be prepaid. If such
notice is given, the aggregate amount specified in such notice shall be due and
payable on the date designated in such notice, together with accrued interest to
such date on the amount so prepaid in accordance with Section 2.15(a); provided,
that if a Eurodollar Loan is prepaid on a date other than the last day of an
Interest Period applicable thereto, the Borrower shall also pay all amounts
required pursuant to Section 2.13. Each partial prepayment of the Term Loan
shall be in an amount not less than $100,000 and in integral multiples of
$100,000 in excess thereof.

 

(d)          Immediately upon receipt by the Borrower or any Subsidiary of the
Borrower of any Net Cash Proceeds of any sale or disposition by the Borrower or
such Subsidiary of assets in excess of $10,000,000 (excluding (i) the transfer
of assets to the Borrower or any other Subsidiary; (ii) the disposition of any
Hedging Transaction; (iii) the sale of loans and/or Other Real Estate Owned in
the ordinary course of business having, in the case of loans, an aggregate
unpaid principal balance and, in the case of Other Real Estate Owned, fair
market value, not to exceed in the aggregate $10,000,000 in any single
transaction or series of related transactions; and (iv) the disposition of any
Cash or Investments made in the ordinary course of business in connection with
asset management) (an “Asset Sale”), the Borrower shall prepay the Obligations
in an aggregate amount equal to 100% of such Net Cash Proceeds. Any such
prepayment shall be applied in accordance with Section 2.5(i).

 

- 21 -

 

 

(e)          Immediately upon receipt by the Borrower or any Subsidiary of any
Net Insurance/Condemnation Proceeds, unless the parties have agreed otherwise in
writing, the Borrower shall prepay the Obligations in an aggregate amount equal
to 100% of such Net Insurance/Condemnation Proceeds. Any such prepayment shall
be applied in accordance with Section 2.5(i).

 

(f)          On the date of receipt by the Borrower or any of its Subsidiaries
of any Net Cash Proceeds from a capital contribution to, or the issuance of any
Capital Stock of, the Borrower or any of its Subsidiaries (other than: (i)
Capital Stock issued by a Subsidiary of the Borrower to the Borrower or another
Subsidiary, (ii) issuances of Capital Stock to employees, consultants, officers
or directors in connection with employee stock options or other equity
incentives, or (iii) Capital Stock issued to the seller of an acquired business
in connection with a Permitted Acquisition), the Borrower shall prepay the
Obligations in an aggregate amount equal to 100% of such Net Cash Proceeds. Any
such prepayment shall be applied in accordance with Section 2.5(i).

 

(g)          On the date of receipt by the Borrower or any of its Subsidiaries
of any Net Cash Proceeds from the incurrence of any Indebtedness of the Borrower
or any of its Subsidiaries (other than with respect to any Indebtedness
permitted to be incurred pursuant to Section 7.1), the Borrower shall prepay the
Obligations in an aggregate amount equal to 100% of such Net Cash Proceeds. Any
such prepayment shall be applied in accordance with Section 2.5(i). Such
prepayment shall not constitute a waiver or discharge of any Event of Default
that may arise by reason of the incurrence of such Indebtedness.

 

(h)          Concurrently with any prepayment of the Term Loan pursuant to
clauses (d), (e), (f) and (g) of this Section 2.5, the Borrower shall deliver to
the Lender a certificate of a Responsible Officer demonstrating the calculation
of the amount of the Net Cash Proceeds or Net Insurance/Condemnation Proceeds,
as applicable. In the event that the Borrower shall subsequently determine that
the actual amount received exceeded the amount set forth in such certificate,
the Borrower shall promptly make an additional prepayment of the Term Loan in an
amount equal to such excess, and the Borrower shall concurrently therewith
deliver to the Lender a certificate of a Responsible Officer demonstrating the
derivation of such excess.

   

(i)          Subject to Section 2.13, all voluntary prepayments of the Term Loan
pursuant to Section 2.5(b) and mandatory prepayments of the Term Loan required
to be prepaid pursuant to clauses (d), (e), (f) and (g) of this Section 2.5
shall applied as follows:

 

first, to the payment of all fees, and all expenses specified in Section 9.3, to
the full extent thereof;

 

second, to the payment of any accrued Default Interest, if any;

 

third, to the payment of any accrued interest with respect to the Term Loan;

 

fourth, to the remaining principal installments of the Term Loan, in inverse
order of maturity, until the Term Loan is repaid in full;

 

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fifth, to all other Obligations owed to the Lender, until paid in full; and

 

sixth, any remaining amounts shall be paid to the Borrower or its designee.

 

(j)          Any prepayment of required by this Section 2.5 shall be applied
first to Base Rate Loans to the full extent thereof before application to LIBOR
Loans.

 

(k)          Nothing in this Section 2.5 shall be interpreted to permit or
authorize the Borrower or any Subsidiary to effect, cause or allow to occur any
sale or disposition of assets, sale or issuance of Capital Stock or Indebtedness
or any other transaction that would otherwise be prohibited by Article VII or
any of the other terms or provisions of this Agreement or the other Loan
Documents.

 

Section 2.6.          Interest on Term Loan.

 

(a)          The Borrower shall pay interest on the Term Loan at, in the case of
any portion of the Term Loan that is a Eurodollar Loan, LIBOR for the applicable
Interest Period then in effect plus 4.50% per annum and, in the case of any
portion of the Term Loan that is a Base Rate Loan, the Base Rate in effect from
time to time plus 3.50%.

 

(b)          Following the occurrence of an Event of Default, the Borrower shall
pay interest (“Default Interest”) with respect to a Eurodollar Loan, at the rate
otherwise applicable for the then-current Interest Period plus an additional
2.00% per annum until the last day of such Interest Period, and thereafter, and
with respect to a Base Rate Loan and all other Obligations under this Agreement
(other than the Term Loan), at the Base Rate plus the Base Rate Margin plus
2.00% per annum.

 

(c)          Interest on the principal amount of the Term Loan shall accrue from
and including the Closing Date to but excluding the date of any repayment
thereof (or portion thereof). Interest on a Eurodollar Loan shall be payable in
arrears on the last day of each Interest Period applicable thereto and on the
Maturity Date. Interest on a Base Rate Loan shall be payable in arrears on the
last day of each calendar month and on the Maturity Date. All Default Interest
shall be payable on demand.

 

(d)          The Lender shall determine each interest rate applicable to the
Term Loan hereunder and shall promptly notify the Borrower of such rate in
writing (or by telephone, promptly confirmed in writing). Any such determination
shall be conclusive and binding for all purposes, absent manifest error.

 

Section 2.7.          Fees. The Borrower shall pay to the Lender an upfront fee
equal to 1.00% of the aggregate principal amount of the Term Loan funding on the
Closing Date, which shall be due and payable on the Closing Date.

 

Section 2.8.          Computation of Interest and Fees. Interest hereunder based
on the Lender’s prime lending rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
computations of interest and fees hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or fees are
payable (to the extent computed on the basis of days elapsed). Each
determination by the Lender of an interest amount or fee hereunder shall be made
in good faith and, except for manifest error, shall be final, conclusive and
binding for all purposes.

 

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Section 2.9.          Inability to Determine Interest Rates. If prior to the
commencement of any Interest Period for a Eurodollar Loan, the Lender shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that (a) by reason of circumstances affecting the relevant interbank
market, adequate means do not exist for ascertaining LIBOR, or (b) the Lender
shall have determined that LIBOR does not adequately and fairly reflect the cost
to the Lender of making, funding or maintaining its Eurodollar Loan, the Lender
shall give written notice (or telephonic notice, promptly confirmed in writing)
to the Borrower as soon as practicable thereafter. Until the Lender notifies the
Borrower that the circumstances giving rise to such notice no longer exist, the
Term Loan shall be deemed to be converted into a Base Rate Loan as of such date
and shall bear interest at the Base Rate plus the Base Rate Margin.

 

Section 2.10.         Evidence of Indebtedness. The Lender shall maintain in
accordance with its usual practice appropriate records evidencing the
Indebtedness of the Borrower to the Lender resulting from the Term Loan made or
held by the Lender, including the amounts of principal and interest payable
thereon and paid to the Lender from time to time under this Agreement. The
entries made in such records shall be prima facie evidence (absent manifest
error) of the existence and amounts of the obligations of the Borrower therein
recorded; provided, that the failure or delay of the Lender in maintaining or
making entries into any such record or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Term Loan (both principal and
unpaid accrued interest) in accordance with the terms of this Agreement. On and
after the Closing Date, the Borrower will execute and deliver a Term Note to the
Lender.

 

Section 2.11.         Illegality. If any Change in Law shall make it unlawful or
impossible for the Lender to maintain or continue any Eurodollar Loan, the
Lender shall promptly give notice thereof to the Borrower, whereupon until the
Lender notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligation of the Lender to continue the Term
Loan as a Eurodollar Loan shall be suspended. In the case of a Eurodollar Loan
then outstanding, such Eurodollar Loan shall be converted to a Base Rate Loan
either (x) on the last day of the then current Interest Period applicable to
such Eurodollar Loan if the Lender may lawfully continue to maintain such
Eurodollar Loan to the date or (y) immediately if such Lender shall determine
that it may not lawfully continue to maintain such Eurodollar Loan to such date.

 

Section 2.12.         Increased Costs.

 

(a)          If any Change in Law shall:

 

(i)          impose, modify or deem applicable any reserve, special deposit or
similar requirement that is not otherwise included in the determination of LIBOR
hereunder against assets of, deposits with or for the account of, or credit
extended by, the Lender (except any such reserve requirement reflected in the
calculation of LIBOR); or

 

 

- 24 -

 

 

(ii)         impose on the Lender or the eurodollar interbank market any other
condition affecting this Agreement or a Eurodollar Loan made or held by the
Lender;

 

and the result of the foregoing is to increase the cost to the Lender of
continuing or maintaining a Eurodollar Loan or to reduce the amount received or
receivable by the Lender hereunder (whether of principal, interest or any other
amount), then the Borrower shall promptly pay, upon written notice from and
demand by the Lender to the Borrower, to the Lender, within five Business Days
after the date of such notice and demand, additional amount or amounts
sufficient to compensate such Lender for the additional costs incurred or
reduction suffered.

 

(b)          If the Lender shall have determined that on or after the date of
this Agreement (but subject to the proviso contained in the defined term “Change
in Law”) any Change in Law regarding capital or liquidity 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 direct or indirect parent) as a consequence of
its obligations hereunder to a level below that the Lender or the Lender’s
direct or indirect parent could have achieved but for such Change in Law (taking
into consideration the Lender’s policies or the policies of the Lender’s direct
or indirect parent with respect to capital adequacy and liquidity) then, from
time to time, within five Business Days after receipt by the Borrower of written
demand by the Lender, the Borrower shall pay to the Lender such additional
amounts as will compensate the Lender or the Lender’s direct or indirect parent
for any such reduction suffered.

 

(c)          A certificate of the Lender setting forth the amount or amounts
necessary to compensate the Lender or its direct or indirect parent, as the case
may be, specified in paragraph (a) or (b) of this Section shall be delivered to
the Borrower and shall be conclusive, absent manifest error. The Borrower shall
pay the Lender such amount or amounts within 10 days after receipt thereof.

 

(d)          Failure or delay on the part of the Lender to demand compensation
pursuant to this Section shall not constitute a waiver of the Lender’s right to
demand such compensation.

 

Section 2.13.         Funding Indemnity. In the event of (a) the payment of any
principal of a Eurodollar Loan other than on the last day of the Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
conversion (even though involuntary) of a Eurodollar Loan other than on the last
day of the Interest Period applicable thereto, or (c) the failure by the
Borrower to prepay or continue a Eurodollar Loan on the date specified in any
applicable notice (regardless of whether such notice is withdrawn or revoked),
then, in any such event, the Borrower shall compensate the Lender, within five
Business Days after written demand from the Lender, for any actual loss, cost or
expense incurred by the Lender attributable to such event. Such loss, cost or
expense shall be deemed to include an amount determined by the Lender to be the
excess, if any, of (A) the amount of interest that would have accrued on the
principal amount of such Eurodollar Loan if such event had not occurred at LIBOR
applicable to such Eurodollar Loan for the period from the date of such event to
the last day of the then current Interest Period therefor (or in the case of a
failure to continue for the period that would have been the Interest Period for
such Eurodollar Loan) over (B) the amount of interest that would accrue on the
principal amount of such Eurodollar Loan for the same period if LIBOR were set
on the date such Eurodollar Loan was prepaid or the date on which the Borrower
failed to continue such Eurodollar Loan. A certificate as to any additional
amount payable under this Section 2.13 submitted to the Borrower by the Lender
shall be conclusive, absent manifest error.

 

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Section 2.14.         Taxes.

 

(a)          Any and all payments by or on account of any Obligation of the
Borrower under this Agreement or the Term Note shall be made free and clear of
and without deduction for any Indemnified Taxes or Other Taxes; provided, that
if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Lender shall receive an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

 

(b)          In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

 

(c)          The Borrower shall indemnify the Lender, within ten Business Days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Lender on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability, together with reasonable evidence of such payment, as applicable,
delivered to the Borrower by the Lender shall be conclusive absent manifest
error.

 

(d)          As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Lender the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Lender.

 

Section 2.15.         Payments Generally.

 

(a)          The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees or of amounts payable under
Section 2.5, Section 2.6 or Section 2.7 or otherwise) prior to 12:00 noon, on
the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Lender, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Lender at the Payment Office, including, for the avoidance
of doubt, the payments pursuant to Section 2.12, Section 2.13 and Section 9.3.
If any payment hereunder shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be made
payable for the period of such extension. All payments hereunder shall be made
in Dollars.

 

- 26 -

 

 

 

(b)          If at any time insufficient funds are received by and available to
the Lender to pay fully all amounts of principal, interest and fees then due
hereunder, such funds shall be applied first, towards payment of interest and
fees then due hereunder, and second, towards payment of principal then due
hereunder.

 

Article III     CONDITIONS PRECEDENT TO EFFECTIVENESS AND BORROWING

 

Section 3.1.          Conditions To Effectiveness and Borrowing. The obligation
of the Lender to fund the Term Loan under this Agreement shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.2).

 

(a)          The Lender shall have received all fees and other amounts due and
payable on or prior to the Closing Date, including, without limitation (i)
reimbursement or payment of all out-of-pocket expenses (including reasonable
fees, charges and disbursements of counsel to the) required to be reimbursed or
paid by the Borrower hereunder, under any other Loan Document and (ii) all fees
payable to the Lender in accordance with the fee letter among the Borrower and
the Lender;

 

(b)          The Lender (or its counsel) shall have received the following, each
in form and substance satisfactory to the Lender:

 

(i)          a counterpart of this Agreement signed by or on behalf of each
party hereto;

 

(ii)         a duly executed Term Note payable to the Lender;

 

(iii)        a certificate of the Secretary or Assistant Secretary of the
Borrower in the form of Exhibit 3.1(b)(iii), attaching and certifying copies of
its bylaws and of the resolutions of its board of directors, authorizing the
execution, delivery and performance of the Loan Documents and certifying the
name, title and true signature of each officer of the Borrower executing the
Loan Documents;

 

(iv)        (a) certified copies of the certificate of incorporation of the
Borrower, together with certificates of good standing or existence, as may be
available from the Secretary of State of the jurisdiction of incorporation of
the Borrower and each other jurisdiction where the Borrower is required to be
qualified to do business as a foreign corporation, and (b) certificates of good
standing or existence with respect to each material Subsidiary of the Borrower
(which shall include, in any event, each Financial Institution Subsidiary), as
may be available from the Secretary of State of the jurisdiction of
incorporation of each such Subsidiary and each other jurisdiction where such
Subsidiary is required to be qualified to do business as a foreign corporation;

 

- 27 -

 

 

(v)         a favorable written opinion of Womble, Carlyle, Sandridge & Rice
LLP, counsel to the Borrower, addressed to the Lender, and covering such matters
relating to the Borrower, the Loan Documents and the transactions contemplated
therein as the Lender shall reasonably request;

 

(vi)        a certificate in the form of Exhibit 3.1(b)(vi), dated the Closing
Date and signed by a Responsible Officer, certifying that (w) no Default or
Event of Default exists, (x) all representations and warranties of the Borrower
set forth in the Loan Documents are true and correct on and as of the Closing
Date, (y) since December 31, 2012, there shall have been no change, event or
other circumstance which has had or could reasonably be expected to have a
Material Adverse Effect and (z) no consents, approvals, authorizations,
registrations, filings or orders of the type described in Section 3.1(b)(vii)
below are required to be made or obtained in connection with the execution,
delivery, performance, validity and enforceability of the Loan Documents or any
transaction contemplated thereby;

 

(vii)       certified copies of a non-objection letter from the Federal Reserve
Bank of Richmond and all other consents, approvals, authorizations,
registrations and filings and orders required to be made or obtained under any
applicable laws, or by any Contractual Obligation of the Borrower, in connection
with the execution, delivery, performance, validity and enforceability of the
Loan Documents or any of the transactions contemplated hereby or thereby, and
such consents, approvals, authorizations, registrations, filings and orders
shall be in full force and effect and all applicable waiting periods shall have
expired, and no investigation or inquiry by any Governmental Authority regarding
the Term Loan or any transaction being financed with the proceeds thereof shall
be ongoing;

 

(viii)      copies of (A) the internally prepared quarterly financial statements
of the Borrower and its Subsidiaries on a consolidated basis for the Fiscal
Quarter ending December 31, 2012, and (B) the audited consolidated financial
statements for Borrower and its Subsidiaries for the Fiscal Year ending December
31, 2012, which, in each case, shall be acceptable to the Lender in its sole
discretion;

 

(ix)         the results of a recent UCC, tax, judgment and lien searches in
respect of the Borrower, and such searches shall reveal no Liens of record other
than Liens expressly permitted pursuant to Section 7.2;

 

(x)          a copy of the Notice of Redemption relating to the Series A
Perpetual Preferred Stock being redeemed with the proceeds of the Term Loan and
such other evidence that the proceeds of the Term Loan shall be used in
accordance with Section 5.9 hereof as the Lender may reasonably request;

 

(xi)         a duly executed Notice of Borrowing in accordance with Section 2.2
hereof;

 

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(xii)        a duly completed and executed Compliance Certificate calculated as
of December 31, 2012 (giving pro forma effect to the funding of, and the use of
the proceeds of, the Term Loan to be funded on the Closing Date);

 

(xiii)       evidence of the filing of a Uniform Commercial Code Form UCC-1
negative pledge filing against the Borrower with the Office of the Secretary of
State of the State of North Carolina; and

 

(xiv)      such other documents, agreements and instruments as the Lender may
reasonably request.

 

Article IV      REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to Lender as follows, as of the Closing
Date, and as of the delivery of each Notice of Conversion/Continuation delivered
or deemed delivered pursuant to Section 2.4 hereof:

 

Section 4.1.          Existence; Power. Each of the Borrower and its
Subsidiaries (i) is duly organized and validly existing as a corporation, bank
or other entity, as the case may be, under the laws of the jurisdiction of its
organization, (ii) has all requisite power and authority to carry on its
business as now conducted, and (iii) is in good standing in its jurisdiction of
organization and is duly qualified to do business, in each jurisdiction where
such qualification is required, except where a failure to be so qualified could
not reasonably be expected to result in a Material Adverse Effect. The Borrower
is duly registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended. The Financial Institution Subsidiaries are the only
“significant subsidiar(ies)” of the Borrower (as such term is defined in Rule
1-02 of Regulation S-X) and have been duly organized and are validly existing
and in good standing under the laws of the jurisdiction of their respective
incorporation or other organization, have the requisite corporate power and
authority to own, lease and operate their respective properties, and to conduct
their respective businesses. The deposit accounts of each Financial Institution
Subsidiary are insured up to the applicable limits by the Deposit Insurance Fund
of the FDIC to the fullest extent permitted by law and the rules and regulations
of the FDIC, and no proceeding for the revocation or termination of such
insurance is pending or, to the knowledge of the Borrower, threatened.

 

Section 4.2.          Organizational Power; Authorization. The Borrowing, and
the execution, delivery and performance by the Borrower of each of the Loan
Documents are within the Borrower’s corporate powers and have been duly
authorized by all necessary corporate, and if required, stockholder, action.
This Agreement has been duly executed and delivered by the Borrower and
constitutes, and each other Loan Document when executed and delivered by the
Borrower will constitute, valid and binding obligations of the Borrower,
enforceable against it in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity.

 

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Section 4.3.          Governmental Approvals; No Conflicts. The execution,
delivery and performance by the Borrower of this Agreement and the other Loan
Documents (a) do not require any consent or approval of, registration or filing
with, or any action by, any Governmental Authority, except those as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the articles of incorporation or by-laws of the
Borrower or any order of any Governmental Authority binding upon Borrower,
(c) will not violate or result in a default under any indenture, material
agreement or other material instrument binding on the Borrower or any of its
Subsidiaries or any of their respective assets or give rise to a right
thereunder to require any payment to be made by the Borrower or any such
Subsidiary and (d) will not result in the creation or imposition of any Lien on
any asset of the Borrower or any Subsidiary. All necessary regulatory approvals
have been obtained for the Borrower and its Subsidiaries to conduct their
respective businesses.

 

Section 4.4.          Financial Statements. The Borrower has furnished to the
Lender (i) the audited consolidated balance sheet of the Borrower and its
Subsidiaries as of December 31, 2012 and the related consolidated statements of
income, shareholders’ equity and cash flows for the fiscal year then ended
prepared by Cherry, Bekaert & Holland, L.L.P. and (ii) the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as of December
31, 2012, and the related unaudited consolidated statements of income and cash
flows for the Fiscal Quarter and year-to-date period then ending, certified by a
Responsible Officer, subject to year-end audit adjustments and the absence of
footnotes. Such financial statements fairly present, in all material respects,
the consolidated financial position of the Borrower and its Subsidiaries as of
such date and the consolidated results of operations and cash flows for such
period in conformity with GAAP consistently applied. Since December 31, 2012,
there have been no changes with respect to the Borrower and its Subsidiaries
which have had or could reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect. In addition, the Borrower has provided to
the Lender copies of the Call Reports filed by its Financial Institution
Subsidiaries for the period ending September 30, 2012, and copies of the FRY-9LP
Report and the FRY-9C Report filed by the Borrower for the period ending
September 30, 2012. Each of such reports filed by the Borrower or the Financial
Institution Subsidiaries with any Governmental Authority is true and correct and
is in accordance with the respective books of account and records of the
Borrower and the Financial Institution Subsidiaries, and has been prepared in
accordance with applicable banking regulations, rules and guidelines on a basis
consistent with prior periods, and fairly and accurately presents, in all
material respects, the financial condition of the Borrower and the Financial
Institution Subsidiaries and their respective assets and liabilities and the
results of their respective operations as of such date.

 

Section 4.5.          Litigation Matters and Enforcement Actions. No litigation,
investigation or proceeding of or before any arbitrators or Governmental
Authorities is pending against, or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination that could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect or (ii) which in any manner draws into question the
validity or enforceability of this Agreement or any other Loan Document. None of
the Borrower, or any of the Financial Institution Subsidiaries, or any of their
respective officers or directors, is now operating under any currently effective
written restrictions agreed to by the Borrower or any of the Financial
Institution Subsidiaries, or agreements, memoranda, or written commitments by
the Borrower or any of the Financial Institution Subsidiaries (other than
restrictions of general application) imposed or required by any Governmental
Authority nor are any such restrictions threatened or agreements, memoranda or
commitments being sought by any Governmental Authority.

 

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Section 4.6.          Compliance with Laws and Agreements. The Borrower and each
Subsidiary is in compliance with all applicable laws (including without
limitation all Environmental Laws and all federal and state banking statutes)
and all rules, regulations (including without limitation all applicable federal
and state banking regulations) and orders of any Governmental Authority, except
where failure to do so could not reasonably be expected to result in a Material
Adverse Effect. Neither the Borrower nor any of the Financial Institution
Subsidiaries is in material default in the performance, observance or
fulfillment of any of the terms, obligations, covenants, conditions or
provisions contained in any indenture or other agreement creating, evidencing or
securing indebtedness of any kind or pursuant to which any such indebtedness is
issued, or other agreement or instrument to which the Borrower or any Financial
Institution Subsidiary is a party or by which the Borrower or any such Financial
Institution Subsidiary or any of their respective properties may be bound or
affected.

 

Section 4.7.          Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an “investment company”, as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended.

 

Section 4.8.          Taxes. The Borrower and its Subsidiaries have timely filed
or caused to be filed all Federal income tax returns and all other material tax
returns that are required to be filed by them, and have paid all taxes shown to
be due and payable on such returns or on any assessments made against it or its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority, except (i) to the extent the failure to
do so would not have a Material Adverse Effect or (ii) where the same are
currently being contested in good faith by appropriate proceedings and for which
the Borrower or such Subsidiary, as the case may be, has set aside on its books
adequate reserves.

 

Section 4.9.          Margin Regulations. None of the proceeds of the Term Loan
will be used for “purchasing” or “carrying” any “margin stock” with the
respective meanings of each of such terms under Regulation U as now and from
time to time hereafter in effect or for any purpose that violates the provisions
of Regulation U.

 

Section 4.10.         ERISA. (a)  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The “benefit obligations” of all Plans did
not, as of December 31, 2012, exceed the “fair market value of the assets” of
such Plans by more than $1,000,000. No event has occurred since December 31,
2012 that would cause the “benefit obligations” of all Plans to exceed the “fair
market value of the assets” of such Plans by the dollar amount specified in the
previous sentence. The terms “benefit obligations” and “fair market value of
assets” shall be determined by and with such terms defined in accordance with
Statement of Financial Accounting Standards No. 158.

 

- 31 -

 

 

(b)          Each Employee Benefit Plan is in compliance in all material
respects with the applicable provisions ERISA, the Code and other applicable
law. Except with respect to Multiemployer Plans, each Qualified Plan (I) has
received a favorable determination from the IRS applicable to the Qualified
Plan’s current remedial amendment cycle (as described in Revenue Procedure
2007-44 or “2007-44” for short), (II) has timely filed for a favorable
determination letter from the IRS during its staggered remedial amendment cycle
(as defined in 2007-44) and such application is currently being processed by the
IRS, (III) has filed for a determination letter prior to its “GUST remedial
amendment period” (as defined in 2007-44) and received such determination letter
and the staggered remedial amendment cycle first following the GUST remedial
amendment period for such Qualified Plan has not yet expired or (IV) is
maintained under a prototype or volume submitter plan and may rely upon a
favorable opinion or letter issued by the IRS with respect to such prototype or
volume submitter plan. No event has occurred which would cause the loss of the
Borrower’s or any ERISA Affiliate’s reliance on the Qualified Plan’s favorable
determination letter or opinion or advisory letter.

 

(c)          With respect to any Employee Benefit Plan that is a retiree welfare
benefit arrangement, all amounts have been accrued on the Borrower’s financial
statements in accordance with Statement of Financial Accounting Standards No.
106.

 

(d)          Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect: (i) there are no pending or to the
best of the Borrower’s knowledge, threatened claims, actions or lawsuits or
action by any Governmental Authority, participant or beneficiary with respect to
an Employee Benefit Plan; (ii) there are no violations of the fiduciary
responsibility rules with respect to any Employee Benefit Plan; and (iii)
neither the Borrower nor ERISA Affiliate has engaged in a non-exempt “prohibited
transaction,” as defined in Section 406 of ERISA and Section 4975 of the Code,
in connection with any Employee Benefit Plan, that would subject the Borrower to
a tax on prohibited transactions imposed by Section 502(i) of ERISA or Section
4975 of the Code.

 

Section 4.11.         Disclosure. The Borrower has disclosed to the Lender all
agreements, instruments, and corporate or other restrictions to which the
Borrower or any of its Subsidiaries is subject, and all other matters known to
any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports (including
without limitation all reports that the Borrower is required to file with the
Securities and Exchange Commission), financial statements, certificates or other
information furnished by or on behalf of the Borrower to the Lender in
connection with this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by any other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, taken as a whole, in
light of the circumstances under which they were made, not misleading.

 

Section 4.12.         Subsidiaries. Schedule 4.12 sets forth the name of, the
ownership interest of the Borrower in, and the jurisdiction of incorporation of
Financial Institution Subsidiary and each other Subsidiary, in each case as of
the Closing Date. All of the Capital Stock of each of the Borrower’s
Subsidiaries has been duly authorized and validly issued, and is fully paid and
non-assessable. Except as set forth on Schedule 4.12, the Borrower owns all of
the issued and outstanding Capital Stock of each of its Subsidiaries free and
clear of any Lien.

 

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Section 4.13.         Dividend Restrictions; Other Restrictions. (a) Except as
applicable generally to North Carolina charted commercial banks, no Financial
Institution Subsidiary of the Borrower is currently prohibited, directly or
indirectly, under any order of any Governmental Authority (other than orders
applicable to bank or savings and loan holding companies and their subsidiaries
generally), under any applicable law, or under any agreement or other instrument
to which it is a party or is subject, from paying any dividends to the Borrower,
from making any other distribution on such subsidiary’s Capital Stock, from
repaying to the Borrower or any other Subsidiary of the Borrower any loans or
advances to such Subsidiary or from transferring any of such Subsidiary’s
properties, assets or operations to the Borrower or any other Subsidiary of the
Borrower.

 

(b)          Neither the Borrower nor any Subsidiary is under investigation by,
or is operating under any restrictions (excluding any restrictions on the
payment of dividends referenced in subsection (a) above) imposed by or agreed to
with, any Governmental Authority, other than routine examinations by such
Governmental Authorities.

 

(c)          Except as set forth as an exhibit to the Borrower’s Form 10-K for
its fiscal year ended December 31, 2011, or its Quarterly Reports on Form 10-Q
for its Fiscal Quarter ended September 30, 2012, or described therein, neither
the Borrower nor any of the Financial Institution Subsidiaries is a party, nor
is bound by, any material contract or agreement or instrument, or subject to any
charter or other corporate restriction, that is of a type that the Borrower is
required to file as an exhibit to its Form 10-K annual reports or otherwise
describe therein.

 

Section 4.14.         Capital Measures. Each of Borrower and its Financial
Institution Subsidiaries is “well-capitalized” (as such term is defined at 12
C.F.R. 225.2(r) or the relevant regulation of the Borrower’s or each of its
Financial Institution Subsidiaries’ primary federal bank regulator), and “well
managed” (as that term is defined at 12 C.F.R. 225.2(s) or the relevant
regulation of the Borrower’s or each of its Financial Institutions Subsidiaries’
primary federal bank regulator), and the rating of each Financial Institution
Subsidiary under the Community Reinvestment Act of 1997 (“CRA”) is no less than
“satisfactory.” Neither the Borrower nor any Financial Institution Subsidiary
has been informed that its status as “well-capitalized,” “well managed” or, in
the case of each Financial Institution Subsidiary, for CRA purposes,
“satisfactory,” will change within one (1) year.

 

Section 4.15.         Ownership of Property. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all of its real
and personal property material to the operation of its business, including all
such properties reflected in the most recent audited consolidated balance sheet
of the Borrower referred to in Section 4.4 or purported to have been acquired by
the Borrower or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens other than those Liens permitted by Section 7.2. All leases that
individually or in the aggregate are material to the business or operations of
the Borrower and its Subsidiaries are valid and subsisting and are in full
force.

 

(b)          Each of the Borrower and its Subsidiaries owns, or is licensed, or
otherwise has the right, to use, all patents, trademarks, service marks, trade
names, copyrights and other intellectual property material to its business, and
the use thereof by the Borrower and its Subsidiaries does not infringe in any
material respect on the rights of any other Person.

 

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(c)          The properties of the Borrower and its Subsidiaries are insured
with financially sound and reputable insurance companies which are not
Affiliates of the Borrower, in such amounts with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or any applicable
Subsidiary operates.

 

Section 4.16.         Patriot Act. Each of the Borrower and its Subsidiaries is
in compliance, in all material respects, with (i) the Trading with the Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto and
(ii) the Uniting And Strengthening America By Providing Appropriate Tools
Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001) (such
laws and regulations collectively referred to herein as “Anti-Terrorism Laws”).
No part of the proceeds of the Obligations will be used, directly or indirectly,
for any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

 

Section 4.17.         Solvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Term Loan under this
Agreement, neither the Borrower nor its Subsidiaries will be “insolvent,” within
the meaning of such term as defined in § 101(32) of Title 11 of the United
States Code, as amended from time to time, or be unable to pay its debts
generally as such debts become due, or have an unreasonably small capital to
engage in any business or transaction, whether current or contemplated
(“Solvent”).

 

Section 4.18.         Labor Relations. There are no strikes, lockouts or other
material labor disputes or grievances against the Borrower or any Subsidiary,
or, to the Borrower’s knowledge, threatened against or affecting the Borrower or
any Subsidiary, and no significant unfair labor practice, charges or grievances
are pending against the Borrower or any Subsidiary, or to the Borrower’s
knowledge, threatened against any of them before any Governmental Authority. All
payments due from the Borrower or any Subsidiary pursuant to the provisions of
any collective bargaining agreement have been paid or accrued as a liability on
the books of the Borrower or such Subsidiary, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

 

Section 4.19.         Regulatory Matters. Neither the Borrower nor any of its
Financial Institution Subsidiaries is subject or is party to, or has received
any notice or advice that any of them may become subject or party to any
investigation with respect to, any corrective, suspension or cease-and-desist
order, agreement, consent agreement, memorandum of understanding or other
regulatory enforcement action, proceeding or order with or by, or is a party to
any commitment letter or similar undertaking to, or is subject to any directive
by, or has been a recipient of any supervisory letter from, or has adopted any
board resolutions at the request of, any Governmental Authority that currently
relates to or restricts in any material respect the conduct of their business or
that in any manner relates to their capital adequacy, credit policies,
management or business (each, a “Regulatory Agreement”), nor has the Borrower or
any of its Financial Institution Subsidiaries been advised by any Governmental
Authority that it is considering issuing or requesting any Regulatory Agreement.
There is no unresolved violation, criticism or exception by any Governmental
Authority with respect to any report or statement relating to any examinations
of the Borrower or any of its Financial Institution Subsidiaries. The Borrower
and its Financial Institution Subsidiaries are in compliance in all material
respects with all laws administered by any Governmental Authority.

 

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Section 4.20.         SEC Reports. The Borrower has timely filed with or
furnished to, as applicable, the Securities and Exchange Commission (the “SEC”)
all registration statements, prospectuses, reports, schedules, forms, statements
and other documents (including exhibits and all other information incorporated
by reference) required to be filed or furnished by it with the SEC since January
1, 2010 (the “Borrower SEC Documents”). The Borrower has made available to the
Lender all such Borrower SEC Documents that it has so filed or furnished prior
to the date hereof. As of their respective filing dates (or, if amended or
superseded by a subsequent filing, as of the date of the last such amendment or
superseding filing prior to the date hereof), each of the Borrower SEC Documents
complied as to form in all material respects with the applicable requirements of
the Securities Act and Exchange Act applicable to such Borrower SEC Documents.
None of the Borrower SEC Documents, including any financial statements,
schedules or exhibits included or incorporated by reference therein at the time
they were filed or furnished (or, if amended or superseded by a subsequent
filing, as of the date of the last such amendment or superseding filing prior to
the date hereof), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the Borrower’s Subsidiaries is required to file
with or furnish to the SEC any forms, reports or other documents.

 

Section 4.21.         Accounting Controls and Disclosure Controls. The Borrower
and each of its Subsidiaries maintain effective internal control over financial
reporting (as defined under Rule 13-a15 and 15d-15 of the 1934 Act Regulations)
and a system of internal accounting controls sufficient to provide reasonable
assurances that: (A) transactions are executed in accordance with management’s
general or specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences; and
(E) any interactive data in eXtensible Business Reporting Language included in
the Borrower’s SEC filings fairly presents the required information and is
prepared in accordance with the SEC’s rules and guidelines applicable thereto.
Since the end of the Borrower’s most recent audited fiscal year, there has been
(1) no material weakness in the Borrower’s internal control over financial
reporting (whether or not remediated) and (2) no change in the Borrower’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Borrower’s internal control over
financial reporting. The Borrower and each of its Subsidiaries maintain an
effective system of disclosure controls and procedures (as defined in Rule
13a-15 and Rule 15d-15 of the 1934 Act Regulations) that are designed to ensure
that the information required to be disclosed by the Borrower in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the SEC’s rules and forms,
and is accumulated and communicated to the Borrower’s management, including its
principal executive officer or officers and principal financial officer or
officers, as appropriate, to allow timely decisions regarding disclosure. Each
of the principal executive officer and the principal financial officer of the
Borrower (or each former principal executive officer and each former principal
financial officer of the Borrower, as applicable) has made all certifications
required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and
906 of the Sarbanes-Oxley Act of 2002 (including the rules and regulations
promulgated thereunder, the “Sarbanes-Oxley Act”) with respect to the Borrower
SEC Documents, and the statements contained in such certifications are true and
accurate in all material respects. For purposes of this Agreement, “principal
executive officer” and “principal financial officer” shall have the meanings
given to such terms in the Sarbanes-Oxley Act. Neither the Borrower nor any of
its Financial Institution Subsidiaries has outstanding (nor has arranged or
modified since the enactment of the Sarbanes-Oxley Act) any “extensions of
credit” (within the meaning of Section 402 of the Sarbanes-Oxley Act) to
directors or executive officers (as defined in Rule 3b-7 under the Exchange Act)
of the Borrower or any of its Financial Institution Subsidiaries. The Borrower
is otherwise in compliance with all applicable provisions of the Sarbanes-Oxley
Act, except for any non-compliance that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

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Section 4.22.         Foreign Corrupt Practices Act. None of the Borrower, nor
any of its Financial Institution Subsidiaries or, to the knowledge of the
Borrower, any director, officer, agent, employee, affiliate or other person
acting on behalf of the Borrower or any of its subsidiaries is aware of or has
taken any action, directly or indirectly, that would result in a violation by
such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder (the “FCPA”), including, without limitation,
making use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization
of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any “foreign official” (as
such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the
FCPA and the Borrower, its subsidiaries and, to the knowledge of the Borrower,
its other affiliates have conducted their businesses in compliance with the FCPA
and have instituted and maintain policies and procedures designed to ensure, and
which are reasonably expected to continue to ensure, continued compliance
therewith.

 

Section 4.23.         Money Laundering Laws. The operations of the Borrower and
its Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Authority (collectively, the “Money Laundering
Laws”). No action, suit or proceeding by or before any Governmental Authority
involving the Borrower or any of its Subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Borrower,
threatened.

 

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Section 4.24.         OFAC. None of the Borrower, any of its Subsidiaries or, to
the knowledge of the Borrower, any director, officer, agent, employee, affiliate
or other person acting on behalf of the Borrower or any of its subsidiaries is
(A) a currently the subject or target of any sanctions administered or enforced
by the United States Government, including, without limitation, the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the
United Nations Security Council, the European Union, Her Majesty’s Treasury, or
other relevant sanctions authority (collectively, “Sanctions”) or (B) located,
organized or resident in a country or territory that is the subject of
Sanctions.

 

Article V       AFFIRMATIVE COVENANTS

 

The Borrower covenants and agrees that so long as any principal of and interest
on the Term Loan or any fee or other obligation owing hereunder remains unpaid:

 

Section 5.1.          Financial Statements and Other Information. The Borrower
will deliver to the Lender:

 

(a)          as soon as available and in any event within 90 days after the end
of each fiscal year of Borrower, a copy of the annual audited report for such
fiscal year for the Borrower and its Subsidiaries, containing (i) a consolidated
and consolidating balance sheet and the related consolidated and consolidating
statements of income, of changes in shareholders’ equity and of cash flows
(together with all footnotes thereto), and (ii) a condensed balance sheet of the
Borrower only and the related condensed statements of income and of cash flows,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and reported on by Cherry, Bekaert &
Holland, L.L.P. or other independent public accountants of nationally recognized
standing (without a “going concern” or like qualification, exception or
explanation and without any qualification or exception as to scope of such
audit) to the effect that such financial statements present fairly in all
material respects the financial condition and the results of operations and cash
flows on a consolidated and consolidating basis of the Borrower for such fiscal
year in accordance with GAAP and that the examination by such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards; provided, that the requirements set forth
in this clause (a), other than the certification of the Borrower’s certified
public accountants set forth in clause (ii) above, may be fulfilled by providing
to the Lender the report of the Borrower to the SEC on Form 10-K for the
applicable fiscal year;

 

(b)          as soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
an unaudited balance sheet of the Borrower and its Subsidiaries on a
consolidated basis as of the end of such fiscal quarter and the related
unaudited statements of income and cash flows of the Borrower and its
Subsidiaries on a consolidated basis, each for such fiscal quarter and the then
elapsed portion of such fiscal year, setting forth in each case in comparative
form the figures for the corresponding quarter and the corresponding portion of
Borrower’s previous fiscal year, all certified by the chief financial officer or
treasurer of the Borrower as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes; provided, that the
requirements set forth in this clause (b) with respect to the financial
information of the Borrower and its Subsidiaries on a consolidated and
consolidating basis may be fulfilled by providing to the Lender the report of
the Borrower to the SEC on Form 10-Q for the applicable fiscal quarter;

 

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(c)          concurrently with the delivery of the financial statements referred
to in clauses (a) and (b) above, a Compliance Certificate, (i) certifying as to
whether there exists a Default or Event of Default on the date of such
certificate, and if a Default or an Event of Default then exists, specifying the
details thereof and the action which the Borrower has taken or proposes to take
with respect thereto, and (ii) setting forth in reasonable detail calculations
demonstrating compliance with Article VI;

 

(d)          concurrently with the delivery of the financial statements referred
to in clauses (a) and (b) above, duly executed copies of the Borrower’s
then-current FR Y-9C Report and FR Y-9LP Report and a duly executed copy of the
then-current Call Report for each Financial Institution Subsidiary and each such
report so filed by the Borrower or the Financial Institution Subsidiaries with
any Governmental Authority shall be true and correct and is in accordance with
the respective books of account and records of the Borrower and the Financial
Institution Subsidiaries, and will be prepared in accordance with applicable
banking regulations, rules and guidelines on a basis consistent with prior
periods, and fairly and accurately presents, in all material respects, the
financial condition of the Borrower and the Financial Institution Subsidiaries
and their respective assets and liabilities and the results of their respective
operations as of such date;

 

(e)          as soon as available and in any event within 60 days after the
first day of each fiscal year of the Borrower, (i) a budget prepared on a
consolidated and quarterly basis in reasonable detail (including budgeted income
statements, statements of cash flow and balance sheets and the principal
assumptions upon which such budgets are based) prepared by the Borrower for such
fiscal year and (ii) projected consolidated and consolidating financial
statements (including in each case, forecasted balance sheets and statements of
income and statements of cash flow) for each fiscal quarter in such fiscal year,
in each case, in form and content reasonably acceptable to the Lender, together
with such supporting information as the Lender may reasonably request;

 

(f)          promptly after the same become publicly available, copies of all
periodic and other reports, financial statements, registration statements, proxy
statements and other materials, together with any amendments or exhibits
relating to any of the foregoing, filed with the SEC, or any Governmental
Authority succeeding to any or all functions of the SEC, or with any national
securities exchange, or distributed by the Borrower to its public security
holders generally, as the case may be (to the extent not otherwise required to
be delivered to the Lender hereunder);

 

(g)          promptly after receiving knowledge thereof, written notice of all
material charges, material assessments, actions, suits and proceedings (as well
as notice of the outcome of any such charges, assessments, orders, actions,
suits and proceedings) that are proposed or initiated by, or brought before, any
court or Governmental Authority, in connection with the Borrower or any of the
Financial Institution Subsidiaries, other than ordinary course of business
litigation or proceedings which, if adversely decided, could not reasonably be
expected to have a Material Adverse Effect;

 

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(h)          promptly, and in any event within five Business Days after the
execution or entry thereof, the execution or entry by the Borrower or any
Financial Institution Subsidiary of any Regulatory Agreement, together with a
copy thereof if such disclosure is permitted by applicable law; and

 

(i)          promptly following any request therefor, such other information
regarding the results of operations, business affairs and financial condition of
the Borrower or any Subsidiary, as the Lender may reasonably request.

 

Documents required to be delivered pursuant to Section 5.1(a) or (b) or Section
5.1(f) (to the extent any such documents are included in materials otherwise
filed with the SEC) may be delivered electronically and if so delivered, shall
be deemed to have been delivered on the date (i) on which the Borrower posts
such documents or provides a link thereto on the Borrower’s website on the
internet at the website address set forth in Section 9.1 or (ii) on which such
documents are posted on the Borrower’s behalf on an internet or intranet
website, if any, to which the Lender have access; provided, that (A) the
Borrower shall deliver paper copies of such documents to the Lender if so
requested until a written notice is received by the Borrower from the Lender to
cease delivering paper copies and (B) the Borrower shall notify (which may be by
telex, telefacsimile or electronic mail) the Lender of the posting of any such
documents and provide to the Lender by electronic mail electronic versions (i.e.
soft copies) of such documents. Notwithstanding anything contained herein, in
every instance the Borrower shall be required to provide paper copies of all
Compliance Certificates.

 

The Borrower and each of its Subsidiaries maintain effective internal control
over financial reporting (as defined under Rule 13-a15 and 15d-15 of the 1934
Act Regulations) and a system of internal accounting controls sufficient to
provide reasonable assurances that: (A) transactions are executed in accordance
with management’s general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management’s general or specific
authorization; (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (E) any interactive data in eXtensible Business
Reporting Language included in the Borrower’s SEC filings fairly presents the
required information and is prepared in accordance with the SEC’s rules and
guidelines applicable thereto. The Borrower and each of its Subsidiaries shall
maintain an effective system of disclosure controls and procedures (as defined
in Rule 13a-15 and Rule 15d-15 of the 1934 Act Regulations) that are designed to
ensure that the information required to be disclosed by the Borrower in the
reports that it files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules
and forms, and is accumulated and communicated to the Borrower’s management,
including its principal executive officer or officers and principal financial
officer or officers, as appropriate, to allow timely decisions regarding
disclosure.

 

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Section 5.2.          Notices of Material Events. The Borrower will furnish to
the Lender prompt written notice of the following:

 

(a)          the occurrence of any Default or Event of Default;

 

(b)          the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or, to the knowledge of
the Borrower, affecting the Borrower or any Subsidiary which, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;

 

(c)          the occurrence of any ERISA Event that alone, or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower or its Subsidiaries in an aggregate amount exceeding
$1,000,000;

 

(d)          any material investigation of the Borrower or any Subsidiary by any
Governmental Authority having regulatory authority over the Borrower or any such
Subsidiary (other than routine examinations of the Borrower and/or any such
Subsidiary) to the extent that such Governmental Authority has consented to the
giving of such notice (if the consent of such Governmental Authority is required
for the Borrower to give such notice);

 

(e)          the issuance of any cease and desist order (whether written or
oral), execution and delivery of any Regulatory Agreement (to the extent that
the Borrower or any such Subsidiary is permitted to disclose such information
(provided that the Borrower shall take all reasonable efforts to obtain any
necessary regulatory consents)), cancellation of insurance or other public or
enforcement action by the FDIC or other Governmental Authority having regulatory
authority over the Borrower or any Subsidiary;

 

(f)          the issuance of any material informal enforcement action,
including, without limitation, a memorandum of understanding or proposed
disciplinary action by or from any Governmental Authority having regulatory
authority over the Borrower or any Subsidiary, to the extent that the Borrower
or any such Subsidiary is permitted to disclose such information (provided that
the Borrower shall take all reasonable efforts to obtain any necessary
regulatory consents); and

 

(g)          any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.         

 

Each notice delivered under this Section shall be accompanied by a written
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

 

Section 5.3.          Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and maintain in full force and effect its legal
existence and its respective rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business and will continue to engage in the same business as presently conducted
or such other businesses that are reasonably related thereto; provided, that
nothing in this Section shall prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.3.

 

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Section 5.4.          Compliance with Laws, Etc..

 

(a)          The Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and requirements of any Governmental
Authority (including without limitation all federal and state banking statutes
and regulations) applicable to its assets, except where the failure to do so,
either individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. In this connection, each of the Borrower
and its Subsidiaries shall comply, in all material respects, with (i) all
Anti-Terrorism Laws; (ii) all Money Laundering Laws, and (iii) the FCPA or other
laws or regulations referenced in Section 4.22 hereof.

 

(b)          The Borrower shall timely file with or furnished to, as applicable,
the SEC all Borrower SEC Documents required to be filed by it during the term of
this Agreement in accordance with all rules and regulations promulgated from
time to time by the SEC. The Borrower shall at all times be in compliance with
the Sarbanes-Oxley Act and related rules and regulations referenced in Section
4.21 hereof.

 

Section 5.5.          Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge at or before maturity, all of its
obligations and liabilities (including without limitation all tax liabilities
and all claims that could result in a statutory Lien) before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.

 

Section 5.6.          Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep proper books of record and account in which full,
true and correct entries shall be made of all dealings and transactions in
relation to its business and activities to the extent necessary to prepare the
consolidated and consolidating financial statements of the Borrower in
conformity with GAAP.

 

Section 5.7.          Visitation, Inspection, Etc. The Borrower will, and will
cause each of its Subsidiaries to, permit any representative of the Lender to,
subject to Section 9.11, visit and inspect its properties, to examine its books
and records and to make copies and take extracts therefrom, and to discuss its
affairs, finances and accounts with any of its officers and with its independent
certified public accountants, all at such reasonable times and as often as the
Lender may reasonably request after reasonable prior notice to the Borrower and
at the Borrower’s expense.

 

Section 5.8.          Maintenance of Properties; Insurance.

 

(a)          The Borrower will, and will cause each of its Subsidiaries to, keep
and maintain all property material to the conduct of its business in good
working order and condition, except for ordinary wear and tear and except where
the failure to do so, either individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

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(b)          The Borrower will, and will cause each of its Subsidiaries to, keep
and maintain with financially sound and reputable insurance companies, insurance
with respect to its properties and business, and the properties and business of
its Subsidiaries, against loss or damage of the kinds customarily insured
against by companies in the same or similar businesses operating in the same or
similar locations.

 

(c)          The deposits of each Financial Institution Subsidiary will at all
times be insured by the FDIC.

 

Section 5.9.          Use of Proceeds. The Borrower will use the proceeds of the
Term Loan solely to redeem a portion of the Borrower’s Series A Perpetual
Preferred Stock and to pay out-of-pocket costs and expenses incurred in
connection with the consummation of the financing transactions contemplated
hereby, including, without limitation, the fees and expenses of counsel to the
Borrower and the Lender.

 

Section 5.10.         Further Assurances. The Borrower agrees, upon request of
the Lender, to execute and deliver or cause to be executed and delivered such
further instruments, documents and certificates, and to and cause to be done
such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Lender to carry out more effectively the provisions
and purposes of this Agreement and the other Loan Documents.

 

Article VI      FINANCIAL COVENANTS

 

The Borrower covenants and agrees that so long as any principal of, and interest
on, the Term Loan, or any fee or other obligation owing hereunder remains
unpaid:

 

Section 6.1.          Regulatory Capital.

 

(a)          The Borrower will, at all times, be “well-capitalized” for all
applicable state and federal regulatory purposes, and the Borrower:

 

(i)          will maintain (A) a Total Risk-based Capital Ratio of 10.50% or
greater, (B) a Tier 1 Common Capital Ratio of 8.50% or greater, (C) a Tier 1
Risk-based Capital Ratio of 8.50% or greater, and (D) a Leverage Ratio of 7.25%
or greater (as defined from time to time under each federal regulation or order
applicable to, or binding upon, the Borrower);

 

(ii)         will not be subject to any written agreement, order, capital
directive or prompt corrective action directive by any Governmental Authority
having regulatory authority over the Borrower; and

 

(iii)        if required by any Governmental Authority having regulatory
authority over the Borrower in order to remain “well capitalized” and in
compliance with all applicable regulatory requirements, will have such higher
amounts of Total Risk-based Capital and Tier 1 Risk-based Capital and/or such
greater Leverage Ratio as specified by such Governmental Authority.

 

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(b)          Each Financial Institution Subsidiary of the Borrower will, at all
times, be “well capitalized” for all applicable state and federal regulatory
purposes, and such Financial Institution Subsidiary:

 

(i)          will maintain (A) a Total Risk-based Capital Ratio of 10.50% or
greater, (B) a Tier 1 Common Capital Ratio of 8.50% or greater, (C) a Tier 1
Risk-based Capital Ratio of 8.50% or greater, and (D) a Leverage Ratio of 7.25%
or greater (as defined from time to time under each federal and state regulation
or order applicable to, or binding upon, such Financial Institution Subsidiary);

 

(ii)         will not be subject to any written agreement, order, capital
directive or prompt corrective action directive by any Governmental Authority
having regulatory authority over such Financial Institution Subsidiary; and

 

(iii)        if required by any Governmental Authority having regulatory
authority over such Financial Institution Subsidiary in order to remain “well
capitalized” and in compliance with all applicable regulatory requirements, will
have such higher amounts of Total Risk-based Capital and Tier 1 Risk-based
Capital and/or such greater Leverage Ratio as specified by such Governmental
Authority.

 

(c)          Notwithstanding the foregoing, if at any time any such Governmental
Authority changes the definition of “well capitalized”, as applicable to the
Borrower or any Financial Institution Subsidiary of the Borrower, either by
amending such ratios, standards or otherwise, in each case, in a manner more
onerous or restrictive to the Borrower or such Financial Institution Subsidiary
than the capital and other ratios required to be maintained pursuant to
paragraphs (a) and (b) above, such amended definition, and any such amended or
new ratios or new standards, shall automatically, and in lieu of the existing
definitions and ratios set forth in this Section, be incorporated by reference
into this Agreement as the minimum standard for the Borrower or any Financial
Institution Subsidiary, as the case may be, on and as of the date that any such
amendment becomes effective by applicable statute, regulation, order or
otherwise.

 

Article VII      NEGATIVE COVENANTS

 

The Borrower covenants and agrees that so long as any principal of and interest
on the Term Loan or any fee or other obligation owing hereunder remains unpaid:

 

Section 7.1.          Indebtedness. Without the prior written consent of the
Lender, which consent shall not be unreasonably delayed, denied or withheld, the
Borrower will not, and will not permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any Indebtedness, except:

 

(a)          Indebtedness of the Borrower created pursuant to the Loan
Documents;

 

(b)          Indebtedness existing on the date hereof and set forth on
Schedule 7.1 and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof (immediately prior
to giving effect to such extension, renewal or replacement) or shorten the
maturity or the weighted average life thereof;

 

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(c)          Permitted Financial Institution Subsidiary Indebtedness;

 

(d)          (i) Indebtedness owed by the Borrower or any “affiliate” of the
Borrower (as defined in Regulation W of the FRB and sections 23A and 23B of the
Federal Reserve Act) to any Financial Institution Subsidiary not in violation of
Regulation W of the FRB (as amended, supplemented or otherwise modified) or
(ii) Indebtedness owed by any Subsidiary to the Borrower; and

 

(e)          Purchase money indebtedness and Capitalized Lease Obligations
secured by Liens permitted under this Agreement in an aggregate amount
outstanding at any time not to exceed $500,000.

 

Section 7.2.          Negative Pledge. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien on any of its assets or property now owned or hereafter acquired
(including, without limitation, in the case of the Borrower, the Capital Stock
of any Financial Institution Subsidiary including the Bank of North Carolina),
except:

 

(a)          Liens (if any) created in favor of the Lender;

 

(b)          Permitted Encumbrances;

 

(c)          Liens on property of the Borrower or any of its Subsidiaries
created solely for the purpose of securing Indebtedness expressly permitted by
Section 7.1(e), representing or incurred to finance, refinance or refund the
purchase price of property; provided, that no such Lien shall extend to or
encumber other property of the Borrower or such Subsidiary other than the
respective property so acquired, and the principal amount of Indebtedness
secured thereby shall at no time exceed the original purchase price of such
property; and

 

(d)          extensions, renewals, or replacements of any Lien referred to in
paragraphs (a), (b) and (c) of this Section; provided, that the principal amount
of the Indebtedness secured thereby is not increased in any manner that would
exceed the amounts permitted in Section 7.1 and that any such extension, renewal
or replacement is limited to the assets originally encumbered thereby.

 

Notwithstanding anything herein or otherwise to the contrary, the Borrower shall
not grant any Lien, or otherwise permit any Lien to exist, on the Capital Stock
of any Financial Institution Subsidiary (other than Liens in favor of the
Lender).

 

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Section 7.3.          Fundamental Changes.

 

(a)          The Borrower will not, and will not permit any Subsidiary to,
(i) merge into or consolidate into any other Person, or permit any other Person
to merge into or consolidate with it, or (ii) sell, lease, transfer or otherwise
dispose of (in a single transaction or a series of transactions) all or a
material portion of its assets or all or substantially all of the stock of any
of its Subsidiaries or (iii) liquidate or dissolve; provided, that if at the
time thereof and immediately after giving effect thereto on a pro forma basis,
no Default or Event of Default shall have occurred, (A)(i) the Borrower may
merge with a Person in connection with a Permitted Acquisition; provided, that,
the Borrower shall be the surviving Person, (ii) a Subsidiary may merge with a
Person in connection with a Permitted Acquisition; provided, that, the
Subsidiary shall be the surviving Person, or (iii) a Subsidiary may merge with
another Subsidiary, so long as a Subsidiary shall be the surviving Person,
(B) any Subsidiary may sell, lease, transfer or dispose of its assets to the
Borrower or another Subsidiary, (C) the Borrower or any Financial Institution
Subsidiary may sell loans, investments, or other similar assets in the ordinary
course of its business, provided, that such sale or series of sales do not
constitute a sale of all or a material portion of such Financial Institution
Subsidiary’s assets, and (D) the Borrower and any Subsidiary may sell any Other
Real Estate Owned; provided, further, that, in the case of clauses (C) and (D)
hereof, no single sale (or series of related sales) shall exceed $200,000,000 of
assets (calculated, in the case of loans, by the unpaid principal balance
thereof, and, in the case of Other Real Estate Owned or other assets, the
greater of (x) the fair market value thereof or (y) the purchase price thereof).

 

(b)          The Borrower will not dispose of any Capital Stock in any of its
Financial Institution Subsidiaries, whether by sale, assignment, lease or
otherwise, without the prior written consent of the Lender.

 

(c)          The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Borrower and its Subsidiaries on the date hereof and
businesses reasonably related thereto and any types of businesses that are
expressly permitted by any Governmental Authority having jurisdiction over the
Borrower and/or any Financial Institutions Subsidiary.

 

Section 7.4.          Restricted Payments. The Borrower will not, and will not
permit its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any dividend on any class of its stock, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, retirement, defeasance, prepayment or other acquisition
of, (a) any shares of Capital Stock or (b) Indebtedness subordinated to the
Obligations of the Borrower or (c) any options, warrants, or other rights to
purchase such Capital Stock or such Indebtedness, whether now or hereafter
outstanding (each a “Restricted Payment”); provided, however, that (i) any
Subsidiary may make Restricted Payments to the Borrower at any time, (ii) the
Borrower may pay dividends payable solely in shares of any class of its common
stock, (iii) the Borrower shall be permitted to pay, in cash, in each Fiscal
Quarter of the Borrower occurring during the period this Agreement is in effect,
its regular quarterly dividend of $0.05 per common share; provided, however,
that in no event, including in the event of any stock split or additional
issuance of common shares or otherwise occurring after the date hereof, shall
the aggregate amount of cash dividends paid in respect of its common shares
exceed $6,000,000 per Fiscal Year and (iv) the Borrower may, from time to time
during the term of this Agreement, redeem or repurchase shares of the Capital
Stock of the Borrower so long as (A) at the time of the making of such
redemption or repurchase, no Default or Event of Default then exists and is
continuing; (B) the Borrower is, after giving pro forma effect to such
redemption or repurchase, in compliance with the covenants set forth in Section
6.1; and (c) the aggregate amount of such Restricted Payments that the Borrower
may make under clause (iv) above shall not exceed $25,000,000 during the term of
this Agreement.

 

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Section 7.5.          Restrictive Agreements. Without the prior written consent
of Lender, which consent shall not be unreasonably delayed, denied or withheld,
the Borrower will not, and will not permit any of its Subsidiaries to, directly
or indirectly, enter into, incur or permit to exist any agreement that
prohibits, restricts or imposes any condition upon  the ability of the Borrower
or any Subsidiary to (a) create, incur or permit any Lien upon any of its assets
or properties, whether now owned or hereafter acquired, or (b) pay dividends or
make any other distributions on any of such Subsidiary’s Capital Stock owned by
the Borrower or any other Subsidiary of the Borrower, repay or prepay any
Indebtedness owed by such Subsidiary to the Borrower or any other Subsidiary of
the Borrower, make loans or advances to the Borrower or any other Subsidiary of
the Borrower, guarantee Indebtedness of the Borrower or any other Subsidiary or
transfer, lease or license any of its property or assets to the Borrower or any
Subsidiary of the Borrower including, but not limited to, any such restriction
referenced in Section 4.13(a) hereof; provided, that (i) clause (a) shall not
prohibit: (x) customary provisions in leases restricting the assignment thereof
and (y) restrictions in agreements evidencing purchase money Indebtedness
permitted by Section 7.1(h) that impose restrictions on the property so
acquired, and (ii) clause (b) shall not prohibit: (x) restrictions or conditions
imposed by law or by this Agreement or any other Loan Document, or (y) customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is sold and such sale is permitted hereunder.

 

Section 7.6.          Investments, Etc. Without the prior written consent of
Lender, which consent shall not be unreasonably delayed, denied or withheld, the
Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly-owned Subsidiary prior to such merger), any Capital Stock, Indebtedness
or other securities (including any option, warrant, or other right to acquire
any of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of, or make or permit to exist any investment or any
other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) all or substantially all of the assets
of a Person, or of any business or division of any Person (all of the foregoing
being collectively called “Investments”), except:

 

(a)          Investments existing on the date hereof (including Investments in
Subsidiaries) and set forth on Schedule 7.6(a).

 

(b)          Investments purchased by any Financial Institution Subsidiary in
connection with its asset management in ordinary course of business;

 

(c)          Investments made by the Borrower in or to any Subsidiary and by any
Subsidiary in or to the Borrower or in or to another Subsidiary;

 

(d)          Permitted Acquisitions;

 

(e)          Investments received in consideration for Asset Sales in a form
other than Cash to the extent expressly permitted by Section 7.3;

 

- 46 -

 

 

(f)          Guarantees of the Borrower of any Indebtedness expressly permitted
under Section 7.1(d); and

 

(g)          Investments constituting Permitted Financial Institution Subsidiary
Indebtedness.

 

Section 7.7.          Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties, (b) if such
transaction with an Affiliate involves an amount in excess of $1,000,000, a
transaction in which a majority of the disinterested directors on the Board of
Directors of the Borrower or such Subsidiary have approved the relevant
transaction as evidenced by a resolution of the Board of Directors of the
Borrower or such Subsidiary, (c) transactions between or among the Borrower and
any Subsidiary not involving any other Affiliates and (d) any Restricted Payment
expressly permitted by Section 7.4.

 

Section 7.8.          Hedging Transactions. The Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Hedging Transaction, other
than Hedging Transactions entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the management of its liabilities. Solely for the
avoidance of doubt, the Borrower acknowledges that a Hedging Transaction entered
into for speculative purposes or of a speculative nature (which shall be deemed
to include any Hedging Transaction under which the Borrower or any of the
Subsidiaries is or may become obliged to make any payment (i) in connection with
the purchase by any third party of any Capital Stock or any Indebtedness or (ii)
as a result of changes in the market value of any Capital Stock or any
Indebtedness) is not a Hedging Transaction entered into in the ordinary course
of business to hedge or mitigate risks.

 

Section 7.9.          Amendment to Material Documents. The Borrower will not,
and will not permit any of its Subsidiaries to, amend, modify or waive any of
its rights in any manner that is adverse to the interests of the Lender or the
Borrower or any of its Subsidiaries under such party’s certificate of
incorporation, bylaws or other organizational documents.

 

Section 7.10.         Sale and Leaseback Transaction. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any arrangement, directly
or indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred.

 

Section 7.11.         Accounting Changes. The Borrower will not, and will not
permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Borrower or any Subsidiary of the Borrower, except to change
the fiscal year of a Subsidiary of the Borrower to conform its fiscal year to
that of the Borrower.

 

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Section 7.12.         Unsafe and Unsound Practices. The Borrower will not, and
will not permit any of its Subsidiaries to, engage in any unsafe or unsound
business practice that has been identified as such by the FRB and/or the FDIC or
other Governmental Authority having jurisdiction over the Borrower or such
Subsidiary or that could otherwise reasonably be expected to have a Material
Adverse Effect.

 

Section 7.13.         Most Favored Lender Status. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, amend or modify
documents evidencing or governing Indebtedness to which the Borrower or its
Subsidiaries are bound, that contain, or are amended and modified to contain,
one or more Additional Covenants or Additional Defaults, unless in each case the
Borrower or such Subsidiary contemporaneously executes an amendment to this
Agreement, in form and substance reasonably satisfactory to the Lender, to
include such Additional Covenants or Additional Defaults herein; provided, that
to the extent that the Borrower or any Subsidiary shall enter into, assume or
otherwise become bound by or obligated under such amendment or agreement
containing one or more Additional Covenants or Additional Defaults without
amending this Agreement to include such Additional Covenants or Additional
Defaults, the terms of this Agreement shall nonetheless, without any further
action on the part of the Borrower or any Subsidiary, be deemed or amended
automatically to include each Additional Covenant and each Additional Default
contained in such amendment or agreement.

 

Article VIII     EVENTS OF DEFAULT

 

Section 8.1.          Events of Default. If any of the following events (each an
“Event of Default”) shall occur:

 

(a)          the Borrower shall fail to pay any principal of the Term Loan when
and as the same shall become due and payable, whether at the due date thereof or
otherwise; or

 

(b)          the Borrower shall fail to pay any interest on the Term Loan or any
fee or any other Obligation (other than an amount payable under clause (a) of
this Article), when and as the same shall become due and payable and such
failure shall continue unremedied for a period of three (3) days; or

 

(c)          any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement or any
other Loan Document (including the Schedules attached thereto) and any
amendments or modifications hereof or waivers hereunder, or in any certificate,
report, financial statement or other document submitted to the Lender by the
Borrower or any representative of the Borrower pursuant to or in connection with
this Agreement or any other Loan Document shall prove to be incorrect in any
material respect when made or deemed made or submitted; or

 

(d)          the Borrower shall fail to observe or perform any covenant or
agreement contained in Section 5.1, Section 5.2, Section 5.3 (with respect to
the Borrower’s existence), Section 5.7, Section 5.9 or Article VI or Article
VII; or

 

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(e)          the Borrower shall fail to observe or perform any covenant or
agreement contained (i) in this Agreement (other than those referred to in
clauses (a), (b) and (d) above), and such failure shall remain unremedied for
30 days after the earlier of (x) any officer of the Borrower becomes aware of
such failure, or (y) notice thereof shall have been given to the Borrower by the
Lender or (ii) in any other Loan Document (after taking into consideration any
applicable grace periods); or

 

(f)          the Borrower or any Subsidiary (whether as primary obligor or as
guarantor or other surety) shall fail to pay any Indebtedness (other than under
this Agreement or the Term Note) owed to any Lender or to any other Person, in
each case, in an amount greater than $1,000,000 that is outstanding, when and as
the same shall become due and payable (whether at scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument evidencing such Indebtedness; or any other event shall occur or
condition shall exist under any agreement or instrument relating to such
Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or permit the acceleration of, the maturity of such
Indebtedness (without regard to whether such holders or other Person shall have
exercised or waived their right to do so); or any such Indebtedness shall be
declared to be due and payable; or required to be prepaid or redeemed (other
than by a regularly scheduled required prepayment or redemption), purchased or
defeased, or any offer to prepay, redeem, purchase or defease such Indebtedness
shall be required to be made, in each case prior to the stated maturity thereof
(and for purposes of determining the amount of attributed Indebtedness under
this clause (f) from Hedging Obligations, the “principal amount” of any Hedging
Obligations at any time shall be the Net Mark-to-Market Exposure of such Hedging
Obligations); or

 

(g)          the Borrower or any Subsidiary shall (i) commence a voluntary case
or other proceeding or file any petition seeking liquidation, reorganization or
other relief under any federal, state or foreign bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
custodian, trustee, receiver, liquidator or other similar official of it or any
substantial part of its property, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (i) of this Section, (iii) apply for or consent to the appointment of
a custodian, trustee, receiver, liquidator or other similar official for the
Borrower or any such Subsidiary or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors, or (vi) take any action for the purpose of effecting any of the
foregoing; or

 

(h)          an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or its debts, or any substantial
part of its assets, under any federal, state or foreign bankruptcy, insolvency
or other similar law now or hereafter in effect or (ii) the appointment of a
custodian, trustee, receiver, liquidator or other similar official for the
Borrower or any Subsidiary or for a substantial part of its assets, and in any
such case, such proceeding or petition shall remain undismissed for a period of
60 days or an order or decree approving or ordering any of the foregoing shall
be entered; or

 

(i)          without duplication of clause (f) of this Section 8.1, the Borrower
or any Subsidiary shall become unable to pay, shall admit in writing its
inability to pay, or shall fail to pay, its debts as they become due; or

 

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(j)          an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with other ERISA Events that have occurred, could
reasonably be expected to result in liability to the Borrower and the
Subsidiaries in an aggregate amount exceeding $1,000,000; or

 

(k)          any judgment or order for the payment of money in excess of
$1,000,000 in the aggregate not covered by insurance and for which the
applicable insurer shall have acknowledged in writing that such claim or payment
is insured shall be rendered against the Borrower or any Subsidiary, and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be a period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or

 

(l)          any non-monetary judgment or order shall be rendered against the
Borrower or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect, and there shall be a period of 30 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or

 

(m)         a Change in Control shall occur; or

 

(n)          any Governmental Authority having regulatory authority over the
Borrower or any Subsidiary shall take any action that restricts, or has the
practical effect of restricting, the payment of dividends from any such
Subsidiary to the Borrower or the payment of any debt owing by a Subsidiary to
the Borrower; or

 

(o)          any Financial Institution Subsidiary shall cease for any reason
(other than as a result of being merged into another Financial Institution
Subsidiary) to be an insured bank under the Federal Deposit Insurance Act, as
amended; or

 

(p)          the FRB, the FDIC or any other Governmental Authority charged with
the regulation of bank holding companies or depository institutions: (i) issues
(whether orally or in writing) to the Borrower or any Financial Institution
Subsidiary, or initiates through formal proceedings any action, suit or
proceeding to obtain against, impose on or require from the Borrower or any
Financial Institution Subsidiary, a cease and desist order or similar regulatory
order, the assessment of civil monetary penalties, articles of agreement, a
memorandum of understanding, a capital directive, a capital restoration plan,
restrictions that prevent or as a practical matter impair the payment of
dividends by any Financial Institution Subsidiary or the payments of any debt by
the Borrower, restrictions that make the payment of the dividends by any
Financial Institution Subsidiary or the payment of debt by the Borrower subject
to prior regulatory approval, a notice or finding under subsection 8(a) of the
Federal Deposit Insurance Act, as amended, or any similar enforcement action,
measure or proceeding; or (ii) proposes or issues (whether orally or in writing)
to any executive officer or director of the Borrower or any Financial
Institution Subsidiary, or initiates any action, suit or proceeding to obtain
against, impose on or require from any such officer or director, a cease and
desist order or similar regulatory order, a removal order or suspension order,
or the assessment of civil monetary penalties; or

 

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(q)          there shall occur with respect to any Financial Institution
Subsidiary any event that is grounds for the required submission of a capital
restoration plan under 12 U. S. C. §1831o (e)(2) and the regulations thereunder,
or a conservator or receiver is appointed for any Financial Institution
Subsidiary; or

 

(r)          any order or decree is entered by any court of competent
jurisdiction directly or indirectly enjoining or prohibiting the Lender or the
Borrower from performing any of their respective obligations under this
Agreement or under any of the other Loan Documents and such order or decree is
not vacated, and the proceedings out of which such order or decree arose are not
dismissed, within 60 days after the granting of such decree or order; or

 

(s)          the Borrower or any Financial Institution Subsidiary (i) shall
enter into any Regulatory Agreement or is otherwise operating under any
restrictions imposed by or agreed to with, any Governmental Authority, other
than routine examinations by such Governmental Authorities or (ii) shall be
declared by any Governmental Authority as not being Solvent; or

 

(t)          the filing of formal charges by any Governmental Authority or
quasi-governmental entity, including, without limitation, the issuance of an
indictment under a RICO Related Law against Borrower or any Subsidiary of
Borrower; or

 

(u)          the failure of the common shares of the Capital Stock of the
Borrower to be listed for trading on either the New York Stock Exchange or the
NASDAQ Global Market Exchange;

 

then, and in every such event (other than an event with respect to the Borrower
or any Subsidiary described in clause (g) or (h) of this Section) and at any
time thereafter during the continuance of such event, the Lender may, by notice
to the Borrower, take any or all of the following actions, at the same or
different times: (i) declare the principal of and any accrued interest on the
Term Loan, and all other Obligations owing hereunder, to be, whereupon the same
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower and
(ii) exercise all remedies contained in any other Loan Document; and that, if an
Event of Default specified in either clause (g) or (h) shall occur, the
principal of the Term Loan then outstanding, together with accrued interest
thereon, and all fees, and all other Obligations shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.

 

Article IX      MISCELLANEOUS

 

Section 9.1.          Notices.

 

(a)          Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications to any
party herein to be effective shall be in writing and shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or telexed
or sent by telefacsimile, as follows:

 

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To the Borrower: BNC Bancorp   3980 Premier Drive   Suite 210   High Point,
North Carolina 27265   Attn:  Richard D. Callicutt II   Telephone Number: (336)
869-9200   Fax Number: (336) 889-8451   Website: www.bankofnc.com       with a
copy to       BNC Bancorp/Bank of North Carolina   3980 Premier Drive   Suite
210   High Point, North Carolina 27265   Attn:  Drema A. Michael       with a
copy to       Womble Carlyle Sandridge & Rice, LLP   271 17th Street, N.W.  
Suite 2400   Atlanta, Georgia 30363-1017   Attn:  Carolyn Saffold Wilson  
Telephone Number:   (404) 888-7487   Email:   cwilson@wcsr.com     To the
Lender: Synovus Bank   3280 Peachtree Road, NE   Suite 500   Atlanta, Georgia
30305   Attn:  Michael Sawicki   Telephone Number:   (678) 578-1927   Email:
  MichaelSawicki@synovus.com     with a copy to       Synovus Bank   3280
Peachtree Road, NE   Suite 500   Atlanta, Georgia 30305   Attn:  Vickie Summey  
Telephone Number:   (678) 784-7157   Email:   vickiesummey@synovus.com

 

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  with a copy to       Alston & Bird LLP   1201 West Peachtree Street   Atlanta,
Georgia 30309   Attn: Richard W. Grice   Telephone Number:  (404) 881-7576  
Email:  richard.grice@alston.com

 

Any party hereto may change its address or telefacsimile number for notices and
other communications hereunder by notice to the other parties hereto. All such
notices and other communications shall, when transmitted by overnight delivery,
be effective when delivered for overnight (next-day) delivery or, when telexed,
sent by telefacsimile, or other electronic transmission (in .pdf format), be
effective when transmitted in legible form by telefacsimile machine or other
electronic transmission (in .pdf format) or if mailed, upon the third Business
Day after the date deposited into the mail or if delivered, upon delivery;
provided, that notices delivered to the Lender shall not be effective until
actually received by the Lender at its address specified in this Section 9.1.

 

(b)          Any agreement of the Lender herein to receive certain notices by
telephone, telex, telefacsimile or other electronic transmission (in .pdf
format) is solely for the convenience and at the request of the Borrower. The
Lender shall be entitled to rely on the authority of any Person purporting to be
a Person authorized by the Borrower to give such notice, and the Lender shall
not have any liability to the Borrower or other Person on account of any action
taken or not taken by the Lender in reliance upon such telephonic, telex,
telefacsimile or electronically transmitted notice. The obligation of the
Borrower to repay the Term Loan and all other Obligations hereunder shall not be
affected in any way or to any extent by any failure of the Lender to receive
written confirmation of any telephonic, telex or telefacsimile notice or the
receipt by the Lender of a confirmation which is at variance with the terms
understood by the Lender to be contained in any such telephonic, telex or
telefacsimile notice.

 

Section 9.2.          Waiver; Amendments.

 

(a)          No failure or delay by the Lender in exercising any right or power
hereunder or any other Loan Document, and no course of dealing between the
Borrower and the Lender, shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power hereunder
or thereunder. The rights and remedies of the Lender hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies provided by law. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of the Term Loan shall not be construed
as a waiver of any Default or Event of Default, regardless of whether the Lender
may have had notice or knowledge of such Default or Event of Default at the
time.

 

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(b)          No amendment or waiver of any provision of this Agreement or the
other Loan Documents, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Borrower and the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Notwithstanding anything herein or otherwise to the contrary, any Event
of Default occurring hereunder shall continue to exist (and shall be deemed to
be continuing) until such time as such Event of Default is waived in writing in
accordance with the terms of this Section notwithstanding (i) any attempted cure
or other action taken by the Borrower or any other Person subsequent to the
occurrence of such Event of Default or (ii) any action taken or omitted to be
taken by the Lender prior to or subsequent to the occurrence of such Event of
Default (other than the granting of a waiver in writing in accordance with the
terms of this Section).

 

Section 9.3.          Expenses; Indemnification.

 

(a)          The Borrower shall pay (i) all reasonable, out-of-pocket costs and
expenses of the Lender and its Affiliates (including, without limitation, the
reasonable fees, charges and disbursements of outside counsel and the allocated
cost of inside counsel for the Lender and its Affiliates) in connection with the
syndication of the Term Loan provided for herein, the preparation and
administration of the Loan Documents and any amendments, modifications or
waivers thereof (whether or not the transactions contemplated in this Agreement
or any other Loan Document shall be consummated), and (ii) all out-of-pocket
costs and expenses (including, without limitation, the reasonable fees, charges
and disbursements of outside counsel and the allocated cost of inside counsel)
incurred by the Lender in connection with the enforcement or protection of its
rights in connection with this Agreement, including its rights under this
Section, or in connection with the Term Loan made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of the Term Loan.

 

(b)          The Borrower shall indemnify the Lender and each officer, director,
employee, agents, advisors and Affiliates of the Lender (each, an “Indemnitee”)
against, and hold each of them harmless from, any and all costs, losses,
liabilities, claims, damages and related expenses, including the fees, charges
and disbursements of any counsel for any Indemnitee, which may be incurred by
any Indemnitee, or asserted against any Indemnitee by the Borrower or any third
Person, arising out of, in connection with or as a result of (i) the execution
or delivery of any this Agreement or any other Loan Document, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of any of the transactions contemplated hereby, (ii) the Term Loan or any actual
or proposed use of the proceeds therefrom, (iii) the use by any Person of any
information or materials obtained by or through SyndTrak or other internet web
sites, (iv) any actual or alleged presence or release of Hazardous Materials on
or from any property owned by the Borrower or any Subsidiary or any
Environmental Liability related in any way to the Borrower or any Subsidiary or
(v) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether brought by the Borrower or any third
Person and whether based on contract, tort, or any other theory and regardless
of whether any Indemnitee is a party thereto; provided, that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction in a final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee.

 

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(c)          The Borrower shall pay, and hold the Lender harmless from and
against, any and all present and future stamp, documentary, and other similar
taxes with respect to this Agreement and any other Loan Documents, or any
payments due thereunder, and save the Lender harmless from and against any and
all liabilities with respect to or resulting from any delay or omission by the
Borrower to pay such taxes.

 

(d)          To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to actual or direct damages) arising out of, in connection with or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated therein, the Term Loan or the use of proceeds thereof.

 

(e)          All amounts due under this Section shall be payable promptly after
written demand therefor.

 

Section 9.4.          Successors and Assigns.

 

(a)          The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Lender, and the Lender may not assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the
provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
paragraph (g) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in paragraph (d) of this Section and, to the extent
expressly contemplated hereby, the Lender and its affiliates) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

(b)          The Lender may at any time assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Term Loan Commitment and Term Loan at the time owing to it, in
each case, without the consent or notice to, the Borrower); provided, however,
that no such assignment shall be made to the Borrower or any of the Borrower’s
Affiliates or Subsidiaries or to a natural person.

 

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(c)          The Lender, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Principal Office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of any new lender, and the Commitment of, and principal amounts of the
Term Loan owing to, the Lender(s) pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive, and the
Borrower and the Lender may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

 

(d)          The Lender may, at any time, without the consent of, or notice to,
the Borrower, sell participations to any Person (other than a natural person or
the Borrower or any Subsidiary of the Borrower or Affiliate of the Borrower)
(each, a “Participant”) in all or a portion of the Lender’s rights and/or
obligations under this Agreement (including, all or a portion of its Term Loan
Commitment and/or the Term Loan owing to it); provided, that (i) the Lender’s
obligations under this Agreement shall remain unchanged, (ii) the Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and obligations
under this Agreement. Any agreement or instrument pursuant to which the Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided, that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver that would (i)
postpone any date upon which any payment of money is scheduled to be made to
such Participant, (ii) reduce the principal, interest, fees or other amounts
payable to such Participant (provided, however, that the Lender may, without the
consent of the Participant, (A) amend any financial covenant hereunder (or any
defined term used therein) even if the effect of such amendment would be to
reduce the rate of interest on the Term Loan or to reduce any fee payable
hereunder and (B) waive the right to be paid Default Interest), or (iii) release
any Guarantor from its Guaranty, as applicable.

 

(e)          The Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
the Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided, that no such pledge or
assignment shall release the Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party hereto.

 

Section 9.5.          Governing Law; Jurisdiction; Consent to Service of
Process.

 

(a)          THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.

 

- 56 -

 

  

(b)          The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the non-exclusive jurisdiction of any Federal and/or
state court located in the State of Georgia and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document or the transactions contemplated hereby or
thereby, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Georgia state court or, to the extent permitted by applicable law, such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Borrower or its properties in
the courts that have jurisdiction over the Borrower.

 

(c)          The Borrower irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding described in paragraph (b) of this Section and brought in
any state or federal court located in the State of Georgia and referred to in
paragraph (b) of this Section. Each of the parties hereto irrevocably waives, to
the fullest extent permitted by applicable law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d)          Each party to this Agreement irrevocably consents to the service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement or in any other Loan Document will affect the right of any party
hereto to serve process in any other manner permitted by law.

 

Section 9.6.          WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 9.7.          Right of Setoff. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, the Lender shall have the right, at any time or from time to time upon
the occurrence and during the continuance of an Event of Default, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, to set off and apply against all
deposits (general or special, time or demand, provisional or final) of the
Borrower at any time held or other obligations at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all
Obligations owed to the Lender under this Agreement, irrespective of whether the
Lender shall have made demand hereunder and although such Obligations may be
unmatured. The Lender agrees promptly to notify the Borrower after any such
set-off and any application made by the Lender; provided, that the failure to
give such notice shall not affect the validity of such set-off and application.

 

- 57 -

 

 

Section 9.8.          Counterparts; Integration. This Agreement may be executed
by one or more of the parties to this Agreement on any number of separate
counterparts (including by telex, telefacsimile or by email, in .pdf format),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. This Agreement, the other Loan Documents, and any
separate letter agreement(s) relating to any fees payable to the Lender
constitute the entire agreement among the parties hereto and thereto regarding
the subject matters hereof and thereof and supersede all prior agreements and
understandings, oral or written, regarding such subject matters. Delivery of an
executed counterpart of a signature page of this Agreement and any other Loan
Document by telex, telefacsimile or by email, in .pdf format, shall be effective
as delivery of a manually executed counterpart of this Agreement or such other
Loan Document.

 

Section 9.9.          Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of the Term
Loan, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on the Term Loan or any fee or any other
amount payable under this Agreement is outstanding and unpaid. The provisions of
Section 2.13 and Section 9.3 shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Term Loan or the termination of this Agreement or any provision
hereof. All representations and warranties made herein, in the certificates,
reports, notices, and other documents delivered pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the other Loan
Documents, and the making of the Term Loan.

 

Section 9.10.         Severability. Any provision of this Agreement or any other
Loan Document held to be illegal, invalid or unenforceable in any jurisdiction,
shall, as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the
illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

- 58 -

 

 

Section 9.11.         Confidentiality. The Lender agrees to maintain the
confidentiality of any and all non-public, confidential or proprietary
information, identified to the Lender as such, of or relating to the Borrower or
any Subsidiary and their respective businesses, operations, finances or
strategies (“Confidential Information”). For purposes of this Section,
Confidential Information shall not include: (1) information that was already
known to the recipient without an obligation of confidentiality to the Borrower
or any Subsidiary with respect to such information, (2) information that was
obtained from a third party who was not known to the Lender to be under an
obligation of confidentiality to the Borrower or any Subsidiary with respect to
such information, (3) information that is or becomes publicly available, other
than through a breach of this Section by the Lender or any Participant or any of
their respective representatives, employees or agents. Notwithstanding the
foregoing, Confidential Information may be disclosed (i) to any officer,
director, agent, affiliate or representative of the Lender, including, without
limitation, accountants, legal counsel and other advisors; provided, however,
that such Person shall agree to be bound by the confidentiality provisions set
forth in this Section with respect to such information, (ii) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (iii) to the extent requested by any regulatory agency or authority,
(iv) to the extent necessary in connection with the exercise of any remedy
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, (v) subject to provisions substantially similar
to this Section 9.11, to any actual or prospective assignee or Participant, or
(vi) with the prior written consent of the Borrower. Any Person required to
maintain the confidentiality of any information as provided for in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such information as such Person would accord its own
confidential information, but in no event less than a reasonable degree of care.

 

Section 9.12.         Waiver of Effect of Corporate Seal. The Borrower
represents and warrants that it is not required to affix its corporate seal to
this Agreement or any other Loan Document pursuant to any requirement of law or
regulation, agrees that this Agreement is delivered by Borrower under seal and
waives any shortening of the statute of limitations that may result from not
affixing the corporate seal to this Agreement or such other Loan Documents.

 

Section 9.13.         Patriot Act. The Lender hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (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 the Lender to identify the Borrower in accordance with the
Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries to,
provide to the extent commercially reasonable, such information and take such
other actions as are reasonably requested by the Lender in order to assist the
Lender in maintaining compliance with the Patriot Act.

 

Section 9.14.         Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.

 

- 59 -

 

 

Section 9.15.         No Advisory or Fiduciary Relationship. In connection with
all aspects of the transactions contemplated hereby (including in connection
with any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrower acknowledges and agrees, and acknowledges its
Affiliates’ understanding, that: (i) the Borrower has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (B) the Borrower is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents; (ii) (A) the Lender is and has been acting solely as a
principal and, except as expressly agreed in writing by the relevant parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary
for the Borrower or any of its Affiliates, or any other Person and (B) the
Lender does not have any obligation to the Borrower or any of its Affiliates
with respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; and (iii) the Lender
and its Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrower and its Affiliates, and the
Lender does not have any obligation to disclose any of such interests to the
Borrower or any of its Affiliates. To the fullest extent permitted by law, the
Borrower hereby waives and releases any claims that it may have against the
Lender with respect to any breach or alleged breach of agency or fiduciary duty
in connection with any aspect of any transaction contemplated hereby.

 

[Remainder of page intentionally left blank. Signatures appear on following
pages]

 

- 60 -

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Term Loan Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

 

  THE BORROWER:       BNC BANCORP           By  /s/Richard D. Callicutt II    
Name:   Richard D. Callicutt II     Title: Executive Vice President and Chief
Operating Officer           THE LENDER:       SYNOVUS BANK,   as Lender        
  By  /s/Michael Sawicki     Name: Michael Sawicki     Title: Vice President

 

 

 

SCHEDULE 4.12

 

Financial Institution Subsidiaries

 

NAME  OWNERSHIP %
BY BORROWER   JURISDICTION OF
INCORPORATION Bank of North Carolina   100%  North Carolina

  

Other Subsidiaries

 

NAME  OWNERSHIP %
BY BORROWER   JURISDICTION 
OF
INCORPORATION BNC BANCORP CAPITAL TRUST I   100%  DELAWARE BNC BANCORP CAPITAL
TRUST II   100%  DELAWARE BNC CAPITAL TRUST III   100%  DELAWARE BNC CAPITAL
TRUST IV   100%  DELAWARE BNC CREDIT CORP.   100%  NORTH CAROLINA STERLING REAL
ESTATE HOLDINGS, LLC   100%  NORTH CAROLINA STERLING REAL ESTATE DEVELOPMENT OF
NORTH CAROLINA, LLC   100%  NORTH CAROLINA BFNM BLDG, LLC   66.66667%  SOUTH
CAROLINA

 

 

 

 

SCHEDULE 7.1

 

OUTSTANDING INDEBTEDNESS

  

Name of Lender
and Amount of
Loan   Purpose   Collateral   Debtor              

a.     FHLB: $252.6 million line of credit 

  Long-term debt   Real estate loans and investment securities   Bank of North
Carolina               b.     Junior Subordinated Debentures  

Guarantee by BNC Bancorp of trust’s obligations under trust preferred securities

 

     

BNC Bancorp Capital Trust I, BNC Bancorp Capital Trust II, BNC Capital Trust III
and BNC Capital Trust IV

 

BNC Bancorp is a guarantor of the obligations 

              c.     $2.435 million of BNC Bancorp 8% Convertible Subordinated
Notes Due June 30, 2020   Subordinated Debt to 6 holders assumed in connection
with the September 14, 2012 KeySource Financial, Inc. merger.  BNC Bancorp has
the option to redeem on June 30, 2013.       BNC Bancorp

 

 

 

 

 

SCHEDULE 7.6

 

INVESTMENTS

  

Trust Preferred Securities: BNC Bancorp Capital Trust I, BNC Bancorp Capital
Trust II, BNC Capital Trust III and BNC Capital Trust IV (see Schedule 7.1.b).

 

$2.435 million of BNC Bancorp 8% Convertible Subordinated Notes Due June 30,
2020: Subordinated Debt to 6 holders assumed in connection with the September
14, 2012 KeySource Financial, Inc. merger. BNC Bancorp has the option to redeem
on June 30, 2013.

  

bfnm bldg llc: The sole asset of this LLC is the branch office of Bank of North
Carolina d/b/a BNC Bank in Myrtle Beach, SC BNC Bancorp is majority owner of
this LLC

  

Exhibit 5.1(c) - 1

  

 

 

  

EXHIBIT A

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of
the Effective Date set forth below and is entered into by and between the
Assignor identified in item 1 below (the “Assignor”) and [the][each] Assignee
identified in item 2 below ([the][each, an] “Assignee”). [It is understood and
agreed that the rights and obligations of [the Assignees] hereunder are several
and not joint.] Capitalized terms used but not defined herein shall have the
meanings given to them in the Term Loan Agreement identified below (as amended,
the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by
[the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Acceptance as if set forth herein in full.

  

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to [the Assignee][the respective Assignees], and [the][each] Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by the Lender as contemplated below (i) all of
the Assignor’s rights and obligations in its capacity as a Lender under the
Credit Agreement and any other documents or instruments delivered pursuant
thereto to the extent related to the amount and percentage interest identified
below of all of such outstanding rights and obligations of the Assignor under
the term loan facility identified below, and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned by the Assignor to
[the][any] Assignee pursuant to clauses (i) and (ii) above being referred to
herein collectively as [the][an] “Assigned Interest”). Each such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Acceptance, without representation or warranty by the
Assignor.

  

A-2

 

 

1. Assignor:  SYNOVUS BANK       2. Assignee[s]: ______________________________
          ______________________________

  

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]

 

3. Borrower:  BNC BANCORP       4. Lender:  SYNOVUS BANK

  

5.  Credit Agreement:  Term Loan Agreement dated as of April 26, 2013 between
BNC Bancorp and Synovus Bank.       6.  Assigned Interest[s]:

  

Assignor   Assignee[s]   Facility
Assigned  Aggregate Amount
of Term Loans   Amount of
Term
Loan
Assigned   Percentage
Assigned of
Term Loan            Term Loan  $    $      %           Term Loan  $    $      %
          Term Loan  $    $      %

  

[7. Trade Date:  ______________]

  

[Signatures on Following Page]

 

A-3

 

  

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY LENDER AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

The terms set forth in this Assignment and Acceptance are hereby agreed to:

  

  ASSIGNOR:       SYNOVUS BANK         By:     Title:         ASSIGNEE[S]:      
[NAME OF ASSIGNEE]         By:     Title:         [NAME OF ASSIGNEE]         By:
    Title:

  

A-4

 

  

ANNEX 1

 

BNC BANCORP TERM LOAN AGREEMENT

 

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ACCEPTANCE

 

1.          Representations and Warranties.

 

1.1        Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of [the][the relevant] Assigned Interest, (ii)
[the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim, and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Acceptance and
to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document ,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document, or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

 

1.2.       Assignee[s]. [The][Each] Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Acceptance and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all the requirements to be an assignee under Section
9.4 of the Credit Agreement, (iii) from and after the Effective Date, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and,
to the extent of [the][the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect to
decisions to acquire assets of the type represented by the Assigned Interest and
either it, or the Person exercising discretion in making its decision to acquire
the Assigned Interest, is experienced in acquiring assets of such type, (v) it
has received a copy of the Credit Agreement, and has received or has been
accorded the opportunity to receive copies of the most recent financial
statements delivered pursuant to Section 5.1 thereof, as applicable, and such
other documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance and to
purchase [the][such] Assigned Interest, and (vi) it has, independently and
without reliance upon the Lender and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Assignment and Acceptance and to purchase [the][such] Assigned
Interest; and (b) agrees that (i) it will, independently and without reliance on
the Lender or the Assignor, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

  

A-5

 

  

2.          Payments. From and after the Effective Date, the Borrower shall make
all payments in respect of [the][each] Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to [the][the relevant]
Assignee for amounts which have accrued from and after the Effective Date.
Notwithstanding the foregoing, the Borrower shall make all payments of interest,
fees or other amounts paid or payable in kind from and after the Effective Date
to [the][the relevant] Assignee.

 

3.          General Provisions. This Assignment and Acceptance shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Acceptance may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Acceptance
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance. This Assignment and Acceptance shall be governed
by, and construed in accordance with, the law of the State of Georgia.

 

A-6

 

 

EXHIBIT B

 

FORM OF TERM NOTE

  

$30,000,000.00

Date: April 26, 2013

Atlanta, Georgia

 

FOR VALUE RECEIVED, the undersigned, BNC BANCORP, a North Carolina corporation
(the “Borrower”), hereby promises to pay to SYNOVUS BANK (the “Lender”) or its
registered assigns at the Payment Office, on the Maturity Date (as defined in
the Term Loan Agreement dated as of April 26, 2013 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), between the Borrower and Synovus Bank), the lesser of the principal
sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00) and the aggregate
unpaid principal amount of the Term Loan made by the Lender to the Borrower
pursuant to the Term Loan Agreement, in lawful money of the United States of
America in immediately available funds, and to pay interest from the date hereof
on the principal amount thereof from time to time outstanding, in like funds, at
said office, at the rate or rates per annum and payable on such dates as
provided in the Term Loan Agreement. The Borrower shall make principal payments
on this Term Note as set forth in Section 2.5 of the Term Loan Agreement.

 

The term loan evidenced by this Term Note and all payments and prepayments of
the principal hereof and the date thereof shall be endorsed by the holder hereof
on the schedule attached hereto and made a part hereof or on a continuation
thereof which shall be attached hereto and made a part hereof, or otherwise
recorded by such holder in its internal records; provided, that the failure of
the holder hereof to make such a notation or any error in such notation shall
not affect the obligations of the Borrower to make the payments of principal and
interest in accordance with the terms of this Term Note and the Term Loan
Agreement.

 

Upon the occurrence of an Event of Default (as defined in the Term Loan
Agreement), the Borrower promises to pay interest, on demand, at a rate or rates
provided in the Term Loan Agreement.

 

This Term Note is issued in connection with, and is entitled to the benefits of,
the Term Loan Agreement which, among other things, contains provisions for the
payment of principal and interest at stated intervals, acceleration of the
maturity hereof upon the happening of certain events and for the amendment or
waiver of certain provisions of the Term Loan Agreement, all upon the terms and
conditions therein specified.

B-1

 

 

THIS TERM NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

  

  BNC BANCORP         By:       Name:       Title:  

 

B-2

 

 

LOANS AND PAYMENTS

  

Date   Amount and Type of Loan   Payments of
Principal   Unpaid Principal
Balance of 
Term Note   Name of Person
Making Notation                                                                
       

 

B-3

 

 

EXHIBIT 2.2

 

FORM OF NOTICE OF BORROWING

 

[Date]

 

 

 

Synovus Bank

3280 Peachtree Road, NE

Suite 500

Atlanta, Georgia 30305

 

Attn: Michael Sawicki

 

Ladies and Gentlemen:

 

Reference is made to the Term Loan Agreement dated as of April 26, 2013 (as
amended and in effect on the date hereof, the “Credit Agreement”), between the
undersigned, as Borrower, and Synovus Bank. Terms defined in the Credit
Agreement are used herein with the same meanings. This notice constitutes the
Notice of Borrowing, and the Borrower hereby requests funding of the Term Loan
under the Credit Agreement, and in that connection the Borrower specifies the
following information:

 

(A)         Principal amount of Term Loan: $30,000,000

 

(B)         Date of Borrowing (which is a Business Day not less than three (3)
Business Days after the date hereof): _________, 2013

 

               (C)         Interest Rate Basis: [LIBOR]

 

               (D)         Interest Period: ___ month(s)

 

(E)         Location and number of Borrower’s account to which proceeds of Term
Loan are to be disbursed:                                         

 

    Very truly yours,           BNC BANCORP         By:        Name:     Title:

  

B-2

 

  

EXHIBIT 2.4

 

FORM OF NOTICE OF CONTINUATION

 

[Date]

 

Synovus Bank

3280 Peachtree Road, NE

Suite 500

Atlanta, Georgia 30305

 

Attn: Michael Sawicki

 

Ladies and Gentlemen:

 

Reference is made to the Term Loan Agreement dated as of April 26, 2013 (as
amended and in effect on the date hereof, the “Credit Agreement”), between the
undersigned, as Borrower, and Synovus Bank. Terms defined in the Credit
Agreement are used herein with the same meanings. This notice constitutes a
Notice of Continuation and the Borrower hereby requests the continuation of the
Term Loan under the Credit Agreement, and in that connection the Borrower
specifies the following information with respect to the Term Loan:

 

 

(A)         Effective date of election (which is a Business Day):
                                                   

 

(B)         Interest Period for Term Loan:
                                                   

  

  Very truly yours,       BNC BANCORP         By:       Name:     Title:

 

Exhibit 2.4

 

 

 

 

Exhibit 3.1(b)(iii)

 

FORM OF SECRETARY'S CERTIFICATE OF
BNC BANCORP

 

Reference is made to that certain Term Loan Agreement dated as of April 26, 2013
(the "Credit Agreement") between BNC BANCORP (the "Borrower”) and SYNOVUS BANK.
Terms defined in the Credit Agreement are used herein with the same meanings.
This certificate is being delivered pursuant to Section 3.1(b)(iii) of the
Credit Agreement.

 

I, __________________, Secretary of the Borrower, DO HEREBY CERTIFY that:

 

a)          annexed hereto as Exhibit A is a true and correct copy of the
certificate of incorporation of the Borrower as in effect on [insert date of
board resolutions in (d) below] and at all times thereafter through the date
hereof;

 

b)          annexed hereto as Exhibit B is a true and correct copy of the bylaws
of the Borrower as in effect on [insert date of board resolutions in (d) below]
and at all times thereafter through the date hereof;

 

c)          annexed hereto as Exhibit C is a true and correct copy of certain
resolutions duly adopted by the Board of Directors of the Borrower at a meeting
of said Board of Directors duly called and held on ____________, 2013, which
resolutions are the only resolutions adopted by the Board of Directors of the
Borrower or any committee thereof relating to the Credit Agreement and the other
Loan Documents to which the Borrower is a party and the transactions
contemplated therein and have not been revoked, amended, supplemented or
modified and are in full force and effect on the date hereof; and

 

d)          each of the persons named below is a duly elected and qualified
officer of the Borrower holding the respective office set forth opposite his or
her name and the signature set forth opposite of each such person is his or her
genuine signature:

 

Name   Title   Specimen Signature [Include all officers who are signing the
Credit Agreement or any other Loan Documents.]                                  
 

  

Exhibit 3.1(b)(iii) - 1

 

 

 

 

IN WITNESS WHEREOF, I have hereunto signed my name as Secretary of the Borrower
and not in an individual capacity this ___ day of April, 2013.

 

      Name:      Title:  Secretary

 

I, ____________, _____________ of the Borrower, do hereby certify that
_______________ has been duly elected, is duly qualified and is the Secretary of
the Borrower, and that the signature set forth above is [his/her] genuine
signature.

 

      Name:      Title:  

 

Exhibit 3.1(b)(iii) - 2

 

 

 

  

EXHIBIT 3.1(b)(vi)

 

FORM OF OFFICER'S CERTIFICATE

 

Reference is made to that certain Term Loan Agreement dated as of April 26, 2013
(the "Credit Agreement") between BNC BANCORP (the "Borrower”) and SYNOVUS BANK.
Terms defined in the Credit Agreement are used herein with the same meanings.
This certificate is being delivered pursuant to Section 3.1Section 3.1(b)(vi) of
the Credit Agreement.

 

I, ______________________, the ______________________of the Borrower, DO HEREBY
CERTIFY that:

 

(a)no Default or Event of Default has occurred and is continuing at the date
hereof;

 

(b)the representations and warranties of the Borrower set forth in the Credit
Agreement are true and correct on and as of the date hereof;

 

(c)since December 31, 2012, there has been no change, event or other
circumstance which has had or could reasonably be expected to have a Material
Adverse Effect;

 

(d)other than non-objection from the Federal Reserve Bank of Richmond as
evidenced by letter dated April 26, 2013, from Mr. Adam M. Drimer, Assistant
Vice President of the Federal Reserve Bank to Mr. Richard T. Hills of Womble
Carlyle Sandridge & Rice, LLP and from the Office of the Commissioner of Banks
of the State of North Carolina as evidenced by letter dated April 9, 2013 from
Mr. Ray Grace, Acting Commissioner of Banks of the State of North Carolina to
Mr. Richard T. Hills of Womble Carlyle Sandridge & Rice, LLP, no consents,
approvals, authorizations, registrations, filings or orders are required to be
made or obtained under any applicable law, or by any Contractual Obligation of
the Borrower, in connection with the execution, delivery, performance, validity
and enforceability of the Loan Documents or any of the transactions contemplated
thereby; and

 

(e)no proceedings have been instituted or are pending or contemplated with
respect to the dissolution, liquidation or sale of all or substantially all the
assets of the Borrower or threatening its existence or the forfeiture or any of
its corporate rights;

 

IN WITNESS WHEREOF, I have hereunto signed my name as _________ of the Borrower
and not in an individual capacity this ______ day of April, 2013.

 

      Name:      Title:  

 

Exhibit 3.1(b)(vi)

 

 

 

 

EXHIBIT 5.1(c)

 

FORM OF COMPLIANCE CERTIFICATE

 

To:Synovus Bank

3280 Peachtree Road, NE

Suite 500

Atlanta, Georgia 30305

Attn: Michael Sawicki

 

Ladies and Gentlemen:

 

Reference is made to that certain Term Loan Agreement dated as of April 26, 2013
(as amended and in effect on the date hereof, the “Credit Agreement”), between
BNC BANCORP (the “Borrower”) and Synovus Bank. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.

 

I, ______________ , being the duly elected and qualified, and acting in my
capacity as [Chief Financial Officer][President] of the Borrower, hereby certify
to the Lender as follows:

 

1.          The financial statements of the Borrower and its Subsidiaries for
the Fiscal [Quarter / Year] ending ____________ provided to the Lender as
provided in Section 5.1 of the Credit Agreement fairly present in all material
respects the financial condition of the Borrower and its Subsidiaries as at the
end of such Fiscal [Quarter / Year] on a consolidated and consolidating basis,
and the related statements of income and cash flows of the Borrower and its
Subsidiaries for such Fiscal [Quarter / Year], in accordance with generally
accepted accounting principles consistently applied (subject, in the case of
such quarterly financial statements, to normal year-end audit adjustments and
the absence of footnotes).

 

2.          As of the end of the Fiscal [Quarter / Year] ended _____________,
the Borrower and each Financial Institution Subsidiary is “well- capitalized” in
accordance with, and satisfy each of the ratios specified in, Section 6.1 of the
Credit Agreement.

 

3.          Based upon a review of the activities of Borrower and its
Subsidiaries and the financial statements attached hereto during the period
covered thereby, as of the date hereof, there exists no Default or Event of
Default.

 

IN WITNESS WHEREOF, I have hereunto signed my name as [Chief Financial
Officer][President] of the Borrower and not in an individual capacity this
____day of ______________, 201_.

 

      Name:     Title: [Chief Financial Officer][President]