**Exhibit10.1**

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Amended andRestated Loan Agreement

 

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**REVOLVING CREDIT NOTE**

 

 

$4,000,000.00                                                                                                                                                                                                                                                                                                                                                          Charlotte,North Carolina

 April 30, 2009 

 

FOR VALUE RECEIVED, the undersigned,SOUTHERN FIRST BANCSHARES, INC., a South Carolina corporation and a bankholding company (the "Borrower"), hereby promises to pay to the orderof SILVERTON BANK, NATIONAL ASSOCIATION (the "Lender"), as providedfor in the Loan Agreement (as defined below), the lesser of (i) the principalsum of $4,000,000.00 or (ii) the aggregate unpaid principal amount of allRevolving Credit Loans made by the Lender to the Borrower pursuant to thatcertain Amended and Restated Loan Agreement, by and between the Borrower andthe Lender, dated of even date herewith (as amended, modified or supplementedfrom time to time, the "Loan Agreement"). The Borrower hereby furtherpromises to pay to the order of the Lender interest on the unpaid principalamount of this Revolving Credit Note ("Note") from time to timeoutstanding at the rate or rates per annum determined pursuant to Article IIof, or as otherwise provided in, the Loan Agreement, and with such amountsbeing payable on the dates set forth in Article II of, or as otherwise providedin, the Loan Agreement. 

 

All payments and prepayments to be made inrespect of principal, interest or other amounts due from the Borrower underthis Note shall be payable at 3:00 p.m. (Charlotte, North Carolina time) on theday when due, without presentment, demand, protest or notice of any kind, allof which are hereby expressly waived, and an action therefore shall immediatelyaccrue. All such payments shall be made to the Lender at its designated officelocated at Lender's Office, in lawful money of the United States of America, inimmediately available funds, without setoff, counterclaim or other deduction ofany nature. 

 

Except as otherwise provided in the LoanAgreement, if any payment of principal or interest under this Note shall becomedue on a day that is not a Business Day, such payment shall be made on the nextfollowing Business Day and such extension of time shall be included incomputing interest in connection with such payment. 

 

This Note is the note referred to in, andis entitled to the benefits of, the Loan Agreement and the other LoanDocuments. This Note is secured by, and is entitled to the benefits of, theStock Pledge Agreement. Capitalized terms used in this Note that are defined inthe Loan Agreement shall have the meanings assigned to them therein unlessotherwise defined in this Note. 

 

This Note shall be governed by, and shallbe construed and enforced in accordance with, the laws of the State of NorthCarolina without regard to the principles of the conflicts of laws thereof. TheBorrower hereby consents to the jurisdiction and venue of the federal and statecourts located in Mecklenburg County, North Carolina with respect to any suitarising out of or mentioning this Note. 

 

IN WITNESS WHEREOF, and intending to belegally bound hereby, the Borrower has executed, issued and delivered this Noteon the day and year first above written. 

 

 

                                                                                                                        WITNESS:                                                        SOUTHERNFIRST BANCSHARES, INC. 

 

 

                                                                                                                        By:                                                                       By:                                                                           

                                                                                                                        Name:                                                                   Name:                                                                      

                                                                                                                        Title:                                                                     Title:                                                                       

 

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**TERM NOTE**

 

 

$5,000,000.00                                                                                                                                                                                                                                                                                                                                                         Charlotte,North Carolina 

April 30, 2009 

$5,000,000.00 Charlotte, North CarolinaApril 30, 2009 

FOR VALUE RECEIVED, the undersigned,  SOUTHERNFIRST BANCSHARES, INC., a South Carolina corporation and a bank holding company(the "Borrower"), hereby promises to pay to the order of SILVERTONBANK, NATIONAL ASSOCIATION (the "Lender"), as provided for in theLoan Agreement (as defined below), the original principal amountof$5,000,000.00, together with interest on the unpaid principal amount of thisTerm Note ("Note") at the rate or rates per annum determined pursuantto Article II of, or as otherwise provided in, that certain Amended andRestated Loan Agreement, by and between the Borrower and the Lender, dated ofeven date herewith (as amended, modified or supplemented from time to time the"Loan Agreement"), and with such amounts being payable on the datesset forth in Article II of, or as otherwise provided in, the Loan Agreement.

 

All payments and prepayments to be made inrespect of principal, interest or other amounts due from the Borrower underthis Note shall be payable at 3:00 p.m. (Charlotte, North Carolina time) on theday when due, without presentment, demand, protest or notice of any kind, allof which are hereby expressly waived, and an action therefor shall immediatelyaccrue. All such payments shall be made to the Lender at its designated officelocated at Lender's Office, in lawful money of the United States of America, inimmediately available funds, without setoff, counterclaim or other deduction ofany nature. 

 

Except as otherwise provided in the LoanAgreement, if any payment of principal or interest under this Note shall becomedue on a day that is not a Business Day, such payment shall be made on the nextfollowing Business Day and such extension of time shall be included incomputing interest in connection with such payment. 

 

This Note is the note referred to in, andis entitled to the benefits of, the Loan Agreement and the other LoanDocuments. This Note is secured by, and is entitled to the benefits of, theStock Pledge Agreement. Capitalized terms used in this Note that are defined inthe Loan Agreement shall have the meanings assigned to them therein unlessotherwise defined in this Note. 

 

This Note shall be governed by, and shallbe construed and enforced in accordance with, the laws of the State of NorthCarolina without regard to the principles of the conflicts of laws thereof. TheBorrower hereby consents to the jurisdiction and venue of the federal and statecourts located in Mecklenburg County, North Carolina with respect to any suitarising out of or mentioning this Note. 

 

This Note amends and restates, and is insubstitution for, that certain Promissory Note in the original principal amountof$15,000,000.00 payable to the order of the Lender and dated December 28, 2007(the "Existing Note"). However, without duplication, this Note shallin no way extinguish, cancel or satisfy the Borrower's unconditional obligationto repay all indebtedness evidenced by the  Existing Note or constitute anovation of the Existing Note. Nothing herein is intended to extinguish, cancelor impair the lien priority or effect of any security agreement, pledgeagreement or mortgage with respect to the Borrower's obligations hereunder andunder any other document relating hereto. 

 

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IN WITNESS WHEREOF, andintending to be legally bound hereby, the Borrower has executed, issued anddelivered this Note on the day and year first above written. 

 

 

                                                                                                                                            WITNESS:                                                        SOUTHERNFIRST BANCSHARES, INC. 

 

 

                                                                                                                                             By:                                                                  By:                                                      

                                                                                                                                            Name:                                                              Name:                                                  

                                                                                                                                            Title:                                                                Title:                                                    

 

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**AMENDEDAND RESTATED STOCK PLEDGE AGREEMENT**

 

 

This Amended and Restated Stock PledgeAgreement (this "Agreement"), dated as of this  30th day of April, 2009, is byand between **SOUTHERN FIRST BANCSHARES, INC.,**a South Carolinacorporation and a bank holding company (the "Borrower"), and **SILVERTONBANK, NATIONAL ASSOCIA TION**(the "Lender"). 

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**W I T N E S S E T H:**

** **

 

WHEREAS, the Borrower and the Lender haveentered into that certain Amended and Restated Loan Agreement, dated of evendate herewith, which is incorporated herein by reference thereto (as amendedmodified or supplemented from time to time, the "Loan Agreement'),pursuant to which the Borrower and the Lender amended and restated that certainLoan Agreement, dated as of December 28, 2007 (the "Existing LoanAgreement"), between the parties and agreed that the Lender shall extendcredit to the Borrower in an amount as set forth in the Loan Agreement(Capitalized terms used in this Agreement that are defined in the LoanAgreement shall have the meanings assigned to them therein unless otherwisedefined in this Agreement); 

 

WHEREAS, the obligations of the Borrowerto the Lender under the Existing Loan Agreement are currently secured by, amongother things, that certain Stock Pledge Agreement, dated as of December 28,2007, between the Borrower and the Lender (the "Existing PledgeAgreement"); and 

 

WHEREAS, the obligations of the Lenderunder the Loan Agreement are subject to the further condition, among others,that the Borrower amend and restate the Existing Pledge Agreement and continuethe Lender's first priority security interest in the Pledged Shares (ashereinafter defined) pursuant to the terms and conditions as hereinafterprovided except as otherwise specifically set forth herein. 

 

NOW, THEREFORE, in consideration of theDebt (as defined in the Loan Agreement), and of other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged bythe Borrower, and in order to induce the Lender to enter into the LoanAgreement and make the Loans (as defined in the Loan Agreement), the partieshereto, intending to be legally bound hereby, covenant and agree as follows:

 

 

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Section 1. Pledge. As security forthe full and timely payment of the Debt in accordance with the terms of thisAgreement, the Loan Agreement and the other Loan Documents and the full andtimely payment and performance of the obligations of the Borrower under thisAgreement, the Loan Agreement and the other Loan Documents, the Borrower herebyreconfirms its prior grant to the Lender of a security interest in, and herebygrants a security interest in and pledges to the Lender all of the Borrower'sright, title and interest in and to all of the issued and outstanding capitalstock of Southern First Bank, National Association, a wholly-owned subsidiaryof the Borrower, together with all additions, substitutions, replacements andproceeds thereof and all income, interest, dividends and other distributionsthereon (collectively, the "Pledged Shares"). The Borrower herebyacknowledges and confirms that (i) in accordance with the provisions of theExisting Pledge Agreement, the Borrower has delivered to the Lender the stockcertificates evidencing the Pledged Shares, accompanied by a duly executedIrrevocable Stock Power in favor of the Lender (f/k/a The Bankers Bank,National Association) and (ii) such Irrevocable Stock Power remains in fullforce and effect. The Borrower hereby authorizes the transfer of possession ofall certificates, instruments, documents and other evidence of the PledgedShares to the Lender. 

Section 2.          Covenants.Representations and Warranties. The Borrower represents and warrants to the Lender as follows:

 

(a)               There are no restrictions on thepledge or transfer of any of the Pledged Shares, other than restrictionsreferenced on the face of any certificates evidencing the Pledged Shares.

 

(b)        The Borrower is the legal owner of thePledged Shares, which are registered in the name of the Borrower. 

 

(c)         ThePledged Shares are free and clear of any security interests, pledges, liens, encumbrances,charges, agreements, claims or other arrangements or restrictions of any kind,except as referenced in Section 2(a) above; and the Borrower will not incur,create, assume or permit to exist any pledge, security interest, lien, chargeor other encumbrance of any nature whatsoever on any of the Pledged Shares orassign, pledge or otherwise encumber any right to receive income from thePledged Shares, other than in favor of the Lender. 

 

(d)        TheBorrower has the right to transfer the Pledged Shares free of any encumbrancesand the Borrower will defend the Borrower's title to the Pledged Shares againstthe claims of all Persons, and any registration with, or consent or approvalof, or other action by, any federal, state or other governmental authority orregulatory body which was or is necessary for the validity of the pledge of andgrant of the security interest in the Pledged Shares has been obtained. 

 

(e)         The pledge of and grant of thesecurity interest in the Pledged Shares is effective to vest in the Lender avalid and perfected first priority security interest, superior to the rights ofany other Person, in and to the Pledged Shares as set forth herein. 

 

Section 3.Voting Rights and Transfer.

 

(a)         Solong as no Event of Default (as hereinafter defined) shall have occurred and iscontinuing and Lender has not delivered the notice specified in subsection (b)below, the Borrower shall be entitled to exercise any and all voting and otherconsensual rights pertaining to the Pledged Shares or any part thereof for anypurpose not inconsistent with the terms of this 

Agreement or any document or agreementexecuted in connection herewith. 

 

(b)        Upon the occurrence and during thecontinuance of an Event of Default, at the option of the Lender exercised in awriting sent to the Borrower, all rights of the Borrower to exercise the votingand other consensual rights which it would otherwise be entitled to exercisepursuant to subsection (a) above shall cease, and the Lender shall thereuponhave the sole right to exercise such voting and other consensual rights. 

 

(c)        At any time after the occurrence of anEvent of Default, the Lender may transfer any or all of the Pledged Shares intoits name or that of its nominee and may exercise all voting rights with respectto the Pledged Shares, but no such transfer shall constitute a taking of suchPledged Shares in satisfaction of any or all of the Debt unless the Lenderexpressly so indicates by written notice to the Borrower. 

 

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Section 4.       Default. 

 

(a)     If any of the following occur (each an"Event of Default"): (i) any Event of Default under the LoanAgreement, (ii) the failure by the Borrower to perform any of its obligationshereunder, (iii) the failure of the Lender to have a perfected first prioritysecurity interest in the Pledged Shares or (iv) any restriction is imposed onthe pledge or transfer of any of the Pledged Shares after the date of thisAgreement without the Lender's prior written consent, then the Lender isauthorized in its discretion to declare any or all of the Debt to beimmediately due and payable without demand or notice, which are expresslywaived, and may exercise any one or more of the rights and remedies grantedpursuant to this Agreement or given to a secured party under the UCC of theapplicable state, as it may be amended from time to time, or otherwise at lawor in equity, including without limitation the right to sell or otherwisedispose of any or all of the Pledged Shares at public or private sale, with orwithout advertisement thereof, upon such terms and conditions as it may deemadvisable and at such prices as it may deem best. 

 

(b)      At any bona fide public sale, and to theextent permitted by law, at any private sale, the Lender shall be free topurchase all or any part of the Pledged Shares, free of any right or equity ofredemption in the Borrower, which right or equity is hereby waived andreleased. Any such sale may be on cash or credit. The Lender shall beauthorized at any such sale (if it deems it advisable to do so) to restrict theprospective bidders or purchasers to Persons who will represent and agree thatthey are purchasing the Pledged Shares for their own account in compliance withRegulation D of the Securities Act of 1933 (the "Act") or any otherapplicable exemption available under such Act. The Lender will not be obligatedto make any sale if it determines not to do so, regardless of the fact thatnotice of the sale may have been given. The Lender may adjourn any sale andsell at the time and place to which the sale is adjourned. If the PledgedShares are customarily sold on a recognized market or threatens to declinespeedily in value, the Lender may sell such Pledged Shares at any time withoutgiving prior notice to the Borrower. Whenever notice is otherwise required bylaw to be sent by the Lender to the Borrower of any sale or other dispositionof the Pledged Shares, ten (10) days written notice sent to the Borrower at itsaddress specified above will be reasonable. 

 

The Borrower recognizes that the Lendermay be unable to effect or cause to be effected a public sale of the PledgedShares by reason of certain prohibitions contained in the Act, so that theLender may be compelled to resort to one or more private sales to a restrictedgroup of purchasers who will be obligated to agree, among other things, toacquire the Pledged Shares for their own account, for investment and without aview to the distribution or resale thereof. The Borrower understands thatprivate sales so made may be at prices and on other terms less favorable to theseller than if the Pledged Shares were sold at public sales, and agrees thatthe Lender has no obligation to delay or agree to delay the sale of any of thePledged Shares for the period of time necessary to permit the issuer of thesecurities which are part of the Pledged Shares (even if the issuer wouldagree), to register such securities for sale under the Act. The Borrower agreesthat private sales made under the foregoing circumstances shall be deemed tohave been made in a commercially reasonable manner. 

 

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(c)      The Lender shall apply the netproceeds of any sale or liquidation of the Pledged Shares, first to the paymentof the reasonable costs and expenses incurred by the Lender in connection withsuch sale or collection including, without limitation, reasonable attorneys'fees and legal expenses, second to the payment of the Debt, whether on accountof principal or interest or otherwise as the Lender in its sole discretion mayelect, and then to pay the balance, if any, to the Borrower or as otherwiserequired by Law. If such proceeds are insufficient to pay the amounts requiredby Law, the Borrower shall be liable for any deficiency; provided, however,that nothing contained herein will obligate the Lender to proceed against theBorrower or any other party obligated under the Debt or against any othercollateral for the Debt prior to proceeding against the Pledged Shares. 

 

(d)      If any demand is made at any time upon theLender for the repayment or recovery of any amount received by it in payment oron account of any of the Debt and if the Lender repays all or any part of suchamount by reason of any judgment, decree or order of any court oradministrative body or by reason of any settlement or compromise of any suchdemand, the Borrower will be and remain liable for the amounts so repaid orrecovered to the same extent as if such amount had never been originallyreceived by the Lender. The provisions of this section will be and remaineffective notwithstanding the release of any of the Pledged Shares by the Lenderin reliance upon such payment (in which case the Borrower's liability will belimited to an amount equal to the fair market value of the Pledged Sharesdetermined as of the date such Pledged Shares was released) and any suchrelease will be without prejudice to the Lender's rights hereunder and will bedeemed to have been conditioned upon such payment having become final andirrevocable. This Section shall survive the termination of this Agreement. 

 

Section 5.      Dividends. Interest andPremiums. The Borrower will have the right to receive all cash dividends,interest and premiums declared and paid on the Pledged Shares prior to theoccurrence of any Event of Default. In the event any additional shares areissued to the Borrower as a stock dividend or in lieu of interest on any of thePledged Shares, as a result of any split ofany of the Pledged Shares, byreclassification or otherwise, any certificates evidencing any such additionalshares will be immediately delivered to the Lender and such shares will besubject to this Agreement and a part of the Pledged Shares to the same extentas the original Pledged Shares. At any time after the occurrence of an Event ofDefault, the Lender shall be entitled to receive all cash or stock dividends,interest and premiums declared or paid on the Pledged Shares, all of whichshall be subject to the Lender's rights under Section 5 above. 

 

Section 6.      Further Assurances.The Borrower hereby irrevocably authorizes the Lender, at any time and fromtime to time, to execute (on behalf of the Borrower), file and record againstthe Borrower any notice, financing statement, continuation statement, amendmentstatement, instrument, document or agreement under the *VCC*that theLender may consider necessary or desirable to create, preserve, continue,perfect or validate any security interest granted hereunder or to enable theLender to exercise or enforce its rights hereunder with respect to suchsecurity interest. Without limiting the generality of the foregoing, theBorrower hereby irrevocably appoints the Lender as the Borrower'sattorney-in-fact to do all acts and things in the Borrower's name that theLender may deem necessary or desirable. This power of attorney is coupled withan interest with full power of substitution and is irrevocable. The Borrowerhereby ratifies all that said attorney shall lawfully do or cause to be done byvirtue hereof. 

 

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Section 7.      Continuing Validity ofObligations. The agreements and obligations of the Borrower hereunder arecontinuing agreements and obligations, and are absolute and unconditionalirrespective of the genuineness, validity or enforceability of the LoanAgreement, the Note or any other instrument or instruments now or hereafterevidencing the Debt or any part thereof or of the Loan Documents or any otheragreement or agreements now or hereafter entered into by the Lender and theBorrower pursuant to which the Debt or any part thereof is issued or of anyother circumstance which might otherwise constitute a legal or equitabledischarge of such agreements and obligations. Without limitation upon theforegoing, such agreements and obligations shall continue in full force andeffect as long as the Debt or any part thereof remains outstanding and unpaidand shall remain in full force and effect without regard to and shall not bereleased, discharged or in any way affected by (i) any renewal, refinancing orrefunding of the Debt in whole or in part, (ii) any extension of the time ofpayment of the Note or other instrument or instruments now or hereafterevidencing the Debt, or any part thereof, (iii) any compromise or settlementwith respect to the Debt or any part thereof, or any forbearance or indulgenceextended to the Borrower, (iv) any amendment to or modification of the terms ofthe Note or other instrument or instruments now or hereafter evidencing theDebt or any part thereof or any other agreement or agreements now or hereafterentered into by the Lender and the Borrower pursuant to which the Debt or anypart thereof is issued or secured, (v) any substitution, exchange, or releaseof a portion of, or failure to preserve, perfect or protect, or other dealingin respect of, the Pledged Shares or any other property or any security for thepayment of the Debt or any part thereof, (vi) any bankruptcy, insolvency,arrangement, composition, assignment for the benefit of creditors or similarproceeding commenced by or against the Borrower, (vii) any dissolution,liquidation or termination of the Borrower for any reason whatsoever or (viii)any other matter or thing whatsoever whereby the agreements and obligations ofthe Borrower hereunder, would or might otherwise be released or discharged. TheBorrower hereby waives notice of the acceptance of this Agreement by theLender. 

 

Section 8.       Defeasance.Notwithstanding anything to the contrary contained in this Agreement, uponpayment in full of the Debt and performance of all obligations of under theLoan Agreement, this Agreement shall terminate and be of no further force andeffect and at the request of the Borrower, the Lender shall thereupon terminateits security interest in the Pledged Shares. Until such time, however, thisAgreement shall be binding upon and inure to the benefit of the parties, theirsuccessors and assigns, provided that the Borrower may not assign thisAgreement or any of its rights under this Agreement or delegate any of itsduties or obligations under this Agreement and any such attempted assignment ordelegation shall be null and void. This Agreement is not intended and shall notbe construed to obligate the Lender to take any action whatsoever with respectto the Pledged Shares or to incur expenses or perform or discharge anyobligation, duty or disability of the Borrower. 

 

Section 9.         Miscellaneous.

 

(a)       The provisions of this Agreement areintended to be severable. If any provision of this Agreement shall for anyreason be held invalid or unenforceable, in whole or in part, in anyjurisdiction, such provision shall, as to such jurisdiction, be ineffective tothe extent of such invalidity or unenforceability without in any manneraffecting the validity or unenforceability of such provision in any otherjurisdiction or any other provision of this Agreement in any jurisdiction. 

 

(b)      No failure or delay on the part of the Lenderin exercising any right, remedy, power or privilege under this Agreement, theLoan Agreement or any of the other Loan Documents shall operate as a waiverthereof or of any other right, remedy, power or privilege of the Lender underthis Agreement, the Loan Agreement, the Note or any of the other LoanDocuments; nor shall any single or partial exercise of any such right, remedy,power or privilege preclude any other right, remedy, power or privilege orfurther exercise thereof or the exercise of any other right, remedy, power orprivilege. The rights, remedies, powers and 

privileges of the Lender under this Agreement, theLoan Agreement, the Note and the other Loan Documents are cumulative and notexclusive of any rights or remedies which it may otherwise have. 

 

(c)       All notices, statements, requests anddemands given to or made upon any party in accordance with the provisions ofthis Agreement shall be deemed to have been given or made when given or made asprovided in the Loan Agreement. 

 

(d)      The section headings contained in thisAgreement are for reference purposes only and shall not control or affect itsconstruction or interpretation in any respect. 

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(e)       The UCC shall govern the settlement,perfection and the effect of attachment and perfection of the Lender's securityinterest in the Pledged Shares and the rights, duties and obligations of theLender and the Borrower with respect to the Pledged Shares (whether or not the UCCapplies to the Pledged Shares). This Agreement shall be deemed to be a contractunder the Laws of the State of North Carolina and the execution and delivery ofthis Agreement and, to the extent not inconsistent with the preceding sentence,the terms and provisions of this Agreement shall be governed by and construedin accordance with the Laws of that State of North Carolina without regard tothe principles of the conflicts of laws thereof. 

 

(f)        The Borrower consents to the exclusivejurisdiction and venue of the federal and state Courts located in MecklenburgCounty, North Carolina in any action on, relating to or mentioning thisAgreement. 

 

(g)        This Agreement amends, restates andreplaces (but does not constitute a novation of or affect the status of anyliens or security interests granted pursuant to) the Existing Pledge Agreement,and the Borrower's execution of this Agreement constitutes a ratification andconfirmation of all liens and security interests granted under or pursuant tothe Existing Pledge Agreement. 

 

**[INTENTIONALLY LEFT BLANK]**

 

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IN WITNESS WHEREOF, and intendingto be legally bound, the undersigned has executed and delivered this Agreementas of the day and year written above. 

 

 

                                                                                                                                                Witness:                                                            SOUTHERN FIRST BANCSHARES, INC.

 

 

                                                                                                                                                By:                                                                   By:                                                                   

                                                                                                                                                Name:                                                               Name:  JamesM. Austin, III                        

                                                                                                                                                Title:                                                                 Title:     ChiefFinancial Officer                    

 

 

 

                                                                                                                                                                                                                            SilvertonBank, National Association

 

 

 

                                                                                                                                                                                                                            By:                                                                   

                                                                                                                                                                                                                                        TimothyS. Beck

                                                                                                                                                                                                                                         SeniorVice President

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AMENDED AND RESTATED LOAN AGREEMENT

 

 by and between 

 

SOUTHERN FIRST BANCSHARES, INC. 

 

and 

 

SILVERTON BANK, NATIONAL ASSOCIATION 

 

**DATED APRIL 30. 2009**

** **

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**AMENDED AND RESTATED LOAN AGREEMENT**

 

 

Agreement, dated as of the 30th dayof April, 2009, by and between Southern First Bancshares, Inc., a SouthCarolina corporation and a bank holding company (the "Borrower"), andSilverton Bank, National Association (f/k/a The Bankers Bank, NationalAssociation) (the "Lender") ("Agreement"). 

** **

**W I T N E S S E T H:**

 

WHEREAS, the Borrower and the Lender are a party tothat certain Loan Agreement, dated as of December 28, 2007, pursuant to whichthe Lender agreed to provide a revolving line of credit in the aggregate amountnot to exceed $15,000,000.00 to the Borrower (as amended prior to the datehereof, the "Existing Loan Agreement"); 

 

WHEREAS, the Borrower has requested the Lender toamend and restate the Existing Loan Agreement in order to, among other things,extend credit to the Borrower in an aggregate principal amount of up to$9,000,000.00, the proceeds of which will be used (i) to refinance existingIndebtedness to the Lender and (ii) for working capital and general corporatepurposes; and 

 

WHEREAS, the Lender is willing to extend such creditto the Borrower pursuant to the terms and conditions set forth herein. 

 

NOW, THEREFORE, in consideration of the premises andof the mutual covenants contained in this Agreement, the receipt andsufficiency of which are hereby acknowledged, and intending to be legally boundhereby, the parties hereto agree as follows: 

 

ARTICLE I 

 

DEFINITIONS 

 

1.01              Certain Definitions. In addition to other words and terms definedelsewhere in this Agreement, the following words and terms have the followingmeanings, respectively, unless the context otherwise clearly requires: 

 

"Affiliate" shall mean any (a) director,officer or employee of the Person, or (b) Person directly or indirectlycontrolling or controlled by, or under direct or indirect common control with,another Person. A Person shall be deemed to control another Person if thecontrolling Person directly or indirectly, either individually or together with(in the case of an individual) his spouse, lineal descendants and ascendantsand brothers or sisters by blood or adoption or spouses of such descendants,ascendants, brothers and sisters, owns 5% or more of any class of votingsecurities of the controlled Person or possesses, directly or indirectly, thepower to direct, or cause the direction of, the management or policies of thecontrolled Person, whether through the ownership of voting securities, throughcommon directors, trustees or officers, by contract or otherwise. 

 

"Agreement" shall mean this Amended andRestated Loan Agreement, as amended, modified or supplemented from time totime. 

 

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"Applicable Rate"shall mean the rate per annum equal to the Prime Rate plus 0.50%; provided,however, that in no event shall the Applicable Rate be less than 4.0%.

 

"AuthorizedRepresentative" shall mean each Person designated from time to time, as 

appropriate, in writing by the Borrower to the Lenderfor the purpose of giving notices of borrowing, which designation shallcontinue in full force and effect until terminated in writing by the Borrowerto the Lender. 

 

"Banking Liabilities" means (i) any depositswith any Bank Subsidiary or funds collected by any Bank Subsidiary, (ii) anybanker's acceptance credit of any Bank Subsidiary, (iii) any check, note,certificate of deposit, money order, letter of credit, travelers check, draftor bill of exchange issued, accepted or endorsed by any Bank Subsidiary, (iv)any discount with, borrowing from, or other obligation to, any Federal ReserveBank, (v) any agreement made by any Bank Subsidiary to purchase or repurchasesecurities, loans or federal funds or any interest or participation in anythereof, (vi) any guarantee or similar obligation incurred by any BankSubsidiary in such circumstances as may be incidental or usual in carrying onthe banking or trust business of a bank or trust company, (vii) any transactionin the nature of an extension of credit, whether in the form of a commitment orotherwise, undertaken by any Bank Subsidiary for the account of a third partywith the application of the same banking considerations and legal lendinglimits that would be applicable if the transaction were a loan to such partyand (viii) any transaction in which any Bank Subsidiary acts solely in afiduciary or agency capacity. 

 

"Bank Subsidiary" shall mean Southern Firstand any Person which is now or hereafter a banking/depository institution andwhich is now or hereafter "controlled" by the Borrower within themeaning of 12 U.S.C. Section 1841(a), as amended. 

 

"Borrower" shall mean Southern FirstBancshares, Inc., a South Carolina corporation and a bank holding company, having its principal place ofbusiness at 100 Verdae Boulevard, Greenville, South Carolina 29607. 

 

"Borrowing Availability Amount" means, forthe period of determination, the net present value of Cash Flow Available to Service Lender Debt based on a five (5)year amortization and current contractual interest rates, as determined by theLender in its sole, reasonable discretion. 

 

"Borrowing Availability Certificate" meansthe certificate required to be delivered by the Borrower to the Lender pursuantto Section 5.01(c), setting forth the Borrowing Availability Amountcalculations for the Borrower. 

 

"Business Day" shall mean a day of the yearon which banks are not required or authorized to close in Charlotte, NorthCarolina. 

 

"Capital Lease" shall mean any lease of anytangible or intangible property (whether real, personal or mixed), howeverdenoted, which is required by GAAP to be reflected as a liability on thebalance sheet of the lessee. 

 

"Capitalized Lease Obligation" shall mean,with respect to each Capital Lease, the amount of the liability reflecting theaggregate discounted amount of future payments under such Capital Leasecalculated in accordance with GAAP and statement of financial accountingstandards No. 13 (as supplemented and modified from time to time), and anycorresponding future interpretations by the Financial Accounting StandardsBoard or any successor thereto. 

 

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"Cash Flow Available toService Lender Debt" means, for the period of determination, the sum of(a) the quotient of (i) Cash Flow Available to Service Debt divided by(ii) 1.00 minus (y) the sum of (i) Debt Service plus (ii)Distributions paid or accrued, in each case determined for the Borrower only inaccordance with GAAP. 

 

"Cash FlowAvailable to Service Debt' means, for the period of determination, the productof(i) Net Income (or loss) plus Interest Expense only plus/minusnon-recurring gains or losses (as determined by the Lender in its solediscretion) net of any income taxes with respect thereto multiplied by (ii)75%. 

 

"Change inControl" shall mean (a) the acquisition by any Person, or two or morePersons acting in concert, of the beneficial ownership (within the meaning ofRule 13d-3 of the Securities and Exchange Commission under the SecuritiesExchange Act of 1934) of20% or more of the outstanding shares of votingownership interests of the Borrower or (b) the lease, sale or transfer or otherdisposition of all or substantially all of the assets of the Borrower or anySubsidiary in one or a series of transactions to any Person, or two or morePersons acting in concert. 

 

"Closing" shall mean the closing of thetransactions provided for in this Agreement on the Closing Date. 

 

"Closing Date" shall mean April 30, 2009 orsuch other date upon which all of the conditions set forth in Section 4.01 of thisAgreement have been satisfied or waived by the Lender. 

 

"Code" shall meanthe Internal Revenue Code of 1986, as amended, along with the rules, 

regulations, decisions and other officialinterpretations in connection therewith. 

 

"Contamination" shall mean the presence orrelease or threat of release of Regulated Substances in, on, under or emanatingto or from the Property which pursuant to Environmental Laws requiresnotification or reporting to an Official Body, or which pursuant toEnvironmental Laws requires the investigation, cleanup, removal, remediation,containment, abatement of or other response action or which otherwiseconstitutes a violation of Environmental Laws. 

 

"Current Maturities" shall mean, for theperiod of determination, the sum of (i) the current principal maturities of allIndebtedness, having an original term of one (I) year or more plus (ii) anyprepayments made in the prior twelve (2) month period with respect to suchIndebtedness (excluding, however, any prepayment arising out of a refinance orpartial refinance of the Indebtedness that was prepaid), in each casedetermined for the Borrower only in accordance with GAAP. 

 

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"Debt" shall mean,collectively, (A) all Indebtedness, whether of principal, interest, fees,expenses or otherwise, of the Borrower to the Lender, whether now existing orhereafter incurred including, but not limited to, future loans and advances, ifany, under this Agreement, the Notes and the other Loan Documents, as the samemay be amended from time to time, together with any and all extensions,renewals, refinancings or refundings thereof in whole or in part; (B) all otherobligations for the repayment of borrowed money, whether of principal,interest, fees, expenses or otherwise, of the Borrower to the Lender, whether nowexisting or hereafter incurred, whether under letters or advices of credit,lines of credit, Hedging Obligations, other financing arrangements or otherwise(including, but not limited to, any obligations arising as a result of anyoverdrafts), whether or not related to this Agreement or to the Notes, whetheror not contemplated by the Lender or the Borrower at the date hereof andwhether direct, indirect, matured or contingent, joint or several, orotherwise, together with any and all extensions, renewals, refinancings or refundingsthereof in whole or in part; (C) all costs and expenses including, withoutlimitation, to the extent permitted by Law, reasonable attorneys' fees andlegal expenses, incurred by the Lender in the collection of any of theindebtedness referred to in clauses (A) or (B) above in amounts due and owingto the Lender under this Agreement or the other Loan Documents; and (D) anyadvances made by the Lender for the maintenance, preservation, protection orenforcement of, or realization upon, any property or assets now or hereaftermade subject to a Lien granted pursuant to this Agreement, the other LoanDocuments or pursuant to any agreement, instrument or note relating to any ofthe Debt, including, without limitation, advances for taxes, insurance, repairsand the like. 

 

"DebtService" means, for the period of determination, the sum of (i) theestimated interest expense on the Loans (assuming that the Revolving CreditFacility is fully funded and is accruing interest at the Applicable Rate) plus(ii) Current Maturities, in each case determined for the Borrower only inaccordance with GAAP. 

 

"Debt Service Coverage Ratio" shall mean,for any period of four consecutive Fiscal Quarters of the Borrower, the ratioof (a) Cash Flow Available to Service Debt to (b) Debt Service, in each casedetermined for the Borrower only in accordance with GAAP. 

 

"Debt to Worth Ratio" means, as of the dateof determination, the ratio of total Indebtedness (assuming that the RevolvingCredit Facility is fully funded) to shareholder's equity, in each casedetermined for the Borrower only in accordance with GAAP. For purpose ofcalculating the Debt to Worth Ratio, any funds received by the Borrower fromthe United States of America or any agency thereof under the United States ofAmerica "Troubled Assets Relief Program (TARP)" that remainoutstanding as of the date of determination will be treated as equity and notIndebtedness. 

 

"Distributions" shall mean, for the periodof determination, (i) all distributions of cash, securities or other property(other than capital stock) on or in respect of any shares of any class ofcapital stock of the Borrower and (ii) all purchases, redemptions or otheracquisitions by the Borrower of any shares of any class of capital stock of theBorrower, in each case determined and consolidated for the Borrower and itsSubsidiaries in accordance with GAAP. 

 

"EnvironmentalLaws" shall mean all federal, state, local and foreign Laws and anyconsent decrees, settlement agreements, judgments, orders, directives, policiesor programs issued by or entered into with an Official Body pertaining orrelating to: (i) pollution or pollution control; (ii) protection of humanhealth or the environment; (iii) employee safety in the workplace; (iv) thepresence, use, management, generation, manufacture, processing, extraction,treatment, recycling, refining, reclamation, labeling, transport, storage,collection, distribution, disposal or release or threat of release of RegulatedSubstances; (v) the presence of Contamination; (vi) the protection ofendangered or threatened species; and (vii) the protection of EnvironmentallySensitive Areas. 

 

"Environmental Liability" shall mean allliability arising under, resulting from or imposed by any Environmental Law andall liability imposed under common law with respect to the use, treatment,generation, storage, disposal, discharge or other handling or release of anyRegulated Substance. 

 

"ERISA" shall mean the Employee RetirementIncome Security Act of 1974, as in effect as of the date of this Agreement andas amended from time to time in the future, and any successor statute ofsimilar impact, and the rules and regulations thereunder, or from time to timein effect. 

 

"Event of Default" shall mean any of theEvents of Default described in Section 7.01 of this Agreement. 

 

"Excess Amount" shall mean that as set forthin Section 2.0 I (d) hereof. 

 

"Excess Interest" shall mean that as setforth in Section 2.03(d) hereof. 

 

"FDIC" shall mean the Federal DepositInsurance Corporation and any successor thereof. 

 

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"Federal Reserve"shall mean the Board of Governors of the Federal Reserve System. 

 

"FiscalQuarter(s)" shall mean the period(s) of January 1 through March 31, April1 through June 30, July 1 through September 30 and October 1 through December31 of each calendar year. 

 

"GAAP" shall mean generally acceptedaccounting principles (as such principles may change from time to time) whichshall include the official interpretations thereof by the Financial AccountingStandards Board applied on a consistent basis (except for changes inapplication in which the Borrower's independent certified public accountantsconcur). 

 

"Guaranty" shall mean any obligation of aPerson guaranteeing or in effect guaranteeing any liability or obligation ofany other Person in any manner, whether directly or indirectly, including anycontingent obligation or agreement to indemnify or hold harmless any otherPerson, any performance bond or other suretyship arrangement and any other formof assurance against loss, except endorsement of negotiable or other instrumentsfor deposit or collection in the ordinary course of business. 

 

"Hedging Contracts" shall mean interest rateswap agreements, interest rate cap agreements and interest rate collar agreements or any other agreements orarrangements entered into by any Loan Party and designed to protect such LoanParty against fluctuations in interest rates or currency exchange rates. 

 

"Hedging Obligations" shall mean, withrespect to a Loan Party, all liabilities of the Loan Party under HedgingContracts. 

 

"Indebtedness"means, without duplication, all of a Person's liabilities, obligations and 

indebtedness to any Personof any and every kind and nature, whether primary, secondary, direct, indirect,absolute, contingent, fixed or otherwise, heretofore, now and/or from time totime hereafter owing, due or payable, however evidenced, created, incurred,acquired or owing and however arising, whether under written or oral agreement,by operation of law or otherwise. Without in any way limiting the generality o theforegoing, Indebtedness specifically includes (i) indebtedness for borrowedmoney, (ii) obligations evidenced by bonds, debentures, notes or other similarinstruments, (iii) any Trust Preferred Indebtedness, (iv) obligations to paythe deferred purchase price of property or services, (v) all obligations undera Capital Lease and the amount of such Indebtedness shall be the aggregateamount of Capitalized Lease Obligations with respect to such Capital Lease,(vi) all net obligations under any Hedging Obligations and all obligations(contingent or otherwise) under any letter of credit, banker's acceptance,Guaranty or indemnification agreement and (vii) obligations under direct orindirect guaranties in respect of, and obligations (contingent or otherwise) topurchase or otherwise acquire, or otherwise to assure a creditor against lossin respect of, indebtedness or obligations of others of the kinds referred toin clauses (i) through (vi) above; provided, however, that for the avoidance ofdoubt, Indebtedness shall not include any Indebtedness arising out of clauses(i), (ii), (iii) or (vii) of the definition of Banking Liabilities incurred inthe ordinary course of any Bank Subsidiary's business. The amount of any netobligation with respect to any Hedging Obligation on any date shall be deemedto be the Swap Termination Value thereof as of such date. For purposes ofcalculating the Debt Service Coverage Ratio, the amount of Indebtedness arisingout of (a) any Hedging Obligations or (b) any Indebtedness described in clauses(a), (e) and (g) of Section 6.02 hereof shall be excluded from the definitionof Indebtedness. For purposes of Section 6.02 hereof, the amount of any HedgingObligations shall be excluded from the definition of indebtedness. 

 

"Indemnified Liabilities" shall mean that asset forth in Section 8.15 hereof. 

 

"Indemnitees" shall mean that as set forthin Section 8.15 hereof. 

 

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"Interest Expense"shall mean, for the period of determination, all interest accruing during suchperiod on Indebtedness, in each case determined and consolidated for theBorrower and its Subsidiaries in accordance with GAAP. 

 

"Law" shall meanany law (including common law), constitution, statute, treaty, regulation,rule, ordinance, order, injunction, writ, decree or award of any Official Body. 

 

"Lender" shall mean as set forth in thepreamble hereof and its successors and assigns. 

 

"Lien" shall mean any mortgage, deed of trust, pledge, lien, security interest, charge orother encumbrance or security arrangement of any nature including, but notlimited to, any conditional sale or title retention arrangement, and anyassignment, deposit arrangement or lease intended as, or having the effect of,security for Indebtedness. 

 

"Loan" or "Loans" shall mean,singularly or collectively as the context may require, the Revolving Credit Loans, the Term Loan and any othercredit extended to the Borrower by the Bank in accordance with Article IIhereof. 

 

"Loan Account" shall mean that as set forthin Section 2.08 hereof. 

 

"Loan Document" or "LoanDocuments" shall mean, singularly or collectively as the context may require, this Agreement, the Notes, theStock Pledge Agreement, any UCC financing statements filed in accordance withthe Stock Pledge Agreement and any and all other documents, instruments,certificates and agreements executed and delivered in connection with thisAgreement, as any of them may be amended, modified, extended or supplementedfrom time to time. 

 

"Loan Party" or "Loan Parties"shall mean, singularly or collectively as the context may require, the Borrower, each Bank Subsidiary and anyother Person (other than the Lender) that becomes a party to this Agreement,the Notes or Stock Pledge Agreement. 

 

"Material Adverse Change" shall mean amaterial adverse change in (a) the business, operations or condition (financialor otherwise) of any Loan Party; (b) the ability of the Borrower to perform anyof its payment or other obligations under this Agreement or the ability of anyLoan Party to perform any of its obligations under any other Loan Document towhich it is a party; (c) the legality, validity or enforceability of theobligations of the Borrower under this Agreement or any Loan Party under anyother Loan Document to which it is a party; or (d) the ability of the Lender toexercise its rights and remedies with respect to, or otherwise realize upon,any security for the Debt. 

 

"Material Adverse Effect" shall mean amaterial adverse effect on (a) the business, operations or condition (financialor otherwise) of any Loan Party; (b) the ability oft he Borrower to perform anyof its payment or other obligations under this Agreement or the ability of anyLoan Party to perform any of its obligations under any other Loan Document towhich it is a party; (c) the legality, validity or enforceability of theobligations of the Borrower under this Agreement or any Loan Party under anyother Loan Document to which it is a party; or (d) the ability of the Lender toexercise its rights and remedies with respect to, or otherwise realize upon,any security for the Debt. 

 

"Maturity Date" shall mean (i) with respectto the Revolving Credit Facility, the Revolving Credit Maturity Date and (ii)with respect to the Term Loan, the Term Loan Maturity Date. 

 

"Maximum Rate" shall mean that as set forthin Section 2.04(d) hereof. 

 

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"Memorandum ofUnderstanding" shall mean any memorandum of understanding between theBorrower or any Bank Subsidiary and an Official Body that either (a) theBorrower discloses to the public in any filing with the Securities and ExchangeCommission or to such Bank Subsidiary's liability bond issuer, or (b) theLender reasonably deems to be material. 

 

"Net Income" shallmean, for the period of determination, net income (after taxes), in each case determined and consolidated for the Borrower andits Subsidiaries in accordance with GAAP. 

 

"Non-Performing Assets" shall mean theaggregate sum of the Borrower's consolidated (i) non-accruals, (ii) loans 90days or more past due, (iii) renegotiated loans, (iv) other real estate ownedand (v) other assets defined as "other non-performing assets" onBorrower's consolidated financial statements, in each case determined andconsolidated for the Borrower and its Bank Subsidiaries in accordance withGAAP. 

 

"Non-Performing Assets Ratio" shall mean,for the period of determination, the ratio of Non-Performing Assets divided by(ii) the sum of(a) total loans (not gross loans, net of deferred fees) and (b)other real estate owned, in each case determined and consolidated for theBorrower and its Bank Subsidiaries in accordance with GAAP. 

 

"Note" or "Notes" shall mean,singularly or collectively as the context may require, the Revolving Credit Note, the Term Note and any othernote or notes of the Borrower executed and delivered pursuant to thisAgreement, together with all extensions, renewals, refinancings or refundingsin whole or in part, as amended, modified or supplemented from time to time. 

 

"Notices" shall mean that as set forth inSection 8.04 hereof. 

 

"Office", when used in connection with theLender, shall mean its designated office located at 1111 Metropolitan Avenue,Suite 650, Charlotte, North Carolina 28204 or such other office of the Lenderas the Lender may designate in writing from time to time. 

 

"Official Body"shall mean any government or political subdivision or any agency, authority,bureau, central bank, board, commission, department or instrumentality ofeither, or any court, tribunal, grand jury or arbitrator, in each case whetherforeign or domestic. 

 

"Person" shall mean an individual,corporation, limited liability company, partnership, joint venture, trust, orunincorporated organization or government or agency or political subdivisionthereof. 

 

"Permitted Liens" shall mean: (a) Liens fortaxes, assessments, or governmental charges, carriers', warehousemen's, repairmen's,mechanics', materialmen's and other like Liens, which are either not delinquent or are being contested in good faith byappropriate proceedings which will prevent foreclosure of such Liens, andagainst which adequate cash reserves have been provided; (b) easements,restrictions, minor title irregularities and similar matters which have nomaterial adverse effect upon the ownership and use of the affected Property;(c) Liens or deposits in connection with worker's compensation, unemployment insurance,social security or other insurance or to secure customs duties, public orstatutory obligations in lieu of surety, stay or appeal bonds, or to secureperformance of contracts or bids, other than contracts for the payment of moneyborrowed, or deposits required by law as a condition to the transaction ofbusiness or other Liens or deposits of a like nature made in the ordinarycourse of business; (d) Liens in favor of the Lender pursuant to the Loan Documents;(e) Liens evidenced by conditional sales, purchase money mortgages or othertitle retention agreements on, or leases with respect to, machinery andequipment (acquired in the ordinary course of business and otherwise permittedto be acquired hereunder) which are created at the time of the acquisition of suchproperty solely for the purposes of securing the Indebtedness incurred tofinance the cost of such property, provided no such Lien shall extend to anyproperty other than the property so acquired and identifiable proceeds; and (I)Liens to secure, or which are granted in connection with, Banking Liabilitiesof the Borrower or a Bank Subsidiary. 

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"PotentialDefault" shall mean any event or condition which with notice, passage of timeor determination by the Lender, or any combination of the foregoing, wouldconstitute an Event of Default. 

 

"Prime Rate" shall mean that rate of interestdetermined using *The Wall Street Journal*"U.S. Prime Rate"reported as of such day, notwithstanding the fact that such rate may actuallybe published on a later date and in the event more than one "U.S. PrimeRate" shall be reported, the Prime Rate for purposes hereof shall be thehighest such published "U.S. Prime Rate". 

 

"Prior LoanDocuments" shall mean the Existing Loan Agreement, and any all otherrelated documents entered into in connection therewith, as amended, modified orsupplemented from time to time. 

 

"Property" shall mean all real property bothowned and leased of the Borrower or any of its Subsidiaries. 

 

"RegulatedSubstances" shall mean, without limitation, any substance, material orwaste, regardless of its form or nature, defined under Environmental Laws as a"hazardous substance," "pollutant," "pollution," "contaminant,""hazardous or toxic substance," "extremely hazardoussubstance," "toxic chemical," "toxic substance,""toxic waste," "hazardous waste," "special handlingwaste," "industrial waste," "residual waste,""solid waste," "municipal waste," "mixed waste,""infectious waste," "chemotherapeutic waste," "medicalwaste," or "regulated substance" or any other material,substance or waste, regardless of its formor nature, which otherwise is regulated by Environmental Laws. 

 

"Required Deductions" shall mean that as setforth in Section 2.06 hereof. 

 

"Revolving Credit Maturity Date" shall meanApril 30, 20 II. 

 

"Revolving Credit Facility" shall mean thefacility described in Section 2.01(a) hereof providing for Revolving CreditLoans to the Borrower by the Lender in the maximum aggregate principal amountat any time outstanding of $4,000,000.00, as adjusted from time to timepursuant to the terms of this Agreement. 

 

"Revolving Credit Loan" or "RevolvingCredit Loans" shall mean, singularly or collectively as the context mayrequire, that as set forth in Section 2.01(a) hereof. 

 

"Revolving Credit Note" shall mean theRevolving Credit Note of the Borrower executed and delivered pursuant toSection 2.0 I (b) of this Agreement, together with all extensions, renewals,refinancings or refundings, in whole or in part, as such Revolving Credit Notemay be amended, modified or supplemented from time to time. 

 

"Shares" shall mean one hundred percent(100%) of the issued and outstanding capital stock of Southern First. 

 

"Southern First" shall mean Southern FirstBank, National Association, a wholly-owned subsidiary of the Borrower. 

 

"Stock Pledge Agreement" shall mean theAmended and Restated Stock Pledge Agreement, dated of even date herewith, madeby the Borrower to the Lender with respect to the Shares, as amended, modifiedor supplemented from time to time. 

 

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"Subsidiary" or ~~Subsidiaries" of a Person shall mean (i) anycorporation or trust of which 50% or more (by number of shares or number ofvotes) of the outstanding capital stock or shares of beneficial interestnormally entitled to vote for the election of one or more directors or trustees(regardless of any contingency which does or may suspend or dilute the votingrights) is at such time owned directly or indirectly by such Person or one ormore of such Person's Subsidiaries, (ii) any partnership of which such Personis a general partner or of which 50% or more of the partnership interests is atthe time directly or indirectly owned by such Person or one or more of suchPerson's Subsidiaries, (iii) any limited liability company of which such Personis a member or of which 50% or more of the limited liability company interestsis at the time directly or indirectly owned by such Person or one or more ofsuch Person's Subsidiaries or (iv) any corporation, trust, partnership, limitedliability company or other entity which is controlled or capable of beingcontrolled by such Person or one or more of such Person's Subsidiaries. 

 

"Swap Termination Value" means, in respectof anyone or more Hedging Contracts, after takinginto account the effect of any legally enforceable netting agreement relatingto such Hedging Contracts, (a) for any date on or after the date such HedgingContracts have been closed out and termination value(s) determined inaccordance therewith, such termination value(s), and (b) for any date prior tothe date referenced in clause (a), the amount(s) determined as themark-to-market value(s) for such Hedging Contracts, as determined based uponone or more mid-market or other readily available quotations provided by anyrecognized dealer in such Hedging Contracts (which may include the Lender orany Affiliate of the Lender). 

 

"Term Loan" shall mean that as set forth inSection 2.02(a) hereof. 

 

"Term Loan Maturity Date" shall mean April 30,2014. 

 

"Term Note" shall mean the Term Note of theBorrower, executed and delivered pursuant to Section 2.02(c) of this Agreement,together with all extensions, renewals, refinancings or refundings, in whole orin part, as such Term Note may be amended, modified or supplemented from timeto time. 

 

"Tier 1 Capital" shall mean the Tier Icapital determined in accordance with Appendix A to Regulation Y of the FederalReserve as from time to time in effect, and any successor or other regulationor official interpretation of said Board of Governors relating thereto. 

 

"Tier 2 Capital" shall mean the Tier 2capital determined in accordance with Appendix A to Regulation Y of the FederalReserve as from time to time in effect, and any successor or other regulationor official interpretation of said Board of Governors relating thereto. 

 

"Trust Preferred Indebtedness" shall meanany Indebtedness issued by the Borrower or any Subsidiary that qualifies asTier I Capital or Tier 2 Capital. 

 

"UCC" shall mean the Uniform Commercial Codeor other similar Law as in effect on the date of this Agreement and as amendedfrom time to time, of the Official Body having jurisdiction with respect to allor any portion of the collateral granted or assigned to the Lender from time totime under or in connection with this Agreement. 

 

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1.02 Amendment andRestatement. This Agreement amends and restates in its entirety theExisting Loan Agreement. All references to the "Loan Agreement"contained in the other Loan Documents delivered in connection with the ExistingLoan Agreement or this Agreement shall, and shall be deemed to, refer to thisAgreement. Notwithstanding the amendment and restatement of the Existing LoanAgreement by this Agreement, the Debt of the Borrower outstanding under theExisting Loan Agreement and the other Loan Documents as of the Closing Dateshall remain outstanding and shall constitute continuing Debt without novationand shall continue as such to be secured by such collateral, if any. Such Debtshall in all respects be continuing and this Agreement shall not be deemed tobe evidence or result in a novation or repayment and reborrowing of such Debt.The Liens securing payment of the Debt under the Existing Loan Agreement, asamended and restated in the form of this Agreement, shall in all respects becontinuing, securing the payment of all Debt. 

 

1.03 Construction andInterpretation. 

 

(a) Construction.Unless the context of this Agreement otherwise clearly requires, references tothe plural include the singular, the singular the plural, the part the wholeand "or" has the inclusive meaning represented by the phrase"and/or". References in this Agreement to "judgments" ofthe Lender include good faith estimates by the Lender (in the case ofquantitative judgments) and good faith beliefs by the Lender (in the case ofqualitative judgments). The definition of any document or instrument includesall schedules, attachments and exhibits thereto and all renewals, extensions,supplements, restatements and amendments thereof. "Hereunder","herein", "hereto", "hereof', "thisAgreement" and words of similar import refer to this entire document;"including" is used by way of illustration and not by way of limitationunless the context clearly indicates to the contrary; and any action requiredto be taken by the Borrower is to be taken promptly, unless the context clearlyindicates to the contrary . 

 

(b) Lender'sDiscretion and Consent. Whenever the Lender is granted the right herein toact in its sole discretion or to grant or withhold consent, such right shall beexercised in good faith and in a reasonable manner. 

 

(c) AccountingPrinciples. Except as otherwise provided in this Agreement, allcomputations and determinations as to accounting or financial matters and allfinancial statements to be delivered pursuant to this Agreement shall be madeand prepared in accordance with GAAP (including principals of consolidation,where appropriate), and all accounting or financial terms shall have themeanings ascribed to such terms by GAAP. In the event of any change after thedate hereof in GAAP, and if such change would result in the inability todetermine compliance with the financial covenants set forth in Section 5.12based upon the Borrower's regularly prepared financial statements by reason ofthe preceding sentence, then the partieshereto agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financialcovenants in a manner that would not affect the substance thereof, but wouldallow compliance therewith to be determined in accordance with the Borrower'sfinancial statements at that time. 

 

ARTICLE II

 

THE CREDIT FACILITY

 

2.01 The Revolving Credit Facility Commitment. 

 

(a) Revolving CreditLoans. Subject to the terms and conditions and relying upon therepresentations and warranties set forth in this Agreement, the Notes and theother Loan Documents, the Lender agrees to make loans (each, a "RevolvingCredit Loan" and, collectively, the "Revolving Credit Loans") tothe Borrower at any time and from time to time on or after the Closing Date andto and including the Business Day immediately preceding the Revolving CreditMaturity Date, in an aggregate principal amount not exceeding at any timeoutstanding the lesser of (i) $4,000,000.00 and (ii) the Borrowing AvailabilityAmount. Within the limits of time and amounts set forth in this Section 2.01,and subject to the other provisions of this Agreement including, withoutlimitation, the Lender's right to demand repayment of the Revolving CreditLoans upon the occurrence of an Event of Default, the Borrower may borrow,repay and reborrow under this Section 2.0 I. 

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(b) Revolving CreditNote. The obligation of the Borrower to repay the unpaid principal amountof the Revolving Credit Loans made to the Borrower by the Lender and to payinterest on the unpaid principal amount thereof shall be evidenced by theRevolving Credit Note of the Borrower,  dated the Closing Date, which shall be in form andsubstance satisfactory to the Lender. The executed Revolving Credit Note shallbe delivered by the Borrower to the Lender on the Closing Date. 

 

(c) Making RevolvingCredit Loans. Subject to the terms and conditions set forth in thisAgreement and the other Loan Documents, and provided that the Borrower hassatisfied all applicable conditions specified in Article IV hereof, the Lendershall make Revolving Credit Loans to the Borrower. Each Revolving Credit Loanshall be made on such Business Day and in such amount as an AuthorizedRepresentative of the Borrower shall request by written notice received by theLender no later than 10:00 a.m. (Charlotte, North Carolina time) on theBusiness Day prior to the date of requested disbursement of the requestedRevolving Credit Loan. Subject to the terms and conditions of this Agreement,the Lender shall make the proceeds of the Revolving Credit Loan available tothe Borrower at the Lender's Office in immediately available funds not laterthan 3:00 p.m. (Charlotte, North Carolina time) on the date of requested disbursement.

 

(d) Maximum PrincipalBalance of all Revolving Credit Loans. The sum of the aggregate principalamount of all Revolving Credit Loans shall not exceed $4,000,000.00. TheBorrower agrees that if at any time the sum of the aggregate principal amountof all Revolving Credit Loans outstanding exceeds lesser of (i) $4,000,000.00and (ii) the Borrowing Availability Amount (the "Excess Amount"), theBorrower shall promptly (but in any event within five (5) Business Days afterthe date of such occurrence) pay to the Lender such Excess Amount. If notsooner paid, the entire balance of all outstanding Revolving Credit Loans,together with all unpaid accrued interest thereon, and all other sums and costsowed to the Lender by the Borrower with respect to the Revolving Credit Loansshall be immediately due and payable on the Revolving Credit Maturity Date,without notice, presentment or demand of any kind. 

 

2.02 Term Loan.

 

(a) Term Loan.Subject to the terms and conditions and relying upon the representations andwarranties set forth in this Agreement, the Notes and the other Loan Documents,the Lender agrees to make a term loan (the "Term Loan") to theBorrower on the Closing Date in the original principal amount of$5,000,000.00.

 

(b) Nature of theLoan. Upon repayment of any amount of principal or interest on the TermLoan by the Borrower, the Borrower may not reborrow under this Section 2.02.

 

(c) Term Note.The obligation of the Borrower to repay the unpaid principal amount of the TermLoan made to the Borrower by the Lender and to pay interest on the unpaidprincipal amount thereof shall be evidenced by the Term Note of the Borrower,dated the Closing Date, which shall be in form and substance satisfactory tothe Lender. The executed Term Note shall be delivered by the Borrower to theLender on the Closing Date. 

 

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(d) Payments ofPrincipal and Maturity. Subject to the terms and conditions of thisAgreement, commencing on July 1,2009, and on the first (I") day of eachsuccessive Fiscal Quarter thereafter through and including the Term LoanMaturity Date, the Borrower shall make equal quarterly principal payments tothe Lender in the amount of$250,000.00 plus interest as set forth in Section2.03(b) hereof. All remaining unpaid principal, accrued interest and all othersums and costs incurred by the Lender pursuant to this Agreement with respectto the Term Loan shall be immediately due and payable on the Term Loan MaturityDate without notice, presentment or demand of any kind. 

2.03 Interest Rates.

 

(a) Interest on theLoans. Subject to the terms and conditions of this Agreement, the aggregateoutstanding principal balance of all Loans shall bear interest for each day ata fluctuating rate per annum equal to the Applicable Rate. 

 

(b) Interest Payments.Interest on the Loans shall be due and payable on the first (I'~ day of eachFiscal Quarter, in arrears, commencing on July 1,2009, and on the first(I") day of each successive Fiscal Quarter thereafter to and including theMaturity Date. After maturity of the Loans (whether upon the occurrence of anEvent of Default, by acceleration or otherwise) interest on such part of theLoans shall be immediately due and payable without notice, presentment ordemand. If not sooner paid, the entire principal balance of all outstandingLoans, all unpaid interest accrued thereon and all other sums and costs owed tothe Lender by the Borrower pursuant to the Loans shall be immediately due andpayable on the Maturity Date, without notice, presentment or demand of anykind. 

 

(c) Calculation ofInterest and Fees: Adjustment to Prime Rate. Interest on the Loans, unpaidfees and other sums payable hereunder shall be computed on the basis of a yearof three hundred sixty (360) days and paid for the actual number of dayselapsed. In the event of any change in the Prime Rate, the rate of interestapplicable to each Loan shall be adjusted effective the next calendar day tocorrespond with such change; except any interest rate charged hereunder shallnot exceed the Maximum Rate. 

 

(d) Interest After Maturity or Default: InterestLaws. Upon the occurrence and during the continuance of an Event ofDefault, the unpaid principal amount of the Loans or any portion thereof,accrued interest thereon, any fees or any other sums payable hereunder shallthereafter until paid in full bear interest at a rate per annum equal to theApplicable Rate plus four percent (4.00%). Notwithstanding any provisions to the contrary contained in thisAgreement or any other Loan Document, the Borrower shall not be required topay, and the Lender shall not be permitted to collect, any amount of interestin excess of the maximum amount of interest permitted by applicable Law("Excess Interest"). If any Excess Interest is provided for ordetermined by a court of competent jurisdiction to have been provided for inthis Agreement or in any other Loan Document, then, in such event: (I) theprovisions of this subsection shall govern and control; (2) the Borrower shallnot be obligated to pay any Excess Interest; (3) any Excess Interest that theLender may have received hereunder shall be, at the Lender's option, (a)applied as a credit against the outstanding principal balance of the Debt oraccrued and unpaid interest (not to exceed the maximum amount permitted by Law),(b) refunded to the payor thereof, or (c) any combination of the foregoing; (4)the interest rate(s) provided for herein shall be automatically reduced to themaximum lawful rate allowed from time to time under applicable Law (the"Maximum Rate"), and this Agreement and the other Loan Documentsshall be deemed to have been and shall be, reformed and modified to reflectsuch reduction; and (5) the Borrower shall have no action against the Lenderfor any damages arising out of the payment or collection of any ExcessInterest. 

 

2.04 Late Charge. Upon the occurrence of anEvent of Default with respect to the payment of any installment of interest orprincipal on the Notes which continues for more than fifteen (\5) days afterthe said installment becomes due, in addition to making payment of theinstallment due and any interest thereon at the interest rates provided inSection 2.03( d) hereof, the Borrower shall pay to the Lender upon demand alate charge in an amount equal to four percent (4.0%) of any such overdueinstallment. 

 

2.05 [Reserved.] 

 

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2.06 Payments. All payments to be made inrespect of principal, interest, fees or other amounts due from the Borrowerunder this Agreement or under the Notes are payable at 3:00 p.m., (Charlotte,North Carolina time), on the day when due, without presentment, demand, protestor notice of any kind, all of which are expressly waived, and an action for thepayments will accrue immediately. All such payments must be made to the Lenderat its Office in U.S. Dollars and in funds immediately available at suchOffice, without setoff, counterclaim or other deduction of any nature. TheLender may in its discretion deduct such payments from the Borrower's demand ordeposit accounts with the Lender on the due date. All such payments shall beapplied at the option of the Lender to accrued and unpaid interest, outstandingprincipal and other sums due under this Agreement in such order as the Lender,in its sole discretion, shall elect. All such payments shall be made absolutelynet of, without deduction or offset, and altogether free and clear of any andall present and future taxes, levies, deductions, charges and withholdings andall liabilities with respect thereto, excluding income and franchise taxesimposed on the Lender under the Laws of the United States or any state orpolitical subdivision thereof. If the Borrower is compelled by Law to deductany such taxes or levies (other than such excluded taxes) or to make any suchother deductions, charges, or withholdings (collectively, the "RequiredDeductions"), the Borrower will pay to the Lender an additional amountequal to the sum of (i) the aggregate amount of all Required Deductions and(ii) the aggregate amount of United States, federal or state income taxesrequired to be paid by the Lender in respect of the Required Deductions. 

 

2.07 Loss of Margin. In the event that any Lawor the interpretation or application thereof by any Official Body or thecompliance with any guideline or request of any central bank or other OfficialBody (whether or not having the force of Law): 

 

(a) subjects the Lender to any tax with respect to anyamounts payable under this Agreement, the Notes or the other Loan Documents bythe Borrower or otherwise with respect to the transactions contemplated underthis Agreement, the Notes or the other Loan Documents (except for taxes on theoverall net income of the Lender imposed by the United States of America or anypolitical subdivision thereof), or 

 

(b) imposes, modifies or deems applicable any depositinsurance, reserve, special deposit, capital maintenance or similar requirementagainst assets held by, or deposits in or for the account of, or Loans oradvances or commitment to make Loans or advances by the Lender, or 

 

          (c) imposes upon the Lender any othercondition with respect to the Loans or the 

commitmentto make Loans under this Agreement, 

 

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and the result of any of the foregoing is tomaterially increase the costs of the Lender, reduce the income receivable by orreturn on equity of the Lender or impose any material expense upon the Lenderwith respect to any Loans or commitments to make Loans under this Agreement,the Lender shall so notify the Borrower in writing. The Borrower agrees to paythe Lender the actual amount of such increase in cost, reduction in income,reduced return on equity or additional expense within ten (l0) days after presentation by the Lender of a statement concerning suchincrease in cost, reduction in income, reduced returnon equity or additional expense. Such statement shall set forth a briefexplanation of the amount and the Lender's calculation of the amount, whichstatement shall be conclusively deemed correct absent manifest error. If theamount set forth in such statement is not paid within ten (l0) days after suchpresentation of such statement, interest will be payable on the unpaid amountat the rate set forth in Section 2.03(d) hereof from the due date until paid(before and after judgment). 

 

2.08 Loan Account. The Lender shall open andmaintain in its books and records, including computer records, in accordancewith its customary procedures, a loan account (the "Loan Account”) in thename of the Borrower in which shall be recorded the date and amount of eachLoan made by the Lender and the date and amount of each payment and prepaymentin respect thereof. The Lender shall record in the Loan Account the principalamount of the Loans owing to the Lender from time to time. Except in the caseof manifest error in computation, the Loan Account will be conclusive and bindingon the Borrower as to the accuracy of the information contained therein.Failure by the Lender to make any such notation or record shall not affect theobligations of the Borrower to the Lender with respect to the Loans. 

 

2.09 Optional Prepayments. The Borrower shallhave the right, at its option, to prepay the Loan in whole or in part withoutpenalty or premium; provided, however, the Borrower shall pay to the Lender allinterest accrued on the outstanding principal balance of the Loan to the date ofsuch prepayment and all other fees, costs and charges required to be paid bythe Borrower to and for the benefit of the Lender. 

 

2.10 Security. The Loans shall be secured bythe Stock Pledge Agreement and all UCC financing statements (if any) and othersimilar instruments executed and recorded with respect thereto. 

 

2.11 Estoppel. As further consideration for theentry of the Lender into this Agreement, the Borrower hereby represents andwarrants that it does not presently have any claims or actions of any kind atlaw or at equity against the Lender arising out of or in any way relating tothe Prior Loan Documents or any related documents with respect thereto, thetransactions referenced in or contemplated by this Agreement or any acts,transactions or events that are or were the subject matter of any other priorloans, agreements or guarantees involving the Borrower and the Lender. 

 

ARTICLE III 

 

REPRESENTATIONS AND WARRANTIES 

 

The Borrower, on behalf of itself and each of itsSubsidiaries including all Loan Parties, represents and warrants to the Lenderthat: 

 

3.01 Organization and Qualification. Each LoanParty is a corporation duly organized and validly subsisting under the Laws ofits state of incorporation. Each Loan Party is duly qualified or licensed to dobusiness as a foreign corporation and is in good standing in all jurisdictionsin which the ownership of its properties or the nature of its activities orboth makes such qualification or licensing necessary except to the extent thatthe failure to be so qualified or licensed would not have a Material AdverseEffect. 

 

3.02 Authority; Power to Carry on Business;Licenses. The Borrower has the power and authority to make the borrowingsprovided for herein, to execute and deliver the Notes in evidence of suchborrowings and to grant and convey any security interests contemplated underthe Stock Pledge Agreement and the other Loan Documents to which it is a partyand all such action has been duly and validly authorized by all necessarycorporate proceedings on the Borrower's part. Each Loan Party and each of itsSubsidiaries has all requisite power and authority to own and operate itsproperties and to carry on its business as now conducted and as presentlyplanned to be conducted. Each Loan Party and each of its Subsidiaries has alllicenses, permits, consents and governmental approvals or authorizationsnecessary to carry on its business as now conducted. 

 

3.03 Execution and Binding Effect. Each of theLoan Documents have been duly and validly executed and delivered by each LoanParty a party thereto and constitutes a legal, valid and binding obligation of suchLoan Parties, enforceable in accordance with its terms. 

 

3.04 Absence of Conflicts. Neither theexecution and delivery of this Agreement, the Notes or the other LoanDocuments, the consummation of the transactions contemplated in any of them,nor the performance of or compliance with the terms and conditions thereof will(a) violate any Law, (b) conflict with or result in a breach of or a defaultunder the articles of incorporation or bylaws of any Loan Party, (c) conflictwith or result in a breach of or a default under any material agreement orinstrument to which any Loan Party or any Subsidiary of a Loan Party is a partyor by which it or any of its properties (now owned or acquired in the future)may be subject or bound or (d) result in the creation or imposition of any Lienupon any property (owned or leased) of any Loan Party or any Subsidiary of anyLoan Party (other than Permitted Liens). 

 

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3.05 Authorizations and Filings. Noauthorization, consent, approval, license, exemption or other action by, and noregistration, qualification, designation, declaration or filing with, any Official Body that has not been obtained or madeis or will be necessary or advisable in connection with the execution anddelivery of this Agreement or the other Loan Documents, the consummation ofthetransactions contemplated herein or therein, or the performance of orcompliance with the terms and conditions hereof or thereof. 

 

3.06 Ownership and Control. The Borrower ownsall of the Shares. The outstanding shares of capital stock of the Borrower andeach of its Subsidiaries have been duly authorized and validly issued and arefully paid and nonassessable. 

 

3.07 Title to Property. Each Loan Party andeach Subsidiary of a Loan Party has good and marketable title in fee simple (orother good title) to all Property purported to be owned by it. Each Loan Partyand each Subsidiary of a Loan Party has good and marketable title to all otherproperty (whether personal, intangible, mixed of otherwise) purported to beowned by it, including that reflected in the most recent financial informationreferred to in Section 3.08 hereof or submitted to the Lender pursuant to Section5.01 of this Agreement (except as sold or otherwise disposed of in the ordinarycourse of business), subject only to Permitted Liens. 

 

3.08 Financial Information. The financialinformation provided by the Loan Parties to the Lender as of the Closing Dateis accurate and complete and has been prepared in accordance with GAAPconsistently applied. Each Loan Party has made full and true disclosure of allpertinent financial and other material information in connection with thetransactions contemplated hereby. 

 

3.09 Loan Loss Reserves. The reserves forpossible loan and lease losses shown on the financial statements and reportsfor the Borrower and its Subsidiaries described in the financial statementsspecified in Section 5.01 are adequate in all material respects to provide forall losses, net of recoveries relating to loans previously charged off, onloans outstanding, as of the date of such statement, and the Borrower and itsSubsidiaries have no reason to believe that the loan portfolios of its Subsidiariesat such date will incur losses in excess of such reserves. 

 

3.10 Taxes. All tax returns required to befiled by the Loan Parties and their Subsidiaries have been properly prepared,executed and filed. All taxes, assessments, fees and other governmental chargesupon the Loan Parties and their Subsidiaries or upon any of their properties,income, sales or franchises which are due and payable have been paid. Thereserves and provisions for taxes on the books of each Loan Party and each ofits subsidiaries are adequate for all open years and for its current fiscalperiod in all material respects. No Loan Party knows of any proposed additionalassessment or basis for any assessment for additional taxes (whether or notreserved against). 

 

3.11 Contracts. No Loan Party nor anySubsidiary of a Loan Party is in default in any material respect in theperformance, observance or fulfillment of any of the obligations, covenants orconditions contained in any material contractual obligation of such Loan Partyor Subsidiary, and no condition exists which, with the giving of notice or thelapse of time or both, would constitute such a default. 

 

3.12 Litigation; Investigations. There is nopending, contemplated or, to the Loan Parties' knowledge, threatened action,suit or proceeding by or before any Official Body against or affecting a LoanParty or any of its Subsidiaries which, if adversely decided, would have aMaterial Adverse Effect. Neither the Borrower nor any Bank Subsidiary is (i) tothe Borrower's knowledge, under investigation by any Official Body or (ii)operating under any formal or informal restrictions or understandings imposedby or agreed to in connection with any Official Body. 

 

3.13 Laws. No Loan Party nor any Subsidiary ofa Loan Party is in violation of any Law inany material respect. 

 

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3.14 ERISA. Each Loan Party and each Subsidiaryof a Loan Party is in compliance in all material respects with all applicablerequirements of ERISA and of the Internal Revenue Code of 1986, as amended, inconnection with each employee benefit plan (as defined by ERISA) maintained bythe Borrower. 

 

3.15 Bank Holding Company; FDIC Insurance. TheBorrower has complied in all material respects with all federal, state andlocal laws pertaining to bank holding companies, including without limitationthe Bank Holding Company Act of 1956, as amended, and there are no conditionsprecedent or subsequent to its engaging in the business of being a registeredbank holding company. The deposits of each Bank Subsidiary of the Borrower areinsured by the FDIC, and no event, act or omission has occurred which wouldadversely affect the status of any Bank Subsidiary as an FDIC insured bank. 

 

3.16 Environmental Matters. The business of theBorrower and each of its Subsidiaries has been operated in full compliance withall Environmental Laws and neither the Borrower nor any Subsidiary is subjectto any Environmental Liability relating to the conduct of its business or theownership of its Property and no facts or circumstances exist which could giverise to such Environmental Liabilities. No notice has been served on theBorrower or any Subsidiary claiming any violation of Environmental Laws,asserting Environmental Liability or demanding payment or contribution forEnvironmental Liability or violation of Environmental Laws. 

 

3.17 Use of Proceeds. The Borrower shall usethe proceeds of (i) the Revolving Credit Loans for working capital and generalcorporate purposes and (ii) the Term Loan to refinance existing indebtedness ofthe Borrower to the Lender. 

 

3.18 Federal Reserve Regulations. The Borrowerand its Subsidiaries will not, directly or indirectly use any proceeds of theLoan to; (a) purchase or carry any "margin stock" within the meaningof Regulation U of the Federal Reserve (12 C.F.R. 221, as amended); (b) extendcredit to other Persons for any such purpose or refund indebtedness originallyincurred for any such purpose, except in compliance with all Laws; or (c)otherwise take or permit any action which would involve a violation of Section7 of the Securities Exchange Act of 1934, as amended, or any regulation of theFederal Reserve. 

 

3.19 No Event of Default: Compliance withAgreements. No event has occurred and is continuing and no condition existswhich constitutes an Event of Default or Potential Default. No Loan Party norany Subsidiary of a Loan Party is (i) in violation of any term of its articlesof incorporation or bylaws; or (ii) in default under any agreement, lease orinstrument to which it is a party or by which it or any of its properties(owned or leased) may be subject or bound. 

 

3.20 No Material Adverse Change. Since the dateof the most recent financial statements referred to in Section 3.08 hereof,there has been no Material Adverse Change. 

 

3.21 Security Interest. The security interestsin the Shares pledged to the Lender pursuant to the Stock Pledge Agreementconstitute and will continue to constitute perfected security interests underthe UCC (or other applicable Law) entitled to all of the rights, benefits and prioritiesprovided by the UCC (or other applicable Law). All such action as is necessaryor advisable to establish such rights of the Lender has been taken or will betaken at or prior to the time required for such purpose and there will be uponexecution and delivery of the Loan Documents no necessity of any further actionin order to preserve, protect and continue such rights except the filing ofcontinuation statements and continued possession or control by the Lender ofthe Shares delivered to it as required by the UCC (or other applicable Law).All filing fees and other expenses in connection with each such action shall bepaid by the Borrower and the Lender shall be reimbursed by the Borrower for anysuch fees and expenses incurred by the Lender. 

 

3.22 Labor Controversies. There are no laborcontroversies pending or, to the best knowledge of the Loan Parties,threatened, against any Loan Party or any of its Subsidiaries. 

 

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3.23 Solvency. After the making of the Loans,each Loan Party (i) will be able to pay its debts as they become due, (ii) willhave funds and capital sufficient to carry on its business and all businessesin which it is about to engage, and (iii) will own property having a value atboth fair valuation and at fair saleable value in the ordinary course of itsbusiness greater than the amount required to pay its debts as they become due.No Loan Party was insolvent immediately prior to the date of this Agreement andno Loan Party will be rendered insolvent by the execution and delivery of thisAgreement, the borrowing hereunder and/or the consummation of any transactionscontemplated by this Agreement or any of the other Loan Documents. 

 

3.24 Subsidiaries. The only Subsidiaries of theBorrower are Southern First, Greenville Statutory Trust I, a Connecticut trust,Greenville Statutory Trust II, a Delaware trust and JB Properties ofGreenville, LLC, a South Carolina LLC. Southern First has no Subsidiaries. 

 

3.25 Regulatory Reporting. The Borrower and itsSubsidiaries have filed all reports, notices and other statements, togetherwith any amendments required to be made with respect thereto, if any, that theywere each required to file with the Federal Reserve and the South CarolinaState Board of Financial Institutions and any other Official Body withjurisdiction over the Borrower or its Subsidiaries and each of such reports,notices and other statements, including the financial statements, exhibits andschedules thereto, complied in all material respects with the relevantstatutes, rules and regulations enforced or promulgated by the regulatoryauthority with which they were filed. Each Bank Subsidiary has complied in allmaterial respects with all laws and regulations relating to the extension ofcredit. 

 

3.26 Accurate and Complete Disclosure: ContinuingRepresentations and Warranties. No representation or warranty made by theBorrower under this Agreement or any of the other Loan Documents and nostatement made by any Loan Party in any financial statement (furnished pursuantto Section 3.08 or 5.01 or otherwise), certificate, report, exhibit or documentfurnished by a Loan Party to the Lender pursuant to or in connection with this Agreementis false or misleading in any material respect 

(includingby omission of any information necessary to make such representation, warrantyor statement 

notmisleading). No Loan Party is aware of any facts which have not been disclosedto the Lender in writing by or on behalf of a Loan Party which would have aMaterial Adverse Effect. The representations and warranties set forth hereinare to survive the delivery of the Loan Documents and the making of the Loanshereunder. 

 

ARTICLE IV 

 

CONDITIONS OF LENDING 

 

The obligation of the Lender to make any Loan issubject to the satisfaction of the following conditions: 

 

4.01 Representations and Warranties: Events ofDefault and Potential Defaults. The representations and warranties contained inArticle IJJ shall be true and correct in all material respects on and as of thedate of each Loan, except for purposes of this Section 4.0 I, after the ClosingDate the representations and warranties contained in Section 3.08 shall bedeemed to refer to the most recent financial statements furnished pursuant toSection 5.01. On the date of any Loan, no Event of Default and no PotentialDefault shall have occurred and be continuing or exist or shall occur or existafter giving effect to the Loan to be made on such date. Each request by theBorrower for any Loan shall constitute a representation and warranty by theBorrower that the conditions set forth in this Section 4.01 have been satisfiedas of the date of such request. The failure of the Lender to receive noticefrom the Borrower to the contrary before such Loan is made shall constitute afurther representation and warranty by the Borrower that the conditionsreferred to in this Section 4.01 have been satisfied as of the date such Loanis made. 

 

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4.02 Loan Documents. On the Closing Date, theLoan Documents, satisfactory in terms, form and substance to the Lender, shallhave been executed and delivered to the Lender and shall be in effect. 

 

4.03 Other Documents and Conditions. On orbefore the Closing Date, the following documents and conditions shall have beendelivered to the Lender or satisfied by or on behalf of the Loan Parties: 

 

(a) Certified Copies of Organizational Documents.A copy of any and all amendments to the articles of incorporation (or suchequivalent formation documents) of each of the Loan Parties since the datepreviously delivered to the Lender certified by the appropriate governing bodyof such parties' jurisdiction of incorporation. A copy of any and allamendments to the bylaws (or such equivalent governing document) of each of theLoan Parties certified by the Secretary of such Loan Party. 

 

(b) Good Standing Certificates.A Good Standing Certificate (or equivalent thereof) of each Loan Party from theappropriate governing body of such party's jurisdiction of incorporation andthe Secretary of State of each jurisdiction in which such Loan Party is qualifiedto do business as a foreign corporation, if any. 

 

(c) Regulatory Certificate. ARegulatory Certificate from the Federal Reserve indicating that the Borrower isa registered bank holding company that was duly organized and registered andhas filed all reports required by the Federal Reserve. 

 

(d) Proceedings and Incumbency.A certificate in form and substance satisfactory to Lender, dated the ClosingDate and signed on behalf of the Borrower by the Secretary of 

 

theBorrower, certifying as to (i) true copies of any and all amendments to thearticles of incorporation and bylaws of the Borrower or, if none, no amendmentshaving been made to the articles of incorporation and bylaws of the Borrowersince the date previously delivered to the Lender, (ii) the resolutions of theBoard of Directors of the Borrower authorizing the execution and delivery ofthis Agreement and the other Loan Documents to which the Borrower is a partyand (iii) the names, true signatures and incumbency of the officers of the Borrowerauthorized to execute and deliver the Loan Documents. 

 

(e) Financial Statements.Financial statements in form and substance satisfactory to the Lender, asdescribed in Section 3.08 of this Agreement. 

 

(f) Termination Statements;Release Statements and Satisfaction Pieces. Evidence satisfactory to theLender that all necessary termination statements, release statements and anyother types of releases in connection with all Liens with respect to any LoanParty or Subsidiary of any Loan Party that are not Permitted Liens have beenfiled or satisfactory arrangements have been made for such filing (includingpayoff letters in form and substance satisfactory to the Lender), if any. 

 

(g) Closing Date ComplianceCertificate. A duly completed compliance certificate signed by theappropriate officer of the Borrower dated as of the Closing Date demonstratingcompliance with the financial covenants contained in Section 5.12 hereof. 

 

(h) No Material Adverse Change.No Material Adverse Change shall have occurred since the date of the mostrecent financial statements delivered to the Lender. 

 

(i) Other Documents and Conditions.Such other documents and conditions as may be required to be submitted to theLender by the terms of this Agreement or of any Loan Document or set forth onthe preliminary closing checklist with respect to the transactions contemplatedby this Agreement. 

 

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4.04 Details Proceedings and Documents. Alllegal details and proceedings in connection with the transactions contemplatedby this Agreement shall be satisfactory to the Lender and the Lender shall havereceived all such counterpart originals or certified or other copies of such documentsand proceedings in connection with such transactions, in form and substancesatisfactory to the Lender, as the Lender may request from time to time. 

 

4.05 Fees and Expenses. The Borrower shall havepaid all fees and charges as required for the Closing and relating to theClosing, including legal fees, closing costs, filing and notary fees and anyother similar matters pertinent to the Closing. 

 

ARTICLE V 

 

AFFIRMATIVE COVENANTS 

 

The Borrower covenants and agrees with the Lender, onbehalf of itself and its Subsidiaries and all Loan Parties and theirSubsidiaries, as follows; 

 

5.01 Reporting and Information Requirements.The Borrower shall deliver or shall cause to be delivered the followingdocuments to the Lender in such detail as reasonably requested by the Lender; 

 

(a) Annual Audited Reports. As soon aspracticable, and in any event within ninety (90) days after the close of eachfiscal year of the Borrower, the Borrower shall furnish to the Lenderconsolidated audited statements of income, retained earnings and cash flow forthe Borrower and its Subsidiaries for such fiscal year and a consolidated auditedand consolidating balance sheet for the Borrower and its Subsidiaries as of theclose of such fiscal year, and notes to each, all in reasonable detail, settingforth in comparative form the corresponding figures for the preceding fiscalyear, prepared in accordance with GAAP applied on a basis consistent with thatof the preceding fiscal year (except for changes in application in which suchaccountants concur), with such statements and balance sheet to be certified byan independent certified public accounting firm selected by the Borrower andacceptable to the Lender. The report of such accountants shall be free ofexception or qualifications not acceptable to the Lender and shall in any eventcontain a written statement of such accountants substantially to the effectthat such accountants examined such statements and balance sheet in accordancewith generally accepted auditing standards. 

 

(b) Quarterly Reports of theBorrower. As soon as practicable, and in any event within forty-five (45)days after the close of each Fiscal Quarter during the term of this Agreement,the Borrower shall furnish to the Lender consolidated and consolidatingstatements of income, retained earnings and cash flow for the Borrower and itsSubsidiaries for such Fiscal Quarter and for the portion of the fiscal year tothe end of such Fiscal Quarter, and a consolidated and consolidating balancesheet of the Borrower and its Subsidiaries as of the close of such FiscalQuarter, all in reasonable detail. All such income statements and balancesheets shall be prepared by the Borrower and certified by the appropriateofficer of the Borrower as presenting fairly the financial position of theBorrower and its Subsidiaries as of the end of such Fiscal Quarter and theresults of its operations for such periods, in conformity with GAAP applied ina manner consistent with that of the most recent consolidated audited financialstatements furnished to the Lender. 

 

(c) Annual and QuarterlyCompliance Certificate and Borrowing Availability Certificate. Theconsolidated income statements and balance sheets of the Borrower and itsSubsidiaries delivered pursuant to Sections 5.01(a) and 5.01(b) of thisAgreement shall be accompanied by (i) a compliance certificate, which shall bein form and substance satisfactory to the Lender, executed by the appropriateofficer of the Borrower, stating that no Event of Default or Potential Defaultexists and that the Borrower is in compliance with all applicable covenantscontained in this Agreement and (ii) a Borrowing Availability Certificate,which shall be in form and substance satisfactory to the Lender, executed bythe appropriate officer of the Borrower. Such certificates shall include allfigures necessary to calculate the Borrower's compliance with all financialcovenants set forth in this Agreement. If an Event of Default or PotentialDefault has occurred and is continuing or exists, such certificate shall specifyin detail the nature and period of existence of the Event of Default orPotential Default and any action taken or contemplated to be taken by theBorrower with respect thereto. 

 

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(d) Reports to GovernmentalAgencies. Promptly after the same are available (but in any event no laterthan sixty (60) days of the filing thereof), copies of (i) each annual report,proxy or financial statement or other report or communication sent to thestockholders of the Borrower, (ii) all annual, regular, periodic and specialreports and registration statements which the Borrower may file or be requiredto file with the Securities and Exchange Commission under Section 13 or 15( d)of the Securities Exchange Act of 1934, or with any national securitiesexchange and (iii) all such financial reports, statements and returns that anyLoan Party has filed with any other Official Body, and in any case nototherwise required to be delivered to the Lender pursuant hereto. Documentsrequired to be delivered pursuant to this Section (to the extent any suchdocuments are included in materials otherwise filed with the SEC) may be deliveredelectronically and if so delivered, shall be deemed to have been delivered onthe date on which the Borrower posts such documents, or provides a link theretoon the Borrower's website on the Internet. 

 

(e) Call Reports: Problem AssetSummaries. The Borrower shall deliver to the Lender within forty-five (45)days of the close of each Fiscal Quarter. copies of Call Reports, Problem AssetSummaries and other regulatory reports of each Bank Subsidiary for the FiscalQuarter then ended, in compliance with the requirements of any Official Bodywhich has authority to examine the Borrower and/or any Bank Subsidiary, allprepared in accordance with the requirements imposed by the applicable OfficialBody. 

 

(f) Loan Reviews. The Borrowershall deliver to the Lender within thirty (30) days of the issuance thereof,copies of any and all external and internal loan reviews of each BankSubsidiary's loan portfolio. 

 

(g) Interim Reports. Withinthirty (30) days after the request of the Lender, the Borrower shall deliver tothe Lender such consolidated interim income statements, balance sheets and/orfinancial statements as the Lender shall reasonably deem necessary, allprepared in accordance with GAAP and certified by the Borrower to be true andcorrect. 

 

(h) Audit Reports. Promptly upon receiptthereof, the Borrower will deliver to the Lender a copy of each other reportsubmitted to the Borrower by independent accountants, including comment ormanagement letters, in connection with any annual, interim or special auditreport made by them of the books of the Borrower. 

 

(i) Visitation: Audits. The Borrower shallpermit or shall cause to be permitted such Persons as the Lender may designateto visit and inspect any of the properties of the Borrower, to examine, and tomake copies and extracts from, the books and records of the Borrower and todiscuss its affairs with its officers, employees and independent accountantsduring normal business hours. The Borrower shall authorize its officers,employees and independent accountants to discuss with the Lender the affairs ofthe Borrower. The Lender may conduct such audits at its reasonable discretionand as often as it reasonably deems necessary. The Borrower shall pay allreasonable costs incurred in connection with conducting such audits. 

 

(j) Notice of Event of Default. Promptly uponbecoming aware of an Event of Default or Potential Default, the Borrower willgive the Lender notice of the Event of Default or Potential Default, togetherwith a written statement signed on behalf of the Borrower setting forth thedetails of the Event of Default or Potential Default and any action taken orcontemplated to be taken by the Borrower with respect thereto. 

 

(k) Notice of Material AdverseChange. Promptly upon becoming aware thereof, the Borrower will give theLender written notice with respect to any Material Adverse Change or anydevelopment or occurrence which would have a Material Adverse Effect. 

 

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(1) Notice of Proceedings.Promptly upon becoming aware thereof, the Borrower will give the Lender noticeof the commencement, existence or threat of all proceedings by or before anyOfficial Body against or affecting any Loan Party which, if adversely decided,would have a Material Adverse Effect. 

 

(m) Further Information. The Borrower willpromptly furnish to the Lender such other information, and in such form, as theLender may reasonably request from time to time. 

 

5.02 Preservation of Existence and Franchises.Each Loan Party and each of its Subsidiaries will maintain its existence as acorporation and its rights and franchises in full force and effect in the stateof its incorporation. No Loan Party nor any Subsidiaries of a Loan Party shallchange its jurisdiction of incorporation without the prior written consent ofthe Lender and each Loan Party and each of its Subsidiaries will qualify andremain qualified as a foreign corporation in each jurisdiction in which thefailure to receive or retain such qualification would have a Material AdverseEffect. 

5.03 Insurance. Each Loan Party and each of itsSubsidiaries will maintain, with financially sound and reputable insurers,insurance with respect to its property and business against such casualties andcontingencies, of such types and in such amounts, as is customary for establishedcompanies engaged in the same or similar business and similarly situated. 

 

5.04 Maintenance of Properties. The LoanParties and their Subsidiaries will maintain or cause to be maintained in goodrepair, working order and condition, Properties now or in the future owned,leased or otherwise possessed by any Loan Party or any Subsidiary of any LoanParty and shall make or cause to be made all needful and proper repairs,renewals, replacements and improvements to the properties so that the businesscarried on in connection with the properties may be properly and advantageouslyconducted at all times. The Borrower shall notify the Lender prior to anychange in the permanent location of any of the properties or businesses of anyLoan Party. 

 

5.05 Payment of Liabilities. The Loan Partieswill, and will cause each Subsidiary of a Loan Party to, pay or discharge: 

 

(a) on or prior to the date on which penalties attach,all taxes, assessments and other governmental charges or levies imposed uponthem or any of their properties or income, sales or franchises; 

 

(b) on or prior to the date when due, all lawfulclaims of materialmen, mechanics, carriers, warehousemen, landlords and otherlike Persons which, if unpaid, might result in the creation of a Lien upon anyof their properties; 

 

(c) on or prior to the date when due, all other lawful claimswhich, if unpaid, might result in the creation of a Lien upon any of theirproperties; and 

 

(d) all other current liabilities sothat none is due more than sixty (60) days after the due date for eachliability; provided, however, that ineach case, such Loan Party shall have the right to contest any such taxes, assessments,rates, dues, charges, liens, liabilities or impositions if the execution orother enforcement of any Lien or charge upon its properties is and continues tobe effectively stayed or bonded in a manner satisfactory to the Lender, thevalidity and amount of such taxes, assessments, rates, dues, charges, fines orimpositions are being actively contested in good faith and by appropriatelawful proceedings and such liens or charges do not, in the aggregate,materially detract from the value of its properties or materially impair theuse thereof and the operation of such Loan Party's business 

 

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5.06 Financial Accounting Practices; Loan LossReserves. 

 

(a) Financial Accounting Practices. Each LoanParty and each Subsidiary of a Loan Party will make and keep books, records andaccounts which, in reasonable detail, accurately and fairly reflect itstransactions and dispositions of its assets and maintain a system of internalaccounting controls sufficient to provide reasonable assurances that (a)transactions are executed in accordance with management's general or specificauthorization, (b) transactions are recorded as necessary (i) to permitpreparation of financial statements in conformity with GAAP and (ii) tomaintain accountability for assets, (c) access to assets is permitted only inaccordance with management's general or specific authorization and (d) the recordedaccountability for assets is compared with the existing assets at reasonableintervals and appropriate action is taken with respect to any differences. 

(b) Loan Loss Reserves. Each Bank Subsidiaryshall maintain a reserve for possible loan losses which is adequate in allrespects to provide for possible or specific losses, net of recoveries relatingto loans previously charged off, on loans outstanding and which contains anadditional amount of unallocated reserves for unanticipated future losses at alevel consistent with administrative policies approved by the Board ofDirectors of such Bank Subsidiary. 

 

5.07 Compliance with Laws. Each Loan Party andeach Subsidiary of a Loan Party shall comply in all material respects with allapplicable Laws. 

 

5.08 ERISA. Each Loan Party and each Subsidiaryof a Loan Party shall comply in all material respects with all applicablerequirements of ERISA and of the Code in connection with each employee benefitplan (as defined by ERISA) maintained by such Person. Each Loan Party and eachSubsidiary of a Loan Party shall promptly notify the Lender if any"Reportable Event" or "Prohibited Transaction" (as definedby ERISA) has occurred with respect to any such plan. 

 

5.09 Use of Proceeds. The Borrower will use theproceeds of the Loans for the purposes stated in Section 3.17 hereof. 

 

5.10 Environmental Compliance. The Borrower andeach of its Subsidiaries shall: 

 

(a) Maintain at all times all permits, licenses andother authorizations required under Environmental Laws, and comply in allmaterial respects with all terms and conditions of the required permits, licensesand authorizations and all other limitations, restrictions, conditions, standards,prohibitions, requirements, obligations, schedules and timetables contained inthe Environmental Laws. 

 

(b) Notify the Lender promptly uponobtaining knowledge that (i) any Property previously or presently owned oroperated is the subject of an environmental investigation by any Official Bodyhaving jurisdiction over the enforcement of Environmental Laws, (ii) theBorrower or any of its Subsidiaries has been named as a responsible partysubject to Environmental Liability, or (iii) the Borrower obtains knowledge ofany Hazardous Substance located on any Property except in compliance with allLaws. 

 

(c) At any reasonable time followingthe occurrence of an Event of Default and following reasonable notice, and asoften as may be reasonably desired, permit the Lender or an independentconsultant selected by the Lender to conduct an environmental investigationsatisfactory to the Lender for the purpose of determining whether the Borrower,each Subsidiary and its Property comply with Environmental Laws and whetherthere exists any condition or circumstance which may require a cleanup, removalor other remedial action by the Borrower or a Subsidiary with respect to anyHazardous Substance. The Borrower and its Subsidiaries shall facilitate suchenvironmental audit. The Lender shall provide the Borrower, at the Borrower'srequest, with all reports and findings but the Borrower may not rely on suchenvironmental investigation for any purpose. Any such environmentalinvestigation of Property shall be at the Borrower's expense at any timefollowing an Event of Default; provided, however, that the Lender'senvironmental investigation shall not be at the Borrower's expense if (i) aOfficial Body or a firm or firms of geotechnical engineers and/or environmentalconsultants hired by the Borrower and reasonably acceptable to the Lender shallundertake to make an environmental audit, and (ii) the Borrower shall providethe Lender at the Borrower's expense with, and the Lender shall be entitled to rely on, all reports and findings of suchOfficial Body or geotechnical engineers as soon as such reports and findingsare made available to the Borrower. 

 

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Notwithstandingthe foregoing, nothing contained in this Agreement, or in the other LoanDocuments, or in the enforcement of this Agreement or the other Loan Documents,shall constitute or be construed as granting or providing the right, power orcapacity to the Lender to exercise (a) decision making control of theBorrower's or any Subsidiary's compliance with any environmental law, or (b)day to day decision making of the Borrower or any Subsidiary with respect to(i) compliance with environmental laws or (ii) all or substantially all of theoperational aspects of the Borrower or any Subsidiary. 

 

5.11 Further Assurances. The Borrower, at itsown cost and expense, will cause to be promptlyand duly taken, executed, acknowledged and delivered all such further acts,documents and assurances as the Lender may reasonably request from time to timein order to carry out the intent and purposes of this Agreement moreeffectively and the transactions contemplated by this Agreement and to causethe Liens granted under the Stock Pledge Agreement or any other Loan Documentto be, at all times, valid, perfected and enforceable against each Loan Party aparty thereto and all third parties. All expenses of such filings andrecordings, and refilings and rerecordings, shall be borne by the Borrower. 

 

5.12 Financial Covenants. The followingfinancial covenants with respect to the Borrower and its Subsidiaries on aconsolidated basis shall apply: 

 

(a) Non-Performing Assets Ratio. TheBorrower and its Subsidiaries shall maintain a Non-Performing Assets Ratio notto exceed (a) as of June 30, 2009 and September 30, 2009, 3.00%, (b) as ofDecember 31, 2009 and March 31, 2010, 2.75% and (c) as of the end of eachfiscal quarter thereafter, 2.50%. 

 

(b) Debt Service Coverage Ratio. Asof June 30, 2009 and as of the end of each Fiscal Quarter thereafter, theBorrower and its Subsidiaries shall maintain a Debt Service Coverage Ratio ofnot less than 1.00 to 1.00. 

 

(c) Borrowing Availability Amount. Asof June 30, 2009 and as of the end of each Fiscal Quarter thereafter, theaggregate amount of all amounts outstanding under the Revolving Credit Facilityand the Term Loan shall not exceed the Borrowing Availability Amount. 

 

(d) Debt to Worth Ratio. As of June30, 2009 and as of the end of each fiscal quarter thereafter, Borrower shallmaintain a Debt to Worth Ratio of not more than 0.38 to 1.00. 

 

(e) Tier I Core Leverage Ratio. As of June 30, 2009and as of the end of each Fiscal Quarter thereafter, the Borrower shallmaintain a Tier 1 Core Leverage Ratio not less than the greater of (i) sixpercent (6%) and (ii) such percentage as is necessary to be "adequatelycapitalized". As of June 30, 2009 and as of the end of each Fiscal Quarterthereafter, each Bank Subsidiary shall maintain a Tier 1 Core Leverage Rationot less the greater of (i) seven percent (7%) and (ii) such percentage as is necessaryto be "well capitalized". In each case, "Tier 1 Core LeverageRatio", "adequately capitalized" and "wellcapitalized" shall be determined in accordance with the applicable Lawsestablished by the Federal Reserve any other applicable Official Body havingsupervisory authority over the Borrower or any of its Bank Subsidiaries (asapplicable), as may be amended or revised from time to time. 

 

(f) Total Risk Based Capital Ratio. As of June 30,2009 and as of the end of each Fiscal Quarter thereafter, the Borrower shallmaintain a Total Risk Based Capital Ratio not less than the greater of(i) ninepercent (9%) and (ii) such percentage as is necessary to be "adequatelycapitalized". As of June 30, 2009 and as of the end of each Fiscal Quarterthereafter, each Bank Subsidiary shall maintain a Total Risk Based CapitalRatio not less than the greater of (i) ten percent (10%) and (ii) such percentageas is necessary to be "well capitalized". In each case, "TotalRisk Based Capital Ratio", "adequately capitalized" and"well capitalized" shall be determined in accordance with theapplicable Laws established by the Federal Reserve or any other applicableOfficial Body having supervisory authority over the Borrower or any of its BankSubsidiaries (as applicable), as may be amended or revised from time to time. 

 

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ARTICLE VI 

 

NEGATIVE COVENANTS 

 

The Borrower covenants, on behalf of itself and itsSubsidiaries and all Loan Parties and their Subsidiaries, to Lender as follows:

 

6.01 Liens. No Loan Party nor any Subsidiary ofa Loan Party shall, at any time, create, incur, assume or suffer to exist anyLien on any of its assets or property, tangible or intangible (includingcapital stock or other equity interest of a Loan Party or any Subsidiary of anyLoan Party), now owned or hereafter acquired, or agree to become liable to doso, except for Permitted Liens. 

 

6.02 Indebtedness. No Loan Party nor anySubsidiary of a Loan Party shall at any time, create, incur, assume or sufferto exist any Indebtedness, except: (a) Indebtedness existing on the date hereofin the aggregate amount of $12,000,000.00 arising out of borrowings similar toIndebtedness to any Federal Home Loan Bank, provided that such Indebtednessshall not be renewed, extended or increased without the prior written consentof the Lender (not be unreasonably withheld); (b) Indebtedness under this Agreement,the Note or any other Loan Document or any other document, instrument oragreement between a Loan Party and the Lender; (c) current accounts payable,accrued expenses and other expenses arising out of transactions (other thanborrowing) in the ordinary course of business; (d) Trust Preferred Indebtednessexisting on the Closing Date; (e) overnight borrowings in the ordinary courseof business by any Bank Subsidiary; (I) Indebtedness of any Loan Party toanother Loan Party to the extent permitted under Section 6.03(b) hereof; (g)any Indebtedness to any Federal Home Loan Bank or to any Federal Reserve Bankincurred in the ordinary course of business by any Bank Subsidiary; and (h)other Indebtedness in an aggregate amount not to exceed $1,000,000.00 at anytime outstanding. 

 

6.03 Loans and Investments. No Loan Party norany Subsidiary of Loan Party shall, at any time, make or suffer to remainoutstanding any loan or advance to, or purchase, acquire, or own any stock,bonds, notes or securities of, or any partnership (whether general or limited)or limited liability company interest in, or any other investment or interestin, or make any capital contribution or loan to, any other Person, or agree,become or remain liable to do any of the foregoing, except (a) investments thatcomply with all Laws applicable to such Loan Party; and (b) advances and loansto Loan Parties. Nothing in this Section 6.03 shall prohibit any BankSubsidiary from making loans, advances or other extensions of credit in theordinary course of its banking business upon substantially the same terms asmay at the time be customary in the banking business, which loans, advances, orother extensions of credit may (but need not) be secured by capital stock orother security of any third party. Furthermore, nothing in this Section 6.03shall prohibit any Bank Subsidiary from acquiring capital stock or othersecurity from any third party by foreclosure or otherwise, provided suchcapital stock or other security is acquired in the ordinary course of such BankSubsidiary's banking business when collecting a debt previously contracted ingood faith. 

 

6.04 Distributions. No Loan Party, nor anySubsidiary of a Loan Party, will declare, make, pay or agree, become or remainliable to make or pay, any Distribution of any nature (whether in cash,property, securities or otherwise) on account of or in respect of any shares ofcapital stock of any Loan Party or Subsidiary of any Loan Party or on accountof the purchase, redemption, retirement or acquisition of any shares of capitalstock (or warrants, options or rights for any such share) of any Loan Party orSubsidiary of any Loan Party, except for (i) Distributions made by any BankSubsidiary to the Borrower and (ii) so long as no Event of Default exists andno Event of Default would occur as a result thereof, Distributions made by theBorrower to its shareholders which are consistent with past practices or whichare consistent with Distributions made by similarly situated financialinstitutions. 

 

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6.05 Affiliate Transactions. No Loan Party norany Subsidiary of a Loan Party shall enter into or carry out any transaction(including, without limitation, purchasing property or services from or sellingproperty or services to) with any Affiliate that would (i) violate Section 23Aor 23B of the Federal Reserve Act, as amended, or Regulations 0 or W or anyother regulation promulgated thereunder, (ii) violate any other applicable Lawor (iii) not be in the ordinary course of and pursuant to the reasonable requirementsof such Loan Party's or Subsidiary's business and upon fair and reasonableterms and are no less favorable to such Loan Party or Subsidiary than wouldobtain in a comparable arm's length transaction with a Person not an Affiliateof such Loan Party or Subsidiary. 

 

6.06 Disposition of Assets. No Loan Party norany Subsidiary of a Loan Party shall sell, convey, pledge, assign, lease(except for (i) leases entered into in the ordinary course of business, (ii)dispositions of its properties or assets; provided that such properties orassets are replaced by replacement properties or assets used for similar orrelated purposes and (iii) other dispositions of properties or assets in theordinary course of business which are not, individually or in the aggregate,material to the operation of such Person's business), abandon or otherwisetransfer or dispose of, voluntarily or involuntarily (any of the foregoingbeing referred to in this Section 6.06 as a transaction and any set of relatedtransactions constituting but a single transaction) any of its properties orassets whether tangible or intangible (including, but not limited to, theShares or any other shares of capital stock of such Loan Party or Subsidiary ofsuch Loan Party or any portion thereof). 

 

6.07 Merger; Consolidation; Business Acquisitions.No Loan Party nor any Subsidiary of a Loan Party shall merge or agree to mergewith or into or consolidate with any other Person without the prior writtenconsent of the Lender (not to be unreasonably withheld). No Loan Party nor anySubsidiary of a Loan Party shall acquire any material portion of the stock,other equity interests or assets or business of any other Person without theprior written consent of the Lender (not to be unreasonably withheld). 

 

6.08 Ownership and Control. The Borrower shallnot cause and shall not permit, directly or indirectly, a Change of Control tooccur without the prior written consent of the Lender (not to be unreasonablywithheld). 

 

6.09 Modifications to Organizational Documents.No Loan Party nor any Subsidiary of a Loan Party shall amend in any respect itsarticles of incorporation, bylaws or other organizational documents which wouldbe materially adverse to the Lender, without the prior written consent of theLender (not to be unreasonably withheld). 

 

6.10 Negative Pledge. The Borrower shall notenter into or suffer to exist any agreement with any Person, other than inconnection with this Agreement or the other Loan Documents, which prohibits orlimits the ability of the Borrower to create, incur, assume or suffer to existany Lien upon or with respect to any property or assets of any kind, real orpersonal, tangible or intangible (including, but not limited to, stock or otherequity interests, as the case may be) of the Borrower; provided that theBorrower may enter into such agreement which prohibits Liens on property orassets which are subject to any Permitted Liens. 

 

6.11 Safe and Sound Banking Practices. No LoanParty shall engage in any unsafe or unsound banking practices. 

 

ARTICLE VII 

 

DEFAULTS 

 

7.01 Events of Default. An Event of Defaultmeans the occurrence or existence of one or more of the following events orconditions (whatever the reason for such Event of Default and whethervoluntary, involuntary or effected by operation of Law): 

 

(a) The Borrower shall fail to pay principal on theLoans on the date due; or 

 

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(b) The Borrower shall fail to payinterest on the Loans or any other fee or other amount payable pursuant to thisAgreement, the Notes, the Stock Pledge Agreement or any of the other LoanDocuments within five (5) days of the date due; or 

 

(c) Any representation or warrantymade by the Borrower under this Agreement or any of the other Loan Documents orany statement made by any Loan Party in any financial statement, certificate,report, exhibit or document furnished by any Loan Party to the Lender pursuantto this Agreement or the other Loan Documents shall prove to have been false ormisleading in any material respect as of the time made; or 

 

(d) The Borrower fails to perform orobserve any term, covenant or agreement contained in any of Section 5.01(a)through (I) or 5.12 or Article VI of this Agreement; or 

 

(e) The Borrower shall default in theperformance or observance of any other covenant, agreement or duty under thisAgreement, the Notes or any other Loan Document (not constituting an Event ofDefault under any other provision of this Section 7.01) and such failurecontinues for thirty (30) days; or 

 

(f) The Lender's security interestunder the Stock Pledge Agreement or any of the other Loan Documents is or shallbecome unperfected; or 

 

(g) Any Loan Party or any Subsidiary of a Loan Partyshall (i) default (as principal or guarantor or other surety) in any payment ofprincipal of or interest on any obligation (or set of related obligations) forborrowed money in excess of $250,000.00 beyond any period of grace with respectto the payment or, if any such obligation (or set of related obligations) is orare payable or repayable on demand, fail to pay or repay such obligation orobligations when demanded, or (ii) default in the observance of any othercovenant, term or condition contained in any agreement or instrument by whichsuch an obligation (or set of related obligations) is or are created, securedor evidenced, if the effect of such default is to cause, or commit the holderor holders of such obligation or obligations (or a trustee or agent on behalfof such holder or holders) to cause, all or part of such obligation orobligations to become due before its or their otherwise stated maturity; or 

 

(h) One or more judgments for the payment of money inexcess of $250,000.00 shall have been entered against any Loan Party or anySubsidiary of any Loan Party and shall remain undischarged or unstayed for aperiod of thirty (30) days; or 

 

(i) A material writ or warrant of attachment,garnishment, execution, distraint or similarprocess shall have been issued against any Loan Party, any Subsidiary of anyLoan Party or any of its properties and shall remain undischarged or unstayedfor a period of thirty (30) days; or 

 

(j) The Lender shall have reasonably determined ingood faith (which determination shall be conclusive) that a Material AdverseChange has occurred or that the prospect of payment or performance of anycovenant, agreement or duty under this Agreement, the Notes or the other LoanDocuments is impaired or that the Lender is insecure; or 

 

(k) (i) the FDIC, the Federal ReserveBoard, the Office of Thrift Supervision, the Office of the Comptroller ofCurrency, the South Carolina State Board of Financial Institutions or any otherstate or federal regulatory entity having or claiming jurisdiction over theBorrower or any Subsidiary shall (a) issue any formal or informal materialorder or directive involving activities deemed unsafe or unsound by theBorrower or any Bank Subsidiary, (b) issue a Memorandum of Understanding,capital maintenance agreement or cease and desist order involving the Borroweror any Subsidiary, or (c) cause the suspension or removal of the ChiefExecutive Officer or any Executive Vice President of the Borrower or the ChiefExecutive Officer of any Bank Subsidiary, or (ii) the FDIC shall terminate itsinsurance coverage with respect to the Borrower or any Subsidiary; 

 

(l) The Borrower ceases to own 100%of the Shares of Southern First or ceases to control any other BankSubsidiaries; or 

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(m) A proceeding shall be institutedin respect of any Loan Party or any Subsidiary of any Loan Party: 

 

(i) seeking to have an order for reliefentered in respect of such Loan Party, or seeking a declaration or entailing afinding that such Loan Party or Subsidiary is insolvent or a similar declaration or finding, or seekingdissolution, winding-up, charter revocation or forfeiture, liquidation,reorganization, arrangement, adjustment, composition or other similar reliefwith respect to such Loan Party orSubsidiary, its assets or debts under any Law relating to bankruptcy,insolvency, relief of debtors or protection of creditors, termination of legalentities or any other similar Law now or hereinafter in effect which shall nothave been dismissed or stayed within thirty (30) days after such proceedingswere instituted; or 

 

(ii) seeking appointment of a receiver, trustee,custodian, liquidator, assignee, sequestrator or other similar official for aLoan Party or Subsidiary of a Loan Party or for all or any substantial part ofits property which shall not have been dismissed or stayed within thirty (30)days after such proceedings were instituted; or 

 

(n) Any Loan Party or Subsidiary of any Loan Partyshall become insolvent; shall become generally unable to pay its debts as theybecome due; shall voluntarily suspend transaction of its business; shall make ageneral assignment for the benefit of creditors; shall institute a proceedingdescribed in Section 7.01 (m)(i) of this Agreement or shall consent to anyorder for relief, declaration, finding or relief described in Section 7.01(m)(i) of this Agreement; shall institute a proceeding described in Section7.01(m)(ii) of this Agreement or shall consent to the appointment or to thetaking of possession by any such official of all or any substantial part of itsproperty whether or not any proceeding is instituted; shall dissolve, wind-upor liquidate itself or any substantial part of its property; or shall take anyaction in furtherance of any of the foregoing. 

 

7.02 Consequences of an Event of Default. If anEvent of Default specified in subsections (a) through (I) of Section 7.01 ofthis Agreement occurs and continues or exists, the Lender will be under nofurther obligation to make Loans and may at its option demand the unpaidprincipal amount of the Notes, interest accrued on the unpaid principal amountthereof and all other amounts owing by the Borrower under this Agreement, theNotes and the other Loan Documents to be immediately due and payable withoutpresentment, protest or further demand or notice of any kind, all of which areexpressly waived, and an action for any amounts due shall accrue immediately. 

 

(a) If an Event of Default specified in subsections(m) or (n) of Section 7.01 of this Agreement occurs and continues or exists,the Lender will be under no further obligation to make Loans and the unpaidprincipal amount of the Notes, interest accrued thereon and all other amountsowing by the Borrower under this Agreement, the Notes and the other LoanDocuments shall automatically become immediately due and payable withoutpresentment, demand, protest or notice of any kind, all of which are expresslywaived, and an action for any amounts due shall accrue immediately. 

 

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7.03 Set-Off. If the unpaid principal amount ofthe Notes, interest accrued on the unpaid principal amount thereof or otheramount owing by the Borrower under this Agreement, the Notes or the other LoanDocuments shall have become due and payable (at maturity, by acceleration orotherwise), the Lender, any assignee of the Lender and the holder of anyparticipation in any Loan will each have the right, in addition to all other rightsand remedies available to it, without notice to the Borrower, to set-offagainst and to appropriate and apply to such due and payable amounts any Debtowing to, and any other funds held in any manner for the account of, theBorrower by the Lender or by such holder including, without limitation, allfunds in all deposit accounts (whether time or demand, general or special,provisionally credited or finally credited, or otherwise) now or in the futuremaintained by the Borrower with the Lender or such holder. The Borrowerconsents to and confirms the foregoing arrangements and confirms the Lender'srights, such assignee's rights and such holder's rights of banker's lien andset-off. Nothing in this Agreement will be deemed a waiver or prohibition of orrestriction on the Lender's rights, such assignee's rights or any such holder'srights of banker's lien or set-off. 

 

7.04 Other Remedies. The remedies in thisArticle VII are in addition to, not in limitation of, any other right, power,privilege or remedy, either at law, in equity or otherwise, to which the Lendermay be entitled. 

 

ARTICLE VIII 

 

MISCELLANEOUS 

 

8.01 Business Days. Except as otherwiseprovided in this Agreement, whenever any payment or action to be made or takenunder this Agreement, or under the Notes or under any of the other LoanDocuments is stated to be due on a day which is not a Business Day, suchpayment or action will be made or taken on the next following Business Day andsuch extension of time will be included in computing interest or fees, if any,in connection with such payment or action. 

 

8.02 Amendments and Waivers. The Lender and theBorrower may from time to time enter into agreements amending, modifying orsupplementing this Agreement, the Notes or any other Loan Document or changingthe rights of the Lender or of the Borrower under this Agreement, under theNotes or under any other Loan Document and the Lender may from time to timegrant waivers or consent to a departure from the due performance of theobligations of the Borrower under this Agreement, under the Notes or under anyother Loan Document. Any such agreement, waiver or consent must be in writing andwill be effective only to the extent specifically set forth in such writing. Inthe case of any such waiver or consent relating to any provision of thisAgreement, any Event of Default or Potential Default so waived or consented towill be deemed to be cured and not continuing, but no such waiver or consentwill extend to any other or subsequent Event of Default or Potential Default orimpair any right consequent thereto. 

 

8.03 No Implied Waiver: Cumulative Remedies. Nocourse of dealing and no delay or failure of the Lender in exercising anyright, power or privilege under this Agreement, the Notes or any other LoanDocument will affect any other or future exercise of any such right, power orprivilege or exercise of any other right, power or privilege except as and tothe extent that the assertion of any such right, power or privilege shall bebarred by an applicable statute of limitations; nor shall any single or partialexercise of any such right, power or privilege or any abandonment ordiscontinuance of steps to enforce such a right, power or privilege precludeany further exercise of such right, power or privilege or of any other right,power or privilege. The rights and remedies of the Lender under this Agreement,the Notes or any other Loan Document are cumulative and not exclusive of anyrights or remedies that the Lender would otherwise have. 

 

8.04 Notices. All notices, requests, demands,directions and other communications (collectively "Notices") underthe provisions of this Agreement or the Notes must be in writing (includingtelexed or telecopied communication) unless otherwise expressly permitted underthis Agreement and must be sent by first-class or first-class express mail,private overnight or next Business Day courier or by telex or telecopy withconfirmation in writing mailed first class, in all cases with charges prepaid,and any such properly given Notice will be effective when received. All Noticeswill be sent to the applicable party at the addresses stated below or inaccordance with the last unrevoked written direction from such party to theother parties. 

 

                                                                                                                                                If to Borrower:     Southern First Bancshares, Inc.

                                                                                                                                                                               112 Haywood Road**

                                                                                                                                                                               Greenville, South Carolina 29607

                                                                                                                                                                               Attention: James M. Austin, III 

 

                                                                                                                                                If to Lender:         Silverton Bank,National Association 

                                                                                                                                                                               1111 Metropolitan Avenue 

                                                                                                                                                                               Suite 650

                                                                                                                                                                               Charlotte, North Carolina 28204

                                                                                                                                                                               Attention: Timothy S. Beck

 

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8.05 Expenses: Taxes: Attorneys Fees. TheBorrower agrees to pay or cause to be paid and to save the Lender harmlessagainst liability for the payment of all reasonable out-of-pocket expensesincluding, but not limited to, reasonable fees and expenses of counsel andparalegals for the Lender, incurred by the Lender from time to time (i) arisingin connection with the preparation, execution, delivery and performance of thisAgreement, the Notes and the other Loan Documents, (ii) relating to any requestedamendments, waivers or consents to this Agreement, the Notes or any of theother Loan Documents and (iii) arising in connection with the Lender'senforcement or preservation of rights under this Agreement, the Notes or any ofthe other Loan Documents including, but not limited to, such expenses as may beincurred by the Lender in the collection of the outstanding principal amount ofthe Loans. The Borrower agrees to pay all stamp, document, transfer, recordingor filing taxes or fees and similar impositions now or in the future determinedin good faith by the Lender to be payable in connection with this Agreement,the Notes or any other Loan Document. The Borrower agrees to save the Lenderharmless from and against any and all present or future claims, liabilities orlosses with respect to or resulting from any omission to pay or delay in payingany such taxes, fees or impositions. In the event of a determination adverse tothe Borrower of any action at Law or suit in equity in relation to thisAgreement, the Notes or the other Loan Documents, the Borrower will pay, inaddition to all other sums which the Borrower may be required to pay, areasonable sum for attorneys' and paralegals' fees incurred by the Lender orthe holder of the Notes in connection with such action or suit. All paymentsdue from the Borrower under this Section will be added to and become part of theDebt until paid in full. 

 

8.06 Severability. The provisions of thisAgreement are intended to be severable. If any provision of this Agreement isheld invalid or unenforceable in whole or in part in any jurisdiction, suchprovision shall, as to such jurisdiction, be ineffective to the extent of suchinvalidity or unenforceability without in any manner affecting the validity orenforceability of the provision in any other jurisdiction or the remainingprovisions of this Agreement in any jurisdiction. 

 

8.07 Governing Law: Consent to Jurisdiction.This Agreement will be deemed to be a contract under the Laws of the State ofNorth Carolina and for all purposes shall be governed by and construed andenforced in accordance with the substantive Laws, and not the laws ofconflicts, of said State. The Borrower consents to the exclusive jurisdictionand venue of the federal and state courts located in Mecklenburg County, NorthCarolina, in any action on, relating to or mentioning this Agreement, theNotes, the other Loan Documents or anyone or more of them. 

 

8.08 Prior Understandings. This Agreement, theNotes and the other Loan Documents supersede all prior understandings andagreements, whether written or oral, among the parties relating to thetransactions provided for in this Agreement, the Notes and the other LoanDocuments. 

 

8.09 Duration: Survival. All representationsand warranties of the Borrower contained in this Agreement or made inconnection with this Agreement or any of the other Loan Documents shall survivethe making of and will not be waived by the execution and delivery of thisAgreement, the Notes or the other Loan Documents, by any investigation by theLender, or the making of any Loan. Notwithstanding termination of thisAgreement or an Event of Default, all covenants and agreements of the Borrowerwill continue in full force and effect from and after the date of thisAgreement so long as the Borrower may borrow under this Agreement and untilpayment in full of the Notes, interest thereon, and all fees and otherobligations of the Borrower under this Agreement or the Notes. Withoutlimitation, it is understood that all obligations of the Borrower to makepayments to or indemnify the Lender will survive the payment in full of theNotes and of all other obligations of the Borrower under this Agreement, theNotes and the other Loan Documents. 

 

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8.10 Counterparts. This Agreement may beexecuted in any number of counterparts and by the different parties to thisAgreement on separate counterparts each of which, when so executed, will bedeemed an original, but all such counterparts will constitute but one and thesame instrument. 

 

8.11 Successors and Assigns. This Agreementwill be binding upon and inure to the benefit of the Lender, the Borrower andtheir respective successors and assigns, except that the Borrower may notassign or transfer any of its rights under this Agreement without the priorwritten consent of the Lender. 

 

8.12 No Third Party Beneficiaries. The rightsand benefits of this Agreement and the other Loan Documents are not intendedto, and shall not, inure to the benefit of any third party. 

 

8.13 Participation and Assignment. The Lendermay from time to time participate, sell or assign all or any part of the Loansmade by the Lender or which may be made by the Lender, or its right, title andinterest in the Loans or in or to this Agreement, to another lending office,lender or financial institution. Except to the extent otherwise required by thecontext of this Agreement, the word "Lender" where used in thisAgreement means and includes any holder of a Notes originally issued to theLender and each such holder of a Notes will be bound by and have the benefitsof this Agreement, the same as if such holder had been a signatory to thisAgreement. In connection with any such sale, assignment or grant ofparticipation, the Lender may make available to any prospective purchaser,assignee or participant any information relative to the Borrower or any LoanParty or any Subsidiary of a Loan Party in the Lender's possession. 

 

8.14 Headings: Exhibits. The section headingscontained in this Agreement are for convenience only and do not limit or defineor affect the construction or interpretation of this Agreement in any respect.All exhibits and schedules attached to this Agreement are incorporated and madea part of this Agreement. 

 

8.15 Indemnity. In addition to the payment ofexpenses pursuant to Section 8.05 hereof, whether or not the transactionscontemplated hereby shall be consummated, the Borrower agrees to indemnify, payand hold the Lender and the officers, directors, employees, agents,consultants, auditors, affiliates and attorneys of the Lender (collectivelycalled the "Indemnitees"), harmless from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments,suits, claims, costs, expenses and disbursements of any kind or naturewhatsoever (including the reasonable fees and disbursements of counsel for suchIndemnitees in connection with any investigative, administrative or judicialproceeding commenced or threatened, whether or not such Indemnitee shall bedesignated a party thereto) that is imposed on, incurred by, or assertedagainst that Indemnitee, in any manner relating to or arising out of thisAgreement or the other Loan Documents, the consummation of the transactionscontemplated by this Agreement, the statements contained in the commitment letters,if any, delivered by the Lender, the Lender's agreement to make the Loanshereunder, the use or intended use of the proceeds of any of the Loans or theexercise of any right or remedy hereunder or under any of the other LoanDocuments, any error, failure or delay in the performance of any of theLender's obligations under this Agreement caused by natural disaster, fire,war, strike, civil unrest, error or inoperability of communication equipment orlines or any other circumstances beyond the control of the Lender or actions takenby the Lender which were reasonably believed by the Lender to be taken pursuantto this Agreement including, but not limited to, actions taken by the Lender toamend or cancel any funds transfer instructions or any decision by the Lenderto effect or not to effect the transfer as provided in this Agreement, or anyother such action taken by the Lender in good faith pursuant to itsresponsibilities under this Agreement (the "IndemnifiedLiabilities"); provided, however, that the Borrower shall have noobligation to an Indemnitee hereunder with respect to Indemnified Liabilitiesarising from the gross negligence or willful misconduct of that or anotherIndemnitee as finally determined by a court of competent jurisdiction.

 

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8.16 Limitation of Liability. To the fullestextent permitted by Law, no claim may be made by any Loan Party against theLender or any affiliate, director, officer, employee, attorney or agent of theLender for any special, incidental, consequential or punitive damages inrespect of any claim arising from or relating to this Agreement or any otherLoan Document or any statement, course of conduct, act, omission or eventoccurring in connection herewith or therewith (whether for breach of  contract,tort or any other theory of liability). Each Loan Party hereby waives, releasesand agrees not to sue upon any claim for any such damages, whether such claimpresently exists or arises hereafter and whether or not such claim is known oris suspected to exist in its favor. This Section 8.16 shall not limit anyrights of any Loan Party arising solely out of willful misconduct as finallydetermined by a court of competent jurisdiction. 

 

[SIGNATURES ON THE FOLLOWING PAGE] 

 

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IN WITNESS WHEREOF, the parties hereto,intending to be legally bound, have executed and delivered this Agreement to beeffective on the date set forth at the beginning of this Agreement. 

 

                                                                                                                                                Witness:                                                            SOUTHERN FIRST BANCSHARES, INC.

 

 

                                                                                                                                                By:                                                                   By:                                                                   

                                                                                                                                                Name:                                                               Name:  JamesM. Austin, III                        

                                                                                                                                                Title:                                                                 Title:     ChiefFinancial Officer                    

 

 

 

                                                                                                                                                                                                                            SilvertonBank, National Association

 

 

 

                                                                                                                                                                                                                            By:                                                                   

                                                                                                                                                                                                                                        TimothyS. Beck

                                                                                                                                                                                                                                         SeniorVice President

 

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