Document:

Exhibit
10.1

 

Amended and
Restated Loan Agreement

 

 

 

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 bank
holding company (the "Borrower"), hereby promises to pay to the order
of SILVERTON BANK, NATIONAL ASSOCIATION (the "Lender"), as provided
for in the Loan Agreement (as defined below), the lesser of (i) the principal
sum of $4,000,000.00 or (ii) the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Lender to the Borrower pursuant to that
certain Amended and Restated Loan Agreement, by and between the Borrower and
the Lender, dated of even date herewith (as amended, modified or supplemented
from time to time, the "Loan Agreement"). The Borrower hereby further
promises to pay to the order of the Lender interest on the unpaid principal
amount of this Revolving Credit Note ("Note") from time to time
outstanding at the rate or rates per annum determined pursuant to Article II
of, or as otherwise provided in, the Loan Agreement, and with such amounts
being payable on the dates set forth in Article II of, or as otherwise provided
in, the Loan Agreement.  

 

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

 

Except as otherwise provided in the Loan
Agreement, if any payment of principal or interest under this Note shall become
due on a day that is not a Business Day, such payment shall be made on the next
following Business Day and such extension of time shall be included in
computing interest in connection with such payment.  

 

This Note is the note referred to in, and
is entitled to the benefits of, the Loan Agreement and the other Loan
Documents. This Note is secured by, and is entitled to the benefits of, the
Stock Pledge Agreement. Capitalized terms used in this Note that are defined in
the Loan Agreement shall have the meanings assigned to them therein unless
otherwise defined in this Note.  

 

This Note shall be governed by, and shall
be construed and enforced in accordance with, the laws of the State of North
Carolina without regard to the principles of the conflicts of laws thereof. The
Borrower hereby consents to the jurisdiction and venue of the federal and state
courts located in Mecklenburg County, North Carolina with respect to any suit
arising out of or mentioning this Note.  

 

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

 

 

                                                                                                                        WITNESS:                                                        SOUTHERN
FIRST BANCSHARES, INC.  

 

 

                                                                                                                        By:                                                                       By:                                                                           

                                                                                                                        Name:                                                                   Name:                                                                      

                                                                                                                        Title:                                                                     Title:                                                                       

 

 

TERM NOTE

 

 

$5,000,000.00                                                                                                                                                                                                                                                                                                                                                         
Charlotte,
North Carolina 

April 30, 2009 

$5,000,000.00 Charlotte, North Carolina
April 30, 2009 

FOR VALUE RECEIVED, the undersigned,  SOUTHERN
FIRST BANCSHARES, INC., a South Carolina corporation and a bank holding company
(the "Borrower"), hereby promises to pay to the order of SILVERTON
BANK, NATIONAL ASSOCIATION (the "Lender"), as provided for in the
Loan Agreement (as defined below), the original principal amount
of$5,000,000.00, together with interest on the unpaid principal amount of this
Term Note ("Note") at the rate or rates per annum determined pursuant
to Article II of, or as otherwise provided in, that certain Amended and
Restated Loan Agreement, by and between the Borrower and the Lender, dated of
even date herewith (as amended, modified or supplemented from time to time the
"Loan Agreement"), and with such amounts being payable on the dates
set forth in Article II of, or as otherwise provided in, the Loan Agreement.

 

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

 

Except as otherwise provided in the Loan
Agreement, if any payment of principal or interest under this Note shall become
due on a day that is not a Business Day, such payment shall be made on the next
following Business Day and such extension of time shall be included in
computing interest in connection with such payment. 

 

This Note is the note referred to in, and
is entitled to the benefits of, the Loan Agreement and the other Loan
Documents. This Note is secured by, and is entitled to the benefits of, the
Stock Pledge Agreement. Capitalized terms used in this Note that are defined in
the Loan Agreement shall have the meanings assigned to them therein unless
otherwise defined in this Note. 

 

This Note shall be governed by, and shall
be construed and enforced in accordance with, the laws of the State of North
Carolina without regard to the principles of the conflicts of laws thereof. The
Borrower hereby consents to the jurisdiction and venue of the federal and state
courts located in Mecklenburg County, North Carolina with respect to any suit
arising out of or mentioning this Note. 

 

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

 

 

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

 

 

                                                                                                                                            WITNESS:                                                        SOUTHERN
FIRST BANCSHARES, INC. 

 

 

                                                                                                                                             By:                                                      
            By:                                                      

                                                                                                                                            Name:                                                  
            Name:                                                  

                                                                                                                                            Title:                                                    
            Title:                                                    

 

2

 

AMENDED
AND RESTATED STOCK PLEDGE AGREEMENT  

 

 

This Amended and Restated Stock Pledge
Agreement (this "Agreement"), dated as of this  30th day of April, 2009, is by
and between SOUTHERN FIRST BANCSHARES, INC., a South Carolina
corporation and a bank holding company (the "Borrower"), and SILVERTON
BANK, NATIONAL ASSOCIA TION (the "Lender").  

 

W I T N E S S E T H:

 

 

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

 

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

 

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

 

NOW, THEREFORE, in consideration of the
Debt (as defined in the Loan Agreement), and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the Borrower, and in order to induce the Lender to enter into the Loan
Agreement and make the Loans (as defined in the Loan Agreement), the parties
hereto, intending to be legally bound hereby, covenant and agree as follows:
 

 

 

 
Section 1. Pledge. As security for
the full and timely payment of the Debt in accordance with the terms of this
Agreement, the Loan Agreement and the other Loan Documents and the full and
timely payment and performance of the obligations of the Borrower under this
Agreement, the Loan Agreement and the other Loan Documents, the Borrower hereby
reconfirms its prior grant to the Lender of a security interest in, and hereby
grants a security interest in and pledges to the Lender all of the Borrower's
right, title and interest in and to all of the issued and outstanding capital
stock of Southern First Bank, National Association, a wholly-owned subsidiary
of the Borrower, together with all additions, substitutions, replacements and
proceeds thereof and all income, interest, dividends and other distributions
thereon (collectively, the "Pledged Shares"). The Borrower hereby
acknowledges and confirms that (i) in accordance with the provisions of the
Existing Pledge Agreement, the Borrower has delivered to the Lender the stock
certificates evidencing the Pledged Shares, accompanied by a duly executed
Irrevocable Stock Power in favor of the Lender (f/k/a The Bankers Bank,
National Association) and (ii) such Irrevocable Stock Power remains in full
force and effect. The Borrower hereby authorizes the transfer of possession of
all certificates, instruments, documents and other evidence of the Pledged
Shares 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 the
pledge or transfer of any of the Pledged Shares, other than restrictions
referenced on the face of any certificates evidencing the Pledged Shares.

 

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

 

(c)         The
Pledged 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, charge
or other encumbrance of any nature whatsoever on any of the Pledged Shares or
assign, pledge or otherwise encumber any right to receive income from the
Pledged Shares, other than in favor of the Lender.  

 

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

 

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

 

Section 3.
  Voting Rights and Transfer.

 

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

Agreement or any document or agreement
executed in connection herewith.  

 

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

 

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

 

2

 

Section 4.        
Default.  

 

(a)     If any of the following occur (each an
"Event of Default"): (i) any Event of Default under the Loan
Agreement, (ii) the failure by the Borrower to perform any of its obligations
hereunder, (iii) the failure of the Lender to have a perfected first priority
security interest in the Pledged Shares or (iv) any restriction is imposed on
the pledge or transfer of any of the Pledged Shares after the date of this
Agreement without the Lender's prior written consent, then the Lender is
authorized in its discretion to declare any or all of the Debt to be
immediately due and payable without demand or notice, which are expressly
waived, and may exercise any one or more of the rights and remedies granted
pursuant to this Agreement or given to a secured party under the UCC of the
applicable state, as it may be amended from time to time, or otherwise at law
or in equity, including without limitation the right to sell or otherwise
dispose of any or all of the Pledged Shares at public or private sale, with or
without advertisement thereof, upon such terms and conditions as it may deem
advisable and at such prices as it may deem best. 

 

(b)      At any bona fide public sale, and to the
extent permitted by law, at any private sale, the Lender shall be free to
purchase all or any part of the Pledged Shares, free of any right or equity of
redemption in the Borrower, which right or equity is hereby waived and
released. Any such sale may be on cash or credit. The Lender shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Pledged Shares for their own account in compliance with
Regulation D of the Securities Act of 1933 (the "Act") or any other
applicable exemption available under such Act. The Lender will not be obligated
to make any sale if it determines not to do so, regardless of the fact that
notice of the sale may have been given. The Lender may adjourn any sale and
sell at the time and place to which the sale is adjourned. If the Pledged
Shares are customarily sold on a recognized market or threatens to decline
speedily in value, the Lender may sell such Pledged Shares at any time without
giving prior notice to the Borrower. Whenever notice is otherwise required by
law to be sent by the Lender to the Borrower of any sale or other disposition
of the Pledged Shares, ten (10) days written notice sent to the Borrower at its
address specified above will be reasonable. 

 

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

 

3

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

 

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

 

Section 5.      Dividends. Interest and
Premiums. The Borrower will have the right to receive all cash dividends,
interest and premiums declared and paid on the Pledged Shares prior to the
occurrence of any Event of Default. In the event any additional shares are
issued to the Borrower as a stock dividend or in lieu of interest on any of the
Pledged Shares, as a result of any split ofany of the Pledged Shares, by
reclassification or otherwise, any certificates evidencing any such additional
shares will be immediately delivered to the Lender and such shares will be
subject to this Agreement and a part of the Pledged Shares to the same extent
as the original Pledged Shares. At any time after the occurrence of an Event of
Default, the Lender shall be entitled to receive all cash or stock dividends,
interest and premiums declared or paid on the Pledged Shares, all of which
shall 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 from
time to time, to execute (on behalf of the Borrower), file and record against
the Borrower any notice, financing statement, continuation statement, amendment
statement, instrument, document or agreement under the VCC that the
Lender may consider necessary or desirable to create, preserve, continue,
perfect or validate any security interest granted hereunder or to enable the
Lender to exercise or enforce its rights hereunder with respect to such
security interest. Without limiting the generality of the foregoing, the
Borrower hereby irrevocably appoints the Lender as the Borrower's
attorney-in-fact to do all acts and things in the Borrower's name that the
Lender may deem necessary or desirable. This power of attorney is coupled with
an interest with full power of substitution and is irrevocable. The Borrower
hereby ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof.  

 

4

Section 7.      Continuing Validity of
Obligations. The agreements and obligations of the Borrower hereunder are
continuing agreements and obligations, and are absolute and unconditional
irrespective of the genuineness, validity or enforceability of the Loan
Agreement, the Note or any other instrument or instruments now or hereafter
evidencing the Debt or any part thereof or of the Loan Documents or any other
agreement or agreements now or hereafter entered into by the Lender and the
Borrower pursuant to which the Debt or any part thereof is issued or of any
other circumstance which might otherwise constitute a legal or equitable
discharge of such agreements and obligations. Without limitation upon the
foregoing, such agreements and obligations shall continue in full force and
effect as long as the Debt or any part thereof remains outstanding and unpaid
and shall remain in full force and effect without regard to and shall not be
released, discharged or in any way affected by (i) any renewal, refinancing or
refunding of the Debt in whole or in part, (ii) any extension of the time of
payment of the Note or other instrument or instruments now or hereafter
evidencing the Debt, or any part thereof, (iii) any compromise or settlement
with respect to the Debt or any part thereof, or any forbearance or indulgence
extended to the Borrower, (iv) any amendment to or modification of the terms of
the Note or other instrument or instruments now or hereafter evidencing the
Debt or any part thereof or any other agreement or agreements now or hereafter
entered into by the Lender and the Borrower pursuant to which the Debt or any
part thereof is issued or secured, (v) any substitution, exchange, or release
of a portion of, or failure to preserve, perfect or protect, or other dealing
in respect of, the Pledged Shares or any other property or any security for the
payment of the Debt or any part thereof, (vi) any bankruptcy, insolvency,
arrangement, composition, assignment for the benefit of creditors or similar
proceeding 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 of
the Borrower hereunder, would or might otherwise be released or discharged. The
Borrower hereby waives notice of the acceptance of this Agreement by the
Lender.  

 

Section 8.       Defeasance.
Notwithstanding anything to the contrary contained in this Agreement, upon
payment in full of the Debt and performance of all obligations of under the
Loan Agreement, this Agreement shall terminate and be of no further force and
effect and at the request of the Borrower, the Lender shall thereupon terminate
its security interest in the Pledged Shares. Until such time, however, this
Agreement shall be binding upon and inure to the benefit of the parties, their
successors and assigns, provided that the Borrower may not assign this
Agreement or any of its rights under this Agreement or delegate any of its
duties or obligations under this Agreement and any such attempted assignment or
delegation shall be null and void. This Agreement is not intended and shall not
be construed to obligate the Lender to take any action whatsoever with respect
to the Pledged Shares or to incur expenses or perform or discharge any
obligation, duty or disability of the Borrower.  

 

Section 9.         Miscellaneous.
 

 

(a)       The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall for any
reason be held invalid or unenforceable, in whole or in part, in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without in any manner
affecting the validity or unenforceability of such provision in any other
jurisdiction or any other provision of this Agreement in any jurisdiction. 

 

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

privileges of the Lender under this Agreement, the
Loan Agreement, the Note and the other Loan Documents are cumulative and not
exclusive of any rights or remedies which it may otherwise have. 

 

(c)       All notices, statements, requests and
demands given to or made upon any party in accordance with the provisions of
this Agreement shall be deemed to have been given or made when given or made as
provided in the Loan Agreement. 

 

(d)      The section headings contained in this
Agreement are for reference purposes only and shall not control or affect its
construction or interpretation in any respect. 

5

 

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

 

(f)        The Borrower consents to the exclusive
jurisdiction and venue of the federal and state Courts located in Mecklenburg
County, North Carolina in any action on, relating to or mentioning this
Agreement. 

 

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

 

[INTENTIONALLY LEFT BLANK]

 

6

 

IN WITNESS WHEREOF, and intending
to be legally bound, the undersigned has executed and delivered this Agreement
as of the day and year written above.  

 

 

                                                                                                                                                Witness:                                                            SOUTHERN FIRST BANCSHARES, INC.
 

 

 

                                                                                                                                                By:                                                                   By:                                                                   

                                                                                                                                                Name:                                                               Name:  James
M. Austin, III                        

                                                                                                                                                Title:                                                                 Title:     Chief
Financial Officer                    

 

 

 

                                                                                                                                                                                                                            Silverton
Bank, National Association

 

 

 

                                                                                                                                                                                                                            By:                                                                   

                                                                                                                                                                                                                                        Timothy
S. Beck

                                                                                                                                                                                                                                         Senior
Vice President

 

AMENDED AND RESTATED LOAN AGREEMENT

 

 by and between  

 

SOUTHERN FIRST BANCSHARES, INC.  

 

and  

 

SILVERTON BANK, NATIONAL ASSOCIATION  

 

DATED APRIL 30. 2009  

 

AMENDED AND RESTATED LOAN AGREEMENT  

 

 

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

 

W I T N E S S E T H: 

 

WHEREAS, the Borrower and the Lender are a party to
that certain Loan Agreement, dated as of December 28, 2007, pursuant to which
the Lender agreed to provide a revolving line of credit in the aggregate amount
not to exceed $15,000,000.00 to the Borrower (as amended prior to the date
hereof, the "Existing Loan Agreement"); 

 

WHEREAS, the Borrower has requested the Lender to
amend 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 existing
Indebtedness to the Lender and (ii) for working capital and general corporate
purposes; and 

 

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

 

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

 

ARTICLE I 

 

DEFINITIONS 

 

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

 

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

 

"Agreement" shall mean this Amended and
Restated Loan Agreement, as amended, modified or supplemented from time to
time. 

 

 "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%.

 

"Authorized
Representative" shall mean each Person designated from time to time, as 

appropriate, in writing by the Borrower to the Lender
for the purpose of giving notices of borrowing, which designation shall
continue in full force and effect until terminated in writing by the Borrower
to the Lender. 

 

"Banking Liabilities" means (i) any deposits
with any Bank Subsidiary or funds collected by any Bank Subsidiary, (ii) any
banker's acceptance credit of any Bank Subsidiary, (iii) any check, note,
certificate of deposit, money order, letter of credit, travelers check, draft
or bill of exchange issued, accepted or endorsed by any Bank Subsidiary, (iv)
any discount with, borrowing from, or other obligation to, any Federal Reserve
Bank, (v) any agreement made by any Bank Subsidiary to purchase or repurchase
securities, loans or federal funds or any interest or participation in any
thereof, (vi) any guarantee or similar obligation incurred by any Bank
Subsidiary in such circumstances as may be incidental or usual in carrying on
the banking or trust business of a bank or trust company, (vii) any transaction
in the nature of an extension of credit, whether in the form of a commitment or
otherwise, undertaken by any Bank Subsidiary for the account of a third party
with the application of the same banking considerations and legal lending
limits that would be applicable if the transaction were a loan to such party
and (viii) any transaction in which any Bank Subsidiary acts solely in a
fiduciary or agency capacity. 

 

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

 

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

 

"Borrowing Availability Amount" means, for
the 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 the
Lender in its sole, reasonable discretion. 

 

"Borrowing Availability Certificate" means
the certificate required to be delivered by the Borrower to the Lender pursuant
to Section 5.01(c), setting forth the Borrowing Availability Amount
calculations for the Borrower. 

 

"Business Day" shall mean a day of the year
on which banks are not required or authorized to close in Charlotte, North
Carolina. 

 

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

 

"Capitalized Lease Obligation" shall mean,
with respect to each Capital Lease, the amount of the liability reflecting the
aggregate discounted amount of future payments under such Capital Lease
calculated in accordance with GAAP and statement of financial accounting
standards No. 13 (as supplemented and modified from time to time), and any
corresponding future interpretations by the Financial Accounting Standards
Board or any successor thereto. 

 

2

 "Cash Flow Available to
Service 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 in
accordance with GAAP. 

 

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

 

"Change in
Control" shall mean (a) the acquisition by any Person, or two or more
Persons acting in concert, of the beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of20% or more of the outstanding shares of voting
ownership interests of the Borrower or (b) the lease, sale or transfer or other
disposition of all or substantially all of the assets of the Borrower or any
Subsidiary in one or a series of transactions to any Person, or two or more
Persons acting in concert. 

 

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

 

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

 

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

regulations, decisions and other official
interpretations in connection therewith. 

 

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

 

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

 

3

 "Debt" shall mean,
collectively, (A) all Indebtedness, whether of principal, interest, fees,
expenses or otherwise, of the Borrower to the Lender, whether now existing or
hereafter incurred including, but not limited to, future loans and advances, if
any, under this Agreement, the Notes and the other Loan Documents, as the same
may be amended from time to time, together with any and all extensions,
renewals, refinancings or refundings thereof in whole or in part; (B) all other
obligations for the repayment of borrowed money, whether of principal,
interest, fees, expenses or otherwise, of the Borrower to the Lender, whether now
existing 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 any
overdrafts), whether or not related to this Agreement or to the Notes, whether
or not contemplated by the Lender or the Borrower at the date hereof and
whether direct, indirect, matured or contingent, joint or several, or
otherwise, together with any and all extensions, renewals, refinancings or refundings
thereof in whole or in part; (C) all costs and expenses including, without
limitation, to the extent permitted by Law, reasonable attorneys' fees and
legal expenses, incurred by the Lender in the collection of any of the
indebtedness referred to in clauses (A) or (B) above in amounts due and owing
to the Lender under this Agreement or the other Loan Documents; and (D) any
advances made by the Lender for the maintenance, preservation, protection or
enforcement of, or realization upon, any property or assets now or hereafter
made subject to a Lien granted pursuant to this Agreement, the other Loan
Documents or pursuant to any agreement, instrument or note relating to any of
the Debt, including, without limitation, advances for taxes, insurance, repairs
and the like. 

 

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

 

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

 

"Debt to Worth Ratio" means, as of the date
of determination, the ratio of total Indebtedness (assuming that the Revolving
Credit Facility is fully funded) to shareholder's equity, in each case
determined for the Borrower only in accordance with GAAP. For purpose of
calculating the Debt to Worth Ratio, any funds received by the Borrower from
the United States of America or any agency thereof under the United States of
America "Troubled Assets Relief Program (TARP)" that remain
outstanding as of the date of determination will be treated as equity and not
Indebtedness. 

 

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

 

"Environmental
Laws" shall mean all federal, state, local and foreign Laws and any
consent decrees, settlement agreements, judgments, orders, directives, policies
or programs issued by or entered into with an Official Body pertaining or
relating to: (i) pollution or pollution control; (ii) protection of human
health or the environment; (iii) employee safety in the workplace; (iv) the
presence, use, management, generation, manufacture, processing, extraction,
treatment, recycling, refining, reclamation, labeling, transport, storage,
collection, distribution, disposal or release or threat of release of Regulated
Substances; (v) the presence of Contamination; (vi) the protection of
endangered or threatened species; and (vii) the protection of Environmentally
Sensitive Areas. 

 

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

 

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

 

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

 

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

 

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

 

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

 

4

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

 

"Fiscal
Quarter(s)" shall mean the period(s) of January 1 through March 31, April
1 through June 30, July 1 through September 30 and October 1 through December
31 of each calendar year. 

 

"GAAP" shall mean generally accepted
accounting principles (as such principles may change from time to time) which
shall include the official interpretations thereof by the Financial Accounting
Standards Board applied on a consistent basis (except for changes in
application in which the Borrower's independent certified public accountants
concur). 

 

"Guaranty" shall mean any obligation of a
Person guaranteeing or in effect guaranteeing any liability or obligation of
any other Person in any manner, whether directly or indirectly, including any
contingent obligation or agreement to indemnify or hold harmless any other
Person, any performance bond or other suretyship arrangement and any other form
of assurance against loss, except endorsement of negotiable or other instruments
for deposit or collection in the ordinary course of business. 

 

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

 

"Hedging Obligations" shall mean, with
respect to a Loan Party, all liabilities of the Loan Party under Hedging
Contracts. 

 

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

indebtedness to any Person
of any and every kind and nature, whether primary, secondary, direct, indirect,
absolute, contingent, fixed or otherwise, heretofore, now and/or from time to
time 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 the
foregoing, Indebtedness specifically includes (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) any Trust Preferred Indebtedness, (iv) obligations to pay
the deferred purchase price of property or services, (v) all obligations under
a Capital Lease and the amount of such Indebtedness shall be the aggregate
amount 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 or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to
in clauses (i) through (vi) above; provided, however, that for the avoidance of
doubt, Indebtedness shall not include any Indebtedness arising out of clauses
(i), (ii), (iii) or (vii) of the definition of Banking Liabilities incurred in
the ordinary course of any Bank Subsidiary's business. The amount of any net
obligation with respect to any Hedging Obligation on any date shall be deemed
to be the Swap Termination Value thereof as of such date. For purposes of
calculating the Debt Service Coverage Ratio, the amount of Indebtedness arising
out 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 definition
of Indebtedness. For purposes of Section 6.02 hereof, the amount of any Hedging
Obligations shall be excluded from the definition of indebtedness. 

 

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

 

"Indemnitees" shall mean that as set forth
in Section 8.15 hereof. 

 

5 

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

 

"Law" shall mean
any 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 the
preamble hereof and its successors and assigns. 

 

"Lien" shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or
other encumbrance or security arrangement of any nature including, but not
limited to, any conditional sale or title retention arrangement, and any
assignment, 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 other
credit extended to the Borrower by the Bank in accordance with Article II
hereof. 

 

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

 

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

 

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

 

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

 

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

 

"Maturity Date" shall mean (i) with respect
to 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 forth
in Section 2.04(d) hereof. 

 

6 

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

 

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

 

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

 

"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 the
Borrower 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 other
note or notes of the Borrower executed and delivered pursuant to this
Agreement, together with all extensions, renewals, refinancings or refundings
in whole or in part, as amended, modified or supplemented from time to time. 

 

"Notices" shall mean that as set forth in
Section 8.04 hereof. 

 

"Office", when used in connection with the
Lender, shall mean its designated office located at 1111 Metropolitan Avenue,
Suite 650, Charlotte, North Carolina 28204 or such other office of the Lender
as 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 of
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic. 

 

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

 

"Permitted Liens" shall mean: (a) Liens for
taxes, 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 by
appropriate proceedings which will prevent foreclosure of such Liens, and
against which adequate cash reserves have been provided; (b) easements,
restrictions, minor title irregularities and similar matters which have no
material 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 or
statutory obligations in lieu of surety, stay or appeal bonds, or to secure
performance of contracts or bids, other than contracts for the payment of money
borrowed, or deposits required by law as a condition to the transaction of
business or other Liens or deposits of a like nature made in the ordinary
course of business; (d) Liens in favor of the Lender pursuant to the Loan Documents;
(e) Liens evidenced by conditional sales, purchase money mortgages or other
title retention agreements on, or leases with respect to, machinery and
equipment (acquired in the ordinary course of business and otherwise permitted
to be acquired hereunder) which are created at the time of the acquisition of such
property solely for the purposes of securing the Indebtedness incurred to
finance the cost of such property, provided no such Lien shall extend to any
property other than the property so acquired and identifiable proceeds; and (I)
Liens to secure, or which are granted in connection with, Banking Liabilities
of the Borrower or a Bank Subsidiary. 

7

 

"Potential
Default" shall mean any event or condition which with notice, passage of time
or determination by the Lender, or any combination of the foregoing, would
constitute an Event of Default. 

 

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

 

"Prior Loan
Documents" shall mean the Existing Loan Agreement, and any all other
related documents entered into in connection therewith, as amended, modified or
supplemented from time to time. 

 

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

 

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

 

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

 

"Revolving Credit Maturity Date" shall mean
April 30, 20 II. 

 

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

 

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

 

"Revolving Credit Note" shall mean the
Revolving Credit Note of the Borrower executed and delivered pursuant to
Section 2.0 I (b) of this Agreement, together with all extensions, renewals,
refinancings or refundings, in whole or in part, as such Revolving Credit Note
may 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 First
Bank, National Association, a wholly-owned subsidiary of the Borrower. 

 

"Stock Pledge Agreement" shall mean the
Amended and Restated Stock Pledge Agreement, dated of even date herewith, made
by the Borrower to the Lender with respect to the Shares, as amended, modified
or supplemented from time to time. 

 

8

"Subsidiary" or ~~Subsidiaries" of a Person shall mean (i) any
corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally 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 voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person's Subsidiaries, (ii) any partnership of which such Person
is a general partner or of which 50% or more of the partnership interests is at
the time directly or indirectly owned by such Person or one or more of such
Person's Subsidiaries, (iii) any limited liability company of which such Person
is a member or of which 50% or more of the limited liability company interests
is at the time directly or indirectly owned by such Person or one or more of
such Person's Subsidiaries or (iv) any corporation, trust, partnership, limited
liability company or other entity which is controlled or capable of being
controlled by such Person or one or more of such Person's Subsidiaries. 

 

"Swap Termination Value" means, in respect
of anyone or more Hedging Contracts, after taking
into account the effect of any legally enforceable netting agreement relating
to such Hedging Contracts, (a) for any date on or after the date such Hedging
Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Hedging Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Hedging Contracts (which may include the Lender or
any Affiliate of the Lender). 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

1.02 Amendment and
Restatement. This Agreement amends and restates in its entirety the
Existing Loan Agreement. All references to the "Loan Agreement"
contained in the other Loan Documents delivered in connection with the Existing
Loan Agreement or this Agreement shall, and shall be deemed to, refer to this
Agreement. Notwithstanding the amendment and restatement of the Existing Loan
Agreement by this Agreement, the Debt of the Borrower outstanding under the
Existing Loan Agreement and the other Loan Documents as of the Closing Date
shall remain outstanding and shall constitute continuing Debt without novation
and shall continue as such to be secured by such collateral, if any. Such Debt
shall in all respects be continuing and this Agreement shall not be deemed to
be 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, as
amended and restated in the form of this Agreement, shall in all respects be
continuing, securing the payment of all Debt. 

 

1.03 Construction and
Interpretation. 

 

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

 

(b) Lender's
Discretion and Consent. Whenever the Lender is granted the right herein to
act in its sole discretion or to grant or withhold consent, such right shall be
exercised in good faith and in a reasonable manner.  

 

(c) Accounting
Principles. Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall be made
and prepared in accordance with GAAP (including principals of consolidation,
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP. In the event of any change after the
date hereof in GAAP, and if such change would result in the inability to
determine compliance with the financial covenants set forth in Section 5.12
based upon the Borrower's regularly prepared financial statements by reason of
the preceding sentence, then the parties
hereto agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financial
covenants in a manner that would not affect the substance thereof, but would
allow compliance therewith to be determined in accordance with the Borrower's
financial statements at that time. 

 

ARTICLE II

 

THE CREDIT FACILITY

 

2.01 The Revolving Credit Facility Commitment. 

 

(a) Revolving Credit
Loans. Subject to the terms and conditions and relying upon the
representations and warranties set forth in this Agreement, the Notes and the
other Loan Documents, the Lender agrees to make loans (each, a "Revolving
Credit Loan" and, collectively, the "Revolving Credit Loans") to
the Borrower at any time and from time to time on or after the Closing Date and
to and including the Business Day immediately preceding the Revolving Credit
Maturity Date, in an aggregate principal amount not exceeding at any time
outstanding the lesser of (i) $4,000,000.00 and (ii) the Borrowing Availability
Amount. Within the limits of time and amounts set forth in this Section 2.01,
and subject to the other provisions of this Agreement including, without
limitation, the Lender's right to demand repayment of the Revolving Credit
Loans upon the occurrence of an Event of Default, the Borrower may borrow,
repay and reborrow under this Section 2.0 I.  

10

 

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

 

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

 

(d) Maximum Principal
Balance of all Revolving Credit Loans. The sum of the aggregate principal
amount of all Revolving Credit Loans shall not exceed $4,000,000.00. The
Borrower agrees that if at any time the sum of the aggregate principal amount
of all Revolving Credit Loans outstanding exceeds lesser of (i) $4,000,000.00
and (ii) the Borrowing Availability Amount (the "Excess Amount"), the
Borrower shall promptly (but in any event within five (5) Business Days after
the date of such occurrence) pay to the Lender such Excess Amount. If not
sooner paid, the entire balance of all outstanding Revolving Credit Loans,
together with all unpaid accrued interest thereon, and all other sums and costs
owed to the Lender by the Borrower with respect to the Revolving Credit Loans
shall 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 and
warranties set forth in this Agreement, the Notes and the other Loan Documents,
the Lender agrees to make a term loan (the "Term Loan") to the
Borrower on the Closing Date in the original principal amount of$5,000,000.00.
 

 

(b) Nature of the
Loan. Upon repayment of any amount of principal or interest on the Term
Loan 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 Term
Loan made to the Borrower by the Lender and to pay interest on the unpaid
principal amount thereof shall be evidenced by the Term Note of the Borrower,
dated the Closing Date, which shall be in form and substance satisfactory to
the Lender. The executed Term Note shall be delivered by the Borrower to the
Lender on the Closing Date.  

 

11

 

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

2.03 Interest Rates.

 

(a) Interest on the
Loans. Subject to the terms and conditions of this Agreement, the aggregate
outstanding principal balance of all Loans shall bear interest for each day at
a 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 each
Fiscal Quarter, in arrears, commencing on July 1,2009, and on the first
(I") day of each successive Fiscal Quarter thereafter to and including the
Maturity Date. After maturity of the Loans (whether upon the occurrence of an
Event of Default, by acceleration or otherwise) interest on such part of the
Loans shall be immediately due and payable without notice, presentment or
demand. If not sooner paid, the entire principal balance of all outstanding
Loans, all unpaid interest accrued thereon and all other sums and costs owed to
the Lender by the Borrower pursuant to the Loans shall be immediately due and
payable on the Maturity Date, without notice, presentment or demand of any
kind.  

 

(c) Calculation of
Interest and Fees: Adjustment to Prime Rate. Interest on the Loans, unpaid
fees and other sums payable hereunder shall be computed on the basis of a year
of three hundred sixty (360) days and paid for the actual number of days
elapsed. In the event of any change in the Prime Rate, the rate of interest
applicable to each Loan shall be adjusted effective the next calendar day to
correspond with such change; except any interest rate charged hereunder shall
not exceed the Maximum Rate. 

 

(d) Interest After Maturity or Default: Interest
Laws. Upon the occurrence and during the continuance of an Event of
Default, the unpaid principal amount of the Loans or any portion thereof,
accrued interest thereon, any fees or any other sums payable hereunder shall
thereafter until paid in full bear interest at a rate per annum equal to the
Applicable Rate plus four percent (4.00%). Notwithstanding any provisions to the contrary contained in this
Agreement or any other Loan Document, the Borrower shall not be required to
pay, and the Lender shall not be permitted to collect, any amount of interest
in excess of the maximum amount of interest permitted by applicable Law
("Excess Interest"). If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been provided for in
this Agreement or in any other Loan Document, then, in such event: (I) the
provisions of this subsection shall govern and control; (2) the Borrower shall
not be obligated to pay any Excess Interest; (3) any Excess Interest that the
Lender may have received hereunder shall be, at the Lender's option, (a)
applied as a credit against the outstanding principal balance of the Debt or
accrued 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 the
maximum lawful rate allowed from time to time under applicable Law (the
"Maximum Rate"), and this Agreement and the other Loan Documents
shall be deemed to have been and shall be, reformed and modified to reflect
such reduction; and (5) the Borrower shall have no action against the Lender
for any damages arising out of the payment or collection of any Excess
Interest. 

 

2.04 Late Charge. Upon the occurrence of an
Event of Default with respect to the payment of any installment of interest or
principal on the Notes which continues for more than fifteen (\5) days after
the said installment becomes due, in addition to making payment of the
installment due and any interest thereon at the interest rates provided in
Section 2.03( d) hereof, the Borrower shall pay to the Lender upon demand a
late charge in an amount equal to four percent (4.0%) of any such overdue
installment. 

 

2.05 [Reserved.] 

 

12

2.06 Payments. All payments to be made in
respect of principal, interest, fees or other amounts due from the Borrower
under 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, protest
or notice of any kind, all of which are expressly waived, and an action for the
payments will accrue immediately. All such payments must be made to the Lender
at its Office in U.S. Dollars and in funds immediately available at such
Office, without setoff, counterclaim or other deduction of any nature. The
Lender may in its discretion deduct such payments from the Borrower's demand or
deposit accounts with the Lender on the due date. All such payments shall be
applied at the option of the Lender to accrued and unpaid interest, outstanding
principal 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 absolutely
net of, without deduction or offset, and altogether free and clear of any and
all present and future taxes, levies, deductions, charges and withholdings and
all liabilities with respect thereto, excluding income and franchise taxes
imposed on the Lender under the Laws of the United States or any state or
political subdivision thereof. If the Borrower is compelled by Law to deduct
any such taxes or levies (other than such excluded taxes) or to make any such
other deductions, charges, or withholdings (collectively, the "Required
Deductions"), the Borrower will pay to the Lender an additional amount
equal to the sum of (i) the aggregate amount of all Required Deductions and
(ii) the aggregate amount of United States, federal or state income taxes
required to be paid by the Lender in respect of the Required Deductions. 

 

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

 

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

 

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

 

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

commitment
to make Loans under this Agreement, 

 

13

 

and the result of any of the foregoing is to
materially increase the costs of the Lender, reduce the income receivable by or
return on equity of the Lender or impose any material expense upon the Lender
with 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 pay
the 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 such
increase in cost, reduction in income, reduced 
return
on equity or additional expense. Such statement shall set forth a brief
explanation of the amount and the Lender's calculation of the amount, which
statement shall be conclusively deemed correct absent manifest error. If the
amount set forth in such statement is not paid within ten (l0) days after such
presentation of such statement, interest will be payable on the unpaid amount
at 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 and
maintain in its books and records, including computer records, in accordance
with its customary procedures, a loan account (the "Loan Account”) in the
name of the Borrower in which shall be recorded the date and amount of each
Loan made by the Lender and the date and amount of each payment and prepayment
in respect thereof. The Lender shall record in the Loan Account the principal
amount of the Loans owing to the Lender from time to time. Except in the case
of manifest error in computation, the Loan Account will be conclusive and binding
on 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 the
obligations of the Borrower to the Lender with respect to the Loans. 

 

2.09 Optional Prepayments. The Borrower shall
have the right, at its option, to prepay the Loan in whole or in part without
penalty or premium; provided, however, the Borrower shall pay to the Lender all
interest accrued on the outstanding principal balance of the Loan to the date of
such prepayment and all other fees, costs and charges required to be paid by
the Borrower to and for the benefit of the Lender. 

 

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

 

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

 

ARTICLE III 

 

REPRESENTATIONS AND WARRANTIES 

 

The Borrower, on behalf of itself and each of its
Subsidiaries including all Loan Parties, represents and warrants to the Lender
that: 

 

3.01 Organization and Qualification. Each Loan
Party is a corporation duly organized and validly subsisting under the Laws of
its state of incorporation. Each Loan Party is duly qualified or licensed to do
business as a foreign corporation and is in good standing in all jurisdictions
in which the ownership of its properties or the nature of its activities or
both makes such qualification or licensing necessary except to the extent that
the failure to be so qualified or licensed would not have a Material Adverse
Effect. 

 

3.02 Authority; Power to Carry on Business;
Licenses. The Borrower has the power and authority to make the borrowings
provided for herein, to execute and deliver the Notes in evidence of such
borrowings and to grant and convey any security interests contemplated under
the Stock Pledge Agreement and the other Loan Documents to which it is a party
and all such action has been duly and validly authorized by all necessary
corporate proceedings on the Borrower's part. Each Loan Party and each of its
Subsidiaries has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted and as presently
planned to be conducted. Each Loan Party and each of its Subsidiaries has all
licenses, permits, consents and governmental approvals or authorizations
necessary to carry on its business as now conducted. 

 

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

 

3.04 Absence of Conflicts. Neither the
execution and delivery of this Agreement, the Notes or the other Loan
Documents, 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 default
under the articles of incorporation or bylaws of any Loan Party, (c) conflict
with or result in a breach of or a default under any material agreement or
instrument to which any Loan Party or any Subsidiary of a Loan Party is a party
or 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 Lien
upon any property (owned or leased) of any Loan Party or any Subsidiary of any
Loan Party (other than Permitted Liens). 

 

14

 3.05 Authorizations and Filings. No
authorization, consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing with, any Official Body that has not been obtained or made
is or will be necessary or advisable in connection with the execution and
delivery of this Agreement or the other Loan Documents, the consummation ofthe
transactions contemplated herein or therein, or the performance of or
compliance with the terms and conditions hereof or thereof. 

 

3.06 Ownership and Control. The Borrower owns
all of the Shares. The outstanding shares of capital stock of the Borrower and
each of its Subsidiaries have been duly authorized and validly issued and are
fully paid and nonassessable. 

 

3.07 Title to Property. Each Loan Party and
each Subsidiary of a Loan Party has good and marketable title in fee simple (or
other good title) to all Property purported to be owned by it. Each Loan Party
and each Subsidiary of a Loan Party has good and marketable title to all other
property (whether personal, intangible, mixed of otherwise) purported to be
owned by it, including that reflected in the most recent financial information
referred to in Section 3.08 hereof or submitted to the Lender pursuant to Section
5.01 of this Agreement (except as sold or otherwise disposed of in the ordinary
course of business), subject only to Permitted Liens. 

 

3.08 Financial Information. The financial
information provided by the Loan Parties to the Lender as of the Closing Date
is accurate and complete and has been prepared in accordance with GAAP
consistently applied. Each Loan Party has made full and true disclosure of all
pertinent financial and other material information in connection with the
transactions contemplated hereby. 

 

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

 

3.10 Taxes. All tax returns required to be
filed by the Loan Parties and their Subsidiaries have been properly prepared,
executed and filed. All taxes, assessments, fees and other governmental charges
upon the Loan Parties and their Subsidiaries or upon any of their properties,
income, sales or franchises which are due and payable have been paid. The
reserves and provisions for taxes on the books of each Loan Party and each of
its subsidiaries are adequate for all open years and for its current fiscal
period in all material respects. No Loan Party knows of any proposed additional
assessment or basis for any assessment for additional taxes (whether or not
reserved against). 

 

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

 

3.12 Litigation; Investigations. There is no
pending, contemplated or, to the Loan Parties' knowledge, threatened action,
suit or proceeding by or before any Official Body against or affecting a Loan
Party or any of its Subsidiaries which, if adversely decided, would have a
Material Adverse Effect. Neither the Borrower nor any Bank Subsidiary is (i) to
the Borrower's knowledge, under investigation by any Official Body or (ii)
operating under any formal or informal restrictions or understandings imposed
by or agreed to in connection with any Official Body. 

 

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

 

15

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

 

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

 

3.16 Environmental Matters. The business of the
Borrower and each of its Subsidiaries has been operated in full compliance with
all Environmental Laws and neither the Borrower nor any Subsidiary is subject
to any Environmental Liability relating to the conduct of its business or the
ownership of its Property and no facts or circumstances exist which could give
rise to such Environmental Liabilities. No notice has been served on the
Borrower or any Subsidiary claiming any violation of Environmental Laws,
asserting Environmental Liability or demanding payment or contribution for
Environmental Liability or violation of Environmental Laws. 

 

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

 

3.18 Federal Reserve Regulations. The Borrower
and its Subsidiaries will not, directly or indirectly use any proceeds of the
Loan to; (a) purchase or carry any "margin stock" within the meaning
of Regulation U of the Federal Reserve (12 C.F.R. 221, as amended); (b) extend
credit to other Persons for any such purpose or refund indebtedness originally
incurred for any such purpose, except in compliance with all Laws; or (c)
otherwise take or permit any action which would involve a violation of Section
7 of the Securities Exchange Act of 1934, as amended, or any regulation of the
Federal Reserve. 

 

3.19 No Event of Default: Compliance with
Agreements. No event has occurred and is continuing and no condition exists
which constitutes an Event of Default or Potential Default. No Loan Party nor
any Subsidiary of a Loan Party is (i) in violation of any term of its articles
of incorporation or bylaws; or (ii) in default under any agreement, lease or
instrument 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 date
of 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 interests
in the Shares pledged to the Lender pursuant to the Stock Pledge Agreement
constitute and will continue to constitute perfected security interests under
the UCC (or other applicable Law) entitled to all of the rights, benefits and priorities
provided by the UCC (or other applicable Law). All such action as is necessary
or advisable to establish such rights of the Lender has been taken or will be
taken at or prior to the time required for such purpose and there will be upon
execution and delivery of the Loan Documents no necessity of any further action
in order to preserve, protect and continue such rights except the filing of
continuation statements and continued possession or control by the Lender of
the 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 be
paid by the Borrower and the Lender shall be reimbursed by the Borrower for any
such fees and expenses incurred by the Lender. 

 

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

 

16

 

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) will
have funds and capital sufficient to carry on its business and all businesses
in which it is about to engage, and (iii) will own property having a value at
both fair valuation and at fair saleable value in the ordinary course of its
business 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 and
no Loan Party will be rendered insolvent by the execution and delivery of this
Agreement, the borrowing hereunder and/or the consummation of any transactions
contemplated by this Agreement or any of the other Loan Documents. 

 

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

 

3.25 Regulatory Reporting. The Borrower and its
Subsidiaries have filed all reports, notices and other statements, together
with any amendments required to be made with respect thereto, if any, that they
were each required to file with the Federal Reserve and the South Carolina
State Board of Financial Institutions and any other Official Body with
jurisdiction over the Borrower or its Subsidiaries and each of such reports,
notices and other statements, including the financial statements, exhibits and
schedules thereto, complied in all material respects with the relevant
statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they were filed. Each Bank Subsidiary has complied in all
material respects with all laws and regulations relating to the extension of
credit. 

 

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

(including
by omission of any information necessary to make such representation, warranty
or statement 

not
misleading). No Loan Party is aware of any facts which have not been disclosed
to the Lender in writing by or on behalf of a Loan Party which would have a
Material Adverse Effect. The representations and warranties set forth herein
are to survive the delivery of the Loan Documents and the making of the Loans
hereunder. 

 

ARTICLE IV 

 

CONDITIONS OF LENDING 

 

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

 

4.01 Representations and Warranties: Events of
Default and Potential Defaults. The representations and warranties contained in
Article IJJ shall be true and correct in all material respects on and as of the
date of each Loan, except for purposes of this Section 4.0 I, after the Closing
Date the representations and warranties contained in Section 3.08 shall be
deemed to refer to the most recent financial statements furnished pursuant to
Section 5.01. On the date of any Loan, no Event of Default and no Potential
Default shall have occurred and be continuing or exist or shall occur or exist
after giving effect to the Loan to be made on such date. Each request by the
Borrower for any Loan shall constitute a representation and warranty by the
Borrower that the conditions set forth in this Section 4.01 have been satisfied
as of the date of such request. The failure of the Lender to receive notice
from the Borrower to the contrary before such Loan is made shall constitute a
further representation and warranty by the Borrower that the conditions
referred to in this Section 4.01 have been satisfied as of the date such Loan
is made. 

 

17

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

 

4.03 Other Documents and Conditions. On or
before the Closing Date, the following documents and conditions shall have been
delivered 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 such
equivalent formation documents) of each of the Loan Parties since the date
previously delivered to the Lender certified by the appropriate governing body
of such parties' jurisdiction of incorporation. A copy of any and all
amendments to the bylaws (or such equivalent governing document) of each of the
Loan 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 the
appropriate governing body of such party's jurisdiction of incorporation and
the Secretary of State of each jurisdiction in which such Loan Party is qualified
to do business as a foreign corporation, if any.  

 

(c) Regulatory Certificate. A
Regulatory Certificate from the Federal Reserve indicating that the Borrower is
a registered bank holding company that was duly organized and registered and
has filed all reports required by the Federal Reserve.  

 

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

 

the
Borrower, certifying as to (i) true copies of any and all amendments to the
articles of incorporation and bylaws of the Borrower or, if none, no amendments
having been made to the articles of incorporation and bylaws of the Borrower
since the date previously delivered to the Lender, (ii) the resolutions of the
Board of Directors of the Borrower authorizing the execution and delivery of
this Agreement and the other Loan Documents to which the Borrower is a party
and (iii) the names, true signatures and incumbency of the officers of the Borrower
authorized to execute and deliver the Loan Documents. 

 

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

 

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

 

(g) Closing Date Compliance
Certificate. A duly completed compliance certificate signed by the
appropriate officer of the Borrower dated as of the Closing Date demonstrating
compliance 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 most
recent financial statements delivered to the Lender.  

 

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

 

18

 4.04 Details Proceedings and Documents. All
legal details and proceedings in connection with the transactions contemplated
by this Agreement shall be satisfactory to the Lender and the Lender shall have
received all such counterpart originals or certified or other copies of such documents
and proceedings in connection with such transactions, in form and substance
satisfactory to the Lender, as the Lender may request from time to time. 

 

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

 

ARTICLE V 

 

AFFIRMATIVE COVENANTS 

 

The Borrower covenants and agrees with the Lender, on
behalf of itself and its Subsidiaries and all Loan Parties and their
Subsidiaries, as follows; 

 

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

 

(a) Annual Audited Reports. As soon as
practicable, and in any event within ninety (90) days after the close of each
fiscal year of the Borrower, the Borrower shall furnish to the Lender
consolidated audited statements of income, retained earnings and cash flow for
the Borrower and its Subsidiaries for such fiscal year and a consolidated audited
and consolidating balance sheet for the Borrower and its Subsidiaries as of the
close of such fiscal year, and notes to each, all in reasonable detail, setting
forth in comparative form the corresponding figures for the preceding fiscal
year, prepared in accordance with GAAP applied on a basis consistent with that
of the preceding fiscal year (except for changes in application in which such
accountants concur), with such statements and balance sheet to be certified by
an independent certified public accounting firm selected by the Borrower and
acceptable to the Lender. The report of such accountants shall be free of
exception or qualifications not acceptable to the Lender and shall in any event
contain a written statement of such accountants substantially to the effect
that such accountants examined such statements and balance sheet in accordance
with generally accepted auditing standards. 

 

(b) Quarterly Reports of the
Borrower. 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 consolidating
statements of income, retained earnings and cash flow for the Borrower and its
Subsidiaries for such Fiscal Quarter and for the portion of the fiscal year to
the end of such Fiscal Quarter, and a consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as of the close of such Fiscal
Quarter, all in reasonable detail. All such income statements and balance
sheets shall be prepared by the Borrower and certified by the appropriate
officer of the Borrower as presenting fairly the financial position of the
Borrower and its Subsidiaries as of the end of such Fiscal Quarter and the
results of its operations for such periods, in conformity with GAAP applied in
a manner consistent with that of the most recent consolidated audited financial
statements furnished to the Lender.  

 

(c) Annual and Quarterly
Compliance Certificate and Borrowing Availability Certificate. The
consolidated income statements and balance sheets of the Borrower and its
Subsidiaries delivered pursuant to Sections 5.01(a) and 5.01(b) of this
Agreement shall be accompanied by (i) a compliance certificate, which shall be
in form and substance satisfactory to the Lender, executed by the appropriate
officer of the Borrower, stating that no Event of Default or Potential Default
exists and that the Borrower is in compliance with all applicable covenants
contained in this Agreement and (ii) a Borrowing Availability Certificate,
which shall be in form and substance satisfactory to the Lender, executed by
the appropriate officer of the Borrower. Such certificates shall include all
figures necessary to calculate the Borrower's compliance with all financial
covenants set forth in this Agreement. If an Event of Default or Potential
Default has occurred and is continuing or exists, such certificate shall specify
in detail the nature and period of existence of the Event of Default or
Potential Default and any action taken or contemplated to be taken by the
Borrower with respect thereto.  

 

19

(d) Reports to Governmental
Agencies. Promptly after the same are available (but in any event no later
than sixty (60) days of the filing thereof), copies of (i) each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Borrower, (ii) all annual, regular, periodic and special
reports and registration statements which the Borrower may file or be required
to file with the Securities and Exchange Commission under Section 13 or 15( d)
of the Securities Exchange Act of 1934, or with any national securities
exchange and (iii) all such financial reports, statements and returns that any
Loan Party has filed with any other Official Body, and in any case not
otherwise required to be delivered to the Lender pursuant hereto. Documents
required to be delivered pursuant to this Section (to the extent any such
documents are included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date on which the Borrower posts such documents, or provides a link thereto
on the Borrower's website on the Internet.  

 

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

 

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

 

(g) Interim Reports. Within
thirty (30) days after the request of the Lender, the Borrower shall deliver to
the Lender such consolidated interim income statements, balance sheets and/or
financial statements as the Lender shall reasonably deem necessary, all
prepared in accordance with GAAP and certified by the Borrower to be true and
correct.  

 

(h) Audit Reports. Promptly upon receipt
thereof, the Borrower will deliver to the Lender a copy of each other report
submitted to the Borrower by independent accountants, including comment or
management letters, in connection with any annual, interim or special audit
report made by them of the books of the Borrower. 

 

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

 

(j) Notice of Event of Default. Promptly upon
becoming aware of an Event of Default or Potential Default, the Borrower will
give the Lender notice of the Event of Default or Potential Default, together
with a written statement signed on behalf of the Borrower setting forth the
details of the Event of Default or Potential Default and any action taken or
contemplated to be taken by the Borrower with respect thereto. 

 

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

 

20

 

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

 

(m) Further Information. The Borrower will
promptly furnish to the Lender such other information, and in such form, as the
Lender 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 a
corporation and its rights and franchises in full force and effect in the state
of its incorporation. No Loan Party nor any Subsidiaries of a Loan Party shall
change its jurisdiction of incorporation without the prior written consent of
the Lender and each Loan Party and each of its Subsidiaries will qualify and
remain qualified as a foreign corporation in each jurisdiction in which the
failure to receive or retain such qualification would have a Material Adverse
Effect. 

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

 

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

 

5.05 Payment of Liabilities. The Loan Parties
will, 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 upon
them or any of their properties or income, sales or franchises; 

 

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

 

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

 

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

 

21 

 

5.06 Financial Accounting Practices; Loan Loss
Reserves. 

 

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

(b) Loan Loss Reserves. Each Bank Subsidiary
shall maintain a reserve for possible loan losses which is adequate in all
respects to provide for possible or specific losses, net of recoveries relating
to loans previously charged off, on loans outstanding and which contains an
additional amount of unallocated reserves for unanticipated future losses at a
level consistent with administrative policies approved by the Board of
Directors of such Bank Subsidiary. 

 

5.07 Compliance with Laws. Each Loan Party and
each Subsidiary of a Loan Party shall comply in all material respects with all
applicable Laws. 

 

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

 

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

 

5.10 Environmental Compliance. The Borrower and
each of its Subsidiaries shall: 

 

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

 

(b) Notify the Lender promptly upon
obtaining knowledge that (i) any Property previously or presently owned or
operated is the subject of an environmental investigation by any Official Body
having jurisdiction over the enforcement of Environmental Laws, (ii) the
Borrower or any of its Subsidiaries has been named as a responsible party
subject to Environmental Liability, or (iii) the Borrower obtains knowledge of
any Hazardous Substance located on any Property except in compliance with all
Laws.  

 

(c) At any reasonable time following
the occurrence of an Event of Default and following reasonable notice, and as
often as may be reasonably desired, permit the Lender or an independent
consultant selected by the Lender to conduct an environmental investigation
satisfactory to the Lender for the purpose of determining whether the Borrower,
each Subsidiary and its Property comply with Environmental Laws and whether
there exists any condition or circumstance which may require a cleanup, removal
or other remedial action by the Borrower or a Subsidiary with respect to any
Hazardous Substance. The Borrower and its Subsidiaries shall facilitate such
environmental audit. The Lender shall provide the Borrower, at the Borrower's
request, with all reports and findings but the Borrower may not rely on such
environmental investigation for any purpose. Any such environmental
investigation of Property shall be at the Borrower's expense at any time
following an Event of Default; provided, however, that the Lender's
environmental investigation shall not be at the Borrower's expense if (i) a
Official Body or a firm or firms of geotechnical engineers and/or environmental
consultants hired by the Borrower and reasonably acceptable to the Lender shall
undertake to make an environmental audit, and (ii) the Borrower shall provide
the Lender at the Borrower's expense with, and the Lender shall be  entitled to rely on, all reports and findings of such
Official Body or geotechnical engineers as soon as such reports and findings
are made available to the Borrower. 

 

22

 Notwithstanding
the foregoing, nothing contained in this Agreement, or in the other Loan
Documents, or in the enforcement of this Agreement or the other Loan Documents,
shall constitute or be construed as granting or providing the right, power or
capacity to the Lender to exercise (a) decision making control of the
Borrower'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 the
operational aspects of the Borrower or any Subsidiary. 

 

5.11 Further Assurances. The Borrower, at its
own cost and expense, will cause to be promptly
and duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as the Lender may reasonably request from time to time
in order to carry out the intent and purposes of this Agreement more
effectively and the transactions contemplated by this Agreement and to cause
the Liens granted under the Stock Pledge Agreement or any other Loan Document
to be, at all times, valid, perfected and enforceable against each Loan Party a
party thereto and all third parties. All expenses of such filings and
recordings, and refilings and rerecordings, shall be borne by the Borrower. 

 

5.12 Financial Covenants. The following
financial covenants with respect to the Borrower and its Subsidiaries on a
consolidated basis shall apply: 

 

(a) Non-Performing Assets Ratio. The
Borrower and its Subsidiaries shall maintain a Non-Performing Assets Ratio not
to exceed (a) as of June 30, 2009 and September 30, 2009, 3.00%, (b) as of
December 31, 2009 and March 31, 2010, 2.75% and (c) as of the end of each
fiscal quarter thereafter, 2.50%.  

 

(b) Debt Service Coverage Ratio. As
of June 30, 2009 and as of the end of each Fiscal Quarter thereafter, the
Borrower and its Subsidiaries shall maintain a Debt Service Coverage Ratio of
not less than 1.00 to 1.00.  

 

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

 

(d) Debt to Worth Ratio. As of June
30, 2009 and as of the end of each fiscal quarter thereafter, Borrower shall
maintain a Debt to Worth Ratio of not more than 0.38 to 1.00.  

 

(e) Tier I Core Leverage Ratio. As of June 30, 2009
and as of the end of each Fiscal Quarter thereafter, the Borrower shall
maintain a Tier 1 Core Leverage Ratio not less than the greater of (i) six
percent (6%) and (ii) such percentage as is necessary to be "adequately
capitalized". As of June 30, 2009 and as of the end of each Fiscal Quarter
thereafter, each Bank Subsidiary shall maintain a Tier 1 Core Leverage Ratio
not less the greater of (i) seven percent (7%) and (ii) such percentage as is necessary
to be "well capitalized". In each case, "Tier 1 Core Leverage
Ratio", "adequately capitalized" and "well
capitalized" shall be determined in accordance with the applicable Laws
established by the Federal Reserve any other applicable Official Body having
supervisory authority over the Borrower or any of its Bank Subsidiaries (as
applicable), 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 shall
maintain a Total Risk Based Capital Ratio not less than the greater of(i) nine
percent (9%) and (ii) such percentage as is necessary to be "adequately
capitalized". As of June 30, 2009 and as of the end of each Fiscal Quarter
thereafter, each Bank Subsidiary shall maintain a Total Risk Based Capital
Ratio not less than the greater of (i) ten percent (10%) and (ii) such percentage
as is necessary to be "well capitalized". In each case, "Total
Risk Based Capital Ratio", "adequately capitalized" and
"well capitalized" shall be determined in accordance with the
applicable Laws established by the Federal Reserve or any other applicable
Official Body having supervisory authority over the Borrower or any of its Bank
Subsidiaries (as applicable), as may be amended or revised from time to time. 

 

23

ARTICLE VI 

 

NEGATIVE COVENANTS 

 

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

 

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

 

6.02 Indebtedness. No Loan Party nor any
Subsidiary of a Loan Party shall at any time, create, incur, assume or suffer
to exist any Indebtedness, except: (a) Indebtedness existing on the date hereof
in the aggregate amount of $12,000,000.00 arising out of borrowings similar to
Indebtedness to any Federal Home Loan Bank, provided that such Indebtedness
shall not be renewed, extended or increased without the prior written consent
of the Lender (not be unreasonably withheld); (b) Indebtedness under this Agreement,
the Note or any other Loan Document or any other document, instrument or
agreement between a Loan Party and the Lender; (c) current accounts payable,
accrued expenses and other expenses arising out of transactions (other than
borrowing) in the ordinary course of business; (d) Trust Preferred Indebtedness
existing on the Closing Date; (e) overnight borrowings in the ordinary course
of business by any Bank Subsidiary; (I) Indebtedness of any Loan Party to
another 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 Bank
incurred 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 any
time outstanding. 

 

6.03 Loans and Investments. No Loan Party nor
any Subsidiary of Loan Party shall, at any time, make or suffer to remain
outstanding 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 interest
in, 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 that
comply with all Laws applicable to such Loan Party; and (b) advances and loans
to Loan Parties. Nothing in this Section 6.03 shall prohibit any Bank
Subsidiary from making loans, advances or other extensions of credit in the
ordinary course of its banking business upon substantially the same terms as
may at the time be customary in the banking business, which loans, advances, or
other extensions of credit may (but need not) be secured by capital stock or
other security of any third party. Furthermore, nothing in this Section 6.03
shall prohibit any Bank Subsidiary from acquiring capital stock or other
security from any third party by foreclosure or otherwise, provided such
capital stock or other security is acquired in the ordinary course of such Bank
Subsidiary's banking business when collecting a debt previously contracted in
good faith. 

 

6.04 Distributions. No Loan Party, nor any
Subsidiary of a Loan Party, will declare, make, pay or agree, become or remain
liable 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 of
capital stock of any Loan Party or Subsidiary of any Loan Party or on account
of the purchase, redemption, retirement or acquisition of any shares of capital
stock (or warrants, options or rights for any such share) of any Loan Party or
Subsidiary of any Loan Party, except for (i) Distributions made by any Bank
Subsidiary to the Borrower and (ii) so long as no Event of Default exists and
no Event of Default would occur as a result thereof, Distributions made by the
Borrower to its shareholders which are consistent with past practices or which
are consistent with Distributions made by similarly situated financial
institutions. 

 

24

6.05 Affiliate Transactions. No Loan Party nor
any Subsidiary of a Loan Party shall enter into or carry out any transaction
(including, without limitation, purchasing property or services from or selling
property or services to) with any Affiliate that would (i) violate Section 23A
or 23B of the Federal Reserve Act, as amended, or Regulations 0 or W or any
other regulation promulgated thereunder, (ii) violate any other applicable Law
or (iii) not be in the ordinary course of and pursuant to the reasonable requirements
of such Loan Party's or Subsidiary's business and upon fair and reasonable
terms and are no less favorable to such Loan Party or Subsidiary than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
of such Loan Party or Subsidiary. 

 

6.06 Disposition of Assets. No Loan Party nor
any 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 or
assets are replaced by replacement properties or assets used for similar or
related purposes and (iii) other dispositions of properties or assets in the
ordinary course of business which are not, individually or in the aggregate,
material to the operation of such Person's business), abandon or otherwise
transfer or dispose of, voluntarily or involuntarily (any of the foregoing
being referred to in this Section 6.06 as a transaction and any set of related
transactions constituting but a single transaction) any of its properties or
assets whether tangible or intangible (including, but not limited to, the
Shares or any other shares of capital stock of such Loan Party or Subsidiary of
such 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 merge
with or into or consolidate with any other Person without the prior written
consent of the Lender (not to be unreasonably withheld). No Loan Party nor any
Subsidiary of a Loan Party shall acquire any material portion of the stock,
other equity interests or assets or business of any other Person without the
prior written consent of the Lender (not to be unreasonably withheld). 

 

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

 

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

 

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

 

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

 

ARTICLE VII 

 

DEFAULTS 

 

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

 

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

 

25

 
(b) The Borrower shall fail to pay
interest on the Loans or any other fee or other amount payable pursuant to this
Agreement, the Notes, the Stock Pledge Agreement or any of the other Loan
Documents within five (5) days of the date due; or  

 

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

 

(d) The Borrower fails to perform or
observe 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 the
performance or observance of any other covenant, agreement or duty under this
Agreement, the Notes or any other Loan Document (not constituting an Event of
Default under any other provision of this Section 7.01) and such failure
continues for thirty (30) days; or  

 

(f) The Lender's security interest
under the Stock Pledge Agreement or any of the other Loan Documents is or shall
become unperfected; or  

 

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

 

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

 

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

 

(j) The Lender shall have reasonably determined in
good faith (which determination shall be conclusive) that a Material Adverse
Change has occurred or that the prospect of payment or performance of any
covenant, agreement or duty under this Agreement, the Notes or the other Loan
Documents is impaired or that the Lender is insecure; or 

 

(k) (i) the FDIC, the Federal Reserve
Board, the Office of Thrift Supervision, the Office of the Comptroller of
Currency, the South Carolina State Board of Financial Institutions or any other
state or federal regulatory entity having or claiming jurisdiction over the
Borrower or any Subsidiary shall (a) issue any formal or informal material
order or directive involving activities deemed unsafe or unsound by the
Borrower or any Bank Subsidiary, (b) issue a Memorandum of Understanding,
capital maintenance agreement or cease and desist order involving the Borrower
or any Subsidiary, or (c) cause the suspension or removal of the Chief
Executive Officer or any Executive Vice President of the Borrower or the Chief
Executive Officer of any Bank Subsidiary, or (ii) the FDIC shall terminate its
insurance 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 Bank
Subsidiaries; or  

26

 

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

 

(i) seeking to have an order for relief
entered in respect of such Loan Party, or seeking a declaration or entailing a
finding that such Loan Party or Subsidiary is insolvent  or a similar declaration or finding, or seeking
dissolution, winding-up, charter revocation or forfeiture, liquidation,
reorganization, arrangement, adjustment, composition or other similar relief
with respect to such Loan Party or
Subsidiary, its assets or debts under any Law relating to bankruptcy,
insolvency, relief of debtors or protection of creditors, termination of legal
entities or any other similar Law now or hereinafter in effect which shall not
have been dismissed or stayed within thirty (30) days after such proceedings
were instituted; or 

 

(ii) seeking appointment of a receiver, trustee,
custodian, liquidator, assignee, sequestrator or other similar official for a
Loan Party or Subsidiary of a Loan Party or for all or any substantial part of
its 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 Party
shall become insolvent; shall become generally unable to pay its debts as they
become due; shall voluntarily suspend transaction of its business; shall make a
general assignment for the benefit of creditors; shall institute a proceeding
described in Section 7.01 (m)(i) of this Agreement or shall consent to any
order for relief, declaration, finding or relief described in Section 7.01
(m)(i) of this Agreement; shall institute a proceeding described in Section
7.01(m)(ii) of this Agreement or shall consent to the appointment or to the
taking of possession by any such official of all or any substantial part of its
property whether or not any proceeding is instituted; shall dissolve, wind-up
or liquidate itself or any substantial part of its property; or shall take any
action in furtherance of any of the foregoing. 

 

7.02 Consequences of an Event of Default. If an
Event of Default specified in subsections (a) through (I) of Section 7.01 of
this Agreement occurs and continues or exists, the Lender will be under no
further obligation to make Loans and may at its option demand the unpaid
principal amount of the Notes, interest accrued on the unpaid principal amount
thereof and all other amounts owing by the Borrower under this Agreement, the
Notes and the other Loan Documents to be immediately due and payable without
presentment, protest or further demand or notice of any kind, all of which are
expressly 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 unpaid
principal amount of the Notes, interest accrued thereon and all other amounts
owing by the Borrower under this Agreement, the Notes and the other Loan
Documents shall automatically become immediately due and payable without
presentment, demand, protest or notice of any kind, all of which are expressly
waived, and an action for any amounts due shall accrue immediately. 

 

27

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

 

7.04 Other Remedies. The remedies in this
Article 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 Lender
may be entitled. 

 

ARTICLE VIII 

 

MISCELLANEOUS 

 

8.01 Business Days. Except as otherwise
provided in this Agreement, whenever any payment or action to be made or taken
under this Agreement, or under the Notes or under any of the other Loan
Documents is stated to be due on a day which is not a Business Day, such
payment or action will be made or taken on the next following Business Day and
such 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 the
Borrower may from time to time enter into agreements amending, modifying or
supplementing this Agreement, the Notes or any other Loan Document or changing
the rights of the Lender or of the Borrower under this Agreement, under the
Notes or under any other Loan Document and the Lender may from time to time
grant waivers or consent to a departure from the due performance of the
obligations of the Borrower under this Agreement, under the Notes or under any
other Loan Document. Any such agreement, waiver or consent must be in writing and
will be effective only to the extent specifically set forth in such writing. In
the case of any such waiver or consent relating to any provision of this
Agreement, any Event of Default or Potential Default so waived or consented to
will be deemed to be cured and not continuing, but no such waiver or consent
will extend to any other or subsequent Event of Default or Potential Default or
impair any right consequent thereto. 

 

8.03 No Implied Waiver: Cumulative Remedies. No
course of dealing and no delay or failure of the Lender in exercising any
right, power or privilege under this Agreement, the Notes or any other Loan
Document will affect any other or future exercise of any such right, power or
privilege or exercise of any other right, power or privilege except as and to
the extent that the assertion of any such right, power or privilege shall be
barred by an applicable statute of limitations; nor shall any single or partial
exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude
any 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 any
rights or remedies that the Lender would otherwise have. 

 

8.04 Notices. All notices, requests, demands,
directions and other communications (collectively "Notices") under
the provisions of this Agreement or the Notes must be in writing (including
telexed or telecopied communication) unless otherwise expressly permitted under
this 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 with
confirmation in writing mailed first class, in all cases with charges prepaid,
and any such properly given Notice will be effective when received. All Notices
will be sent to the applicable party at the addresses stated below or in
accordance with the last unrevoked written direction from such party to the
other 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

 

28

 

8.05 Expenses: Taxes: Attorneys Fees. The
Borrower agrees to pay or cause to be paid and to save the Lender harmless
against liability for the payment of all reasonable out-of-pocket expenses
including, but not limited to, reasonable fees and expenses of counsel and
paralegals for the Lender, incurred by the Lender from time to time (i) arising
in connection with the preparation, execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents, (ii) relating to any requested
amendments, waivers or consents to this Agreement, the Notes or any of the
other Loan Documents and (iii) arising in connection with the Lender's
enforcement or preservation of rights under this Agreement, the Notes or any of
the other Loan Documents including, but not limited to, such expenses as may be
incurred by the Lender in the collection of the outstanding principal amount of
the Loans. The Borrower agrees to pay all stamp, document, transfer, recording
or filing taxes or fees and similar impositions now or in the future determined
in 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 Lender
harmless from and against any and all present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions. In the event of a determination adverse to
the Borrower of any action at Law or suit in equity in relation to this
Agreement, the Notes or the other Loan Documents, the Borrower will pay, in
addition to all other sums which the Borrower may be required to pay, a
reasonable sum for attorneys' and paralegals' fees incurred by the Lender or
the holder of the Notes in connection with such action or suit. All payments
due from the Borrower under this Section will be added to and become part of the
Debt until paid in full. 

 

8.06 Severability. The provisions of this
Agreement are intended to be severable. If any provision of this Agreement is
held invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability of the provision in any other jurisdiction or the remaining
provisions 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 of
North Carolina and for all purposes shall be governed by and construed and
enforced in accordance with the substantive Laws, and not the laws of
conflicts, of said State. The Borrower consents to the exclusive jurisdiction
and venue of the federal and state courts located in Mecklenburg County, North
Carolina, in any action on, relating to or mentioning this Agreement, the
Notes, the other Loan Documents or anyone or more of them. 

 

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

 

8.09 Duration: Survival. All representations
and warranties of the Borrower contained in this Agreement or made in
connection with this Agreement or any of the other Loan Documents shall survive
the making of and will not be waived by the execution and delivery of this
Agreement, the Notes or the other Loan Documents, by any investigation by the
Lender, or the making of any Loan. Notwithstanding termination of this
Agreement or an Event of Default, all covenants and agreements of the Borrower
will continue in full force and effect from and after the date of this
Agreement so long as the Borrower may borrow under this Agreement and until
payment in full of the Notes, interest thereon, and all fees and other
obligations of the Borrower under this Agreement or the Notes. Without
limitation, it is understood that all obligations of the Borrower to make
payments to or indemnify the Lender will survive the payment in full of the
Notes and of all other obligations of the Borrower under this Agreement, the
Notes and the other Loan Documents. 

 

29

 

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

 

8.11 Successors and Assigns. This Agreement
will be binding upon and inure to the benefit of the Lender, the Borrower and
their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights under this Agreement without the prior
written consent of the Lender. 

 

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

 

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

 

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

 

8.15 Indemnity. In addition to the payment of
expenses pursuant to Section 8.05 hereof, whether or not the transactions
contemplated hereby shall be consummated, the Borrower agrees to indemnify, pay
and hold the Lender and the officers, directors, employees, agents,
consultants, auditors, affiliates and attorneys of the Lender (collectively
called the "Indemnitees"), harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that is imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this Agreement, the statements contained in the commitment letters,
if any, delivered by the Lender, the Lender's agreement to make the Loans
hereunder, the use or intended use of the proceeds of any of the Loans or the
exercise of any right or remedy hereunder or under any of the other Loan
Documents, any error, failure or delay in the performance of any of the
Lender's obligations under this Agreement caused by natural disaster, fire,
war, strike, civil unrest, error or inoperability of communication equipment or
lines or any other circumstances beyond the control of the Lender or actions taken
by the Lender which were reasonably believed by the Lender to be taken pursuant
to this Agreement including, but not limited to, actions taken by the Lender to
amend or cancel any funds transfer instructions or any decision by the Lender
to effect or not to effect the transfer as provided in this Agreement, or any
other such action taken by the Lender in good faith pursuant to its
responsibilities under this Agreement (the "Indemnified
Liabilities"); provided, however, that the Borrower shall have no
obligation to an Indemnitee hereunder with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of that or another
Indemnitee as finally determined by a court of competent jurisdiction.

 

30

 

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

 

[SIGNATURES ON THE FOLLOWING PAGE] 

 

31

 

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

 

                                                                                                                                                Witness:                                                            SOUTHERN FIRST BANCSHARES, INC.
 

 

 

                                                                                                                                                By:                                                                   By:                                                                   

                                                                                                                                                Name:                                                               Name:  James
M. Austin, III                        

                                                                                                                                                Title:                                                                 Title:     Chief
Financial Officer                    

 

 

 

                                                                                                                                                                                                                            Silverton
Bank, National Association

 

 

 

                                                                                                                                                                                                                            By:                                                                   

                                                                                                                                                                                                                                        Timothy
S. Beck

                                                                                                                                                                                                                                         Senior
Vice Presidentexhibit10_1.htm

    Exhibit
10.1

    

    CHARTER
COMMUNICATIONS, INC.

    VALUE
CREATION PLAN

    

    1.           Effective
Date.  This Value Creation Plan (the “Plan”) of Charter
Communications, Inc. (the “Company”) is
effective as of January 9, 2009 (the “Effective Date”), and
shall remain in effect until the payment of all benefits earned and payable
hereunder.

    

    2.           General.  The
Plan shall consist of two components, the Restructuring Value Program (the
“RVP”) and the
Cash Incentive Program (the “CIP”).  Each
Participant (as defined below) shall participate in both components of the Plan.
 The compensation
provided under the Plan is intended to be in addition to all other compensation
payable to Participants under any employment agreement in effect with the
Company or its direct or indirect subsidiaries.

    

    3.           Participants
Covered.  Each person listed on Exhibit A shall become a
participant in the Plan as of the Effective Date (each such person, a “Participant”).  The
Board of Directors of the Company (the “Board”) may elect to
add additional participants in the Plan after the Effective Date and such
individuals shall be considered to be Participants as of the date specified by
the Board.

    

    4.           The Restructuring Value
Program.  The RVP component of the Plan provides a one-time
cash incentive payment to Participants to motivate and reward them for achieving
specified cash management goals in connection with the Company’s financial
restructuring.

    

    a.           Bonus
Amounts.  Exhibit A sets forth the “RVP Target Bonus” for each
Participant under the RVP component of the Plan.  The actual amount
payable under the RVP component of the Plan to a Participant (the “RVP Bonus”) shall be
the Participant’s RVP Target Bonus unless otherwise determined in writing by the
Chief Executive Officer of the Company (the “CEO”) at any time
prior to the Vesting Date (as defined below).  Notwithstanding
anything to the contrary contained herein, the CEO may decrease (including to
zero) any Participant’s RVP Target Bonus or RVP Bonus at any time prior to the
Vesting Date.  Any such reduction shall be used to increase the
amounts otherwise payable under the RVP component of the Plan to one or more
other Participants, as selected by the CEO, it being understood that the CEO may
not increase his own RVP Target Bonus or RVP Bonus without the consent of both
(i) the Board and (ii) if prior to the Qualified Emergence Date, the
Committee.  Notwithstanding anything in the Plan to the contrary, the
aggregate amount of the RVP Bonuses  payable under the Plan shall not
exceed the amount listed as “Total” under the RVP Target Bonus column on Exhibit
A, as of the date hereof.

    

    b.           Vesting.  A
Participant shall vest in the right to receive the RVP Bonus on the earliest to
occur of (i) the occurrence of the Qualified Emergence Date, (ii) the occurrence
of a Change in Control, (iii) the date of the Participant’s termination of
employment with the Company and its direct and indirect subsidiaries due to
death or disability or (iv) the termination of the Participant’s employment with
the Company and its direct and indirect subsidiaries by the Company for a reason
other than Cause or by the Participant for Good Reason, in each case, after the
effective date of the Company’s Chapter 11 plan of reorganization (the “Emergence Date”) (the
first such date to occur, the “Vesting
Date”).  Notwithstanding the foregoing, a Participant shall
forfeit any 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    right to
the RVP Bonus if, prior to the Emergence Date, the Participant’s employment with
the Company and its direct and indirect subsidiaries is terminated for any
reason other than death or disability or if, on or after the Emergence Date and
prior to a Change in Control or Qualified Emergence Date, the Participant’s
employment with the Company and its direct and indirect subsidiaries is
terminated other than as a result of a Qualifying Termination.

    

    c.           Payment of RVP
Bonus.  The Company shall pay each Participant who has vested
in the right to receive an RVP Bonus pursuant to Section 4.b. an amount equal to
100% of the Participant’s RVP Bonus in a cash lump sum within 15 days following
the applicable Vesting Date for each such
Participant.  Notwithstanding the foregoing, as a condition to the
receipt of any RVP Bonus, the Participant shall be required to execute and
deliver to the Company within 15 days following the applicable Vesting Date, an
agreement in a form reasonably satisfactory to the Company that releases all
claims related to the calculation and payment of the RVP Bonus.  The
Company shall be required to deliver such release to the Participant within 10
days following the applicable Vesting Date.

    

    5.           The Cash Incentive
Program.  The CIP component of the Plan provides for the
payment of cash incentive payments to Participants for the achievement of
individual performance goals in each of the three Fiscal Periods following the
Emergence Date.

    

    a.           Target Bonus
Amounts.  Exhibit A sets forth the “CIP Target Bonus” for each
Participant under the CIP component of the Plan for each Fiscal
Period.  Notwithstanding anything the contrary contained herein, the
CEO may decrease (including to zero) any Participant’s CIP Target Bonus at any
time prior to a Vesting Date (to be defined by substituting “Emergence Date” for
“Qualified Emergence Date”).  Any such reduction shall be used to
increase the CIP Target Bonuses of one or more other Participants, as selected
by the CEO, it being understood that the CEO may not increase his own CIP Target
Bonus without the consent of the Board and, prior to the Qualified Emergence
Date, the Committee.  In addition, a Participant’s CIP Target Bonus
shall be adjusted in accordance with Section 5.b.

    

    b.           Performance
Goals.  For each Fiscal Period, the CEO shall establish
objective and reasonably attainable individual performance goals subject to the
good faith approval by the Board (it being understood that such performance
goals for the CEO shall be mutually agreed upon in good faith by the Board and
the CEO and shall be reasonably consistent with the performance goals
established for other executive officers) (the “Performance Goals”)
within 30 days following the Emergence Date.  Each Participant who is
employed by the Company or its direct or indirect subsidiaries on the last day
of such Fiscal Period shall earn an amount (the “CIP Bonus”) equal to
the Participant’s CIP Target Bonus multiplied by the degree to which the
Performance Goals were achieved, as determined by the CEO, subject to the good
faith review and approval by the Board.  In no event may a Participant
earn more than 100% of the Participant’s CIP Target Bonus.

    

    c.           Payment of CIP
Bonus.  The Company shall pay each Participant who has earned a
CIP Bonus in accordance with Section 5.b. a cash lump sum in an amount equal to
100% of such CIP Bonus no later than 15 days after the end of the applicable
Fiscal Period.  Notwithstanding the foregoing, a Participant shall
earn and be paid in a cash lump sum an amount equal to such Participant’s
aggregate CIP Target Bonuses reduced by the aggregate amount 

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    previously
paid to such Participant under this CIP component of the Plan within 15 days of
the first to occur of (i) a Change in Control or (ii) the date of the
Participant’s Qualifying Termination that occurs after the Emergence
Date.  A Participant shall immediately forfeit any right to receive
any CIP Bonus if, prior to the date on which such CIP Bonus is earned hereunder,
(A) the Participant’s employment with the Company and its direct and indirect
subsidiaries is terminated for a reason other than a Qualifying Termination, or
(B) the Participant’s employment is terminated for any reason prior to the
Emergence Date.  Notwithstanding the foregoing, as a condition to the
receipt of any CIP Bonus, the Participant shall be required to execute and
deliver to the Company within 15 days following the date the Participant’s right
to receive such CIP Bonus vests hereunder, an agreement in a form reasonably
satisfactory to the Company that releases all claims related to the calculation
and payment of the CIP Bonus.  The Company shall be required to
deliver such release to the Participant within 10 days following the date the
Participant’s right to receive such CIP Bonus vests hereunder.

    

    6.           Section
409A.  To the extent necessary to avoid imposition on the
Executive of a penalty tax pursuant to Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), any
distribution payable as a result of a Participant’s termination of employment
shall be deferred for six months and one day after such
termination.  Each payment hereunder shall be considered to be a
separate payment for purposes of Section 409A of the Code.

    

    7.           Definitions.

    

    a.           “Cause” shall have the
meaning set forth in any currently effective employment agreement by and between
the Participant and the Company or any of its direct or indirect subsidiaries
or, if there is no such contract or the term “Cause” (or any similar term) is
not defined therein, “Cause” shall have the meaning set forth in the Company’s
2001 Stock Incentive Plan.

    

    b.           “Change in Control”
shall mean the occurrence of any of the following events:

     

    
      	
              (i)  

            	
               an
      acquisition of any voting securities of the Company by any “Person” or
      “Group” (as those terms are used for purposes of Section 13(d) or 14(d) of
      the Exchange Act of 1934, amended (the “Exchange
      Act”)), immediately after which such Person has “Beneficial
      Ownership” (within the meaning of Rule 13d-3 promulgated under the
      Exchange Act) of thirty-five percent (35%) or more of the combined voting
      power of the Company’s then outstanding voting securities; provided,
      however, that voting securities which are acquired in a “Non-Control
      Transaction” (as hereinafter defined) assuming that the acquisition of
      voting securities for this purpose qualifies as  Merger (as
      hereinafter defined) shall not constitute a Change in Control; and
      provided further that an acquisition of Beneficial Ownership of less than
      fifty percent (50%) of the Company’s then outstanding voting securities by
      any Equity Backstop Party (as defined in the Joint Plan) or the Allen
      Entities (as defined in the Joint Plan) shall not be considered to be a
      Change in Control under this clause
(i);

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (ii)  

            	
              the
      individuals who, as of immediately after the Emergence Date, are members
      of the Board (the “Incumbent Board”), cease for any reason to constitute a
      majority of the Board; provided, however, that if the election, or
      nomination for election by the Company’s common stockholders, of any new
      director (excluding any director whose nomination or election to the Board
      is the result of any actual or threatened proxy contest or settlement
      thereof) was approved by a vote of at least two-thirds of the Incumbent
      Board, such new director shall, for purposes of this Plan, be considered
      as a member of the Incumbent Board;

            

    

     

    
      	
              (iii)  

            	
              the
      consummation of a merger, consolidation or reorganization with or into the
      Company or in which securities of the Company are issued (a “Merger”),
      unless such Merger is a Non-Control Transaction. A “Non-Control
      Transaction” shall mean a Merger where: (1) the stockholders of the
      Company, immediately before such Merger own directly or indirectly
      immediately following such Merger more than fifty percent (50%) of the
      combined voting power of the outstanding voting securities of the entity
      resulting from such Merger or its controlling parent entity (the
      “Surviving Entity”), (2) the individuals who were members of the Incumbent
      Board immediately prior to the execution of the agreement providing for
      such Merger constitute at least a majority of the members of the board of
      directors (or similar governing body) of the Surviving Entity, and (3) no
      Person other (X) than the Company, its subsidiaries or affiliates or any
      of their respective employee benefit plans (or any trust forming a part
      thereof) that, immediately prior to such Merger was maintained by the
      Company or any subsidiary or affiliate of the Company, or (Y) any Person
      who, immediately prior to such Merger had Beneficial Ownership of
      thirty-five percent (35%) or more of the then outstanding voting
      securities of the Company, has Beneficial Ownership of thirty-five percent
      (35%) or more of the combined voting power of the outstanding voting
      securities or common stock of the Surviving Entity; provided that this
      clause (Y) shall not trigger a Change in Control solely because, after
      such Merger, any Equity Backstop Party or any Allen Entity has Beneficial
      Ownership of more than thirty-five percent (35%) but less than fifty
      percent (50%) of the combined voting power of the outstanding voting
      securities or common stock of the Surviving
  Entity;

            

    

     

    
      	
              (iv)  

            	
              complete
      liquidation or dissolution of the Company (other than where assets of the
      Company are transferred to or remain with subsidiaries of the Company);
      or

            

    

     

    
      	
              (v)  

            	
              the
      sale or other disposition of all or substantially all of the assets of the
      Company and its direct and indirect subsidiaries on a consolidated basis,
      directly or indirectly, to any Person (other than a transfer to a
      subsidiary or affiliate of the Company unless, such sale or disposition
      constitutes a Non-Control Transaction with the disposition of assets being
      regarded as a Merger for this purpose or the distribution to the Company’s
      stockholders of the stock of a subsidiary or affiliate of the Company or
      any other assets).

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
the foregoing a Change in Control shall not occur solely based on a filing of a
Chapter 11 reorganization proceeding of the Company or the implementation of the
Joint Plan.

     

    c.           “Committee” mean the
members of the unofficial committee of bondholders who hold certain outstanding
bonds of Charter affiliates CCH I, LLC and CCH II, LLC as more fully set forth
in the term sheet filed as Exhibit 10.3 to the Current Report on Form 8-K filed
by Charter on February 13, 2009.

    

    d.           “Fiscal Period” means
each of the three consecutive 12-month periods commencing upon the Emergence
Date.

     

    e.           “Good Reason” shall
have the meaning set forth in any currently effective employment agreement by
and between the Participant and the Company or any of its direct or indirect
subsidiaries or, if there is no such contract or the term “Good Reason” (or any
similar term) is not defined therein, “Good Reason” shall have the meaning set
forth in the Company’s 2001 Stock Incentive Plan; provided that “Good Reason”
shall not be deemed to exist (i) solely by reason of the filing of a Chapter 11
reorganization proceeding by the Company or the implementation of the plan of
reorganization, including the Joint Plan, (ii) due to failure to grant
equity-based compensation to a Participant during the pendency of such a
proceeding or (iii) due to any termination of employment by the Company or its
subsidiaries for Cause.

     

    f.           “Joint Plan” means the
joint plan of reorganization of the Company, certain of its direct and indirect
subsidiaries and Charter Investment, Inc., that is consistent in all material
respects with the plan of reorganization under consideration by the Committee
and the Company on March 12, 2009, as summarized in the most recent draft Joint
Plan of Reorganization circulated by the Company prior to such
date.

    

    g.           “Qualified Emergence
Date” means the Emergence Date; provided that if the Company’s Chapter 11
plan of reorganization is the Joint Plan, “Qualified Emergence Date” shall mean
the date on which all or any portion of the Commitment Fees (as defined in the
Joint Plan) are first payable.

    

    h.           “Qualifying
Termination” means the Participant’s termination of employment with the
Company and its direct and indirect subsidiaries (i) due to the Participant’s
death or disability, (ii) by the Company or its direct or indirect subsidiaries
for a reason other than Cause or (iii) by the Participant for Good
Reason.

    

    8.           Miscellaneous.

    

    a.           Withholding.  Any
amounts payable hereunder shall be reduced by all required withholdings for
state, federal and local employment, income, payroll or other
taxes.

    

    b.           No Right to Continued
Employment.  Nothing contained in this Agreement shall be
construed as a guarantee or right of any Participant to be continued as an
employee of the Company or its subsidiaries or as a limitation of the right of
the Company or its subsidiaries to terminate the employment of the Participant
for any or no reason.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    c.           Governing
Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Missouri without giving
effect to the conflict of law principles thereof.

    

    d.           Dispute
Resolution.  Each of the parties agrees that any dispute
between the parties regarding this Agreement shall be resolved only in the
courts of the State of Missouri sitting in the City or County of St. Louis or
the United States District Court for the Eastern District of Missouri and the
appellate courts having jurisdiction of appeals in such courts. Without limiting
the generality of the foregoing, each of the parties hereto irrevocably and
unconditionally (a) submits for himself or itself in any proceeding relating to
this Agreement, or for the recognition and enforcement of any judgment in
respect thereof (a “Proceeding”), to the
exclusive jurisdiction of the courts of the State of Missouri sitting in the
City or County of St. Louis, the court of the United States of America for the
Eastern District of Missouri, and appellate courts having jurisdiction of
appeals from any of the foregoing, and agrees that all claims in respect of any
such Proceeding shall be heard and determined in such courts; (b) consents that
any such Proceeding may and shall be brought in such courts and waives any
objection that he or it may now or thereafter have to the venue or jurisdiction
of any such Proceeding in any such court or that such Proceeding was brought in
an inconvenient court and agrees not to plead or claim the same; and (c) waives
all right to trial by jury in any Proceeding (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement.

    

    e.           Notice.  All
notices, requests, demands and other communications required or permitted to be
given under this Agreement shall be in writing and shall be deemed given (i)
when personally delivered to the recipient (provided a written acknowledgement
of receipt is obtained), (ii) one (1) business day after being sent by a
nationally recognized overnight courier (provided that a written acknowledgement
of receipt is obtained by the overnight courier) or (iii) four (4) business days
after mailing by certified or registered mail, postage prepaid, return receipt
requested, to the party concerned at the address indicated below (or such other
address as the recipient shall specify by ten (10) days’ advance written notice
given in accordance with this Section 8(e)):

    

    To the Company:

    

    Charter Communications,
Inc.

    12405 Powerscourt Drive

    St. Louis, MO 63131

    

    To the Participant: The last address
shown in the Company’s records.

    

    f.           Successors and
Assigns.  This Agreement shall be binding upon and shall inure
to the benefit of the Company, its successors and assigns.  The term
“Company” as used herein shall include such successors and assigns.

    

    g.           Spendthrift
Clause.  No benefit, distribution or payment under the Plan may
be anticipated, assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process
whether pursuant to a “qualified domestic relations order” as defined in
Section 414(p) of the Code or otherwise.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    h.           Beneficiary
Designation.  A Participant may from time to time designate, in
the manner specified by the Company, a beneficiary to receive payment pursuant
to Section 6 in the event of his death.  In the event that there
is no properly designated beneficiary living at the time of a Participant’s
death, his benefit hereunder shall be paid to his estate.

    

    i.           Amendment. The Board
may, with the consent of both (i) the CEO and (ii) if  prior to the
Qualified Emergence Date, the Committee, amend this Plan from time to time;
provided that any amendment that adversely affects a Participant may be adopted
only with the written consent of such Participant.  The Company shall
modify Exhibit A from time to time to appropriately reflect changes
thereto.

    

    IN WITNESS WHEREOF, the Company has
caused this Plan to be adopted as of the Effective Date.

     

     

    
      
        
        

      

      
        7

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