Document:

exhibit104.htm - Generated by SEC Publisher for SEC Filing

Exhibit 10.4    

 

2005 Long-Term Incentive Plan 2010 Restricted Stock Unit Award Agreement evidencing restricted stock units granted to Mary N. Dillon on June 1, 2010 

(without accelerated vesting in the event of termination without cause or for good reason)

 

[See Attached]

2005 LONG-TERM INCENTIVE PLAN

2010 RESTRICTED STOCK UNIT AWARD AGREEMENT

 

United States Cellular Corporation, a Delaware corporation (the “Company”), hereby grants to Mary N. Dillon (the “Employee”) as of June 1, 2010 (the “Grant Date”), pursuant to the provisions of the United States Cellular Corporation 2005 Long-Term Incentive Plan, as amended (the “Plan”), a Restricted Stock Unit Award (the “Award”) with respect to 25,000 shares of Stock, upon and subject to the restrictions, terms and conditions set forth below.  Capitalized terms not defined herein shall have the meanings specified in the Plan.

 

1.   Award Subject to Acceptance of Award Agreement

 

The Award shall become null and void unless the Employee accepts this Award Agreement by executing it in the space provided at the end hereof and returning it to the Company.

 

2.   Restriction Period and Forfeiture

 

(a)  In General.  Except as otherwise provided in this Award Agreement, the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate on the sixth annual anniversary of the Grant Date (the “Six-Year Anniversary Date”), provided that the Employee remains continuously employed by or of service to the Employers and Affiliates until the Six-Year Anniversary Date.  Within sixty (60) days following the Six-Year Anniversary Date, the Company shall issue to the Employee in a single payment the shares of Stock subject to the Award on the Six-Year Anniversary Date.

 

(b)  Death.  If the Employee has a Separation from Service prior to the Six-Year Anniversary Date by reason of death, then on the date of the Employee’s death the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate.  Within sixty (60) days following the date of the Employee’s death, the Company shall issue to the Employee’s designated beneficiary in a single payment the shares of Stock subject to the Award.

 

(c)  Disability.  If the Employee has a Separation from Service prior to the Six-Year Anniversary Date by reason of Disability, then on the date of the Employee’s Separation from Service the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate.  The Company shall issue the shares of Stock subject to the Award in a single payment within sixty (60) days following the date of the Employee’s Separation from Service; provided, however, that if the Award is subject to § 409A of the Code, and if the Employee is a Specified Employee as of the date of his or her Separation from Service, then such payment shall be delayed until and made during the seventh calendar month following the calendar month during which the Employee’s Separation from Service occurs (or, if earlier, the calendar month following the calendar month of the Employee’s death). 

 

(d)  Retirement at or after Attainment of Age 66.  If the Employee has a Separation from Service on or after January 1, 2011 but prior to the Six-Year Anniversary Date by reason of retirement at or after attainment of age 66, then on the date of the Employee’s Separation from Service the Award shall become nonforfeitable and the Restriction Period with respect to the Award shall terminate.  The Company shall issue the shares of Stock subject to the Award in a single payment within sixty (60) days following the date of the Employee’s Separation from Service; provided, however, that if the Award is subject to § 409A of the Code, and if the Employee is a Specified Employee as of the date of his or her Separation from Service, then such payment shall be delayed until and made during the seventh calendar month following the calendar month during which the Employee’s Separation from Service occurs (or, if earlier, the calendar month following the calendar month of the Employee’s death).  If the Employee has a Separation from Service prior to January 1, 2011 by reason of retirement at or after attainment of age 66, then on the 

 

 

2005 LTI Plan / 2010 Restricted Stock Unit Award Agreement

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date of the Employee’s Separation from Service the Award shall be forfeited and shall be canceled by the Company.

 

(e)  Other Separation from Service.  If the Employee has a Separation from Service prior to the Six-Year Anniversary Date for any reason other than death, Disability or retirement at or after attainment of age 66 (including if the Employee has a Separation from Service prior to the Six-Year Anniversary Date by reason of the Employee’s negligence or willful misconduct, as determined by the Company in its sole discretion, irrespective of whether such separation occurs on or after the Employee attains age 66), then on the date of the Employee’s Separation from Service the Award shall be forfeited and shall be canceled by the Company. 

 

(f)  Forfeiture of Award upon Competition or Misappropriation of Confidential Information.  Notwithstanding any other provision herein, if the Employee (i) enters into competition with an Employer or other Affiliate or (ii) misappropriates confidential information of an Employer or other Affiliate, as determined by the Committee or the Company in its sole discretion, then on the date of such competition or misappropriation the Award shall be forfeited and shall be canceled by the Company.  For purposes of the preceding sentence, the Employee shall be treated as entering into competition with an Employer or other Affiliate if the Employee (i) directly or indirectly, individually or in conjunction with any person, firm or corporation, has contact with any customer of an Employer or other Affiliate or any prospective customer which has been contacted or solicited by or on behalf of an Employer or other Affiliate for the purpose of soliciting or selling to such customer or prospective customer any product or service, except to the extent such contact is made on behalf of an Employer or other Affiliate; (ii) directly or indirectly, individually or in conjunction with any person, firm or corporation, becomes employed in the business or engages in the business of providing wireless products or services in any geographic territory in which an Employer or other Affiliate offers such products or services or has plans to do so within the next twelve months or (iii) otherwise competes with an Employer or other Affiliate in any manner or otherwise engages in the business of an Employer or other Affiliate.  The Employee shall be treated as misappropriating confidential information of an Employer or other Affiliate if the Employee (i) uses confidential information (as described below) for the benefit of anyone other than an Employer or such Affiliate, as the case may be, or discloses the confidential information to anyone not authorized by an Employer or such Affiliate, as the case may be, to receive such information, (ii) upon termination of employment or service, makes any summaries of, takes any notes with respect to or memorizes or takes any confidential information or reproductions thereof from the facilities of an Employer or other Affiliate or (iii) upon termination of employment or service or upon the request of an Employer or other Affiliate, fails to return all confidential information then in the Employee's possession.  “Confidential information” shall mean any confidential and proprietary drawings, reports, sales and training manuals, customer lists, computer programs and other material embodying trade secrets or confidential technical, business, or financial information of an Employer or other Affiliate.

 

Employee acknowledges and agrees that the Award, by encouraging stock ownership and thereby increasing an employee’s proprietary interest in the Company’s success, is intended as an incentive to participating employees to remain in the employ of an Employer or other Affiliate.  Employee acknowledges and agrees that this Section 2(f) is therefore fair and reasonable, and not a penalty.

 

 

2005 LTI Plan / 2010 Restricted Stock Unit Award Agreement

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3.   Change in Control

 

(a)  (1)  Notwithstanding any provision in the Plan or in this Award Agreement, in the event of a Change in Control, the Board may, but shall not be required to, make such adjustments to the Award as it deems appropriate, including, without limitation, (i) causing the Award immediately to become nonforfeitable; (ii) to the extent permitted by section 409A of the Code (if applicable thereto), causing the Restriction Period with respect to the Award to immediately terminate and payment of the Award to occur within sixty (60) days following the occurrence of the Change in Control (the “Change in Control Payment Period”) or (iii) to the extent permitted under section 409A of the Code (if applicable thereto), electing that the Award be surrendered to the Company by the holder thereof, that the Award be immediately canceled by the Company and that the holder of the Award receive, within the Change in Control Payment Period, a cash payment from the Company in an amount equal to the number of shares of Stock then subject to the Award, multiplied by the greater of (x) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (y) the Fair Market Value of a share of Stock on the date of the occurrence of the Change in Control.

 

(2)  In the event of a Change in Control pursuant to Section (b)(3) or (4) below in connection with which the holders of Stock receive shares of common stock that are registered under Section 12 of the Exchange Act, the Board may, but shall not be required to, substitute for each share of Stock available under the Plan, whether or not then subject to an outstanding award, the number and class of shares into which each outstanding share of Stock shall be converted pursuant to such Change in Control.

 

(3)  Any adjustment or substitution pursuant to this Section 3(a) shall be made by the Board in compliance with the requirements of section 409A of the Code (if applicable thereto).

 

(b)  For purposes of the Plan and this Award Agreement, a “Change in Control” shall mean: 

 

(1)  the acquisition by any Person, including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of the combined voting power of the then outstanding securities of the Company entitled to vote generally on matters (without regard to the election of directors) (the “Outstanding Voting Securities”), excluding, however, the following:  (i) any acquisition directly from the Company or an Affiliate (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege, unless the security being so exercised, converted or exchanged was acquired directly from the Company or an Affiliate), (ii) any acquisition by the Company or an Affiliate, (iii) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate, (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 3(b), or (v) any acquisition by the following persons:  (A) LeRoy T. Carlson or his spouse, (B) any child of LeRoy T. Carlson or the spouse of any such child, (C) any grandchild of LeRoy T. Carlson, including any child adopted by any child of LeRoy T. Carlson, or the spouse of any such grandchild, (D) the estate of any of the persons described in clauses (A)-(C), (E) any trust or similar arrangement (including any acquisition on behalf of such trust or similar arrangement by the trustees or similar persons) provided that all of the current beneficiaries of such trust or similar arrangement are persons described in clauses (A)-(C) or their lineal descendants, or (F) the voting trust which expires on June 30, 2035, or any successor to such voting trust, including the trustees of such voting trust on behalf of such voting trust (all such persons, collectively, the “Exempted Persons”); 

 

 

2005 LTI Plan / 2010 Restricted Stock Unit Award Agreement

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(2)  individuals who, as of February 22, 2005, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to February 22, 2005, and whose election or nomination for election by the Company's stockholders was approved by the vote of at least a majority of the directors then comprising the Incumbent Board, shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;

 

(3)  consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”), excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners of the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding securities of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns, either directly or indirectly, the Company or all or substantially all of the Company's assets) which are entitled to vote generally on matters (without regard to the election of directors), in substantially the same proportions relative to each other as the shares of Outstanding Voting Securities are owned immediately prior to such Corporate Transaction, (ii) no Person (other than the following Persons:  (v) the Company or an Affiliate, (w) any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate, (x) the corporation resulting from such Corporate Transaction, (y) the Exempted Persons, and (z) any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Voting Securities) will beneficially own, directly or indirectly, 25% or more of the combined voting power of the outstanding securities of such corporation entitled to vote generally on matters (without regard to the election of directors) and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

 

(4)  approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company.  

 

4.   Additional Terms and Conditions of Award

 

4.1.  Transferability of Award.  Except pursuant to a beneficiary designation effective on the Employee's death, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.

 

By accepting the Award, the Employee agrees that if all beneficiaries designated on a form prescribed by the Company predecease the Employee or, in the case of corporations, partnerships, trusts or other entities which are designated beneficiaries, are terminated, dissolved, become insolvent or are adjudicated bankrupt prior to the date of the Employee’s death, or if the Employee fails to designate a beneficiary on a form prescribed by the Company, then the Employee hereby designates the following persons in the order set forth herein as the Employee’s beneficiary or beneficiaries:  (i) the Employee’s spouse, if living, or if none, (ii) the Employee’s then living descendants, per stirpes, or if none, (iii) the Employee’s estate.

 

4.2.  Investment Representation.  The Employee hereby represents and covenants that (a) any shares of Stock acquired upon the lapse of restrictions with respect to the Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended 

 

 

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(the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities law; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Employee shall submit a written statement, in a form satisfactory to the Company, to the effect that such representation is true and correct as of the date of acquisition of any shares hereunder or is true and correct as of the date of sale of any such shares, as applicable.  As a condition precedent to the issuance or delivery to the Employee of any shares subject to the Award, the Employee shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

 

4.3.  Tax Withholding.  The Employee timely shall pay to the Company such amount as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to the Award.  The Employee may elect to satisfy his or her obligation to advance the Required Tax Payments by (a) authorizing the Company to withhold whole shares of Stock which otherwise would be delivered to the Employee pursuant to the Award, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with the Award or (b) delivery to the Company of previously-owned whole shares of Stock, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with the Award.  Shares of Stock to be withheld or delivered may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.  Any fraction of a share of Stock which would be required to pay the Required Tax Payments shall be disregarded and the remaining amount due shall be paid in cash by the Employee.  The Employee agrees that if by the pay period that immediately follows the date that the Restriction Period with respect to the Award terminates, no cash payment attributable to any such fractional share shall have been received by the Company, then the Employee hereby authorizes the Company to deduct such cash payment from any amount payable by the Company or any Affiliate to the Employee, including without limitation any amount payable to the Employee as salary or wages.  The Employee agrees that this authorization may be reauthorized via electronic means determined by the Company.  The Employee may revoke this authorization by written notice to the Company prior to any such deduction.

 

4.4.  Award Confers No Rights as a Stockholder.  The Employee shall not be entitled to any privileges of ownership with respect to the shares of Stock subject to the Award unless and until the restrictions on the Award lapse and the Employee becomes a stockholder of record with respect to such shares.

 

4.5.  Adjustment.  In the event of any conversion, stock split, stock dividend, recapitalization, reclassification, reorganization, merger, consolidation, combination of shares in a reverse stock split, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Stock other than a regular cash dividend, the number and class of shares of Stock subject to the Award shall be appropriately and equitably adjusted by the Committee.  Such adjustment shall be final, binding and conclusive.  If such adjustment would result in a fractional share being subject to the Award, the Company shall pay the holder of the Award, on the date that the shares with respect to the Award are issued, an amount in cash determined by multiplying (i) the fraction of such share (rounded to the nearest hundredth) by (ii) the Fair Market Value of a share on the date that the Restriction Period with respect to the Award terminates.

 

4.6.  Compliance with Applicable Law.  The Award is subject to the condition that if the listing, registration or qualification of the shares of Stock subject to the Award upon any securities exchange or under any law, the consent or approval of any governmental body or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares, such shares may not be issued or delivered, in whole or in part, unless such listing, registration, qualification, 

 

 

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consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

 

4.7.  Delivery of Shares.  On the date of payment of the Award, the Company shall deliver or cause to be delivered to the Employee the shares of Stock subject to the Award.  The Company may require that the shares of Stock delivered pursuant to the Award bear a legend indicating that the sale, transfer or other disposition thereof by the Employee is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.  The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Sections 4.3 and 5.4.

 

4.8.  Award Confers No Rights to Continued Employment or Service.  In no event shall the granting of the Award or the acceptance of this Award Agreement and the Award by the Employee give or be deemed to give the Employee any right to continued employment by or service with the Company or any of its subsidiaries or affiliates. 

 

4.9.  Decisions of Committee.  The Committee shall have the right to resolve all questions which may arise in connection with the Award.  Any interpretation, determina­tion or other action made or taken by the Committee regarding the Plan or this Award Agreement shall be final, binding and conclusive.

 

4.10.  Company to Reserve Shares.  The Company shall at all times prior to the cancellation of the Award reserve and keep available, either in its treasury or out of its authorized but unissued shares of Stock, the full number of shares subject to the Award from time to time.

 

4.11.  Award Agreement Subject to the Plan.  This Award Agreement is subject to the provisions of the Plan, as it may be amended from time to time, and shall be interpreted in accordance therewith.  The Employee hereby acknowledges receipt of a copy of the Plan.  

 

5.   Miscellaneous Provisions

 

5.1.  Successors.  This Award Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Employee, acquire any rights hereunder.

 

5.2.  Notices.  All notices, requests or other communications provided for in this Award Agreement shall be made in writing either (a) by actual delivery to the party entitled thereto, (b) by mailing in the United States mails to the last known address of the party entitled thereto, via certified or registered mail, postage prepaid and return receipt requested, (c) by electronic mail, utilizing notice of undelivered electronic mail features or (d) by telecopy with confirmation of receipt.  The notice, request or other communication shall be deemed to be received (a) in case of delivery, on the date of its actual receipt by the party entitled thereto, (b) in case of mailing by certified or registered mail, five days following the date of such mailing, (c) in case of electronic mail, on the date of mailing but only if a notice of undelivered electronic mail is not received or (d) in case of telecopy, on the date of confirmation of receipt.  

 

5.3.  Governing Law.  The Award, this Award Agreement and all determinations made and actions taken pursuant thereto, to the extent otherwise not governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without regard to principles of conflicts of laws.

 

5.4  Compliance with Section 409A of the Code.  It is intended that this Award Agreement and the Plan comply with the provisions of section 409A of the Code (if applicable thereto).  This Award Agreement and the Plan shall be administered and interpreted in a manner consistent with this intent.  In the event that 

 

 

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this Award Agreement or the Plan does not comply with section 409A of the Code (if applicable thereto), the Company shall have the authority to amend the terms of this Award Agreement or the Plan (which amendment may be retroactive to the extent permitted by section 409A of the Code and may be made by the Company without the consent of the Employee) to avoid taxes and other penalties under section 409A of the Code, to the extent possible.  Notwithstanding the foregoing, no particular tax result for the Employee with respect to any income recognized by the Employee in connection with this Award Agreement is guaranteed, and the Employee solely shall be responsible for any taxes, penalties, interest or other losses or expenses incurred by the Employee under section 409A of the Code in connection with this Award Agreement.

 

5.5  Counterparts.  This Award Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.  

 

 

 

 

	
UNITED STATES CELLULAR CORPORATION

	
 

	
 

	
By:

	
 

	
 

	
LeRoy T. Carlson, Jr.

Chairman

 

                                                                        

                                                                                  

	
Accepted this         day of

	
 

	
                         , 20     .

	
 

	
 

	
 

	
Employee

 

 

2005 LTI Plan / 2010 Restricted Stock Unit Award Agreement

Page 7 of 7amendedandrestatednote.htm

    
       

       

    

    

     

    AMENDED
AND RESTATED PROMISSORY NOTE

     

    June
4, 2010                                  $18,000,000.00

     

                                                                                                                      

            This
Amended and Restated Promissory Note (this "Note") is made as of the date set
forth above by SAVB HOLDINGS, LLC, a Georgia limited liability company, whose
address for notice is Attn: John Helmken, 25 Bull Street, Savannah, Georgia
31401, as maker (hereinafter, the "Maker"), in favor of LEWIS BROADCASTING
CORPORATION, a Georgia corporation, whose payment address and address for notice
is Attn: Charles
E. Izlar, 9505 Abercorn Street, Savannah, Georgia 31406, as holder and
administrative agent on behalf of the participating lenders under that certain
Participation Agreement of even date herewith between Lewis Broadcasting
Corporation and Colonial Group, Inc. (the "Holder"), and amends and restates
that certain Promissory Note dated September 29, 2009 made by Maker in favor of
Holder (the "Original Note").

     

    The
proceeds of this Note shall be used by Maker to (1) retire the indebtedness
evidenced by that certain Amended and Restated Promissory Note dated May 22,
2009 between Maker and Lewis Broadcasting Corporation in the original principal
amount of $13,500,000, (2) purchase foreclosed real property identified in Exhibit A attached
hereto ("Purchased OREO"), and (3) purchase a loan portfolio comprised of
promissory notes (the "Purchased Notes"), the collateral documents securing such
promissory notes and the loan documents related or ancillary thereto, all as
identified on Exhibit
B attached hereto.

     

    Maker's
performance under this Note is secured by that certain Security Agreement of
even date herewith between Maker and Holder (the "Security Agreement"), which
grants Holder a security interest in, inter alia, (a) the Purchased OREO and all
real property previously acquired by Maker and listed on Exhibit B of the
Security Agreement (the "Previously Acquired OREO") (the Purchased OREO and the
Previously Acquired OREO, collectively, the "Collateral OREO"), as well as (b)
the Purchased Notes and the promissory notes previously purchased by Maker and
listed on Exhibit
C of the Security Agreement (the "Previously Acquired Notes") (the
Purchased Notes and the Previously Acquired Notes, collectively, the "Collateral
Notes").

     

    Now,
therefore, for value received and on the terms set forth in this Note, Maker
promises to pay to the order of Holder at the address for Holder set forth above
or at such other place as the Holder hereof may from time to time designate in
writing, the principal sum of Eighteen Million Dollars
($18,000,000.00), plus interest as set forth below at the rate or rates
set forth below, determined daily, in lawful money of the United States of
America which shall be legal tender in payment of all debts and dues, public and
private.

     

    
      	
              1.  

            	
              Payments.

            

    

     

    
      	
              (a)  

            	
              Payment at
      Maturity. Maker shall pay to Holder all outstanding principal and
      accrued but unpaid interest hereunder on or before September 29, 2012 (the
      "Maturity Date").

            

    

     

    
      	
              (b)  

            	
              Mandatory Monthly
      Payments. On the fifth (5th) day of each calendar month during the
      term of this Note, Maker shall pay to Holder as principal payments, in
      addition to the monthly payment of interest and the Administrative Fee due
      under this Note (each as described below), the sum
  of:

            

    

     

    
      	
              (1)  

            	
              All
      principal payments received by Maker on the Collateral Notes during the
      immediately preceding calendar
month;

            

    

     

    
      
        1

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (2)  

            	
              All
      net sales proceeds received by Maker during the immediately preceding
      calendar month from Maker's sale of any underlying collateral securing the
      Collateral Notes;

            

    

     

    
      	
              (3)  

            	
              All
      net sales proceeds received by Maker during the immediately preceding
      calendar month from Maker's sale of Collateral
  OREO;

            

    

     

    
      	
              (4)  

            	
              An
      amount equal to any accounting action taken by Maker that results in a
      reduction in the principal amount shown as due with respect to any
      Collateral Note during the immediately preceding calendar month, as
      reflected on Maker's internal books and
records;

            

    

     

    
      	
              (5)  

            	
              An
      amount equal to the total reduction in the fair market value
      of  the Collateral OREO, as reflected on Maker's internal books
      and records;

            

    

     

    
      	
              (6)  

            	
              All
      payments received by Maker or any affiliate of Maker (including, without
      limitation, Harborside Community Bank) from any federal or state
      governmental agency or authority or other regulatory body relating to the
      Collateral Notes or the Collateral OREO;
and

            

    

     

    
      	
              (7)  

            	
              A
      fee in the amount of five hundred dollars ($500.00) each month as payment
      to Lewis Broadcasting Corporation for the administration costs relating to
      the Participation Agreement between the participating lenders (the
      "Administrative Fee").

            

    

     

    For
purposes of this Section 1(b), "net sales proceeds" means the gross sales
proceeds from the sale of any Collateral OREO, or underlying collateral securing
the Collateral Notes, less any real estate commission or other closing costs not
paid to Maker or any affiliate of Maker. Each monthly payment shall be
accompanied by a certificate, in the form attached hereto as Exhibit C, executed
by an officer of Maker setting forth the amounts of principal payments received,
proceeds received, write-offs taken and the amount of fair market value
reduction recognized by Maker with respect to Maker's payment obligations under
this Section 1(b) during the immediately preceding calendar month.

     

    
      	
              2.  

            	
              Variable, Monthly
      Interest Payments.

            

    

     

    
      	
              (a)  

            	
              Maker
      shall pay interest to Holder in arrears on a monthly basis. Each monthly
      interest payment shall be due on or before the fifth (5th) day of each
      calendar month. The first monthly interest payment shall be due and
      payable on or before October 5, 2009, and shall include interest accrued
      from the date of this Note through and including September 30, 2009.
      Thereafter, each of the remaining monthly interest payments shall be due
      and payable on or before the fifth (5th) day of each
      month immediately following
thereafter.

            

    

     

    
      	
              (b)  

            	
              During
      the term of this Note, interest shall accrue on the
      unpaid principal balance at a variable rate of interest per annum, which
      shall be adjusted on a daily basis, equal to two hundred (200) basis
      points in excess of the "prime rate" published in The Wall Street Journal
      (the "Interest Rate"); provided,
      however, that at no time shall the Interest Rate applicable under this
      Note be less than Seven and One-Half Percent (7.5%) per annum (regardless
      of how low the said "prime rate" falls). All interest shall be calculated on
      the basis of a 360-day year. Subject to any maximum or minimum interest
      rate limitation specified herein or by applicable law, the variable rate
      of interest on the obligations evidenced hereby shall change automatically
      without notice to Maker with each change in the "prime rate." If The Wall Street Journal
      prime rate is discontinued as a standard or becomes
      unascertainable, then the interest rate as used hereinabove
      shall be the "prime rate" as published from time to time by Bank of
      America, N.A., Charlotte, North
Carolina.

            

    

     

    
      
        2

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (c)  

            	
              During
      any Covenant Default Quarter, as defined in Section 19(a) of this Note,
      interest due under this Note shall be calculated at the Interest Rate plus
      two hundred (200) basis points; provided that in no event shall the
      interest rate during such Covenant Default Quarter be less than Ten
      Percent (10%) ("Covenant Default Interest
  Rate").

            

    

     

    
      	
              (d)  

            	
              During
      any Asset Ratio Default Quarter, as defined in Section 19(b) of this Note,
      interest due under this note shall be calculated at the Interest Rate plus
      fifty (50) basis points; provided that in no event shall the Interest Rate
      during such Asset Ratio Default Quarter be less than Eight Percent (8%)
      ("Asset Ratio Default Interest
Rate").

            

    

     

    
      	
              3.  

            	
              Minimum Annual
      Payments.

            

    

     

    
      	
              (a)  

            	
              Notwithstanding
      anything to the contrary, on September 29, 2010, Maker shall pay to Holder
      an amount equal to the difference between (i) Three Million Seven
      Hundred Fifty Thousand Dollars ($3,750,000.00) and (ii) the sum of
      all principal payments made by Maker to Holder pursuant to Section 1(b)
      above or otherwise pursuant to this
Note.

            

    

     

    
      	
              (b)  

            	
              Notwithstanding
      anything to the contrary, on September 29, 2011, Maker shall pay to Holder
      an amount equal to the difference between (i) Seven Million Five
      Hundred Thousand Dollars ($7,500,000.00) and (ii) the sum of all
      principal payments made by Maker to Holder pursuant to Section 1(b) above,
      or otherwise pursuant to this Note.

            

    

     

    
      	
              4.  

            	
              Maturity.
      Notwithstanding anything contained herein to the contrary, this Note shall
      mature on September 29, 2012, and all outstanding amounts due and payable
      under this Note shall be immediately due and payable on the date of
      maturity.

            

    

     

    
      	
              5.  

            	
              Prepayment.
      Except for the payments referred to in Sections 1(b)(i) - 1(b)(vi) and 3
      above or pursuant to an acceleration of this Note pursuant to Section 8
      below, Maker shall not be entitled to prepay any principal outstanding
      under this Note in whole or in part prior to the Maturity
      Date.

            

    

     

    
      	
              6.  

            	
              Application of
      Payments. Other than with respect to the mandatory principal
      payments required to be made under Section 3 above, which shall be applied
      to principal, any prepayment shall be applied first to unpaid accrued
      interest, if any, and then to the outstanding
  principal.

            

    

     

    
      	
              7.  

            	
              Event of
      Default. An event of default ("Event of Default") means the
      occurrence of any of the following
events:

            

    

     

    
      	
              (a)  

            	
              Any
      failure to pay in full any payment when due
  hereunder;

            

    

     

    
      	
              (b)  

            	
              Any
      breach by Maker of its covenants, agreements or obligations under this
      Note or under any security instrument or collateral assignment executed by
      Maker in favor of Holder and securing this Note, which breach is not cured
      (if such breach is capable of being cured) within ten (10) days after the
      date Holder gives written notice of such breach to Maker; provided,
      however, that the failure of Maker to comply with any of the covenants
      listed in Sections 18(a)(i) through Section 18(a)(iv) of this Note shall
      not constitute an Event of Default so long as Holder pays each monthly
      interest payment at the Covenant Default Interest Rate or the Asset Ratio
      Default Interest Rate, as
applicable;

            

    

     

    
      
        3

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (c)  

            	
              Any
      breach by any guarantor of the obligations evidenced by this Note (a
      "Guarantor") or any guaranty agreement executed in favor of
      Holder;

            

    

     

    
      	
              (d)  

            	
              A
      proceeding being filed or commenced against Maker for dissolution or
      liquidation which is not dismissed within sixty (60) days of filing, or
      Maker voluntarily or involuntarily dissolving or being
      dissolved;

            

    

     

    
      	
              (e)  

            	
              The
      appointment of a custodian, trustee, liquidator or receiver for or for any
      of the property of, or an assignment for the benefit of creditors by, or
      the filing of a petition under any bankruptcy, insolvency or debtor's relief law or for
      any adjustment of indebtedness, composition or extension by or against
      Maker or any guarantor of this Note;
or

            

    

     

    
      	
              (f)  

            	
              The
      occurrence of a "change of control" with respect to Maker or any
      Guarantor. For purposes of this Section 7, a "change of control" shall
      mean any "person" or "group" (as such terms are used in Sections 13(D) and
      14(D) of the Securities and Exchange Act of 1934, as amended) shall own,
      directly or indirectly, 20% or more of the voting capital stock of Maker
      or Guarantor other than as currently in place as of the date hereof, the
      sale or transfer by Maker or any Guarantor of all or substantially all of
      its assets in one or more series of transactions, the merger or other
      business combination of Maker or any Guarantor with or into any other
      person or entity, or the resignation or removal of 50% or more of the
      members of the board of directors of Maker or any Guarantor currently
      serving as of the date hereof.

            

    

     

    
      	
              8.  

            	
              Right to Accelerate;
      Default Interest Rate.  Upon the occurrence of an Event
      of Default, Holder shall have the immediate right to accelerate the
      outstanding indebtedness under this Note and declare all such sums
      immediately due and payable without any further action or notice to
      Maker whatsoever as well
      as to exercise any and all other remedies available to Holder of any
      nature whatsoever. Upon such acceleration, interest shall accrue on all of
      the outstanding indebtedness at the default interest rate ("Default
      Interest Rate"), which shall be an interest rate equal to the greater of
      (i) the Interest Rate plus Four Percent (4%) or (ii) Twelve Percent (12%)
      per annum, determined daily, from the date of acceleration until
      repaid.

            

    

     

    
      	
              9.  

            	
              Collection Costs and
      Attorney's Fees. Time is
      of the essence of this Note and each term, provision and covenant herein.
      In the event this Note is placed in the hands of an attorney for
      collection (whether suit be brought or not), the Maker hereof shall pay on
      demand all reasonable costs and expenses incurred by the Holder arising
      therefrom, including reasonable attorney's fees and
      expenses.

            

    

     

    
      	
              10.  

            	
              Waivers. The
      Maker and all endorsers and Guarantors hereof, if any, and all others who
      may become liable for all or any part of the obligations referenced
      hereunder each severally waives presentment for payment, demand for
      payment, protest and notice of nonpayment, and any and all other notices
      and demands which may be required by applicable law. Failure to accelerate
      the indebtedness evidenced hereby by reason of an occurrence of an event
      of default or the acceptance of a past due payment shall not be construed
      as a novation of this Note or a waiver of the right of Holder to
      thereafter insist upon strict compliance with the terms of this Note
      without previous notice of such intention given to
  Maker.

            

    

     

    
      
        4

      

      
         

        
          

        

      

      
         

      

    

    
      	
              11.  

            	
              Notices. All
      notices and other communications required or permitted to be given
      hereunder or by reason of this Note shall be in writing and shall be
      deemed to have been properly given when delivered in person, when received
      by facsimile or e-mail, when delivered by nationally recognized overnight
      courier, or five (5) days after being deposited in the U.S. Mail,
      certified mail, return receipt requested, postage prepaid, to the parties
      addressed to their addresses for notice listed
  above.

            

    

     

    
      	
              12.  

            	
              Assignment; Binding
      Effect.  Maker may not assign or delegate any of its
      rights, duties or obligations under this Note without the prior written
      consent of Holder. Holder may assign from time to time all or part of this
      Note or participations in this Note without Maker's consent. This Note
      shall inure to the benefit of and be binding upon the respective
      successors, estates, heirs, legal representatives and permitted assigns of
      the parties hereto.

            

    

     

    
      	
              13.  

            	
              Severability.
      Whenever possible, each provision of this Note, or subpart thereof, shall
      be interpreted so as to be valid and effective under applicable law, but
      if any provision of this Note, or subpart thereof, shall be prohibited or
      invalid under applicable law, that provision shall be ineffective only to
      the extent of the prohibition or invalidity, without invalidating the
      remainder of that provision or the remaining provisions of this
      Note.

            

    

     

    
      	
              14.  

            	
              Choice of
      Law/Jurisdiction. It is the intention of the parties hereto that
      the terms of this Note are to be construed in accordance with and governed
      by the laws of the State of Georgia, without reference to the conflicts or
      choice of law principles thereof. Maker agrees that any legal action or
      proceeding with respect to this Note may be brought in the federal or
      state courts of Chatham County, State of Georgia, all as Holder may elect.
      By execution of this Note, Maker hereby submits to the jurisdiction and
      venue of said courts, hereby expressly waiving any defense of personal
      jurisdiction or improper venue. Nothing herein shall affect the right of
      Holder to commence legal proceedings or otherwise proceed against Maker in
      any other jurisdiction or to serve process in any manner permitted or
      required by law.

            

    

     

    
      	
              15.  

            	
              Savings
      Clause/Headings/Entire Agreement/Waivers. If from any circumstances
      whatsoever fulfillment of any provision of this Note at the time
      performance of such provision shall be due shall involve transcending the
      limit of validity presently prescribed by any applicable usury statute or
      any other law, with regard to obligations of like character and amount,
      then, ipso facto, the obligation to be fulfilled shall be reduced to the
      limit of such validity, so that in no event shall any exaction be possible
      under this note that is in excess of the limit of such validity, but such
      obligation shall be fulfilled to the limit of such validity. The paragraph
      headings or captions appearing in this Note are for convenience only, are
      not part of this Note and are not to be considered in interpreting this
      Note. This Note and all exhibits and documents incorporated herein by
      reference constitute the entire and complete agreement between the parties
      hereto and supersede any prior oral or written agreement between the
      parties with respect to the obligations and covenants contemplated
      hereunder. It is expressly agreed that there are no verbal understandings
      or agreements which in any way change the terms, covenants, and conditions
      herein set forth, and that no modification of this Note and no waiver or
      release of any obligation or right of any party hereto shall be valid and
      enforceable unless made in writing and duly executed by all parties
      hereto.

            

    

     

    
      	
              16.  

            	
              Security.
      Maker's performance under this Note is secured by (a) the unconditional
      guaranty of even date herewith executed by Maker's parent company, The
      Savannah Bancorp, Inc., a Georgia corporation, in favor of Holder, and (b)
      the Security Agreement.

            

    

     

    
      
        5

      

      
         

        
          

        

      

      
         

      

    

    
      	
              17.  

            	
              Closing Costs.
      All closing costs associated with the loan contemplated hereby, including
      Holder's reasonable attorneys' fees, shall be paid by
    Maker.

            

    

     

    
      	
              18.  

            	
              Reporting
      Requirements. Maker shall maintain a system of accounting
      established and administered in accordance with sound business practices
      to permit preparation of financial statements in conformity with generally
      accepted accounting principles, consistently applied. During the term of
      this Note, Maker shall provide Holder with the following
      reports:

            

    

     

    
      	
              (a)  

            	
              Quarterly Non-Default
      Certificate. Maker shall deliver within thirty (30) days following
      the end of each calendar quarter, a certificate in the form attached
      hereto as Exhibit D (the
      "Non-Default Certificate"), signed by Maker or by its principal financial
      officer to the effect that no event of default as specified herein or any
      event which, upon notice or lapse of time or both, would constitute such
      an Event of Default, has occurred and that Maker is in compliance with
      each of the following financial covenants listed below in Sections
      18(a)(i) through 18(a)(iv).

            

    

     

    
      	
              (i)  

            	
              Loan-to-Value
      Ratio. On the last day of each calendar quarter during the term of
      this Note, Maker shall have and maintain a loan-to-value ratio of at least
      1.00:1.00. "Loan-to-value ratio" will be calculated by dividing (A) the
      fair market value of the sum of Collateral OREO and the Collateral Notes,
      as determined in accordance with all rules and regulations promulgated by
      any governmental or regulatory authority with respect to any national
      bank, including, without limitation, the Office of the Comptroller of the
      Currency and the Georgia Department of Banking and Finance, by (B) the
      outstanding principal balance of this Note. The Non-Default Certificate
      shall reflect the fair market value of each piece of Collateral OREO and
      each Collateral Note as of the last day of the immediately preceding
      calendar quarter.

            

    

     

    
      	
              (ii)  

            	
              Well-Capitalized
      Status. The Savannah Bank, N.A. and Bryan Bank & Trust shall
      each maintain a well-capitalized status as determined by the Office of the
      Comptroller of the Currency as to The Savannah Bank, N.A. and the Georgia
      Department of Banking and Finance as to Bryan Bank & Trust. The
      Non-Default Certificate shall include evidence of compliance of The
      Savannah Bank, N.A. and Bryan Bank & Trust with this Section
      18(a)(ii).

            

    

     

    
      	
              (iii)  

            	
              Non-Performing Assets
      Ratio. On the date of this Note and on the last day of each
      calendar quarter during the term of this Note, the amount of
      non-performing assets of The Savannah Bancorp, Inc., on a consolidated
      basis, as set forth on The Savannah Bancorp, Inc.'s financial statements
      provided to the Securities and Exchange Commission (the "SEC") in
      connection with the filing of The Savannah Bancorp, Inc.'s quarterly and
      annual reports pursuant to the Securities and Exchange Act of 1934, as
      amended (the "Non-Performing Assets Ratio"), shall not exceed Four and
      Three-Quarters Percent (4.75%) of the total assets of The Savannah
      Bancorp, Inc., on a consolidated basis. Within five (5) days of the filing
      of each quarterly and annual report by The Savannah Bancorp, Inc. with the
      SEC, Maker shall provide a copy of each such filing to Holder together
      with the Non Default Certificate certifying compliance with this Section
      18(a)(iii).

            

    

     

    
      	
              (iv)  

            	
              Dividend Ratio.
      During the term of this Note, dividends paid out by The Savannah Bancorp,
      Inc. to its shareholders during each calendar quarter shall not exceed
      Fifty Percent (50%) of the after-tax net income of The Savannah Bancorp,
      Inc. and its subsidiaries, per the Statement of Operations contained in
      its form 10-Q or 10-K filed with the SEC with respect to the immediately
      preceding calendar quarter.

            

    

     

    
      
        6

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (b)  

            	
              Monthly Activity
      Report. Maker shall deliver within ten (10) days following the end
      of each calendar month, a certificate in the form attached hereto as Exhibit C (the
      "Monthly Activity Report"), signed by Maker or by its principal financial
      officer setting forth a written summary of all activity relating to
      Collateral OREO and Collateral Notes during the immediately preceding
      calendar month, as well as all disclosures required of Maker pursuant to
      Section 1(b) supra. Maker shall include with the Monthly Activity Report
      the internally produced financial statements of SAVB Holdings,
      LLC.

            

    

     

    
      	
              19.  

            	
              Covenant
      Default.

            

    

     

    
      	
              (a)  

            	
              In
      the event that Maker fails to comply with any of the covenants listed in
      Section 18(a)(i) through Section 18(a)(iv) or is unable to make the
      certifications required with respect to such covenants in its Non-Default
      Certificate (other than a failure described in Section 19(b) below), the
      entire calendar quarter in which such Non-Default Certificate is delivered
      to Maker shall be deemed a covenant default quarter ("Covenant Default
      Quarter").  In the event that Maker is unable to certify
      compliance with the covenant contained in Section 18(a)(iv) regarding
      dividends paid by The Savannah Bancorp, Inc. to its shareholders (the
      "Excess Dividend Covenant"), then the entire calendar quarter in which the
      Excess Dividend Covenant is breached (the "Excess Dividend Quarter") shall
      be deemed to be a Covenant Default Quarter.  In addition, Maker
      shall pay to Holder, on the date which Maker sends to Holder the
      Non-Default Certificate which discloses the breach of the Excess Dividend
      Covenant, an amount equal to the difference between (x) the total amount
      of interest which would have been due under this Note had the Covenant
      Default Interest Rate been in effect from the first day of the Excess
      Dividend Quarter until the date such payment is made (the "Retroactive
      Interest Payment Period") and (y) the amount of interest Maker has
      actually paid during the Retroactive Interest Payment Period.
    

            

    

     

    
      	
              (b)  

            	
              In
      the event Maker complies with each of the covenants listed in Sections
      18(a)(i), (ii), and (iv), but fails to comply with the covenant listed in
      Section 18(a)(iii), and the Non-Performing Assets Ratio does not exceed
      Five and One-Quarter Percent (5.25%), the entire calendar quarter in which
      such Non-Default Certificate is delivered to Maker shall be deemed an
      asset ratio default quarter ("Asset Ratio Default
    Quarter").

            

    

     

    
      	
              20.  

            	
              Negative
      Pledge. During the term of this Note, Maker shall provide Holder
      with notice of any sale or payment of any Collateral Note or Collateral
      OREO and the principal payment to Holder with respect to such sale or
      payment must be the greater of (A) the net sales proceeds from such sale
      or (B) the stated value of that asset on Maker's most recent financial
      statement which sets forth the value of the asset sold; provided that the
      Holder has the right, in its sole discretion, to fully collateralize the
      Note by filing mortgages/debt deeds on all of the Collateral OREO and
      taking possession and an assignment of the Collateral Notes if it deems
      itself insecure at any time prior to the payoff of the obligations
      evidenced by the Note. During the term of this Note, Maker shall not grant
      any person or entity other than Holder a security interest in any of
      Maker's assets.

            

    

     

    

    
      
        7

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              21.  

            	
              Waiver of Right to
      Trial by Jury.   THE
      UNDERSIGNED HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
      CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS NOTE OR
      ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
      CONNECTION HEREWITH OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR
      INCIDENTAL TO THE DEALINGS OF THE UNDERSIGNED OR HOLDER WITH RESPECT TO
      THIS NOTE OR ANY OTHER INSTRUMENT,
      DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
      TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING
      OR HEREAFTER ARISING, AND WHETHER ARISING IN CONTRACT OR TORT OR
      OTHERWISE; AND THE UNDERSIGNED HEREBY AGREES AND CONSENTS THAT ANY SUCH
      CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL
      WITHOUT A JURY, AND THAT THE UNDERSIGNED OR THE HOLDER MAY FILE AN
      ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
      EVIDENCE OF THE CONSENT OF THE UNDERSIGNED TO THE WAIVER OF THE RIGHT OF
      THE UNDERSIGNED TO A TRIAL BY
JURY.

            

    

     

     

    

     

    IN
WITNESS WHEREOF, this Note has been executed under seal as of the date first set
forth above, as follows:

     

    Signed,
sealed and delivered in
the                                                                                     SAVB
HOLDINGS, LLC,

    presence
of:                                                                                                                              as
Maker

     

    ________________________                                                                           By:
_/s/ John C.
Helmken II_

    Witness                                                                                                                      
     John C. Helmken II, as Manager

     

    

     

    _________________________                                                                           Attest:
_/s/ R. Stephen
Stramm_

    Notary
Public                                                                                                             
     R. Stephen Stramm, as Manager

    
      
         
8

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