Exhibit 10.2





 


PLEDGE AND SECURITY AGREEMENT


 


THIS PLEDGE AND SECURITY
AGREEMENT (“Agreement”), dated May 16, 2016, by and between CITIZENS COMMUNITY BANCORP, INC.,
a Maryland corporation (“Pledgor”) and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national banking
association (“Lender”);


 


WITNESSETH:


 


WHEREAS, Lender
has extended certain loan and credit facilities to Pledgor pursuant to that certain Loan Agreement between Lender and Pledgor of
even date herewith (the “Loan Agreement”), and all capitalized terms used but not otherwise defined in this
Agreement shall have the same meaning as set out in the Loan Agreement; and


 


WHEREAS, pursuant
to the Loan Agreement, Lender is willing to extend such loan and credit facilities to Pledgor only upon Pledgor executing this
Agreement for the purpose of securing all Obligations (as hereinafter defined) of Pledgor to Lender.


 


NOW THEREFORE, in
consideration of the foregoing, and to enable Pledgor to obtain loans and other extensions of credit from Lender and to induce
Lender to have transactions with Pledgor, Pledgor agrees as follows:


 


1.         Pledge.
As collateral security for the payment and performance in full of the Obligations, Pledgor hereby pledges, hypothecates, assigns,
transfers, sets over and delivers unto Lender, and hereby grants to Lender a first lien security interest in, the collateral described
in Schedule A, together with the proceeds thereof and all cash, additional securities or other property at any time
and from time to time receivable or otherwise distributable in respect of, in exchange for, or in substitution for any and all
such pledged securities (all such pledged securities, the proceeds thereof, cash, dividends, additional securities and other property
now or hereafter pledged hereunder are hereinafter collectively called the “Pledged Securities”);


 


TO HAVE AND TO HOLD the
Pledged Securities, together with all rights, titles, interests, powers, privileges and preferences pertaining or incidental thereto,
unto Lender, its successors and assigns; subject, however, to the terms, covenants and conditions hereinafter set forth. Pledgee
agrees to hold the Pledged Securities to secure the payment of the Obligations and shall not encumber or otherwise dispose of such
Pledged Securities except in accordance with the terms and provisions of this Agreement.


 


Upon delivery to Lender,
the Pledged Securities shall be accompanied by executed stock powers in blank and by such other instruments or documents as Lender
or its counsel may reasonably request. Each delivery of certificates for such Pledged Securities shall be accompanied by a schedule
showing the number of shares and the numbers of the certificates theretofore and then pledged hereunder, which schedule shall be
attached hereto as Schedule A and made a part hereof. Each schedule so delivered shall supersede any prior schedule
so delivered.


 




     


     


    

 


2.          Obligations
Secured. This Agreement is made, and the security interest created hereby is granted to Lender, to secure full payment and
performance of any and all indebtedness and other obligations of Pledgor to Lender, direct or contingent, however evidenced or
denominated, and however or whenever incurred, including without limitation (a) indebtedness incurred pursuant to any past, present
or future commitment of Lender to Pledgor, including without limitation that certain Eleven Million Dollars ($11,000,000.00) loan
governed by the Loan Agreement), and all other indebtedness or obligations of Pledgor or Bank (hereinafter defined) under or evidenced
by the Note, Loan Agreement and other Loan Documents, as each of them may be amended from time to time and (b) all indebtedness,
liabilities, obligations, covenants and duties of Pledgor to the Lender, of every kind, nature and description arising under of
in respect of any Lender Product (hereinafter defined) (including arising under or in respect of any guaranty thereof), whether
direct or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, in each case now
existing or hereafter arising (all of the foregoing, collectively, the “Obligations”); except that the indebtedness
and other liabilities secured by this Agreement shall not include any indebtedness subject to the disclosure requirements of the
Federal Truth-in-Lending Act if at the time such indebtedness is created or incurred, any legally required disclosure of this security
interest shall not have been made. As used herein, "Lender Products" means any of the following that the Lender
provides, to or enters into with the Pledgor: (i) any deposit, lockbox, Cash Management Services (hereinafter defined), or other
cash management agreement, (ii) any Swap Contract, (iii) any credit cards, purchase cards and/or debit cards, and (iv) any other
product, service or agreement pursuant to which Pledgor is indebted to the Lender. As used herein, "Cash Management Services"
means any services provided from time to time by the Lender to Pledgor in connection with the operating, collections, payroll,
trust or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire
transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.


 


3.          Representations
and Warranties. Pledgor hereby represents and warrants to Lender (a) that Pledgor is the legal and equitable owner of the Pledged
Securities, that Pledgor has the complete and unconditional authority to pledge the Pledged Securities being pledged by it, and
holds the same free and clear of all liens, charges, encumbrances and security interests of every kind and nature; (b) that no
consent or approval of any governmental body or regulatory authority, or of any other party, which was or is necessary to the validity
of this pledge, has not been obtained; and (c) that the Pledged Securities represent one hundred percent (100%) of the issued and
outstanding Capital Stock of Citizens Community Federal National Association, a national banking association (the "Bank").
Pledgor further represents and warrants that no part of the Obligations will be used to purchase or carry any “margin stock”,
as defined in Regulation U of the Board of Governors of the Federal Reserve System, 12 CFR § 221.1 et seq.


 


4.          Covenants.
Pledgor hereby further covenants and agrees with Lender as follows, until all Obligations have been fully paid and performed (or
unless specifically waived by Lender in writing):


 




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(a)          No
Disposition, Etc. The Pledgor shall not sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, any of the Pledged Securities, nor will it create, incur or permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with respect to any of the Pledged Securities, or any interest therein,
or any proceeds thereof, except for the lien and security interest provided for by this Agreement.


 


(b)          Share
Adjustments. All new, substitute, and additional shares, or other securities, issued by reason of any share dividend, reclassification,
recapitalization, adjustment or other change declared or made in the capital structure of the Bank (subject to obtaining Lender’s
prior written consent thereto as required by the Loan Documents), which are issued in respect of the Pledged Securities, shall
be delivered to and held by Lender under the terms of this Agreement in the same manner as the Pledged Securities originally pledged
hereunder.


 


(c)          Warrants
and Rights. In the event that subscription warrants or any other rights or options shall be issued in connection with any of
the Pledged Securities (subject to obtaining Lender’s prior written consent thereto as required by the Loan Documents), such
warrants, rights, and options shall be immediately assigned to Lender to be held under the terms of this Agreement in the same
manner as the Pledged Securities originally pledged hereunder.


 


(d)          No
Dilution. Pledgor shall not consent to, approve, or permit to occur any change in the capital structure of the Bank which would
result in any dilution of the percentage of stock ownership represented by the Pledged Securities as determined immediately prior
to the acquisition of the Pledged Securities by Pledgor.


 


5.          Registration
in Nominee Name; Denominations. Lender shall have the right (in its sole and absolute discretion) to hold the certificates
representing the Pledged Securities in its own name or in the name of the Pledgor, endorsed or assigned in blank or in favor of
Lender. Upon request and delivery of certificates representing the Pledged Securities to the issuer of the Pledged Securities,
Lender may have such Pledged Securities registered in the name of Lender or any nominee or nominees of Lender. Lender shall at
all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations
for any purpose consistent with this Agreement.


 


6.          Dividends.
Notwithstanding anything in this Agreement to the contrary, so long as Pledgor is not in default of any of the terms of the Obligations,
all cash dividends paid in respect of the Pledged Securities, if any (subject to obtaining Lender’s prior written consent
thereto, if required by the Loan Documents), shall be the property of Pledgor. If any default or Event of Default occurs, all such
cash dividends shall thereafter be paid to Lender and applied in reduction of the Obligations, in such order of priority as Lender
shall determine in its sole discretion.


 


7.          Voting
Rights.


 


(a)          Provided
that no default or Event of Default shall have occurred and be continuing hereunder or under any other Loan Documents:


 




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(i)          Pledgor
shall be entitled to exercise or refrain from exercising the voting rights attributable to the Pledged Securities or any part thereof
for any purpose not inconsistent with the terms and conditions of this Agreement and the other Loan Documents, and


 


(ii)         Lender
will execute and deliver any proxies or other instruments reasonably requested by Pledgor for the purpose of enabling Pledgor to
exercise the voting rights that it is entitled to exercise pursuant to subparagraph 7(a)(1).


 


(b)          Upon
the occurrence and during the continuance of a default or Event of Default hereunder or under any other Loan Documents, all rights
of Pledgor to exercise or refrain from exercising the voting rights attributable to the Pledged Securities or any part thereof
pursuant to subparagraph 7(a)(1) or otherwise shall cease, and Lender and its successors and assigns shall have the
sole right to exercise or refrain from exercising such rights after obtaining all necessary regulatory approvals. In furtherance
of the foregoing, Pledgor hereby makes, constitutes and appoints Lender and its officers as the proxies and attorneys-in-fact of
and for Pledgor, with full power to exercise or to refrain from exercising any and all voting rights attributable to the Pledged
Securities upon the occurrence and during the continuance of any such default or event of default. The foregoing appointment and
power, being coupled with an interest, are irrevocable until the Obligations have been fully and irreversibly satisfied.


 


8.          Remedies
Upon Default.


 


(a)          Upon
the occurrence of any Event of Default, Lender shall have all of the rights, powers, privileges, options and remedies of a secured
party under the Uniform Commercial Code as in effect in the State of Tennessee, and without limiting the foregoing, Lender may
(1) collect any and all amounts payable in respect of the Pledged Securities and exercise any and all rights, powers, privileges,
options and remedies of the holder and owner thereof, and (2) sell, transfer or negotiate the Pledged Securities, or any part
thereof, at public or private sale, for cash, upon credit or for future delivery as Lender shall deem appropriate, including without
limitation, at Lender’s option, the purchase of all or any part of the Pledged Securities at any public sale by Lender. Upon
consummation of any sale, Lender shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the
Pledged Securities so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or
right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay or appraisal
that Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereinafter enacted.
Pledgor hereby expressly waives notice to redeem and notice of the time, place and manner of such sale.


 


(b)          Pledgor
recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Securities
Act”), applicable state securities laws, and other applicable laws, rules and regulations (including without limitation
the rules and regulations of any Bank Regulatory Authority), Lender may be compelled, with respect to any sale of all or any part
of the Pledged Securities, to limit purchasers to those who agree, among other things, to acquire such Pledged Securities for their
own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including,
without limitation, a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding
such circumstances, Pledgor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner
and that Lender shall have no obligation to engage in public sales and no obligation to delay the sale of any of the Pledged Securities
for the period of time necessary to permit the issuer thereof to register such sale under the Securities Act or under applicable
state securities laws, even if Pledgor would agree to do so.


 




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(c)          If
Lender determines to exercise its right to sell any or all of the Pledged Securities, upon written request, Pledgor from time to
time shall, and shall cause each issuer of the Pledged Securities to be sold hereunder to, furnish to Lender all such information
as Lender may request in order to determine the number of shares and other instruments included in the Pledged Securities that
may be sold by Lender as exempt transactions under the Securities Act and the rules of the Securities and Exchange Commission thereunder,
as the same are from time to time in effect.


 


9.          Application
of Proceeds. The proceeds of the sale of Pledged Securities sold pursuant to Section 8, and the proceeds of the
exercise of any of Lender’s other remedies hereunder, shall be applied by Lender as follows:


 


First:
To the payment of all reasonable costs and expenses incurred by Lender in connection with any such sale, including, but not limited
to, all court costs and the reasonable fees and expenses of counsel for Lender in connection therewith, and


 


Second:
To the payment in full of the Obligations, in such order of priority as Lender shall determine, in its sole discretion, and


 


Third:
The excess, if any, shall be paid to Pledgor or any other person lawfully thereunto entitled.


 


10.         Reimbursement
of Lender. Pledgor agrees to reimburse Lender, upon demand, for all expenses, including without limitation reasonable attorney’s
fees, incurred by it in connection with the administration and enforcement of this Agreement, and agrees to indemnify Lender and
hold it harmless from and against any and all liability incurred by it hereunder or in connection herewith, unless such liability
shall be due to fraud, willful misconduct or gross negligence on the part of Lender.


 


11.         No
Waiver. No failure on the part of Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by Lender preclude any
other or further exercise thereof or the exercise of any other right, power or remedy. All remedies are cumulative and are not
exclusive of any other remedies provided by law.


 




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12.         Limitation
of Liability. The powers conferred on Lender hereunder are solely to protect its interests in the Pledged Securities, and shall
not impose any duty upon Lender to exercise any such powers. Except for the exercise of reasonable care in the custody and preservation
of the certificates or other instruments representing Pledged Securities in its possession and the accounting for monies actually
received by it hereunder, Lender shall have no duty as to any Pledged Securities. Without limiting the generality of the foregoing,
Lender shall have no responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Securities, regardless of whether Lender has or is deemed to have knowledge of
such matters, (b) taking any necessary steps (other than steps in accordance with the standard of care set forth above to
maintain possession of the certificates or other instruments representing Pledged Securities in its possession) to preserve rights
against any parties with respect to the Pledged Securities, (c) taking any necessary steps to collect or realize upon any
of the Obligations or any of the Pledged Securities, or (d) initiating any action to protect the Pledged Securities against
the possibility of a decline in market value. Lender shall be deemed to have exercised reasonable care in the custody and preservation
of the certificates or other instruments representing Pledged Securities in its possession if such items are accorded treatment
substantially equal to that which Lender accords its own property consisting of negotiable securities.


 


13.         Counterparts.
This Agreement may be executed in multiple counterparts or copies, each of which shall be deemed an original hereof for all purposes.
One or more counterparts or copies of this Agreement may be executed by one or more of the parties hereto, and some different counterparts
or copies executed by one or more of the other parties. Each counterpart or copy hereof executed by any party hereto shall be binding
upon the party executing same even though other parties may execute one or more different counterparts or copies, and all counterparts
or copies hereof so executed shall constitute but one and the same agreement. Each party hereto, by execution of one or more counterparts
or copies hereof, expressly authorizes and directs any other party hereto to detach the signature pages and any corresponding acknowledgment,
attestation, witness or similar pages relating thereto from any such counterpart or copy hereof executed by the authorizing party
and affix same to one or more other identical counterparts or copies hereof so that upon execution of multiple counterparts or
copies hereof by all parties hereto, there shall be one or more counterparts or copies hereof to which is(are) attached signature
pages containing signatures of all parties hereto and any corresponding acknowledgment, attestation, witness or similar pages relating
thereto.


 


14.         Binding
Agreement. This Agreement and the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of
the parties hereto and to all holders of indebtedness secured hereby and their respective successors and assigns.


 


15.         Further
Assurances. Pledgor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments (including but not limited to the execution and delivery and filing of UCC financing statements with
respect to the security interests of this Agreement), as Lender at any time may request in connection with the administration and
enforcement of this Agreement or relative to the Pledged Securities or any part thereof or in order to assure and confirm unto
Lender its rights and remedies hereunder.


 




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16.         Severability.
If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to
any extent, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforceable to the greatest extent permitted by law.


 


17.         Miscellaneous.


 


(a)          This
Agreement shall be governed by and construed according to the laws of the State of Tennessee, without reference to the conflicts
or choice of law principles thereof.


 


(b)          Neither
this Agreement nor any provision hereof may be altered, amended, modified or changed, nor may any of the Pledged Securities be
released, except by an instrument in writing signed by the party against whom enforcement of such alteration, amendment, modification,
change or release is sought.


 


(c)          The
headings in this Agreement and the usage herein of defined terms are for convenience of reference only, and shall not be construed
as amplifying, limiting or otherwise affecting the substantive provisions hereof.


 


(d)          Any
reference herein to any instrument, document or agreement, by whatever terminology used, shall be deemed to include any and all
past, present or future amendments, restatements, modifications, supplements, extensions, renewals or replacements thereof, as
the context may require.


 


(e)          All
references herein to the preamble, the recitals or sections, paragraphs, subparagraphs, schedules or exhibits are to the preamble,
recitals, sections, paragraphs, subparagraphs, schedules and exhibits of or to this Agreement unless otherwise specified. The words
“hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement,
refer to this Agreement as a whole and not to any particular provision of this Agreement.


 


(f)          When
used herein, (1) the singular shall include the plural, and vice versa, and the use of the masculine, feminine or neuter gender
shall include all other genders, as appropriate, (2) ”include”, “includes” and “including”
shall be deemed to be followed by “without limitation” regardless of whether such words or words of like import in
fact follow same, and (3) unless the context clearly indicates otherwise, the disjunctive “or” shall include the
conjunctive “and”.


 


(g)          Any
reference herein to any law shall be a reference to such law as in effect from time to time and shall include any rules and regulations
promulgated or published thereunder and published interpretations thereof.


 




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IN WITNESS WHEREOF,
Pledgor and Lender have executed this Agreement, or have caused this Agreement to be duly executed by a duly authorized officer,
all as of the day first above written.


 


	 	PLEDGOR:
	 	 
	 	
        CITIZENS COMMUNITY BANCORP, INC., a

        Maryland corporation

	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	LENDER:
	 	 
	 	
        FIRST TENNESSEE BANK NATIONAL 

        ASSOCIATION, a national banking association

	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 


 




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SCHEDULE A


 


Pledged Securities


 


	ISSUER:	 	NO. OF

SHARES:	 	CLASS:	 	CERTIFICATE

NO(S).:
	Citizens Community Federal National Association	 	 	 	 	 	 


 




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