LOAN AGREEMENT

THIS LOAN AGREEMENT (as amended, restated or supplemented or otherwise modified
from time to time, hereinafter called the “Agreement”) made and entered into
this 22nd day of December, 2015, (“Effective Date”) by and between FIRST
GUARANTY BANCSHARES, INC., a Louisiana corporation, (hereinafter called
“Borrower”) and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national banking
association having its principal office located in Memphis, Tennessee
(“Lender”).

W I T N E S S E T H :

WHEREAS, the Borrower has requested that Lender provide a term loan in the
amount of Twenty-Five Million Dollars ($25,000,000.00) (“Loan”) and Lender has
agreed to make this Loan on the terms and conditions hereinafter set forth;

WHEREAS, Borrower and Lender wish to enter into this Loan Agreement to set forth
certain terms of the Loan and to secure the Loan by a pledge of 4,823,899 shares
of common stock of First Guaranty Bank, a Louisiana corporation (the “Bank”)
which constitutes eighty-five percent (85.00%) of the outstanding shares of the
Bank, which is a wholly-owned subsidiary of Borrower.

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

AGREEMENTS

1. AMOUNT AND TERMS OF BORROWINGS.
 
1.1 Defined Terms.  Any capitalized term used but not defined in the body of
this Agreement shall have the meaning set forth on Appendix A attached hereto
and incorporated herein by reference.
 
1.2 Loan.  Lender hereby agrees to lend, and Borrower hereby agrees to borrow,
upon the terms and conditions set forth in this Agreement, the sum of up to
Twenty-Five Million Dollars ($25,000,000.00), as the Loan, to be evidenced by a
promissory note (the “Note”), as set forth in Exhibit A and included herein by
reference.  The Loan shall bear interest and be payable in accordance with the
terms and provisions of the Note.  The Loan shall expire and mature, and the
outstanding principal balance of the Loan and all accrued interest thereon shall
be due and payable, on the Maturity Date.
 
1.3 Collateral. All indebtedness and obligations of Borrower to Lender under
this Agreement shall be secured by Lender’s lien and security interest in the
Collateral.  The pledging of such Collateral shall be evidenced by the Pledge
Agreement.  Borrower agrees that all of the rights of Lender with regard to the
Pledge Agreement set forth in this Agreement shall apply to any modification of,
or supplement to this Agreement.
 
1.4 Fees.
 
 
 

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(a)           A loan origination fee in the amount of Twenty-Five Thousand
Dollars ($25,000.00) shall be paid by Borrower to Lender on or before the
closing of this Loan.  Borrower agrees that this fee is fair and reasonable
considering the condition of the money market, the creditworthiness of the
Borrower, the interest rate to be paid, and the nature of the security for the
Loan.
 
1.5 Increased Costs Generally.
 
(a) If any Change in Law shall:
 
(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or advances, loans or other credit extended or
participated in by, the Lender;
 
(ii) subject the Lender to any tax of any kind whatsoever with respect to this
Agreement, or any Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof; or
 
(iii) impose on the Lender any other condition, cost or expense affecting this
Agreement or the Loan made by the Lender;
 
and the result of any of the foregoing shall be to increase the cost to the
Lender of making, converting to, continuing or maintaining the Loan (or of
maintaining its obligations to make the Loan), or to increase the cost to the
Lender of issuing or maintaining any letter of credit (or of maintaining its
obligation to participate in or to issue any letter of credit), or to reduce the
amount of any sum received or receivable by the Lender hereunder (whether of
principal, interest or any other amount) then, upon written request of the
Lender, the Borrower shall promptly pay to the Lender, as the case may be, such
additional actual amount or amounts as will compensate the Lender, as the case
may be, for such additional costs actually incurred or reductions actually
suffered.
 
(b) Capital Requirements.  If Lender determines that any Change in Law affecting
the Lender or Lender’s holding company, if any, regarding capital requirements,
has or would have the effect of reducing the rate of return on the Lender’s
capital or on the capital of the Lender’s holding company, if any, as a
consequence of this Agreement, the commitment of the Lender hereunder or the
Loan made by the Lender hereunder, to a return below that which the Lender or
the Lender’s holding company could have achieved but for such Change in Law
(taking into consideration the Lender’s policies and the policies of the
Lender’s holding company with respect to capital adequacy), then from time to
time upon written request of the Lender, the Borrower shall promptly pay to the
Lender such additional amount or amounts as will compensate the Lender or the
Lender’s holding company for any such actual reduction suffered.
 
(c) Certificates for Reimbursement.  A certificate of the Lender setting forth
the amount or amounts necessary to compensate the Lender or its holding company,
as the case may be, as specified in this Section and delivered to Borrower,
shall be conclusive absent manifest error.  The Borrower shall pay the amount
shown as due on any such certificate within ten (10) days after receipt thereof.
 
 
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(d) Delay in Requests.  Failure or delay on the part of Lender to demand
compensation pursuant to this Section shall not constitute a waiver of Lender’s
right to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender pursuant to this Section for any increased costs
incurred or reductions suffered more than six (6) months prior to the date that
the Lender, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions, and of the Lender’s intention
to claim compensation therefor (except that if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the 6-month period
referred to above shall be extended to include the period of retroactive effect
thereof).
 
(e) Limitations.  Notwithstanding the foregoing, (i) Borrower shall not be
required to so reimburse Lender unless Lender at, the time of the request for
reimbursement, is generally assessing such amounts on a nondiscriminatory basis
against similarly-situated borrowers under its other loan agreements that have
similar increased costs provisions and (ii) Borrower shall not be required to
reimburse Lender for such costs if Borrower instead repays the Loan and all
other obligations under the Loan Documents to Lender within thirty (30) days of
receipt of Lender's notice assessing same.
 
2. USE OF PROCEEDS.
 
2.1 Use of Loan Proceeds.  The proceeds of the Loan shall be used by the
Borrower for the sole purpose of assisting in the redemption of preferred
securities issued to the Small Business Lending Fund established by the Small
Business Jobs Act of 2010, in the amount of $39,435,000, plus accrued dividends
of $88,728.75.
 
3. CONDITIONS TO LOAN CLOSING.
 
The obligation of Lender to extend any loan or credit to Borrower under this
Agreement or to make any Loan disbursements is subject to the strict
satisfaction of each of the following conditions:

3.1 No Defaults; Certificate.  Borrower and the Bank shall be in full compliance
with all the terms and conditions of this Agreement, and no Event of Default,
nor any event which upon notice or lapse of time or both would constitute such
an Event of Default, shall have occurred.  At Lender’s request, Lender shall
have received from Borrower and the Bank a certificate, in form and content
reasonably acceptable to Lender dated as of and delivered on the date of the
Loan, certifying that (1) the representa­tions and warranties set forth herein,
and the exhibits attached hereto, are accurate, true and correct on and as of
such date, (2) show that neither the transactions contemplated hereby or by any
other Loan Document will cause or result in any violation of (or creation of any
right in third parties under the provisions of) any laws restricting or
otherwise regulating the use, application or distribution of corporate funds and
assets, and (3) that no Event of Default nor any event which upon notice or
lapse of time or both would constitute such an Event of Default, exists.
 
 
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3.2 Accuracy of Representations and Warranties.  At the time of the initial Loan
disbursement, the representa­tions and warranties set forth herein and in any
other Loan Document shall be true and correct.
 
3.3 Corporate Action and Authority.  The Borrower shall have delivered to
Lender: (i) a certificate from the Secretary of State of Louisiana that Borrower
is in good standing and certificates from the Secretaries of State of each other
State in which the Borrower owns any property, has stationed any employees or
agents, or otherwise conducts business, certifying the Borrower’s good standing
as a corporation in each such State; (ii) a copy of the Resolutions passed by
the Borrower’s Board of Directors authorizing the execution and delivery of the
performance of Borrower’s obligations under the Loan Documents certified by the
Secretary or Assistant Secretary to be true and correct; and (iii) a certificate
or certificates, dated as of and delivered on the date of the execution of this
Agreement and signed on behalf of the Borrower by the Secretary or Assistant
Secretary, certifying the names of the officers authorized to execute and
deliver the Loan Documents on behalf of the Borrower, together with the
original, not photocopied, signatures of each officer.  Borrower shall also
deliver the same items specified in (i) above pertaining to the Bank from the
appropriate regulatory agency.
 
3.4 Delivery of Note, Loan Agreement, Pledge Agreement, and Stock
Certificates.  At the time of the exten­sion of the Loan, Borrower shall have
deliv­ered the Loan Documents.  The security interest in the Collateral shall be
prior to all other liens.
 
3.5 Proceedings.  The Loan Documents, upon their execution, and all proceedings
in connection with the authorization, execution and delivery of and the
performance of the obligations under the Loan Documents shall be satisfactory in
substance and form to Lender.
 
3.6 Payment of Fees and Expenses.  Borrower shall have paid, at or prior to the
date of the extension of the Loan, all costs and expenses in accordance with
Section 8.9, to the extent then determined by Lender.
 
3.7 Other Writings.  The Lender shall receive such other agreements,
instruments, documents, certificates, affidavits and other writings as Lender
may reasonably require.
 
3.8 Opinion of Counsel.  Borrower shall have delivered to Lender at Borrower’s
expense, favorable written opinions of counsel for Borrower dated as of and
delivered on the date of the extension of the Loan, in form and content
acceptable to Lender, as set forth in Exhibit B.
 
3.9 Financial Statements.  Prior to any disbursement under the Loan, Borrower
shall have delivered to Lender, true and exact copies of the current financial
statements of the Borrower, the Bank and all other Subsidiaries, for 2014 and
audit report and opinion of  the Borrower’s independent accounting firm, with
respect thereto (it being understood that Lender is relying upon such audit
report and opinion in entering into this Loan Agreement), the unaudited
financial statements of Borrower as of September 30, 2015 and the 2014 F.R. Y-6
Annual Report and F.R. Y-9 Parent Company only (and Consolidated, if applicable)
financial statement(s) filed by Borrower with the Federal Reserve.
 
 
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3.10 No Material Adverse Change.  At the time the Loan is funded hereunder,
there shall have occurred, in the opinion of Lender, no material adverse changes
in the condition, financial or otherwise, of Borrower or Bank from that
reflected in the financial statements furnished pursuant to Section 3.9 hereof
or furnished to Lender from time to time hereafter as required herein.
 
3.11 Raising Funds.  Prior to the closing, Borrower shall provide Lender with
evidence it has raised sufficient funds through a common equity raise, preferred
stock offering, or subordinated debt issuance (not to exceed Fifteen Million
Dollars ($15,000,000.00)), or that it has sufficient cash on hand, such that
these funds may be combined with the Loan to fully redeem the aforementioned
preferred securities issued to the Small Business Lending Fund.
 
4. REPRESENTATIONS AND WARRANTIES.
 
In order to induce the Lender to enter into this Agreement and to make the Loan,
the Borrower represents and warrants to the Lender (which representations and
warranties shall survive the delivery of the Loan Documents and the funding of
the Loan) that:

4.1 Corporate Status.  Borrower is a corporation duly organized and existing
under the laws of the State of Louisiana, is duly qualified to do business and
is in good standing under the laws of other states where the Borrower does
business, if any, and has the corporate power and authority to own its
properties and assets and conduct its affairs and business.
 
4.2 Corporate Power and Authority.  Borrower has full power and authority to
enter into this Agreement, to borrow funds as contemplated herein, to execute
and deliver this Agreement, the Note and other Loan Documents executed and
delivered by it, and to incur the obligations provided for herein, all of which
have been duly authorized by all proper and necessary corporate action; and the
officer executing each of the Loan Documents is duly authorized to do so by all
necessary corporate action.  Any consents or approval of shareholders or
directors of Borrower, or any other party (including without limitation any
regulatory agency or authority) required as a condition to the execution,
delivery, or validity of any Loan Document have been obtained; and each of said
Loan Documents is the valid, legal, and binding obligation of Borrower
enforceable in accordance with its terms.
 
4.3 No Violation of Agreements or Law.  Neither Borrower, Bank, nor any other
Subsidiary of Borrower is in default beyond any applicable cure period under any
indenture, agreement or instrument to which it is a party or by which it may be
bound, nor in violation of any state or federal statute, rule, ruling, or
regulation governing its operations and the conduct of its business, operations
or financial condition of Borrower, Bank, or any other Subsidiary.  Neither the
execution and delivery of the Loan Documents nor the consummation of the
transactions herein contemplated, or compliance with the provisions hereof will
conflict with, or result in the breach of, or constitute a default under, any
indenture, agreement or other instrument to which Borrower is a party or by
which it may be bound, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property of Borrower, or violate or be in
conflict with any provision of the charter or bylaws of Borrower, the Bank or
any other Subsidiary.
 
 
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4.4 Compliance With Law; Government Approvals.
 
(a) Borrower has complied and is complying with all requirements, made all
applications, and submitted all reports required by The Bank Holding Company Act
of 1956, as amended, and any regulations or rulings issued in connection
therewith, and the transaction contemplated hereby will not violate any such
statutes, rules, rulings, or regulations nor will the consummation of said
actions and transactions cause Borrower to be in violation thereof.  Borrower
has, if required, made all filings and received all governmental or regulatory
approvals necessary for the consummation of the transactions described herein,
including without limitation the approval of the Board of Governors of the
Federal Reserve System.
 
(b) Borrower has complied and is complying with all other applicable state or
federal statutes, rules, rulings and regulations.  The borrowing of money and
said actions and transactions required hereunder will not violate any of such
statutes, rules, rulings, or regulations.
 
4.5 Litigation.  There are no actions, suits or proceedings pending or, to the
knowledge of the Borrower threatened against the Borrower, the Bank or any other
Subsidiary before any court, arbitrator or governmental or administrative body
or agency which, if adversely determined, would result in any material and
adverse change in the financial condition, business operation, or properties or
assets of the Borrower, the Bank, or any other Subsidiary except as set forth in
Exhibit C.
 
4.6 Supervisory Action.  Neither Borrower, the Bank nor any other Subsidiary is
subject to any Supervisory Action by any federal or state bank regulatory
authority, except as set forth on Schedule 4.6 attached hereto and incorporated
by reference herein.
 
4.7 Financial Condition.  The balance sheets and the related statements of
income of Borrower, the Bank, and the other Subsidiaries and the financial
reports of Borrower, the Bank, and the other Subsidiaries which will be
delivered to Lender pursuant to Section 3.9 hereof are, or will be as of their
respective dates and for the respective periods stated therein, complete and
correctly and fairly present the financial condition of Borrower, the Bank, and
the other Subsidiaries, and the results of their operations, respectively, as of
the dates and for the periods stated therein, and have been, or will be as of
their respective dates and for the respective periods stated therein, prepared
in accordance with generally accepted accounting principles consistently applied
throughout the period involved and consistent with that of the preceding fiscal
year or period, as the case may be.  There are no liabilities of the Borrower,
the Bank, or any other Subsidiary not included in such financial
statements.  There has been no material adverse change in the business,
properties or condition of Borrower, the Bank, or the other Subsidiaries since
the date of the financial statement furnished to Lender pursuant to Section 3.9
hereof.
 
4.8 Tax Liability.  Borrower, the Bank, and the other Subsidiaries have filed
all federal, state and other tax returns, which are required to be filed by
them, and have paid all taxes which have become due pursuant to such returns or
pursuant to any assessments received by Borrower, the Bank, and the other
Subsidiaries.
 
 
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4.9 Subsidiaries.  Borrower has no Subsidiaries and owns stock in no corporation
or banking association other than the Subsidiaries listed in Exhibit D.
 
4.10 Bank Stock.  The common stock of the Bank owned by Borrower or any other
Subsidiary of Borrower is duly authorized and validly issued by the Bank or
other Subsidiary.  The total number of shares of common stock of the Bank and
each other Subsidiary issued and outstanding as of the date hereof  are all
owned by Borrower, the Bank or other Subsidiaries of Borrower.  Except as set
forth in Section 6.2 hereof or on Exhibit E, the stock of the Bank and each
other Subsidiary is free and clear of all liens, encumbrances, security
interests; said common stock is fully paid and non-assessable. There are no
outstanding warrants or options to acquire any common stock of the Bank and any
other Subsidiary.  There are no outstanding securities convertible or
exchangeable into shares of common stock of any Subsidiary; and there are no
restrictions on the transfer or pledge of any shares of common stock of any
Subsidiary, except as set forth in Section 6.2 hereof or on Exhibit E.  Borrower
has the right to pledge and transfer the Collateral and assign the income
therefrom without obtaining the consent of any other person or authority except
as set forth in Section 6.2 hereof or on Exhibit E; and the Pledge Agreement
creates for the benefit of Lender a first lien security interest in the
Collateral subject to no other interests or claims.
 
4.11 Title to Assets; Liens.  Borrower and Bank each have good and marketable
title to all its respective properties and assets reflected on the financial
statements referred to herein, except for (i) such assets as have been disposed
of since said date as no longer used or useful in the conduct of business and
(ii) items which have been amortized in accordance with GAAP applied on a
consistent basis.  There are no liens or any assets of the Borrower, the Bank or
any other Subsidiaries other than as set forth in Section 6.2 hereof or as
disclosed on Exhibit E.
 
4.12 Options, Warrants, Etc. Related to Shares.  Except as set forth in Exhibit
F, there are no options, warrants or other rights agreements or commitments
(including conversion rights and preemptive rights) obligating the Borrower, the
Bank, or any Subsidiary to issue, sell, purchase or redeem shares of the
Borrower, the Bank, or any other Subsidiary or securities convertible to such
shares.
 
4.13 Environmental Laws.
 
(a) The Borrower and each of its Subsidiaries have obtained all permits,
licenses, and other authorizations which are required under all Environmental
Laws and are in compliance in all respects with all applicable Environmental
Laws.
 
(b) On or prior to the date hereof, no notice, demand, request for information,
citation, summons, or order has been issued, no complaint has been filed, no
penalty has been assessed, and no investigation or review is pending or, to the
best of the knowledge of the Borrower, threatened by any governmental or other
Person with respect to any alleged or suspected failure by the Borrower or any
of its Subsidiaries to comply in any material respect with any Environmental
Laws.
 
 
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(c) There are no material Liens arising under or pursuant to any Environmental
Laws on any of the property owned or leased by the Borrower or any of its
Subsidiaries.
 
(d) There are no conditions existing currently or anticipated to exist during
the term of this Agreement which would subject the Borrower or any of its
Subsidiaries or any of their property to any material Lien, damages, penalties,
injunctive relief, or cleanup costs under any Environmental Laws or which
require or are likely to require cleanup, removal, remedial action, or other
responses by the Borrower and its Subsidiaries pursuant to Environmental Laws.
 
4.14 Disclosure.  The Borrower has disclosed to the Lender (i) all agreements,
instruments and corporate or other restrictions to which it, Bank or any of the
other Subsidiaries is subject, the termination of which could reasonably be
expected to result in a material and adverse change in the financial condition,
business operation, or properties or assets of the Borrower, the Bank  or any of
the other Subsidiaries and (ii) all matters known to it that, individually or in
the aggregate, could reasonably be expected to result in a material and adverse
change in the financial condition, business operation, or properties or assets
of the Borrower, the Bank or any of the other Subsidiaries.  No report,
financial statement, certificate or other information furnished (whether in
writing or orally) by or on behalf of the Borrower to Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
 
4.15 Contracts or Restrictions Affecting Borrower and/or Bank.  Neither Borrower
nor Bank is a party to any agreement or instrument or subject to any charter or
other corporate restrictions adversely affecting its business, properties or
assets, operations or condition (financial or otherwise).
 
4.16 No Default.  Neither Borrower nor Bank is in default in the performance,
observance or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument to which it is a party, which will or
might materially and adversely affect the business or operations of Borrower or
the Bank, as the case may be.
 
4.17 ERISA.  Borrower and Bank are in compliance with all applicable provisions
of ERISA and all other laws, state or federal, applicable to any employees’
retirement plan maintained or established by either of them.
 
4.18 OFAC.  Neither the Borrower nor any Subsidiary (a) is an “enemy” or an
“ally of the enemy” within the meaning of Section 2 of the Trading with the
Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), as amended, (b) is
in violation of (i) the Trading with the Enemy Act, as amended, (ii) any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto or (iii) the PATRIOT Act or (c) is a Sanctioned
Person.  No part of the proceeds of the Loan hereunder will be used directly or
indirectly to fund any operations in, finance any investments or activities in
or make any payments to, a Sanctioned Person or a Sanctioned Country.
 
 
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5. AFFIRMATIVE COVENANTS.
 
Borrower covenants and agrees that, until the Note together with interest
thereon is paid in full, unless specifically waived by the Lender in writing,
Borrower will, and will cause the Bank and the Subsidiaries to:

5.1 Business and Existence; Compliance with Laws.  Perform all things necessary
to preserve and keep in full force and effect the existence, rights and
franchises of Borrower, the Bank and the other Subsidiaries and to comply and
cause the Bank and the other Subsidiaries to comply in all material respects
with all local, state and federal laws and regulations applicable to banks and
bank holding companies, and all laws and regulations of the Local Authorities,
and the provisions and requirements of all franchises, permits, certificates of
compliance and approval issued by regulatory authorities and other like grants
of authority held by the Borrower and the Bank; and notify Bank immediately (and
in detail) of any actual or alleged failure to comply with or perform, breach,
violation or default under any such laws or regulations or under the terms of
any such franchises or licenses, or grants of authority, the result of which
would constitute a materially adverse effect on the Borrower or the Bank, or the
occurrence or existence of any facts or circumstances which with the passage of
time, the giving of notice or otherwise could create such a breach, violation or
default or could occasion the termination of any such franchises or grants of
authority.
 
5.2 Maintain Property.  Maintain, preserve, and protect all properties used or
useful in the conduct of Borrower’s, the Bank’s, and each other Subsidiary’s
business and keep the same in good repair, working order and condition.
 
5.3 Insurance.  At all times keep the insurable properties of Borrower, the
Bank, and each other Subsidiary adequately insured and maintain in force (i)
insurance, to such an extent and against such risks, including fire and theft,
as is customary with companies in the same or similar business, (ii) necessary
workmen’s compensation insurance, fidelity bonds and directors’ and officers’
insurance coverage in amounts satisfactory to Lender, and (iii) such other
insurance as may be required by law; and if required by Lender, deliver to the
Lender a copy of the bonds and policies providing such coverage and a
certificate of Borrower’s, the Bank’s, or each other Subsidiary’s chief
executive officer, as the case may be, setting forth the nature of the risks
covered by such insurance, the amount carried with respect to each risk, and the
name of the insurer.
 
5.4 Taxes and Liens.  Pay and discharge promptly all taxes, assessments, and
governmental charges or levies imposed upon Borrower, the Bank, or each other
Subsidiary or upon any of their respective income and profits, or their
properties, real, personal or mixed, or any part thereof, before the same shall
become delinquent; provided, however, that Borrower, the Bank, and each other
Subsidiary shall not be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the amount
or validity thereof shall be contested in good faith by appropriate proceedings
and provided that procedures satisfactory to Lender are carried out to prevent
foreclosure of any lien therefrom.
 
 
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5.5 Financial Reports and ERISA.
 
(a) Furnish to Lender as soon as available and in any event within ninety (90)
days after the end of each calendar year, (1) consolidated and consolidating
balance sheets of Borrower, the Bank, and each other Subsidiary, as of the end
of such year and consolidated and consolidating statements of income of
Borrower, the Bank, and each other Subsidiary for the year then ended, together
with the audit report and opinion of independent Certified Public Accountants
acceptable to the Lender with respect thereto, such audit report and opinion
shall contain no exceptions or qualifications unacceptable to Lender; (2)
promptly upon receipt, copies of all management letters and other assessments
and recommendations, formal or informal, submitted by the Certified Public
Accountants to Borrower or each Subsidiary; (3) a copy of Borrower’s FR Y-9
Parent Company Only (and Consolidated, if applicable) financial statement(s) and
(4) a copy of Borrower’s F.R. Y-6 Annual Report promptly upon the filing of the
same with the Federal Reserve Board; and (5) a copy of the Bank’s Call Report
promptly upon the filing with the appropriate regulatory agency.
 
(b) Upon senior management of the Borrower obtaining knowledge thereof, the
Borrower will give written notice to the Lender promptly (and in any event
within five (5) business days), of:  (1) any event or condition, including, but
not limited to, any Reportable Event, that constitutes, or might reasonably lead
to, an ERISA Event; (2) with respect to any Multiemployer Plan, the receipt of
notice as prescribed in ERISA or otherwise of any withdrawal liability assessed
against the Borrower or any of its ERISA Affiliates, or of a determination that
any Multiemployer Plan is in reorganization or insolvent (both within the mean
of Title IV of ERISA); (3) the failure to make full payment on or before the due
date (including extensions) thereof of all amounts which the Borrower, the Bank,
or any other Subsidiary or any ERISA Affiliate is required to contribute to each
Plan pursuant to its terms and as required to meet the minimum funding standard
set forth in ERISA and the Code with respect thereto; or (4) any change in the
funding status of any Plan that could have a material adverse effect, together
with a description of any such event or condition or a copy of any such notice
and a statement by the chief financial officer of the Borrower briefly setting
forth the details regarding such event, condition, or notice, and the action, if
any, which has been or is being taken or is proposed to be taken by the Borrower
with respect thereto.  Promptly upon request, the Borrower shall furnish the
Lender and the Lenders with such additional information concerning any Plan as
may be reasonably requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for each
“plan year” (within the meaning of Section 3(39) of ERISA).
 
 
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(c) Promptly upon the transmis­sion thereof, copies of all material financial
statements, proxy statements, notices, reports and other communications sent by
the Borrower or any other Subsidiary to the shareholders of the Borrower and any
other such communications as may be requested by Lender and copies of any and
all regular or periodic reports, registration statements, prospectuses or other
written communications that the Borrower or the Bank or any other Subsidiary is
or may be required to file with the Securities and Exchange Commission or any
governmental department, bureau, commission or agency succeeding to the
functions of the Securities and Exchange Commission if any.
 
(d) With reasonable promptness, such other financial information for the
Borrower or the Bank or any other Subsidiary as Lender may reasonably request.
 
5.6 Regulatory Examinations.  (a) To the extent allowed by applicable Bank
Regulatory Authorities, promptly notify Lender of every examination by, or any
material correspondence, report, memoranda or other written communication from
or with, any federal or state regulatory body or authority, with respect to the
properties, loans, operations and/or condition of Borrower, the Bank, or any
other Subsidiary, and of the receipt by Borrower, the Bank, or any other
Subsidiary of every examination or other report prepared by such body or
authority with respect thereto; and (b) if required by Lender, fully and
completely assist and cooperate with Lender in requesting approval by such
regulatory body or authority of the furnishing to Lender of any such report, and
furnish such report to Lender if such approval is given; provided, however, that
Lender shall take such steps as may be necessary to assure that all such reports
shall remain confidential and shall be used by Lender solely in connection with
the administration of the Loan in accordance with the provisions of this
Agreement.
 
5.7 Additional Information.  Furnish such other information regarding the
operations, business affairs and financial condition of Borrower, the Bank, and
each other Subsidiary as Lender may from time to time reasonably request,
including but not limited to true and exact copies of any monthly management
reports to their respective directors, their respective tax returns, and all
information furnished to shareholders, or any governmental authority, including
the results of any stock valuation performed.
 
5.8 Right of Inspection.  Except to the extent, if any, prohibited by applicable
law, permit any person designated by Lender, to inspect any of the properties,
books and financial and other reports and records of Borrower, the Bank, and
each other Subsidiary, including, but not limited to, all documentation and
records pertaining to the Bank’s loans, investments and deposits; and to discuss
their affairs; finances and accounts with Borrower’s, the Bank’s, and each other
Subsidiary’s principal officers, at all such reasonable times and as often as
Lender may reasonable request.  If required by Lender, Borrower will pay Lender
loan fees in an amount determined by Lender to be necessary to cover the costs
of such inspections, including a reasonable allowance for Lender’s overhead as
well as out-of-pocket expenses in connection with such inspection; provided,
however, that in the absence of an Event of Default, Borrower's liability under
the foregoing provisions shall not exceed $5,000.00 per year.
 
5.9 Notice of Default.  At the time of Borrower’s first knowledge or notice,
furnish the Lender with written notice or the occurrence of any event or the
existence of any condition which constitutes or upon written notice or lapse of
time or both would constitute an Event of Default under the terms of this Loan
Agreement or other Loan Documents or an event of default or default under any
other loan documents for any other loan to the Borrower, the Bank, or any other
Subsidiary.
 
 
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5.10 Notice of Litigation.  Borrower shall notify Lender of any actions, suits
or proceedings instituted by any person against the Borrower, the Bank or other
Subsidiary claiming money damages or other monetary liability in an amount of
Five Hundred Thousand Dollars ($500,000.00) or more, said notice to be given
within ten days of the first notice to Borrower or other party of the
institution of such action, suit or proceeding and to specify the amount of
damages being claimed or other relief being sought, the nature of the claim, the
person instituting the action, suit or proceeding, and any other significant
features of the claim.
 
5.11 Perfection of Security Interest.  The Borrower or other Subsidiary shall
perform such acts as may be necessary, in the reasonable judgment of Lender, now
or in the future, to perfect or continue perfection of the security interests
granted to Lender, or otherwise pro­vided for, under any and all Loan Documents.
 
5.12 Dividends to Borrower from the Bank.  Borrower shall cause the Bank and
other Subsidiary to pay dividends or otherwise make such cash contributions at
such times and in such amounts, as is necessary to enable Borrower to meet all
of its obligations under the Loan Documents on a timely basis, including the
payment, when due, of each installment of interest and the payment of princi­pal
on the Loan to the extent permitted by law including applicable bank regulatory
agency rules and regulations. Without limiting the generality of the foregoing,
should any prepayment, accelerated payment or other payment ever be due with
respect to the Loan, Borrower shall cause the Bank and other Subsidiary to pay
dividends or otherwise make such additional distributions to the Borrower as
necessary to enable the Borrower to make such prepayment, accelerated payment or
other payment, to the extent permitted by law including applicable bank
regulatory agency rules and regulations.
 
5.13 Capital Ratio/Equity Capital Adequacy.
 
(a) Borrower and Bank shall maintain at all times a “Well Capitalized” rating as
required by any applicable regulatory authority as such requirement may be
revised from time to time.
 
(b) Bank shall maintain as of each Covenant Compliance Date a Tier 1 Leverage
Ratio of not less than Eight Percent (8.00%), monitored quarterly.
 
5.14  “Modified” Texas Ratio.  As of each Covenant Compliance Date Bank shall
maintain a “Modified” Texas Ratio of not more than Thirty-Five Percent (35.00%),
monitored quarterly.
 
5.15 Fixed Charge Coverage Ratio.  Borrower shall maintain a minimum Fixed
Charge Coverage Ratio of not less than 1.35x. This ratio shall be tested
annually as of each December 31st.
 
 
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5.16 Loan Loss Reserves.  With respect to the Bank, maintain at all times loan
loss reserves in amounts deemed adequate by all federal and state regulatory
authorities.
 
5.17 Loan to Value. Borrower and Bank shall maintain as of each Covenant
Compliance Date a Loan-to-Value Ratio of not more than Fifty Percent (50.00%).
Such ratio shall be monitored quarterly.
 
5.18 Change in Management. The Borrower shall promptly notify Lender of any
change in the senior executive management personnel (CEO, President, CFO, or
other "c-level" or equivalent offices) of Borrower or Bank and shall,
thereafter, promptly replace such officer with a replacement reasonably
qualified officer in accordance with applicable laws and regulations. 
 
5.19 Indemnification.  Borrower and Bank shall indemnify the Lender, and hold it
harmless of and from any and all loss, cost, damage or expense, of every kind
and nature, including reasonable attorneys’ fees, which the Lender could or
might incur by reason of any violation of any Environmental Laws by Borrower or
Bank or by any predecessors or successors to title to any property of the
Borrower or Bank.
 
5.20 Compliance Certificate.  Furnish Lender a Certificate of Compliance duly
certified by the Chief Executive Officer of Borrower within forty-five (45) days
after the end of each calendar quarter stating that Borrower and each Bank
Subsidiary and the Borrower and all Subsidiaries, as applicable, are in
compliance with all terms, covenants and conditions of this Loan Agreement and
all related Loan Documents, including, but not limited to, Sections 5.1 – 5.18
of this Agreement.  Such Certificate of Compliance shall be as set forth in
Exhibit H and otherwise be in form and substance satisfactory to Lender.
 
6. NEGATIVE COVENANTS.
 
Borrower covenants and agrees with Lender that Borrower shall comply and cause
the Bank and other Subsidiaries to comply with the following negative covenants
unless the prior written consent of Lender shall be obtained, so long as any
indebtedness remains outstanding under the Loan Documents:

6.1 Indebtedness.  Neither Borrower nor the Bank shall create, incur, assume or
suffer to exist, contingently or otherwise, any indebtedness, except for the
following indebtedness:
 
(a) The indebtedness of Borrower under the Loan;
 
(b) Indebtedness owed by the Borrower to the Bank or any other Subsidiary;
 
(c) Debt for operating expenses or otherwise incurred by the Bank or any other
Subsidiary in the ordinary course of business;
 
(d) Indebtedness as set forth in Exhibit G; and
 
 
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(e) Obligations (contingent or otherwise) existing or arising under any Interest
Rate Swap approved in advance by Lender.
 
6.2 Mortgages, Liens, Etc.  Neither Borrower nor the Bank shall create, assume
or suffer to exist any mortgage, pledge, lien, charge or other encumbrance of
any nature whatsoever on any of its assets, now or hereafter owned, except for:
 
(a) Liens in favor of Lender securing payment of the Loan; and
 
(b) Permitted Encumbrances.
 
6.3 Guaranties.  Guarantee or otherwise in any way become or be responsible for
the indebtedness or obligations of any other Person, by any means whatsoever,
whether by agreement to purchase the indebtedness of any other Person or
agreement for the furnishing of funds to any other Person through the purchase
of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging the
indebtedness of any other Person, or otherwise, except for the endorsement of
negotiable instruments by the Borrower or Bank in the ordinary course of
business for collection.
 
6.4 Merger, Dissolution, Acquisition of Assets.  Borrower shall not enter into,
or permit the Bank or any other Subsidiary to enter into, any transaction of
merger or consolidation, or any reorganization, reclassification of stock,
readjustment or change in capital structure; or acquire, or permit any
Subsidiary to acquire, all of the stock, or other ownership interest, property
or assets of any other person, corporation, partnership or other entity;
provided, however, that if at the time thereof and immediately after giving
effect thereto on a pro forma basis (a) Borrower or the applicable Subsidiary
has obtained all corporate and regulatory approvals required in connection
therewith, (b) no Event of Default or event which would, with the passage of
time, giving of notice, or both, constitute an Event of Default, exists, (c)
such acquisition has the approval of the boards of directors and/or
shareholders, as required, of both the acquiror and the target and is not a
hostile acquisition, and (d) such transaction is in compliance with the
restrictions on additional indebtedness and liens set forth in Sections 6.1 and
6.2 hereof, (i) any Subsidiary (other than the Bank) may merge into or transfer
its property or assets to another Subsidiary and (ii) Borrower or any Subsidiary
may acquire all of the stock or other ownership interests, property or assets of
another Person if (x) the assets of the target(s) do not, in the aggregate,
exceed Three Hundred Million Dollars ($300,000,000.00) in any fiscal year of the
Borrower and (y) in the event such acquisition involves a merger of the acquired
entity with an existing Subsidiary, the applicable existing Subsidiary is the
surviving entity after consummation of the transaction.  In any of such events,
to the extent permitted by applicable law, Borrower shall give Lender at least
thirty (30) days' prior written notice of any such permitted acquisition which
notice shall include Borrower's pro forma covenant calculations establishing
continuing compliance as stated above as certified by a responsible officer of
Borrower and, if and to the extent that such prior notice is impermissible under
applicable law, Borrower shall give Lender written notice thereof together with
such certified calculations as promptly as legally permissible.
 
6.5 Subsidiaries.  Except as permitted under Section 6.4 hereof, Borrower shall
not create, establish or acquire Subsidiaries or acquire or own stock or any
other interest in any bank other than the Bank, or permit the creation,
establishment or acquisition of any such Subsidiaries by any other Subsidiary.
 
 
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6.6 Sale of Collateral, Merger, or Asset Disposition.
 
(a) Borrower shall not sell, transfer, pledge, assign, or otherwise dispose of,
or otherwise encumber, any of the Collateral, nor permit the Bank or any other
Subsidiary to issue additional shares of stock or rights, options or securities
convertible into Capital Stock of the Bank or any other Subsidiary.
 
(b) The Borrower will not, nor will it permit any of its Subsidiaries to, make
any Asset Disposition except in the ordinary course of business.
 
6.7 Dividends, Redemptions and Other Payments.  Borrower shall not declare or
pay any dividends on the stock of Borrower or redeem any stock of Borrower if an
Event of Default has occurred and is continuing under this Agreement or allow
the payment of such a dividend that would create an Event of Default. The
payment of any dividend or the redemption of any stock not otherwise prohibited
shall in all respects comply with the rules and regulations of the Federal
Reserve Board.
 
6.8 Capital Expenditures.  Borrower shall not make or become committed to make,
or permit any Subsidiary to make or to become committed to make, directly or
indirectly, during any calendar year, capital expenditures which for Borrower
and the Subsidiary exceed amounts deemed acceptable to applicable regulatory
authorities.
 
6.9 Relocation.  The Borrower shall not cause or permit Borrower or any
Subsidiary to relocate their principal office, principal banking office,
principal registered office or approved charter location without the written
consent of Lender.
 
6.10 Transactions with Affiliates.  The Borrower shall not, nor will it permit
any of its Subsidiaries to, enter into or permit to exist any transaction or
series of transactions with any officer, director, shareholder, Subsidiary or
Affiliate of such person or entity other than (a) normal compensation and
reimbursement of expenses of officers and directors and (b) except as otherwise
specifically limited in this Agreement, other transactions which satisfy the
applicable requirements under Section 23A of the Federal Reserve Act, 12 USC
§371c and Section 23B of the Federal Reserve Act, 12 USC §371c-1.  For purposes
of this Agreement, the term affiliates shall have the same meaning as set forth
in applicable bank regulations.
 
6.11 Intentionally Omitted.
 
6.12 Charter or By-Law Amendments.  Neither Borrower, Bank nor any other
Subsidiary shall adopt, amend or enter into, as applicable, any charter,
articles of incorporation, bylaws (or any amendments thereto) or other
provisions or agreements that would affect in any way the rights, obligations
and/or preferences of the Collateral.
 
 
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6.13 No Defaults.  Borrower shall not permit or suffer the occurrence of any
event nor allow any Subsidiary or other Affiliate to knowingly permit or suffer
the occurrence of any event which constitutes an event of default under any
indenture or loan agreement or otherwise with respect to any indebtedness of the
Borrower, the Bank, or any other Subsidiary, in each case where the principal
amount of the obligations covered thereby exceed Five Hundred Thousand Dollars
($500,000.00).
 
7. DEFAULT AND REMEDIES.
 
7.1 Events of Default.  Any one or more of the following events which occurs and
continues uncured beyond any applicable grace or notice and cure period, if any,
shall constitute an "Event of Default" under the terms of this Agreement and the
other Loan Documents:
 
(a) Failure to make prompt payment as and when due of the principal of or
interest on the Loan or any fees due under this Loan Agreement within ten (10)
days of the date when due, or in the prompt performance or payment when due of
any other obligations of the Borrower to the Bank, whether now existing or
hereafter created or arising, direct or indirect, absolute or contingent;
provided, however, that for the first such payment which is not made within such
ten (10) day cure period described above during any calendar year, Lender shall
first provide Borrower with written notice and a five (5) day period to cure
such payment failure.
 
(b) Except as otherwise expressly addressed in this Section 7.1 or with respect
to an event that materially and adversely impacts the Lender's rights with
respect to the Collateral, failure to comply with or in the performance or
observance of any term, covenant, obligation, condition, or agreement in this
Agreement or any other Loan Document which continues after thirty (30) days
written notice from Lender or such other notice and cure period as may be
expressly provided herein.
 
(c) If any representation, warranty or any other statement made or deemed to be
made by the Borrower herein, in any other Loan Document, or in any writing,
certificate, or report or statement at any time furnished to Lender pursuant to
or in connection with this Agreement shall to be false or misleading in any
material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter, and is not cured to Lender's satisfaction
within thirty (30) days after written notice to Borrower thereof.
 
(d) Borrower, the Bank or any other Subsidiary shall fail to pay when due and
before the expiration of any grace period, any debt for borrowed money which it
is primarily obligated to pay as borrower, or in any other capacity, whether
such debt shall have become due because of acceleration of maturity or otherwise
and where such debt shall be in a principal amount in excess of Five Hundred
Thousand Dollars ($500,000.00), other than debt created by this Agreement, where
such failure continues for thirty (30) days after the earlier to occur of (i)
Borrower's notice thereof or (ii) Lender's written notice thereof to Borrower.
 
 
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(e) An event other than one expressly addressed in this Section 7.1(b) - (i)
which occurs and which constitutes an event of default as defined in the Note or
any other Loan Document, which continues for thirty (30) days after written
notice thereof from Lender.
 
(f) The Borrower, the Bank, or any other Subsidiary shall
 
(i) admit in writing its inability to pay its debts as they become due; or
 
(ii) file a petition in bankruptcy or for reorganization or for the adoption of
an arrangement under the Bankruptcy Act as now or in the future amended, or file
a pleading asking such relief, or have or suffer to be filed an involuntary
petition in bankruptcy against it which is not contested and discharged within
sixty (60) days; or
 
(iii) make an assignment for the benefit of creditors generally; or
 
(iv) consent to the appointment of a trustee, custodian, or receiver for all or
a major portion of its property; or
 
(v) be adjudicated a bankrupt or insolvent under any federal or state law; or
 
(vi) suffer the entry of a court order under any federal or state law appointing
a receiver, custodian, or trustee for all or a major part of its property or
ordering the winding up or liquidation of its affairs, or approving a petition
filed against it under the Bankruptcy Act, as now or in the future amended; or
 
(vii) suffer the entry of a final judgment for the payment of money in excess of
$500,000.00 and the same shall not be dis­charged or provision made for its
discharge within 45 days from the date of entry thereof or an appeal or other
appropriate proceeding for review thereof shall not be taken within said period
and a stay of execu­tion pending such appeal shall not be obtained; or
 
(viii) suffer a writ or warrant of attachment or any similar process to be
issued by any court against all or any substantial portion of its property.
 
No notice and cure period shall apply to Events of Default under this Section
7.1(f).
 
(g) The issuance of any Supervisory Action against the Borrower, the Bank or
other Subsidiaries or the Borrower’s, the Bank’s or the other Subsidiaries’
directors, whether temporary or permanent, by or at the request of any bank
regulatory agency; provided, however, that notwithstanding anything to the
contrary in this Agreement (including without limitation Section 5.9 hereof),
Borrower shall not be required to disclose the existence of any Supervisory
Action to the extent that such disclosure is prohibited by applicable law or
regulation; but further provided that (i) Section 5.9 of this Agreement shall
nevertheless require Borrower to disclose to Lender the maximum amount of
information legally permissible to be disclosed regarding any such Supervisory
Action  and (ii) such Supervisory Action may, even if confidential, constitute
an Event of Default hereunder if Lender becomes aware of such Supervisory Action
through other channels without the violation of applicable law or
regulation.  Notwithstanding the foregoing, Supervisory Actions that (i) relate
to safety and soundness or the Bank Secrecy Act, (ii) could reasonably be
expected to result in a material adverse effect upon the Borrower, the Bank, or
the Borrower's ability to repay the Loan, (iii) which provide for a financial
penalty that could reasonably be expected to cause the Borrower to breach a
financial covenant set forth in this Loan Agreement, or (iv) impact the Bank's
ability to provide dividends to the Borrower shall constitute an immediate Event
of Default.  Other Supervisory Actions shall constitute an Event of Default if
not cured or resolved to Lender's satisfaction within forty-five (45) days of
the institution thereof;
 
 
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(h) There shall occur any Change of Control of Borrower.  No notice and cure
period shall apply to this Section 7.1(h); or
 
(i) The failure of the Borrower, the Bank, or any other Subsidiary, or the
Borrower’s, the Bank’s, or any other Subsidiary’s directors to comply with the
terms of any memorandum of understanding or letter agreement with any bank
regulatory agency, including but not limited to any applicable state bank
regulatory agency, Federal Deposit Insurance Corporation, the Office of the
Comptroller of the Currency, and the Board of Governors of the Federal Reserve
System and such failure has not been fully corrected within thirty (30) business
days of the earlier to occur of (i) Borrower’s or the Bank’s awareness of its
failure to comply or (ii) Lender's written notice to Borrower thereof.
 
7.2 Intentionally Omitted.
 
7.3 Remedies on Default.  Upon the occurrence of an Event of Default, Lender may
(i) terminate all obligations of Lender to Borrower, the Bank, or any other
Subsidiary including, without limitation, all obli­gations to lend money to
Borrower under this Agreement, (ii) declare the Note immediately due and
payable, without presentment, demand, protest, notice of intent to accelerate
and notice of acceleration of the maturity date of this Note, or any other
notice of any kind, all of which are expressly waived, (iii) declare immediately
due and payable from Borrower the expenses set forth in Section 8.14 hereof, and
(iv) pursue any remedy available to it under this Agreement, the Note, the
Pledge Agreement or any other Loan Document, or available at law or in equity,
concurrently or subsequently, in such order as the Lender may elect, all of
which remedies shall be cumulative.
 
8. MISCELLANEOUS.
 
8.1 No Waiver.  No delay or failure on the part of Lender or on the part of any
holder of the Note in the exer­cise of any right, power or privilege granted
under this Agreement, or under any other Loan Document, or available at law or
in equity, shall impair any such right, power or privi­lege or be construed as a
waiver of any Event of Default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exer­cise of such right, power or privilege. No waiver shall be valid against
Lender unless made in writing and signed by Lender, and then only to the extent
expressly specified therein.
 
 
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8.2 Notices.  All notices and communications provided for hereunder shall be in
writing, delivered by hand or sent by first-class, registered or certified mail,
postage prepaid, or express courier to the following addresses:
 

(1)
If to Lender:
First Tennessee Bank National Association
   
165 Madison Avenue, 5th Floor
   
Memphis, Tennessee  38103
   
Attention:  Correspondent Banking
     
(2)
If to Borrower:
First Guaranty Bancshares, Inc.
   
400 East Thomas Street
Hammond, LA 70401
   
Attention:  Alton B. Lewis Jr.

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

8.3 Governing Law.  This Agreement and all other Loan Documents shall be
governed by and interpreted in accor­dance with the laws of the State of
Tennessee except with respect to interest which shall be governed by and
construed in accordance with applicable Federal laws in effect from time to
time.
 
8.4 Survival of Representations and Warranties.  All representations, warranties
and covenants contained herein or made by or furnished on behalf of Borrower,
the Bank, or the other Subsidiaries in connection herewith shall survive the
execution and delivery of this Agreement and all other Loan Documents and the
extension or funding of the loan hereunder.
 
8.5 Descriptive Headings.  The descriptive head­ings of the several sections of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
 
8.6 Severability.  If any part of any provision contained in this Agreement or
in any other Loan Document shall be invalid or unenforceable under applicable
law, said part shall be ineffective to the extent of such invalidity only,
without in any way affecting the remaining parts of said provi­sion or the
remaining provisions.
 
8.7 Time is of the Essence.  Time is of the essence in interpreting and
performing this Agreement and all other Loan Documents.
 
8.8 Counterparts.  This Agreement may be exe­cuted in any number of
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
 
8.9 Payment of Costs.  Borrower shall pay, promptly demand by Lender, all
reasonable costs, expenses, taxes and fees incurred by Lender in connection with
the preparation, execution and delivery of this Agreement and all other Loan
Documents and the recording and filing and rerecording and refiling thereof,
including, without limitation, the reasonable costs and professional fees of
counsel for Lender, any and all transfer, mortgage or other taxes and all
recording costs that may be payable.  In the future, Borrower shall pay promptly
following written demand by the Lender, all such costs and expenses determined
to be payable, in connection therewith.
 
 
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8.10 Successors and Assigns.  This Agreement shall bind and inure to the benefit
of Borrower and Lender, and their respective successors and assigns; provided,
however, Borrower, the Bank, and the other Subsidiaries shall not have any right
to assign their rights or obligations hereunder to any person.  Notwithstanding
anything in this Agreement to the contrary, but subject to the notice provisions
of Section 8.25 below, Lender shall have the right, but shall not be obligated,
to sell participation in the loan made pursuant hereto to other banks, financial
institutions and investors.
 
8.11 Amendments; No Implied Waiver.  This Agreement may be amended or modified,
and Borrower, the bank, and the other Subsidiaries may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if Borrower shall obtain the prior written con­sent of Lender to that
specific amendment, modification, action or omission to act, and no course of
dealing between Borrower, the Bank, or the other Subsidiaries and Lender shall
operate as a waiver of any right, power or privilege granted to Lender under
this Agreement or under any other Loan Document, or available to Lender at law
or in equity.
 
8.12 Rights Cumulative.  All rights, powers and privileges granted hereunder
shall be cumulative to and shall not be exclusive of any other rights, powers
and privileges granted by any other Loan Document or available at law or in
equity.
 
8.13 Indemnity.  Borrower agrees to protect, indemnify and save harmless Lender,
and all directors, officers, employees and agents of Lender, from and against
any and all (i) claims, demands and causes of action of any nature whatsoever
brought by any Person not a party to this Agreement and arising from or related
or incident to this Agreement or any other Loan Document, including, without
limitation, any liability under federal or state securities laws arising out of
Lender’s dispo­sition of all or part of the Collateral, (ii) costs and expenses
incident to the defense of such claims, demands and causes of action, including,
without limitation, reasonable attorneys’ fees, and (iii) liabilities,
judgments, settlements, penalties and assessments arising from such claims,
demands and causes of action; provided, however, that Borrower does not agree to
indemnify Lender against Lender’s own negligence, misconduct, or default under
this Agreement. The indemnity contained in this section shall survive the
termina­tion of this Agreement.  If Lender receives a complaint, claim, or other
notice of any item or claim indemnified against under this Section 8.13, Lender
shall promptly notify Borrower of each such item or claim, but the omission to
so notify Borrower shall not relieve Borrower of any liability under this
Section 8.13 except to the extent Borrower is directly prejudiced by such
failure.  If any judicial or administrative proceeding, including any
governmental investigation, whether civil, criminal, or otherwise (individually,
an "Action" and, collectively, "Actions"), is threatened, asserted, commenced,
or brought against Lender for which Lender may be indemnified by Borrower
pursuant to this Section 8.13, Borrower shall retain and direct counsel to
defend such Action, and shall permit Lender to monitor the defense
thereof.  Lender shall have the right to reasonably approve such
counsel.  Lender shall cooperate fully with Borrower and with such counsel in
such defense.  Borrower shall assume responsibility for the payment of all fees
and disbursements of such counsel.  To the extent that the interests of Borrower
and Lender with respect to any such Action conflict, Borrower shall, upon the
request of Lender, retain separate counsel for Lender with respect to such
action, and all fees and expenses of such separate counsel shall be paid by
Borrower.  Expenses (including reasonable attorneys' fees) incurred by Lender in
defending any Action shall be paid by Borrower in advance of the final
disposition of such Action; provided, however, Lender agrees to repay any such
expenses paid by Borrower if it shall be determined by a final non-appealable
judgment by a court of competent jurisdiction that Lender is not entitled for
indemnification for such expenses pursuant to this Section 8.13.
 
 
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8.14 Expenses.  Borrower agrees to promptly reimburse Lender for (i) all costs
and expenses of collection of the Note, including reasonable attorneys’ fees,
and (ii) all expenses incurred by Lender in acting on behalf of Borrower, the
Bank or the other Subsidiaries in accordance with the terms of this Agreement or
to maintain or preserve the value of the Collateral, or Lender’s interest
therein pursuant to the Pledge Agreement, or any other Loan Document.  Such sums
shall include interest at the maximum rate allowed by law accruing from the date
Lender requests such reimbursement.
 
8.15 Usury.  It is the intent of the parties hereto not to violate any federal
or state law, rule or regula­tion pertaining either to usury or to the
contracting for or charging or collecting of interest, and Borrower, the Bank,
and the other Subsidiaries, and Lender agree that, should any provision of this
Agreement, or of the Note, or of any other Loan Document or any act performed
hereunder or thereunder, violate any such law, rule or regulation, then the
excess of interest contracted for or charged or collected over the maximum
lawful rate of interest shall be applied to the outstanding principal
indebtedness due to Lender by Borrower under this Agreement, and if the
princi­pal indebtedness has been paid in full, any remaining excess shall
forthwith be paid to Borrower.
 
8.16 Jurisdiction and Venue.  Borrower, the Bank, and the other Subsidiaries,
and Lender agree, without power of revocation, that any civil suit or action
brought against them as a result of , or which relates to, any of their
obligations under this Agreement or under any other Loan Document may be brought
against them, jointly or singly, in the United States District Court for the
Western District of Tennessee, and Borrower, the Bank, the other Subsidiaries,
and Lender irrevocably submit to the jurisdiction of such court and irrevocably
waive, to the full­est extent permitted by law, any objections that they may now
or hereafter have to the laying of the venue of such civil suit or action and
any claim that such civil suit or action has been brought in an inconvenient
forum, and Borrower, the Bank, and the other Subsidiaries, and Lender agree that
final judgment in any such civil suit or action shall be conclusive and binding
upon them and shall be enforceable against them by suit upon such judgment in
any court of competent jurisdiction.
 
8.17 Construction.  Should any provision of this Agreement require judicial
interpretation, the parties hereto agree that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party by reason of the rule of construction
that a document is to be more strictly construed against the party who itself or
through its agents prepared the same, it being agreed that Borrower, Lender and
their respective agents have participated in the preparation hereof.
 
 
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8.18 Holidays.  In any case where the date for any action required to be
performed under this Agreement or under any other Loan Document shall be, in the
city where the performance is to be made, a Saturday, a Sunday, a legal holi­day
or a day on which banking institutions are authorized by law to close, then such
performance may be made on the next succeeding business day not a Saturday, a
Sunday, a legal holi­day or a day on which banking institutions are authorized
by law to close.
 
8.19 Entire Agreement.  This Agreement and the other Loan Documents executed and
delivered contemporaneously herewith, together with the exhibits attached hereto
and thereto, constitute the entire understanding of the parties with respect to
the subject matter hereof, and any other prior or contemporaneous agreements,
whether written or oral, with respect thereto are expressly superseded hereby.
The execution of this Agreement and the other Loan Documents by Borrower, the
Bank, and the other Subsidiaries was not based upon any facts or materi­als
provided by Lender, nor was Borrower, the Bank, and the other Subsidiaries
induced to execute this Agreement or any other Loan Document by any
representation, statement or analysis made by Lender. In the event that the
provisions of this Loan Agreement shall conflict with provisions of any of the
other Loan Documents, the provi­sions of this Agreement shall control.  This
written Loan Agreement represents the final agreement between the parties and
may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties.  There are no unwritten oral agreements between
the parties.
 
8.20 Consent.  Borrower hereby represents and warrants that to the best of
Borrower’s knowledge there is no consent from any lender or creditor needed to
prevent Borrower, the Bank, or the other Subsidiaries from being in default by
Borrower executing the Note or Borrower, the Bank, and the other Subsidiaries
executing, this Loan Agreement or any other loan document associated with this
Loan.
 
8.21 Waiver Of Right To Trial By Jury.  EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
 
 
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8.22 Further Assurances.  Borrower agrees to furnish a current financial
statement upon the request of Lender from time to time, and further agrees to
execute and deliver all other instruments and take such other actions as Lender
may from time to time reasonably request in order to carry out the provisions
and intent hereof.
 
8.23 Execution by Bank.  The undersigned Bank is joining this Agreement for the
sole purpose of acknowledging the pledge of its Capital Stock pursuant to the
Pledge Agreement.
 
8.24 Non-Control.  In no event shall the Lender’s rights hereunder be deemed to
indicate that the Lender is in control of the business, management or properties
of the Borrower or the Bank or has power over the daily management functions and
operating decisions made by the Borrower and the Bank, all such rights and
powers being hereby expressly reserved to the Borrower and the Bank.
 
8.25 Assignments and Participations.  Lender may sell or offer to sell the Loan
or interests therein to one or more assignees or participants.  Borrower shall
execute, acknowledge and deliver any and all instruments reasonably requested by
Lender in connection therewith, and to the extent, if any, specified in any such
assignment or participation, such assignee(s) or participant(s) shall have the
same rights and benefits with respect to the Loan Documents as such Person(s)
would have if such Person(s) were Lender hereunder.  Lender may disseminate any
information it now has or hereafter obtains pertaining to the Loan, including
any security for the Loan, Borrower, Bank, any other Subsidiary, any of
Borrower’s, Bank’s, or any other Subsidiary’s principals, or any guarantor, if
any, to any actual or prospective assignee or participant, to Lender’s
affiliates, to any regulatory body having jurisdiction over Lender, to any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to Lender and the Loan, or to any other party as necessary
or appropriate in Lender’s reasonable judgment.  Except in case of a transfer
after an Event of Default or in connection with a merger or sale of all or
substantially all of the assets of Lender, Lender shall provide Borrower with at
least thirty (30) days prior written notice of any such assignment or
participation.
 
8.26 Electronic Transmission of Data.  Lender and Borrower agree that certain
data related to the  Loan (including confidential information, documents,
applications and reports) may be transmitted electronically, including
transmission over the internet to the parties, the parties’ affiliates, agents
and representatives, and other Persons involved with the subject matter of this
Agreement.  Borrower acknowledges and agrees that (a) there are risks associated
with the use of electronic transmission and that Lender does not control the
method of transmittal or service providers, (b) Lender has no obligation or
responsibility whatsoever and assumes no duty or obligation for the security,
receipt or third party interception of any such transmission, and (c) Borrower
and Bank will release, hold harmless and indemnify Lender from any claim, damage
or loss, including that arising in whole or part from Lender’s strict liability
or sole, comparative or contributory negligence, which is related to the
electronic transmission of data.
 
 
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8.27 USA PATRIOT Act.  The Lender hereby notifies the Borrower and any guarantor
that pursuant to the requirements of the PATRIOT Act, it is required to obtain,
verify and record information that identifies the Borrower and any guarantors,
which information includes the name and address of the Borrower and any
guarantors and other information that will allow Lender to identify the Borrower
and any guarantors in accordance with the PATRIOT Act.
 
8.28 No Inference of Extension Past Maturity Date.  Notwithstanding any other
provision herein, the terms, conditions, and requirements provided for herein
that would, by their express terms, be applicable to time periods after the
Maturity Date of the Note, are not to be interpreted as an inference that the
Lender has agreed to any extension, automatic or otherwise, to the extension of
the Maturity Date.  The Lender has not agreed and is under no obligation to
extend the Maturity Date of the Note.
 
WITNESS the hand and seal of the parties hereto through their duly authorized
officers as of the date first above written.

LENDER:
 
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
 
By:          /s/ R. Chuck
Hunt                                                      
Printed Name:   R. Chuck
Hunt                                                             
Title: Vice
President                                                                
 
 
BORROWER:
 
FIRST GUARANTY BANCSHARES, INC.
 
 
By: /s/ Alton B. Lewis,
Jr.                                                           
Printed Name: Alton B. Lewis,
Jr.                                                             
Title: President and Chief Executive
Officer                                                               
 
 
The undersigned Bank executes this Loan Agreement for the sole purpose of
acknowledging the pledge of its Capital Stock under the Pledge Agreement.
 
BANK:
 
FIRST GUARANTY BANK
 
 
By: /s/ Alton B. Lewis,
Jr.                                                           
Printed Name: Alton B. Lewis,
Jr.                                                             
Title: President and Chief Executive
Officer                                                               
                                                          

 
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APPENDIX A

DEFINITIONS

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

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

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

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

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

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

"Cash Flow" means the sum of (a) Borrower's consolidated Net Income, plus (b)
non-cash charges or expenses of Borrower, including depreciation and
amortization, plus (c) all interest expense of the Borrower to the extent
deducted in the determination of consolidated Net Income, plus (d) proceeds from
the purchase of Borrower shares by the Borrower's employee stock ownership plan,
less (e) dividends or other payments paid or declared by the Borrower to its
shareholders, less (f) Borrower's non-cash income.

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

 
 

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“Change of Control” means a change in the ownership of the capital stock of the
Borrower whereby a Person, who is not a shareholder as of the Effective Date,
acquires, directly or indirectly, beneficial ownership of a number of shares of
capital stock of the Borrower that constitutes fifty percent (50%) or more of
the combined voting power of the Borrower's outstanding capital stock then
entitled to vote.

“Collateral” shall mean 4,823,899 shares of the common stock of the Bank
represented by stock certificate number 1-000-4603.

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

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

“Equity Issuance” shall mean any issuance by the Borrower to any person of
shares of its Capital Stock, any shares of its Capital Stock pursuant to the
exercise of options or warrants or any shares of its Capital Stock pursuant to
the conversion of any debt to equity, after the date of the Loan.

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

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

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

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

"Fixed Charge Coverage Ratio" for any period shall mean the ratio of: (a) Cash
Flow for such period to (b) Fixed Charges for such period.
 
"Fixed Charges" means the sum of (a) all interest expense of the Borrower to the
extent deducted in the determination of consolidated Net Income, plus (b) all
contractually required principal payments on any indebtedness of the Borrower,
all determined with respect to the Borrower in accordance with GAAP.

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

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

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

 
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“Lien(s)” shall have the meaning set forth in Section 4.11 of this Agreement and
are more specifically set forth in Exhibit E attached hereto.

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

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

“Loan-to-Value Ratio” shall mean the ratio that (a) the then-outstanding balance
of the Loan at the time of measurement bears to (b) the Bank's tangible common
equity tier 1 capital at the time of measurement.

“Maturity Date” shall mean December 22, 2020.

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

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

“Net Cash Proceeds” shall mean the aggregate cash proceeds received by the
Borrower in respect of any Equity Issuance, net of (1) direct costs (including,
without limitation, legal, accounting, and investment banking fees and sales
commissions) and (2) taxes paid or payable as a result thereof.

“Net Income” shall mean the net income after taxes including the Borrower’s
equity in undistributed earnings of its Subsidiaries as determined under GAAP.

“Net Worth” shall mean the shareholders’ equity, net worth or surplus as
determined under GAAP.

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

“Non-Performing Asset Ratio” shall mean the ratio of (1) Non-Performing Assets
to (2) the sum of the total assets of Borrower and its Subsidiaries, determined
in accordance with GAAP, as of the Covenant Compliance Date.

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

“Non-Performing Loan Ratio” shall mean the ratio of (1) Non-Performing Loans to
(2) total gross loans made by Bank, measured as of each applicable Covenant
Compliance Date.

“Note” shall have the meaning assigned to such term in Section 1.2 of this
Agreement, together with any and all renewals, modifications, extensions and
replacements thereof.

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

“Permitted Encumbrances” shall mean and include: (a) liens for taxes,
assessments or similar governmental charges not in default or being contested in
good faith by appropriate proceedings; (b) workmen’s, vendors’, mechanics’ and
materialmen’s liens and other liens imposed by law incurred in the ordinary
course of business, and easements and encumbrances which are not substantial in
character or amount and do not materially detract from the value or interfere
with the intended use of the properties subject thereto and affected thereby;
(c) liens in respect of pledges or deposits under social security laws,
workmen’s compensation laws, unemployment insurance or similar legislation and
in respect of pledges or deposits to secure bids, tenders, contracts (other than
contracts for the payment of money), leases or statutory operations; and (d)
(the debt to Premier Bank) [PLEASE PROVIDE MORE SPECIFICITY - DESCRIBE LOAN
AMOUNT, LOAN AGREEMENT, ETC.] and such other liens and encumbrances to which
Lender shall consent in writing, if any.

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

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

“Pledge Agreement” shall mean that certain Pledge and Security Agreement
executed by Borrower for the benefit of Lender dated December 22, 2015 pledging
the Collateral.

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

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

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

“Subsidiaries” or individually “Subsidiary” shall mean any partnership,
corporation, limited liability company, trust, unincorporated organization,
association, joint venture, or other entity other than Borrower in an unbroken
chain of entities beginning with the Borrower with each of the entities or the
Bank other than the last entity in the unbroken chain owning fifty percent (50%)
or more of the total combined voting power of all classes of stock or other form
of equity in one of the other entities or the Bank and are more specifically
listed in Exhibit D attached hereto.

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

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

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

 
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