Exhibit 10.13


 


LOAN AGREEMENT


 


for a loan in the amount of


 


$7,500,000


 


MADE BY AND BETWEEN


 


First Foundation Inc., a California
corporation


18101 Von Karman Ave., Suite 700,


Irvine, California 92612,


as Borrower


 


AND 


 


NEXBANK SSB,


2515 McKinney Avenue, Suite 1100, 


Dallas, Texas 75201,


as Lender


 


Dated as of April 19, 2013


 




    	 



    	 



    

 


LOAN AGREEMENT


 


THIS LOAN AGREEMENT
(“Agreement”) is made as of April 19, 2013 (the “Effective Date”), by and between First
Foundation Inc., a California corporation (“Borrower”) and NEXBANK SSB, a Texas savings bank, its successors
and assigns (“Lender”).


 


WITNESSETH:


 


RECITALS


 


Borrower has applied
to Lender for a term loan in the amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) (the “Loan”),
and Lender is willing to make the Loan on the terms and conditions hereinafter set forth.


 


NOW, THEREFORE,
in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:


 


ARTICLE I


INCORPORATION OF RECITALS AND EXHIBITS


 


		1.1	Incorporation of Recitals.



 


The foregoing preambles
and all other recitals set forth herein are made a part hereof by this reference.


 


		1.2	Incorporation of Exhibits.



 


Exhibit A to
this Agreement, which is attached hereto, is hereby incorporated in this Agreement and expressly made a part hereof by this reference.


 


ARTICLE II


DEFINITIONS


 


		2.1	Defined Terms.



 


The following terms
as used herein shall have the following meanings:


 


Affiliate:
With respect to a specified person or entity, any individual, partnership, corporation, limited liability company, trust, unincorporated
organization, association or other entity which, directly or indirectly, through one or more intermediaries, Controls or is Controlled
by or is under common control with such person or entity, including, without limitation, any general or limited partnership in
which such person or entity is a partner.


 


Agreement:
As such term is defined in the Preamble.


 


Allowance for Loan
and Lease Losses: As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority and
as reported by any Person on the Regulatory Capital Schedule of their respective Call Report applicable to such period.


 




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Applicable Bank
Regulatory Authority: When used with reference to a Person, the Bank Regulatory Authority or Authorities which have jurisdiction
over such Person.


 


Applicable Rate:
As such term is defined in Section 5.1(a).


 


Authorized Representative:
The person appointed as the Authorized Representative pursuant to Section 17.3.


 


Average Total Assets:
As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority and as reported by any
Person on the Regulatory Capital Schedule of any their respective Call Report applicable to such period.


 


Bank: First
Foundation Bank, a wholly owned subsidiary of Borrower.


 


Bank Regulatory
Authority: The DFI, the OCC, the FDIC, the Federal Reserve Bank, OFAC and any regulatory authority (whether Federal or State)
that has jurisdiction over the operations of Borrower, as a bank holding company, or over the banking operations of the Bank.


 


Bankruptcy Code:
Title 11 of the United States Code entitled “Bankruptcy” as now or hereafter in effect, or any successor thereto or
any other present or future bankruptcy or insolvency statute.


 


BHCA: The United
States Bank Holding Company Act of 1956, as amended.


 


Borrower: As
such term is defined in the Preamble. Borrower is the parent holding company of the Bank. Unless otherwise expressly provided
to the contrary in this Agreement or in any of the other Loan Documents, Borrower shall mean the Borrower on a unconsolidated
basis


 


Borrower Disclosure
Schedules: A set of written schedules to be delivered to Lender by Borrower at least two (2) Business Days prior to the execution
and delivery of this Agreement, setting forth (i) any information required, pursuant to any of the provisions of Article III hereof,
to be disclosed to Lender and (ii) any exceptions or qualifications applicable to any of the representations or warranties of
Borrower contained in Article III hereof.


 


Borrower 2012 Financial
Statements: The audited consolidated financial statements of Borrower as of and for the years ended December 31, 2012 and
2011.


 


Business Day:
A day of the year on which banks are not required or authorized to close in Dallas, Texas.


 


Call Report:
For each Bank, the “Consolidated Reports of Condition and Income” (FFIEC Form 031 or Form 041), or any successor
form promulgated by the FFIEC.


 


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


 


Change of Control:
Borrower shall cease to beneficially own and control 100% on a fully diluted basis of the economic and voting interests in the
Equity Interests of the Bank. For the avoidance of doubt, the grant of the Lien in the Equity Interests of the Bank to Lender
pursuant to the Security Documents shall not constitute a Change of Control.


 




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Classified Assets:
An asset classified as “Substandard,” “Doubtful,” “Loss” or a similar category in accordance
with the then-current regulations of the Applicable Bank Regulatory Authority.


 


Classified Assets
to Tier 1 Capital Ratio: With respect to any Person, the ratio (expressed as a percentage) as of the last day of any
fiscal quarter of (a) Classified Assets of such Person to (b) (i) Tier 1 Capital of such Person, plus (ii) Allowance
for Loan and Lease Losses.


 


Collateral:
The term “Collateral” shall have the meaning given to it in the Security Agreement.


 


Constituent Documents:
(a) in the case of a corporation, its articles or certificate of incorporation and bylaws; (b) in the case of a general
partnership, its partnership agreement; (c) in the case of a limited partnership, its certificate of limited partnership
and partnership agreement; (d) in the case of a trust, its trust agreement; (e) in the case of a joint venture, its
joint venture agreement; (f) in the case of a limited liability company, its articles of organization, operating agreement,
regulations and/or other organizational and governance documents and agreements; and (g) in the case of any other entity,
its organizational and governance documents and agreements.


 


Control: As
such term is used with respect to any person or entity, including the correlative meanings of the terms “controlled by”
and “under common control with”, shall mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of such person or entity, whether through the ownership of voting securities, by contract
or otherwise.


 


Controlled Entity:
As such term is used with respect to Borrower, a (i) corporation or limited liability company with respect to which such director
or executive officer has the power to elect a majority of the directors or managers (as the case may be), (ii) a partnership with
respect to which the director or executive officer is a general partner, or (iii) a trust of which the director or executive officer
is a trustee.


 


Default or default:   Any
event, circumstance or condition, which, if it were to continue uncured, would, with notice or lapse of time or both, constitute
an Event of Default hereunder.


 


Default Rate:
A rate per annum equal to three percentage points (300 basis points) in excess of the Applicable Rate, but which shall not at
any time exceed the Maximum Lawful Rate.


 


Depository Account:
A deposit account opened and maintained by Bank with Lender, to be utilized in the manner set forth in Section 4.1(c),
provided that, such deposit account shall bear interest in an amount equal to the greater of (i) the prevailing rate of interest
(which shall be subject to change from time to time) that Lender pays on money market deposit accounts with deposit balances equal
to the balance in the Depository Account from time to time or (ii) 0.50% (50 basis points) per annum.


 


DFI: The State
of California Department of Financial Institutions.


 


EBITDA: For
any period, the Net Income of Borrower for such period, plus, without duplication and to the extent deducted in calculating
Net Income for such period, the sum of (a) Interest Expense for such period, (b) Taxes for such period, (c) the amount of any
depreciation and amortization expense deducted in determining Net Income, and (d) any extraordinary or non-recurring items reducing
Net Income for such period, minus any extraordinary or non-recurring items increasing Net Income for such period.


 


Effective Date:
As defined in the Preamble.


 


Environmental Proceedings:
Any environmental proceedings, whether civil (including actions by private parties), criminal, or administrative, relating to
Borrower.


 




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Equity Interests:
Shares of capital stock of a corporation, partnership interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the
holder thereof to purchase or acquire any such equity interest.


 


ERISA: The
Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder from time to time.


 


Event of Default:
As such term is defined in Article XV.





 


FDIA: The Federal
Deposit Insurance Act of 1933, as amended from time to time, and the regulations promulgated pursuant thereto.


 


FDIC: The Federal
Deposit Insurance Corporation, or any successor Governmental Authority then performing the same or substantially similar duties.


 


Federal Reserve
Bank: The Board of Governors of the Federal Reserve Bank or the Federal Reserve System, or any Federal Reserve Bank, or any
successor Governmental Authority then performing the same or substantially similar duties.


 


FFIEC: The
Federal Financial Institutions Examination Council, or any successor Governmental Authority then performing the same or substantially
similar duties.


 


Fixed Charges:
For any period, the sum, without duplication, of the amounts determined for Borrower equal to (a) Interest Expense, (b) scheduled
payments of principal on Total Debt, and (c) Taxes.


 


Fixed Charge Coverage
Ratio: With respect to Borrower, the ratio as of the last day of any fiscal quarter of (a) EBITDA, to (b) Fixed
Charges, all for the twelve month period ending on such date.


 


GAAP: Generally
accepted accounting principles in the United States of America.


 


Governmental Approvals:
All authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings by Borrower or the Bank
with, and reports made by Borrower or the Bank to, all Applicable Bank Regulatory Authorities.


 


Governmental Authority:
Any nation or government, any state, province or territory or other political subdivision thereof, any governmental agency (including
any Bank Regulatory Authority), department, authority, instrumentality, regulatory body, court, central bank or other governmental
entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization exercising such functions (including any supra-national bodies such
as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory
capital rules or standards (including, without limitation, the Bank for International Settlements or the Basel Committee on Banking
Supervision or any successor or similar authority to any of the foregoing).


 




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Guarantee:
Any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness
or other obligation of any other Person (the “primary obligor”) in any manner (other than any Indebtedness
or other obligation of any direct or indirect subsidiaries of the guarantor), whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness
or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as
an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation of
the primary obligor; provided, that the term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.


 


Including or including:
Including but not limited to, and including without limitation.


 


Indebtedness:
Without duplication, with respect to any Person (a) all obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured
thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters
of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship
with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.


 


Intangible Assets:
As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority.


 


Interest Expense:
For any period, total interest expense of Borrower (including that portion attributable to Capital Lease Obligations), premium
payments, debt discount, fees and related expenses with respect to all outstanding Indebtedness of Borrower (but excluding any
interest payable on deposits or like instruments).


 


Internal Revenue
Code: The Internal Revenue Code of 1986, as amended from time to time.


 


Knowledge or knowledge
of Borrower: Borrower’s knowledge or phrases such as “the best knowledge of Borrower” shall mean the actual
knowledge of the then acting Chief Executive Officer or Chief Financial Officer of Borrower.


 


Late Charge:
As such term is defined in Section 4.6.


 


Laws: Collectively,
all federal, state and local laws, statutes, codes, ordinances, orders, rules and regulations, including judicial opinions or
precedential authority in the applicable jurisdiction.


 


Lender: As
defined in the opening paragraph of this Agreement, and including any successor holder of the Loan from time to time.


 


Leverage Ratio:
With respect to any Person, the ratio (expressed as a percentage) as of the last day of any fiscal quarter of (a) Tier
1 Capital of such Person to (b) Average Total Assets of such Person.


 




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LIBOR: With
respect to any LIBOR Reset Period, the rate of interest at which deposits in U.S. dollars are offered to major banks in the London
interbank market for a ninety (90) day period on the day that is two (2) LIBOR Business Days prior to the commencement of such
LIBOR Reset Period, based on information presented by any interest rate reporting service of recognized standing selected by Lender,
or if Lender determines that no interest rate reporting service has presented such information, the rate of interest at which
deposits in U. S. dollars are offered to major banks in the London interbank market for a ninety (90) day period on the day that
is two (2) LIBOR Business Days prior to the commencement of such LIBOR Reset Period by any bank reasonably selected by Lender.
Under the terms of this Agreement, the applicable “LIBOR” rate is used by Lender as a reference rate. The use of ninety
(90) day LIBOR as a reference rate does not mean the Borrower will actually pay interest on the Loan pursuant to a ninety (90)
day contract or any other interest rate contract. Instead, the effective interest rate under this Agreement will adjust at the
beginning of each LIBOR Reset Period.


 


LIBOR Business
Day: A Business Day on which commercial banks are open for dealings in U.S. dollar deposits in the London interbank market.


 


LIBOR Reset Period:
(i) as to the calendar quarter in which the Effective Date occurs, the period commencing on the Effective Date and ending on the
last calendar day of such quarter and (ii) as to any calendar quarter thereafter, the period commencing on the first calendar
day of the quarter immediately following the end of the prior LIBOR Reset Period, and ending on the earlier of (a) the last calendar
day of the quarter during which the Loan was made or most recently continued and (b) the Maturity Date.


 


Lien: With
respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, Capital Lease Obligations or
title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right
of a third party with respect to such securities.


 


Loan: As defined
in Recital A.


 


Loan Amount:
The maximum amount of the Loan as set forth in Section 4.1(a).


 


Loan Documents:
The collective reference to this Agreement and the documents and instruments listed in Section 4.2.


 


Loan Opening Date:
The date of the initial disbursement of proceeds of the Loan.


 


London Banking
Day: Any such day on which dealings in dollar deposits are conducted by and between banks in the London interbank Eurodollar
market.


 


Marketable Securities:
Collectively, (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency thereof,
(b) marketable direct obligations issued by any of the United States or any municipality thereof and currently having a rating
of (i) AA or higher issued by S&P and (ii) Aa2 or higher issued by Moody’s, and (c) corporate bonds and
issuances and currently having a rating of (i) AA or higher issued by S&P and (ii) Aa2 or higher issued by Moody’s.


 




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Material Adverse
Change or material adverse change: When used herein, means, any change, effect, or circumstance that has or could reasonably
be expected to have a material adverse effect on (a) the ability of Borrower to consummate the transactions contemplated by this
Agreement and the Security Documents or to perform its material obligations thereunder; or (b) the business, financial condition,
results of operations, assets or prospects of Borrower and its Subsidiaries taken as a whole; provided, however, that a “Material
Adverse Change” shall not be deemed to occur or exist in the case of any change, effect, or circumstance that is or was
reasonably attributable to: (i) economic conditions generally in the United States or foreign economies in any locations where
Borrower or any of its Subsidiaries has material operations (ii) changes in banking and similar laws of general applicability
or interpretations thereof by courts or Governmental Authorities or (iii) changes in the monetary policies of the Federal Reserve;
provided, that with respect to clauses (i), (ii) and (iii), the changes, effects or circumstances do not have a materially disproportionate
effect (relative to other industry participants) on Borrower and its Subsidiaries considered as a whole; (iv) the announcement
or pendency of the transactions contemplated by this Agreement, or (v) any failure, in and of itself, by Borrower or any of its
Subsidiaries to meet internal or other estimates, predictions, projections or forecasts of revenue, net interest income, operating
income, net income or any other measure of financial performance, unless excepted from the definition of Material Adverse Change
as set forth in clauses (i) to (iv) inclusive of this definition, the facts or circumstances giving rise or contributing to such
change failure to meet estimates or projections may be deemed to constitute, or be taken into account in determining whether there
has been, a Material Adverse Change.


 


Maturity Date:
May 1, 2018.


 


Maximum Lawful
Rate: As such term is defined in Section 5.3.


 


Moody’s:
Moody’s Investors Service, Inc. and any successor thereto.


 


Net Income:
For any period, the consolidated net income of Borrower determined in accordance with GAAP.


 


Non-Performing
Assets to Net Capital Ratio: With respect to any Person, the ratio (expressed as a percentage) as of the last day of
any fiscal quarter of (a) (i) Total Non-Accrual Loans of such Person, plus (ii) Other Real Estate Owned of such Person
to (b) (i) Total Capital of such Person, plus (ii) unrealized losses (gains) on securities for such Person, plus
(iii) Allowance for Loan and Lease Losses of such Person, minus (iv) Intangible Assets of such Person.


 


Note: A promissory
note, in the Loan Amount, executed by Borrower and payable to the order of Lender, evidencing the Loan.


 


Note Rate:
A rate per annum equal to the sum of (a) LIBOR for the then-current LIBOR Reset Period plus (b) 400 basis points (4.00%).


 


Obligations:
All obligations, indebtedness, and liabilities of Borrower to Lender, now existing or hereafter arising, under this Agreement
and the other Loan Documents, and all interest accruing thereon (whether a claim for post-filing or post-petition interest is
allowed in any bankruptcy, insolvency, reorganization or similar proceeding) and all reasonable attorneys’ fees and other
reasonable expenses incurred in the enforcement or collection thereof.


 


OCC: The Office
of the Comptroller of the Currency, or any successor Governmental Authority then performing the same or substantially similar
duties.


 


OFAC: As defined
in Section 3.1(u).


 


Open the Loan,
Opening of the Loan or Loan Opening: The disbursement of Loan proceeds in full by Lender to Borrower.


 




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Other Real Estate
Owned: As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority.


 


Payment Date:
The first day of each and every calendar month during the term of the Note or the next succeeding Business Day if the first day
of any such calendar month is a day other than a Business Day.


 


Permitted Investments:
Each of the following:


 


(a)         loans
made in the ordinary course of business (including liquidity support to broker-dealer Subsidiaries);


 


(b)         loans
made other than in the ordinary course of business; provided, that the aggregate principal amount (based on the aggregate
amount advanced and without giving effect to any payment thereof) of all outstanding loans hereunder shall not exceed $250,000
as at any date of determination;


 


(c)         direct
obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States
of America), in each case maturing within one year from the date of acquisition thereof;


 


(d)         investments
in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody’s;


 


(e)         investments
in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital
and surplus and undivided profits of not less than $500,000,000;


 


(f)         fully
collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in clause (c) above; and


 


(g)         money
market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment
Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.


 


Permitted
Liens: Each of the following:


 


(a)         Liens
imposed by law for Taxes that are not yet due or are being contested in compliance with Section 10.3;


 


(b)         carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in
the ordinary course of business or which are being contested in good faith by appropriate proceedings and which could not reasonably
be expected to cause a Material Adverse Change;


 


(c)         pledges
and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and
other social security laws or regulations;


 




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


 


(e)         judgment
liens in respect of judgments that do not constitute an Event of Default under clause (f) of Article XV; and


 


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


 


provided that
the term “Permitted Liens” shall not include any Liens securing Indebtedness (other than Indebtedness to Lender and
Indebtedness which Borrower is permitted to incur pursuant to Section 11.1 of this Agreement).


 


Person: Any
natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, bank, Governmental
Authority or other entity.


 


Restricted Payment:
Any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the
Borrower (other than for or in respect of repurchases or cancellations of equity incentive awards granted under the Borrower’s
equity incentive plans, if and to the extent permitted thereunder).


 


Risk-Based Capital
Guidelines: (a) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including
transition rules, (b) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (c) all requests, rules, guidelines or directives promulgated
by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority)
or the United States regulatory authorities, in each case pursuant to Basel III, regardless of the date enacted, adopted
or issued.


 


S&P: Standard
& Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.


 


Sanctioned Entity:
(a) an agency of the government of, (b) an organization directly or indirectly controlled by, or (c) a person resident
in, a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/programs,
or as otherwise published from time to time as such program may be applicable to such agency, organization or person.


 


Sanctioned Person:
A person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html,
or as otherwise published from time to time.


 


Security Agreement:
The Pledge and Security Agreement being executed and delivered on the date hereof by Borrower, as it may be amended, restated,
supplemented or otherwise modified from time to time hereafter by mutual written agreement of Lender and Borrower.


 


Security Documents:
The Security Agreement and all other instruments, documents and agreements delivered by or on behalf of Borrower pursuant to this
Agreement or any of the other Loan Documents in order to grant to, or perfect in favor of, Lender, a Lien on the Collateral as
security for the Obligations.


 




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Subsidiary:
(a) any corporation of which at least a majority of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by Borrower or one or more of its other Subsidiaries or by Borrower
and one or more of such Subsidiaries, and (b) any other entity (i) of which at least a majority of the ownership, equity
or voting interest is at the time directly or indirectly owned or controlled by one or more of Borrower and other Subsidiaries
and (ii) which is treated as a subsidiary in accordance with GAAP.


 


Taxes: Any
present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties applicable thereto accounted for in accordance with
GAAP.


 


Tier 1 Capital:
As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority.


 


Tier 2 Capital:
As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority.


 


Total Capital:
As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority.


 


Total Debt:
As at the date of any determination thereof, the aggregate amount of all Indebtedness of Borrower.


 


Total Non-Accrual
Loans: Total value of the loans held by a Person, which loans are classified as non-accrual in accordance with the then-current
regulations of its Applicable Bank Regulatory Authority and/or Call Report instructions.


 


Total Risk-Based
Capital Ratio: With respect to any Person, the ratio (expressed as a percentage) as of the last day of any fiscal quarter
of (a) the sum of (i) Tier 1 Capital of such Person and (ii) Tier 2 Capital of such Person, to (b) Total Risk-Weighted
Assets of such Person.


 


Total Risk-Weighted
Assets: As defined in accordance with the then-current regulations of the Applicable Bank Regulatory Authority.


 


		2.2	Other
                                                                                       Definitional Provisions.



 


All terms
defined in this Agreement shall have the same meanings when used in the Note, any other Loan Documents, or any certificate or
other document made or delivered pursuant hereto. The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this Agreement.


 


		2.3	Accounting
                                                                                       Terms.



 


All accounting
terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with
GAAP, applied on a consistent basis, as in effect from time to time and in a manner consistent with that used in preparing the
audited financial statements required by Section 10.1(a), except as otherwise specifically prescribed herein.  Notwithstanding
the foregoing, all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall
be calculated, without giving effect to any election under the FASB ASC 825 (or any similar accounting principle) permitting
a Person to value its financial liabilities or Indebtedness at the fair value thereof.


 




    	11



    	 



    

 


ARTICLE III


BORROWER’S REPRESENTATIONS AND
WARRANTIES


 


			



		3.1	Representations and Warranties.



 


To induce
Lender to execute this Agreement and perform its obligations hereunder, Borrower hereby represents and warrants to Lender that,
as of the date hereof, the statements contained in this Article III are true and correct, except as may otherwise be specified
in any such representation or warranty or in the Company Disclosure Schedules.


 


(a)         Except
as previously disclosed to Lender in writing, no litigation or proceedings are pending, or to the best of Borrower’s knowledge
threatened, in writing, against Borrower or its Subsidiaries, which could reasonably be expected, if adversely determined against
Borrower, to cause a Material Adverse Change with respect to Borrower and its Subsidiaries considered as a whole. There are no
pending Environmental Proceedings, no Environmental Proceedings have been threatened in writing against Borrower and to the knowledge
of Borrower there are no facts or circumstances which could reasonably be expected to give rise to any future Environmental Proceedings
against Borrower or its Subsidiaries.


 


(b)         Borrower
is a duly organized and validly existing corporation and has all the requisite corporate power and authority to execute, deliver
and perform its obligations under the Loan Documents to which Borrower is a party, and such execution, delivery and performance
have been duly authorized by all requisite corporate action of Borrower. Each Loan Document to which Borrower is a party has been
duly executed and delivered by Borrower and is the legally binding obligation of Borrower, enforceable against Borrower in accordance
with its respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or similar laws, now or hereafter in effect, relating to or limiting the rights of creditors’ and general equitable
principles , regardless of whether the issue of enforceability is considered in a proceeding in equity or at law.


 


(c)         No
consent, approval or authorization of or declaration, registration or filing with any Governmental Authority or nongovernmental
person or entity, including any creditor of Borrower or its Subsidiaries, is required in connection with the execution, delivery
and performance by Borrower of this Agreement or of any of the Loan Documents other than the filing of UCC-1 financing statements,
except for such consents, approvals or authorizations of or declarations or filings with any Governmental Authority or non-governmental
person or entity where the failure to so obtain would not have a Material Adverse Change on Borrower and its Subsidiaries, considered
as a whole, or which have been obtained as of any date on which this representation is made. The
Borrower and each Subsidiary of Borrower (i) has all Governmental Approvals required by any applicable Law for it to conduct
its business, each of which, on the date hereof is in full force and effect, and not subject to review on appeal and is not the
subject of any proceeding pending or, which to Borrower’s knowledge, threatened in writing against Borrower, (ii) is
in compliance with each Governmental Approval applicable to it and in compliance with all other applicable Laws relating to it
or any of its respective properties and (iii) has timely filed all material reports, documents and other materials required
to be filed by it under all applicable Laws with any Governmental Authority and has retained all material records and documents
required to be retained by it under applicable Law except in each case of clauses (i), (ii) or (iii) above, where the failure
to have, comply or file could not reasonably be expected to have a Material Adverse Change.


 




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(d)        The
execution and delivery of, and the performance by Borrower of its obligations under this Agreement or the Security Documents does
not constitute, upon the giving of notice or lapse of time or both, a breach or default under any other agreement to which Borrower
or its Subsidiaries is a party or may be bound or affected, or a violation of any Law or court order which could reasonably be
expected to have a Material Adverse Change.


 


(e)         Borrower
is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property where the failure to be in compliance therewith,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change. Borrower has received all
permits and licenses issued by any Governmental Authority as are necessary for the conduct of its business.


 


(f)         There
is no default under this Agreement or any of the other Loan Documents by Borrower, nor any condition known to Borrower which,
after notice or the passage of time or both, would constitute a default or an Event of Default by Borrower under said Documents.


 


(g)         No
brokerage fees or commissions are payable by Borrower to any person pursuant to any brokerage agreement or agency or other agreement
entered into by Borrower in connection with this Agreement or the Loan to be disbursed hereunder.


 


(h)        The
Borrower 2012 Financial Statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods
indicated and fairly presented, in all material respects, the consolidated financial position, results of operations, cash flows
and shareholders’ equity of the Borrower and its consolidated Subsidiaries as of the respective dates thereof and for the
respective periods covered thereby. , and no Material Adverse Change with respect to Borrower or its Subsidiaries has occurred
since the respective dates of such statements. Borrower does not have any material Indebtedness or other material liability, that
is not disclosed in the Borrower 2012 Financial Statements or in the Borrower Disclosure Schedules.


 


(i)         Borrower
has good title to, or valid leasehold interests in, all its real and personal property material to its business, subject to Permitted
Liens thereon and except for defects in title that do not interfere with its ability to conduct its business as currently conducted
or to utilize such properties for their intended purposes.


 


(j)          Reserved.


 


(k)         Borrower
owns, or is licensed to use, all trademarks, trade names, copyrights, patents and other intellectual property material to its
business, and, to Borrower’s Knowledge, the use thereof by the Borrower and its Subsidiaries does not infringe upon the
rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change.


 


(l)          The
Loan is not being made for the purpose of purchasing or carrying “margin stock” within the meaning of Regulation T,
U or X issued by the Federal Reserve Bank.


 


(m)         Borrower
is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.


 




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(n)         Borrower
has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid
all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings
and for which the Borrower has set aside reserves on its books which Borrower deems adequate or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse Change.


 


(o)        The
assets of Borrower are not “plan assets” of any employee benefit plan covered by ERISA or Section 4975 of the Internal
Revenue Code.


 


(p)         Borrower
has disclosed to Lender all agreements, instruments and corporate or other restrictions to which it is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change.
None of the representations or warranties contained in this Agreement as modified or qualified by the Borrower Disclosure Schedules
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.


 


(q)         Borrower
is not a “foreign person” within the meaning of Section 1445 or 7701 of the Internal Revenue Code.


 


(r)          Borrower
uses no trade name other than its actual name set forth herein. The principal place of business of Borrower is as stated in Section
17.16.


 


(s)         Borrower’s
place of formation or organization is the State of California.


 


(t)         None
of Borrower or its Subsidiaries is a person with whom Lender is restricted from doing business under regulations of the Office
of Foreign Asset Control (“OFAC”) of the Department of the Treasury of the United States of America (including,
those Persons named on OFAC’s Specially Designated and Blocked Persons list) or under any statute, executive order (including,
the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit,
or Support Terrorism), or other governmental action and is not and shall not engage in any dealings or transactions or otherwise
be associated with such persons. In addition, Borrower hereby agrees to provide to the Lender with any additional information
that the Lender deems necessary from time to time in order to ensure compliance with all applicable Laws concerning money laundering
and similar activities. None of the Borrower, any Subsidiary of the Borrower or any Affiliate of the Borrower: (i) is a Sanctioned
Person, (ii) has more than ten percent (10%) of its assets in Sanctioned Entities, or (iii) derives more than ten percent
(10%) of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.  The
proceeds of any Loan will not be used and have not been used to fund any operations in, finance any investments or activities
in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.


 


		3.2	Survival of Representations and Warranties.



 


The representations
and warranties of Borrower set forth in Section 3.1, as may be modified or qualified by the information contained in the
Borrower Disclosure Schedules or the notes to Borrower’s 2012 Financial Statements, will survive the execution and delivery
by Borrower of the Loan Documents and the Loan Opening until all of the Obligations of Borrower have been paid or performed.


 




    	14



    	 



    

 


ARTICLE IV


LOAN AND LOAN DOCUMENTS


 


			



		4.1	Agreement to Borrow and
                                                                   Lend; Lender’s Obligation to Disburse.



 


Subject to
the terms, provisions and conditions of this Agreement and the other Loan Documents, Borrower agrees to borrow from Lender and
Lender agrees to lend to Borrower the Loan, for the purposes and subject to all of the terms, provisions and conditions contained
in this Agreement.


 


(a)         The maximum aggregate
principal amount of the Loan shall not exceed Seven Million Five Hundred Dollars ($7,500,000) (the “Loan Amount”).
No principal amount repaid may be reborrowed.


 


(b)         Lender agrees
to Open the Loan within one (1) Business Day following Borrower’s compliance with, and satisfaction of, all conditions precedent
to the Loan Opening and provided no Material Adverse Change has occurred with respect to Borrower and its Subsidiaries, considered
as a whole, and no Default or Event of Default has occurred and is continuing hereunder.


 


(c)         Bank shall, prior
to the Opening of the Loan, open a Depository Account, subject to the Bank’s compliance with Regulation F (12 CFR 206) and
Bank’s internal policies related thereto.


 


		4.2	Loan Documents.



 


Borrower agrees
that it will, on or before the Loan Opening Date, execute and deliver or cause to be executed and delivered to Lender the following
documents:


 


(a)         The Note.


 


(b)         The Security
Agreement.


 


(c)         Such UCC financing
statements as Lender determines are advisable or necessary to perfect or notify third parties of Lender’s security interest
in the Collateral.


 


		4.3	Term of the Loan.



 


All principal, interest
and other sums due under the Loan Documents shall be due and payable in full on the Maturity Date.


 


		4.4	Prepayments.



 


Borrower shall have
the right to make prepayments of the Loan, without any premium, penalty or other charges of any kind whatsoever, in whole or in
part, upon not less than seven (7) days’ prior written notice to Lender. No prepayment of all or part of the Loan shall
be permitted unless same is made together with the payment of all interest accrued on the Loan through the date of prepayment.


 


		4.5	Late Charge.



 


Any and all amounts
due hereunder or under the other Loan Documents which remain unpaid on the tenth (10th) day after the date said amount was due
and payable shall incur a fee (the “Late Charge”) of five percent (5%) per annum of said amount, which payment
shall be in addition to all of Lender’s other rights and remedies under the Loan Documents, provided that no Late Charge
shall apply to the final payment of principal on the Maturity Date. Nothing in this Section shall be deemed a cure period for
the purpose of determining the occurrence of an Event of Default.


 




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ARTICLE V 


INTEREST


			



		5.1	Interest Rate.



 


(a)         Subject to Section
5.3, the principal amount of the Loan outstanding will bear interest at the Note Rate (the “Applicable Rate”),
unless the Default Rate is applicable.


 


(b)         Interest shall
be calculated for the actual number of days elapsed on the basis of a 365-day year, including the first date of the applicable
period to, but not including, the date of repayment.


 


(c)         The principal
amount of the Loan outstanding shall bear interest at the Default Rate at any time at which an Event of Default shall exist and
is continuing, provided that if any Event of Default is cured by the Borrower, then the Interest Rate on the Loan shall thereupon
revert back to the Applicable Rate.


 


		5.2	Required Principal and Interest
                                                                   Payments.



 


Commencing on June
1, 2013 and continuing on each Payment Date thereafter, until the Loan and all accrued interest thereon has been paid in full,
installments of principal in the amount of $62,500 (unless the principal balance is less than such required installment amount,
and in such case, the remaining principal balance of the Note shall be due and payable on the Payment Date) and accrued interest
thereon shall be due and payable on each Payment Date. The outstanding principal balance of the Loan and any and all accrued but
unpaid interest hereon shall be due and payable in full on the Maturity Date or upon any earlier maturity hereof, whether by acceleration
in accordance with this Agreement and the other Loan Documents. All payments (whether of principal or of interest) shall be deemed
credited to Borrower’s account only if received by 2:00 p.m. Dallas time on a Business Day; otherwise, such payment shall
be deemed received on the next Business Day.


 


		5.3	Maximum Lawful Rate.



 


It is the intent of
Borrower and Lender to conform to and contract in strict compliance with applicable usury law from time to time in effect. In
no way, nor in any event or contingency (including but not limited to prepayment, default, demand for payment, or acceleration
of the maturity of any obligation), shall the rate of interest taken, reserved, contacted for, charged or received under this
Agreement and the other Loan Documents exceed the highest lawful interest rate permitted under applicable law (the “Maximum
Lawful Rate”). If Lender shall ever receive anything of value which is characterized as interest under applicable law
and which would apart from this provision be in excess of the Maximum Lawful Rate, an amount equal to the amount which would have
been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loan in the inverse
order of its maturity and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the
extent such amount which would have been excessive exceeds such unpaid principal. All interest paid or agreed to be paid to the
holder hereof shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full
stated term (including any renewal or extension) of the Loan so that the amount of interest on account of such obligation does
not exceed the Maximum Lawful Rate. As used in this Section, the term “applicable law” shall mean the laws
of the State of Texas or the federal laws of the United States, whichever laws allow the greater interest, as such laws now exist
or may be changed or amended or come into effect in the future.


 




    	16



    	 



    

  


ARTICLE VI


RESERVED.


 


ARTICLE VII


LOAN EXPENSE AND ADVANCES


 


			



		7.1	Loan and Administration
                                                                   Expenses.



 


Borrower unconditionally
agrees to pay all reasonable costs and expenses incurred by Lender in connection with the Loan incurred by Lender if any Event
of Default occurs hereunder or under any of the Loan Documents or if the Loan or Note or any portion thereof is not paid in full
when and as due, all reasonable costs and expenses of Lender (including, without limitation, court costs and counsel’s fees
and disbursements and fees and costs of paralegals, and costs incurred in connection with any litigation or bankruptcy or administrative
hearing and any appeals therefrom and any post- judgment enforcement action including, without limitation, supplementary proceedings)
incurred in attempting to enforce payment of the Loan and reasonable expenses of Lender incurred (including court costs and counsel’s
fees and disbursements and fees and costs of paralegals) in attempting to realize, while an Event of Default exists, on any security
or incurred in connection with the sale or disposition (or preparation for sale or disposition) of any security for the Loan.
Whenever Borrower is obligated to pay or reimburse Lender for any attorneys’ or paralegals’ fees, those fees shall
include the reasonable allocated costs for services of in-house counsel.


 


		7.2	Reserved.



 


		7.3	Reserved.



 


		7.4	Expenses and Advances Secured
                                                                   by Loan Documents.



 


Any and all advances
or payments made by Lender under this Article VII from time to time, and any amounts expended by Lender pursuant to Article
XVI, shall constitute additional indebtedness evidenced by the Note and secured by the Security Documents and the other Loan
Documents if such advances are not paid to Lender within ten (10) days of the date Lender notifies Borrower in writing of the
amounts of such advances or payments due by Borrower to Lender and the purposes for which such advances or payments were made
by Lender.


 


		7.5	Right of Lender to Make
                                                                   Advances to Cure Borrower’s Defaults.



 


In the event that
Borrower fails to perform any of Borrower’s covenants, agreements or obligations contained in this Agreement or any of the
other Loan Documents (after the expiration of applicable grace periods, except in the event of an emergency or other exigent circumstances),
Lender may (but shall not be required to) perform any of such covenants, agreements and obligations, and any amounts expended
by Lender in so doing and shall constitute additional indebtedness evidenced by the Note and secured by the Security Documents
and the other Loan Documents.


 


ARTICLE VIII 


CONDITIONS PRECEDENT TO THE OPENING
OF THE LOAN


 


			






		8.1	Conditions Precedent.



 


Borrower agrees that
Lender’s obligation to Open the Loan is conditioned upon Borrower’s delivery, performance and satisfaction of the
following conditions precedent:


 




    	17



    	 



    

 


(a)         Loan Documents:
The Lender shall have received copies of each of the documents set forth in Section 4.2 hereof, executed by the Borrower,
and recorded, if applicable.


 


(b)         Reserved.


 


(c)         Insurance
Policies: Borrower shall have furnished to Lender evidence that insurance coverages are in effect with respect to Borrower,
in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating
in the same or similar locations.


 


(d)         No Litigation:
No litigation or proceedings shall be pending or threatened which could reasonably be expected to cause a Material Adverse Change
with respect to Borrower and its Subsidiaries, considered as a whole;


 


(e)         Legal Opinion:
Borrower shall have furnished to Lender an opinion from counsel for Borrower covering due authorization, execution and delivery
and enforceability of the Loan Documents;


 


(f)         Searches:
Borrower shall have furnished to Lender current bankruptcy, federal tax lien and judgment searches and searches of all Uniform
Commercial Code financing statements for Borrower and Bank, filed in each place UCC Financing Statements are to be filed hereunder,
demonstrating the absence of adverse claims;


 


(g)         Financial
Statements: Borrower shall have furnished to Lender the Borrower 2012 Financial Statements;


 


(h)         Equity Interests
of Bank: Borrower shall deliver to Lender, within five (5) Business Days of the Effective Date, the share certificates evidencing
the Equity Interests of Bank;


 


(i)         Organizational
Documents: Borrower shall have furnished to Lender proof satisfactory to Lender of the incorporation and good standing in
the state of its incorporation of Borrower and Bank. Borrower shall also provide certified resolutions in form and content reasonably
satisfactory to Lender, authorizing execution, delivery and performance of the Loan Documents by Borrower, and such other documentation
as Lender may reasonably require to evidence the authority of the persons executing the Loan Documents. Borrower shall also have
delivered Constituent Documents for Borrower and Bank certified by the appropriate government officials of the state of incorporation.
Borrower shall also have delivered a certificate of incumbency certified by an authorized officer or representative certifying
the names of the individuals or other Persons authorized to sign this Agreement and each of the other Loan Documents to which
Borrower is or is to be a party (including the certificates contemplated herein) on behalf of such Person together with specimen
signatures of such individual Persons;


 


(j)         No Default:
There shall be no uncured Default or Event of Default by Borrower hereunder as of the Opening of the Loan;


 


(k)         Additional
Documents: Borrower shall have furnished to Lender such other materials, documents, papers or requirements regarding Borrower
and its Subsidiaries as Lender shall reasonably request, provided that such documents or instruments are of the type customarily
delivered at closings of loan transactions similar to the loan transaction contemplated by this Agreement.


 




    	18



    	 



    

 


ARTICLE IX


RESERVED


 


ARTICLE X 


AFFIRMATIVE COVENANTS


 


Borrower covenants and agrees as follows:


 


			



		10.1	Furnishing Information.



 


(a)         Financial
Reports. Borrower shall deliver or cause to be delivered to Lender (i) a duly executed Certificate of Compliance in the form
of Exhibit B attached hereto within forty-five (45) days after the end of each calendar quarter , (ii) quarterly consolidated
financial statements within (60) days after the end of each of the first three calendar quarters of each year and (iii) audited
annual consolidated financial statements within 90 days after the end of each calendar year. . The Chief Executive Officer or
the Chief Financial Officer of Borrower shall certify that each of such quarterly consolidated financial statements fairly present,
in all material respects, the financial position, results of operations, cash flows and shareholders’ equity of Borrower
on a consolidated basis as of the date thereof and for the quarterly period covered thereby (subject to normal year-end adjustments
which were not and which are not expected to be, individually or in the aggregate, material to Borrower and its consolidated Subsidiaries
taken as a whole).Borrower shall deliver to Lender with respect to Borrower copies of its annual Federal Income Tax Returns within
ten (10) days after the filing thereof with the Internal Revenue Service. Borrower shall, on not less than ten (10) days prior
written notice from Lender, permit Lender or any of its agents or representatives, at Lender’s sole expense, to have access
to and examine Borrower’s accounting books and records during Borrower’s regular business hours.


 


(b)         Call Reports.
As soon as available, and in no event more than sixty (60) days after the end of each fiscal quarter of each Bank, copies of each
Bank’s Call Reports or other quarterly reports of condition and income furnished to Governmental Authorities.


 


(c)         FR Y-9SP.
If applicable to Borrower, as soon as available, and in any event no later than sixty (60) days after the end of each fiscal quarter,
the Borrower’s complete form FR Y-9SP as filed with the Federal Reserve Bank in the applicable Federal Reserve District.


 


(d)         FR Y-6.  If
applicable to Borrower, as soon as available, and in any event within ninety (90) days after the end of each fiscal year, the
Borrower’s complete form FR Y-6 as filed with the Federal Reserve Bank in the applicable Federal Reserve District.


 


(e)         USA Patriot
Act. Promptly upon the request thereof, such other information and documentation required by Bank Regulatory Authorities under
applicable “know your customer” and Anti-Money Laundering rules and regulations (including, without limitation, the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended), as from time to time reasonably
requested by the Lender.


 


(f)         Notice of
Litigation and Other Matters. Promptly (but in no event later than ten (10) days after Borrower obtains knowledge thereof),
to the extent not prohibited by law, telephonic and written notice of (i) the commencement of all proceedings by or before any
Governmental Authority (other than routine period examinations by Applicable Governmental Authorities) and (ii) all actions and
proceedings in any court or before any arbitrator against or involving the Borrower or any Subsidiary of Borrower or any of their
respective properties, assets or businesses which if adversely determined against Borrower or such Subsidiary, could reasonably
be expected to result in a Material Adverse Change to the Borrower and its Subsidiaries, considered as a whole.


 


(g)        Additional
Information. Such other information regarding the operations, business affairs and financial condition of the Borrower or
any Subsidiary as the Lender may reasonably request and which can be provided by Borrower in compliance with applicable laws and
regulations.


 







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		10.2	Maintenance of Insurance.



 


Borrower shall
maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily
maintained by companies and financial institutions engaged in the same or similar businesses operating in the same or similar
locations.


 


		10.3	Payment of Taxes.



 


Borrower shall
pay all Taxes before the same become delinquent, provided, however, that Borrower shall have the right to contest any such tax
or assessment, but only if (i) such contest has the effect of preventing the collection of such Taxes so contested and also of
preventing the attachment of any Lien to any of Borrower’s property, and (ii) Borrower contests such Taxes diligently and
in good faith. If Borrower fails to commence such contest or, having commenced to contest the same, shall thereafter fail to prosecute
such contest in good faith or with due diligence, or, upon adverse conclusion of any such contest, shall fail to pay such Tax,
Lender may, at its election (but shall not be required to), pay and discharge any such Tax, and any interest or penalty thereon,
and any amounts so expended by Lender shall be deemed to constitute disbursements of the Loan proceeds hereunder (even if the
total amount of disbursements would exceed the face amount of the Note). Upon request of Lender, Borrower shall furnish to Lender
evidence that Taxes are paid on or prior to the last date for payment of such Taxes and before imposition of any penalty or accrual
of interest (except for Taxes being contested diligently and in good faith as described in this Section).


 


		10.4	Reserved.



 


		10.5	Use of Proceeds.



 


The proceeds
of the Loan will be used for working capital and general corporate purposes, including the contribution of capital to its subsidiaries.
No part of the proceeds of the Loan will be used, whether directly or indirectly, for any purpose that entails a violation of
any of regulations of any Bank Regulatory Authority, including Regulations T, U and X.


 


		10.6	Lost Note.



 


Upon Lender’s
furnishing to Borrower an affidavit to such effect, Borrower shall, if the Note is mutilated, destroyed, lost or stolen, deliver
to Lender, in substitution therefor, a new note containing the same terms and conditions as the Note.


 


		10.7	Indemnification.



 


FROM THE CLOSING
DATE THROUGH THE DATE THAT IS THREE (3) YEARS FOLLOWING THE FULL SATISFACTION OF THE OBLIGATIONS HEREUNDER, BORROWER SHALL INDEMNIFY
LENDER AND ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND CONSULTANTS (EACH, AN “INDEMNIFIED PARTY”) AND
DEFEND AND HOLD EACH INDEMNIFIED PARTY HARMLESS FROM AND AGAINST ALL CLAIMS (INCLUDING, WITHOUT LIMITATION, ANY CIVIL PENALTIES
OR FINES ASSESSED BY OFAC), INJURY, DAMAGE, LOSS AND LIABILITY, COST AND EXPENSE (INCLUDING ATTORNEYS’ FEES, COSTS AND EXPENSES)
OF ANY AND EVERY KIND TO ANY PERSONS OR PROPERTY BY REASON OF (I) ANY BREACH OF REPRESENTATION OR WARRANTY, DEFAULT OR EVENT OF
DEFAULT UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATED DOCUMENT; OR (II) ANY OTHER MATTER ARISING IN CONNECTION WITH
THE LOAN, BORROWER, OR ITS SUBSIDIARIES THAT MAY ARISE ANY TIME PRIOR TO THE DATE THAT THE LOAN AND THE OTHER OBLIGATIONS OWED
HEREUNDER ARE PAID IN FULL. BORROWER’S DUTY TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE INDEMNIFIED PARTIES AGAINST LOSSES
EXTENDS TO LOSS THAT MAY BE CAUSED OR ALLEGED TO BE CAUSED IN PART BY THE NEGLIGENCE OF INDEMNITEES TO THE FULLEST EXTENT THAT
SUCH INDEMNIFICATION IS PERMITTED BY APPLICABLE LAW. THE FOREGOING INDEMNIFICATION SHALL SURVIVE REPAYMENT OF THE LOAN.


 




    	20



    	 



    

 


		10.8	Depository Account. 



 


Bank shall at all
times maintain at least Two Million Five Hundred Thousand Dollars ($2,500 ,000) in the Depository Account, subject to any limitations
thereon contained in, and compliance with, Regulation F (12 CFR 206) and Bank’s internal policies relating thereto. Lender
hereby confirms that it shall have no, and hereby waives any, right of offset or set-off against the Depository Account for any
obligations of the Borrower hereunder or under any other Loan Document.


 


ARTICLE XI 


NEGATIVE COVENANTS


 


Borrower covenants and agrees as follows:


 


			



		11.1	Indebtedness.



 


Without prior written consent of Lender,
Borrower will not create, incur, assume or permit to exist any Indebtedness, except:


 


(a)         Indebtedness created hereunder; and


 


(b)         Indebtedness
existing on the date hereof and set forth in Schedule 11.1(b), but not any extensions, renewals or replacements of any
such Indebtedness.


 


		11.2	Liens.



 


Borrower will
not create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:


 


(a)         Permitted Liens;


 


(b)         any Lien on any
property or asset of Borrower existing on the date hereof and set forth in Schedule 11.2(b); provided that (i) such Lien shall
not apply to any other property or asset of the Borrower and (ii) such Lien shall secure only those obligations which it secures
on the date hereof; and


 


(c)         Liens on fixed
or capital assets acquired, constructed or improved by the Borrower; provided that (i) such security interests secure Indebtedness
permitted by Section 11.1, (ii) such security interests and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does
not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests
shall not apply to any other property or assets of the Borrower.


 




    	21



    	 



    

 


 


		11.3	Fundamental Changes; Disposition
                                                                    of Assets.



 


Without prior written
consent of Lender, which shall not be unreasonably withheld or delayed, the Borrower will not (a) merge into or consolidate with
any other Person, or permit any other Person to merge into or consolidate with it, unless the Persons who were the shareholders
of Borrower immediately prior to the consummation of such merger or consolidation will, immediately after the consummation of
such merger or consolidation, beneficially own at least 50.1% of the outstanding voting stock of the surviving company in such
merger or consolidation; (b) or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions)
all or any substantial part of its assets (other than in the ordinary course of business), (c) liquidate or dissolve, or (d) engage
to any material extent in any business other than businesses of the type conducted by the Borrower on the Effective Date and businesses
reasonably related thereto.


 


		11.4	Investments, Loans, Advances,
                                                                    Guarantees and Acquisitions.



 


The Borrower will
not purchase, hold or acquire any capital stock, evidences of indebtedness or other securities (including any option, warrant
or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in
one transaction or a series of transactions) any assets of any other Person constituting a business unit (collectively, an “Investment”)
except:


 


(a)         Permitted Investments;


 


(b)         Investments made in the Bank;


 


(c)         Guarantees constituting Indebtedness
permitted by Section 11.1; and


 


(d)         Any Investments in which the amount
of all such Investments in the aggregate does not exceed 20% of the capital of Borrower at any one time outstanding.


 


		11.5	Reserved.



 


		11.6	Restricted Payments.



 


Without the prior
written consent of Lender, the Borrower will not declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment.


 


		11.7	Transactions with Directors
                                                                    or Officers.



 


The Borrower will
not sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets
from any of Borrower’s directors or executive officers, or any of their Controlled Entities (as defined below), or engage
in any other transaction with any of such directors or officers, or any of their respective Controlled Entities outside the ordinary
course of business of Borrower or its Subsidiaries at prices and on terms and conditions not less favorable to the Borrower than
could be obtained on an arm’s-length basis from unrelated third parties.


 


		11.8	Reserved.



 


		11.9	Leverage Ratio.



 


As of the last day of any fiscal quarter,
the Bank shall have a Leverage Ratio of 5.0% or greater.


 


		11.10	Total Risk-Based Capital
                                                                     Ratio.



 


As of the last
day of any fiscal quarter, the Bank shall have a Total Risk-Based Capital Ratio of 10.0% or greater.


 




    	22



    	 



    

 


		11.11	Non-Performing Assets
                                                                     to Net Capital Ratio.



 


As of the last day
of any fiscal quarter, the Bank shall have a Non-Performing Assets to Net Capital Ratio of 40.0% or less.


 


		11.12	Classified Assets to Tier
                                                                     1 Capital Ratio.



 


As of the last day
of any fiscal quarter, the Bank shall have a Classified Assets to Tier 1 Capital Ratio of no greater than 50.0%.


 


		11.13	Fixed Charge Coverage
                                                                     Ratio. 



 


As of the last day
of any fiscal quarter, Borrower shall not permit the Fixed Charge Coverage Ratio to be less than 1.50 to 1.0 for the twelve month
period ending on such date.


 


		11.14	Minimum Liquidity.



 


The Borrower shall
not permit the sum of (a) cash of the Borrower not subject to any Lien, plus (b) cash of the Borrower on deposit
with any bank and which is not subject to any Lien (other than Liens in favor of such bank securing amounts owed by the Borrower
to such bank with respect to returned items and standard account charges), plus (c) the market value of all Marketable
Securities not subject to any Lien to be less than $1,000,000 at any time.





 


ARTICLE XII


RESERVED


 


ARTICLE XIII


ASSIGNMENTS BY LENDER AND BORROWER


 





			



		13.1	Prohibition of Assignments
                                                                    and Participations by Lender.



 


Without prior written
consent of Borrower, Lender shall not sell the Loan (or any interest therein) or any Loan Document nor grant any participations
in the Loan.


 


		13.2	Prohibition of Assignments
                                                                    by Borrower.



 


Borrower shall not
assign or attempt to assign its rights under this Agreement and any purported assignment shall be void.


 


		13.3	Successors and Assigns.



 


Subject to the foregoing
restrictions on transfer and assignment contained in this Article XIII, this Agreement shall inure to the benefit of and shall
be binding on the parties hereto and their respective successors and permitted assigns.


 


ARTICLE XIV 


TIME OF THE ESSENCE


 


			



		14.1	Time is of the Essence.



 


Borrower agrees that
time is of the essence under this Agreement.


 




    	23



    	 



    

 


ARTICLE XV 


EVENTS OF DEFAULT


 


			



		15.1	Events of Default.



 


The occurrence of
any one or more of the following shall constitute an “Event of Default” as said term is used herein:


 


(a)         Failure of Borrower
(i) (A) to make any payment when due, or (B) to observe or perform any of the other covenants or conditions by Borrower to be
performed under the terms of this Agreement or any other Loan Document concerning the payment of money, for a period of ten (10)
days after written notice from Lender that the same is due and payable; or (ii) for a period of thirty (30) days after written
notice from Lender, to observe or perform any non-monetary covenant or condition contained in this Agreement or any other Loan
Documents; provided that if any such failure concerning a non-monetary covenant or any of the covenants set forth in Sections
11.9, 11.10, 11.11, 11.12, 11.13 or 11.14, or any other covenant which is otherwise susceptible
to cure and cannot reasonably be cured within said thirty (30) day period, then Borrower shall have an additional sixty (60) day
period to cure such failure and no Event of Default shall be deemed to exist hereunder so long as Borrower commences such cure
within the initial thirty (30) day period and diligently and in good faith pursues such cure to completion within such resulting
ninety (90) day period from the date of Lender’s notice; and provided further that if a different notice or grace
period is specified under any other subsection of this Section 15.1 with respect to a particular breach, or if another
subsection of this Section 15.1 applies to a particular breach and does not expressly provide for a notice or grace period
the specific provision shall control.


 


(b)         Any assignment
in violation of Section 13.2.


 


(c)         If any representation
or warranty made by Borrower contained in this Agreement or the Security Documents (as the same may be modified by the Disclosure
Schedules), or any report or certificate delivered by Borrower in satisfaction of any of the conditions of this Agreement is untrue
or incorrect in any material respect at the time made or delivered, provided that if such breach is reasonably susceptible of
cure, then no Event of Default shall exist so long as Borrower cures said breach (i) within the notice and cure period provided
in (a)(i) above for a breach that can be cured by the payment of money or (ii) within the notice and cure period provided
in (a)(ii) above for any other breach.


 


(d)         Borrower or its
Subsidiaries shall commence a voluntary case concerning Borrower or such Subsidiary under the Bankruptcy Code; or an involuntary
proceeding is commenced against Borrower or its Subsidiaries under the Bankruptcy Code and relief is ordered against Borrower,
or the petition is controverted but not dismissed or stayed within sixty (60) days after the commencement of the case, or a custodian
(as defined in the Bankruptcy Code) is appointed for or takes charge of all or substantially all of the property of Borrower or
its Subsidiaries; or the Borrower or any of its Subsidiaries commences any other proceedings under any reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar Law of any jurisdiction whether now
or hereafter in effect relating to the Borrower or its Subsidiaries; or there is commenced against Borrower or its Subsidiaries
any such proceeding which remains undismissed or unstayed for a period of sixty (60) days; or the Borrower or its Subsidiaries
fails to controvert in a timely manner any such case under the Bankruptcy Code or any such proceeding, or any order of relief
or other order approving any such case or proceeding is entered; or the Borrower or its Subsidiaries by any act or failure to
act indicates its consent to, approval of, or acquiescence in any such case or proceeding or the appointment of any custodian
or the like of or for it for any substantial part of its property or suffers any such appointment to continue undischarged or
unstayed for a period of sixty (60) days.


 




    	24



    	 



    

 


(e)         Borrower or its
Subsidiaries shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally
as they become due, or shall consent to the appointment of a receiver or trustee or liquidator of all of its property or the major
part thereof or if all or a substantial part of the assets of Borrower or its Subsidiaries are attached, seized, subjected to
a writ or distress warrant, or are levied upon, or come into the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors.


 


(f)         One or more final,
non-appealable judgments are entered (i) against Borrower in amounts aggregating in excess of $250,000 or (ii) against any of
Borrower’s Subsidiaries in amounts aggregating in excess of $1,000,000, and said judgments are not stayed or bonded over
within thirty (30) days after entry.


 


(g)         If Borrower shall
fail to pay any debt owed by it or is in default under any agreement with Lender or any other party (other than a failure or default
for which Borrower’s maximum liability does not exceed $250,000) and such failure or default continues after any applicable
grace period specified in the instrument or agreement relating thereto, unless Borrower is contesting its obligation to pay such
debt in good faith and by appropriate actions or proceedings.


 


(h)         If a Material Adverse Change occurs
with respect to Borrower and any of its Subsidiaries, considered as a whole.


 


(i)         The failure at any time of a security
interest created under any Security Document to be a valid first lien upon the Collateral described therein, and such failure
remains uncured for a period of fifteen (15) days following written notice of such failure by Lender to Borrower.


 


(j)         Reserved.


 


(k)         A Change of Control shall occur.


 


(l)         Failure of Borrower to comply with
clauses (a) through (f) of Section 10.1 and such failure continues uncured for a period of fifteen (15) days after such
failure.


 


(m)         The occurrence
of any other event or circumstance denominated as an Event of Default in this Agreement or under any of the other Loan Documents
and the expiration of any applicable grace or cure periods, if any, specified for such Event of Default herein or therein, as
the case may be.


 


(n)         Reserved.


 


(o)         If (i) any
Bank shall cease for any reason to be an insured bank under the FDIA, (ii) the FDIC or any other Governmental Authority shall
issue a cease and desist order to take other action of a disciplinary or remedial nature against the Borrower or any Subsidiary
and such order or other action could reasonably be expected to have a Material Adverse Change or there shall occur with respect
to any Subsidiary any event that is grounds for the required submission of a capital restoration plan under 12 U.S.C. § 1831o(e)(2)
and the regulations thereunder, or (iii) the Borrower or any Subsidiary shall enter into a written supervisory or similar
agreement with any Bank Regulatory Authority or other Governmental Authority for any reason, but only to the extent that such
supervisory or similar agreement would have a Material Adverse Change with respect to such Subsidiary or the Borrower.


 


(p)         Without limiting
the generality of Section 15.1(o), the appointment of a conservator or receiver for any Subsidiary of Borrower that
is an “insured depository institution” as defined in the FDIA (12 U.S.C. § 1813(c)(2)), by any “appropriate
Federal banking agency” as defined in the FDIA (12 U.S.C. § 1813(q)), by any state supervisory agency or by the
FDIC or any successor thereto pursuant to the FDIA; or the organization of a bridge bank to purchase assets and assume liabilities
of such Subsidiary pursuant to the FDIA; or the provision of any form of assistance to any such Subsidiary by the FDIC pursuant
to the FDIA or other Governmental Authority.


 




    	25



    	 



    

 


(q)         If Borrower shall
cease to be a bank holding company, within the meaning of the BHCA.


 


ARTICLE XVI


LENDER’S REMEDIES IN EVENT OF
DEFAULT


 


			



		16.1	Remedies Conferred Upon
                                                                    Lender.



 


Upon the occurrence
of, and during the continuance of, any Event of Default, Lender may pursue any one or more of the following remedies:


 


(a)         Declare the Note to be immediately
due and payable (the “Acceleration”);


 


(b)         Following Borrower’s
failure to repay the Note after Acceleration, (i) use and apply any monies or letters of credit deposited by Borrower with Lender,
regardless of the purposes for which the same was deposited (other than the Depository Account), to cure any such default or to
apply on account of any indebtedness under this Agreement which is due and owing to Lender; and (ii) exercise or pursue any other
remedy or cause of action permitted under this Agreement or any other Loan Documents, or conferred upon Lender by operation of
Law, including, the enforcement of any Liens or security interests under the Security Documents. For the avoidance of doubt, in
no event shall Lender use or apply any monies in the Depository Account as a remedy for or in respect of any Event of Default
by Borrower or otherwise.


 


Notwithstanding the
foregoing, upon the occurrence of any Event of Default under Section 15.1(d), (e), (o), (p) or
(q) with respect to Borrower or any Bank, all amounts evidenced by the Note shall automatically become due and payable,
without any presentment, demand, protest or notice of any kind to Borrower.


 


ARTICLE XVII 


GENERAL PROVISIONS


 


			



		17.1	Captions.



 


The captions and headings
of various Articles, Sections and subsections of this Agreement and Schedules and Exhibits pertaining hereto are for convenience
of reference only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.


 


		17.2	Modification; Waiver.



 


No modification, waiver,
amendment or discharge of this Agreement or any other Loan Document shall be valid unless the same is in writing and signed by
both parties hereto.


 


		17.3	Authorized Representative.



 


Borrower hereby appoints
each of Scott Kavanaugh, its Chief Executive Officer as of the Effective Date, and John Michel, its Chief Financial Officer as
of the Effective Date, as its Authorized Representatives for purposes of dealing with Lender on behalf of Borrower in respect
of any and all matters in connection with this Agreement, the other Loan Documents, and the Loan. Each of the Authorized Representatives
shall have the power, in his discretion, to give and receive all notices, monies, approvals, and other documents and instruments,
and to take any other action on behalf of Borrower. All actions by any of the Authorized Representatives shall be final and binding
on Borrower. Lender may rely on the authority given to any of the Authorized Representatives until actual receipt by Lender of
a duly authorized resolution substituting a different person as one of, or different persons as the Authorized Representatives.


 




    	26



    	 



    

 


		17.4	Governing Law.



 


Irrespective of the
place of execution and/or delivery, this Agreement shall be governed by, and shall be construed in accordance with, the laws of
the State of Texas.


 


		17.5	Reserved.



.


		17.6	Disclaimer by Lender.



 


This Agreement is
made for the sole benefit of Borrower and Lender, and no other person or persons shall have any benefits, rights or remedies under
or by reason of this Agreement, or by reason of any actions taken by Lender pursuant to this Agreement. Lender shall not be liable
for any debts or claims accruing in favor of any such parties against Borrower or others. Lender, by making the Loan or taking
any action pursuant to any of the Loan Documents, shall not be deemed a partner or a joint venturer with Borrower or fiduciary
of Borrower. No payment of funds directly to a contractor or subcontractor or provider of services shall be deemed to create any
third-party beneficiary status or recognition of same by the Lender.


 


		17.7	Partial Invalidity; Severability.



 


If any of the provisions
of this Agreement, or the application thereof to any person, party or circumstances, shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement, or the application of such provision or provisions to persons, parties or circumstances other
than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and every provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by Law.


 


		17.8	Definitions Include Amendments.



 


Definitions contained
in this Agreement which identify documents, including, but not limited to, the Loan Documents, shall be deemed to include all
amendments and supplements to such documents from the date hereof, and all future amendments, modifications, and supplements thereto
entered into from time to time to satisfy the requirements of this Agreement or otherwise with the written consent of the parties
hereto. Reference to this Agreement contained in any of the foregoing documents shall be deemed to include all amendments and
supplements executed in accordance with this Agreement and the other Loan Documents.


 


		17.9	Execution in Counterparts;
                                                                    Electronic Execution.



 


This Agreement may
be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page of this Agreement by fax or other digital or electronic imaging means shall be effective
as delivery of a manually executed counterpart of this Agreement.


 




    	27



    	 



    

 


		17.10	Entire Agreement.



 


This Agreement, taken
together with all of the other Loan Documents, embody the entire agreement and supersedes all prior agreements, written or oral,
between the parties, relating to the subject matter hereof.


 


		17.11	Waiver of Damages.



 


Neither Lender nor
Borrower shall be liable to each other for punitive, exemplary or consequential damages, including, without limitation, lost profits,
whatever the nature of a breach by Lender or Borrower of its obligations under this Agreement or any of the Loan Documents, and
each of Lender and Borrower hereby waives all claims for punitive, exemplary or consequential damages.


 


		17.12	Claims Against Lender.



 


Lender shall not be
in default under this Agreement, or under any other Loan Documents, unless a written notice specifically setting forth the claim
of Borrower shall have been given to Lender within twelve (12) months after Borrower first had actual Knowledge of the occurrence
of the event which Borrower alleges gave rise to such claim and Lender does not remedy or cure the default, if any there be, promptly
thereafter. Borrower waives any claim, set-off or defense against Lender arising by reason of any alleged default by Lender as
to which Borrower does not give such notice timely as aforesaid. Borrower acknowledges that such waiver is or may be essential
to Lender’s ability to enforce its remedies without delay and that such waiver therefore constitutes a substantial part
of the bargain between Lender and Borrower with regard to the Loan.


 


		17.13	Jurisdiction.



 


TO THE GREATEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT,
ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A “PROCEEDING”), BORROWER IRREVOCABLY (A) SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY OF DALLAS, COUNTY OF DALLAS AND
STATE OF TEXAS, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN
ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO
OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT
SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR
MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. BORROWER FURTHER AGREES AND CONSENTS THAT,
IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN
ANY TEXAS STATE OR UNITED STATES COURT SITTING IN THE CITY OF DALLAS AND COUNTY OF DALLAS MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON
RECEIPT; EXCEPT THAT IF BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER
THE SAME SHALL HAVE BEEN SO MAILED.


 




    	28



    	 



    

 


		17.14	Set-Offs.



 


After the occurrence
and during the continuance of an Event of Default, Borrower hereby irrevocably authorizes and directs Lender from time to time
to charge Borrower’s accounts and deposits with Lender or its Affiliates (other than the Depository Account and deposits
therein), and to pay over to Lender an amount equal to any amounts from time to time due and payable to Lender hereunder, under
the Note or under any other Loan Document. Borrower hereby grants to Lender a security interest in and to all such accounts and
deposits (other than the Depository Account and deposits therein) maintained by the Borrower with Lender (or its Affiliates).


 


		17.15	Lender’s Consent.



 


Wherever in this Agreement
there is a requirement for Lender’s consent and/or a document to be provided or an action taken “to the satisfaction
of Lender”, it is understood by such phrase that, except as expressly modified herein, Lender shall exercise its consent,
right or judgment in its reasonable discretion.


 


		17.16	Notices.



 


Any notice, demand,
request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and
shall be deemed to have been properly given (a) if hand delivered, when delivered; (b) if mailed by United States Certified Mail
(postage prepaid, return receipt requested), three (3) Business Days after mailing (c) if by Federal Express or other reliable
overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier on the day
of transmission so long as copy is sent on the same day by overnight courier as set forth below:


 


If to Borrower:


First Foundation Inc.


18101 Von Karman Ave., Suite 700,


Irvine, California 92612


Attention: Mr. John Michel


Telephone: (949) 202-4160


Facsimile: (949) 202-4187


 


With a copy to:


Stradling Yocca Carlson & Rauth PC


660 Newport Center Drive, Suite 1600


Newport Beach, CA 92669


Attention: Ben A. Frydman


Telephone: (949) 725-4000


Facsimile: (949) 725-4100


Email:   bfrydman@sycr.com


 


If to Lender:


NexBank SSB


2515 McKinney Avenue, Suite 1100


Dallas, Texas 75201


Attention: Matt Siekielski


Telephone: 972-934-4724


 


With a copy to:


NexBank SSB


2515 McKinney Avenue, Suite 1100


Dallas, Texas 75201


Attention: Joshua Bock


Telephone: 972-934-4700


Facsimile: 972-934-4785


 




    	29



    	 



    

 


With a copy to:


Haynes and Boone, LLP


2323 Victory Avenue, Suite 700


Dallas, Texas 75219


Attention: Darrel Rice          


Telephone: 214-651-5969


Facsimile: 214-200-0664


Email:   darrel.rice@haynesboone.com


 


or at such other address as the party to be served
with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.


 


		17.17	Waiver of Jury Trial.



 


BORROWER AND LENDER
EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREE
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.


 


		17.18	No Oral Agreements.



 


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.


 


[Signature page follows.]




    	30



    	 



    

 


EXECUTED as of the date first set forth
above.


 


	 	BORROWER:
	 	 
	 	FIRST FOUNDATION INC.
	 	 
	 	By:	/S/ JOHN MICHEL
	 	Name: John Michel
	 	Title: Chief Financial Officer
	 	 	 
	 	LENDER:
	 	 
	 	NEXBANK SSB
	 	 	 
	 	By:	/S/ MATT SIEKIELSKI
	 	Name: Matt Siekielski
	 	Title: Chief Operating Officer


 




    	31



    	 



    

 


EXHIBIT A


 


Certificate of Compliance


 


NexBank SSB


2515 McKinney Avenue, Suite 1100


Dallas, Texas 75201


 


Attn: First Foundation Inc.


 


Re: Loan Agreement dated as of April 19, 2013 (as
amended, modified, supplemented, restated, or renewed, from time to time, the “Agreement”), between FIRST
FOUNDATION INC. (“Borrower”) and NEXBANK SSB (“Lender”).


 


Reference is made to the Agreement.
Capitalized terms used in this Certificate (including schedules and other attachments hereto, this “Certificate”)
without definition have the meanings specified in the Agreement.


 


Pursuant to applicable provisions
of the Agreement, the undersigned, being the Authorized Representative designated in the Agreement, hereby certifies to the Lender
that the information furnished in the attached schedules, including, without limitation, each of the calculations listed below
are true, correct and complete in all material respects as of the last day of the fiscal periods subject to the financial statements
and associated covenants being delivered to the Lender pursuant to the Agreement together with this Certificate (such statements
the “Financial Statements” and the periods covered thereby the “reporting period”) and for
such reporting periods.


 


The undersigned hereby further
certifies to the Lender that:


 


1.         Compliance with Financial
Covenants. As shown below, the Borrower or the Bank, as applicable, is in full compliance with the Financial Covenants contained
in the Agreement. All covenants are expressed as a percentage.


 


[Note to preparer. The following Financial Covenants
are provided as illustration. The actual Financial Covenants must be obtained from the Agreement]


 


		A.	Covenant: Classified Assets to Tier 1 Capital
Ratio of no greater than 50.0% tested quarterly



 


Calculation:


 


Classified Assets to Tier 1 Capital Ratio = Classified
Assets / (Tier 1 Capital + Allowance for Loan and Lease Losses)


 


Classified Assets to Tier 1 Capital Ratio of
                                                       
  as of                         .


 


[Borrower to include specific calculation based
upon formula outlined in Agreement]


 


Compliance? (Yes or No)                                                                                          


 




    	32



    	 



    

 


		B.	Covenant: Non-Performing Assets to Net Capital
Ratio of less than 40% tested quarterly



 


Calculation:


 


Non-Performing Assets to Net Capital Ratio
= (Total Non-Accrual Loans + Other Real Estate Owned of such Person) / ((Total Capital + unrealized losses (gains) on securities
+ Allowance for Loan and Lease Losses) - (Intangible Assets))


 


Non-Performing Assets to Net Capital Ratio of                                                        
as of                         .


 


[Borrower to include specific calculation based
upon formula outlined in Agreement]


 


Compliance? (Yes or No)                                                                                          


 


		C.	Covenant: Leverage Ratio of not less than 5.0%
tested quarterly



 


Calculation:


 


Leverage Ratio = Tier 1 Capital / Average Total
Assets


 


Leverage Ratio of                                                        
as of                         .


 


[Borrower to include specific calculation based
upon formula outlined in Agreement]


 


Compliance? (Yes or No)                                                                                          


 


		D.	Covenant: Fixed Charge Coverage Ratio of less
than 1.50 to 1.0 tested quarterly



 


Calculation:


 


Fixed Charge Coverage Ratio = EBITDA / Fixed
Charges


 


Fixed Charge Coverage Ratio of              
for the 12 month period ending                         .


 


[Borrower to include specific calculation based
upon formula outlined in Agreement]


 


Compliance? (Yes or No)                                                                                          


 





		E.	Covenant: Total Risk-Based Capital Ratio of 10.0%
or greater tested quarterly



 


Calculation:


 


Total Risk-Based Capital Ratio = (Tier 1 Capital
+ Tier 2 Capital) / Total Risk-Weighted Assets


 


Total Risk-Based Capital Ratio of               
as of                         .


 


[Borrower to include specific calculation based upon formula
outlined in Agreement]




 




    	2



    	 



    

 


Compliance? (Yes or No)                                                                                          


 


		F.	Covenant: Minimum Liquidity of at least $1,000,000
tested quarterly



 


Minimum Liquidity of                                for
the quarterly period ending                           .


 


[Borrower to include specific calculation based
upon formula outlined in Agreement]


 


Compliance? (Yes or No)                                                                                          


 


		G.	Covenant: Bank shall at all times maintain at
least $2,500,000 in the Depository Account



 


Borrower has                                         
on deposit in the Depository Account for the quarterly period ending                                        .


 


Compliance? (Yes or No)                                                                                          


 


2.          Review of Condition.
The undersigned has reviewed the terms of the Loan Documents, including, but not limited to, the representations and warranties
of the Borrower set forth in the Loan Documents and the covenants of the Borrower set forth in the Loan Documents, and has made,
or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Borrower
through the reporting periods.


 


3.          Representations and Warranties.
The representations and warranties of the Borrower contained in the Loan Documents, including those contained in the Agreement,
are true and accurate in all material respects as of the date hereof and were true and accurate in all material respects at all
times during the reporting period except as expressly noted on Schedule A hereto.


 


4.          Covenants. During the
reporting period, the Borrower observed and performed all of the respective covenants and other agreements under the Loan Documents,
and satisfied each of the conditions contained therein to be observed, performed or satisfied by the Borrower, except as expressly
noted on Schedule A hereto.


 


5.          No Event of Default.
No Event of Default exists as of the date hereof or existed at any time during the reporting period, except as expressly noted
on Schedule A hereto.


 


IN WITNESS WHEREOF, this Certificate is executed by the undersigned
this  ____ day of ________.


 





	 	FIRST FOUNDATION INC.
	 	 	 
	 	By:	 
	 	 	Authorized Representative


 




    	3



    	 



    

 


SCHEDULE 11.1(b)


 


Indebtedness


 


None.


 




    	4



    	 



    

 


SCHEDULE 11.2(b)


 


Liens


 


None.


 




    	5



    	 



    

 


PROMISSORY NOTE


 


	U.S. $7,500,000	As of April 19, 2013


 


FOR VALUE RECEIVED,
FIRST FOUNDATION INC., a California corporation, having an address at 18101 Von Karman Ave., Suite 700, Irvine, California 92612
(“Maker”), hereby promises to pay to the order of NEXBANK SSB (“Payee”), at its address
at 2515 McKinney Avenue, Suite 1100, Dallas, Texas 75201 or such other address as it may designate in writing, the principal sum
of Seven Million Five Hundred Thousand and NO/100 Dollars ($7,500,000), or, if less, the unpaid principal amount of the Loan,
and interest from the date hereof on the balance of principal from time to time outstanding, in United States currency, at the
rates and at the times hereinafter described.


 


This Promissory
Note (this “Note”) is issued by Maker pursuant to that certain Loan Agreement of even date herewith (the “Loan
Agreement”) entered into between Payee and Maker. This Note evidences the Loan (as defined in the Loan Agreement), in
the principal amount of $7,500,000, being made concurrently herewith by Payee to Maker. Payment of this Note is governed by the
Loan Agreement, the terms of which are incorporated herein by express reference as if fully set forth herein. In the event of
any conflict between any of the terms and provisions of this Note and the terms or provisions of the Loan Agreement, the terms
and provisions of the Loan Agreement shall control. Capitalized terms used and not otherwise defined herein shall have the meanings
given to them in the Loan Agreement.


 


1.         Principal
and Interest.


(a)         The
maximum aggregate principal amount of this Note shall not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000). No
principal amount repaid may be reborrowed. All principal, interest and other sums due under this Note shall be due and payable
in full on the Maturity Date


 


(b)         Subject
to Section 1(c) below, the unpaid principal amount of this Note shall bear interest at the Note Rate, unless the Default Rate
becomes applicable. Interest shall be calculated for the actual number of days elapsed on the basis of a 365-day year, including
the first date of the applicable period to, but not including, the date of repayment. The Loan shall bear interest at the Default
Rate upon the occurrence and during the continuance of an Event of Default; provided, however, that, upon the cure or other cessation
of the Event of Default, interest shall thereafter accrue at the Note Rate.


 


(c)         Principal
shall be paid in monthly installments, each in the amount of sixty-two thousand five hundred dollars ($62,500), together accrued
but unpaid interest, commencing on June 1, 2013 and continuing on each Payment Date thereafter, until the Maturity Date or, if
the Maturity Date of this Note is accelerated to any earlier date by Lender pursuant to Section 16.1(a) of the Loan Agreement,
then until such earlier date, when the principal amount of this Note then outstanding, and all accrued but unpaid interest thereon
shall be due and payable in full. All payments (whether of principal or of interest) shall be deemed credited to Borrower’s
account only if received by 2:00 p.m. Dallas time on a Business Day; otherwise, such payment shall be deemed received on the next
Business Day.


 


(d)         Notwithstanding
anything in this Note to the contrary, Maker shall have the right, in its sole discretion, to prepay the unpaid principal balance
of this Note at any time in whole or from time to time in part, without penalty, premium or other charge whatsoever, and on the
terms and conditions set forth in Section 4.4 of the Loan Agreement.


 




    	1



    	 



    

 


2.         Maximum
Lawful Rate. It is the intent of Maker and Payee to conform to and contract in strict compliance with applicable usury
law from time to time in effect. In no way, nor in any event or contingency (including but not limited to prepayment, default,
demand for payment, or acceleration of the maturity of any obligation), shall the rate of interest taken, reserved, contacted
for, charged or received under this Note and the other Loan Documents exceed the highest lawful interest rate permitted under
applicable law. If Lender shall ever receive anything of value which is characterized as interest under applicable law and which
would apart from this provision be in excess of the highest lawful interest rate permitted under applicable law, an amount equal
to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount
owing on the Loan in the inverse order of its maturity and not to the payment of interest, or refunded to the Borrower or the
other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal. All interest
paid or agreed to be paid to the holder hereof shall, to the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full stated term (including any renewal or extension) of the Loan so that the amount of interest on
account of such obligation does not exceed the maximum permitted by applicable law. As used in this Section, the term “applicable
law” shall mean the laws of the State of Texas or the federal laws of the United States, whichever laws allow the greater
interest, as such laws now exist or may be changed or amended or come into effect in the future.


 


3.         Monthly
Payments. Subject to any applicable grace periods set forth in the Loan Agreement, all payments on account of the indebtedness
evidenced by this Note shall be made to Payee not later than 2:00 p.m. Dallas, Texas time on the day when due, or if such day
is other than a Business Day, then on the next succeeding Business Day, in lawful money of the United States and shall be first
applied to the payment of late charges, costs of collection or enforcement and other similar amounts due, if any, under this Note
as and to the extent provided in the Loan Agreement, then to accrued but unpaid interest payable hereunder and the remainder to
reduce the principal amount of this Note then outstanding.


 


4.         Maturity
Date. The indebtedness evidenced hereby shall mature on the Maturity Date, or if the Maturity Date of this Note is accelerated
to any earlier date by Lender pursuant to Section 16.1(a) of the Loan Agreement, then on such earlier date. On the Maturity Date,
or such earlier date, as the case may be, the entire outstanding principal balance hereof, together with accrued and unpaid interest
and all other sums evidenced by this Note, shall, if not sooner paid, become due and payable.


 


5.         General Provisions.


 


(a)         In the event (i) the
principal balance hereof is not paid when due, whether upon acceleration or the Maturity Date or (ii) an Event of Default occurs,
then the principal balance hereof shall thereafter bear interest at the Default Rate until such date, if any, on which the Event
of Default is cured or otherwise ceases, at which time any remaining principal balance shall again bear interest at the Note Rate.
In addition, for any installment (exclusive of the payment due upon the Maturity Date) which is not paid by the tenth (10th
) day following the due date thereof a late charge equal to five percent (5%) of the amount of such installment shall be
due and payable to the holder of this Note on demand to cover the extra expense involved in handling delinquent payments.


 


(b)         Maker
agrees that the obligation evidenced by this Note is an exempt transaction under the Truth-in-Lending Act, 15 U.S.C. § 1601,
et seq.


 




    	2



    	 



    

 


(c)         This
Note and all provisions hereof shall be binding upon Maker and all persons claiming under or through Maker, and shall inure to
the benefit of Payee, together with its successors and Permitted Assigns.


 


(d)         Time is of the essence as to all dates set
forth herein.


 


(e)         To
the fullest extent permitted by applicable law, except as may be agreed in writing by Payee or as may be set forth to the contrary
in the Loan Agreement or the other Loan Documents, Maker’s liability shall not be in any manner affected by any indulgence,
extension of time, or renewal, granted or consented to by Payee.


 


(f)         To
the fullest extent permitted by applicable Law, Maker hereby waives and renounces for itself, its successors and assigns, all
rights to the benefits of any statute of limitations and any moratorium, reinstatement, marshaling, forbearance, valuation, stay,
extension, redemption, appraisement, or exemption and homestead laws now provided, or which may hereafter be provided, by the
laws of the United States and of any state thereof against the enforcement and collection of the obligations evidenced by this
Note.


 


(g)         If
this Note is placed in the hands of attorneys for collection or is collected through any legal proceedings, Maker promises and
agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all reasonable costs incurred by
Lender to collect, or attempt to collect this Note, including all reasonable attorneys’ fees and disbursements actually
incurred by the Lender.


 


(h)         To
the fullest extent permitted by applicable law, except as otherwise provided in the Loan Agreement or any of the other Loan Documents,
(i) all parties now or hereafter liable with respect to this Note, whether Maker, principal, surety, guarantor, endorsee or otherwise
hereby severally waive presentment for payment, demand, notice of nonpayment or dishonor, protest and notice of protest, and (ii)
no failure to accelerate the indebtedness evidenced hereby, acceptance of a past due installment following the expiration of any
cure period provided by this Note, any Loan Document or applicable law, or indulgences granted from time to time shall be construed
(A) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration
or of the right of Payee thereafter to insist upon strict compliance with the terms of this Note, or (B) to prevent the exercise
of such right of acceleration or any other right granted hereunder or by the laws of the State.


 


(i)         THIS
NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.


 


(j)         THIS
NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


 


[Signature page follows.]


 




    	3



    	 



    

 


Maker has delivered this Note as of the day and year
first set forth above.


 


	 	MAKER:
	 	 
	 	FIRST FOUNDATION INC.,
	 	a California corporation
	 	 
	 	By:	/S/ JOHN MICHEL
	 	Name: John Michel
	 	Title:  Chief Financial Officer


 


Signature Page to

Promissory Note


 




    	 



    	 



    

 


PLEDGE AND SECURITY AGREEMENT


 


dated as of April 19, 2013


 


between


 


First Foundation, Inc., as Grantor


 


and 


 


NEXBANK SSB, as
Lender


 




    	 



    	 



    

 


PLEDGE AND SECURITY AGREEMENT


 


This PLEDGE
AND SECURITY AGREEMENT, dated as of April 19, 2013 (as it may be amended, restated, supplemented or otherwise modified
from time to time, this “Agreement”), by and among First Foundation, Inc., a California corporation (the “Borrower”
or “Grantor”), and NexBank, SSB, as lender (together with its successors and permitted assigns,
the “Lender”).


 


RECITALS:


 


WHEREAS,
reference is made to that certain Loan Agreement, dated as of the date hereof (as it may be amended, restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”), by and between Borrower and Lender;


 


WHEREAS,
in consideration of the extensions of credit and other accommodations of Lender as set forth in the Loan Agreement, Grantor has
agreed to secure Grantor’s obligations under the Loan Documents as set forth herein; and


 


NOW, THEREFORE,
in consideration of the premises and the agreements, provisions and covenants herein contained, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, Grantor and Lender agree as follows:


 


SECTION 1. DEFINITIONS; GRANT
OF SECURITY.


 


		1.1	General Definitions.
                                                                      In this Agreement, the following terms shall have the
                                                                      following meanings:



 


“Agreement” shall have
the meaning set forth in the preamble.


 


“Borrower” shall have
the meaning set forth in the preamble.


 


“Cash Proceeds” shall
have the meaning assigned in Section 9.6.


 


“Change of
Control Laws” shall mean all U.S. federal and state laws and regulations which govern or impose conditions, requirements
or restrictions on changes in the ownership of FDIC insured banks, including the Change in Bank Control Act of 1978, as amended,
the BHCA and Regulation Y under the Federal Reserve Act.


 


“Collateral” shall have
the meaning assigned in Section 2.1.


 


“Collateral Account”
shall mean any account established by the Lender for the purpose of holding any Pledged Stock pursuant to and in accordance with
the terms and provisions of this Agreement.


 


“Collateral
Records” shall mean books, records, files, and similar items that at any time evidence or contain information relating
to any of the Collateral or are otherwise necessary in the collection thereof or realization thereupon.


 


“Control”
shall mean: with respect to any Certificated Security, control within the meaning of Section 8-106(a) or (b) of the UCC.


 




    	1



    	 



    

 


“FFB” means First Foundation
Bank, a California state chartered and FDIC insured bank, which is the issuer of the Pledged Shares and a wholly-owned subsidiary
of Grantor.


 


“Grantor” shall have
the meaning set forth in the preamble.


 


“Insurance”
shall mean all insurance policies covering any or all of the Collateral (regardless of whether the Lender is the loss payee thereof).


 


“Lender” shall have
the meaning set forth in the preamble.


 


“Loan Agreement” shall
have the meaning set forth in the recitals.


 


“Pledge Supplement”
shall mean any supplement to this Agreement in substantially the form of Exhibit A.


 


“Pledged
Stock” and “Pledged Shares” shall each mean all shares of capital stock of FFB owned by Grantor,
including, without limitation, all shares of capital stock described on Schedule 5.2(I) under the heading “Pledged Stock”
(as such schedule may be amended or supplemented from time to time by mutual written agreement of the parties hereto), and the
certificates, if any, representing such shares and any interest of Grantor in the entries on the books of the issuer of such shares
, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares.


 


“Secured Obligations”
shall have the meaning assigned in Section 3.1.


 


“Securities
Act” means the U.S. Securities Act of 1933, as amended, and any successor statute thereto.


 


“To Transfer”
and any other term or phrase of similar import shall mean and include: to sell, assign, pledge, lease, license (on an exclusive
or nonexclusive basis) or otherwise dispose of the Collateral, or any interest therein, whether in whole or in part, unless the
context in which such term or phrase is used indicates otherwise.


 


“Transfer”
shall mean, when used as a noun, a transfer, sale, assignment, lease, license or other disposition of the Collateral, or any interest
therein, whether in whole or in part.


 


“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the State of Texas; provided, however, that in the event
that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any
Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Texas,
the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes of the provisions hereof relating to such perfection, priority or remedies.


 


“United States” or “U.S.”
shall mean the United States of America.


 


		1.2	Definitions; Interpretation.



 


(a)         In this Agreement, the
following capitalized terms shall have the meaning given to them in the UCC (and, if defined in more than one Article of the UCC,
shall have the meaning given in Article 9 thereof): Certificated Security, Money, Proceeds, and Supporting Obligations.


 




    	2



    	 



    

 


(b)         All other capitalized terms
used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto
in the UCC or Loan Agreement, as applicable. The incorporation by reference of terms defined in the Loan Agreement shall survive
any termination of the Loan Agreement until this Agreement is terminated as provided in Section 10 hereof. Any of the terms
defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference.
References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit,
as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including”,
when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language
(such as “without limitation” or “but not limited to” or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such
general statement, term or matter. If any conflict or inconsistency exists between this Agreement and the Loan Agreement, the
Loan Agreement shall govern. All references herein to provisions of the UCC shall include all successor provisions under any subsequent
version or amendment to any Article of the UCC.


 


SECTION 2.GRANT OF SECURITY.


 


2.1         Grant of Security. The Grantor
hereby grants to the Lender a security interest in and continuing lien on all of Grantor’s right, title and interest in,
to and under the following personal property of the Grantor, in each case whether now or hereafter existing or in which the Grantor
now has or hereafter acquires an interest and wherever the same may be located (all of which being hereinafter collectively referred
to as the “Collateral”):


 


(a)         Pledged Stock;


 


(b)         to the extent not otherwise included
above, all Collateral Records and Supporting Obligations relating to the Pledged Stock; and


 


(c)         to the extent not otherwise included
above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing.


 


SECTION 3.SECURITY FOR OBLIGATIONS; GRANTOR
REMAINS LIABLE.


 


3.1         Security for Obligations. This
Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when
due, whether at stated maturity, or by acceleration or demand as provided in the Loan Agreement (including the payment of amounts
that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a)
(and any successor provision thereof)), of all Obligations of Grantor arising under the Loan Documents (the “Secured
Obligations”).


 


3.2         Continuing Liability Under Collateral.
Notwithstanding anything herein to the contrary, (i) Grantor shall remain liable for all obligations under the Collateral and
nothing contained herein is intended or shall be a delegation of duties to the Lender, (ii) Grantor shall remain liable under
each of the agreements included in the Collateral, including, without limitation, any agreements relating to Pledged Stock, to
perform all of the obligations undertaken by it thereunder all in accordance with and pursuant to the terms and provisions thereof
and the Lender shall have no obligation or liability under any of such agreements by reason of or arising out of this Agreement
or any other document related thereto nor shall the Lender have any obligation to make any inquiry as to the nature or sufficiency
of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included
in the Collateral, including, without limitation, any agreements relating to Pledged Stock, and (iii) the exercise by the Lender
of any of its rights hereunder shall not release Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral.


 




    	3



    	 



    

 


SECTION 4. CERTAIN PERFECTION
REQUIREMENTS


 


			



4.1         Delivery Requirements. With
respect to any Certificated Securities included in the Collateral, Grantor shall deliver to the Lender the Security Certificates
evidencing such Certificated Securities duly indorsed by an effective endorsement (within the meaning of Section 8-107 of the
UCC), or accompanied by share transfer powers or other instruments of transfer duly endorsed by such an effective endorsement,
in each case, to the Lender or in blank.


 


4.2         Reserved.


 


4.3         Timing and Notice. With
respect to any Collateral in existence on the date hereof, Grantor shall comply with the requirements of Section 4 on the
date hereof and, with respect to any Collateral hereafter owned or acquired, Grantor shall comply with such requirements within
30 (thirty) days of Grantor acquiring rights therein. Grantor shall promptly inform the Lender of its acquisition of any Collateral
for which any action is required by Section 4 hereof.


 


SECTION 5.REPRESENTATIONS AND WARRANTIES. Grantor
hereby represents and warrants, on the Closing Date and on each Credit Date, that:


 


			



		5.1	Grantor Information and Status.



 


(a)         Schedule
5.1(A) and (B) sets forth, as of the Effective Date, under the appropriate headings: (1) the full legal name of Grantor, (2) all
trade names or other names under which Grantor currently conducts business, (3) the type of organization of Grantor, (4) the jurisdiction
of organization of Grantor, (5) its organizational identification number, if any, and (6) the jurisdiction where the chief executive
office or its principal place of business (or the principal residence if Grantor is a natural person) is located.


 


(b)         Except
as provided on Schedule 5.1(C), it has not changed its name, jurisdiction of organization or its corporate structure in any way
(e.g., by merger, consolidation, change in corporate form or otherwise) and has not done business under any other name, in each
case, within the past five (5) years;


 


(c)         It
has been duly organized and is validly existing as an entity of the type as set forth opposite its name on Schedule 5.1(A) solely
under the laws of the jurisdiction as set forth opposite its name on Schedule 5.1(A) and remains duly existing as such. It has
not filed any certificates of dissolution or liquidation, any certificates of domestication, transfer or continuance in any other
jurisdiction; and


 


(d)         Grantor
is not a “transmitting utility” (as defined in Section 9-102(a)(80) of the UCC).


 


		5.2	Collateral Identification,
                                                                 Special Collateral.



 


(e)         Schedule
5.2 sets forth as of the Closing Date under the appropriate headings all of Grantor’s Pledged Stock;


 


(f)         none
of the Collateral constitutes, or is the Proceeds of, (1) Farm Products, (2) As-Extracted Collateral, (3) Manufactured Homes,
(4) timber to be cut, or (5) aircraft, aircraft engines, satellites, ships or railroad rolling stock; and


 




    	4



    	 



    

 


(g)         All
information supplied in writing by Grantor to Lender with respect to any of the Collateral (in each case taken as a whole with
respect to any particular Collateral) is accurate and complete in all material respects.


 


5.3         Ownership
of Collateral and Absence of Other Liens. It owns the Collateral purported to be owned by it or otherwise has the rights it
purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, developed or
created , will continue to own or have such rights in each item of the Collateral (except as otherwise permitted by the Loan Agreement),
in each case free and clear of any and all Liens, rights or claims of all other Persons, including, without limitation, liens
arising as a result of Grantor becoming bound (as a result of merger or otherwise) as debtor under a security agreement entered
into by another Person other than, in the case of priority only, any Permitted Liens.


 


		5.4	Status of Security Interest.



 


(a)         upon
the filing of financing statements naming Grantor as “debtor” and the Lender as “secured party” and describing
the Collateral in the filing offices set forth opposite Grantor’s name on Schedule 5.4 hereof (as such schedule may be amended
or supplemented from time to time), the security interest of the Lender in all Collateral that can be perfected by the filing
of a financing statement under the Uniform Commercial Code as in effect in the jurisdiction where such filing is made will constitute
a valid, perfected, first priority Lien subject, in the case of priority only, to any Permitted Liens with respect to Collateral.
This Agreement is effective to establish the Lender’s Control of the Collateral subject thereto; and


 


(b)         no
authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory
body or any other Person is required for either (i) the pledge or grant by Grantor of the Liens purported to be created in favor
of the Lender hereunder or (ii) the exercise by Lender of any rights or remedies in respect of any Collateral (whether specifically
granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by clause
(a) above, (B) those that have been obtained prior to the date of determination, (C) as may be required, in connection with the
disposition of any Pledged Stock, by laws generally affecting the offering and sale of Securities, and (D) as may be required
in connection with the exercise of voting and consensual rights with respect to, and any Transfer of any of the Pledged Shares,
under applicable Change of Control Laws.


 


		5.5	Reserved.



 


		5.6	Pledged Stock.



 


(a)         it
is the record and beneficial owner of the Pledged Stock free of all Liens, rights or claims of other Persons and there are no
outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with
respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Stock;


 


(b)         no
consent of any Person including any other general or limited partner, any other member of a limited liability company, any other
shareholder or any other trust beneficiary is necessary in connection with the creation, perfection or first priority status of
the security interest of the Lender in any Pledged Stock or, except as otherwise provided in Section 5.4(b), or the exercise by
the Lender of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof except
such consents as have been obtained.


 




    	5



    	 



    

 





SECTION 6.COVENANTS AND
AGREEMENTS. Grantor hereby covenants and agrees that:


 


			



6.1         Grantor Information and Status.
Without limiting any prohibitions or restrictions on mergers or other transactions set forth in the Loan Agreement, it shall
not change Grantor’s name, identity, corporate structure (e.g. by merger, consolidation, change in corporate form or otherwise),
principal place of business chief executive office, organizational identification number, type of organization or jurisdiction
of organization unless it shall have (a) notified the Lender in writing at least ten (10) days prior to any such change or establishment,
identifying such new proposed name, identity, corporate structure, principal place of business, chief executive office, jurisdiction
of organization or trade name and providing such other information in connection therewith as the Lender may reasonably request
and (b) taken all reasonable actions necessary to maintain the continuous validity, perfection and the same or better priority
of the Lender’s security interest in the Collateral granted or intended to be granted and agreed to hereby, which in the
case of any merger or other change in corporate structure shall include, without limitation, executing and delivering to the Lender
a completed Pledge Supplement together with all Supplements to Schedules thereto, upon completion of such merger or other change
in corporate structure confirming the grant of the security interest hereunder.


 


		6.2	Ownership of Collateral and
                                                                 Absence of Other Liens.



 


(a)         except
for the security interest created by this Agreement, it shall not create or suffer to exist any Lien upon or with respect to any
of the Collateral, other than Permitted Liens, and Grantor shall defend the Collateral against all Persons at any time reasonably
claiming any interest therein;


 


(b)         upon
Grantor, or its Chief Executive Officer or Chief Financial Officer, obtaining knowledge thereof, it shall promptly notify the
Lender in writing of any event that could reasonably be expected to diminish the value of the Collateral or any portion thereof
(other than changes in FFB’s operating results or financial condition, or cash flows that are disclosed in the Financial
Statements required to be delivered by Grantor to Lender pursuant to Section 10.1(a) of the Loan Agreement), the ability of Grantor
or the Lender to dispose of the Collateral or any portion thereof, or the rights and remedies of the Lender in relation thereto,
including, without limitation, the levy of any legal process against the Collateral or any portion thereof; and


 


(c)         Grantor
shall not Transfer (by operation of law or otherwise) or exclusively license to another Person any Collateral except as otherwise
permitted by this Agreement or the Loan Agreement.


 


		6.3	Status of Security Interest.



 


(a)         Grantor
shall maintain the security interest of the Lender hereunder in all Collateral as valid, perfected, first priority Liens (subject
to Permitted Liens).


 


(b)         Notwithstanding
the foregoing, Grantor shall not be required to take any action to perfect any Collateral to the extent that (i) the Grantor,
in consultation with the Lender, reasonably determines that the cost of obtaining a security interest in such Collateral exceeds
the practical benefit thereof to the Lender, or (ii) if such action pursuant to Section 6.3(a) is necessitated as a result of
any act of Lender.


 




    	6



    	 



    

 


		6.4	Pledged Stock.



 


(a)         except
as provided in the next sentence, in the event Grantor receives any dividends, interest or distributions on any Pledged Stock
, upon the merger, consolidation, liquidation or dissolution of any issuer of any Pledged Stock, then (i) such dividends, interest
or distributions and securities or other property shall be included in the definition of Collateral without further action and
(ii) Grantor shall promptly take all steps, if any, necessary to ensure the validity, perfection, priority and, if applicable,
control of the Lender over such Pledged Stock and pending any such action Grantor shall be deemed to hold such dividends, interest,
distributions, securities or other property in trust for the benefit of the Lender and shall segregate such dividends, distributions,
Securities or other property from all other property of Grantor. Notwithstanding the foregoing or anything to the contrary that
may be contained elsewhere in this Agreement or under applicable law, unless an Event of Default has occurred and is continuing,
there shall be no restriction under this Agreement, the Loan Agreement or the other Loan Documents on the declaration or payment
of cash dividends or distributions by the Issuer to Grantor and Grantor shall be entitled to retain all cash dividends and distributions
that are paid by the issuer and all scheduled payments of interest;


 


(b)         Voting.


(i)           So
long as no Event of Default shall have occurred and be continuing, Grantor shall be entitled, in its sole and absolute discretion,
to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Pledged Stock or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the Loan Agreement; and


 


(ii)           Upon the occurrence and
during the continuance of an Event of Default:


 


(1)         subject to compliance
by Lender with any applicable Change of Control Laws, all rights of Grantor to exercise or refrain from exercising the voting
and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall upon notice from the Lender
cease and all such rights shall thereupon become vested in the Lender who shall thereupon have the sole right to exercise such
voting and other consensual rights; provided, however, that upon cure or other cessation of any Event of Default, all rights of
Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to paragraph 6.4(b)(i) above shall immediately revert to Grantor; and


 


(2)         in order to permit the
Lender to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive
all dividends and other distributions which it may be entitled to receive hereunder, upon compliance by Lender with any applicable
Change of Control Laws: (x) Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Lender all
proxies, dividend payment orders and other instruments as the Lender may from time to time reasonably request and (y) Grantor
shall acknowledge that Lender may utilize the power of attorney set forth in Section 8.1.


 




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SECTION 7.FURTHER ASSURANCES; ADDITIONAL GRANTORS.


 


		7.1	Further Assurances.



 


(a)         Grantor
agrees that from time to time, at the expense of Grantor, that it shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary, or that the Lender may reasonably request, in order to create and/or
maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or
to enable the Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral.


 


(b)         Grantor
hereby authorizes the Lender to file, at Lender’s sole expense, a Record or Records, including, without limitation, financing
or continuation statements and amendments and supplements to any of the foregoing, in any jurisdictions and with any filing offices
as the Lender may determine, in its sole discretion, are necessary to perfect or otherwise protect the security interest granted
to the Lender herein. Such financing statements may describe the Collateral in the same manner as described herein or may contain
an indication or description of collateral that describes such property in any other manner as the Lender may determine, in its
sole discretion, is necessary to ensure the perfection of the security interest in the Collateral granted to the Lender herein.


 


SECTION 8.         LENDER APPOINTED ATTORNEY-IN-FACT.


 


			



8.1         Power of Attorney. Grantor
hereby irrevocably appoints the Lender (such appointment being coupled with an interest), effective on the occurrence and during
the continuance of an Event of Default, as Grantor’s attorney-in-fact, with full authority in the place and stead of Grantor
and in the name of Grantor, the Lender or otherwise, from time to time in the Lender’s discretion to take any action and
to execute any instrument that the Lender may deem reasonably necessary to accomplish the purposes of this Agreement, including,
without limitation, the following:


 


(a)         upon
the occurrence and during the continuance of any Event of Default, to obtain insurance required to be maintained by Grantor or
paid to the Lender pursuant to the Loan Agreement, if and to the extent Grantor has allowed the insurance to lapse or such insurance
has otherwise been terminated;


 


(b)         upon
the occurrence and during the continuance of any Event of Default, to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;


 


(c)         upon
the occurrence and during the continuance of any Event of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;


 


(d)         upon
the occurrence and during the continuance of any Event of Default, to file any claims or take any reasonable action or institute
any proceedings that the Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce
the rights of the Lender with respect to any of the Collateral;


 




    	8



    	 



    

 


(e)         upon
the occurrence and during the continuance of any Event of Default, to take or cause to be taken all reasonable actions necessary
to perform or comply or cause performance or compliance with the terms of this Agreement, including, without limitation, access
to pay or discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the
legality or validity thereof and the amounts necessary to discharge the same to be determined by the Lender in its reasonable
discretion, any such payments made by the Lender to become obligations of Grantor to the Lender, due and payable within ten (10)
days after Lender has given Grantor written notice thereof, setting forth such taxes and Liens and the amounts paid by Lender
to discharge same; and


 


(f)         upon
the occurrence and during the continuance of any Event of Default, subject to the provisions of Section 9.1(b) and Section 9.1(e)
below, generally to Transfer or make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely
as though the Lender were the absolute owner thereof for all purposes, and to do, at the Lender’s option and Grantor’s
expense, at any time or from time to time, all acts and things that the Lender deems reasonably necessary to protect, preserve
or realize upon the Collateral and the Lender’s security interest therein in order to effect the intent of this Agreement,
all as fully and effectively as Grantor might do, in each case, subject, however, to compliance with any applicable Change in
Control Laws by Lender and by any Person to whom Lender may Transfer the Collateral, in whole or part.


 


8.2          No Duty on the Part of Lender.
The powers conferred on the Lender hereunder are solely to protect its interest in the Collateral and shall not impose any
duty upon the Lender to exercise any such powers. The Lender shall be accountable only for amounts that it actually receives as
a result of the exercise of such powers, and neither the Lender nor any of its officers, directors, employees or agents shall
be responsible to Grantor for any act or failure to act hereunder, except for their own gross negligence bad faith or willful
misconduct.


 


8.3         Effect of Cure or other Cessation
of Event of Default. Upon the cure or other cessation of any Event of Default, the rights, powers and authority of Lender
under the Power of Attorney, as set forth above in this Section 8, shall cease and all such rights, power and authority shall
thereupon revert to Grantor to the same extent as if no Event of Default had occurred.


 


SECTION 9.         REMEDIES.


 


		9.1	Generally.



(a)         If
any Event of Default shall have occurred and for so long as it is continuing, the Lender may exercise in respect of the Collateral,
in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights
and remedies of the Lender on default under the UCC (whether or not the UCC applies to the affected Collateral) to collect, enforce
or satisfy any Secured Obligations then owing, whether by acceleration or otherwise, and also may pursue any of the following
separately, successively or simultaneously, subject, however, to compliance with any applicable Change in Control Laws by Lender
and by any Person to whom Lender may Transfer the Collateral, in whole or part:


 


(i)         require Grantor to, and
Grantor hereby agrees that it shall at its expense and promptly upon request of the Lender forthwith, assemble all or part of
the Collateral in the Possession of Grantor as directed by the Lender and make it available to the Lender at a place to be designated
by the Lender that is reasonably convenient to both parties;


 


(ii)         prior to the Transfer
of the Collateral, prepare the Collateral for Transfer in such manner to the extent the Lender reasonably deems necessary; and


 




    	9



    	 



    

 


(iii)         without notice except
as specified below or under the UCC, Transfer the Collateral (including licensing the Collateral on an exclusive or nonexclusive
basis) or any part thereof in one or more parcels at public or private sale, at any of the Lender’s offices, for cash, on
credit or for future delivery, at such time or times and at such price or prices and upon such other terms as are commercially
reasonable, subject, however, to compliance with any applicable Change in Control Laws by Lender and by any Person to whom Lender
may Transfer the Collateral, in whole or par.


 


(b)         The
Lender may be the purchaser of any or all of the Collateral at any public sale or at any private sale, but only if and to the
extent the portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the
subject of widely distributed standard price quotations (a “Permitted Private Sale”) in accordance with the UCC and
the Lender shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale or Permitted Private Sale made in accordance with the UCC, to use and apply
any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by the Lender at such sale.
Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Grantor, except
for a ten (10) day right of redemption by Grantor, and Grantor hereby waives (to the extent permitted by applicable law) all other
rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Grantor and Lender agree that Lender shall provide at least twenty (20) days’ prior written
notice to Grantor of the time and place of any public sale or Permitted Private Sale is to be made and the same shall constitute
reasonable notification. The Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Lender may adjourn any public or Permitted Private Sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Due to
the nature of the Collateral, Lender and Grantor agree that it would not be commercially reasonable for the Lender to Transfer
the Collateral or any portion thereof by using Internet sites that provide for the auction of assets. Grantor hereby waives any
claims against the Lender arising by reason of the fact that the price at which any Collateral may have been sold at such a Permitted
Private Sale was less than the price which might have been obtained at a public sale provided that such Permitted Private Sale
is conducted in a commercially reasonable manner. If the proceeds of any such sale or other Transfer of the Collateral are insufficient
to pay all the Secured Obligations, Grantor shall be liable for the deficiency and the reasonable fees of any attorneys employed
by the Lender to collect such deficiency. On the other hand, if the proceeds of any such sale or other Transfer of the Collateral
exceeds the aggregate amount of the Secured Obligations (such excess, a “Surplus”), Lender shall be liable to the
Grantor for such Surplus.


 


(c)         The
Lender may sell the Collateral without giving any warranties as to the Collateral. The Lender may specifically disclaim or modify
any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of
any sale of the Collateral.


 


(d)         The Lender shall have no obligation to marshal
any of the Collateral.


 




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(e)          Notwithstanding the foregoing,
however, or any other provision in this Agreement to the contrary, any sale or other Transfer of the Collateral, in whole or in
part, by or on behalf of Lender pursuant to either this Section 9 or any other provision of this Agreement shall not be effective
and shall not confer any ownership, voting, consensual or other rights in or to or under any of the Collateral to any Person (including
Lender), unless such sale or other Transfer is made in compliance with (i) any applicable provisions of the Change in Control
Laws and (ii) any applicable provisions of the Securities Act and any applicable state securities laws (and, any Transfer made
in compliance therewith, shall sometimes be referred to as a “Permitted Transfer”).


 


9.2         Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds received by the Lender upon the occurrence and during
the continuance of an Event of Default which has not otherwise been waived, and the maturity of the Obligations shall have been
accelerated pursuant to Section 16.1 of the Loan Agreement and in respect of any Permitted Transfer, or any collection from or
other realization upon all or any part of the Collateral shall be applied in full or in part by the Lender against, the Secured
Obligations in the following order of priority: first, to the payment of all documented out-of-pocket reasonable costs and expenses
of such sale, collection or other realization, including reasonable attorney fees, and all other documented reasonable expenses
incurred and advances made by the Lender in connection therewith, and all amounts for which the Lender is entitled to indemnification
hereunder, and to the payment of all documented reasonable costs and expenses paid or incurred by the Lender in connection with
the exercise of any right or remedy hereunder as and to the extent provided for in and all in accordance with the terms of the
Loan Agreement; second, to the payment of all other Secured Obligations; and third,, to the payment to or upon the order of the
Grantor or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. In the
event of any Surplus, however, Lender shall promptly, but in any event within five (5) days of the receipt of the proceeds by
Lender, pay over such Surplus to Grantor without offset or deduction.


 


9.3         Pledged Stock. Grantor
recognizes that if Lender conducts any sale or sales of any of the Pledged Stock comprising the Collateral following the occurrence
and during the continuance of any Event of Default, then, unless such sale or sales are first registered under the Securities
Act and qualified under any applicable state securities laws, the Lender may be compelled to conduct such sale or sales in compliance
with the applicable provisions of Section 4(2) and/or Regulation D under the Securities Act and to limit such sales to purchasers
who agree in writing, among other things, to acquire the Pledged Stock for their own account, for investment and not with a view
to the distribution or resale thereof, as well as to comply with any applicable Change of Control Laws. Grantor acknowledges that
any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions
(including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances,
Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner, provided that
such private sale is conducted in a manner and by means of efforts materially consistent with private or limited offerings of
securities generally, that are made in reliance on the exemptions from registration provided by Section 4(2) of or Regulation
D under the Securities Act, and that the Lender shall have no obligation to engage in public sales and no obligation to delay
the sale of any Pledged Stock for the period of time necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under applicable state securities laws. Lender agrees that Grantor shall
have no obligation to register or qualify any of the Pledged Shares under the Securities Act or any state securities laws.


 


SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER
OF LOANS; TERMINATION OF SECURITY INTEREST.


 


10.1         Assignment of Security
Interest in the Collateral. This Agreement shall create a continuing security interest in the Collateral and shall remain
in full force and effect and shall be binding upon Grantor, its successors and Permitted Assigns, and inure, together with the
rights and remedies of the Lender hereunder, to the benefit of the Lender and its successors and Permitted Assigns, until the
payment in full of all Secured Obligations (other than contingent obligations that survive the termination of the Loan Agreement).
Without limiting the generality of the foregoing, Lender may assign or otherwise transfer the Loan to any other Person, if and
to the extent permitted by the express terms of the Loan Agreement (such Person, a “Permitted Assign”), and such Permitted
Assign shall thereupon become vested with all the benefits in respect thereof granted to Lender herein.


 




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10.2         Termination of Security
Interest. Release of Security Interest and Return of Collateral to Grantor. Upon the payment in full of all Secured Obligations
(other than contingent obligations that survive the termination of the Loan Agreement), the security interest granted hereby shall
automatically terminate hereunder and of record and all rights to the Collateral shall revert to the Grantor. Lender covenants
and agrees that upon, but not later than five (5) days after, any such termination:


 


(a) at the
Grantor’s expense, Lender shall execute and deliver to the Grantor and/or any designee thereof, upon request of Grantor,
any documents and/or instruments, in form and substance acceptable to Grantor, including financing statement amendments, releases
or terminations suitable for filing in the office of Secretary of State of each jurisdiction where Lender filed any UCC-1 financing
statements with respect to any or all of the Collateral, to evidence the release and/or termination of all of Lender’s security
interests, Liens and any other rights or interests created hereunder in or to the Collateral. In addition, upon any such termination
of Lender’s security interest in the Collateral, (i) the security interest and any and all Liens on or in the Collateral
granted pursuant hereto shall be deemed to be and shall be automatically released, without the necessity of any action by Grantor
or Lender and (ii) Lender hereby authorizes Grantor to file any or all of the documents and instruments described in clause (a)
above, all as Grantor may request; and


 


(b)         at
Grantor’s expense, Lender shall deliver or caused to be delivered to Grantor, by such method of delivery as shall be designated
by Grantor, the Pledged Stock which were delivered into the possession of Lender pursuant to this Agreement.


 


10.3         Other Documents and
Instruments. At Grantor’s expense, upon any request made by Grantor at any time or from time to time from and after
the termination of the Lender’s security interest in the Collateral, Lender shall execute and deliver, and/or authorize
the filing of, any and all other documents and instruments as Grantor shall reasonably request, in form and substance reasonably
satisfactory to Grantor, to better evidence and effectuate the termination of Lender’s security interest in the Collateral
and the release of all rights and interests that may have been granted to Lender in the Collateral pursuant to this Agreement.


 


10.4         Survival; Equitable
Rights and Remedies. The rights of Grantor and the obligations of Lender under this Section 10 shall survive indefinitely
the termination of Lender’s security interest in the Collateral. Lender further agrees that a breach of any of the covenants
of Lender contained in this Section 10 will cause irreparable injury to Grantor, that Grantor has no adequate remedy at law in
respect of any such breach and that, as a consequence, each and every covenant of Lender and each and every right of Grantor contained
in this Section 10 shall be specifically enforceable against Lender, and Lender hereby waives and agrees not to assert any defenses
against an action brought by Grantor for specific performance of such covenants except for a defense that Lender is not in breach
of its covenants under this Section 10. Nothing in this Section 10 shall in any way limit the rights of Grantor hereunder.


 




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SECTION 11. STANDARD OF CARE;
LENDER MAY PERFORM.


 


The powers conferred on the Lender
hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Lender shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral. Neither the Lender nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise Transfer any Collateral upon the request of Grantor or
otherwise. If Grantor fails to perform any agreement contained herein, the Lender may itself perform, or cause performance of,
such agreement, and the reasonable expenses of the Lender incurred in connection therewith shall be payable by Grantor if and
to the extent it is required to do so under the Loan Agreement.


 


SECTION 12. MISCELLANEOUS.


 


Any notice required or permitted
to be given under this Agreement shall be given in accordance with Section 17.16 of the Loan Agreement. No failure or delay
on the part of the Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair
such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right
or privilege. All rights and remedies existing under this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available. In case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. All covenants
hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. This Agreement shall
be binding upon and inure to the benefit of the Lender and the Grantor and their respective successors and Permitted Assigns.
Grantor shall not, without the prior written consent of the Lender given in accordance with the Loan Agreement, assign any right,
duty or obligation hereunder. This Agreement and the other Loan Documents embody the entire agreement and understanding between
the Grantor and the Lender and supersede all prior agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Loan Documents 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. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages
may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically
attached to the same document.


 


Irrespective of the place of execution and/or delivery,
this Agreement shall be governed by, and shall be construed in accordance with, the laws of the State of Texas.


 


THE PROVISIONS OF THE LOAN AGREEMENT UNDER THE HEADINGS
“JURISDICTION” AND “WAIVER OF JURY TRIAL” ARE INCORPORATED HEREIN BY THIS REFERENCE AND SUCH INCORPORATION
SHALL SURVIVE ANY TERMINATION OF THE LOAN AGREEMENT.


 


[Signature page follows.]


 




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IN WITNESS WHEREOF, Grantor and
the Lender have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized
as of the date first written above.


 


	 	FIRST FOUNDATION, INC.
	 	 
	 	By:	/S/ JOHN MICHEL
	 	 	Name:  John Michel
	 	 	Title:  Chief Financial Officer
	 	 	 
	 	NEXBANK, SSB,
	 	as Lender
	 	 	 
	 	By:	/S/ MATT SIEKIELSKI
	 	 	Name: Matt Siekielski
	 	 	Title: Chief Operating Officer


 




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SCHEDULE 5.1


TO PLEDGE AND SECURITY AGREEMENT


 


GENERAL INFORMATION


 


(A) Full
Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business and Organizational
Identification Number of Grantor:


 





	Full Legal Name	 	Type of

Organization	 	Jurisdiction

of

Organization	 	Chief Executive

Office/Principal Place of

Business 	 	Federal Tax ID

Number
	
         

        First Foundation Inc.

         
	 	Corporation	 	California	 	
        18101 Von Karman Ave. Suite 700

        Irvine, CA 92612
	 	20-8639702




 


		(B)	Other Names (including any Trade Name or Fictitious Business Name)
                                                            under which Grantor currently conducts business (excluding activities
                                                            of its subsidiaries):



 





	Full Legal Name	 	Trade Name or Fictitious Business Name
	First Foundation Inc.	 	Keller Financial Group




 


		(C)	Changes in Name, Jurisdiction of Organization,
                                                            Chief Executive Office, Principal Place of Business or Corporate Structure
                                                            within past five (5) years:



 


	Grantor	 	Date of Change	 	Description of Change
	First Foundation Inc.	 	2/7/2009	 	Changed name from “Keller Financial Group” to “First Foundation Inc.”




 




    	 



    	 



    

 


SCHEDULE 5.2


TO PLEDGE AND SECURITY AGREEMENT


 


COLLATERAL
IDENTIFICATION


 


I. PLEDGED
STOCK


 





	Grantor	 	Stock

Issuer	 	Class of

Stock	 	Certificated

(Y/N)	 	Stock

Cert.

 No.	 	Par

Value	 	No. of

Pledged

Stock	 	%

of

Outstanding

Stock of the

Stock Issuer
	First

Foundation

Inc.	 	First Foundation Bank	 	Common	 	Y	 	1	 	None	 	250	 	100%




 




    	 



    	 



    

 


SCHEDULE 5.4 TO


PLEDGE SECURITY AGREEMENT


 


 


FINANCING STATEMENTS:


 


	Grantor	 	Filing Jurisdiction(s)
	First Foundation Inc.	 	California