EXHIBIT 10.1

LOAN AGREEMENT

THIS LOAN AGREEMENT (as amended, restated or supplemented or otherwise modified
from time to time, hereinafter called the “Loan Agreement”) made and entered
into this 20th day of December, 2016, (“Effective Date”) by and between
COMMUNITY FIRST, INC., a Tennessee corporation, (hereinafter called “Borrower”)
and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national banking association
having its principal office located in Memphis, Tennessee (“Lender”).

W I T N E S S E T H :

WHEREAS, the Borrower has established a wholly-owned subsidiary named Community
First Trups Holding Company, a Tennessee corporation (the “TRuPS Subsidiary”)
for the purpose of purchasing $10,000,000 in face amount of Fixed/Floating Rate
Capital Securities (the “Capital Securities”) of Community First Statutory Trust
III, a Delaware statutory trust (the “Trust”); and

WHEREAS, to facilitate the TRuPS Subsidiary’s purchase of the Capital
Securities, the Borrower has requested that the Lender provide a term loan to it
in the principal amount of Four Million Dollars ($4,000,000.00) (“Loan”), the
proceeds of which will be contributed to the TRuPS Subsidiary and to be used,
together with additional funds contributed by Borrower from a dividend paid to
Borrower by its wholly-owned subsidiary Community First Bank & Trust, a
Tennessee corporation (the “Bank”), to purchase the Capital Securities; and

WHEREAS, Lender has agreed to make such Loan on the terms and conditions
hereinafter set forth; and

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 572,753 shares
of common Capital Stock of the Bank, which constitutes one hundred percent
(100%) of the outstanding shares of Capital Stock of the Bank.

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
Loan 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 Loan Agreement, the principal
sum of Four Million Dollars ($4,000,000.00), 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
then-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 Loan 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 Loan Agreement.

1.4 Fee. A loan commitment fee in the amount of Six Thousand Dollars ($6,000.00)
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 Funding. The advance of Loan proceeds hereunder shall be made at one time,
upon Borrower’s request, by depositing the same into a demand deposit account
with Lender, or by wire transfer to Borrower’s account according to the wire
instructions set forth on Schedule 1.5, or as otherwise agreed between Borrower
and Lender.

1.6 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
Loan Agreement, or the Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (other than taxes on Lender’s net
income, however denominated); or

 

  (iii) impose on the Lender any other condition, cost or expense affecting this
Loan 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 such additional amount or
amounts as will compensate the Lender for such additional costs incurred or
reductions 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 Loan Agreement, the

 

2

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

commitment of the Lender hereunder or the Loan made by the Lender hereunder, to
a rate of 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
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 1.6 and delivered to Borrower,
shall be conclusive absent manifest error. The Borrower shall pay the Lender the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.

(d) Delay in Requests. Failure or delay on the part of Lender to demand
compensation pursuant to this Section shall not constitute a waiver of Lender’s
right to demand such compensation; provided that the Borrower shall not be
required to compensate 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) Notice of Changes or Increased Costs. Lender agrees that, as promptly as
reasonably practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be affected by any of the
events or conditions described in this Section 1.6, it will notify Borrower of
such event and the possible effects thereof, provided that the failure to
provide such notice shall not affect Lender’s rights to reimbursement provided
for herein.

 

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 contributing to the capital of the TRuPS Subsidiary to
facilitate the TRuPS Subsidiary’s purchase of the Capital Securities. If such
purchase does not occur on the Effective Date, Borrower shall, as a covenant
under this Loan Agreement, cause such purchase to occur within thirty (30) days
of the Effective Date pursuant to documentation meeting the requirements of
Section 3.11.

 

3. CONDITIONS TO LOAN CLOSING.

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

3.1 No Defaults; Certificate. 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

 

3

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

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) 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.

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 Tennessee that Borrower is in
good standing and certificates from the Secretaries of State and of each other
State in which the Borrower’s ownership of any property, location of any
employees or agents, or other conduct of business, certifying the Borrower’s
good standing as a corporation in each such State, except to the extent that
failure to do so would not reasonably be expected to cause a Material Adverse
Effect; (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
Loan 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
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 executed
counterparts of 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 Intentionally Omitted.

3.9 Financial Statements. Prior to any disbursement under the Loan, Borrower
shall have delivered or made available to Lender, true and exact copies of
(i) the current consolidated

 

4

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

financial statements of the Borrower, as of and for the year ended December 31,
2015 and audit report and opinion of the Borrower’s independent accounting firm,
with respect thereto, (ii) the unaudited consolidated financial statements of
Borrower as of and for the nine months ended September 30, 2016 and (iii) the
2015 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.

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 financial condition of Borrower or Bank from that reflected in the financial
statements furnished pursuant to Section 3.9(ii) hereof.

3.11 TruPS Documentation. Such evidence of the formation and good standing of
the TRuPS Subsidiary as Lender may require, together with copies of all
documentation related to the purchase of the Capital Securities, in form and
substance reasonably satisfactory to the Lender; provided, however, that if such
evidence and documentation is not available or finalized on the Effective Date,
Borrower shall, as a covenant under this Loan Agreement, provide such evidence
and documentation when available and finalized but in no event later than the
closing of the acquisition of the Capital Securities and such documentation
shall be the same in all material respects as the documentation provided to
Lender prior to the date hereof or, if not in such form, in form and substance
reasonably acceptable to Lender.

 

4. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender to enter into this Loan 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 initial
funding of the Loan) that:

4.1 Corporate Status. Borrower is a corporation duly organized and existing
under the laws of the State of Tennessee, is duly qualified to do business and
is in good standing under the laws of other states where the Borrower does
business, if any, except where the failure to so qualify would not reasonably be
expected to cause a Material Adverse Effect, and Borrower has the corporate
power and authority to own its properties and assets and conduct its affairs and
business as now being conducted, except where the failure to have such authority
would not reasonably be expected to cause a Material Adverse Effect.

4.2 Corporate Power and Authority. Borrower has full corporate power and
authority to enter into this Loan Agreement, to borrow funds as contemplated
herein, to execute and deliver this Loan 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 or the other transactions
described in the recitals to this Loan Agreement have been obtained; and each of
said Loan Documents is the valid, legal, and binding obligation of Borrower
enforceable in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other laws
related to or limiting creditors’ rights or equitable principles generally.

 

5

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

4.3 No Violation of Agreements or Law. Neither Borrower, Bank, nor any other
Subsidiary of Borrower is in default under any indenture, agreement or
instrument to which it is a party or by which it may be bound, nor in violation
of any state or federal statute, rule, ruling, or regulation governing its
operations and the conduct of its business, operations or financial condition
except where such default or violation would not reasonably be expected to cause
a Material Adverse Effect. Neither the execution and delivery of the Loan
Documents nor the consummation of the transactions herein contemplated or the
other transactions described in the recitals to this Loan Agreement, or
compliance with the provisions hereof will (i) conflict with, 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, (ii) result
in the creation or imposition of any Lien, charge or encumbrance upon any of the
property of Borrower, or (iii) violate or be in conflict with any provision of
the charter or bylaws of Borrower, the Bank or any other Subsidiary except in
the case of clause (i) above where the result of such conflict, breach, or
default would not constitute an Event of Default hereunder or would not
reasonably be expected to have a Material Adverse Effect and in the case of
clause (ii) above the Liens and encumbrances created pursuant to the Pledge
Agreement and the other Loan Documents.

4.4 Compliance With Law; Government Approvals.

(a) Since January 1, 2014, Borrower has complied and is in compliance 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 except where the failure to be in compliance,
make such application or submit such report would not reasonably be expected to
cause a Material Adverse Effect, 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) The borrowing of money and said actions and transactions required hereunder
will not violate any state or federal 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 reasonably be expected to cause
a Material Adverse Effect with respect to the Borrower or Bank.

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.

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,

 

6

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

and the other Subsidiaries delivered or made available to Lender pursuant to
Section 3.9(i) and (ii) hereof are, true and correct in all material respects
and correctly and fairly present, in all material respects, the consolidated
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, prepared in accordance with GAAP applied
throughout the period involved and consistent with that of the preceding fiscal
year or period, as the case may be, subject to year-end adjustments and the
absence of notes in the case of any interim financial statements. There are no
material liabilities of the Borrower, the Bank, or any other Subsidiary required
to be disclosed under GAAP not included in such financial statements other than
liabilities incurred since September 30, 2016 in the ordinary course of
Borrower’s and the Bank’s business. 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 or made
available to Lender pursuant to Section 3.9(ii) 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, except as to such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided.

4.9 Subsidiaries. Borrower has no Subsidiaries and owns stock in no corporation
or banking association other than the Bank, the TRuPS Subsidiary, and the
Subsidiaries listed in Exhibit B.

4.10 Bank Stock. The common stock of the Bank or any other Subsidiary owned by
Borrower is duly authorized and validly issued by the Bank or other Subsidiary.
All of the 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 C, the stock of the Bank and each other Subsidiary is free and clear of
all Liens; said stock is fully paid and non-assessable. There are no outstanding
warrants or options to acquire any common stock of the Bank or 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 C. Borrower has the right to
pledge and transfer the Collateral without obtaining the consent of any other
person or authority except as set forth in Section 6.2 hereof or on Exhibit C;
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 in the ordinary course of business, (ii) real property and
other assets acquired and/or being acquired from debtors in full or partial
satisfaction of obligations owed to Borrower, (iii) property or other assets
leased by the Bank or any Subsidiary, and (iv) items which have been amortized
in accordance with GAAP applied on a consistent basis. Except for property and
other assets acquired and/or being acquired from debtors in full or partial
satisfaction of obligations owed to Borrower and property

 

7

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

or other assets leased by the Bank or any Subsidiary, there are no Liens on any
assets of the Borrower, the Bank or any other Subsidiaries other than
(x) Permitted Encumbrances and (y) as set forth in Section 6.2 hereof or as
disclosed on Exhibit C.

4.12 Options, Warrants, Etc. Related to Shares. Except for options and other
equity-based awards granted pursuant to the Company’s equity incentive plans and
the ability of participants in such plans to cause the Borrower to withhold
shares of the Borrower’s common stock or otherwise accept shares of such common
stock in satisfaction of any exercise price or withholding tax obligation or as
set forth in Exhibit D, 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, except where the failure to have obtained such permit, license or other
authorization or to be in compliance with such Environmental Laws would not
reasonably be expected to cause a Material Adverse Effect.

(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 agency or
other Person with respect to any alleged or suspected failure by the Borrower or
any of its Subsidiaries to comply in any material respect with any Environmental
Laws.

(c) There are no material Liens arising under or pursuant to any Environmental
Laws on any of the property owned or leased by the Borrower or any of its
Subsidiaries.

(d) There are no conditions existing currently 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 all matters known to
it that, individually or in the aggregate, could reasonably be expected to cause
a Material Adverse Effect. 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 Loan 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.

 

8

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

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 that could reasonably be expected to cause a
Material Adverse Effect.

4.16 Intentionally Omitted.

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, except where such
noncompliance would not reasonably be expected to cause a Material Adverse
Effect.

4.18 OFAC. Neither the Borrower nor any Subsidiary (a) is an “enemy” or an “ally
of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act
of the United States (50 U.S.C. App. §§ 1 et seq.), as amended, (b) is in
violation of (i) the Trading with the Enemy Act, as amended, (ii) any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto or (iii) the PATRIOT Act or (c) is a Sanctioned Person.
No part of the proceeds of the Loan hereunder will be used directly or
indirectly to fund any operations in, finance any investments or activities in
or make any payments to, a Sanctioned Person or a Sanctioned Country.

 

5. AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, until the 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 thereto, and
all applicable 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 Lender 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 could
reasonably be expected to have a Material Adverse Effect, 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.
Notwithstanding the foregoing, Borrower shall be permitted to merge Community
First Properties, Inc. with and into the Bank.

 

9

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

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 consistent with industry standards,
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 reasonably satisfactory to Lender are carried out
to prevent foreclosure of any lien therefrom.

5.5 Financial Reports and ERISA.

(a) Furnish to Lender as soon as available and in any event within one hundred
twenty (120) days after the end of each calendar year, (1) consolidated and
consolidating balance sheets of Borrower, the Bank, and each other Subsidiary,
as of the end of such year and the related 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 unqualified opinion of
Borrower’s independent Certified Public Accountants reasonably acceptable to the
Lender with respect thereto (provided that HORNE LLP is deemed to be
acceptable); (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) at Lender’s
request, a copy of Borrower’s F.R. Y-9 Parent Company Only (and Consolidated, if
applicable) financial statement(s) and (4) at Lender’s request, 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) at Lender’s request, 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

 

10

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

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).

(c) Promptly following the transmission thereof, and in any event, within ten
(10) days after the date transmitted, 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. Borrower shall be
deemed to be in compliance with its delivery obligations under Section 5.5(a)
and this Section 5.5(c) with respect to any documents or information that is
publicly filed or delivered electronically and if so filed or delivered
electronically, shall be deemed to have been delivered for purposes of this
Agreement on the date (i) on which Borrower posts such documents, or provides a
link thereto on Borrower’s website on the Internet; or (ii) on which such
documents are posted on Borrower’s behalf on an Internet or intranet website, if
any, to which Lender has access (whether a commercial, third-party website or
whether sponsored by Lender).

(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. Subject in all cases to requirements under
applicable laws and regulations, (a) promptly notify Lender of any material
correspondence, report, memoranda or other written communication from or with,
any federal or state regulatory body or authority, with respect to the Borrower
or the Bank, and of the receipt by the Borrower or the Bank of any material
examination or other report prepared by such body or authority with respect
thereto; and (b) if required by Lender, assist and cooperate with Lender in a
commercially reasonable manner 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 Loan
Agreement.

 

11

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

Regardless of the foregoing, (i) subject to clause (b) above, Borrower shall not
by virtue of this Section 5.6, be required to disclose any information to the
extent that such disclosure is prohibited by applicable law or regulation and
(ii) Borrower shall not, by virtue of this Section 5.6, be required to disclose
to Lender the existence or occurrence of routine, ordinary course of business
examinations or communications of a type that would not reasonably be expected
to have a Material Adverse Effect.

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 material monthly
management reports to their respective directors, their respective tax returns,
and including the results of any stock valuation performed.

5.8 Right of Inspection. Except to the extent, if any, prohibited by applicable
law, if an Event of Default has occurred and is continuing, permit Lender,
through its employees, attorneys, accountants, and other agents, 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 upon reasonable advance notice and as often as Lender may
reasonably request. At any time during the existence of an Event of Default, if
required by Lender, Borrower will pay Lender its reasonable, out-of-pocket
expenses in connection with such inspections. Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent required or requested by any regulatory authority purporting to have
jurisdiction over Lender or its Affiliates; provided that Lender has provided
notice to Borrower of its intent to provide the Information in connection
therewith, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) in connection with the exercise of
any remedies hereunder or under any other Loan Document or any action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (e) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or participant in, or any prospective assignee of or participant in,
any of its rights and obligations under this Agreement, (f) with the consent of
Borrower or (g) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
Lender or its Affiliates on a nonconfidential basis from a source other than
Borrower. For purposes of this Section, “Information” means all information
received from Borrower or any Subsidiary relating to Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to Lender on a nonconfidential basis prior to disclosure by Borrower
or any Subsidiary. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

 

12

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

5.9 Notice of Default. Promptly following Borrower’s first knowledge or notice,
furnish the Lender with written notice of the occurrence of any event or the
existence of any condition which constitutes or upon written notice or lapse of
time or both would constitute an Event of Default under the terms of this Loan
Agreement or other Loan Documents or an event of default or default under any
other loan documents for any other loan to the Borrower, the Bank, or any other
Subsidiary.

5.10 Notice of Litigation. Borrower shall notify Lender of any actions, suits or
proceedings instituted by any person against the Borrower, the Bank or other
Subsidiary claiming money damages or other monetary liability in an amount of
Five Hundred Thousand Dollars ($500,000.00) or more, said notice to be given
within thirty (30) days of the first notice to Borrower in writing 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 not prohibited by law including applicable bank
regulatory agency rules and regulations or any agreement or other commitment to
any bank regulatory agency. 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 or any agreement or other commitment to
any bank regulatory agency.

5.13 Capital Ratio/Equity Capital Adequacy.

(a) Borrower shall maintain at all times an “Adequately Capitalized” rating in
accordance with the rules, regulations and applicable guidance of the applicable
primary federal regulator as in effect from time to time.

(b) Bank shall maintain at all times a “Well Capitalized” rating in accordance
with the rules, regulations and applicable guidance of the applicable primary
federal regulator as in effect from time to time.

(c) Bank shall maintain as of each Covenant Compliance Date a Total Risk-Based
Capital Ratio of greater than or equal to Ten and 50/100 Percent (10.50%).

 

13

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

5.14 “Modified” Texas Ratio. As of each Covenant Compliance Date Bank shall
maintain a “Modified” Texas Ratio of less than or equal to Thirty-Five Percent
(35%).

5.15 Return on Average Assets. Bank shall maintain an annualized Return on
Average Assets of greater than or equal to 40/100 percent (0.40%) as of each
Covenant Compliance Date. In determining such annualized Return on Average
Assets, Bank’s earnings will be annualized using its year to date earnings.

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 Ratio. Borrower shall maintain as of each Covenant Compliance
Date a Loan-to-Value Ratio of not more than Fifty Percent (50%).

5.18 Indemnification. Borrower and Bank shall indemnify the Lender, and hold it
harmless of and from any and all loss, cost, damage or expense, of every kind
and nature, including reasonable attorneys’ fees, which the Lender may 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.

5.19 Compliance Certificate. Furnish Lender a Certificate of Compliance duly
certified by the Chief Executive Officer of Borrower within forty-five (45) days
after the end of each calendar quarter stating that Borrower and Bank and the
Borrower and all Subsidiaries, as applicable, are in compliance in all material
respects with all terms, covenants and conditions of this Loan Agreement and all
related Loan Documents (or in all respects, if the applicable term, covenant, or
condition is qualified by reference to materiality or Material Adverse Effect),
including, but not limited to, Sections 5.1 – 5.18 of this Loan Agreement. Such
Certificate of Compliance shall be as set forth in Exhibit E and otherwise be in
form and substance reasonably satisfactory to Lender.

 

6. NEGATIVE COVENANTS.

Borrower covenants and agrees with Lender that Borrower shall comply and cause
the Bank and its 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 or by
the Bank to Borrower or by any Subsidiary other than the Bank to Borrower or the
Bank;

(c) Debt for operating expenses or otherwise incurred by the Borrower, the Bank
or any other Subsidiary in the ordinary course of business;

 

14

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

(d) Indebtedness as set forth in Exhibit F (and any refinancings, renewals,
amendments or extensions thereof, but not including any increase in the
principal amount thereof or any acceleration of the maturity date thereof or
alteration of any subordination provisions thereof);

(e) Indebtedness of any Person acquired by Borrower or the Bank that is
subordinated to the Indebtedness under this Agreement pursuant to a written
agreement in form and substance reasonably acceptable to Lender, as long as
Borrower is in compliance both before and after giving effect to such
acquisition with the covenants contained in Article 5 of this Agreement and no
Event of Default exists or would result from such acquisition;

(f) Indebtedness incurred under any Interest Rate Swap entered into by Borrower,
the Bank or any Subsidiary in the ordinary course of business to hedge or
mitigate risks to which Borrower, the Bank or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities, including, but not
limited to, with Lender’s prior consent, Borrower’s Indebtedness incurred under
this Agreement;

(g) Indebtedness in respect of leases in the ordinary course of business or the
guaranty thereof;

(h) Indebtedness in respect of purchase money obligations for fixed or capital
assets, not to exceed an aggregate of $200,000 at any one time outstanding;

(i) Indebtedness consisting of the financing of insurance premiums payable
within one year; and

(j) 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 the Collateral, except for:

(a) Liens in favor of Lender securing payment of the Loan; and

(b) the 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 and Guarantees in respect of Indebtedness otherwise
permitted hereunder.

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,

 

15

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

or any reorganization, reclassification of stock, readjustment or change in
capital structure which would adversely impact the Collateral or the Lender’s
priority or rights with respect thereto; 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 so long as no Event of Default or event which would, with the passage of
time, giving of notice, or both, exists, Borrower may acquire one or more banks
or all or a portion of the assets thereof with the aggregate total assets
acquired during any single twelve (12) month period not to exceed twenty percent
(20%) of the Bank’s assets at the time of the proposed merger or acquisition
without Lender’s prior written consent, so long as (i) Borrower’s reasonable,
good faith projections and pro forma financials show that it and Bank will
remain in compliance with all financial and other covenants under this Agreement
upon completion of such acquisition; (ii) Borrower, Bank, and all other parties
to such acquisition have received all approvals required by any applicable Bank
Regulatory Authorities in connection with such acquisition as well as all
shareholder, board, and/or other governmental approvals required in connection
therewith; (iii) to the extent permitted by applicable law, Borrower gives
Lender written notice of such proposed acquisition at least fifteen (15) days
prior to consummation of same, and if to the extent that such prior notice is
impermissible under applicable law, Borrower gives Lender written notice thereof
as promptly as legally permissible, and (iv) Borrower provides Lender with such
evidence as Lender reasonably requests to confirm such acquisition’s compliance
with the foregoing requirements. Moreover, notwithstanding anything in this
Agreement to the contrary, any Subsidiary of the Borrower other than the Bank
may merge with and into any other Subsidiary of the Borrower or the Borrower
without the Lender’s consent.

6.5 Subsidiaries. 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, except as permitted under Section 6.4.

6.6 Sale of Stock or Asset Disposition.

(a) Borrower shall not sell, transfer, pledge, assign, or otherwise dispose of,
or otherwise encumber, any of the Capital Stock of the Bank nor shall Borrower
permit the Bank to issue additional shares of stock or rights, options or
securities convertible into Capital Stock of the Bank.

(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 Loan Agreement or
allow the payment of such a dividend that would create an Event of Default
(other than any redemption in connection with the exercise of any stock option
or payment of any withholding taxes in connection with the vesting of any
equity-based award granted pursuant to any employee benefit plan of the Borrower
or the Bank). 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.

 

16

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

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. Without ten (10) days’ prior written notice, 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 Loan 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 Loan Agreement, the term Affiliates shall have the same meaning as set
forth in applicable bank regulations.

6.11 Change in Management. Neither the Borrower nor the Bank shall make any
change in its senior executive management personnel (CEO, President, or CFO, or
equivalent offices); provided, however, that if any of the foregoing officers
cease to hold the applicable office described above, the same shall not be an
Event of Default provided that the Borrower or the Bank, as the case may be,
replaces such individual with another officer reasonably qualified and
acceptable to all applicable Bank Regulatory Authorities within one hundred
eighty (180) days of such change.

6.12 Charter or By-Law Amendments. Neither Borrower nor Bank shall adopt, amend
or enter into, as applicable, any charter, articles of incorporation, bylaws (or
any amendments thereto) or other provisions or agreements that would reasonably
be expected to materially and adversely affect in any way the rights,
obligations and/or preferences of the Collateral.

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, except to the extent the result of
such event would not reasonably be expected to constitute an Event of Default
under Section 7.1 or to cause a Material Adverse Effect.

 

7. DEFAULT AND REMEDIES.

7.1 Events of Default. Any one or more of the following events shall constitute
an Event of Default under the terms of this Loan Agreement and the other Loan
Documents:

(a) Defaults in the 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.

 

17

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

(b) Default in compliance with or in the performance or observance of any term,
covenant, obligation, condition, or agreement in this Loan Agreement or any
other Loan Document.

(c) If any representation, warranty or any other statement made or deemed to be
made by the Borrower herein, in any other Loan Document, or in any writing,
certificate, or report or statement at any time furnished to Lender pursuant to
or in connection with this Loan Agreement shall be false or misleading in any
material respect, at the time made or deemed to be made.

(d) Borrower, the Bank or any other Subsidiary shall fail to pay when due and
before the expiration of any grace period, any Indebtedness for borrowed money
having an aggregate principal amount of more than $250,000 which it is primarily
obligated to pay as borrower, or in any other capacity, whether such
Indebtedness shall have become due because of acceleration of maturity or
otherwise, in each case beyond any period of cure, notice or grace provided for
in the instrument or instruments evidencing such Indebtedness, other than
Indebtedness created by this Loan Agreement.

(e) An event occurs which constitutes an event of default as defined in the Note
or any other Loan Document; or an event occurs which constitutes an event of
default (following the expiration of applicable grace, notice or cure periods)
under any present or future loan agreement between Lender and Borrower for any
other loan.

(f) The Borrower, the Bank, or any other Subsidiary shall

 

  (i) be unable or admits in writing its inability to pay its debts as they
become due; or

 

  (ii) file a petition in bankruptcy or for reorganization or for the adoption
of an arrangement under the Bankruptcy Act as now or in the future amended, or
file a pleading asking such relief, or have or suffer to be filed an involuntary
petition in bankruptcy against it which is not contested and discharged within
sixty (60) days; or

 

  (iii) make an assignment for the benefit of creditors generally; or

 

  (iv) consent to the appointment of a trustee, custodian, or receiver for all
or a major portion of its property; or

 

  (v) be adjudicated 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

 

18

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

  (vii) suffer the entry of a final judgment for the payment of money in excess
of $250,000.00 (to the extent not covered by independent third-party insurance
as to which the insurer does not dispute coverage) 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 substantially all of its property.

(g) The issuance of any Supervisory Action against the Borrower, the Bank or
other Subsidiaries or the Borrower’s, the Bank’s or the other Subsidiaries’
directors, whether temporary or permanent, by or at the request of any bank
regulatory agency, in each case, unless such Supervisory Action would not
reasonably be expected to have a Material Adverse Effect; provided, however,
that notwithstanding anything to the contrary in this Loan 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 Loan Agreement shall nevertheless require Borrower
to disclose to Lender the maximum amount of information legally permissible to
be disclosed regarding any such Supervisory Action and (ii) such Supervisory
Action may, even if confidential, constitute an Event of Default hereunder if
Lender becomes aware of such Supervisory Action through other channels without
the violation of applicable law or regulation;

(h) There shall occur any change in the equity ownership of the Bank, or any
change in the equity ownership of the Borrower such that a “change in control”
of Borrower under applicable law or regulation shall have occurred; 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 in all
material respects 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, the 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 Borrower’s or the Bank’s
awareness of its failure to comply.

7.2 Cure Provisions. If any Event of Default, other than a default in payment,
is curable, and, with respect to an Event of Default arising due to a breach of
a negative covenant as set forth in Section 6, if Borrower has not been given a
notice of a breach of the same covenant within the preceding twelve (12) months,
it may be cured if Borrower, after receiving written notice from Lender
demanding cure of such default: (1) cures the default within thirty (30) days;
or (2) if the cure requires more than thirty (30) days, immediately initiates
steps which Lender deems in Lender’s sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to pursue compliance as soon as reasonably practical.

 

19

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

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 Loan 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 Loan 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.

7.4 Liens; Setoff by Lender. Borrower hereby grants to Lender a continuing lien
for all indebtedness of Borrower hereunder, upon any and all of its monies,
securities and other property and the proceeds thereof, now or hereafter held or
received by or in transit to Lender from or for Borrower, and also upon any and
all deposits (general or special, matured or unmatured) and credits of Borrower
against Lender at any time existing. Upon the occurrence of any Event of Default
as specified above, Lender is hereby authorized at any time and from time to
time, without notice to Borrower, the Bank, or the other Subsidiaries, to set
off, appropriate, and apply any and all items hereinabove referred to against
any or all indebtedness of Borrower to Lender under this Loan Agreement, whether
now existing or hereafter arising. Lender shall give written notice to Borrower
of such setoff appropriation or application after such setoff, appropriation or
application occurs.

 

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 Loan Agreement, or under any other Loan Document, or available at law
or in equity, shall impair any such right, power or privilege or be construed as
a waiver of any Event of Default or any acquiescence therein. No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege. No waiver shall be valid
against Lender unless made in writing and signed by Lender, and then only to the
extent expressly specified therein.

8.2 Notices. All notices and communications provided for hereunder shall be in
writing, delivered by hand or sent by first-class, registered or certified mail,
postage prepaid, or express courier to the following addresses:

 

        (1)    If to Lender:    First Tennessee Bank National Association      
165 Madison Avenue       Memphis, Tennessee 38103       Attention: Correspondent
Banking (2)    If to Borrower:                Community First, Inc.       501
South James Campbell Blvd.           Columbia, TN 38401       Attention: Jon
Thompson, President and CFO

 

20

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

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 Loan 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 Loan 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 Loan Agreement are inserted for convenience only and do not constitute a
part of this Loan Agreement.

8.6 Severability. If any part of any provision contained in this Loan 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 Loan Agreement and all other Loan Documents.

8.8 Counterparts. This Loan 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 following demand by Lender,
all reasonable costs, expenses, taxes and fees incurred by Lender in connection
with the preparation, execution and delivery of this Loan 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, pursuant to this Loan Agreement and the Loan
Documents.

8.10 Successors and Assigns. This Loan 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 Loan Agreement to the contrary, Lender shall
have the right, but shall not be obligated, to sell participation in the loan
made pursuant hereto to other banks, financial institutions and investors.

 

21

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

8.11 Amendments; No Implied Waiver. This Loan 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 Loan 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 Loan Agreement and arising from or
related or incident to this Loan 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 willful misconduct or
gross negligence. The indemnity contained in this section shall survive the
termination of this Loan Agreement.

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 Loan
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 Loan
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 Loan 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 Loan Agreement or under any other Loan Document may be brought
against them, jointly or singly, in the United States

 

22

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

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 Loan 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.

8.18 Holidays. In any case where the date for any action required to be
performed under this Loan 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 Loan 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 Loan 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 Loan 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 Loan 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 LOAN AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (a) ARISING UNDER THIS LOAN AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT

 

23

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

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 LOAN 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 LOAN 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.

8.22 Further Assurances. Borrower 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 Loan 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; provided,
however, that in the absence of an Event of Default, and except in connection
with a merger or sale of all or substantially all of the assets of the Lender or
the correspondent banking division of the Lender, Lender shall first obtain
Borrower’s prior written consent, which shall not be unreasonably withheld,
conditioned, or delayed. If the Borrower fails to respond to a request for such
consent within ten (10) business days after receipt thereof given in compliance
with Section 8.2, Borrower shall be deemed to have consented to such sale of the
Loan or interests therein. 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.

 

24

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

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
Loan 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.

8.27 USA PATRIOT Act. The Lender hereby notifies the Borrower that pursuant to
the requirements of the PATRIOT Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow Lender to
identify the Borrower in accordance with the PATRIOT Act.

8.28 No Inference of Extension Past Maturity Date. Notwithstanding any other
provision herein, the terms, conditions, and requirements provided for herein
that would, by their express terms, be applicable to time periods after the
Maturity Date of the 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.

Signature Page Follows.

 

25

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

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

 

LENDER:     BORROWER:

FIRST TENNESSEE BANK NATIONAL

ASSOCIATION

    COMMUNITY FIRST, INC. By:                                   
                                                                     
By:                                                                             
       Printed Name:                                 
                                                     
Printed Name:                                                                  
Title:                                   
                                                                  
Title:                                   
                                                    The undersigned Bank
executes this Loan Agreement for the sole purpose of acknowledging the pledge of
its Capital Stock under the Pledge Agreement.       BANK:       COMMUNITY FIRST
BANK & TRUST       By:                                   
                                                       Printed
Name:                                                                        
Title:                                   
                                              

 

26

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

LIST OF EXHIBITS EXHIBIT A    NOTE EXHIBIT B    SUBSIDIARIES OF BORROWER EXHIBIT
C    LIENS EXHIBIT D                            OPTIONS, WARRANTS OR OTHER
RIGHTS AGREEMENTS OR COMMITMENTS (INCLUDING CONVERSION RIGHTS AND PREEMPTIVE
RIGHTS) OBLIGATING BORROWER OR ANY SUBSIDIARY TO ISSUE, SELL, PURCHASE OR REDEEM
SHARES OR SECURITIES CONVERTIBLE TO SHARES EXHIBIT E    COMPLIANCE CERTIFICATE
EXHIBIT F    INDEBTEDNESS NOT AUTHORIZED IN SECTION 6.1 APPENDIX A   
DEFINITIONS SCHEDULE 1.5    WIRE INSTRUCTIONS

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

EXHIBIT A

NOTE

 

A-1

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

PROMISSORY NOTE

 

$4,000,000.00    Memphis, Tennessee    December 20, 2016

FOR VALUE RECEIVED, the undersigned, COMMUNITY FIRST, INC., a Tennessee
corporation (“Maker”), promises to pay to the order of FIRST TENNESSEE BANK
NATIONAL ASSOCIATION, a national banking association having its principal place
of business in Memphis, Tennessee (“Lender”), the principal sum of FOUR MILLION
DOLLARS ($4,000,000.00), together with interest from the date hereof until
maturity, upon disbursed and unpaid principal balances, at the rate hereinafter
specified, said principal and interest being payable as follows:

the unpaid principal balance hereof and interest thereon shall be payable in 20
consecutive installments of principal and interest, installment nos. 1 to 19,
both inclusive, being in the amount of One Hundred Twenty-One Thousand Eight
Hundred Twenty-Two and 39/100 Dollars ($121,822.39) each, and installment no. 20
being for the entire unpaid principal balance and all accrued and unpaid
interest, the first of said installments being due and payable on the first
(1st) day of April, 2017, and each additional installment being due and payable
on the first (1st) day of each calendar quarter thereafter, with the final
installment, if not sooner paid, being due and payable on the fourteenth
(14th) day of December, 2021).

This Note is being issued pursuant to that certain Loan Agreement, dated of even
date, between the Maker and the Lender, as said agreement may be amended or
modified (the “Loan Agreement”). Capitalized terms not otherwise defined herein
shall have the meaning ascribed to such terms in the Loan Agreement.

Interest shall be charged on the outstanding principal balance from the date
advanced until the full amount of principal due hereunder has been paid at a
fixed rate of four percent (4%) per annum (the “Contract Rate”).

The annual interest rate for this Note is computed on a 366/360 basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding.

Notwithstanding the foregoing, upon the occurrence of an Event of Default (as
defined in the Loan Agreement), the Lender, at its option, may charge, and the
Maker agrees to pay, interest on disbursed and unpaid principal balances at the
default rate (the “Default Rate”) per annum equal to the lesser of (a) the
maximum effective variable contract rate which may be charged by the Lender
under applicable law from time to time in effect (the “Maximum Rate”) or
(b) (i) the Contract Rate plus (ii) four percent (4%).

Any amounts not paid when due hereunder (whether by acceleration or otherwise)
shall bear interest after maturity at the Default Rate.

For any payment which is not made within ten (10) days of the due date for such
payment, the Maker shall pay a late fee. The late fee shall equal five percent
(5%) of the unpaid portion of the past-due payment.

 

A-2

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

This Note is secured by the Pledge Agreement, and may now or hereafter be
secured by other mortgages, trust deeds, assignments, security agreements, or
other instruments of pledge or hypothecation.

All installments of interest, and the principal hereof, are payable at the
office of First Tennessee Bank National Association, 165 Madison Avenue,
Memphis, Tennessee 38103, or at such other place as the holder may designate in
writing, in lawful money of the United States of America, which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment.

If the Maker shall fail to make payment of any installment of principal or
interest within ten (10) days of its due date, or upon any default in the terms
and provisions of the Pledge Agreement, or upon any Event of Default under the
Loan Agreement, the entire unpaid principal balance of the indebtedness
evidenced hereby, together with all interest then accrued, shall, at the
absolute option of the holder hereof, at once become due and payable, without
demand or notice, the same being expressly waived and Lender may exercise any
right, power or remedy permitted by law or equity, or as set forth herein or in
the Loan Agreement or any other Loan Document.

If this Note is placed in the hands of an attorney for collection, by suit or
otherwise, or to protect the security for its payment, or to enforce its
collection, or to represent the rights of the Lender in connection with any loan
documentation executed in connection herewith, or to defend successfully against
any claim, cause of action or suit brought by the Maker against the Lender, the
Maker shall pay on demand all costs of collection and litigation (including
court costs), together with a reasonable attorney’s fee. These include, but are
not limited to, the Lender’s reasonable attorney’s fees and legal expenses,
whether or not there is a lawsuit, including attorney’s fees for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction) and appeals.

The Lender and the Maker hereby waive the right to any jury trial in any action,
proceeding, or counterclaim arising under the Loan Agreement or any other Loan
Document brought by either Lender or Maker against the other.

To the extent permitted by applicable law, the Lender reserves a right of setoff
in all the Maker’s accounts with the Lender (whether checking, savings, or some
other account). This includes all accounts the Maker may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. The Maker authorizes the Lender, to
the extent permitted by applicable law, to charge or setoff all sums owing on
the indebtedness evidenced by this Promissory Note against any and all such
accounts, and, at the Lender’s option, to administratively freeze all such
accounts to allow the Lender to protect the Lender’s charge and setoff rights
provided in this paragraph.

To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each business entity that opens an
account. What this means to Maker: When Maker opens an account, the Lender will
ask for Federal Tax Identification Number, physical street address, full legal
name of the Maker and other information that will allow the Lender to identify
Maker. The Lender may also ask Maker to provide copies of certain documents that
will aid in confirming this information.

 

A-3

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

The Maker and any endorsers or guarantors hereof waive protest, demand,
presentment, and notice of dishonor, and agree that this Note may be extended,
in whole or in part, without limit as to the number of such extensions or the
period or periods thereof, without notice to them and without affecting their
liability thereon. Maker agrees that borrowers, endorsers, guarantors and
sureties may be added or released without notice and without affecting Maker’s
liability hereunder. The liability of Maker shall not be affected by the failure
of Lender to perfect or otherwise obtain or maintain the priority or validity of
any security interest in any collateral. The liability of Maker shall be
absolute and unconditional and without regard to the liability of any other
party hereto.

It is the intention of the Lender and the Maker to comply strictly with
applicable usury laws; and, accordingly, in no event and upon no contingency
shall the holder hereof ever be entitled to receive, collect, or apply as
interest any interest, fees, charges or other payments equivalent to interest,
in excess of the maximum effective contract rate which the Lender may lawfully
charge under applicable statutes and laws from time to time in effect; and in
the event that the holder hereof ever receives, collects, or applies as interest
any such excess, such amount which, but for this provision, would be excessive
interest, shall be applied to the reduction of the principal amount of the
indebtedness hereby evidenced; and if the principal amount of the indebtedness
evidenced hereby, all lawful interest thereon and all lawful fees and charges in
connection therewith, are paid in full, any remaining excess shall forthwith be
paid to the Maker, or other party lawfully entitled thereto. All interest paid
or agreed to be paid by the Maker shall, to the maximum extent permitted under
applicable law, be amortized, prorated, allocated and spread throughout the full
period until payment in full of the principal so that the interest hereon for
such full period shall not exceed the maximum amount permitted by applicable
law. Any provision hereof, or of any other agreement between the holder hereof
and the Maker, that operates to bind, obligate, or compel the Maker to pay
interest in excess of such maximum effective contract rate shall be construed to
require the payment of the maximum rate only. The provisions of this paragraph
shall be given precedence over any other provision contained herein or in any
other agreement between the holder hereof and the Maker that is in conflict with
the provisions of this paragraph.

This Note shall be governed and construed according to the statutes and laws of
the State of Tennessee from time to time in effect, except to the extent that
Section 85 of Title 12 of the United States Code (or other applicable federal
statute) may permit the charging of a higher rate of interest than applicable
state law, in which event such applicable federal statute, as amended and
supplemented from time to time shall govern and control the maximum rate of
interest permitted to be charged hereunder; it being intended that, as to the
maximum rate of interest which may be charged, received, and collected
hereunder, those applicable statutes and laws, whether state or federal, from
time to time in effect, which permit the charging of a higher rate of interest,
shall govern and control; provided, always, however, that in no event and under
no circumstances shall the Maker be liable for the payment of interest in excess
of the maximum rate permitted by such applicable law, from time to time in
effect.

Upon three (3) business days’ prior written notice to Lender, Maker shall have
the right to prepay the indebtedness evidenced hereby in whole or in part by
paying the principal amount being prepaid (the “Prepayment Amount”) plus accrued
interest, plus, if such prepayment occurs on or prior to the third
(3rd) anniversary of the date of this Note, the Yield Maintenance Amount, if
any.

 

A-4

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

The “Yield Maintenance Amount” shall be equal to one hundred percent (100%) of
the present value (discounted based on the Current Interest Rate Swap Rate) of
the difference between (i) the total amount of interest (based on the Original
Interest Rate Swap Rate) which would have accrued on the Prepayment Amount had
such event not occurred, and (ii) the amount of interest (based on the Current
Interest Rate Swap Rate) which would have accrued on the Prepayment Amount had
such event not occurred. The “Original Interest Rate Swap Rate” is the
mid-market quotation for the maturity date of the Note as quoted by Bloomberg,
L.P. on the date that the loan advance is made by the Lender under the Note. The
“Current Interest Rate Swap Rate” is the mid-market quotation for the same
maturity date as the original maturity of the Note as quoted by Bloomberg, L.P.
on the date of prepayment of the Prepayment Amount.

Notwithstanding the foregoing, Maker may prepay the indebtedness evidenced
hereby without penalty at any time if the Lender shall seek to impose additional
costs, expenses or conditions on Maker as a result of the occurrence of any
event described in Section 1.6(a) or Section 1.6(b) of the Loan Agreement.

Lender is hereby authorized to disclose any financial or other information about
Maker to any regulatory body or agency having jurisdiction over Lender and to
any present, future or prospective participant or successor in interest in any
loan or other financial accommodation made by Lender to Maker. The information
provided may include, without limitation, amounts, terms, balances, payment
history, return item history and any financial or other information about Maker.
However, subject to applicable law, Lender shall use reasonable efforts to
protect the confidentiality of the terms and conditions of the Loan in all other
respects.

The invalidity or unenforceability of any one or more provisions of this Note
shall not render any other provision invalid or unenforceable. In lieu of any
invalid or unenforceable provision, there shall be added automatically a valid
and enforceable provision as similar in terms to such invalid or unenforceable
provision as may be possible.

The covenants, conditions, waivers, releases and agreements contained in this
Note shall bind, and the benefits thereof shall inure to, the parties hereto and
their respective heirs, executors, administrators, successors and assigns;
provided, however, that this Note cannot be assigned by Maker without the prior
written consent of Lender, and any such assignment or attempted assignment by
Maker without consent shall be void and of no effect with respect to Lender.

Subject to the requirements of the Loan Agreement, Lender may from time to time
sell or assign, in whole or in part, or grant participations in, the Loan, this
Note and/or the obligations evidenced thereby. Subject to the requirements of
the Loan Agreement, the holder of any such sale, assignment or participation, if
the applicable agreement between Lender and such holder so provides, shall be:
(a) entitled to all of the rights, obligations and benefits of Lender; and
(b) deemed to hold and may exercise the rights of setoff or banker’s lien with
respect to any and all obligations of such holder to Maker, in each case as
fully as though Maker were directly indebted to such holder. Lender shall give
notice to Maker of such sale, assignment or participation; however, the failure
to give such notice shall not affect any of Lender’s or such holder’s rights
hereunder.

 

A-5

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

Maker irrevocably appoints each and every member and/or officer of Maker as its
attorneys upon whom may be served, by certified mail at the address set forth in
the Loan Agreement, or such other address as may be directed by Maker, in
writing, any notice, process or pleading in any action or proceeding against it
arising out of or in connection with this Note or any other Loan Document; and
Maker hereby consents that any action or proceeding against it be commenced and
maintained in any state or federal court sitting in Memphis, Shelby County,
Tennessee, by service of process on any such owner, partner and/or officer; and
Maker agrees that such courts of the State shall have jurisdiction with respect
to the subject matter hereof and the person of Maker and all collateral securing
the obligations of Maker. Maker agrees not to assert any defense to any action
or proceeding initiated by Lender based upon improper venue or inconvenient
forum.

 

COMMUNITY FIRST, INC. By:  

 

Name:  

 

Title:  

 

  MAKER

 

A-6

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

EXHIBIT B

SUBSIDIARIES OF BORROWER

Community First Bank & Trust

Community First Properties, Inc.

Community First Trups Holding Company

 

B-1

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

EXHIBIT C

ADDITIONAL LIENS

Financing statement No. 202-035407 filed with Tennessee Secretary of State on
June 18, 2002, identifying the Bank as debtor and Federal Home Loan Bank of
Cincinnati as secured party. See also related filing nos. 205-036441, 207-050576
and 312-304219.

 

C-1

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

EXHIBIT D

OPTIONS, WARRANTS, OR OTHER RIGHTS, AGREEMENTS, OR

COMMITMENTS (INCLUDING CONVERSION RIGHTS AND

PREEMPTIVE RIGHTS) OBLIGATING BORROWER OR ANY

SUBSIDIARY TO ISSUE, SELL, PURCHASE, OR REDEEM

SHARES OR SECURITIES CONVERTIBLE INTO SHARES

1. The Borrower’s board of directors and shareholders have approved the
Community First, Inc. 2016 Equity Incentive Plan pursuant to which the Borrower
may issue up to 200,000 shares of the Borrower’s common stock to employees,
directors and consultants of the Borrower and its Subsidiaries.

2. The Borrower’s board of directors and shareholders have approved the
Community First, Inc. 2005 Stock Incentive Plan pursuant to which the Borrower
has previously awarded stock options and other equity-based awards at the
Borrower level to the Borrower’s employees and directors. No future awards may
be made under this plan, but awards granted as of the date hereof remain
outstanding and exercisable.

3. The Borrower maintains an employee stock purchase plan that was previously
approved by the Borrower’s board of directors pursuant to which the Borrower has
set aside for issuance to employees of the Borrower and its Subsidiaries up to
100,000 shares of the Borrower’s common stock.

 

D-1

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

EXHIBIT E

COMPLIANCE CERTIFICATE

[Place on Community First, Inc. Letterhead]

[DATE]

Mr.                                                      

First Tennessee Bank National Association

Correspondent Banking

165 Madison Ave, 5th Floor

Memphis, TN 38103

 

Re: Compliance Certificate

I,                     ,                 , of Community First, Inc., a Tennessee
corporation (the “Borrower”), certify to First Tennessee Bank National
Association, a national banking association (the “Lender”) that the attached
financial statements for the period ending                 , 20        , present
fairly in all material respects the financial position and results of operations
of the Borrower and its Subsidiaries. The attached statements include all
financial statements required to be delivered as of the date hereof pursuant to
the Loan Agreement dated December 20, 2016, between Lender and Borrower, as
amended or modified from time to time (the “Loan Agreement”). This certification
is provided to Lender under the provisions of Section 5.19 of the Loan
Agreement. Capitalized terms used but not otherwise defined herein shall have
the meanings given to them in the Loan Agreement.

[Remainder of Page Intentionally Left Blank]

 

E-1

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

Loan Agreement Section - Covenant   

Covenant

  

Actual

  

In Compliance ?

5.13(a) - Borrower Capitalization:    “Adequately          Capitalized”   
                        [Yes]     [No] 5.13(b) - Bank Capitalization:    “Well
         Capitalized”                            [Yes]     [No] 5.13(c) - Total
Risk-Based Capital Ratio    greater than or          equal to10.50%   
                        [Yes]     [No] 5.14 - “Modified” Texas Ratio    less
than or          equal to 35%                            [Yes]     [No] 5.15 -
Return on Average Assets    greater than or          equal to 0.40%   
                        [Yes]     [No] 5.17 Loan to Value Ratio    not more than
         50%                            [Yes]     [No]

By signing below I acknowledge that I have completed the above covenant
compliance check, that all calculations were made in accordance with the terms
and requirements of the applicable Loan Agreement sections, and that, to the
best of my knowledge, except where indicated, the Borrower and its Subsidiaries
are in compliance with all of the above covenants and in compliance in all
material respects with all other affirmative and negative covenants, events of
default, and all other terms of the agreements encompassing the Loan Agreement
(except where such covenants, events of default, or other terms are qualified by
reference to materiality or Material Adverse Effect, in which case the Borrower
and its Subsidiaries are in compliance with such matters in all respects.).

 

Community First, Inc. By:  

 

Title:  

 

 

E-2

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

EXHIBIT F

INDEBTEDNESS NOT AUTHORIZED IN SECTION 6.1

In connection with three separate trust preferred offerings by statutory trusts
affiliated with Borrower, Borrower has issued $23,000,000 of subordinated
debentures. Borrower guarantees the payment of distributions and payments for
redemption or liquidation of the trust preferred securities issued by the
affiliated statutory trusts to the extent of funds held by the trusts.
Borrower’s obligations under the subordinated debentures together with the
guarantee and other back-up obligations, in the aggregate, constitute a full and
unconditional guarantee by Borrower of the obligations of the affiliated
statutory trusts under those trusts’ preferred securities.

 

F-1

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

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 all or a material amount 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.

“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.

“Capitalized Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.

“Change in Law” means the occurrence, after the date of this Loan 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 (regardless of whether 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.

“Collateral” shall mean 572,753 shares of the common stock of the Bank.

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

“Environmental Laws” shall mean all federal, state, and local laws, including
statutes, regulations, ordinances, codes, rules, and other governmental
restrictions and requirements,

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

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

“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.

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

 

A-2

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

“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.

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness payable or performable by another Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of the first Person, direct or indirect, (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness,
(ii) to purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness of the payment or
performance of such Indebtedness, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part) or (b) any Lien on any assets of such Person securing any
Indebtedness of any other Person, regardless of whether such Indebtedness is
assumed by the first Person (or any right, contingent or otherwise, of any
holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary Indebtedness, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, regardless of whether or not included as
indebtedness or liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments as the debtor thereunder (other
than any letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments issued or
undertaken in good faith in the ordinary course of business consistent with past
practice among the Bank and its customers);

(c) net obligations of such Person under any Interest Rate Swap (other than any
Interest Rate Swap entered into in good faith in the ordinary course of business
consistent with past practice among the Bank and its customers);

 

A-3

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

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and not past due for more than 90 days);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), regardless of
whether or not such indebtedness shall have been assumed by such Person or is
limited in recourse;

(f) all Indebtedness in respect of Capitalized Leases of such Person;

(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any equity interest in such Person or
any other Person or any warrant, right or option to acquire such equity
interest, valued, in the case of a redeemable preferred interest, at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; and

(h) all Guarantees of such Person in respect 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.

“Lien(s)” means any charge, claim, equitable interest, lien, encumbrance,
pledge, security interest, mortgage, encroachment, easement or restriction of
any kind, including, without limitation, those liens identified on Exhibit C
attached hereto.

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

 

A-4

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

“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.

“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.

“Material Adverse Effect” means a material adverse effect on and/or material
adverse developments with respect to (i) the business, financial condition, or
operating results of the Borrower or the Bank, (ii) the ability of the Borrower
to fully and timely perform its obligations under the Loan Documents, (iii) the
validity or enforceability of any Loan Document, or (iv) the rights or remedies
of the Lender under any Loan Document or the priority of any Lien granted in
favor of the Lender under any Loan Document.

“Maturity Date” shall mean December 20, 2021.

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

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

“Net Income” shall mean the net income after taxes including the Borrower’s
equity in undistributed earnings of its Subsidiaries 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 the applicable Call Reports and other such
assets acquired through foreclosure or other realization upon collateral or
rearrangement or satisfaction of Indebtedness.

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

 

A-5

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

“Note” shall have the meaning assigned to such term in Section 1.2 of this Loan
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; (d) liens
granted to secure deposit liabilities with any Governmental Entity; (e) deposits
to secure the performance of leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature, in each case in
the ordinary course of business; (f) judgment and attachment liens not giving
rise to an Event of Default, including Liens created by or existing from any
litigation or legal proceeding that are currently being contested in good faith
by appropriate proceedings; (g) any lien existing on the Closing Date that is
set forth in Exhibit C to the Loan Agreement and any continuation statements
filed with respect thereto; (h) easements or other minor defects or
irregularities in title of real property not interfering in any material respect
with the use of such property in the business of Borrower or any Subsidiary;
(i) purchase money liens on fixed assets securing loans and Capitalized Lease
Obligations, provided that such lien is limited to the purchase price and only
attaches to the property being acquired; and (j) 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.

“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.

 

A-6

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

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

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

“Return on Average Assets” shall mean quotient resulting from dividing the
Bank’s annualized net income (as set forth in the Bank’s Call Report for the
applicable period(s)) for the then current fiscal year by the year-to-date
average of total assets of the Bank (as set forth in the Bank’s Call Report for
the applicable period(s)).

“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 B 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.

“Total Risk-Based Capital Ratio” shall have the meaning and be calculated as set
forth in Appendix A to Part 325 of the FDIC’s rules and regulations.

 

A-7

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

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

 

A-8