10.1
LOAN AGREEMENT
Dated as of October 26, 2020
between
The Dixie Group, Inc., a Tennessee Corporation

and

TDG Operations, LLC,
a Georgia Limited Liability Company

"Borrowers"
and
AmeriState Bank,
an Oklahoma state banking corporation
"Bank"

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10.1
LOAN AGREEMENT

    THIS LOAN AGREEMENT ("Loan Agreement"), dated effective as of October 26,
2020, is entered into by and between The Dixie Group, a Tennessee corporation,
and TDG Operations, LLC, a Georgia limited liability company (collectively, the
"Borrowers"), and AmeriState Bank, an Oklahoma state banking corporation (the
"Bank").

RECITALS:
A.Borrowers have requested that the Bank loan to Borrowers the principal sum of
$10,000,000.00, with a final maturity date of October 26, 2045.
B.The Bank is willing to so establish a term loan in the stated principal amount
of $10,000,000.00, with a final maturity date of October 26, 2045 (the "Term
Loan").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties hereto, the parties agree as
follows:
Article I.
CERTAIN DEFINITIONS
When used herein, the following terms shall have the following meanings:
“Change of Control” means that (a) Permitted Holders fail to own and control,
directly or indirectly, the Stock of The Dixie Group, Inc. representing the
right to vote 20% of the total voting rights for the election of members of its
Board of Directors, (b) any “person” or “group” (within the meaning of Sections
13(d) and 14(d) of the Exchange Act), other than Permitted Holders, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of the Stock of The Dixie Group, Inc. representing the right to vote
35% of the total voting rights for the election of members of the Board of
Directors, (c) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (d) The Dixie Group, Inc. fails to own and
control, directly or indirectly, 100% of the Stock of TDG Operations, LLC other
than by merger of TDG Operations, LLC into The Dixie Group, Inc..
"Closing" or "Closing Date" shall mean October 26, 2020.
"Collateral" shall have the meaning assigned to that term in Section 3.1 of this
Agreement.
“Continuing Director” means (a) any member of the Board of Directors who was a
director of The Dixie Group, Inc on the Closing Date, and (b) any individual who
becomes a member of the Board of Directors after the Closing Date if such
individual was approved, appointed or nominated for election to the Board of
Directors by either the Permitted Holders or a majority of the Continuing
Directors, but excluding any such individual originally proposed for
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10.1
election in opposition to the Board of Directors in office at the Closing Date
in an actual or threatened election contest relating to the election of the
directors of The Dixie Group, Inc. and whose initial assumption of office
resulted from such contest or the settlement thereof.
"Contractual Obligation" means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"Debt Service Ratio" means the ratio of net operating income plus depreciation,
amortization expense and interest on debt service (“Adjusted Operating Income”)
to total debt service.
"Dollar," "Dollars" and the symbol "$" shall mean lawful currency of the United
States of America.
"Environmental Laws" shall mean Laws, including without limitation federal,
state or local Laws, ordinances, rules, regulations, interpretations and orders
of courts or administrative agencies or authorities relating to pollution or
protection of the environment (including, without limitation, ambient air,
surface water, groundwater, land surface and subsurface strata), and other Laws
relating to (i) Polluting Substances or (ii) the manufacture, processing,
distribution, use, treatment, handling, storage, disposal or transportation of
Polluting Substances.
"Event of Default" shall mean any of the events specified in Section 8.1 of this
Agreement, and "Default" shall mean any event, which together with any lapse of
time or giving of any notice, or both, would constitute an Event of Default.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis in all material respects to those principles so applied in the
preceding period. Unless otherwise indicated herein, all accounting terms will
be defined according to GAAP.
"Governmental Authority" means any federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.
"Guarantor" shall mean James Randolph, Jr. and Brandy Randolph.
"Indebtedness" means and include any and all: (i) indebtedness, obligations and
liabilities of the Borrowers to the Bank incurred or which may be incurred or
purportedly incurred hereafter pursuant to the terms of this Loan Agreement or
any of the other Loan Documents, and any extensions, renewals, substitutions,
amendments and increases in amount thereof, including such amounts as may be
evidenced by the Note, outstanding standby/performance letters of credit issued
by the Bank for the Borrowers’ account, if any, and all lawful interest, loan
closing fees, service fees, letter of credit fees, facility fees, commitment
fees and other similar charges, and all reasonable costs and expenses incurred
in connection with the negotiation, preparation, closing, filing and recording
of the Loan Documents, including attorney’s fees and legal expenses; (ii) all
reasonable costs and expenses paid or incurred by the Bank, including attorney’s
fees, in enforcing or attempting to enforce collection of any Indebtedness and
in
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10.1
enforcing or realizing upon or attempting to enforce or realize upon any
collateral or security for any Indebtedness, including interest on all sums so
expended by the Bank accruing from the date upon which such expenditures are
made until paid, at an annual rate equal to the interest rate provided in the
Note; (iii) all sums expended by the Bank in curing any Event of Default or
Default of the Borrowers under the terms of this Loan Agreement, the other Loan
Documents or any other writing evidencing or securing the payment of the Note
together with interest on all sums so expended by the Bank accruing from the
date upon which such expenditures are made until paid, at an annual rate equal
to the rate of interest specified for the Note; (iv) all overdraft items, return
items and ACH obligations and liabilities of the Borrowers owing to the Bank
from time to time; and (v) all "Indebtedness", "Obligations" or "Secured
Obligations or "Secured Indebtedness" as said terms are defined in the Loan
Documents.
"Laws" shall mean all statutes, laws, ordinances, regulations, orders, writs,
injunctions, or decrees of the United States, any state or commonwealth, any
municipality, any foreign country, any territory or possession, or any Tribunal.
"Lien" shall mean any pledge, security interest, lien or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing statement or other similar form of public
notice under the Laws of any jurisdiction)
"Loan Documents" means this Loan Agreement, the Note, the Security Instruments,
the Borrowers’ Certifications, and any other applicable security agreements,
pledge agreements, subordination agreements, financing statements and all other
documents, instruments and certificates and resolutions executed and delivered
to the Bank by the Borrowers pursuant to the terms, provisions and conditions of
this Loan Agreement.
"Material Adverse Effect" means a material negative effect on or material
impairment of (i) the validity or enforceability of any Loan Document or the
rights, benefits or remedies of the Bank under any Loan Document, (ii) the
condition (financial or otherwise), operations, business, assets, liabilities or
prospects of the Borrowers, or (iii) the ability of the Borrowers to perform or
fulfill its obligations under the Loan Documents.
"Mortgaged Premises" means the real property and premises more particularly
described on Exhibit A and Exhibit B attached hereto.
"Note" shall mean the Term Note described in Section 2.2 of this Loan Agreement,
together with each and every extension, renewal, modification, rearrangement,
replacement, substitution, consolidation and change in form of either thereof
which may be from time to time and for any term or terms effected.
"Person" means and includes an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, and a government or any
department, agency or political subdivision thereof.

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10.1

"Permitted Encumbrances" shall mean:
(i)    liens, if any, granted to Bank to secure the Indebtedness;
(ii)    pledges or deposits to secure the payment of workers' compensation
insurance, or funds in connection with workers' compensation, unemployment
insurance, pension or social security programs;
(iii)    materialman's, mechanics' or warehousemen's liens, and other liens
arising in the ordinary course of business where payment is not yet due or which
is being contested in good faith or for which adequate cash reserves have been
made;
(iv)    tax liens, assessments, or other governmental levies imposed, if the
same are not yet due and payable, or if the same are being contested in good
faith and for which adequate cash reserves have been made; and
(v)    liens from good faith deposits to secure public or statutory obligations
and deposits such as lease rental deposits, sureties, stays, appeal bonds,
customs bonds, or the like, customs, duties or similar charges.
“Permitted Holder” means Daniel K. Frierson, his family and their respective
spouses, children, grandchildren and any trusts for the sole benefit of any of
the foregoing Persons.
"Polluting Substances" shall mean all pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes and shall include, without
limitation, any flammable explosives, radioactive materials, oil, hazardous
materials, hazardous or solid wastes, hazardous or toxic substances or related
materials defined in any Environmental Law(s) provided, in the event any
Environmental Law(s)is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment and, provided further, to the extent that the Laws of any State
or other Tribunal establish a meaning for "hazardous substance," "hazardous
waste," "hazardous RCRA/HSWA material," "solid waste" or "toxic substance" which
is broader than that specified in any such Environmental Law(s), such broader
meaning shall apply.
"Requirement of Law" means, as to any Person, any requirement or provision of
the charter or organization documents of such Person, or of any law, statute,
rule, regulation, code or ordinance, or of any order, decree, judgment,
injunction or other determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or to which any of its material properties is subject.
"Security Agreement" shall mean the Security Agreement as described in Article
III.
"Security Instruments" means all financing statements, mortgages, assignments,
security agreements, pledge agreements, documents or writings of any and all
amendments and supplements thereto, granting, conveying, assigning, transferring
or in any manner providing the
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10.1
Bank with a security interest in the Collateral as security for the repayment of
all or any part of the Indebtedness.
“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrowers.
"Taxes" shall mean all taxes, assessments, fees, or other charges or levies from
time to time or at any time imposed by any Laws or by any Tribunal.
"Term Note" shall have the meaning assigned to it in Section 2.2.
"Term Loan" shall have the meaning assigned to it in Recital B, above.
"Term Loan Maturity Date" shall mean October 26, 2045 (insofar as the Term Loan
is concerned), unless otherwise extended in writing by the Bank.
"Tribunal" means any municipal, state, commonwealth, federal, foreign,
territorial or other sovereign, governmental entity, governmental department,
court, commission, board, bureau, agency or instrumentality.
Article II.
COMMITMENTS
2.1    Loan Commitment. The Bank agrees, upon the terms and subject to the
conditions hereinafter set forth, to make a loan in the principal amount of
$10,000,000.00 (hereinafter referred to as the "Commitment") which sum shall be
utilized by Borrowers as follows:
A.to refinance debt                  $ 9,432,500

B.    for fees and costs associated with the Term Loan $ 567,500 and the
transactions contemplated hereby                                    
2.2    Term Note. On the Closing Date, the Borrowers shall execute and deliver
to the order of the Bank the Borrowers’ Term Note in the principal amount of
$10,000,000.00, as extended, renewed, restated, changed in form, rearranged,
consolidated or otherwise modified from time to time. All of the payment terms
related to Borrowers’ Term Note including the applicable
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10.1
interest rate and rate adjustments, payment amounts and due dates and prepayment
provisions shall be as set forth in the Term Note executed by Borrowers in favor
of Bank of even date herewith, the terms of which are expressly incorporated by
reference herein.
2.3    Loan Origination Fee. The Borrowers agrees to pay Lender at closing a
loan origination fee equal to $150,000.00.
Article III.
SECURITY
3.2    Collateral. The repayment of the Indebtedness shall be secured by a first
priority and senior mortgage lien encumbering the interest of Borrower, TDG
Operations, LLC (which is intended and represented by Borrowers to comprise 100%
of the Mortgaged Premises) in the Mortgaged Premises, pursuant to that certain
Real Estate Mortgage, Security Agreement, Assignment of Rents, and Fixture
Filing (the “Mortgage”) from the Borrower, TDG Operations, LLC, as mortgagor, to
and in favor of the Bank, as mortgagee and secured party, dated effective as of
even date herewith covering the Mortgaged Premises (such instrument, together
with all future amendments, supplements, restatements, extensions and other
modifications thereof, collectively, the "Collateral").
3.3    Additional Collateral. If, at any time during the term of this Agreement,
Bank, in good faith, believes that there has occurred a Material Adverse Effect,
including the payment, when due, of any of the payments due or to become due on
the term Note, or of Bank's ability to protect its interests under this
Agreement by reliance on its rights under this Agreement and any of the
Collateral documents, Borrowers will, within thirty (30) days after Bank's
request, provide such additional collateral as Bank shall require to bring the
loan to value ratio back to no more than 80%. Borrowers will execute all
documents and instruments that are required to perfect Bank's security interest
in such additional collateral. The security interest in any such additional
collateral will secure all of the Indebtedness.
3.4    Fixture Filings. The Bank is authorized to file such fixture filings,
notices and other documents and instruments as it shall deem necessary or
appropriate to perfect and continue the perfection of the security interests
created by the Security Instruments. The Borrowers hereby acknowledges that all
of the Collateral is granted to the Bank as security for the repayment of all of
the Indebtedness and obligations of the Borrowers to the Bank. If any portion of
the Indebtedness remains unsatisfied, the Bank shall retain its security
interest in all of the Collateral until the remaining Indebtedness is paid in
full, even if the value of the Collateral far exceeds the amount of Indebtedness
outstanding.
3.5    Additional Documents or Instruments. The Borrowers agrees to deliver to
the Bank such other reports, certificates, data and writings the Bank may
request to evidence, perfect, more fully evidence or perfect or evaluate the
Bank's continuing security interest in the Collateral.

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10.1
Article IV.
CONDITIONS PRECEDENT TO LOANS
4.1    Conditions Precedent to Initial Loan. The obligation of the Bank to make
the advance under the Loan Commitment is subject to the satisfaction of all of
the conditions and requirements set forth in the Form 4279-3, Conditional
Commitment, and Attachments to Form RD 4279-3, issued by the United States
Department of Agriculture, Rural Development dated August 28, 2020, the terms
and conditions of which are incorporated herein as if fully set forth (such
document shall be referred to herein as the "USDA Approval"). Additionally,
Bank's obligation to make the advance under the Loan Commitment is subject to
the following:
A.No Default. No Event of Default or Default shall exist on the Closing Date.
B.    Representations and Warranties. The representations, warranties and
covenants set forth in Article VII shall be true and correct on and as of the
Closing Date, with the same effect as though made on and as of the Closing Date.
C.    Borrowers’ Certificate. The Borrowers shall have delivered to the Bank a
Certificate, dated as of the Closing Date, certifying (i) to the matters covered
by the conditions specified in subsections (a) and (b) of this Section 4.1, (ii)
that the Borrowers has performed and complied with all of the conditions and
requirements of the USDA Approval and any other agreements and conditions
required to be performed or complied with by it prior to or on the Closing Date,
(iii) to the name and signature of any officer of the Borrowers authorized to
execute and deliver the Loan Documents and any other documents, certificates or
writings and to borrow under this Loan Agreement, and (iv) to such other matters
in connection with this Loan Agreement which the Bank shall determine to be
advisable. The Bank may conclusively rely on such Certificate until it receives
notice in writing to the contrary.
D.    Loan Documents/Security Instruments. The Borrowers shall have delivered to
the Bank the Loan Agreement, Mortgage, and other Loan Documents, appropriately
executed by all parties, witnessed and acknowledged to the satisfaction of the
Bank and dated as of the Closing Date, together with such financing statements,
and other documents as shall be necessary and appropriate to perfect the Bank’s
security interests in the Collateral covered by said Security Instruments.
E.    Note. The Borrowers shall have delivered the Term Note to the order of the
Bank, appropriately executed.
F.    Fees and Costs. The Borrowers shall have paid all fees and expenses in
connection with the transactions contemplated by this Agreement and the USDA
Approval including but not limited to any USDA Guarantee fees, appraisal fees,
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10.1
attorney fees, title insurance fees, any environmental inspection fees, filing
fees and any other fees or expenses.
G.    Title Insurance. The Bank shall have received a satisfactory policy of
mortgagee’s title insurance based upon an attorney’s opinion covering the
Mortgaged Premises and issued for at least the face amount of the Note by
companies approved by the Bank, insuring the Bank’s first mortgage lien and
insuring that all funds advanced under the Note will be secured by the first
lien of the Mortgage, subject only to such exceptions as are approved by the
Bank. Such title insurance policy shall include such endorsements deemed
reasonably necessary by Bank. Prior to issuance of such policy, the Bank shall
have received a commitment for such policy, together with copies of all
documents evidencing restrictive covenants, easements, encumbrances, and other
exceptions of record covering the Mortgaged Premises. The title policy shall not
include an exception based on mechanics’ and materialmen’s liens, any exception
based on discrepancies, conflicts in boundary lines, shortage in area or other
facts which would be disclosed by a proper survey, or any exception based on
violations of restrictive covenants of record.
H.    Litigation Statement. The Bank shall have received a written statement
from Borrowers as to (i) the sufficiency of any insurance currently in effect
through which any pending litigation may be resolved or satisfied or (ii) which
will indicate that any such pending litigation will not have a material adverse
effect upon the Mortgaged Premises or on Borrowers’ ability to repay the Term
Note.
I.Use Restrictions. The Bank shall have received satisfactory evidence that the
use of the Mortgaged Premises will comply with all applicable zoning, use,
building and requirements imposed by any governmental authority or private
restriction.

J.     Inspection. The Bank shall have inspected the Collateral to its
satisfaction.

K.    Financial Statements. The Bank shall have received current financial
statements on Borrowers.
L.    Hazard Insurance. The Bank shall have received proof of Borrowers’
purchase of and the issuance by an insurer agreeable to Bank of hazard insurance
on the Mortgaged Premises and the Collateral with bank named as loss payee in an
amount at least equal to the amount of the Term Note or the replacement value of
the Collateral, whichever is greater. Such hazard insurance shall insure against
loss from fire, windstorm, lightning, hail, explosion, riot, civil commotion,
aircraft, vehicle, marine, smoke, builder's risk during construction and
property damage.
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10.1
M.     Worker's Compensation Insurance. The Bank shall have received proof of
Borrowers’ purchase of and the issuance by an insurer agreeable to Bank of
Worker's Compensation Insurance in accordance with applicable state law.
N.    Appraisal. Bank shall have received, at Borrowers’ expense, a current
FIRREA-conforming appraisal of the Mortgaged Premises in full compliance with
the Bank’s lending policy and other requirements and supporting a fair market
value of at least $12,500,000, excluding any value attributed to Borrowers’
business.
O.     Survey. The Bank shall have received, at Borrowers’ sole expense, a
current survey of the entire tract of the Mortgaged Premises complying with the
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, jointly
established and adopted by the American Land Title Association ("ALTA") and the
National Society of Professional Surveyors ("NSPS") in 2005, as amended or
modified thereafter, accompanied by surveyor’s certificate and showing such
state of facts as a detailed physical inspection of the Mortgaged Premises would
reveal and prepared by a licensed/registered land surveyor acceptable to the
Bank and the title insurer incorporating the complete and exact legal
description of such Mortgaged Premises (including the courses and measured
distances of the exterior property lines thereof, the total square foot are
thereof, location of the Project and dimensions thereof at the ground surface
level and the distance therefrom to the facing exterior property lines of the
Mortgaged Premises, as applicable, and the location and number of parking
spaces, as and if applicable, and showing all improvements, out boundaries and
lot lines thereof, all building lines, setback lines and restrictions, adjoining
roadways and streets, alleys and easements pertaining thereto (with appropriate
notes concerning the dates and recording data of all instruments of record, if
any, creating the same), the location of encroachments thereon or onto adjacent
property and otherwise, flood hazard certificate and otherwise in form and
substance satisfactory to Bank, its legal counsel and the title insurer,
including, without limitation, the certificate.
P.     Authority/Organization. The Bank shall have received a certified copy of
the certificate of Borrowers’ organizational documents filed with the Secretary
of State for the state in which each Borrower is organized and the bylaws and
limited liability company operating agreement (as applicable) for each Borrower,
complete with all amendments thereto, and certified copies of all resolutions
and other documents required to authorize the execution, delivery and
performance of the Loan Documents by Borrowers, all in form and substance
satisfactory to the Bank. The Bank shall also have received satisfactory written
evidence that the Borrowers are duly organized, validly existing and in good
standing under the laws of the state in which each is organized.
Q.    Environmental. At the request of Bank, Borrowers shall have obtained and
furnished to the Bank a Phase II environmental report on the Mortgaged Premises,
satisfactory in form, scope and substance to the Bank.
R.     USDA Guaranty Fee. Borrowers shall pay the USDA guaranty fee of $210,000.
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10.1
S.     Other Information. The Bank shall have received such other information as
the Bank might reasonably require.
T.    Loan Note Guarantee. The issuance by the USDA of its Loan Note Guarantee
in an amount equal to at least 70% of the face amount of the Term Note.
U.    Flood Certification. The Bank shall have received a completed flood hazard
certificate on FEMA Form 81-93 evidencing that the Mortgaged Premises are not
located in any flood plain or special flood hazard area, or (ii) alternatively,
Borrowers shall furnish evidence satisfactory to the Bank that flood insurance
is being issued by a reputable insurer concurrent with the Closing Date on the
applicable portion of the Mortgaged Premises not certifiable under clause (i)
above in scope and substance reasonably acceptable to the Bank and in compliance
with mortgage loan flood plain banking rules and regulations applicable thereto
and to the Bank.
V.    Closing Opinion. Legal counsel for Borrowers shall have delivered to the
Bank a closing opinion letter covering customary legal matters concerning
Borrowers and the Loan Documents in form, scope and substance reasonably
acceptable to Bank.
W.    Tangible Equity. Borrowers must demonstrate to Bank’s satisfaction that,
as of the Closing Date, they have at least 10% tangible balance sheet equity.
Tangible balance sheet equity will be determined based upon Borrowers’
consolidated balance sheet prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and will not include subordinated debt, intangible
assets, bargain purchase gains or appraisal surplus. Tangible balance sheet
equity must be met in the form of either cash or tangible earning assets
contributed to Borrowers’ business and reflected on Borrowers’ balance sheet.
Article V
AFFIRMATIVE COVENANTS
The Borrowers covenants and agrees with the Bank that from the date hereof and
so long as this Loan Agreement is in effect (by extension, amendment or
otherwise) and until payment in full of all Indebtedness and the performance of
all other obligations of the Borrowers under this Loan Agreement, unless the
Bank shall otherwise consent in writing:
5.1    Statements and Reports. The Borrowers shall maintain a standard system of
accounting and shall furnish to the Bank as soon as practicable, the following:
A.    Borrowers’ Annual Financial Statements. The Borrowers must obtain
financial statements annually compiled by a certified public accountant,
prepared in accordance with GAAP, and submit them to the Bank within 90 days of
the business' fiscal year end. Financial statements will contain, at a minimum,
a balance sheet and a profit and loss statement reflecting the financial
condition of the Borrowers as of its year end or quarter end, as the case may
be. Borrowers providing bank with copies of the timely online public filings
with the Securities Exchange Commission (the “SEC”) by The Dixie Group, Inc.
shall satisfy this requirement. TDG Operations, LLC does not produce separate
financial statements as such are consolidated with The Dixie Group, Inc. The
Bank is responsible for obtaining all required financial statements from the
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Borrowers, analyzing them, and providing copies of statements with a detailed
written analysis to USDA Rural Development within 120 days.
B.    Borrowers’ Annual Income Tax Returns. The Borrowers shall, within 30 days
of the due date or with thirty days of any extension thereof, provide Bank a
copy of its annual income tax return in which TDG Operations, LLC is
consolidated with The Dixie Group, Inc..
5.2    Intentionally Left Blank.
5.3    Financial Covenant Compliance Certificate. As soon as practicable after
the end of each calendar year and in any event within ninety (90) days following
the close of each calendar year, commencing as of March 31, 2021, for the
calendar year ending December 31, 2020, the Borrowers shall deliver to Bank a
certificate, in the form set forth in Exhibit C attached hereto, certifying that
Borrowers are in compliance with all of the applicable Financial Covenants set
forth in Sections 5.12 and 5.13.
5.4    Inspection/ Field Audits/Examinations. Borrowers will keep complete and
accurate books and records with respect to its obligations to Bank and others
and will permit employees and representatives of the Bank (including the
independent contractors thereof), upon reasonable notice, to audit, inspect and
examine the files and records of Borrowers during normal business hours to
confirm compliance by the Borrowers with the provisions of this Loan Agreement.
All such records shall be at all times kept and maintained at the principal
offices of Borrowers. Bank agrees for itself, its employees, representatives and
contractors to maintain the confidentiality of all information it may inspect or
review under this Section and shall only utilize any such information for the
limited purposes of monitoring compliance with the requirements of this Loan
Agreement, evaluating the value of the collateral and monitoring the financial
condition of Borrowers.
5.5    Maintenance of Legal Existence. The Borrowers will do or cause to be done
all things necessary to preserve and keep in full force and affect its legal
existence, rights and franchises and will continue to conduct and operate its
business substantially as being conducted and operated presently. The Borrowers
will remain qualified to conduct business in the jurisdiction where the
Mortgaged Premises are located.
5.6    Notice of Default. Immediately upon Borrowers becoming aware of any
condition or event which constitutes an Event of Default or Default or any
default or event of default under any other loan, mortgage, financing or
security agreement, the Borrowers will give the Bank a written notice thereof
specifying the nature and period of existence thereof and what actions, if any,
the Borrowers is taking and proposes to take with respect thereto.
5.7    Notice of Litigation. Immediately upon becoming aware of the existence of
any action, suit or proceeding at law or in equity before any Tribunal, an
adverse outcome in which would (i) materially impair the ability of the
Borrowers to carry on its business substantially as now conducted, (ii)
materially and adversely affect the condition (financial or otherwise) of the
Borrowers, or (iii) result in monetary damages in excess of $5,000,000.00, the
Borrowers will give
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the Bank a written notice specifying the nature thereof and what actions, if
any, the Borrowers is taking and proposes to take with respect thereto.
5.8    Notice of Claimed Default. Immediately upon becoming aware that the
holder of any note or any evidence of indebtedness or other security of the
Borrowers has given notice or taken any action with respect to a claimed default
or event of default thereunder, if the amount of the note or indebtedness
exceeds $1,000,000.00, the Borrowers will give the Bank a written notice
specifying the notice given or action taken by such holder and the nature of the
claimed default or event of default thereunder and what actions, if any, the
Borrowers is taking and proposes to take with respect thereto.
5.9    Change of Management/Business Purpose. Within five (5) days after any
change in senior officers, directors or management of the Borrowers, the
Borrowers shall give written notice thereof to the Bank, together with a
description of the reasons for the change and a reasonably detailed management
succession plan for the Bank's review. This requirement may be satisfied with
required SEC filings relative to such events that are provided to Bank by
Borrower.
5.10    Requested Information. With reasonable promptness, the Borrowers will
give the Bank such other data and information relating to the Borrowers as from
time to time may be reasonably requested by the Bank.
5.11    Maintenance of Employee Benefit Plans. Borrowers will maintain each
employee benefit plan as to which it may have any liability or responsibility in
compliance with ERISA and all other Laws applicable thereto.
5.12    Payment of Indebtedness. The Borrowers hereby agrees to pay, when due
and owing, all Indebtedness, whether or not evidenced by the Note.
5.13    Debt-to-Net Worth Ratio. Borrowers shall maintain a Debt-to-Net Worth
Ratio of not more than 9.1 to 1.0 and shall report thereon to Bank on an annual
basis beginning with the year ended December 31, 2020. “Debt-to-Net Worth Ratio”
shall be defined as the Borrowers’ combined total liabilities divided by
Borrowers’ combined net worth as of the last day of each calendar year.
5.14    Debt Service Coverage Ratio. The Borrowers will maintain at all times a
combined Debt Service Coverage Ratio of not less than 1.2 to 1.0, tested
annually beginning December 31, 2021.
5.15    Permits, Authorizations and Approvals. Borrowers will obtain and
maintain in effect all permits and licenses which are (i) necessary for it to
own and/or operate its business and the Mortgaged Premises, (ii) material to its
business, properties, operations or condition, financial or otherwise, and/or
(iii) necessary for it to carry on its business as contemplated to be conducted.
Borrowers will deliver a copy of such permits and licenses to the Bank upon
request and/or a copy of each renewal, modification, supplement or amendment of
any such permit. Borrowers will notify the Bank within thirty (30) days of any
notice of, threat to or proceedings to revoke, suspend, withdraw, or adversely
affect any permit required to be maintained hereby, and of any
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violation thereof or of any operation or activity which violates or is not
allowed by any such permit.
5.16    Compliance With Other Laws. Borrowers shall comply with all applicable
laws, rules, regulations, and all orders of any governmental authority
applicable to it or any of its property, business operations or transactions, a
breach of which could have a material adverse effect.
5.17    Insurance. Borrowers shall maintain insurance of types and in amounts on
its properties, assets and business, now owned or hereafter acquired, against
such casualties, risks and contingencies, and in such types and amounts as are
consistent in the industry and/or are consistent with the terms of any Loan
Documents. All hazard insurance policies shall name the Borrowers and the Bank
as loss payees, as their respective interest may appear, and shall contain a
standard mortgage endorsement acceptable to the Bank. All liability insurance
policies shall name as an additional insured the Bank. All providers of
insurance and policies, including coverage, amounts, deductibles and exclusions,
under this Section shall be subject to approval by Bank.
5.18    Title to Assets and Maintenance. Borrowers shall defend and maintain
title to all its material properties and assets. Borrowers shall keep its
assets, both real and personal, in good order and condition consistent with
industry practice and shall make all necessary repairs, replacements and
improvements required by the Loan Documents.
Artivle VI
NEGATIVE COVENANTS
The Borrowers covenant and agree with the Bank that from the date hereof and so
long as this Loan Agreement is in effect (by extension, amendment or otherwise)
and until payment in full of all Indebtedness and the performance of all other
obligations of the Borrowers under this Loan Agreement, unless the Bank shall
otherwise consent in writing:
6.1    Limitation on Liens. Borrowers will not create or suffer to exist any
Lien upon any of the Collateral except (i) Liens in favor of the Bank securing
the Indebtedness; (ii) Liens (including statutory tax liens to the extent not
delinquent) arising in the ordinary course of business for sums not due or sums
being contested in good faith and by appropriate proceedings and not involving
any deposits, advances, borrowed money or the deferred purchase price of
property or services; and (iii) Liens expressly permitted to exist under the
terms of any of the Security Instruments.
6.2    Disposition/Negative Pledge regarding Encumbrance of Collateral and Other
Assets. Borrowers will not sell or encumber any of the Collateral without first
obtaining the Bank's and USDA’s written consent thereto nor will Borrowers sell,
lease, transfer, mortgage, pledge, grant a security interest in (including to
entities related to the Borrowers) or in any manner encumber Borrowers’ other
fixed assets, without first obtaining the Bank's written consent thereto.
6.3    Intentionally Left Blank.
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6.4    Limitation on Fixed Asset Purchases. Borrowers will not invest in
additional fixed asset purchases in an annual aggregate of more than $5,000,000
without concurrence of the Bank. Borrowers will not lease, sell, transfer, or
otherwise encumber fixed assets without the concurrence of the Bank.
6.5    Merger, Consolidation, Acquisition, etc. Borrowers will not merge or
consolidate with or into any other Person, or permit any Person to merge into
the Borrowers, or acquire all or substantially all of the assets or properties
or capital stock of any other Person, or adopt or effect any plan of
reorganization, recapitalization, liquidation or dissolution; or acquire any
properties or assets with the prior written consent of Bank; provided, however,
Borrowers may enter into letters of intent pertaining to merger, consolidation
or acquisition subject to obtaining the Bank’s written consent (which consent
shall not be unreasonably withheld) thereto prior to consummation of the
transactions contemplated by such letter(s) of intent.
6.6    Change of Control. Borrowers will not permit any Change of Control
without the prior written consent of Bank.
6.7    Change of Fiscal Year. Borrowers will not change its fiscal year from its
present 52/53 week fiscal year ending between December 15 and January 15.
6.8    Change of Business. The Borrowers will not engage in any business
activity substantially different from or unrelated to present business
activities and operations.
6.9    Certificate of Formation; Partnership Agreement and Assumed Names.
Borrowers will not amend, alter, modify or restate their certificates of
formation in any way which would: (i) change the name or adopt a trade name for
the Borrowers; or (ii) in any manner adversely affect the Borrowers’ obligations
or covenants to the Bank hereunder.
6.10    Other Agreements. Borrowers will not enter into or permit to exist any
agreement which: (i) would cause an Event of Default or a Default hereunder; or
(ii) contains any provision which would be violated or breached by the
performance of Borrowers’ obligations hereunder or under any of the other Loan
Documents.
6.11    Compensation of Officers and Directors. Compensation of officers and
directors will be limited to an amount that, when taken, will not adversely
affect the repayment ability of the Borrowers. This amount shall be set annually
by shareholder vote on Borrowers’ annual compensation plan.
6.12    Outside Loans and Investments. Except for the payment of taxes on stock
grants in accordance with the Borrowers’ annual compensation plan and in
compliance with SEC rules, any loans or investments to directors, officers, or
affiliates require the prior written consent of the Bank. Loans to any Borrower
from directors, officers or affiliates must be subordinated to the Indebtedness
with no payments to be made unless the Term Note is current and in good
standing.
6.13    Co-signing/Guaranteeing Obligations of Others. The Borrowers will
refrain from co-signing or otherwise becoming liable for obligations or
liabilities of others.
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6.14    Environmental Laws. The Borrowers will not cause any violation of
applicable Environmental Laws, nor permit any tenant of any portion of the
Mortgaged Premises to cause such a violation, nor permit any environmental lien
to be placed on any portion of the Mortgaged Premises, while the Borrowers
maintains control of the Mortgaged Premises. The Borrowers and its successors
and assigns, agree to defend, indemnify and hold harmless the Bank and its
directors, officers, employees, agents, contractors, subcontractors, licensees,
invitees, successors and assigns, from and against any and all claims, demands,
judgments, settlements, damages, actions, causes of actions, injuries,
administrative orders, consent agreements and orders, liabilities, penalties,
costs, including, but not limited to, any cleanup costs, and all expenses of any
kind whatsoever, including claims arising out of loss of life, injury to
persons, property, or business or damage to natural resources in connection with
the activities of Borrowers arising out of the actual, alleged or threatened
discharge, dispersal, release, storage, treatment, generation, disposal or
escape of any Polluting Substances; or the use, specifications, or inclusion of
any product, material or process containing chemicals, the failure to detect the
existence or proportion of chemicals in the soil, air, surface water or
groundwater, or the performance or failure to perform the abatement of any
pollution source or the replacement or removal of any soil, water, surface
water, or groundwater-containing chemicals. The Borrowers and its successors and
assigns, shall bear, pay and discharge when and as the same becomes due and
payable, any and all such judgments or claims for damages, penalties or
otherwise against the Bank as described herein, shall hold the Bank harmless for
those judgments or claims, and shall assume the burden and expense of defending
all suits, administrative proceedings, and negotiations of any description with
any and all persons, political subdivisions or government agencies arising out
of any of the occurrences set forth herein. It is agreed that if, and as often
as, the Bank is required to become involved in any action or proceeding
commenced by any governmental authority or any other Person with respect to
storage, disposal or cleanup of any Polluting Substances on the Mortgaged
Premises, the Borrowers shall pay to the Bank its reasonable attorney’s fees
together with all court costs or other disbursements relating to the Mortgaged
Premises, which sums shall be secured by the Collateral. The obligation defined
in this paragraph applies to the Borrowers’ tenure of ownership related to the
Mortgaged Premises.
6.15    Distributions/Dividends. Dividends and other distributions of earnings
will be limited to an amount that, when taken, will not adversely affect the
repayment ability of the Borrowers. No dividend payments or other distributions
of earnings will be made unless (i) Borrowers have earned an after-tax profit in
the preceding fiscal year; (ii) the Borrowers are and will remain in compliance
with the covenants and conditions of the Loan Agreement and the Conditional
Commitment; and (iii) all Borrowers debts are paid to current status.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Loan Agreement and in consideration
thereof, the Borrowers incorporate by reference herein all of the
representations and warranties set forth in Borrowers’ Certification of even
date herewith and, further, represent, warrant and covenant as follows:
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7.1    Litigation. There is no action, suit, investigation or proceeding
threatened or pending before any Tribunal against or affecting the Borrowers or
any properties or rights of the Borrowers, which, if adversely determined, would
result in a Material Adverse Effect on Borrowers. The Borrowers are not in
default with respect to any judgment, order, writ, injunction, decree, rule or
regulation of any Tribunal.
7.2    Conflicting Agreements and Other Matters. The Borrowers are not in
default in the performance of any obligation, covenant, or condition in any
agreement to which it is a party or by which it is bound. The Borrowers is not a
party to any contract or agreement or subject to any charter or other corporate
restriction which materially and adversely affects its business, property or
assets, or financial condition. The Borrowers is not a party to or otherwise
subject to any contract or agreement which restricts or otherwise affects the
right or ability of the Borrowers to execute the Loan Documents or the
performance of any of their respective terms. Neither the execution nor delivery
of any of the Loan Documents, nor fulfillment of nor compliance with their
respective terms and provisions will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any Lien (except those created by
the Loan Documents) upon any of the properties or assets of the Borrowers
pursuant to, or require any consent, approval or other action by or any notice
to or filing with any Tribunal (other than routine filings after the Closing
Date with the Securities and Exchange Commission, any securities exchange and/or
state blue sky authorities) pursuant to any award of any arbitrator, or any
agreement, instrument or Law to which the Borrowers is subject.
7.3    Financial Statements. The financial statements of Borrowers furnished to
the Bank have been prepared in accordance with GAAP accounting principles, show
all material liabilities, direct and contingent of a type reflected on such
financial statements, and fairly present the financial condition of the
Borrowers and the results of their operations for the periods then ended, and
since such date there has been no material adverse change in the business,
financial condition or operations of the Borrowers.
7.4    Purposes. The Borrowers is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System) and no part of the proceeds of
any borrowing hereunder will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock. If requested by the Bank, the Borrowers will furnish to the Bank a
statement in conformity with the requirements of Federal Reserve Form U-1,
referred to in Regulation U, to the foregoing effect. Neither the Borrowers nor
any agent acting on behalf thereof has taken or will take any action which might
cause this Loan Agreement or the Note to violate any regulation of the Board of
Governors of the Federal Reserve System (including Regulations G, T, U and X) or
to violate any Securities Laws, state or federal, in each case as in effect now
or as the same may hereafter be in effect.
7.5    Compliance with Applicable Laws. The Borrowers is in material compliance
with all Laws, ordinances, rules, regulations and other legal requirements
applicable thereto and the
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businesses conducted thereby, the violation of which could or would have a
Material Adverse Effect on Borrowers’ business condition, financial or
otherwise.
7.6    Enforceability. Each Loan Document to which Borrowers are a party
constitutes a legal, valid and binding obligation of the Borrowers enforceable
against the Borrowers in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
7.7    No Legal Bar. The execution, delivery and performance of the Loan
Documents, the Security Instruments and the borrowings hereunder will not
violate any Requirement of Law or any Contractual Obligation of the Borrowers
(except those as to which waivers or consents have been obtained and those which
would not reasonably be expected to have a Material Adverse Effect), and will
not result in, or require, the creation or imposition of any Lien on any of its
respective properties or revenues (except those created by the Loan Documents)
pursuant to any Requirement of Law or Contractual Obligation. The Borrowers is
not in default under or with respect to any of its Contractual Obligations in
any respect that has had or would reasonably be expected to have a Material
Adverse Effect.
7.8    Title to Collateral; Authority. Borrowers have full power, authority and
legal right to own and operate the properties which it now owns and operates,
including the properties it will acquire as part of this Agreement, and to carry
on the lines of business in which it is now engaged, and has good and marketable
title to the Collateral subject to no Lien of any kind except Liens permitted by
this Agreement. Borrowers have full power, authority and legal right to execute
and deliver and to perform and observe the provisions of this Agreement and the
other Loan Documents. Borrowers further represents to Bank that any and all
after acquired interest in any one or more of the Collateral being concurrently
or subsequently assigned of record to Borrowers are and shall be deemed
encumbered by the Security Agreement in all respects.
7.9    Disclosure. Neither this Agreement nor any other Loan Document or writing
furnished to Bank by or on behalf of Borrowers in connection herewith contains
any untrue statement of a material fact nor do such Loan Documents and writings,
taken as a whole, omit to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact known
to Borrowers that is not reflected in the financial statements provided to Bank
which materially adversely affects its assets or in the future may materially
adversely affect the business, property, assets or consolidated financial
condition of Borrowers which has not been set forth in this Agreement, in the
Loan Documents or in other documents furnished to Bank by or on behalf of
Borrowers prior to the date hereof in connection with the transactions
contemplated hereby.
7.10    Due Organization/Good Standing. Borrowers are duly organized, validly
existing, and in good standing as a corporation and limited liability company,
respectively, under the laws of their respective states of formation.
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7.11    Authorization. Borrowers have the necessary capacity and authority to
enter into this Agreement, the Term Note, and the Security Instruments and to
perform and carry out the terms and provisions hereof. The authorized signatory
of each of the Borrowers has the power and authority to execute singly and
deliver this Agreement, the Term Note, the Security Instruments described or
defined herein or contemplated hereby.
ARTICLE VIII
EVENTS OF DEFAULT
8.1    Events of Default. The following events shall constitute events of
default (herein called "Events of Default"), whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of Law or
otherwise:
A.        The Borrowers shall fail to make any payment or mandatory payment of
principal or interest upon the Note, or fail to pay any other Indebtedness
within fifteen (15) days after the same shall become due and payable (whether by
extension, renewal, acceleration or otherwise); or
B.    Any representation or warranty of the Borrowers made herein or in any
writing furnished in connection with or pursuant to any of the Loan Documents
shall have been false or misleading in any material respect on the date when
made; or
C.    The Borrowers shall fail duly to observe, perform or comply with any
covenant, agreement or term contained in this Loan Agreement or any of the Loan
Documents and such default or breach shall have not been cured or remedied
within thirty (30) days following receipt of notice thereof from the Bank; or
D.    The Borrowers shall default in the payment of principal or of interest on
any other obligation for money borrowed or received as an advance (or any
obligation under any conditional sale or other title retention agreement, or any
obligation issued or assumed as full or partial payment for property whether or
not secured by purchase money Lien, or any obligation under notes payable or
drafts accepted representing extensions of credit) beyond any grace or curative
period provided with respect thereto, or shall default in the performance of any
other agreement, term or condition contained in any agreement under which such
obligation is created (or if any other default under any such agreement shall
occur and be continuing beyond any period of grace provided with respect
thereto) if the effect of such default is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such holder or holders) to
cause such obligation to become due prior to its date of maturity and such
default results in a Material Adverse Effect; or
E.    Any of the following: (i) any of the Borrowers shall make an assignment
for the benefit of creditors, become insolvent or admit in writing its inability
to pay its debts generally as they become due; or (ii) an order, judgment or
decree is entered adjudicating any of the Borrowers bankrupt or insolvent; or
(iii) any of the Borrowers shall petition or apply to any tribunal for the
appointment of a trustee, receiver or liquidator of any of the Borrowers or of
any substantial part of the assets of any of the Borrowers or shall commence any
proceedings relating
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to any of the Borrowers under any bankruptcy, reorganization, compromise,
arrangement, insolvency, dissolution, readjustment of debts, dissolution, or
liquidation law of any jurisdiction, whether now or hereafter in effect; or (iv)
any such petition or application shall be filed, or any such proceedings shall
be commenced, against any of the Borrowers and any of the Borrowers by any act
shall indicate its approval thereof, consent thereto or acquiescence therein, or
an order, judgment or decree shall be entered appointing any such trustee,
receiver or liquidator, or approving the petition in any such proceedings, and
such order, judgment or decree shall remain unstayed and in effect for more than
ninety (90) days; or (v) any order, judgment or decree materially and adversely
affecting any of the Borrowers or the Collateral shall be entered in any
proceedings against Borrowers or the Collateral and such order, judgment or
decree shall remain unstayed and in effect for more than sixty (60) days; or
(vi) any final judgment on the merits for the payment of money in excess of
$500,000.00, in the aggregate, not adequately covered by insurance shall be
outstanding against any of the Borrowers, and such judgment shall remain
unstayed and in effect and unpaid for more than sixty (60) days; or (vii) any of
the Borrowers shall fail to make timely payment or deposit of any amount of tax
required to be withheld by Borrowers and paid to or deposited to or to the
credit of the United States of America pursuant to the provisions of the
Internal Revenue Code of 1986, as amended, or any taxing jurisdiction in which
Borrowers conduct business in respect to any and all wages and salaries paid to
employees of Borrowers; or
F.    Any Reportable Event (as defined in ERISA and/or the Internal Revenue
Code) in connection with any Plan described in Section 6.13 which Bank
determines in good faith might constitute grounds for the termination of a Plan
therein described or for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan shall have occurred and
be continuing thirty (30) days after written notice to such effect shall have
been given to Borrowers by Bank, or any such Plan shall be terminated, or a
trustee shall be appointed by an appropriate United States District Court to
administer any such Plan or the Pension Benefit Guaranty Corporation shall
institute proceedings to terminate any such Plan or to appoint a trustee to
administer any such Plan and any such event causes a Material Adverse Effect on
Borrowers;
G.    Any default or event of default occurs under any of the other Loan
Documents, and such default or event of default shall not have been cured or
remedied within thirty (30) days following receipt of notice thereof from the
Bank, or if such default cannot be cured within such 30-day period, Borrowers
have not initiated such cure within the 30-day period and diligently pursued
such cure to completion within 90 days following receipt of notice from the
Bank, excepting default in any payment obligations; or
H.    Any failure by a Guarantor to comply with any terms, covenants or
conditions of their Guaranty Agreement and/or such Guarantor’s failure to make
any payment when due of any debt or obligation owed to Bank; or
I.    Substantial uninsured damage to or destruction of the Mortgaged Premises
or any total or partial taking of any Improvements on the Mortgaged Premises
such that it would constitute a material taking by rights of eminent domain
without compensation in amounts satisfactory to the Bank; or
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J.    The death, dissolution or loss of legal existence or capacity of any of
the Borrowers or any Guarantor; and
K.    A default (beyond and after expiration of applicable notice and cure
periods) by any affiliate of Borrowers in the performance or observance of its
obligations under its loan agreement, note or other loan documents with Bank.
8.2    Remedies. Upon the occurrence of any Event of Default, and without
prejudice to any right or remedy of the Bank under this Loan Agreement or the
Loan Documents or under applicable Law under any other instrument or document
delivered in connection herewith, the Bank shall have the following rights:
A.    All the rights and remedies at law or equity as may be allowed by law, or
pursuant to the provisions of this Agreement, including but not limited to, suit
for specific performance of any or all of the covenants contained in this
Agreement or in the Note; acceleration of the payment of principal of the Note;
or suit at law or equity to enforce or enjoin the action or inaction of parties
under the provisions of this Agreement.
B.    Declare the Note to be immediately due and payable whereupon the Note
shall become forthwith due and payable without presentment, demand, protest or
notice of any kind, and the Bank shall be entitled to proceed simultaneously or
selectively and successively to enforce its rights under the Note, this
Agreement and any of the instruments executed pursuant to the terms hereof, or
any one or all of them. Nothing contained herein shall limit the Bank's rights
and remedies available under applicable laws.
C.    In the event the Bank shall elect to selectively and successively enforce
its rights under any of the aforementioned Loan Documents, such action shall not
be deemed a waiver or discharge of any other lien, encumbrance or security
instrument securing payment of the Note until such time as the Bank shall have
been paid in full all of the Indebtedness. The foreclosure of any lien provided
pursuant to this Agreement without the simultaneous foreclosure of all such
liens shall not merge the liens granted which are not foreclosed with any
interest which the Bank might obtain as a result of such selective and
successive foreclosure.
D.    No delay or omission on the part of the Bank in exercising any power or
right hereunder or under the Note, the Loan Documents or under applicable law
shall impair such right or power or be construed to be a waiver of any default
or any acquiescence therein, nor shall any single or partial exercise by the
Bank of any such power or right preclude other or further exercise thereof or
the exercise of any other such power or right by the Bank. In the event that all
or part of the Indebtedness becomes or is declared to be forthwith due and
payable as herein provided, the Bank shall have the right to set off the amount
of all the Indebtedness of the Borrowers owing to the Bank against, and shall
have, and is hereby granted by the Borrowers, a lien upon and security interest
in, all property of the Borrowers in the Bank's possession at or subsequent to
such default, regardless of the capacity in which the Bank possesses such
property, including but not limited to any balance or share of any deposit,
collection or agency account. After Default all proceeds received by the Bank
may be applied to the Indebtedness in such order of application and such
proportions as the Bank, in its discretion, shall choose. At any time after
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the occurrence of any Event of Default, the Bank may, at its option, cause an
audit of any and/or all of the books, records and documents of the Borrowers to
be made by auditors satisfactory to the Bank at the expense of the Borrowers.
The Bank also shall have, and may exercise, each and every right and remedy
granted to it for default under the terms of the Security Instruments and the
other Loan Documents.
8.3    Deposits; Setoff. Regardless of the adequacy of any other collateral held
by the Bank, any deposits or other sums credited by or due from the Bank to
Borrowers shall at all times constitute collateral security for the
Indebtedness, and may be set off against any Indebtedness in any manner the Bank
shall choose and any and all liabilities, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising to the Bank.
The rights granted by this Section 8.3 shall be in addition to the rights of the
Bank under any statutory banker's lien or the common law right of set-off.
8.4    Application of Payments. During the continuation of any Event of Default,
all payments received by the Bank in respect of the Term Note, recoveries upon
any portion of the Collateral, or otherwise, may be applied by the Bank to any
liabilities, obligations or indebtedness of the Borrowers selected by the Bank
in its sole and exclusive discretion.

ARTICLE IX MISCELLANEOUS
9.1    Notices. Unless otherwise provided herein, all notices, requests,
consents and demands shall be in writing and shall be mailed by certified mail,
postage prepaid, to the respective addresses specified below, or, as to any
party, to such other address as may be designated by it in written notice to the
other parties:

If to the Borrowers, to:
The Dixie Group
TDG Operations, LLC
475 Reed Rd.
Dalton, GA 30722

If to the Bank, to:

AmeriState Bank
P.O. Box 718
Atoka, Oklahoma 74525-0718

All notices, requests, consents and demands hereunder will be effective when
mailed by certified mail, postage prepaid, addressed as aforesaid.
9.2    Governing Law and Jurisdiction. This Agreement and the Note shall be
deemed to have been made or incurred under the Laws of the State of Oklahoma and
shall be construed and enforced in accordance with and governed by the Laws of
Oklahoma.
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9.3    No Waiver; Cumulative Remedies. No failure to exercise, and no delay in
exercising, on the part of the Bank, any right, power or privilege hereunder or
under any other Loan Document or applicable Law shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
of the Bank. The rights and remedies herein provided are cumulative and not
exclusive of any other rights or remedies provided by any other instrument or by
law. No amendment, modification or waiver of any provision of this Loan
Agreement or any other Loan Document shall be effective unless the same shall be
in writing and signed by the Bank. No notice to or demand on the Borrowers in
any case shall entitle the Borrowers to any other or further notice or demand in
similar or other circumstances.
9.4    Place of Payment. All sums payable hereunder shall be paid in immediately
available funds to the Bank, at its banking offices at 131 S. Pennsylvania Ave.,
Atoka, Oklahoma 74525-2431, or at such other place as the Bank shall notify the
Borrowers in writing. If any interest, principal or other payment falls due on a
date other than a Business Day, then (unless otherwise provided herein) such due
date shall be extended to the next succeeding Business Day, and such extension
of time will in such case be included in computing interest, if any, in
connection with such payment.
9.5    Survival of Agreements. All covenants, agreements, representations and
warranties made herein shall survive the execution and the delivery of Loan
Documents. All statements contained in any certificate or other instrument
delivered by the Borrowers hereunder shall be deemed to constitute
representations and warranties by the Borrowers.
9.6    Parties in Interest. All covenants, agreements and obligations contained
in this Loan Agreement shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto, except that the Borrowers may not
assign its rights or obligations hereunder without the prior written consent of
the Bank.
9.7    GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT, THE NOTE AND
THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF OKLAHOMA, EXCEPT TO THE EXTENT OTHERWISE SPECIFIED IN
SUCH LOAN DOCUMENT AND TO THE EXTENT THAT UNITED STATES FEDERAL LAW PERMITS ANY
BANK TO CHARGE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE THE
BANK IS LOCATED.
A.    All actions or proceedings with respect to this Agreement, THE NOTE or the
MORTGAGE, AT THE OPTION OF BANK, SHALL BE INSTITUTED IN EITHER THE DISTRICT
COURT OF ATOKA COUNTY, OKLAHOMA, OR ANY JURISDICTION WHERE ANY COLLATERAL MAY BE
LOCATED, and by execution and delivery of this Loan Agreement, the BORROWERS
irrevocably and unconditionally (i) submits to the non-exclusive jurisdiction
(both subject matter and person) of such court, and (ii) waives (A) any
objection that the BORROWERS may now or hereafter have to the laying of venue in
any of such courts, and (B) any claim that any action or proceeding brought in
any such court has been brought in an inconvenient forum. THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE THE BANK FROM
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OBTAINING JURISDICTION OVER THE BORROWERS IN ANY COURT OTHERWISE HAVING
JURISDICTION.
B.    THE BORROWERS HEREBY IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWERS AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS
AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE BANK OR ANY
HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWERS OR ITS
PROPERTIES IN ANY OTHER JURISDICTION.
9.8    Maximum Interest Rate. Regardless of any provision herein, the Bank shall
never be entitled to receive, collect or apply, as interest on the Indebtedness
any amount in excess of the maximum rate of interest permitted to be charged by
the Bank by applicable Law, and, in the event the Bank shall ever receive,
collect or apply, as interest, any such excess, such amount which would be
excessive interest shall be applied to other Indebtedness and then to the
reduction of principal; and, if the other Indebtedness and principal are paid in
full, then any remaining excess shall forthwith be paid to the Borrowers.
9.9    NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND
UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND
UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF, THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
9.10    Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Loan Agreement by
signing such counterpart. Delivery of an executed counterpart of a signature
page to this Loan Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Loan Agreement.
9.11    Exculpation Provisions. Each of the parties hereto specifically agrees
that it has a duty to read this Loan Agreement and the Security Instruments and
agrees that it is charged with notice and knowledge of the terms of this Loan
Agreement and the Security Instruments; that it has in fact read this Loan
Agreement and is fully informed and has full notice and knowledge of the terms,
conditions and effects of this Loan Agreement; that it has been afforded the
option to be represented by independent legal counsel of its choice throughout
the negotiations preceding its execution of this Loan Agreement and the Security
Instruments; and has received the advice of its attorney in entering into this
Loan Agreement and the Security Instruments; and that it recognizes that certain
of the terms of this Loan Agreement and the Security Instruments result in one
party
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assuming the liability inherent in some aspects of the transaction and relieving
the other party of its responsibility for such liability. Each party hereto
agrees and covenants that it will not contest the validity or enforceability of
any exculpatory provision of this Loan Agreement and the Security Instruments on
the basis that the party had no notice or knowledge of such provision or that
the provision is not "conspicuous."
9.12    Costs. The Borrowers agrees to pay to the Bank all filing fees and
expenses incurred or accrued by the Bank in connection with the preparation,
execution, delivery and filing of this Loan Agreement, the Security Instruments
and the other Loan Documents, or any amendment, waiver, consent or modification
thereto or thereof, or any enforcement thereof. The Borrowers further agrees
that such foregoing fees and expenses shall be paid regardless of whether or not
the transactions provided for in this Loan Agreement are eventually closed and
whether or not any sums are advanced to the Borrowers by the Bank.
9.13    Severability. The unenforceability or invalidity as determined by a
Tribunal of competent jurisdiction, of any provision or provisions of this Loan
Agreement shall not render unenforceable or invalid any other provision or
provisions hereof.
9.14    Exceptions to Covenants. The Borrowers shall not be deemed to be
permitted to take any action or fail to take any action which is permitted as an
exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
9.15    WAIVER OF JURY; CERTIFICATIONS. BORROWERS AND BANK FULLY, VOLUNTARILY,
IRREVOCABLY, UNCONDITIONALLY AND EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY
IN THE FUTURE BE DELIVERED) IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, THE NOTES AND/OR THE
SECURITY INSTRUMENTS. BORROWERS AND BANK AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE BORROWERS
(I) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (II) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE, THE
BANK OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVERS, AND (III) ACKNOWLEDGES THAT IT AND THE BANK HAVE BEEN
INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
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10.1
9.16    USA PATRIOT Act Notice. IMPORTANT INFORMATION ABOUT PROCEDURES FOR
OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and
money laundering activities, federal law requires all financial institutions to
obtain, verify, and record information that identifies each person or entity
that opens an account, including any deposit account, treasury management
account, loan, other extension of credit, or other financial services product.
What this means for the Borrowers: When a Borrowers opens an account, the Bank
will ask for the Borrowers’ name, residential address, tax identification
number, and other information that will allow the Bank to identify the
Borrowers, including the Borrowers’ date of birth if the Borrowers are an
individual. The Bank may also ask, if the Borrowers are an individual, to see
the Borrowers’ driver's license or other identifying documents, and, if the
Borrowers is not an individual, to see the Borrowers’ legal organizational
documents or other identifying documents. The Bank will verify and record the
information the Bank obtains from the Borrowers pursuant to the USA PATRIOT Act,
and will maintain and retain that record in accordance with the regulations
promulgated under the USA PATRIOT Act.
9.17    Not a Reportable Transaction. The parties signatory hereto acknowledge
and stipulate and the Borrowers represents to the Bank that the transactions
contemplated by this Loan Agreement do not constitute a "Reportable Event" as
that term is described and defined in regulations of the Treasury Department of
the United States.
9.18    Indemnification. Borrowers agrees to indemnify and hold harmless the
Bank and its respective officers, employees, agents, attorneys and
representatives (singularly, an “Indemnified Party”, and collectively, the
“Indemnified Parties”) from and against any loss, cost, liability, damage or
expense (including the reasonable fees and out-of-pocket expenses of counsel to
the Bank, including all local counsel hired by such counsel) (“Claim”) incurred
by the Bank in investigating or preparing for, defending against, or providing
evidence, producing documents or taking any other action in respect of any
commenced or threatened litigation, administrative proceeding or investigation
under any federal securities law, federal or state environmental law, or any
other statute of any jurisdiction, or any regulation, or at common law or
otherwise, which is alleged to arise out of or is based upon any acts, practices
or omissions or alleged acts, practices or omissions of the Borrowers or their
agents or arises in connection with the duties, obligations or performance of
the Indemnified Parties in negotiating, preparing, executing, accepting,
keeping, completing, countersigning, issuing, selling, delivering, releasing,
assigning, handling, certifying, processing or receiving or taking any other
action with respect to the Loan Documents and all documents, items and materials
contemplated thereby unless such claim arises out of an Indemnified Party’s
gross negligence or willful misconduct. The indemnity set forth herein shall be
in addition to any other obligations or liabilities of the Borrowers to the Bank
hereunder or at common law or otherwise, and shall survive any termination of
this Agreement, the expiration of the Loans and the payment of all indebtedness
of the Borrowers to the Bank hereunder and under the Term Note, provided that
the Borrowers shall have no obligation under this Section to the Bank with
respect to any of the foregoing arising out of the gross negligence or willful
misconduct of the Bank. If any Claim is asserted against any Indemnified Party,
the Indemnified Party shall endeavor to notify the Borrowers of such Claim (but
failure to do so shall not affect the indemnification herein made except to the
extent of the actual harm caused by such failure). The Indemnified Party shall
have the right to employ, at the Borrowers’ expense, counsel of the Indemnified
Parties’
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10.1
choosing and to control the defense of the Claim. The Borrowers may at their
expense also participate in the defense of any Claim. Each Indemnified Party may
employ separate counsel in connection with any Claim to the extent such
Indemnified Party believes it reasonably prudent to protect such Indemnified
Party. The parties intend for the provisions of this Section to apply to and
protect each Indemnified Party from the consequences of any liability including
strict liability imposed or threatened to be imposed on Bank as well as from the
consequences of its own negligence, whether or not that negligence is the sole,
contributing, or concurring cause of any Claim. It is not the intent of this
Section to excuse any breach by the Bank of this Agreement.
9.19    Third-Party Beneficiary. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and their
respective assigns, any rights or remedies under or by reason of this Agreement,
and no third party shall have any right to compel or effect any advance,
disbursement, or other benefit described herein.
9.20    Selective Enforcement. In the event either party elects selectively and
successively to enforce its rights under any one or more of the instruments
securing payment of the Term Note, or the Loan Documents, such action will not
be deemed a waiver or discharge of any other lien or encumbrance securing
payment of the Term Note until such time as the Bank shall have been paid in
full all sums advanced by the Bank.
**********

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
duly executed and delivered effective as of the day and year first above
written.

The Dixie Group, Inc.

By: ______________________________________
    Jon Faulkner
    Vice President

TDG Operations, LLC

By: ______________________________________
    Jon Faulkner
    Vice President and Manager

"Borrowers"

AmeriState Bank, a state banking corporation

By______________________________________
Joe Geisler, Vice President
    "Bank"

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EXHIBITS

            Exhibit A     -Mortgaged Premises (Escambia County -- Legal
Description)
            
            Exhibit B    - Mortgaged Premises (Randolph County -- Legal
Description)

            Exhibit C        -Compliance Certificate (Borrowers)