# EDGAR Filing Document

**Accession Number:** 0000038723
**File Stem:** 0000038723-25-000149
**Filing Date:** 2025-12
**Character Count:** 48232
**Document Hash:** 982200a66a655801a104310634559303
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000038723-25-000149.hdr.sgml**: 20251229

**ACCESSION NUMBER**: 0000038723-25-000149

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20251223

**ITEM INFORMATION**: Entry into a Material Definitive Agreement

**ITEM INFORMATION**: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20251229

**DATE AS OF CHANGE**: 20251229

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** 1st FRANKLIN FINANCIAL CORP
- **CENTRAL INDEX KEY:** 0000038723
- **STANDARD INDUSTRIAL CLASSIFICATION:** PERSONAL CREDIT INSTITUTIONS [6141]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 580521233
- **STATE OF INCORPORATION:** GA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 002-27985
- **FILM NUMBER:** 251609792

**BUSINESS ADDRESS:**
- **STREET 1:** 135 E TUGALO ST
- **STREET 2:** P O BOX 880
- **CITY:** TOCCOA
- **STATE:** GA
- **ZIP:** 30577
- **BUSINESS PHONE:** 7068867571

**MAIL ADDRESS:**
- **STREET 1:** 135 EAST TUGALO STREET
- **STREET 2:** PO  BOX  880
- **CITY:** TOCCOA
- **STATE:** GA
- **ZIP:** 30577

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FIRST FRANKLIN FINANCIAL CORP
- **DATE OF NAME CHANGE:** 19920703

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FRANKLIN DISCOUNT CO
- **DATE OF NAME CHANGE:** 19840115

?xml version='1.0' encoding='ASCII'? na-20251223

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**<br>

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

Date of Report (date of earliest event reported): December 23, 2025

**1st FRANKLIN FINANCIAL CORPORATION**

(Exact name of Registrant, as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Georgia** | **2-27985** | **58-0521233** |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |

---

Mailing address: **135 East Tugalo Street, P.O. Box 880, Toccoa, GA 30577**

(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: **(706) 886-7571** 

Former name or address, if changed since last report: **n/a**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: **None**

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 1.01 – Entry into Material Definitive Agreement**

*First Amendment to Loan and Security Agreement* 

On December 23, 2025, 1st Franklin Financial Corporation (the "Company") entered into a First Amendment to Loan and Security Agreement (the "First Amendment"), which amended the Loan and Security Agreement dated as of December 6, 2024 (the "Loan Agreement," and as amended by the First Amendment, the "Amended Loan Agreement"), by and among the Company, the guarantors party thereto, BMO Bank N.A. ("BMO"), as agent for the lenders and a lender, and the other financial institutions from time to time party thereto. Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Amended Loan Agreement.

The First Amendment, among other things, amends the definition of Adjusted Tangible Net Worth under the Loan Agreement to add to such amount the amount of any Qualifying Subordinated Debt then outstanding. "Qualifying Subordinated Debt" means any indebtedness of the Company that (i) is unsecured and is not guaranteed, (ii) is subordinated in right of payment to the Company's obligations under the Amended Loan Agreement and (iii) does not require the payment of principal thereon earlier than the date that is six months following the maturity date of the Amended Loan Agreement. The First Amendment also amends the definition of Funded Debt to Adjusted Tangible Net Worth Ratio under the Loan Agreement to, as of any date of determination, subtract the amount of any Qualifying Subordinated Debt outstanding from the amount of Funded Debt as of such date. Further, the First Amendment amends other provisions of the Loan Agreement necessary to permit the Company to incur, and make payments on, any Qualifying Subordinated Debt.

The foregoing description of the First Amendment is only a summary and is qualified in its entirety by reference to the First Amendment, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

*Subordinated Notes* 

On December 23, 2025, the Company issued $18.7 million aggregate principal amount of subordinated notes (the "Subordinated Notes"), which constitutes Qualifying Subordinated Debt for purposes of the Amended Loan Agreement. The Subordinated Notes bear interest at a rate of 6.5% per annum, payable monthly in arrears, and mature on June 6, 2028. The Subordinated Notes were issued to Virginia C. Barrett, the Company's President and Chief Executive Officer and a director, Ben F. Cheek, IV, a director, and David Cheek, a director (collectively, the "Related Parties"). All of the Company's voting common stock is held by the Related Parties. Concurrently with the issuance and sale of the Subordinated Notes, and as consideration therefor, an equal aggregate principal amount of the Company's commercial paper previously issued to and held by the Related Parties was deemed redeemed in full and without penalty.

The foregoing description of the Subordinated Notes is only a summary and is qualified in its entirety by reference to the Form of Subordinated Note, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

**Item 2.03 – Creation of a Direct Financial Obligation or an Obligation under the Off-Balance Sheet Arrangement of a Registrant.**

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

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**Item 9.01 – Financial Statements and Exhibits**.

**(d) Exhibits** 

---

| | |
|:---|:---|
| **<u>Exhibit Number</u>** | **<u>Description</u>** |
| [10.1](exhibit101.htm) | [First Amendment to Loan and Security Agreement, dated as of December 23, 2025, by and among 1st Franklin Financial Corporation, the guarantors party thereto, BMO Bank N.A., as agent, and the other financial institutions party thereto.](exhibit101.htm) |
| [10.2](exhibit102.htm) | [Form of Subordinated Note.](exhibit102.htm) |
| 104 | Cover Page Interactive Data File (embedded with the Inline XBRL document). |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | |
|:---|:---|
| **By:** | /s/ Jenna C. Hood |
| **Name:** | Jenna C. Hood |
| **Title:** | Executive Vice President and Chief Financial Officer  |

---

Date: December 29, 2025

## Exhibit 10.1

Execution Version

**First Amendment to Loan and Security Agreement**

This First Amendment to Loan and Security Agreement (this "*Amendment*") is dated as of December 23, 2025, by and among 1st Franklin Financial Corporation, a Georgia corporation (the "*Initial Borrower*", and the Initial Borrower together with such other Persons joined to the Credit Agreement referred to below, collectively, the "*Borrowers*" and each a "*Borrower*"), the Lenders (as defined below) party hereto and BMO Bank N.A., as agent for the Lenders (in such capacity, "*Agent*").

**Preliminary Statements**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;Reference is made to that certain Loan and Security Agreement dated as of December 6, 2024 (as amended, restated, supplemented or otherwise modified from time to time, the "*Loan Agreement*"), by and among the Initial Borrower, the guarantors party thereto (the "*Guarantors*"), the financial institutions from time to time party thereto as lenders (the "*Lenders*") and the Agent. Capitalized terms used but not otherwise defined in this Amendment shall have the meanings respectively ascribed to them in the Loan Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;Initial Borrower has requested and Agent and Lenders have agreed to amend the Loan Agreement in certain respects, all on the terms and conditions set forth herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby promise and agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;*Amendments*. Upon the satisfaction of the conditions set forth in Section 2 below, the Loan Agreement is hereby amended as follows:

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The following definitions contained in Section 1.1 of the Loan Agreement are amended and restated in their entirety as follows:

*"Adjusted Tangible Net Worth"* means (i) Tangible Net Worth minus (ii) the amount of any accounts greater than 180 days past due that have not been charged off plus (iii) the amount of Qualifying Subordinated Debt then outstanding; *provided,* the determination of Adjusted Tangible Net Worth shall exclude any mark-to-market non-cash gains or losses with respect to municipal bonds characterized as "other comprehensive income".

"*Compliance Certificate*" means the certificate in the form of Exhibit A attached hereto and made a part hereof to be delivered by Borrowers to Agent pursuant to Sections 6.2(a) or (b) hereof.

"*Credit Documents*" means this Agreement, the Notes, the Guaranties, the Subordination Agreement**s**, the Management Fee Subordination Agreement, any Control Agreement, any Electronic Collateral Control Agreement, and any and all additional

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documents, instruments, agreements and other writings executed and delivered pursuant to or in connection with this Agreement.

*"Permitted Indebtedness"* means (a) borrowings from Agent and Lenders hereunder; (b) trade indebtedness in the normal and ordinary course of business for value received; (c) indebtedness and obligations incurred to purchase or lease fixed or capital assets, (d) the other indebtedness and obligations described on Schedule II attached hereto and made part hereof, (e) indebtedness in connection with Bank Products, (f) Other Debt, (g) real property leases entered into by Borrowers with respect to the branch offices and other buildings in the ordinary course of their business, (h) unsecured Debt permitted to be drawn with the prior written consent of Agent owing under the Reinsurance Credit Facilities, (i) Qualifying Subordinated Debt and (j) unsecured Debt owed by one Debtor to another Debtor or Debtors.

"*Restricted Payments*" means payments by Borrowers, or any of them, which constitute (a) redemptions, repurchases, dividends or distributions of any kind with respect to a Borrower's stock or any warrants, rights or options to purchase or otherwise acquire any shares of Borrower's capital stock, (b) payments of principal or interest on Subordinated Debt or (c) the payment of management fees (whether under the Management Agreement or otherwise), except as expressly authorized by Section 7.2 of this Agreement.

"*Short Term Funding Retention Ratio*" means, as of any the last day of any calendar month, the ratio of (i) the sum of the total outstanding principal balance of all the Borrowers' Senior Demand Notes and Commercial Paper as of the last day of such calendar month to (ii) the sum of the total outstanding principal balance of all the Borrowers' Senior Demand Notes and Commercial Paper as of the last day of the calendar month ending three months prior to such calendar month (other than any Senior Demand Notes and Commercial Paper refinanced with Qualifying Subordinated Debt during the period beginning on the earlier date referenced in this clause (ii) and ending on the later date referenced in the preceding clause (i)).

"*Subordinated Debt*" means any indebtedness for borrowed money which shall contain provisions subordinating the payment of such indebtedness and the liens and security interests securing such indebtedness to the Obligations, in form, substance and extent acceptable to Agent in its sole discretion. For purposes hereof, Subordinated Debt includes, without limitation, the Variable Rate Subordinated Debentures and any Qualifying Subordinated Debt.

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"*Subordination Agreement*" means, individually, and "*Subordination Agreements*" means, collectively, the Subordination Agreements executed in connection with the Subordinated Debt, from time to time, each in the form of Exhibit D attached hereto and made part hereof or in such other form as Agent may agree in its discretion, including the First Amendment Subordination Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Section 1.1 of the Loan Agreement is hereby amended to add in correct alphabetical order the following defined terms:

*"First Amendment Effective Date*" means December 23, 2025.

*"First Amendment Subordination Agreement*" means that certain First Amendment Subordination Agreement, dated as of December 23, 2025, by and among the Initial Borrower, the Regulated Guarantors, the Subordinated Creditors (as defined therein) party thereto from time to time and the Agent, as Senior Creditor Agent (as defined therein).

"*Funded Debt to Adjusted Tangible Net Worth Ratio*" means, as of any date of determination, the ratio of (i) (x) Funded Debt as of such date minus (y) Qualifying Subordinated Debt as of such date to (ii) Adjusted Tangible Net Worth as of such date.

"*Qualifying Subordinated Debt*" means Subordinated Debt evidenced by one or more instruments issued by the Initial Borrower from time to time substantially in the form attached hereto as Exhibit K or otherwise with material terms reasonably satisfactory to Agent, including: (i) such indebtedness requires only payment of interest in-kind or in cash at rates satisfactory to Agent, (ii) such indebtedness does not require the payment of principal prior to the date that is six (6) months following the date set forth in clause (i) of the definition of Maturity Date, (iii) such indebtedness contains no financial covenants or affirmative or negative covenants other than the obligation of the Company to make payments thereunder, (iv) such indebtedness is unsecured and is not guaranteed and (v) such indebtedness is subordinated to the Obligations pursuant to the terms of the First Amendment Subordination Agreement or another form of subordination agreement satisfactory to Agent.

&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The final paragraph of Section 6.4 of the Loan Agreement is hereby amended and restated in its entirety as follows:

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Notwithstanding the foregoing, (x) Debtors' failure to comply with Section 6.4(e) shall not, in itself, constitute an Event of Default so long as such losses are deducted, as contemplated by the terms of this Agreement, in the determination of the other financial covenants contained herein, (y) the determination of the covenants contained in this Section 6.4 shall exclude any asset or liability associated with Statement of Financial Accounting Standard No. 133 and (z) for the purposes of calculating the Funded Debt to Adjusted Tangible Net Worth Ratio under Section 6.4(g) for the month ending November 30, 2025, the amount of Qualifying Subordinated Debt advanced to the Initial Borrower on the First Amendment Effective Date shall be permitted to be included under clauses (i)(y) and (ii) of the definition of Funded Debt to Adjusted Tangible Net Worth Ratio.

&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Section 7.13 of the Loan Agreement is hereby amended and restated in its entirety as follows:

&nbsp;&nbsp;&nbsp;&nbsp;Section 7.13.&nbsp;&nbsp;&nbsp;&nbsp;*Bulk Purchases*. In any purchase transaction, purchase Receivables in an aggregate amount exceeding $5,000,000 without prior written consent of Agent (other than a purchase of Receivables in connection with a Permitted Receivables Financing or a Permitted Transfer). For the avoidance of doubt, this Section 7.13 shall not prohibit the purchase, exchange, redemption or repayment of Other Debt with Qualifying Subordinated Debt.

&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Exhibit A to the Loan Agreement is hereby amended and restated in its entirety as set forth on <u>Annex I</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Exhibit K is hereby added to the Loan Agreement as set forth on <u>Annex II</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;*Conditions Precedent*. This Amendment shall be effective upon the completion of the following conditions precedent (all agreements, documents and instruments to be in form and substance satisfactory to Agent and Agent's counsel):

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Execution and delivery by Initial Borrower, the Regulated Guarantors and the Required Lenders of this Amendment to Agent;

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Receipt by Agent of a customary secretary's certificate of Borrower with cross-signature page attaching (i) a copy of the charter of Borrower certified by the Secretary of State of the State of Georgia no earlier than thirty days prior to the date hereof (or certification as to no change since the Closing Date), (ii) a copy of the bylaws of Borrower hereof (or certification as to no change since the Closing Date), (iii) resolutions authorizing the execution of this Amendment, (iv) updated evidence of

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incumbency of the relevant officers of Borrower and (v) a certificate of good standing of Borrower certified by the Secretary of State of the State of Georgia no earlier than thirty days prior to the date hereof;

&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Receipt by Agent of (i) the First Amendment Subordination Agreement duly executed by each party thereto including each holder of Qualifying Subordinated Debt as of the First Amendment Effective Date, (ii) a certificate of a Responsible Officer of the Borrower certifying to (1) the holders of Qualifying Subordinated Debt as of the First Amendment Effective Date, (2) the amount of such Subordinated Debt owed thereto and (3) true, correct and complete copies of the instruments evidencing the Qualifying Subordinated Debt incurred on the First Amendment Effective Date, which instruments shall be attached to such certificate, (iii) evidence satisfactory to Agent that Initial Borrower has received, or will receive substantially concurrently with the execution of this Amendment, at least $18,741,555.57 in proceeds from Qualifying Subordinated Debt on (or a span of time satisfactory to the Agent prior to) the First Amendment Effective Date and (iv) a legal opinion of Jones Day reasonably satisfactory to Agent;

&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Payment by Initial Borrower to Chapman and Cutler LLP as counsel to Agent of all unpaid legal fees, costs and expenses incurred in connection with this Amendment and the other Credit Documents to the extent invoiced on or prior to the date hereof; and

&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Execution and/or delivery by the parties of all other agreements, instruments and documents requested by Agent to effectuate and implement the terms hereof and the Credit Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;*Representations and Warranties*. Each Borrower represents and warrants to Agent and Lenders that:

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;All warranties and representations made to Agent and Lenders under the Loan Agreement and the Credit Documents are true and correct in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The execution and delivery by the Initial Borrower and Guarantors of this Amendment and the performance by each of them of the transactions herein and therein contemplated do not and will not violate any provisions of any law, rule, regulation, judgment, order, writ, decree, determination or award or breach any provisions of the charter, bylaws or other organizational documents of any Borrower or any Guarantor, or constitute a default or result in the creation or imposition of any security interest in, or lien or encumbrance upon, any assets of any Borrower or any Guarantor (immediately or with the passage of time or with the giving of notice and passage of time, or both) under any other contract, agreement, indenture or instrument to which a Borrower or a Guarantor is a party or by which a Borrower or a Guarantor or its property is bound with failure to comply resulting in a material adverse change in the business, operations, property (including the Collateral), prospects or financial condition of any Borrower or any Guarantor.

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&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;This Amendment and any assignment, instrument, document, or agreement executed and delivered in connection herewith will be valid, binding and enforceable in accordance with its respective terms.

&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;No Event of Default or Default has occurred under the Loan Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;*Representations and Release of Claims*. Except as otherwise specified herein, the terms and provisions hereof shall in no manner impair, limit, restrict or otherwise affect the obligations of the Initial Borrower, any Guarantor or any third party to Agent and Lenders as evidenced by the Credit Documents. Each Borrower and each Guarantor hereby acknowledge, agree, and represent that (a) as of the date of this Amendment, there are no known claims or offsets against, or defenses or counterclaims to, the terms or provisions of the Credit Documents or the other obligations created or evidenced by the Credit Documents; (b) as of the date of this Amendment, neither the Initial Borrower nor any Guarantor has any known claims, offsets, defenses or counterclaims arising from any of Agent's acts or omissions with respect to the Credit Documents or Agent's performance under the Credit Documents; (c) as of the date of this Amendment, the Initial Borrower has reviewed and reconciled all Advances, calculations of interest due and principal owing, and agrees with and has no claims regarding any such matters and (d) the Initial Borrower promises to pay to the order of Agent and Lenders the indebtedness evidenced by the Note according to the terms thereof. In consideration of the modification of certain provisions of the Credit Documents, all as herein provided, and the other benefits received by the Initial Borrower hereunder, the Initial Borrower and each Guarantor hereby RELEASE, RELINQUISH and forever DISCHARGE Agent and Lenders, and their predecessors, successors, assigns, shareholders, principals, parents, subsidiaries, agents, officers, directors, employees, attorneys and representatives (collectively, the "*Released Parties*"), of and from any and all present claims, demands, actions and causes of action of any and every kind or character, which the Initial Borrower or Guarantors, or any of them, has or may have against Released Parties arising out of or with respect to any and all transactions relating to the Loan Agreement, the Note, the Guaranties, and the other Credit Documents occurring prior to the date hereof. Further, the Initial Borrower and Guarantors warrant and represent that they are not now aware of any claims or potential claims against Agent or Lenders pursuant to the Loan Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;*Reaffirmation of Collateral*. As security for the payment of the Obligations to Agent and Lenders under the Loan Agreement and satisfaction by the Initial Borrower of all covenants and undertakings contained in the Loan Agreement and the Credit Documents, the Initial Borrower reconfirms, ratifies and reaffirms the prior security interest and lien on, upon and to, its Collateral, whether now owned or hereafter acquired, created or arising and wherever located. The Initial Borrower hereby confirms and agrees that all security interests and Liens granted to Agent for the ratable benefit of Lenders continue in full force and effect and shall continue to secure the Obligations. All Collateral remains free and clear of any Liens other than Permitted Liens. Nothing herein contained is intended to in any manner impair or limit the validity, priority and extent of Agent's existing security interest in and Liens upon the Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;*Acknowledgment of Indebtedness and Obligations*. The Initial Borrower and Guarantors hereby acknowledge and confirm that as of the date hereof, the Initial Borrower is

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indebted to Agent and Lenders, without known defense, setoff or counterclaim, for all Obligations under the Loan Agreement (in addition to any other indebtedness or obligations owed by the Initial Borrower to BMO Affiliates), plus continually accruing interest and all fees, costs, and expenses, including reasonable attorneys' fees, incurred through the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;*Ratification of Credit Documents*. This Amendment shall be incorporated into and deemed a part of the Loan Agreement. Except as expressly set forth herein, all of the terms and conditions of the Loan Agreement and Credit Documents are hereby ratified and confirmed and continue unchanged and in full force and effect. All references to the Loan Agreement shall mean the Loan Agreement as modified by this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;*Acknowledgment of Guarantors*. By execution of this Amendment, each Guarantor hereby acknowledges the terms and conditions of this Amendment and confirms that such Guarantor guarantees, as surety, all of the Initial Borrower's Obligations to Agent and Lenders pursuant to and subject to the terms, conditions and limitations contained in its respective Guaranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;*Governing Law*. This Amendment, the Loan Agreement and the existing Credit Documents shall be deemed to have been made and to be performable in the State of New York and shall, together with all matters arising hereunder or related hereto, be governed by and construed in accordance with the laws of the State of New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;**Jury Trial Waiver. Each party hereto hereby waives trial by jury in any judicial proceeding involving, directly or indirectly, any matter (whether sounding in tort, contract or otherwise) in any way arising out of or related to this Amendment or any Credit Document or the relationship established hereunder. This provision is a material inducement for agent and Lenders to enter into this Amendment**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;*Counterparts; Electronic Signatures*. This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. This Amendment may be executed by means of (a) an electronic signature that complies with the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, or any other relevant and applicable electronic signatures law; (b) an original manual signature; or (c) an e-mail transmission of a Portable Document Format File (also known as an "PDF" file), faxed, scanned, or photocopied manual signature. Each electronic signature or PDF, faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature.

[*Signature Pages Follow*]

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**IN WITNESS WHEREOF**, the parties have caused this Amendment to be executed by their respective duly authorized officers as of the date first above written.

**Initial Borrower:**

&nbsp;&nbsp;&nbsp;&nbsp;1st Franklin Financial Corporation

&nbsp;&nbsp;&nbsp;&nbsp;By: <u>/s/ Jenna C. Hood</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Jenna C. Hood

&nbsp;&nbsp;&nbsp;&nbsp;Title: EVP & Chief Financial Officer

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

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**Regulated Guarantors:**

&nbsp;&nbsp;&nbsp;&nbsp;Frandisco Life Insurance Company

&nbsp;&nbsp;&nbsp;&nbsp;Frandisco Property & Casualty Insurance Company

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ Mark J. Scarpitti</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Mark J. Scarpitti

&nbsp;&nbsp;&nbsp;&nbsp;Title: Secretary / Treasurer

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

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&nbsp;&nbsp;&nbsp;&nbsp;BMO Bank N.A., as Agent and a Lender

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ Daniel A. Ryan</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Daniel A. Ryan

&nbsp;&nbsp;&nbsp;&nbsp;Title: Director

[First Amendment Subordination Agreement (1st Franklin 2025)]

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&nbsp;&nbsp;&nbsp;&nbsp;First Horizon Bank, as a Lender

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ Matthew Mallen</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Matthew Mallen

&nbsp;&nbsp;&nbsp;&nbsp;Title: VP

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

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&nbsp;&nbsp;&nbsp;&nbsp;Flagstar Bank, N.A., as a Lender

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ Blake Chandler</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Blake Chandler

&nbsp;&nbsp;&nbsp;&nbsp;Title: SVP

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

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&nbsp;&nbsp;&nbsp;&nbsp;SouthState Bank, N.A., as a Lender

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ Abraham Swartz</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Abraham Swartz

&nbsp;&nbsp;&nbsp;&nbsp;Title: SVP, Middle Market Banking

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

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&nbsp;&nbsp;&nbsp;&nbsp;Renasant Bank, as a Lender

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ John Adcox</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: John Adcox

&nbsp;&nbsp;&nbsp;&nbsp;Title: Senior Vice President

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

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&nbsp;&nbsp;&nbsp;&nbsp;Banc of California, as a Lender

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ Hans Sylvester</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Hans Sylvester

&nbsp;&nbsp;&nbsp;&nbsp;Title: SVP, Portfolio Manager

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

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&nbsp;&nbsp;&nbsp;&nbsp;Forbright Bank, as a Lender

&nbsp;&nbsp;&nbsp;&nbsp;By:&nbsp;&nbsp;&nbsp;&nbsp; <u>/s/ Kevin Messett</u>

&nbsp;&nbsp;&nbsp;&nbsp;Name: Kevin Messett

&nbsp;&nbsp;&nbsp;&nbsp;Title: Managing Director

[Signature Page to First Amendment to Loan and Security Agreement (1st Franklin 2025)]

## Exhibit 10.2

**THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "<u>ACT</u>"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER THE ACT HAS BECOME EFFECTIVE OR UNLESS THE PAYEE ESTABLISHES TO THE SATISFACTION OF THE MAKER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.**

**THE INDEBTEDNESS AND OTHER OBLIGATIONS EVIDENCED BY THIS NOTE ARE SUBORDINATE TO ALL SENIOR DEBT (AS DEFINED IN THE SUBORDINATION AGREEMENT REFERRED TO BELOW) IN THE MANNER SET FORTH IN THAT CERTAIN FIRST AMENDMENT SUBORDINATION AGREEMENT, DATED ON OR ABOUT DECEMBER 23, 2025 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE "<u>SUBORDINATION AGREEMENT</u>"), BY AND AMONG, INTER ALIOS, BMO BANK N.A., AS SENIOR CREDITOR AGENT (AS DEFINED THEREIN), THE ORIGINAL PAYEE NAMED IN THIS NOTE, AS A SUBORDINATED CREDITOR (AS DEFINED THEREIN), THE OTHER SUBORDINATED CREDITORS PARTY THERETO FROM TIME, AND MAKER, TO WHICH REFERENCE IS HEREBY MADE FOR A FULLER STATEMENT THEREOF. THE TERMS OF THE SUBORDINATION AGREEMENT SHALL PREVAIL IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THIS NOTE AND THE SUBORDINATION AGREEMENT.**

**SUBORDINATED NOTE**

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| | |
|:---|:---|
| $[●] | December 23, 2025 (the "<u>Issuance Date</u>") |

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FOR VALUE RECEIVED, 1<sup>st</sup> Franklin Financial Corporation, a Georgia corporation (the "<u>Maker</u>"), promises to pay to [●] (the "<u>Payee</u>"), in lawful money of the United States of America, the principal sum of [●] ($[●]), on June 6, 2028 (the "<u>Maturity Date</u>"), together with interest on the unpaid principal balance at an annual rate of 6.5%, pursuant to the terms set forth herein.

This Subordinated Note (this "<u>Note</u>") has been executed and delivered pursuant to the Subordinated Note Purchase Agreement, dated as of the date hereof (the "<u>Purchase Agreement</u>"), by and between the Maker and the Payee. Capitalized terms used in this Note have the respective meanings assigned to them in <u>Section 5(i)</u> of this Note unless otherwise indicated.

1.&nbsp;&nbsp;&nbsp;&nbsp;PAYMENTS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;<u>Interest</u>. The Maker promises to pay interest on the unpaid principal amount of this Note at the rate of 6.5% per annum from the date of this Note until the Maturity Date. Interest on this Note will begin to accrue on the date of this Note and will be computed on the basis of a 360-day year comprised of twelve 30-day months. The Maker will pay interest monthly in arrears on the first calendar day of each month (each, an "<u>Interest Payment Date</u>"), commencing on January 1, 2026. The amount of interest payable on this Note on any Interest Payment Date, the Maturity Date, or any other date on which interest on this Note is due (in accordance with its terms) will be the amount of interest accrued to, but excluding, such Interest Payment Date, Maturity Date or other date, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;<u>Manner of Payment</u>. All payments on this Note shall be made by wire transfer of immediately available funds to an account designated by the Payee in writing at least five (5) Business

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Days prior to the applicable Interest Payment Date, Maturity Date or other date on which any payment on this Note is due. If an Interest Payment Date, the Maturity Date or other date on which any payment on this Note is due falls on a day that is not a Business Day, then payment of principal and interest, as the case may be, due on such date need not be made on such date, but instead may be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after such Interest Payment Date, Maturity Date or other date on which payment is due, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;<u>Beneficiary Upon Death of Payee</u>. Upon any death of the Payee named in the third paragraph of this Note prior to the Maturity Date, all payments on this Note shall thereafter become payable to [●] (the "<u>Beneficiary</u>"), and the Beneficiary shall be deemed to be the Payee hereunder for all other provisions of this Note; provided that the Beneficiary shall not be entitled to any payments on this Note in accordance with this section until the Beneficiary shall execute and deliver a joinder to the Subordination Agreement or other instrument evidencing the subordination of the Maker's obligations under this Note as the Senior Creditor Agent may reasonably request.

2.&nbsp;&nbsp;&nbsp;&nbsp;DEFAULTS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;<u>Events of Default</u>. The occurrence of any one or more of the following events with respect to the Maker shall constitute an event of default hereunder ("<u>Event of Default</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) &nbsp;&nbsp;&nbsp;&nbsp;If the Maker shall fail to pay when due any payment of interest on this Note and such failure continues for thirty (30) days, or if the Maker shall fail to pay when due any principal on this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) &nbsp;&nbsp;&nbsp;&nbsp;If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (a "<u>Bankruptcy Law</u>"), the Maker: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for all or substantially all of its property; or (D) makes a general assignment for the benefit of its creditors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) &nbsp;&nbsp;&nbsp;&nbsp;If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Maker in an involuntary case, (B) appoints a Custodian of the Maker or for all or substantially all of the Maker's properties, or (C) orders the liquidation of the Maker, and in each case the order or decree remains unstayed and in effect for sixty (60) days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;If the Maker fails to meet any of its obligations under or otherwise breaches the terms of this Note and such failure or breach continues for thirty (30) days after the Payee notifies the Maker thereof in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;<u>Notice by Maker</u>. The Maker shall notify the Payee in writing within five (5) Business Days after the occurrence of any Event of Default of which the Maker acquires knowledge.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;<u>Remedies</u>. Upon the occurrence and during the continuance of an Event of Default hereunder, the Payee may, at its option, (i) by written notice to the Maker, declare the entire unpaid principal balance of this Note, together with all accrued and unpaid interest thereon, immediately due and payable regardless of any prior forbearance, and (ii) exercise any and all rights and remedies available to it under applicable law, including the right to collect from the Maker all sums due under this Note.

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3.&nbsp;&nbsp;&nbsp;&nbsp;REDEMPTION

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Redemption by the Maker</u>. This Note shall not be redeemable by the Maker, in whole or in part, without the prior written consent of BMO. Subject to the foregoing, this Note shall be redeemable at the option of the Maker, at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of the Note to be redeemed, plus accrued and unpaid interest on such amount to, but excluding, the redemption date. Unless the Maker defaults in payment of the redemption price, interest will cease to accrue on the Note or portions thereof called for redemption on and after the redemption date. If this Note is to be redeemed in part only, a new Note in a principal amount equal to the unredeemed portion of this Note will be issued in the name of the Payee upon surrender for cancellation of the original Note.

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Notice of Redemption</u>. In the case of any redemption of this Note pursuant to and in accordance with paragraph (a) of this <u>Section 4</u>, the Maker will give the Payee written notice of redemption, which notice shall indicate the aggregate principal amount of the Note to be redeemed, the date of redemption and the amount of accrued interest payable up to, but excluding, the redemption date. Such notice of redemption shall be given to the Payee not less than thirty (30) nor more than forty-five (45) calendar days prior to the redemption date.

&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>No Redemption at Option of Payee</u>. This Note is not subject to redemption at the option of the Payee.

4. &nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver</u>. No waiver by the Payee of any right or remedy under this Note shall be effective unless in a writing signed by the Payee. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by the Payee will preclude any other or farther exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (i) no claim or right of the Payee arising out of this Note can be discharged by the Payee, in whole or in part, by a waiver or renunciation of the claim or right unless in a writing, signed by the Payee; (ii) no waiver that may be given by the Payee will be applicable except in the specific instance for which it is given; and (iii) no notice to or demand on the Maker will be deemed to be a waiver of any obligation of the Maker or of the right of the Payee to take further action without notice or demand as provided in this Note. The Maker hereby waives presentment, demand, protest and notice of nonpayment, dishonor and protest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;<u>Amendment</u>. No amendment or other modification to this Note shall be effective unless in a writing signed by the Payee and the Maker, which makes specific reference to this Note. Additionally, the second paragraph of this Note may not be rescinded, canceled, amended or modified in any way without the prior written consent of the Senior Creditor Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. Any notice required or permitted to be given hereunder shall be given in accordance with the notice provisions in the Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &nbsp;&nbsp;&nbsp;&nbsp;<u>Severability</u>. If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) &nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. This Note will be governed by the laws of the State of Georgia, without regard to conflicts of laws principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &nbsp;&nbsp;&nbsp;&nbsp;<u>Parties in Interest</u>. This Note shall bind the Maker and its successors and assigns. This Note shall not be assigned or transferred by either Party without the express prior written consent of the other, except by operation of law; provided that, any assignee or transferee of this Note shall acknowledge the terms of this Note in writing. There are no third-party beneficiaries of this Note, except each of the Senior Creditor Agent and the Beneficiary shall be a third-party beneficiary of this Note and may enforce the provisions hereof as though it were a party hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;<u>Cancellation</u>. After all principal, interest and all other amounts at any time owed on this Note have been paid in full, or otherwise deemed to be $0.00, this Note shall be of no further force and effect and shall be promptly surrendered to the Maker for cancellation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;<u>Section Headings; Construction</u>. The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Note unless otherwise specified. All words used in this Note will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the words "hereof' and "hereunder" and similar references refer to this Note in its entirety and not to any specific section or subsection hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;<u>Defined Terms</u>. The following terms shall have the meanings set forth below:

"<u>Business Day</u>" means any day other than a Saturday, Sunday, or legal holiday in the State of New York.

"<u>Custodian</u>" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

"<u>Default</u>" means any event which is, or after notice or passage of time would be, an Event of Default.

*[Signature Page Follows]*

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IN WITNESS WHEREOF, the Maker has executed and delivered this Note as of the date first stated above.

**MAKER:**

**1**<sup>st</sup> **FRANKLIN FINANCIAL CORPORATION**

By: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name: Jenna C. Hood

Title: Executive Vice President and Chief Financial Officer

**ACKNOWLEDGED:**

**PAYEE**

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>

Name:

[Signature Page to Subordinated Note]