EXHIBIT 10.1
TERM LOAN AGREEMENT
     THIS TERM LOAN AGREEMENT (together with all schedules annexed hereto from
time to time, this “Agreement”) is entered into this 6th day of November, 2008,
between PEOPLES STATE BANK OF COMMERCE, a bank organized under the laws of the
State of Tennessee (“Lender”), and HOME FEDERAL HOLDINGS CORPORATION, a
corporation organized under the laws of the State of Georgia (“Borrower”).
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Definitions Schedule annexed hereto. All schedules
annexed hereto are incorporated herein and made a part hereof.
SECTION 1. TERM LOAN AND TERMS OF REPAYMENT
     1.1 Term Loan. Subject to the terms and conditions of this Agreement,
Lender agrees to make a term loan to Borrower in the principal amount of ONE
MILLION FIVE HUNDRED TWENTY-TWO THOUSAND FOUR HUNDRED AND NO/100 DOLLARS
($1,522,400.00) (the “Term Loan”), which shall be evidenced by a promissory note
to be executed and delivered by Borrower in favor of Lender in the form of
Exhibit A attached hereto (as at any time amended, renewed or extended, the
“Term Note”). Subject to the satisfaction of the conditions precedent set forth
in Section 3 of this Agreement, the Term Loan shall be funded by Lender on the
Closing Date. The proceeds of the term Loan shall be used by Borrower solely to
pay a portion of the purchase price for the Real Property.
     1.2 Payments.
          (a) All payments with respect to any of the Obligations shall be made
to Lender in dollars on the date when due, in immediately available funds,
without any offset or counterclaim. Except where evidenced by Notes or other
instruments made by Borrower to Lender specifically containing payment
provisions in conflict with this Section 1.2 (in which event the conflicting
provisions of such instruments shall govern and control), the Obligations shall
be due and payable as follows:
     (i) Principal payable on account of the Term Loan shall be due and payable
immediately upon the Maturity Date;
     (ii) Interest accrued on the principal balance of the Term Loan shall be
due and payable on (x) the first day of each month, computed through the last
day of the preceding month; and (y) the Maturity Date; and
     (iii) The balance of the Obligations requiring the payment of money, if
any, shall be due and payable as and when provided in the Loan Documents, or, if
the date of payment is not specified in the Loan Documents, on demand.
          (b) Whenever any payment of any Obligations shall be due on a day that
is not a Business Day, the date for payment thereof shall be extended to the
next succeeding Business Day and interest thereon shall continue to accrue and
shall be payable for such extended period of time. If any amount applied to the
Obligations is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other Person, then the Obligations or part thereof originally intended to be
satisfied, and all rights and remedies therefor, shall be revived and continued
in full force and effect as if such amount had not been made or received. The
provisions hereof shall survive the Maturity Date and payment in full of the
Obligations.

 

--------------------------------------------------------------------------------

 

     1.3 Interest Rates. The principal balance of the Term Loan and other
Obligations outstanding from time to time shall bear interest from the
respective dates such principal amounts are advanced or incurred until paid at a
variable rate per annum equal to the sum of the Prime Rate plus 0.75%. All
interest chargeable under this Agreement shall be computed on the basis of the
actual number of days elapsed in a year of 360 days. At any time that an Event
of Default exists, the principal amount of the Obligations outstanding shall
bear interest at the Default Rate. The Prime Rate on the date hereof is 4.00%
and therefore the rate of interest in effect hereunder, expressed in simple
interest terms as of the date hereof, is 4.75%.
     1.4 Reimbursement of Expenses. Borrower shall reimburse Lender for all
Lender Expenses. All amounts chargeable to Borrower under this Section 1.4 shall
be secured by the Collateral, shall be payable on demand to Lender, and shall
bear interest from the date such demand is made until paid in full at the rate
applicable to the Term Loan from time to time.
     1.5 Maximum Interest. In no event shall the aggregate of all amounts that
are contracted for, charged or received by Lender pursuant to the terms of the
Loan Documents and that are deemed interest under applicable law exceed the
highest rate permissible under any applicable law, that a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If any
interest is charged or received in excess of the maximum rate allowable under
applicable law (“Excess”), Borrower acknowledges and stipulates that any such
charge or receipt shall be the result of an accident and bona fide error, and
such Excess, to the extent received, shall be applied first to reduce the
principal Obligations and the balance, if any, returned to Borrower, it being
the intent of the parties hereto not to enter into a usurious or other illegal
relationship. The provisions of this Section shall be deemed to be incorporated
into every Loan Document (whether or not any provision of this Section is
referred to therein).
     1.6 Prepayments. Borrower may, at its option, prepay any portion of the
Term Loan in whole at any time or in part from time to time, in an amount not
less than $50,000, by paying the principal amount to be prepaid together with
interest accrued thereon to the date of prepayment. Borrower shall prepay the
Term Loan concurrently with, and by an amount equal to, (i) the net proceeds
received in connection with an Permitted Asset Disposition of Fixed Assets and
(ii) proceeds of insurance or condemnation awards paid in respect of any Fixed
Assets.
     1.7 Application of Payments and Collections. Borrower irrevocably waives
the right to direct the application of any and all payments and collections at
any time or hereafter received by Lender from or on behalf of Borrower, and
agrees that Lender shall have the continuing right to apply and reapply any and
all such payments and collections received at any time hereafter against the
Obligations, in such manner as Lender may deem advisable.
     1.8 Collateral. All of the Obligations shall be secured by a continuing
security interest and Lien upon all property of Borrower, as and to the extent
provided in the Security Documents.
SECTION 2. TERM
     On the Maturity Date, all Obligations shall become immediately due and
payable without notice to or demand upon Borrower and shall be paid to Lender in
cash or by wire transfer of immediately available funds.

-2-

--------------------------------------------------------------------------------

 

SECTION 3. CONDITIONS PRECEDENT
     Lender shall not be obligated to make any extension of credit hereunder
unless, on or before November 7, 2008, each of the following conditions has been
satisfied:
          (a) Borrower and each other Person that is to be a party to any Loan
Document shall have executed and delivered each such Loan Document, all in form
and substance satisfactory to Lender;
          (b) Borrower shall cause to be delivered to Lender the following
documents, each in form and substance satisfactory to Lender:
     (i) A copy of the Organic Documents of Borrower;
     (ii) A certificate of the resolutions of the board of directors or other
appropriate governing body of Borrower, signed by a Senior Officer of Borrower,
authorizing Borrower to execute, deliver and perform its obligations under the
Loan Documents;
     (iii) A favorable legal opinion of Borrower’s outside legal counsel
addressed to Lender regarding such matters as Lender and its counsel may
request;
     (iv) Evidence of insurance, including standard forms of certificates of
insurance addressed to Lender, reasonably satisfactory to Lender and otherwise
confirming Borrower’s satisfaction of the insurance requirements contained in
the Loan Documents;
     (v) A UCC fixture filing naming Borrower as debtor and Lender as secured
party with respect to fixtures from time to time located on the Real Property;
     (vi) A fully paid commitment for a loan policy of title insurance with
respect to the Real Property issued to Lender by a title insurance company, and
with endorsements, satisfactory to Lender in such amount as Lender may request,
and with no exceptions not approved by Lender; and
     (vii) A certificate, signed by Borrower’s President, confirming
satisfaction not the conditions set out in clauses (c) through (g), below.
          (c) There shall be no Liens upon the Real Property, other than
Permitted Liens;
          (d) There shall be no litigation pending or threatened against
Borrower which Lender determines may have a Material Adverse Effect;
          (e) The Real Property shall not have been materially damaged by fire
or other casualty;
          (f) Borrower shall have received all licenses, permits and approvals
of governmental authorities, if any, required to purchase the Real Property, and
the Real Property shall not violate any law, ordinance, rule or regulation,
building lines or other restrictions applicable to it; and
          (g) There shall not have occurred any Event of Default under (and as
defined in) the Line of Credit Loan Agreement.

-3-

--------------------------------------------------------------------------------

 

SECTION 4. BORROWER’S REPRESENTATIONS AND WARRANTIES
     To induce Lender to enter into this Agreement and to extend credit,
Borrower makes the following representations and warranties, all of which shall
be deemed made as of the date hereof and on each date that a request for an
extension of credit hereunder is made:
     4.1 Existence and Rights; Predecessors. Borrower is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Georgia and is duly qualified or licensed to transact business in all places
where the failure to be so qualified could reasonably be expected to have a
Material Adverse Effect; has the right and power to enter into and discharge all
of its obligations under the Loan Documents, each of which constitutes a legal,
valid and binding obligation of Borrower, enforceable against it in accordance
with its terms, subject only to bankruptcy and similar laws affecting creditors’
rights generally; and has the power, authority, rights and franchises to own its
property and to carry on its business as presently conducted. Borrower has not
been a party to any merger, consolidation or acquisition of all or substantially
all of the assets or equity interests of any other Person and has not changed
its legal status or the jurisdiction in which it is organized.
     4.2 Authority. The execution, delivery and performance of the Loan
Documents by Borrower and each other Person (other than Lender) executing any
Loan Document have been duly authorized by all necessary actions of such Person,
and do not and will not violate any provision of law, or any writ, order or
decree of any court or governmental authority or agency, or any provision of the
Organic Documents of such Person, and do not and will not result in a breach of,
or constitute a default or require any consent under, or result in the creation
of any Lien upon any property or assets of such Person pursuant to, any law,
regulation, instrument or agreement to which any such Person is a party or by
which any such Person or its properties may be subject or bound.
     4.3 Litigation. There are no actions or proceedings pending, or to the
knowledge of Borrower threatened, against any Obligor before any court or
administrative agency, and Borrower has no knowledge or belief or any pending,
threatened or imminent, governmental investigations or claims, complaints,
actions or prosecutions involving Borrower or any Obligor. Borrower is not in
default with respect to any order, writ, injunction, decree or demand of any
court or any governmental or regulatory authority.
     4.4 Financial Condition. All financial statements and information relating
to Borrower which have been delivered to Lender have been prepared in accordance
with GAAP, unless otherwise stated therein, and fairly and reasonably present
Borrower’s financial condition. There has been no material adverse change in the
financial condition of Borrower since the date of the most recent of such
financial statements submitted to Lender. Borrower has no knowledge of any
liabilities, contingent or otherwise, that are not reflected in such financial
statements and information. Borrower has not entered into any special
commitments or contracts which are not reflected in such financial statements or
information and that may have a Material Adverse Effect. Borrower is, and after
consummating the transactions described in the Loan Documents will be, Solvent.
Borrower has delivered to Lender pro forma balance sheets and income statements
for Bank in the forms filed by Borrower with the OCC in connection with the Bank
Application.
     4.5 Taxes. Borrower has filed all tax returns that it is required to file,
and has paid all Taxes shown on said returns as well as all Taxes shown on all
assessments received by it to the extent that such Taxes are not being Properly
Contested; and Borrower is not subject to any tax Liens and has not received any
notice of deficiency or other official notice to pay any Taxes.

-4-

--------------------------------------------------------------------------------

 

     4.6 Material Agreements. Borrower is not a party to any agreement or
instrument adversely affecting its business, assets, operations or condition,
nor is Borrower in default in the performance, observance or fulfillment of any
material obligations, covenants or conditions contained in any agreement or
instrument where such default could reasonably be expected to have a Material
Adverse Effect.
     4.7 Title to Assets; Intellectual Property. Borrower has good title to its
assets and the same are not subject to any Liens other than Permitted Liens.
Borrower possesses all necessary trademarks, trade names, copyrights, patents,
patent rights and licenses to conduct business as now operated, without any
known conflict with the rights of others.
     4.8 Compliance With Laws. Borrower, and its properties, business operations
and leaseholds, are in compliance in all material respects with all applicable
laws.
     4.9 Business and Collateral Locations. Borrower’s chief executive office,
principal place of business and office where Borrower’s business records are
located is 4271 Mundy Mill Road, Oakwood, Georgia. None of Borrower’s assets is
in the possession of any Person other than Borrower.
     4.10 ERISA. Borrower does not have, and has not ever had, any Plan.
Borrower is not required to contribute to or is not contributing to a
Multiemployer Plan and has no withdrawal liability to any Plan, nor has any
reportable event referred to in Section 4043(b) of ERISA occurred that has
resulted or could result in liability of Borrower; and Borrower does not have
any reason to believe that any other event has occurred that has resulted or
could result in liability of Borrower as set forth above.
     4.11 Labor Relations. Borrower is not a party to or bound by any collective
bargaining agreement, management agreement or consulting agreement. On the date
hereof, there are no material grievances, disputes or controversies with any
union or any other organization of Borrower’s employees, or, to Borrower’s
knowledge, any threats of strikes, work stoppages or any asserted pending
demands for collective bargaining by any union or organization.
     4.12 Anti-Terrorism Laws. Neither Borrower nor any of its Affiliates is in
violation of any anti-terrorism law, including the PATRIOT Act, engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any anti-terrorism law, including the PATRIOT Act; or is any of the
following (each a “Blocked Person”): (i) a Person that is listed in the annex
to, or is otherwise subject to the provisions of, Executive Order No. 13224;
(ii) a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224; (iii) a Person with which any bank or other financial
institution is prohibited from dealing or otherwise engaging in any transaction
by any anti-terrorism law; (iv) a Person that commits, threatens or conspires to
commit or supports “terrorism” as defined in Executive Order No. 13224; (v) a
Person that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control
at its official website or any replacement website or other replacement official
publication of such list; or (vi) a Person who is affiliated with a Person
listed above. Neither Borrower nor any of its Affiliates conducts any business
or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person or deals in, or otherwise engages in
any transaction relating to, any property or interests in property blocked
pursuant to Executive Order No. 13224.
     4.13 Capital Structure. Borrower does not have, and has not ever had, any
Subsidiaries. Borrower has not made, or obligated itself to make, any
Distributions. There are no outstanding

-5-

--------------------------------------------------------------------------------

 

agreements or instruments binding upon holders of any Borrower’s Equity
Interests relating to ownership of such Equity Interests.
     4.14 Bank Application Status. Borrower submitted the Bank Application to
the OCC to establish Bank as a national bank. The Bank Application includes a
business plan or operating plan, articles of association for Bank, an
organization certificate for Bank, and a statement to the OCC that demonstrates
Bank’s plans for attracting and maintaining community support and that Bank
intends to achieve the objectives of the community Reinvestment Act, 12 U.S.C. §
901 et seq. Bank does not intend to offer fiduciary services. To ensure that all
capital stock of Bank will be paid in, Borrower has established the Escrow
Account with the Escrow Agent pursuant to the Escrow Agreement and has delivered
to Lender a complete and correct copy of the Escrow Agreement. When its capital
stock is paid in, Bank would have capital sufficient to support the projected
volume and type of business proposed in Bank’s plan filed as part of the Bank
Application, and Bank can reasonably be expected to achieve and maintain
profitability. Borrower and its principals are familiar with national banking
laws and regulations (including, without imitation, safe and sound banking
operations and practices). Bank has competent management, including a board of
directors of no fewer than 5 elected members, with the ability and experience
relevant to the types of services to be provided by Bank. Each of Borrower and
Bank has complied with all instructions of the OCC regarding the Escrow Account
established in connection with the issuance or sale of Equity Interests in Bank.
SECTION 5. AFFIRMATIVE COVENANTS
     At all times prior to the Maturity Date and payment in full of the
Obligations, Borrower covenants that it shall:
     5.1 Notices. Notify Lender, promptly after Borrower’s obtaining knowledge
thereof, of (i) any Default or Event of Default; (ii) the commencement of any
action, suit or other proceeding against, or any demand for arbitration with
respect to, any Obligor; (iii) the occurrence or existence of any default by an
Obligor under any agreement relating to Debt for money borrowed; (iv) any notice
by Borrower or Bank to, or to Borrower or Bank from, the OCC in connection with
the Bank Application; (v) any notice to Borrower or Bank from any subscribers to
the Equity Interests in Borrower; or (vi) any other event or transaction that
could reasonably be expected to have a Material Adverse Effect.
     5.2 Maintenance of Rights and Properties. Maintain and preserve all rights,
franchises and other authority adequate for the conduct of its business;
maintain its properties, equipment and facilities in good order and repair;
conduct its business in an orderly manner without voluntary interruption; and
maintain and preserve its existence.
     5.3 Insurance. In addition to the insurance required by the Loan Documents
with respect to the Collateral, maintain with its current insurers or with other
financially sound and reputable insurers having a rating of at least A- or
better by Best’s Ratings, a publication of A.M. Best Company, (i) insurance with
respect to its properties and business against such casualties and contingencies
of such type (including product liability, workers’ compensation, larceny,
embezzlement or other criminal misappropriation insurance) and in such amounts
and with such coverages, limits and deductibles as is customary in the business
of Borrower and (ii) business interruption insurance in an amount approved by
Lender.
     5.4 Visits and Inspections. Permit representatives of Lender, as often as
may be reasonably requested, but only during normal business hours and (except
when a Default or Event of Default exists) upon reasonable prior notice to
Borrower to: visit and inspect properties of Borrower and each of its
Subsidiaries; inspect, audit and make extracts from Borrower’s Books, including
all records

-6-

--------------------------------------------------------------------------------

 

relating to any Collateral; and discuss with its officers, employees and
independent accountants Borrower’s business, financial conditions, business
prospects and results of operations.
     5.5 Taxes. Pay and discharge all Taxes prior to the date on which such
Taxes become delinquent or any penalties attached thereto, except and to the
extent only that such Taxes are being Properly Contested. If requested by
Lender, Borrower shall provide proof of payment or, in the case of withholding
or other employee taxes, deposit required by applicable law and shall deliver to
Lender copies of all of tax returns (and amendments thereto).
     5.6 Financial Statements and Other Information. Keep adequate records and
books of account with respect to its business activities in which proper entries
are made in accordance with GAAP reflecting all its financial transactions; and
cause to be prepared and furnished to Lender all reporting with respect to the
Collateral as provided in the Loan Documents, and, upon Lender’s request
therefor, copies of Borrower’s internal unaudited financial statements, any
audited financial statements of Borrower and, promptly after the sending or
filing thereof, as the case may be, copies of any statements or reports which
Borrower has made generally available to its shareholders, copies of any
regular, periodic and special reports or registration statements or prospectuses
which Borrower files with any governmental authority, and copies of any press
releases or other statements made available by Borrower to the public concerning
material changes to or developments in the business of Borrower.
     5.7 Compliance with Laws. Comply with all applicable laws (including the
PATRIOT Act), and all other laws regarding the collection, payment and deposit
of Taxes, and shall obtain and keep in full force and effect any and all
governmental approvals necessary to the ownership of its properties or the
conduct of its business and shall promptly report any non-compliance to Lender.
SECTION 6. NEGATIVE COVENANTS
     At all times prior to the Maturity Date and payment in full of the
Obligations, Borrower shall not:
     6.1 Fundamental Changes. Merge, reorganize, or consolidate with any Person,
or liquidate, wind up its affairs or dissolve itself, in each case whether in a
single transaction or in a series of related transactions; change its name or
conduct business under any fictitious name; change its federal employer
identification number, organizational identification number or state of
organization; relocate its chief executive office or principal place of business
without having first provided 30 days prior written notice to Lender; amend,
modify or otherwise change any of the terms or provisions in any of its Organic
Documents, except for changes that do not affect in any way Borrower’s authority
to enter into and perform the Loan Documents to which it is a party, the
perfection of Lender’s Liens in any of the Collateral, or Borrower’s authority
or obligation to perform and pay the Obligations; or create any Subsidiary or
acquire all or substantially all of the assets or Equity Interests of another
Person.
     6.2 Conduct of Business. Sell, lease or otherwise dispose of any of its
assets (including any Collateral) other than in a Permitted Asset Disposition;
suspend or otherwise discontinue all or any material part of its business
operations; or engage in any business other than the business engaged in by it
on the Closing Date.
     6.3 Liens. Create, incur or suffer to exist any Lien on any of its assets
other than Permitted Liens.
     6.4 Loans; Asset Transfers. Make any loans, advances or other transfers of
property to any Person, except reimbursement of expenses to officers or
employees of Borrower in the Ordinary Course of Business and transfers to Lender
pursuant to the Loan Documents.

-7-

--------------------------------------------------------------------------------

 

     6.5 Distributions. Declare or make any Distribution.
     6.6 ERISA. Withdraw from participation in, permit any full or partial
termination of, or permit the occurrence of any other event with respect to any
Plan maintained for the benefit of Borrower’s employees under circumstances that
could result in liability to the Pension Benefit Guaranty Corporation, or any of
its successors or assigns, or to any entity which provides funds for such Plan;
or withdraw from any Multiemployer Plan described in Section 4001(a)(3) of ERISA
which covers Borrower’s employees.
     6.7 Tax and Accounting Matters. File or consent to the filing of any
consolidated income tax return with any Person; make any significant change in
accounting treatment or reporting practices, except as required by GAAP; or
establish a fiscal year different than the Fiscal Year.
SECTION 7. EVENTS OF DEFAULTS; REMEDIES
     7.1 Events of Default. The occurrence or existence of any one or more of
the following events or conditions shall constitute an Event of Default under
this Agreement:
          (a) Borrower shall fail to pay any of the Obligations on the due date
thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
          (b) Any Obligor fails or neglects to perform, keep or observe any
(i) covenant contained in Sections 5.1, 5.4, 5.6, 5.7 or 6 on the date that
Borrower is required to perform, keep or observe such covenant; (ii) any other
covenant contained in this Agreement if the breach of such other covenant is not
cured to Lender’s satisfaction within 15 days after the sooner to occur of any
Senior Officer’s receipt of notice of such breach from Lender or the date on
which such failure or neglect first becomes known to any Senior Officer,
provided that such notice and opportunity to cure shall not apply in the case of
any failure to perform, keep or observe any covenant that is not capable of
being cured at all or within such 15-day period or that is a willful and knowing
breach by Borrower; or (iii) any Obligor fails or neglects to perform or
discharge any covenant or undertaking by it in any other Loan Document.
          (c) Any representation, statement, report, or certificate made or
delivered by Borrower to Lender is not true and correct, in any material
respect, when made or furnished.
          (d) An Insolvency Proceeding (i) is commenced against an Obligor and
is not dismissed within 45 days thereafter or (ii) is commenced by an Obligor.
          (e) One or more judgments shall be entered against any Obligor and
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment, (ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, shall not be in effect, or (iii) results in the creation or
imposition of a Lien upon any of the Collateral that is not a Permitted Lien.
          (f) An Event of Default under (as defined in) the Line of Credit Loan
Agreement shall occur.
          (g) There is a default by Borrower in performance under any material
agreement, mortgage, or indenture to which Borrower is a party with a Person
other than Lender, if as a result of such default the Debt evidenced or secured
by any such agreement may be accelerated or demand for payment thereof may be
made.

-8-

--------------------------------------------------------------------------------

 

          (h) Any Guarantor dies or becomes the subject of an Insolvency
Proceeding; revokes or attempts to revoke the guaranty signed by such Guarantor;
repudiates or disputes such Guarantor’s liability thereunder; is in default
under the terms thereof; or fails to confirm in writing, promptly after receipt
of Lender’s written request therefor, such Guarantor’s ongoing liability under
the guaranty in accordance with the terms thereof.
          (i) A Reportable Event (consisting of any of the events set forth in
Section 4043(b) of ERISA) shall occur which Lender, in its reasonable
discretion, shall determine constitutes grounds for the termination by the
Pension Benefit Guaranty Corporation of any Plan or the appointment by the
appropriate United States district court of a trustee for any Plan, or if any
Plan shall be terminated or any such trustee shall be requested or appointed, or
if Borrower or any other Obligor is in “default” (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from Borrower’s, or such other Obligor’s complete or partial
withdrawal from such Multiemployer Plan.
          (j) Any Obligor shall challenge in any action, suit or other
proceeding the validity or enforceability of any of the Loan Documents, the
legality or enforceability of any of the Obligations, or any of the Loan
Documents ceases to be in full force or effect for any reason other than a full
or partial waiver or release by Lender in accordance with the terms thereof.
          (k) A Change of Control shall occur.
     7.2 Remedies. Upon or after the occurrence of an Event of Default, Lender
may, in its discretion, without notice to or demand upon any Obligor, do any one
or more of the following:
          (a) Declare all Obligations, whether arising pursuant to this
Agreement or otherwise, due, whereupon the same shall become without further
notice or demand (all of which notice and demand Borrower expressly waives)
immediately due and payable, and Borrower shall pay to Lender the entire
principal of and accrued and unpaid interest on the Loans and other Obligations
plus reasonable attorneys’ fees and its court costs if such principal and
interest are collected by or through an attorney-at-law;
          (b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement or under any other agreement between Borrower and
Lender;
          (c) Exercise any other rights or remedies afforded under any
agreement, including the Deed to Secure Debt, by law, at equity or otherwise,
including the rights and remedies of a secured party under the UCC. Such rights
and remedies to include the rights to sell or otherwise dispose of all or any
part of the Collateral in its then condition, at public or private sales, with
such notice as may be required by applicable law, in lots or in bulk, for cash
or on credit, all as Lender in its discretion may deem advisable; and Borrower
agrees to any requirement of notice to Borrower or any other Obligor of any
proposed public or private sale or other disposition of Collateral that is not
real property by Lender shall be deemed reasonable notice thereof if given at
least 10 days prior thereto, and such sale may be at such locations as Lender
may designate in said notice; and
          (d) Petition for and obtain the appointment of a receiver, without
notice of any kind whatsoever, to take possession of any or all of the
Collateral and business of Borrower and to exercise such rights and powers as
the court appointing such receiver shall confer upon such receiver; and
provided, that, upon the occurrence of an Event of Default described in
Section 7.1(d), the Obligation shall terminate immediately and automatically,
without the necessity of any action by Lender.

-9-

--------------------------------------------------------------------------------

 

     7.3 Cumulative Rights; No Waiver. All covenants, conditions, warranties,
guaranties, indemnities and other undertakings of Borrower in any of the Loan
Documents shall be deemed cumulative, and Lender shall have all other rights and
remedies not inconsistent herewith as provided under applicable law. No exercise
by Lender of one right or remedy shall be deemed an election, and no waiver by
Lender of any Default or Event of Default on one occasion shall be deemed to be
a continuing waiver or applicable to any other occasion. No delay by Lender
shall constitute a waiver, election or acquiescence by Lender in any failure by
Borrower strictly to comply with its obligations under the Loan Documents.
SECTION 8. GENERAL PROVISIONS
     8.1 Notices and Communications. Except as otherwise provided in
Section 1.1, all notices, requests and other communications to or upon a party
hereto shall be in writing (including facsimile transmission or similar writing)
and shall be given to such party at the address or facsimile number for such
party set forth below, or at such other address or facsimile number as such
party may hereafter specify for the purpose by notice to Lender and Borrower in
accordance with the provisions of this Section. Each such notice, request or
other communication shall be effective (i) if given by facsimile transmission,
when transmitted to the facsimile number specified herein for the noticed party
and confirmation of receipt is received, (ii) if given by mail, 3 Business Days
after such communication is deposited in the U.S. Mail, with first class postage
pre-paid, addressed to the noticed party at the address specified herein, or
(iii) if given by personal delivery, when duly delivered with receipt
acknowledged in writing by the noticed party. Notwithstanding the foregoing, no
notice to or upon Lender pursuant to Sections 1.1, 2.2 or 5.1 shall be effective
until actually received by the individual to whose attention at Lender such
notice is required to be sent. Any written notice, request or demand that is not
sent in conformity with the provisions hereof shall nevertheless be effective on
the date that such notice, request or demand is actually received by the
individual to whose attention at the noticed party such notice, request or
demand is required to be sent.
If to Borrower:
Home Federal Holdings Corporation
4271 Mundy Mill Road
P.O. Box 1889
Oakwood, GA 30566
Attn: President
Telecopier No.: (770) 538-5016
If to Lender:
Peoples State Bank of Commerce
7122 Nolensville Road
Nolensville, Tennessee 37135
Attention: Elizabeth Lowery Saffle
Telecopier No.: (615) 776-8648
     8.2 Performance of Borrower’s Obligations. If Borrower shall fail to
discharge any covenant, duty or obligation under any of the Loan Documents,
Lender may, in its discretion at any time, for Borrower’s account and at
Borrower’s expense, pay any amount or do any act required of Borrower under any
of the Loan Documents or otherwise lawfully requested by Lender. All costs and
expenses incurred by Lender in connection with the taking of any such action
shall be reimbursed to Lender by

-10-

--------------------------------------------------------------------------------

 

Borrower on demand with interest at the Default Rate from the date such payment
is made or such costs or expenses are incurred to the date of payment thereof.
Any payment made or other action taken by Lender under this Section shall be
without prejudice to any right to assert, and without waiver of, an Event of
Default hereunder and without prejudice to Lender’s right to proceed thereafter
as provided herein or in any of the other Loan Documents.
     8.3 Further Assurances. Borrower shall take such further actions as Lender
shall request from time to time in connection herewith to evidence or give
effect to this Agreement and the other Loan Documents and any of the
transactions contemplated hereby. Promptly after Lender’s request therefor,
Borrower shall execute or cause to be executed and delivered to Lender such
instruments, assignments or other documents as are necessary under the UCC, or
other applicable law to perfect (or continue the perfection of) Lender’s Liens
upon the Collateral, and shall take such other action as may be requested by
Lender to give effect to or carry out the intent and purposes of this Agreement.
     8.4 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of each of the parties,
provided , that Borrower may not assign this Agreement or any rights or
obligations hereunder without Lender’s prior written consent and any prohibited
assignment shall be absolutely void. Lender may sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in, or
any right or remedy under, the Obligations and the Loan Documents.
     8.5 General Indemnity. Borrower hereby agrees to indemnify and defend the
Indemnitees against and to hold the Indemnitees harmless from any Indemnified
Claim that may be instituted or asserted against or incurred by any of the
Indemnitees. Without limiting the generality of the foregoing, this indemnity
shall extend to any Indemnified Claims instituted or asserted against or
incurred by any of the Indemnitees under any environmental laws. Additionally,
if any Taxes (excluding Taxes imposed upon or measured solely by the net income
of Lender, but including any intangibles tax, stamp tax, recording tax or
franchise tax) shall be payable by Lender or any Obligor on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance or
recording of any of the other Loan Documents, or the creation or repayment of
any of the Obligations hereunder, by reason of any applicable law now or
hereafter in effect, Borrower shall pay (or shall promptly reimburse Lender for
the payment of) all such Taxes, including any interest and penalties thereon,
and will indemnify and hold Indemnitees harmless from and against all liability
in connection therewith. The foregoing indemnities shall not apply to
Indemnified Claims incurred by any Indemnitee as a direct and proximate result
of its own gross negligence or willful misconduct. Notwithstanding anything to
the contrary in any of the Loan Documents, the obligations of Borrower with
respect to each indemnity given by it under any of the other Loan Documents
shall survive the termination of the Commitment and payment in full of the
Obligations.
     8.6 Interpretation; Severability. Section headings and section numbers have
been set forth herein for convenience only. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against Lender or
Borrower, whether under any rule of construction or otherwise, as this Agreement
has been reviewed and prepared by all parties hereto. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
purposes of determining the legal enforceability of any specific provision.
     8.7 Indulgences Not Waivers. Lender’s failure at any time or times to
require strict performance by Borrower of any provision of this Agreement or any
of the other Loan Documents shall not waive, affect or otherwise diminish any
right of Lender thereafter to demand strict compliance and performance with such
provision.

-11-

--------------------------------------------------------------------------------

 

     8.8 Modification; Counterparts; Facsimile Signatures. This Agreement cannot
be changed or terminated orally; supersedes all prior agreements,
understandings, negotiations and inducements regarding the same subject matter,
and, together with the other Loan Documents, represents the entire understanding
of the parties with respect to the subject matter hereof and thereof. This
Agreement and any amendments hereto may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument. Counterparts of each of the Loan Documents may be delivered by
facsimile or electronic mail and the effectiveness of each such Loan Document
and signatures thereon shall have the same force and effect as manually signed
originals.
     8.9 Governing Law; Consent to Forum. This Agreement shall be deemed to have
been made in Atlanta, Georgia, and shall be governed by and construed in
accordance with the internal laws (but without regard to conflict of law
provisions) of the State of Georgia. Borrower hereby consents to the
non-exclusive jurisdiction of any United States federal court sitting in or with
direct or indirect jurisdiction over the Middle District of Tennessee or any
state or superior court sitting in Williamson County, Tennessee, in any action,
suit or other proceeding arising out of or relating to this Agreement or any of
the other Loan Documents; and Borrower irrevocably agrees that all claims and
demands in respect of any such action, suit or proceeding may be heard and
determined in any such court and irrevocably waives any objection it may now or
hereafter have as to the venue of any such action, suit or proceeding brought in
any such court or that such court is an inconvenient forum. Lender reserves the
right to bring proceedings against any Obligor in the courts of any other
jurisdiction. Nothing in this Agreement shall be deemed or operate to affect the
right of Lender to serve legal process in any other manner permitted by law or
to preclude the enforcement by Lender of any judgment or order obtained in such
forum or the taking of any action under this Agreement to enforce same in any
other appropriate forum or jurisdiction.
     8.10 Waiver of Certain Rights. To the fullest extent permitted by
applicable law, Borrower hereby knowingly and intelligently waives (with the
benefit of advice of legal counsel of its own choosing): (i) the right to trial
by jury (which Lender hereby also waives) in any action, suit, proceeding or
counterclaim of any kind arising out of, related to or based in any way upon any
of the Loan Documents, the Obligations or the Collateral; (ii) any claim against
Lender on any theory of liability, for special, indirect, consequential,
exemplary or punitive damages arising out of, in connection with, or as a result
of any of the Loan Documents, any transaction thereunder, the enforcement of any
remedies by Lender or the use of any proceeds of any Loans; and (iii) notice of
acceptance of this Agreement by Lender.

-12-

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first set forth above.

            BORROWER:

HOME FEDERAL HOLDINGS CORPORATION

      By:   /s/ Clyde A. McArthur         Name:   Clyde A. McArthur       
Title:   President              Attest: /s/ Ricky D. Davis       Name:   Ricky
D. Davis      Title:   Assistant Secretary

     

            [SEAL]
 
  Accepted in Nolensville, Tennessee:

LENDER:

PEOPLES STATE BANK OF COMMERCE
      By:   /s/ David A. Holt       Name:   David A. Holt      Title:   SVP   

-13-

--------------------------------------------------------------------------------

 

         

DEFINITIONS SCHEDULE
     This Definitions Schedule is a part of the Term Loan Agreement dated
November 6, 2008, between Home Federal Holdings Corporation, as Borrower, and
Peoples State Bank of Commerce, as Lender (as at any time amended, the “Loan
Agreement”). When used in the Loan Agreement or in any Schedule (including this
Definitions Schedule), the following terms shall have the following meanings
(terms defined in the singular to have the same meaning when used in the plural
and vice versa):
     “ Affiliate ” means a Person (i) which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common control
with, another Person; (ii) which beneficially owns or holds 10% or more of any
class of the Equity Interests of a Person; or (iii) 10% or more of the Equity
Interests with power to vote of which is beneficially owned or held by another
Person or a Subsidiary of another Person. For purposes hereof, “control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of any Equity Interest, by contract or otherwise.
     “ Agreement ” means the Term Loan Agreement, together with all Schedules
(including the Guarantors Schedule and this Definitions Schedule) thereto, in
each case, whether now or hereafter annexed thereto.
     “ Authorized Officer ” means each Senior Officer and each other person
designated in writing by Borrower to Lender as an authorized officer to make
requests for Loans or other extensions of credit under the Agreement.
     “ Bank ” means Home Federal Bank, a national bank in organization.
     “ Bank Application ” means the application filed by Borrower with the OCC
to approve the establishment of the Bank as a national bank.
     “ Borrower’s Books ” means all of Borrower’s books and records relating to
its existence, governance, financial condition or operations, or any of the
Collateral, regardless of the medium in which any such information may be
recorded.
     “ Business Day ” means any day of the week, excluding Saturdays, Sundays,
or a day on which banks in Tennessee are authorized or required to be closed.
     “ Change of Control ” means (i) the occurrence of any event (whether in one
or more transactions) that results in a transfer of control of Borrower to a
Person who is not in control of Borrower on the date of the Loan Agreement or
(ii) any merger or consolidation of or with Borrower or sale of all or
substantially all of the property of Borrower. For purposes of this definition,
“control of Borrower” shall mean the power, direct or indirect, (x) to vote 50%
or more of the Equity Interests having ordinary voting power for the election of
directors or managing agents of Borrower or (y) to direct or cause the direction
of the management and policies of Borrower by contract or otherwise.
     “ Closing Date ” means the date on which the Term Loan is made by Lender.
     “ Collateral ” means all of the property and interests in property of
Borrower described in the Deed to Secure Debt as security for the payment or
performance of any of the Obligations, and all other property and interests in
property that now or hereafter secure the payment or performance of any of the
Obligations, in each case whether real or personal, or tangible or intangible,
and wherever located.

-i-

--------------------------------------------------------------------------------

 

     “ Debt ” means, as applied to a Person, without duplication: (i) all items
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person as of the date
as of which Debt is to be determined, including capitalized lease obligations;
(ii) all contingent obligations of such Person; (iii) all reimbursement
obligations in connection with letters of credit issued for the account of such
Person; and (iv) in the case of Borrower (without duplication), the Obligations.
The Debt of a Person shall include any recourse Debt of any partnership or joint
venture in which such Person is a general partner or joint venturer.
     “ Deed to Secure Debt ” means that certain Deed to Secure Debt dated on or
about the date hereof, by Borrower, as Grantor, in favor of Lender, as Grantee,
with respect to the real property.
     “ Default ” means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of Default.
     “ Default Rate ” means, with respect to any Obligations and during any time
that an Event of Default exists, a per annum rate equal to the sum of the Prime
Rate plus 5.75%.
     “ Distribution ” means, in respect of any entity, (i) any payment of
dividends or other distributions on Equity Interests of the entity (except
distributions in such Equity Interests) and (ii) any purchase, redemption or
other acquisition or retirement for value of any Equity Interests of the entity
or an Affiliate of the entity unless made contemporaneously from the net
proceeds of the sale of Equity Interests.
     “ Equity Interest ” means the interest of (i) a shareholder in a
corporation, (ii) a partner (whether general or limited) in a partnership
(whether general, limited or limited liability), (iii) a member in a limited
liability company, or (iv) any other Person having any other form of equity
security or ownership interest.
     “ ERISA ” means the Employee Retirement Income Security Act of 1974.
     “ Escrow Account ” means the escrow account established by Borrower with
the Escrow Agent pursuant to the Escrow Agreement.
     “ Escrow Agent ” means Nexity Bank.
     “ Escrow Agreement ” means the escrow agreement between Borrower and the
Escrow Agent establishing the Escrow Account in connection with the issuance or
sale of Equity Interests in Bank.
     “ Escrow Termination Event ” means the date on which the funds deposited in
the Escrow Account as payment of the purchase price for the Equity Interests in
Bank are either distributed by the Escrow Agent to Bank in exchange for the
issuance of such Equity Interests, or returned to the subscribers upon the
failure of one or more conditions for payment of such funds to Bank, in either
case in accordance with the terms of the Escrow Agreement.
     “ Event of Default ” means any event or condition described in Section 7 of
the Loan Agreement.
     “ Fiscal Year ” means the fiscal year of Borrower for accounting and tax
purposes, which ends on December 31 of each calendar year.
     “ Fixed Assets ” means property of Borrower consisting of Equipment,
Fixtures and real property.

-ii-

--------------------------------------------------------------------------------

 

     “ GAAP ” means generally accepted accounting principles in the United
States of America in effect from time to time.
     “ Guarantor ” means each Person listed on Guarantors Schedule as a
Guarantor and any other Person who may guarantee payment or collection of any of
the Obligations.
     “ Guarantors Schedule ” means the Guarantors Schedule annexed to the Loan
Agreement.
     “ Guaranty ” means each guaranty now or hereafter executed by a Guarantor
with respect to any of the Obligations.
     “ Indemnified Claims ” means all claims, demands, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, awards, remedial response
costs, expenses or disbursements of any kind or nature whatsoever (including
reasonable attorneys’, accountants’, auctioneers’, consultants’ or paralegals’
fees and expenses), which may at any time be imposed on, incurred by, or
asserted against any Indemnitee in any way relating to or arising out of the
administration, performance or enforcement by Lender of any of the Loan
Documents or consummation of any of the transactions described therein; the
existence of, perfection of a Lien upon or the sale or collection of or other
realization upon any Collateral; or the failure of any Obligor to observe,
perform or discharge any of such Obligor’s covenants or duties under any of the
Loan Documents, in each case including any cost or expense incurred by any
Indemnitee in connection with any investigation, litigation, arbitration, or
other judicial or non-judicial proceeding whether or not such Indemnitee is a
party thereto.
     “ Indemnitees ” means Lender and each of its officers, directors, agents
(including legal counsel) and Affiliates.
     “ Insolvency Proceeding ” means a bankruptcy, receivership, assignment for
the benefit of creditors, debt adjustment, liquidation or any other insolvency
case or proceeding under any applicable law.
     “ Lender Expenses ” means all of the following: (a) Taxes and insurance
premiums required to be paid by Borrower under the Loan Documents which are paid
or advanced by Lender; (b) filing, recording, publication and search fees paid
or incurred by Lender, including all recording taxes; and (c) the costs, fees
(including reasonable attorneys’, paralegals’, auctioneers’ appraisers’ or other
consultants fees) and expenses incurred by Lender (i) to inspect, copy, audit or
examine or any of Borrower’s Books or inspect, count or appraise any Collateral,
(ii) to correct any default or enforce any provision of any of the Loan
Documents, whether or not litigation is commenced, (iii) in recovering any of
the Obligations, or (iv) in structuring, drafting, reviewing or preparing any
amendment, modification or waiver of any of the Loan Documents.
     “ Lien ” means any interest in property securing an obligation owed to or a
claim by a Person, whether such interest is based on common law, statute or
contract.
     “ Line of Credit Loan Agreement ” means that certain Loan Agreement, dated
October 9, 2008, between Borrower and Lender.
     “ Loan ” means an advance of money made by Lender to Borrower pursuant to
the Agreement, including the Term Loan.

-iii

--------------------------------------------------------------------------------

 

     “ Loan Documents ” means, collectively, the Agreement, each Note, each
Guaranty and any other instruments or agreements executed by an Obligor in
connection with the Agreement or any of the Obligations.
     “ Material Adverse Effect ” means the effect of any event, condition,
action, omission or circumstance, which, alone or when taken together with other
events, conditions, actions, omissions or circumstances occurring or existing
concurrently therewith, (i) has, or with the passage of time is reasonably
likely to have, a material adverse effect upon the business, operations,
properties, prospects or condition (financial or otherwise) of any Obligor;
(ii) has or could be reasonably expected to have any material adverse effect
upon the validity or enforceability of the Agreement or any of the other Loan
Documents; (iii) has any material adverse effect upon the title to or value of
any material part of the Collateral, the Liens or Lender with respect to the
Collateral or the priority of any such Liens; (iv) materially impairs the
ability of any Obligor to perform its obligations under any of the Loan
Documents, including repayment of any of the Obligations when due; or
(iv) materially impairs or delays Lender’s ability to enforce or collect the
Obligations accordance with the Loan Documents or applicable law.
     “Maturity Date” means the date that is the soonest to occur of (i) July 10,
2009, (ii) the Escrow Termination Date, (iii) the date on which the Commitment
under (and as defined in) the Line of Credit Loan Agreement is terminated
pursuant to the Line of Credit Loan Agreement, or (iv) (A) at Lender’s option,
at any time that an Event of Default exists, or (B) automatically upon the
occurrence of an Event of Default resulting from the commencement of an
Insolvency Proceeding by or against Borrower.
     “ Notes ” means each of the Term Note and any other promissory note
executed by Borrower at Lender’s request to evidence any of the Obligations.
     “ Obligations ” means all Debts, obligations, covenants, and duties now or
at any time or times hereafter owing by Borrower to Lender of any kind and
description, whether incurred pursuant to or evidenced by any of the Loan
Documents or any other agreement and whether direct or indirect, absolute or
contingent, due or to become due, or joint or several, including the principal
of and interest on the Loans, all fees, all obligations of Borrower in
connection with any indemnification of Lender, and all Lender Expenses.
     “ Obligors ” means Borrower, each Guarantor, and each other Person that is
at any time liable for the payment of the whole or any part of the Obligations
or that has granted in favor of Lender a Lien upon any of any of such Person’s
assets to secure payment of any of the Obligations.
     “ OCC ” means the Office of the Comptroller of the Currency of the United
States of America.
     “ Ordinary Course of Business ” means, with respect to any Person, the
ordinary course of such Person’s business, as conducted by such Person in
accordance with past practices and undertaken by such Person in good faith and
not for the purpose of evading any covenant or restriction in any Loan Document.
     “ Organic Documents ” means, with respect to any Person, its charter,
certificate or articles of incorporation, bylaws, articles of organization,
limited liability agreement, operating agreement, members agreement,
shareholders agreement, partnership agreement, certificate of partnership,
certificate of formation, voting trust, or similar agreement or instrument
governing the formation or operation of such Person.

-iv-

--------------------------------------------------------------------------------

 

     “Permitted Asset Disposition” means a sale, lease, license, consignment or
other transfer or disposition of assets (real or personal, tangible or
intangible) or Borrower, including a disposition of property of Borrower in
connection with a sale-leaseback transaction or synthetic lease, in each case
only if such disposition is a disposition of Fixed Assets consented to by Lender
in its discretion or otherwise expressly permitted by the Loan Documents.
     “ Permitted Lien ” means any of the following: (i) Liens granted in favor
of Lender; (ii) Liens for Taxes (excluding any Lien imposed pursuant to the
provisions of ERISA) not yet due or being Properly Contested; (iii) statutory
Liens (other than Liens for Taxes) arising in the Ordinary Course of Business of
Borrower, but only if and for so long as payment in respect of such Liens is not
at the time required or the Debt secured by any such Liens is being Properly
Contested and such Liens do not materially detract from the value of the
property of Borrower and do not materially impair the use thereof in the
operation of Borrower’s business; (iv) normal and customary rights of setoff
upon deposits of cash in favor of banks and other depository institutions and
Liens of a collecting bank arising under the Uniform Commercial Code as adopted
and in force in the State of Georgia, on payment items in the course of
collections; and (v) such other Liens as may be consented to in writing by
Lender in its discretion.
     ” Person “ means an individual, partnership, corporation, limited liability
company, limited liability partnership, joint stock company, land trust,
business trust, or unincorporated organization, or a government or agency,
department, or other subdivision thereof.
     ” Plan “ means an employee pension benefit plan that is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and that is either (i) maintained by Borrower for
employees or (ii) maintained pursuant to a collective bargaining agreement or
any other arrangement under which more than one employer makes contributions and
to which Borrower is then making or accruing an obligation to make contributions
or has within the preceding 5 years made or accrued such contributions.
     ” Prime Rate “ for any day means a fluctuating rate of interest equal to
the highest rate published in the “Money Rates” section of The Wall Street
Journal as the Prime Rate for such day (or, if such source is not available,
such alternate source as determined by Lender). The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
     ” Properly Contested “ means, in the case of any Debt of an Obligor
(including any Taxes) that is not paid as and when due or payable by reason of
such Obligor’s bona fide dispute concerning its liability to pay same or
concerning the amount thereof, (i) such Debt is being properly contested in good
faith by appropriate proceedings promptly instituted and diligently conducted;
(ii) such Obligor has established appropriate reserves as shall be required in
conformity with GAAP; (iii) the non-payment of such Debt will not have a
Material Adverse Effect; (iv) no Lien is imposed upon any of such Obligor’s
assets with respect to such Debt (except only with respect to property taxes
that have priority as a matter of applicable state law and enforcement of such
Lien is stayed during the period prior to the final resolution or disposition of
such dispute); (v) if the Debt results from, or is determined by the entry,
rendition or issuance against an Obligor or any of its assets of, a judgment,
the enforcement of such judgment is stayed pending a timely appeal or other
judicial review; and (vi) if such contest is abandoned, settled or determined
adversely (in whole or in part) to such Obligor, such Obligor forthwith pays
such Debt and all penalties, interest and other amounts due in connection
therewith.
     “Real Property” means that certain real property located at 3626 Mundy Mill
Road, Oakwood, Hall County, Georgia, as more particularly described in the Deed
to Secure Debt, and all buildings, improvements and other property thereon.

-v-

--------------------------------------------------------------------------------

 

     “Security Documents” means each instrument or agreement at any time
securing or assuring payment of any of the Obligations, including the Deed to
Secure Debt, and each Guaranty.
     ” Senior Officer “ means, on any date, any person occupying any of the
following positions with Borrower on such date: the chair of the board of
directors, president, chief executive officer, chief financial officer, managing
member or managing partner.
     ” Solvent “ means, as to any Person, such Person (i) is able to pay all of
its debts as such debts mature, (ii) has capital that is not unreasonably small
for its business and is sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage, (iii) is not
“insolvent” within the meaning of Section 101(32) of Title 11 of the United
States Code, and (iv) has not incurred (by way of assumption or otherwise) any
obligations or liabilities (contingent or otherwise) under any of the Loan
Documents, or made any conveyance pursuant to or in connection therewith, with
actual intent to hinder, delay or defraud either present or future creditors of
such Person.
     ” Subsidiary “ means a Person in which some or all Equity Interests (or
those having a power to vote) is owned, directly or indirectly, by Borrower, one
or more other Subsidiaries of Borrower or Borrower and one or more other
Subsidiaries.
     ” Taxes “ means any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales, use, transfer, license,
payroll, withholding, social security and franchise taxes now or hereafter
imposed or levied by the United States or any other governmental authority and
all interest, penalties, additions to tax and similar liabilities with respect
thereto, but excluding, in the case of Lender, taxes imposed on or measured by
the net income or overall gross receipts of Lender.
     ” Term Loan “ has the meaning set forth in Section 1.1 of the Loan
Agreement.
     ” Term Note “ has the meaning set forth in Section 1.1 of the Loan
Agreement.
     ” UCC “ means the Uniform Commercial Code (or any successor statute) as
adopted and in force in the State of Georgia or, when the laws of any other
state govern the method or manner of the perfection or enforcement of any
security interest in any of the Collateral, the Uniform Commercial Code (or any
successor statute) of such state.
     All other capitalized terms contained in the Agreement and not otherwise
defined therein shall have, when the context so indicates, the meanings provided
for by the UCC. Without limiting the generality of the foregoing, the terms
Equipment and Fixtures shall have the meanings ascribed to them in the UCC.
     Certain Matters of Construction. The terms “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of this Agreement. All references in this Agreement to statutes
shall include all amendments of same and implementing regulations and any
successor statutes and regulations; to any instrument or agreement (including
any of the Loan Documents) shall include any and all modifications and
supplements thereto and any and all restatements, extensions or renewals thereof
to the extent such modifications, supplements, restatements, extensions or
renewals of any such documents are permitted by the terms thereof; to any Person
shall mean and include the successors and permitted assigns of such Person; to
“including” shall be understood to mean “including, without limitation”; or to
the time of day shall

-19-

--------------------------------------------------------------------------------

 

mean the time of day on the day in question in Nolensville, Tennessee, unless
otherwise expressly provided in this Agreement. A Default or an Event of Default
shall be deemed to exist at all times during the period commencing on the date
that such Default or Event of Default occurs to the date on which such Default
or Event of Default is waived in writing pursuant to this Agreement or, in the
case of a Default, is cured within any period of cure expressly provided in this
Agreement. Whenever in any provision of this Agreement Lender is authorized to
take or decline to take any action (including making any determination) in the
exercise of its “discretion,” such provision shall be understood to mean that
Lender may take or refrain to take such action in its sole and absolute
discretion. Whenever the phrase “to the best of Borrower’s knowledge” or words
of similar import relating to the knowledge or the awareness of Borrower are
used in this Agreement or other Loan Documents, such phrase shall mean and refer
to the actual knowledge of any Senior Officer of Borrower.

-20-