Document:

EXHIBIT 10.1

 

 

 

AMENDED AND RESTATED 

LOAN AND SECURITY AGREEMENT

 

 

 

 

 

By and among

 

 

 

1ST FRANKLIN FINANCIAL CORPORATION

 

 

as Borrower

______________________

 

 

 

WELLS FARGO BANK, N.A.

 

as Agent

________________________

 

 

FIRST HORIZON BANK

 

as Syndication Agent

________________________

 

 

Each of the financial institutions

now or hereafter a party hereto

 

as Lenders

TABLE OF CONTENTS

Page

 

ARTICLE 1 DEFINITIONS1 

Section  1.1Certain Definitions1 

Section  1.2Rules of Construction14 

ARTICLE 2 THE REVOLVING CREDIT FACILITY14 

Section  2.1The Loan14 

Section  2.2The Notes15 

Section  2.3Method of Payment15 

Section  2.4Extension and Adjustment of Maturity Date16 

Section  2.5Use of Proceeds16 

Section  2.6Interest.16 

Section  2.7Advances.16 

Section  2.8Prepayment.19 

Section  2.9Fees19 

Section  2.10Regulatory Changes in Capital Requirements; Replacement of a Lender20 

Section  2.11Sharing of Payments20 

Section  2.12Pro Rata Treatment21 

Section  2.13Accordion21 

Section  2.14Existing Indebtedness22 

ARTICLE 3 SECURITY22 

Section  3.1Security Interest22 

Section  3.2Financing Statements23 

Section  3.3Documents to be Delivered to Agent23 

Section  3.4Collections23 

Section  3.5Additional Rights of Agent; Power of Attorney.23 

Section  3.6Additional Collateral Provisions.24 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES25 

Section  4.1Representations and Warranties as to Receivables.25 

Section  4.2Organization and Good Standing26 

Section  4.3Perfection of Security Interest26 

Section  4.4No Violations26 

Section  4.5Power and Authority.26 

Section  4.6Validity of Agreements27 

Section  4.7Litigation27 

Section  4.8Compliance27 

Section  4.9Accuracy of Information; Full Disclosure.27 

Section  4.10Taxes.28 

Section  4.11Indebtedness28 

Section  4.12Investments28 

Section  4.13ERISA28 

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Section  4.14Hazardous Wastes, Substances and Petroleum Products.28 

Section  4.15Solvency29 

Section  4.16Business Location29 

Section  4.17Capital Stock29 

Section  4.18No Extension of Credit for Securities29 

Section  4.19Sanctions29 

Section  4.20Anti-Money Laundering and Anti-Corruption Laws30 

Section  4.21Beneficial Ownership Certification30 

ARTICLE 5 CONDITIONS TO LOAN30 

Section  5.1Documents to be Delivered to Agent Prior to Effectiveness30 

Section  5.2Conditions to all Advances31 

ARTICLE 6 AFFIRMATIVE COVENANTS31 

Section  6.1Place of Business and Books and Records31 

Section  6.2Reporting Requirements.32 

Section  6.3Books and Records33 

Section  6.4Financial Covenants33 

Section  6.5Compliance With Applicable Law.34 

Section  6.6Notice of Certain Events35 

Section  6.7Existence, Properties35 

Section  6.8Payment of Indebtedness; Taxes35 

Section  6.9Notice Regarding Any Plan35 

Section  6.10Other Information35 

Section  6.11Litigation, Enforcement Actions and Requests for Information36 

Section  6.12Business Location, Legal Name and State of Organization36 

Section  6.13Operations36 

Section  6.14Further Assurances36 

Section  6.15Chattel Paper/Jurisdictions.36 

ARTICLE 7 NEGATIVE COVENANTS37 

Section  7.1Payments to and Transactions with Affiliates37 

Section  7.2Restricted Payments37 

Section  7.3Indebtedness38 

Section  7.4Guaranties38 

Section  7.5Nature of Business38 

Section  7.6Negative Pledge38 

Section  7.7Investments38 

Section  7.8Compliance with Formula38 

Section  7.9Mergers, Divestitures 38 

Section  7.10Use of Proceeds.38 

Section  7.11Ownership and Management38 

Section  7.12Amendment to Subordinated Debt39 

Section  7.13Bulk Purchases39 

Section  7.14Guarantor Dividends39 

Section  7.15Asset Sales39 

Section  7.16Deposit Accounts39 

Section  7.17Source of Repayment and Collateral39 

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Section  7.18Franklin Securities, Inc.39 

ARTICLE 8 EVENTS OF DEFAULT39 

Section  8.1Failure to Make Payments.39 

Section  8.2Information, Representations and Warranties39 

Section  8.3Covenants40 

Section  8.4Collateral40 

Section  8.5Defaults Under Other Agreements40 

Section  8.6Certain Events40 

Section  8.7Possession of Collateral41 

Section  8.8Guarantor41 

Section  8.9Credit Documents41 

Section  8.10Hedging Agreements41 

Section  8.11Material Adverse Change41 

Section  8.12Level Two Regulatory Event41 

ARTICLE 9 REMEDIES OF AGENT AND WAIVER41 

Section  9.1Agent’s Remedies41 

Section  9.2Waiver and Release by Borrowers42 

Section  9.3No Waiver42 

Section  9.4Application of Proceeds42 

ARTICLE 10 MISCELLANEOUS43 

Section  10.1Indemnification and Release Provisions43 

Section  10.2Amendments.43 

Section  10.3APPLICABLE LAW45 

Section  10.4Notices45 

Section  10.5Termination and Release46 

Section  10.6Counterparts46 

Section  10.7Costs, Expenses and Taxes46 

Section  10.8Participations and Assignments.46 

Section  10.9Effectiveness of Agreement49 

Section  10.10JURISDICTION AND VENUE49 

Section  10.11WAIVER OF JURY TRIAL49 

Section  10.12REVIEW BY COUNSEL49 

Section  10.13Exchanging Information49 

Section  10.14Acknowledgment of Receipt49 

Section  10.15Patriot Act Notice50 

Section  10.16Recognition of the U.S. Special Resolution Regimes.50 

ARTICLE 11 AGENT50 

Section  11.1Appointment of Agent.50 

Section  11.2Nature of Duties of Agent.51 

Section  11.3Lack of Reliance on Agent.51 

Section  11.4Certain Rights of Agent52 

Section  11.5Reliance by Agent52 

Section  11.6Indemnification of Agent52 

Section  11.7Agent in its Individual Capacity52 

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Section  11.8Holders of Notes53 

Section  11.9Successor Agent.53 

Section  11.10Collateral Matters.53 

Section  11.11Delivery of Information54 

Section  11.12Defaults54 

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116549.01097/122059808v.9

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of the 19th day of November, 2019 by and among 1ST FRANKLIN FINANCIAL CORPORATION, a Georgia corporation, and such other Persons joined hereto from time to time as borrowers pursuant to written agreement by the parties hereto (collectively, the “Borrowers” and each individually is referred to as a “Borrower”), WELLS FARGO BANK, N.A., as agent for Lenders (“Agent”), and the financial institutions from time to time party hereto (collectively, the “Lenders” and each individually is referred to as a “Lender”).

BACKGROUND

A.Wells Fargo Bank, N.A., as agent and lender, and 1st Franklin Financial Corporation are parties to that certain Loan and Security Agreement dated as of September 11, 2009 (as amended or modified from time to time, the “Existing Agreement”) and certain instruments, documents and agreements executed in connection therewith (together with the Existing Agreement, the “Existing Loan Documents”). 

B.Agent, Lenders and Borrowers desire to amend and restate the Existing Agreement in its entirety pursuant to the terms and conditions hereof. 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties covenant and agree as follows:

ARTICLE 1
DEFINITIONS

Section  1.1          Certain Definitions.  The terms defined in this Section 1.1, whenever used and capitalized in this Agreement shall, unless the context otherwise requires, have the respective meanings herein specified. 

“Access Agreement” shall mean the access agreement, in form and substance acceptable to Agent, executed and delivered to Agent by Borrowers and a Person reasonably acceptable to Agent (including DHI Computing Service, Inc., doing business through a division known as GOLDPoint Systems).

“Adjusted Tangible Net Worth” means Tangible Net Worth minus (a) any deficits from the amount required as Allowance for Loan Losses under Section 6.4(c) hereof and (b) the amount of any accounts to be charged-off, that have not been charged-off, under Section 6.4(e) hereof.

“Advance” means each advance of the Loan made to Borrowers pursuant to Section 2.1 of this Agreement.

“Advance Rate” means 70%.

“Affiliate” means (i) any Person who or entity which directly or indirectly owns, controls or holds 5.0% or more of the outstanding beneficial interest in a Borrower; (ii) any entity of which 5.0% or more of the outstanding beneficial interest is directly or indirectly owned, controlled, or held by a 

Borrower; (iii) any entity which directly or indirectly is under common control with a Borrower; or (iv) any officer, director, partner or employee of a Borrower or any Affiliate.  For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.  

“Agreement” means this Amended and Restated Loan and Security Agreement and all exhibits and schedules hereto, as the same may be amended, modified or supplemented from time to time.

“Allowance for Loan Losses” means, at all times, the sum of allowance for loan losses, as calculated in accordance with GAAP (inclusive of discounts, Dealer Reserves and dealer holdbacks).

“Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which any Borrower or any member of the Borrowing Group is located or doing business.

“Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in which any Borrower or any member of the Borrowing Group is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering (including Anti-Money Laundering Laws), including the Patriot Act.

“Applicable Margin” means (a) initially 2.75% and (b) commencing with Agent’s receipt of the monthly financial statements and other documentation and reports required pursuant to Section 6.2 of this Agreement for the calendar month ending November 30, 2019, the following percentage as set forth in the matrix below (no downward rate adjustment being permitted if an Event of Default or Default is outstanding):

 

	Funded Debt to 

Adjusted Tangible Net Worth Ratio

	Applicable Margin

	Less than 2.75 to 1.0

	2.75%

	Greater than or equal to 2.75 to 1.0

	3.00%

 

For purposes of the foregoing (i) the Applicable Margin shall be adjusted monthly in accordance with the matrix above, based upon Agent’s receipt of monthly financial statements and other documentation and reports required pursuant to Section 6.2 of this Agreement, and effective the first (1st) day of the month of the delivery of such financial statements and other documentation and reports and (ii) if Borrowers fail to timely deliver the applicable financial statements, documentation and reports or any other Event of Default then exists, then at Agent’s option, the Applicable Margin will be increased to the highest rate of interest pursuant to the above matrix, which rate of interest shall continue in effect until the applicable financial statements are delivered.  In the event that any financial 

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statement, covenant compliance certificate, documentation and reports delivered pursuant to Section 6.2 of this Agreement is shown to be inaccurate (regardless of whether this Agreement is in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, and only in such case, then Borrowers shall immediately (i) deliver to Agent a corrected covenant compliance certificate for such Applicable Period, (ii) determine the Applicable Margin for such Applicable Period based upon the corrected covenant compliance certificate, and (iii) pay to Agent the accrued additional interest owing as a result of such increased Applicable Margin for such Applicable Period.

“Asset Quality” means, as of the date of determination, the sum of the following percentage: (a) Net Charge-Offs of Receivables for the 12 month period ending on such date, as a percentage of Principal Receivables outstanding during such 12 month period, plus (b) Receivables more than 60 days past due on a contractual basis on such date, as a percentage of gross Receivable on such date.

“Assignment and Acceptance” means an assignment and acceptance entered into by an assigning Lender and an assignee Lender, accepted by Agent, in accordance with Section 10.8 in form and substance satisfactory to Agent (in its sole and absolute discretion).

“Annual Compliance Certificate” means the certificate in the form of Exhibit A attached hereto and made a part hereof to be delivered by Borrowers to Agent pursuant to Section 6.2(f) hereof.

“Availability Statement” means the certificate in substantially the form of Exhibit B attached hereto and made part hereof to be submitted by Borrowers to Agent in accordance with the provisions of this Agreement.

“Bankruptcy Code” means the United States Bankruptcy Code as now constituted or hereafter amended and any similar statute or law affecting the rights of debtors.

“Bank Products” means any one or more of the following types of services or facilities extended to a Borrower by the Agent or any Wells Fargo Affiliate: (a) Cash Management Services; (b) products under Hedging Agreements; (c) commercial credit card and merchant card services; and (d) leases and other banking products or services as may be requested by any Borrower.

“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. §1841(k).

“Books and Records” means all of Borrowers’ original ledger cards, payment schedules, credit applications, contracts, lien and security instruments, guarantees relating in any way to the Collateral and other books and records or transcribed information of any type, whether expressed in electronic form in tapes, discs, tabulating runs, programs and similar materials now or hereafter in existence relating to the Collateral.

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“Borrowers’ Loan Account” has the meaning assigned to that term in Section 2.1 of this Agreement.

“Borrowing Base” means, as of the date of determination, and subject to change from time to time as described below, an amount equal to the Advance Rate multiplied by the aggregate balance of outstanding Eligible Receivables.  Notwithstanding the foregoing, Agent may adjust the above rates in the Borrowing Base from time to time and at any time in Agent’s commercially reasonable discretion, upon 10 days notice to Borrowers if, in Agent’s commercially reasonable judgment, there has been an adverse change with respect to Borrowers’ Receivables, business operation or regulatory affairs related to Borrowers’ Receivables or business operations.

“Borrowing Group” means: (a) Borrowers, (b) the parent of Borrowers, (c) any Affiliate or Subsidiary of Borrowers, (c) any Guarantor, (d) the owner of any collateral securing any part of the credit (including the Collateral), any guaranty (including the Guaranties), or this Agreement, and (e) any officer, director or agent acting on behalf of any of the parties referred to in items (a) through (d) with respect to the credit, this Agreement or any of the other Credit Documents.  

“Business Day” means any day except a Saturday, Sunday or other day on which national banks are authorized by law to close including, without limitation, United States federal government holidays.

“Cash Management Services” means any services provided from time to time by Agent or any Wells Fargo Affiliate to any Borrower or Subsidiary in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and regulations with respect thereto in effect from time to time.

“Collateral” means:

 

(i)All of each Borrower’s Receivables, now owned or existing or hereafter arising or acquired; 

(ii)All collateral, security and guaranties now or hereafter in existence for any Receivables; 

(iii)All insurance related to any Receivables, to any collateral or security for any Receivables or to any obligor in respect of any Receivables and all proceeds of such insurance to which a Borrower has a right of receipt (including, without limitation, all non-filing insurance, credit insurance and credit life insurance related to any Receivables, to any collateral or security for any Receivables, or to any obligor in respect of any Receivables and all proceeds of such insurance); 

(iv)All of each Borrower’s Books and Records related to any Receivables including tapes and software; 

(v)All notes, drafts, deposit accounts, acceptances, documents of title, deeds,  

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policies and policies or certificates of insurance (including without limitation credit insurance, credit life insurance, non-filing insurance and title insurance) and securities (domestic and foreign) and letter of credit rights now or hereafter owned by each Borrower or in which a Borrower has or at any time acquires an interest in connection with any Receivables;

(vi)All of each Borrower’s Accounts, Documents, Instruments, General Intangibles, Investment Property (including, without limitation, equity interests in and capital stock of each Entity Guarantor) and Chattel Paper, now owned or existing or hereafter arising or acquired, and all payment obligations owed to a Borrower, now owned or existing or hereafter arising or acquired; together with all collateral, security and guaranties now or hereafter in existence for any of the foregoing; and 

(vii)All cash and non-cash proceeds of all the foregoing. 

“Collections” means payment of principal, interest and fees on Receivables, the cash and non-cash proceeds realized from the enforcement of such Receivables and any security therefor, or the Collateral, proceeds of credit, group life or non-filing insurance, or proceeds of insurance on any real or personal property which is part of the collateral for the Receivables.

“Commercial Paper” means the short term promissory notes issued by Borrowers from time to time in connection with their commercial paper program.

“Commitment” means, with respect to each Lender, a commitment of such Lender to make its portion of the Advance in a principal amount up to each such Lender’s Commitment Percentage of the Maximum Principal Amount.

“Commitment Percentage” means, for any Lender, the percentage identified as the Commitment Percentage on Schedule I, as such percentage may be modified in connection with any assignment made in accordance with Section 10.8. 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. Section 1 et seq.), as amended from time to time, and any successor statute.

“Consumer Finance Laws” means all applicable laws and regulations, federal, state and local, relating to the extension of consumer credit, and the creation of a security interest in personal property or a mortgage in real property in connection therewith, as the case may be, and laws with respect to protection of consumers’ interests in connection with such transactions, including without limitation, any usury laws, the Federal Consumer Credit Protection Act, the Federal Fair Credit Reporting Act, RESPA, the Magnuson-Moss Warranty Act, the Federal Trade Commission’s Rules and Regulations and Regulations B and Z of the Federal Reserve Board, as any of the foregoing may be amended from time to time.

“Consumer Purpose Loans” means amortizing loans to one or more individuals the proceeds of which are used for personal use including to purchase goods, services or merchandise for personal, household or family use.

“Control Agreement” means that certain deposit account control agreement among Borrowers, Agent and South State Bank (in form and substance satisfactory to Agent and South State Bank).

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“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §382.2(b). 

 “Credit Documents” means this Agreement, the Notes, the Guaranties, the Subordination Agreement, the Control Agreement and any and all additional documents, instruments, agreements and other writings executed and delivered pursuant to or in connection with this Agreement.

“Dealer Reserves” means a reserve on Borrower’s Books and Records for charges and claims against dealers.

“Debt” means as of the date of determination, all outstanding indebtedness (other than deferred loan origination fees of Borrowers) including without limitation (a) all loans made hereunder to Borrowers; (b) accounts payable as of the date of determination; (c) income tax liabilities; (d) mortgages; (e) deposits, debenture instruments, and other instruments, including all accruals of interest and fees related thereto; (e) all other obligations which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise); (f) Subordinated Debt and (g) Other Debt.

“Default” means an event, condition or circumstance which, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§252.81, 47.2 or 382.1, as applicable.

“Deficiency Balance Receivable” means a Receivable for which a balance remains after any collateral associated with such Receivable has been sold and the remaining balance has not been charged off.

“EBITDA Ratio” means the ratio of such Person’s (a) earnings before payments of interest, taxes, depreciation and amortization expense for the twelve month period ending on the date of determination, net of any deficits from the amount required as an Allowance for Loan Losses under Section 6.4(c) hereof and the amount of any accounts to be charged off, that have not been charged off, in Section 6.4(e) hereof, to (b) interest expense during such twelve month period in accordance with GAAP principles pursuant to Section 6.4 of this Agreement.

 “Eligible Receivables” means, as of the date of determination, Receivables (net of unearned interest, fees, dealer reserves, holdbacks, discounts, insurance premiums and commissions thereon), which conform to the warranties set forth in Section 4.1 hereof, in which Agent has a validly perfected first priority Lien, and which are not any of the following: (i) Receivables for which a payment is more than 60 days past due on a contractual basis; (ii) Receivables subject to a bankruptcy proceeding, litigation, foreclosure, repossession or other legal proceeding; (iii) Receivables from employees (unless payments with respect thereto are automatically deducted from such employee’s paycheck) or shareholders of any Borrower or any Affiliate; (iv) Receivables which have been deferred, restructured, extended, renewed, modified or altered not in compliance with Borrowers’ Modification Policy; (vi) Receivables not in compliance with Borrowers’ Underwriting Policy; (vii) if Borrowers have elected to note their first priority Lien on the applicable certificate of title, Receivables for which Agent or 

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Borrowers have not received a valid certificate of title or notification of a valid certificate of title with the Lien of a Borrower noted thereon, if applicable, within 120 days after the origination of the Receivable; (viii) Receivables arising from balloon payment accounts, non-amortizing accounts or Interest-Only Accounts; (ix) Receivables arising from assignments for repossession; (x) Real Estate Related Accounts for which the original term exceeds 120 months; (xi) Receivables which were originated to support the acquisition of commercial vehicles; (xii) RESERVED; (xiii) Deficiency Balance Receivables; (xiv) Receivables serviced, collected or enforced by a Person other than a Borrower without prior written consent of Agent; (xv) Real Estate Related Accounts for which the amount, when aggregated with all other Real Estate Related Accounts exceeds the lesser of (A) $55,000,000 or (B) 10% of all total Receivables of Borrowers then outstanding, to the extent of such excess; (xvi) Receivables with any deferred payments; (xvii) Receivables constituting “premier loans” with a credit score of less than 640; (xviii) Receivables for which the original term exceeds 60 months (other than Real Estate Related Accounts); (xix) Receivables with an original principal balance in excess of $15,000 (other than Real Estate Related Accounts); and (xx) Receivables which, in Agent’s commercially reasonable discretion, do not constitute acceptable collateral following 10 days’ notice from Agent to Borrowers.

“Entity Guarantors” means, collectively, Frandisco Life Insurance Company, a Georgia corporation, and Frandisco Property & Casualty Insurance Company, a Georgia corporation.

“Environmental Control Statutes” means any federal, state, county, regional or local laws governing the control, storage, removal, spill, release or discharge of Hazardous Substances, including without limitation CERCLA, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976, the Hazardous Materials Transportation Act, the Emergency Planning and Community Right to Know Act of 1986, the National Environmental Policy Act of 1975, the Oil Pollution Act of 1990, any similar or implementing state law, and in each case including all amendments thereto and all rules and regulations promulgated thereunder and permits issued in connection therewith.

“EPA” means the United States Environmental Protection Agency, or any successor thereto.

“ERISA” means the Employee Retirement Income Security Act of 1974, all amendments thereto, and any successor statute of similar import, and regulations thereunder, in each case as in effect from time to time.  References to sections of ERISA shall be construed to refer to any successor sections.

“Event of Default” has the meaning assigned to that term in Article 8 of this Agreement.

“Excess Availability” means, as of any date of determination, an amount equal to (a) the lesser of the Borrowing Base and the Maximum Principal Amount, minus (b) the amount of outstanding Advances.

“Excluded Swap Obligation” means, with respect to any Person, any Swap Obligation if, and to the extent that, all or a portion of the agreement of such Person to be obligated with respect of, or the grant by such Person of a Lien to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal or unlawful under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any 

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thereof) by virtue of such Person’s failure for any reason not to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the agreement of such Person to be obligated with respect of such Swap Obligation would otherwise have become effective with respect to such related Swap Obligation but for such Person’s failure to constitute an “eligible contract participant” at such time.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such agreement of such Person to be obligated or Lien is or becomes illegal or unlawful.

“Funded Debt” means, with respect to any Person on any day, without duplication, the following Debt: (i) all indebtedness or guarantees of such Person for borrowed money or for the deferred purchase price of property or services (other than current liabilities incurred in the ordinary course of business and payable in accordance with customary trade practices) or which is evidenced by a note, bond, debenture or similar instrument or which accrue interest or are a type upon which interest charges are customarily paid (specifically excluding all obligations of such Person under capital leases), (ii) liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof (provided that the amount of such liabilities included as Funded Debt shall be the lesser of the amount of such liabilities and the fair market value of the property of such Person securing such liabilities), (iii) the net amount of all indebtedness, obligations or liabilities of that Person in respect of Hedge Agreements, (iv) all obligations, contingent or otherwise, of such Person as an account party in respect of undrawn letters of credit and undrawn letters of guaranty, (v) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, and (vi) guaranties of any of the foregoing

“Funded Debt to Adjusted Tangible Net Worth Ratio” means the ratio of Funded Debt to Adjusted Tangible Net Worth.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied; provided, however, that all calculations relative to liabilities shall be made without giving effect to Statement of Financial Accounting Standards No. 159.

“Governmental Authority” means any federal, state, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body (including, without limitation, Local Authorities).

“Guarantors” shall mean, collectively, Entity Guarantors.

“Guaranty” means individually, and “Guaranties” means collectively, the limited and unlimited guaranty agreements in form and substance satisfactory to Agent, as the same may be amended, modified, restated or extended from time to time.

“Hazardous Substance” means any toxic, reactive, corrosive, carcinogenic, flammable or hazardous pollutant or other substance, including without limitation petroleum and items defined in Environmental Control Statutes as “hazardous substances,” “hazardous wastes,” “pollutants” or “contaminants.”

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“Hedging Agreement” an agreement relating to any interest rate hedge, exchange, swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk (including, without limitation, any ISDA Master Agreement).

“Insurance Premium Dividend” means distribution to shareholders of Borrowers used solely to pay life insurance premiums.

“Intangible Assets” means all assets of any Person which would be classified in accordance with GAAP as intangible assets, including without limitation (a) all franchises, licenses, permits, patents, applications, copyrights, trademarks, trade names, goodwill, experimental or organization expenses and other like intangibles, and (b) unamortized debt discount and expense and unamortized stock discount and expense.

“Interest-Only Accounts” means those Receivables on which collections are applied entirely to interest and expense charges, with no portion thereof being required to reduce the principal balance on the loan prior to the stated maturity of such accounts.

“Level One Regulatory Event” means the formal commencement by written notice by any federal or state Governmental Authority of any inquiry, investigation, legal action or similar proceeding against any Borrower or any of their Subsidiaries challenging its authority to originate, hold, own, service, collect or enforce Receivables generally or any category or group of Receivables that is material to the business of such Borrower or such Subsidiary, or otherwise alleging any material non-compliance by any Borrower or any of their Subsidiaries with any applicable laws related to originating, holding, collecting, servicing or enforcing Receivables generally or any category or group of Receivables that is material to the business of such Borrower or such Subsidiary (which shall include, without limitation, the issuance of a civil investigative demand by the Consumer Financial Protection Bureau that meets the criteria set forth above), which inquiry, investigation, legal action or proceeding is not released or terminated in a manner reasonably acceptable to Agent within thirty (30) calendar days of commencement thereof.

“Level Two Regulatory Event” means the issuance or entering of any stay, order, judgment, cease and desist order, injunction, temporary restraining order, or other judicial or non-judicial sanction, order or ruling against any Borrower or any of their Subsidiaries related in any way to the originating, holding, pledging, collecting, servicing or enforcing of Receivables generally or any category or group of Receivables that is material to the business of such Borrower or such Subsidiary.

“LIBOR Rate” means the greater of (a) 0.75% per annum or (b) the one-month London Interbank Offered Rate as found in the Wall Street Journal, Interactive Edition, or any successor edition or publication and selected by Agent in its sole discretion for its entire loan portfolio for all borrowers for any day during a given month.  The LIBOR Rate shall be adjusted on the first day of each calendar month based upon the LIBOR Rate as of the last day of the immediately preceding calendar month.  In the event such rate ceases to be published or quoted, LIBOR Rate shall mean a comparable rate of interest reasonably selected by Agent for its entire loan portfolio for all borrowers.  Agent’s determination of the LIBOR Rate shall be conclusive and binding on Borrowers, absent manifest error.

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 “Lien” means any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, including without limitation any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security.

“Liquidity” means the sum of unencumbered cash of Borrowers, Excess Availability and availability under the Reinsurance Credit Facilities.

“Loan” means the aggregate principal amount advanced by Lenders to Borrowers pursuant to Section 2.1 of this Agreement, together with interest accrued thereon and fees and costs owing hereunder in connection therewith.

“Loan Availability” means the amount available for Advances under this Agreement on any date as determined in accordance with the Availability Statement submitted to Agent pursuant to the terms hereof.

“Local Authorities” means individually and collectively the state and local governmental authorities which govern the business and operations owned or conducted by Borrowers or any of them.  

“Maturity Date” means February 28, 2022, as such date may be extended from time to time in accordance with the provisions of Section 2.4 of this Agreement. 

“Maximum Principal Amount” means $200,000,000.

“Modification Policy” means that certain policy of Borrowers attached hereto as Exhibit E.

“Net Charge-Offs” means Principal Receivables which have been charged off (net of bad debt recoveries).

“Notes” mean collectively, the promissory notes to this Agreement of Borrowers in favor of each Lender in form and substance satisfactory to Agent, evidencing the joint and several obligation of Borrowers to repay the Loan, and any and all amendments, renewals, replacements or substitutions therefor, and each is referred to individually as a “Note.”

“Obligations” means (a) each and every draft, liability and obligation of every type and description which Borrowers may now or at any time hereafter owe to Agent and Lenders (whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it arises in a transaction involving Agent and/or any Lender alone or in a transaction involving other creditors of Borrowers, or any of them, and whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several), and including specifically, but not limited to, all indebtedness of Borrowers arising under this Agreement, the Notes, any fee letter or any other loan or credit agreement between or among a Borrower or Borrowers and Agent and/or any Lender, whether now in effect or hereafter entered into and including, without limitation, all Loans and (b) payment or performance, as the case may be, of all obligations of Borrowers with respect to Bank Products.  Notwithstanding anything to the contrary contained herein, the Obligations shall specifically exclude Excluded Swap Obligations.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the 

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Treasury.

“Other Debt” means Senior Demand Notes, Commercial Paper and Variable Rate Subordinated Debentures.

“Participant” has the meaning assigned to that term in Section 10.8 of this Agreement. 

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA Patriot Act of 2001).

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

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

“Permitted Liens” means (a) Liens granted to Agent by Borrowers pursuant to this Agreement, (b) Liens existing as of the date hereof described on Schedule III attached hereto and (c) Liens granted to real property landlords by Borrowers on furniture, fixture and equipment.

“Permitted Tax Distributions” shall mean as to any taxable year of a Borrower during which such Borrower makes an S corporation election with the Internal Revenue Service and appropriate state agency, an annual distribution necessary to enable each shareholder of such Borrower to pay federal or state income taxes attributable to such shareholder resulting solely from the allocated share of income of such Borrower for such period.

“Person” means all natural persons, corporations, limited partnerships, general partnerships, joint stock companies, limited liability companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and federal and state governments and agencies or regulatory authorities and political subdivisions thereof, or any other entity.  

“Plan” means any employee benefit plan subject to the provisions of Title IV of ERISA which is maintained in whole or in part for employees of Borrowers or any Affiliate of Borrowers.

“Principal Receivables” means net Receivables less unearned interest and insurance commissions (including discounts).

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“Real Estate Related Accounts” means Receivables arising from loans (a) the proceeds of which are used to purchase or improve real property; or (b) collateralized or secured by an interest in real property; and shall include without limitation home equity accounts. 

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“Receivables” means all lien, title retention and security agreements, chattel mortgages, chattel paper, bailment leases, installment sale agreements, instruments, consumer finance paper and/or promissory notes securing and evidencing loans made, and/or time sale transactions acquired, by a Borrower.

“Regulatory Event” means either a Level One Regulatory Event or a Level Two Regulatory Event.

“Reinsurance Credit Facilities” means the unsecured credit facilities established for the benefit of Borrowers pursuant to two Line of Credit Loan Agreements with Borrowers’ Subsidiaries, Frandisco Life Insurance Company and Frandisco Property and Casualty Insurance Company, the documentation of which are in form and substance acceptable to Agent, and which shall have (w) maturity dates thereunder at least five (5) months after the Maturity Date, (x) no financial or negative covenants, (y) a per annum rate of interest no more than 25 basis points greater than the interest accruing on the principal balance of the Obligations and (z) an aggregate commitment of at least $92,000,000.

“Replacement Lender” has the meaning assigned to that term in Section 2.10(b) of this Agreement.

“Reportable Event” has the meaning assigned to that term in Section 4.13 of this Agreement.

“Required Lenders” means, at any time, Lenders which are then in compliance with their obligations hereunder and holding in the aggregate at least seventy five percent (75%) of (a) the Commitment Percentage (and participation interest) or (b) if this Agreement has been terminated, the outstanding Loans and participation interest; provided, however, if there are less than three (3) Lenders at any time, Required Lenders shall mean one hundred percent (100%) of Lenders which are then in compliance with their obligations hereunder.

“Restricted Payments” means payments by Borrowers, or any of them, which constitute (a) redemptions, repurchases, dividends or distributions of any kind with respect to a Borrower’s stock or any warrants, rights or options to purchase or otherwise acquire any shares of Borrower’s capital stock or (b) payments of principal or interest on Subordinated Debt.

“Sanction” or “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and restrictions and anti-terrorism laws imposed, administered or enforced from time to time by any Sanctioned Entity: including, without limitation: (a) the United States of America, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future statute or Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, (e) any other governmental authority with jurisdiction over Borrower or any member of the Borrowing Group.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.

“Sanctioned Target” means any target of Sanctions, including: (a) Persons on any list of targets 

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identified or designated pursuant to any Sanctions, (b) Persons, countries, or territories that are the target of any territorial or country-based Sanctions program, (c) Persons that are a target of Sanctions due to their ownership or control by any Sanctioned Target(s), or (d) otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program.

“Schedule of Receivables and Assignment” means a Schedule of Receivables and Assignment to be submitted by Borrowers to Agent pursuant to the terms hereof, describing the Receivables assigned and pledged to Agent, for the benefit of Agent, on the date hereof and thereafter for the period to which such schedule relates and confirming the assignment and pledge of such Receivables.

“Senior Demand Notes” means the Senior Demand Notes issued by Borrowers from time to time, as more fully described in the most current prospectus with respect to the Senior Demand Notes as filed with the Securities and Exchange Commission, as the same may be amended, modified, supplemented, increased or restated from time to time.

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

“Subordination Agreement” means, individually, and “Subordination Agreements” means, collectively, the Subordination Agreements executed in connection with the Subordinated Debt, from time to time, each in the form of Exhibit D attached hereto and made part hereof.

“Subsidiary” of any entity means any corporation, limited liability company, partnership or other legal entity of which such entity directly or indirectly owns or controls at least a majority of the outstanding stock or other equity interest having general voting power.  For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.

“Swap Obligation” means, with respect to any Person, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “Swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

“Tangible Net Worth” means, at any date, the amount of the capital stock liability of such Person on a consolidated basis (but excluding the effect of intercompany transactions) plus (or minus in the case of a deficit) its capital surplus and earned surplus minus, to the extent not otherwise excluded (i) the cost of treasury shares; (ii) the amount equal to the value shown on its books of Intangible Assets, including the excess paid for assets acquired over their respective book values on the books of the corporation from which acquired; and (iii) investments in and loans to any Subsidiary or Affiliate or to any shareholder, director or employee of such Person, any Subsidiary or any Affiliate.

“Termination Date” means the earlier of: (a) the Maturity Date, or (b) the date on which the Commitments are terminated and the Loan becomes due and payable pursuant to Section 9.1.

“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and 

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Consumer Protection Act and the regulations promulgated thereunder.

“Underwriting Policy” means that certain policy of Borrowers attached hereto as Exhibit F.

“UCC” means the Uniform Commercial Code as in effect in the State of New York from time to time. 

“Variable Rate Subordinated Debentures” means the Variable Rate Subordinated Debentures issued by Borrowers from time to time under the Subordinated Indenture (that certain Indenture dated as of October 31, 1984, as the same may be amended, modified, supplemented, restated, renewed, refinanced or replaced from time to time), the repayment of which are subordinate in right of payment to the Obligations, the Senior Demand Notes, the Commercial Paper and any other Indebtedness of Borrowers.

“Wells Fargo Affiliate” means in relation to Agent, any entity controlled, directly or indirectly, by Agent, any entity that controls, directly or indirectly, Agent or any entity directly or indirectly under common control with Agent (including, without limitation, Wachovia Bank, National Association and its subsidiaries and affiliates).  For this purpose, “control” of any entity means ownership of a majority of the voting power of the entity.

Section  1.2          Rules of Construction. 

(a)Accounting Term.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP; provided, however, that if at any time any change in GAAP would affect the computation of any covenant (including the computation of any financial covenant) and/or pricing grid set forth in this Agreement or any other Credit Document, Borrowers and Agent shall negotiate in good faith to amend such covenant and/or pricing grid to preserve the original intent in light of such change; provided further, that until so amended, (i) such covenant and/or pricing grid shall continue to be computed in accordance with the application of GAAP prior to such change and (ii) Borrowers shall provide to Agent a written reconciliation in form and substance reasonably satisfactory to Agent, between calculations of such covenant and/or pricing grid made before and after giving effect to such change in GAAP.  Whenever the term “Borrowers” is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrowers and their Subsidiaries on a consolidated basis, unless the context clearly requires otherwise. 

(b)Uniform Commercial Code.  Except as otherwise provided herein, terms used in the foregoing definitions or elsewhere in this Agreement that are defined in the Uniform Commercial Code, including without limitation, “Accounts”, “Documents”, “Goods”, “Instruments”, “Investment Property”, “General Intangibles” and “Chattel Paper” shall have the respective meanings given to such terms in the UCC. 

ARTICLE 2
THE REVOLVING CREDIT FACILITY

Section  2.1          The Loan.  Until the Termination Date, Borrowers may request Lenders to make Advances to Borrowers and, subject to the terms and conditions of this Agreement, each Lender severally and not jointly agrees to lend such Lender’s Commitment Percentage of each requested Advance up to such Lender’s Commitment which Borrowers may repay and reborrow  from time to  

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time.  The aggregate unpaid principal amount at any one time outstanding of all Advances shall not exceed the lesser of the Maximum Principal Amount or the Borrowing Base in effect as of the date of determination.

(a)Agent shall establish on its books an account in the name of Borrowers (the “Borrowers’ Loan Account”).  A debit balance in Borrowers’ Loan Account shall reflect the amount of Borrowers’ indebtedness to Agent and Lenders from time to time by reason of Advances and other appropriate charges (including, without limitation, interest charges) hereunder.  At least once each month, Agent shall provide to Borrowers a statement of Borrowers’ Loan Account which statement shall be considered correct and accepted by Borrowers and conclusively binding upon Borrowers unless Borrowers notify Agent to the contrary within 30 days of Agent’s providing such statement to Borrowers.  

(b)Each Advance made hereunder shall, in accordance with GAAP, be entered as a debit to Borrowers’ Loan Account, and shall be in a principal amount which, when aggregated with all other Advances then outstanding, shall not exceed the lesser of the then effective Borrowing Base or Maximum Principal Amount. 

(c)The Loan shall be due and payable on the Termination Date.  Upon the occurrence of an Event of Default, Agent shall have rights and remedies available to it under Article 9 of this Agreement. 

(d)Agent has the right upon 10 days prior notice to Borrowers at any time, and from time to time, in its commercially reasonable discretion exercised in good faith (but without any obligation), to set aside reasonable reserves against the Borrowing Base in such amounts as it may deem commercially reasonable, including, without limitation, a reserve equal to the amount of outstanding indebtedness in connection with Bank Products and with respect to Regulatory Events. 

Section  2.2          The Notes.  The indebtedness of Borrowers to each Lender hereunder shall be evidenced by a separate Note executed by Borrowers in favor of such Lender in the principal amount equal to each such Lender’s Commitment Percentage of the Maximum Principal Amount.  The principal amount of the Notes will be the Maximum Principal Amount; provided, however, that notwithstanding the face amount of the Notes, Borrowers’ liability under the Notes shall be limited at all times to the actual indebtedness (principal, interest and fees) then outstanding and owing by Borrowers to Agent and Lenders hereunder. 

Section  2.3          Method of Payment.  Borrowers shall make all payments of principal and interest on the Notes in lawful money of the United States of America and in funds immediately available by wire transfer or funds transfer, to Agent at its address referred to in Section 10.4 of this Agreement or at such other address as Agent otherwise directs.  Whenever any payment is due on a day, which is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and interest shall be paid for such extended time. As soon as practicable after Agent receives payment from Borrowers, but in no event later than 1 Business Day after such payment has been made, subject to Section 2.7, Agent will cause to be distributed like funds relating to the payment of principal, interest or fees (other than amounts payable to Agent to reimburse Agent for fees and expenses payable solely to Agent pursuant to the terms of this Agreement) or expenses payable to Agent and Lenders in accordance with the terms of this Agreement, in like funds relating to the payment of any such other amounts payable to Lenders.  Borrowers’ obligations to Lenders with  

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respect to such payment shall be discharged by making such payments to Agent pursuant to this Section 2.3 or, if not timely paid or any Event of Default or Default then exists, may be added to the principal amount of the Loans outstanding.  Borrowers hereby authorize Agent to charge the line of credit established hereunder for any amounts that are due and owing pursuant to the terms of this Agreement with such amounts added to the principal amount of the Loans outstanding and Agent may elect to utilize such right in its sole discretion.

Section  2.4          Extension and Adjustment of Maturity Date.  Upon the written agreement of Borrowers, Agent and Lenders, the Maturity Date may be extended.   

Section  2.5          Use of Proceeds.  Advances shall be used to finance Borrowers’ portfolios of Consumer Purpose Loans, for general working capital purposes and for other lawful corporate purposes except as limited under this Agreement. 

Section  2.6          Interest. 

(a)In the absence of an Event of Default or Default hereunder, and prior to maturity, the outstanding balance of the Loan will bear interest at an annual rate at all times equal to the LIBOR Rate plus the Applicable Margin.   

(b)Interest shall be payable monthly in arrears on the first day of each month commencing on the first such date after the first Advance under the Loan and continuing until the Commitments are terminated and the Obligations are indefeasibly paid in full.  Interest as provided hereunder will be calculated on the basis of a 360 day year and the actual number of days elapsed. 

(c)Notwithstanding the foregoing, upon the occurrence and during the continuance of an Event of Default hereunder, including after maturity and before and after judgment, Borrowers hereby agree to pay to Lenders interest on the outstanding principal balance of the Loan and any other obligations and, to the extent permitted by law, overdue interest with respect thereto, at the rate of 2.50% per annum above the rate otherwise applicable to the Loan.  

Section  2.7          Advances. 

(a)Borrowers shall notify Agent in writing not later than 3:00 P.M. eastern time, on the date of each requested Advance, specifying the date and amount of the Advance.  Such notice shall submitted electronically via Agent’s online system (or in such other manner as acceptable to Agent in its sole discretion) and shall contain the following information and representations, which shall be deemed affirmed and true and correct as of the date of the requested Advance: 

(i)the aggregate amount of the requested Advance, which shall be in an minimum amount of at least $25,000 or the unborrowed balance of the Borrowing Base; 

(ii)confirmation that no Event of Default or Default exists either immediately prior to or after making such Advance; and that there has been no material adverse change in Borrowers’ financial condition, operations or business since the date of the monthly and audited annual financial statements most recently delivered by Borrowers to Agent pursuant to this Agreement; and 

(iii)statements that the representations and warranties set forth in Article 4  

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are true and correct as of the date of the Advance in all material respects.

(b)Agent shall give to each Lender prompt notice of each request for Advance submitted via Agent’s online automatic advance request system.  Unless Agent shall have been notified by any Lender at least 5 Business Days prior to the date of Advance that such Lender does not intend to make available to Agent its portion of the Advance to be made on such date, Agent may assume that such Lender will make such amount available to Agent as required above and Agent may, in reliance upon such assumption, make available the amount of the Advance to be provided by such Lender.  Upon fulfillment of the conditions set forth in Sections 2.7(a) and 5.2 for such Advance, and as soon as practicable after receipt of funds from Lenders Agent will make such funds as have been received from Lenders available to Borrowers at the account specified by Borrowers from time to time in writing to Agent. 

(c)Because Borrowers anticipate requesting Advances on a daily basis, resulting in the amount of outstanding Advances fluctuating from day to day, in order to administer the Loan in an efficient manner and to minimize the transfer of funds between Agent and Lenders, Lenders hereby instruct Agent, and Agent may (in its sole discretion, without any obligation) (i) make available, on behalf of Lenders, the full amount of all Advances requested by Borrowers, without giving each Lender prior notice of the proposed Advance and of such Lender’s Commitment Percentage thereof and (ii) if Agent has made any such amounts available as provided in clause (i), upon repayment of Loans by Borrowers, first apply such amounts repaid directly to the amounts made available by Agent in accordance with clause (i) and not yet settled as described below.  If Agent makes an Advance on behalf of Lenders, as provided in the immediately preceding sentence, the amount of outstanding Loans and each Lender’s Commitment Percentage thereof shall be computed weekly rather than daily and shall be adjusted upward or downward on the basis of the amount of outstanding Loans as of 5:00 P.M., Central time on the Business Day immediately preceding the date of each computation; provided, however, that Agent retains the absolute right at any time or from time to time to make the afore-described adjustments at intervals more frequent than weekly.  Agent shall deliver to each of Lenders at the end of each week, or such lesser period or periods as Agent shall determine, a summary statement of the amount of outstanding Loans for such period (such week or lesser period or periods being hereafter referred to as a “Settlement Period”).  If the summary statement is sent by Agent and received by Lenders prior to 12:00 Noon, Central time on any Business Day each Lender shall make the transfers described in the next succeeding sentence no later than 3:00 P.M., Central time on the day such summary statement was sent; and if such summary statement is sent by Agent and received by Lenders after 12:00 Noon, Central time on any Business Day, each Lender shall make such transfers no later than 3:00 P.M., Central time no later than the next succeeding Business Day after such summary statement was sent.  If in any Settlement Period, the amount of a Lender’s Commitment Percentage of the Loans is in excess of the amount of Loans actually funded by such Lender, such Lender shall forthwith (but in no event later than the time set forth in the next preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of such excess; and, on the other hand, if the amount of a Lender’s Commitment Percentage of the Loans in any Settlement Period is less than the amount of Loans actually funded by such Lender, Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the amount of such difference.  The obligation of each of Lenders to transfer such funds shall be irrevocable and unconditional, without recourse to or warranty by Agent and made without setoff or deduction of any kind.  Each of Agent and Lenders agree to mark their respective books and records at the end of each Settlement Period to show at all times the dollar amount of their respective Commitment Percentages of the outstanding Loans.  Because Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to  

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the time when Lenders will actually advance and/or be repaid Loans, interest with respect to Loans shall be allocated by Agent to each Lender (including Agent) in accordance with the amount of Loans actually advanced by and repaid to each Lender (including Agent) during each Settlement Period and shall accrue from and including the date such Advance is made by Agent to but excluding the date such Loans are repaid by Borrower in accordance with Section 2.3 or actually settled by the applicable Lender as described in this Section 2.7(c).  All such Advances made by Agent on behalf of Lenders hereunder shall bear interest at the interest rate applicable hereunder for Advances.

(d)If the amounts described in subsection (b) or (c) of this Section 2.7 are not in fact made available to Agent by a Lender (such Lender being hereinafter referred to as a “Defaulting Lender”) and Agent has made such amount available to Borrowers, Agent shall be entitled to recover such corresponding amount on demand from such Defaulting Lender.  If such Defaulting Lender does not pay such corresponding amount forthwith upon Agent’s demand therefor, Agent shall promptly notify Borrowers and Borrowers shall immediately (but in no event later than 10 Business Days after such demand) pay such corresponding amount to Agent.  Agent shall also be entitled to recover from such Defaulting Lender and Borrowers, (i) interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by Agent to Borrowers to the date such corresponding amount is recovered by Agent, at a rate per annum equal to either (A) if paid by such Defaulting Lender, the overnight federal funds rate or (B) if paid by Borrowers, the then applicable rate of interest, calculated in accordance with Section 2.6, plus (ii) in each case, an amount equal to any costs (including reasonable legal expenses) and losses incurred as a result of the failure of such Defaulting Lender to provide such amount as provided in this Agreement.  Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which Borrowers may have against any Lender as a result of any default by such Lender hereunder, including, without limitation, the right of Borrowers to seek reimbursement from any Defaulting Lender for any amounts paid by Borrowers under clause (ii) above on account of such Defaulting Lender’s default. 

(e)The failure of any Lender to make its portion of the Advance to be made by it as part of any Advance shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Advance.  The amounts payable by each Lender shall be a separate and independent obligation. 

(f)Each Lender shall be entitled to earn interest at the then applicable rate of interest, calculated in accordance with Section 2.6, on outstanding Loans which it has funded to Agent from the date such Lender funded such Advance to, but excluding, the date on which such Lender is repaid with respect to the Loan. 

(g)RESERVED. 

(h)Nothing contained in this Section 2.7 or otherwise in this Agreement shall impair or limit any claim of Borrowers against a Defaulting Lender (including, without limitation, expenses incurred by Borrowers by reason of any such default) who breaches its commitment to fund Advances hereunder. 

(i)Each request for an Advance pursuant to this Section 2.7 shall be irrevocable and binding on Borrowers. 

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Section  2.8          Prepayment. 

(a)Optional Prepayments.  Borrowers may prepay the Loan from time to time, in full or in part without premium or penalty, provided that (i) in the event Borrowers prepay the Loan in full and terminate this Agreement prior to the Maturity Date, Borrowers shall provide at least 3 Business Days prior notice to Agent and pay a sum equal to 1.0% of the Maximum Principal Amount as a prepayment fee; (ii) prepayments shall be in a minimum amount of $25,000 and $25,000 increments in excess thereof; and (iii) partial prepayments prior to the Termination Date shall not reduce Lenders’ Commitments under this Agreement and may be reborrowed, subject to the terms and conditions hereof for borrowing, and prior to the occurrence of an Event of Default, partial prepayments will be applied first to outstanding Advances and thereafter to other Obligations owing hereunder.  Each Borrower acknowledges that the above described fee is an estimate of Lenders’ damages in the event of early termination and is not a penalty.  In the event of termination of the credit facility established pursuant to this Agreement, all of the Obligations shall be immediately due and payable upon the termination date stated in any notice of termination.  All undertakings, agreements, covenants, warranties and representations of Borrowers contained in the Credit Documents shall survive any such termination, and Agent shall retain its liens in the Collateral and all of its rights and remedies under the Credit Documents notwithstanding such termination until Borrowers have paid the Obligations to Agent and Lenders, in full, in immediately available funds, together with the applicable termination fee, if any.  Notwithstanding the foregoing, in the event that (y) Borrowers repay the Loan in full and terminate this Agreement within 60 days of making a payment under Section 2.10(a), Borrowers shall not be obligated to pay to the specific Lender receiving such payment under Section 2.10(a) the prepayment fee contained in this Section 2.8(a) and (z) Borrowers request an increase to the Maximum Principal Amount in writing and Agent and Lenders fail to approve such increase within 45 days of such request, Borrowers shall not be obligated to pay the prepayment fee to Lenders if (i) the amount of such increase is supported by Borrowers’ financial statement projections of availability and usage, (ii) Borrowers refinance the Obligations with a larger credit facility agented by a financial institution other than Wells Fargo Bank, N.A. within one hundred twenty (120) days thereafter and (iii) no Event of Default then exists. 

(b)Mandatory Prepayments.  In the event that amounts outstanding hereunder at any time exceed the Borrowing Base (whether established by an Availability Statement or otherwise) Borrowers shall pay to Agent immediately and without demand or notice of any kind required, the amount by which Borrowers’ indebtedness hereunder exceeds the Borrowing Base then applicable, together with all accrued interest on the amount so paid and any fees and costs incurred in connection therewith. 

Section  2.9          Fees.  Borrowers shall pay to Agent, at Agent’s offices, the following: 

(a)Administrative Fee.  A non-refundable administrative fee of $2,000 shall be due and payable monthly in arrears on the first day of each month solely for the account of Agent, commencing on the first such date after the funding of this Agreement and continuing until the Commitments are terminated and the Obligations are indefeasibly paid in full, in which event a pro-rated monthly installment of the administrative fee shall be paid on the date of such termination. 

(b)Unused Line Fee.  A non-refundable unused line fee at the rate of 0.50% per annum (computed on the basis of a 360 day year and the actual number of days elapsed) on the daily unused Commitments.  Such fee shall be payable to Agent, for the account of Lenders in accordance  

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with their Commitment Percentages, monthly in arrears on the first day of each month, and on the Termination Date, unless the Commitments are terminated on an earlier date, in which event the unused line fee shall be paid on the date of such termination.  

Section  2.10          Regulatory Changes in Capital Requirements; Replacement of a Lender.   

(a)Regulatory Changes in Capital Requirements. If any Lender shall have determined that the adoption or the effectiveness after the date hereof of any law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any governmental authority, central lender or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender (or any lending office of such Lender) or such Lender’s holding company with any industry wide request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central lender or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, to a level below that which such Lender or its holding company could have achieved on the portion of the Loans made by such Lender pursuant hereto but for such adoption, change or compliance (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy) by an amount deemed by such Lender to be material and Lender has made such determination with respect to all or substantially all of the loans in its loan portfolio, then from time to time Borrowers shall pay to such Lender on demand such additional amount or amounts as will compensate such Lender or its holding company for any such reduction suffered together with interest on each such amount from the date demanded until payment in full thereof at the rate of interest otherwise applicable to the Obligations.  Agent will notify Borrowers of any event occurring after the date of this Agreement that will entitle a Lender to compensation pursuant to this Section 2.10(a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. 

(b)Replacement of a Lender.  If Borrowers become obligated to pay additional amounts to any Lender pursuant to Section 2.10(a), then Borrowers may within 120 days thereafter designate another bank that is acceptable to Agent in its reasonable discretion (such other bank being called a “Replacement Lender”) to purchase the Loans of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment and Acceptance), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to Borrower hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder.  In addition to the foregoing, if a Replacement Lender purchases such Loans and assumes all such obligations of a Lender hereunder pursuant to this Section 2.10(b), each such replaced Lender shall reimburse Borrowers for all amounts previously paid pursuant to Section 2.10(a) within 30 days of such replacement. 

Section  2.11          Sharing of Payments.  If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff or otherwise) on account of the  

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Loans made by it in excess of its pro rata share of such payment as provided for in this Agreement, such Lender shall forthwith purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment accruing to all Lenders in accordance with their respective ratable shares as provided for in this Agreement; provided, however, that if all or any portion of such excess is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) or any interest or other amount paid or payable by the purchasing Lender in respect to the total amount so recovered.  Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 2.11 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of Borrowers in the amount of such participation.

Section  2.12          Pro Rata Treatment.  Subject to Section 9.4 hereof, each payment or prepayment of principal of the Loan, and each payment of interest on the Loans, actually received by Agent shall be allocated pro rata among Lenders in accordance with the respective principal amounts of their outstanding Loans; provided, however, that the foregoing fees payable hereunder (other than the fees payable under Section 2.9(a) hereof) to Lenders shall be allocated to each Lender based on such Lender’s Commitment Percentage. 

Section  2.13          Accordion.  Subject to the terms and conditions set forth herein below, Borrowers shall have a right at any time to increase the amount of the Maximum Principal Amount (the “Accordion Increase”) in an amount acceptable to Agent in its sole and absolute discretion; provided, however, that the aggregate amount of the Accordion Increase shall not exceed $100,000,000.  The following additional terms and conditions shall apply to the Accordion Increase: 

(a)the Accordion Increase shall constitute additional Obligations and shall be secured and guaranteed with the other Obligations on a pari passu basis by the Collateral; 

 

(b)Borrowers shall execute a new Note in favor of any new Lender or any existing Lender whose Commitment is increased, as well as any other legal documentation and modification documents reasonably requested by Agent to consummate the Accordion Increase;  

 

(c)unless otherwise provided by Agent, the Accordion Increase shall be subject to the same terms (including interest rate and maturity date) as the existing Loan;  

 

(d)all documents, organizational documents and other documents evidencing and contemplated by the Accordion Increase shall be in form and substance acceptable to Agent and Borrowers;  

 

(e)Borrowers shall have delivered all due diligence materials and other deliverables reasonably requested by Agent;  

 

(f)each of the closing conditions set forth in Article 5 shall have been satisfied;  

 

(g)no Default or Event of Default shall have occurred that has not been waived  

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by Lenders pursuant to the terms hereof; 

 

(h)Agent shall have received from Borrowers updated financial statements and projections and a certificate, in each case in form and substance reasonably satisfactory to Agent, demonstrating that, after giving effect to the Accordion Increase on a pro forma basis, Borrowers will be in compliance with all financial covenants set forth herein; 

 

(i)the Accordion Increase shall be subject to the ability of Agent to syndicate the Accordion Increase as determined by Agent in its sole and absolute discretion; and  

 

(j)Agent shall have received such other due diligence and credit committee approvals as it may require with results satisfactory to Agent in its sole and absolute discretion.   

 

Participation in the Accordion Increase shall be offered first to each of the existing Lenders in an amount equal to each Lender’s Commitment Percentage of the Accordion Increase, but no such Lender shall have any obligation to provide all or any portion of the Accordion Increase.  If the amount of the Accordion Increase requested by Borrowers shall exceed the Commitments which the existing Lenders are willing to provide with respect to the Accordion Increase, then Agent may invite other banks or lending institutions acceptable to Agent and Borrowers to join this Agreement as Lenders hereunder for the portion of such Accordion Increase not provided by the existing Lenders; provided, however, that such other banks, or financial institutions shall enter into such joinder agreements to give effect thereto as Agent and Borrowers may reasonably request.  Agent is authorized to enter into, on behalf of Lenders, any amendment to this Agreement or any other Credit Document as may be necessary to incorporate the terms of the Accordion Increase in accordance with the terms hereof.

Section  2.14          Existing Indebtedness.  This Agreement amends and restates the Existing Agreement and the existing indebtedness under the Existing Agreement (“Existing Indebtedness”) shall be deemed to constitute an Advance hereunder.  The execution and delivery of this Agreement and the other Credit Documents, however, does not evidence or represent a refinancing, repayment, accord and/or satisfaction or novation of the Existing Indebtedness.  All of the obligations of Agent and Lenders to Borrowers with respect to Advances to be made concurrently herewith or after the date hereof are set forth in this Agreement.  All liens and security interests previously granted to Agent (or its predecessors in interest), pursuant to the Existing Loan Documents are acknowledged and reconfirmed and remain in full force and effect and are not intended to be released, replaced or impaired. 

ARTICLE 3
SECURITY

Section  3.1          Security Interest.  To secure the payment and performance of the Obligations, each Borrower hereby grants to Agent, for the benefit of Lenders, a continuing general Lien on and a continuing security interest in all of the Collateral, wherever located, whether now owned or hereafter acquired, existing or created, together with all replacements and substitutions therefor, and the cash and non-cash proceeds thereof, subject to Permitted Liens.  The Liens and security interests of Agent in the Collateral shall be first and prior perfected Liens and security interests, subject only to Permitted Liens, and may be retained by Agent until all of the Obligations  

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have been indefeasibly satisfied in full and the Commitments have expired or otherwise have been terminated.  

Section  3.2          Financing Statements.  Agent is hereby authorized by each Borrower to file any financing statements covering the Collateral or any amendment adding collateral to any financing statement in each case whether or not a Borrower’s signature appears thereon.  Borrowers agree to comply with the requirements of all state and federal laws and requests of Agent in order for Agent to have and maintain a valid and perfected first security interest in the Collateral. 

Section  3.3          Documents to be Delivered to Agent.  All Receivables of Borrowers originated on or after the date hereof shall be stamped or watermarked with the following: 

This document is pledged as collateral to Wells Fargo Bank, N.A., as agent.

Borrowers shall (a) upon request of Agent following the occurrence of an Event of Default, deliver to Agent or its designee any other property in which Borrowers have granted Agent a security interest hereunder; and (b) execute and deliver to Agent, for the benefit of Lenders, such assignments, endorsements, allonges to promissory notes, mortgages, financing statements, amendments thereto and continuation statements thereof, in form satisfactory to Agent, and such additional agreements, documents or instruments as Agent may, from time to time, require to evidence, perfect and continue to perfect Agent’s liens and security interests granted hereunder.

Section  3.4          Collections.  Notwithstanding the security interest granted hereunder with respect to the Collateral by Borrowers to Agent, until notice to the contrary is provided to Borrowers by Agent following the occurrence of an Event of Default, Borrowers may service, manage, enforce and receive Collections on Receivables.  Borrowers shall have no power to make any unusual allowance or credit to any obligor without Agent’s prior written consent.  Upon notice by Agent at any time following the occurrence of an Event of Default, Agent may require Borrowers to endorse and deposit all Collections within 1 Business Day of receipt thereof and in the original form received (except for the endorsement of Borrowers, if necessary, to enable the collection of instruments for the payment of money, which endorsements Borrowers hereby agree to make) in such account maintained with such depository as Agent may from time to time specify, such account to limit withdrawals by Borrowers therefrom only to the order of Agent, but to permit withdrawals by Agent therefrom without the co-signature of a Borrower.  Agent may also require Borrowers to enter into an appropriate lock box agreement with Agent or another financial institution acceptable to Agent, in form and content acceptable to Agent, with respect to opening and maintaining a lock box arrangement for the Collections.  Such lock box agreements shall be irrevocable so long as Borrowers are indebted to Agent under this Agreement and this Agreement remains in effect. 

Section  3.5          Additional Rights of Agent; Power of Attorney. 

(a)In addition to all the rights granted to Agent hereunder, Agent shall have the right, at any time following the occurrence and during the continuance of an Event of Default, to notify the obligors and account debtors of all Collateral to make payment thereon directly to Agent, and to take control of the cash and non-cash proceeds of such Collateral.  When Collections received by Agent have been converted into cash form, Agent shall forthwith apply the same first to discharge all expenses, fees, costs and charges including reasonable attorneys’ fees and costs of Collections owing hereunder; second to pay all interest accrued under the Notes and this Agreement; third to pay  

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principal due under the Notes and this Agreement; fourth to pay any other sums due to Agent and Lenders under the terms of this Agreement and fifth to whoever is entitled to such amounts under applicable law.

(b)Each Borrower irrevocably appoints Agent its true and lawful attorney, with power of substitution, to act in the name of such Borrower or in the name of Agent or otherwise, for the use and benefit of Agent, but at the cost and expense of Borrowers, without notice to Borrowers to do any of the following after the occurrence of an Event of Default: to demand, collect, receipt for and give renewals, extensions, discharges and releases of any Collateral; to institute and to prosecute legal and equitable proceedings to realize upon any Collateral; to settle, compromise, or adjust claims; to take possession and control in any manner and in any place of any cash or non-cash items of payment or proceeds thereof; to endorse the name of such Borrower upon any notes, checks, drafts, money orders, or other evidences of payment of Collateral; to sign such Borrower’s name on any instruments or documents relating to any of the Collateral or on drafts against account debtors; to do all other acts and things necessary, in Agent’s commercially reasonable judgment, to effect collection of the Collateral or protect its security interest in the Collateral; and generally to sell in whole or in part for cash, credit or property to others or to itself at any public or private sale, assign, make any agreement with respect to or otherwise deal with the Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes, except to the extent limited by any applicable laws and subject to any requirement of notice to Borrowers or other Persons under applicable laws. 

(c)Each Borrower hereby agrees to indemnify and hold Agent and Lenders harmless from and against any and all expenses, costs, liabilities or damages (including reasonable attorneys fees) sustained by Agent and each Lender by reason of any misrepresentation, breach of warranty or breach of covenant by Borrowers whether caused by Borrowers or Guarantors, or whether caused by any other Person if Borrowers knew of or reasonably should have known that facts, circumstances or information on which Borrowers relied were false, incorrect or incomplete in any material respect, and also all court costs and all other expenses Agent and each Lender incurred in enforcing or attempting to enforce payment of the Loan or any Collateral, in supervising the records and proper management and disposition of the collection of Collateral or in prosecuting or defending any of Agent’s and Lenders’ rights under this Agreement. 

Section  3.6          Additional Collateral Provisions. 

(a)Borrowers will defend the Collateral against all Liens (other than Permitted Liens), and claims and demands of all Persons at any time claiming the same or any interest therein.  Borrowers agree to comply with the requirements of all state and federal laws and requests of Agent in order for Agent to have and maintain a valid and perfected first security interest and/or mortgage Lien in the Collateral. 

(b)In addition to the foregoing, Borrowers shall perform all further acts that may be lawfully and reasonably required by Agent to secure Agent and effectuate the intentions and objects of this Agreement. 

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES

Each Borrower represents and warrants and shall continue to represent and warrant to Agent and Lenders until the Obligations hereunder have been indefeasibly satisfied in full and the Commitments have expired or otherwise have been terminated as follows:

Section  4.1          Representations and Warranties as to Receivables. 

(a)As to the Receivables generally: 

(i)Each Borrower or, where a Borrower was not the original lender, to the best of such Borrower’s knowledge, the original lender or seller had full power and authority to make the loans (or other extensions of credit) evidenced by the Receivables and all such Receivables and all Books and Records related thereto are genuine, based on enforceable contracts and are in all respects what they purport to be; 

(ii)All Receivables have been duly authorized, executed, delivered by the parties whose names appear thereon and are valid and enforceable in accordance with their terms; any chattels described in any Receivable are and will be accurately described and are and will be in the possession of the parties granting the security interest therein; and (A) any applicable filing, recording or lien notation law with respect to any collateral securing a Receivable will have been complied with to the extent such filing or recording is necessary under applicable law to create or perfect such Borrower’s security interest in such collateral consistent with its present policy; or (B) a Borrower shall have procured non-filing insurance from a reputable insurer in an amount not less than the value of the collateral securing such Receivables. 

(iii)The form and content of all Receivables and the security related thereto and the transactions from which they arose comply in all material respects (and in any event in all respects necessary to maintain and ensure the validity and enforceability of the Receivables) with any and all applicable laws, rules and regulations, including without limitation, the Consumer Finance Laws; 

(iv)The original amount and unpaid balance of each Receivable on Borrowers’ Books and Records and on any statement or schedule delivered to Agent and/or any Lender, including without limitation the Schedule of Receivables, is and will be the true and correct amount actually owing to a Borrower as of the date each Receivable is pledged to Agent, is not subject to any claim of reduction, counterclaim, set-off, recoupment or any other claim, allowance or adjustment; and no Borrower has any knowledge of any fact which would impair the validity or collectability of any Receivables; 

(v)All security agreements, title retention instruments, mortgages and other documents and instruments which are security for Receivables contain a correct and sufficient description of the real or personal property covered thereby, and, subject to the rights of Agent hereunder and the interests of Borrowers as holder of such security agreements, title retention instruments or mortgages or other documents or instruments, are or create security interests and Liens; 

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(vi)Borrowers have made an adequate credit investigation of the obligor of each Receivable and has determined that his or her credit is satisfactory and meets the standards generally observed by prudent finance companies and is in conformity in all material respects with Borrowers’ policies and standards; and 

(vii)A Borrower has good and valid indefeasible title to the Receivables, free and clear of all prior assignments, claims, liens, encumbrances and security interests, and has the right to pledge and grant Agent, for the benefit of Lenders, a first priority security interest in the same, in the manner provided in this Agreement; the parties specifically agree and acknowledge that from time to time Borrowers make loans based upon a subordinate lien status (such as but not limited to a second lien on a motor vehicle or real property) and such ordinary-course loans secured by subordinate lien status shall not be and are not in violation of this representation and warranty; and 

Notwithstanding the provisions of this Section 4.1, the parties agree and acknowledge that in the ordinary course of Borrowers’ business, Borrowers from time to time (w) make loans on an unsecured basis (such as with Borrowers’ "Live Checks" loan product), (x) elect not to perfect their security interests, (y) make errors that defeat the viability of perfecting a security interest in collateral pledged by a customer, and (z) unaffiliated first lienholders refuse to give effect to Borrowers’ second liens (especially regarding motor vehicles) and that in each such instance such decisions, mistakes, or failures to recognize Borrowers’ lien status by Borrowers’ branch offices or third parties shall not be considered to be in breach of this Section 4.1.

Section  4.2          Organization and Good Standing.  Each Borrower is duly organized and validly existing in good standing under the laws of the state identified on Schedule 4.2 attached hereto and made part hereof and has the power and authority to engage in the business it conducts and is qualified and in good standing in those states wherein the nature of business or property owned by it requires such qualification, is not required to be qualified in any other state; or if not so qualified, no adverse effect would result therefrom. 

Section  4.3          Perfection of Security Interest.  Upon filing of appropriate financing statements in all places as are necessary to perfect the security interests granted in Article 3 of this Agreement, Agent will have a first perfected security interest in the Collateral which can be perfected by the filing of a UCC-1 financing statement in each Borrower’s state of organization, superior in right of interest to any other Person (including, without limitation, purchasers from, or creditors or receivers or a trustee in bankruptcy of, Borrowers).   

Section  4.4          No Violations.  The making and performance of the Credit Documents do not and will not violate any provisions of any law, rule, regulation, judgment, order, writ, decree, determination or award or breach any provisions of the charter, bylaws or other organizational documents of any Borrower or any Guarantor, or constitute a default or result in the creation or imposition of any security interest in, or lien or encumbrance upon, any assets of any Borrower or any Guarantor (immediately or with the passage of time or with the giving of notice and passage of time, or both) under any other contract, agreement, indenture or instrument to which a Borrower or a Guarantor is a party or by which a Borrower or a Guarantor or its property is bound with failure to comply resulting in a material adverse change in the business, operations, property (including the Collateral), prospects or financial condition of any Borrower or any Guarantor. 

Section  4.5          Power and Authority. 

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(a)Each Borrower and each Guarantor has full power and authority under the law of the state of its organization and under its organizational documents to enter into, execute and deliver and perform the Credit Documents; to borrow monies hereunder, to incur the obligations herein provided for and to pledge and grant to Agent, for the benefit of Lenders, a security interest in the Collateral; and 

(b)All actions (corporate or otherwise) necessary or appropriate for each Borrower’s and each Guarantor’s execution, delivery and performance of the Credit Documents have been taken. 

Section  4.6          Validity of Agreements.  Each of the Credit Documents is, or when delivered to Agent will be, duly executed and constitute valid and legally binding obligations of each Borrower and each Guarantor enforceable against such Borrower and such Guarantor, as applicable, in accordance with their respective terms. 

Section  4.7          Litigation.  As of the date hereof, there is no order, notice, claim, action, suit, litigation, proceeding or investigation pending or, threatened against or affecting any Borrower or any Guarantor where the amount in controversy is in excess of $100,000, whether or not fully covered by insurance, except as identified and described on Schedule 4.7 attached hereto and made part hereof. 

Section  4.8          Compliance.  As of the date hereof, each Borrower and each Guarantor is in compliance in all material respects with all applicable material laws and regulations, federal, state and local (including all Consumer Finance Laws and those administered by the Local Authorities), material to the conduct of its business and operations; each Borrower and each Guarantor possesses all the franchises, permits, licenses, certificates of compliance and approval and grants of authority necessary or required in the conduct of its business and the same are valid, binding, enforceable and subsisting without any defaults thereunder or enforceable adverse limitations thereon, and are not subject to any proceedings or claims opposing the issuance, development or use thereof or contesting the validity thereof; and no approvals, waivers or consents, governmental (federal, state or local) or non-governmental, under the terms of contracts or otherwise, are required by reason of or in connection with such Borrower’s and such Guarantor’s execution and performance of the Credit Documents. 

Section  4.9          Accuracy of Information; Full Disclosure. 

(a)All financial statements, including any related schedules and notes appended thereto, delivered and to be delivered to Agent and/or any Lender pursuant to this Agreement have been or will be prepared in accordance with GAAP with respect to Borrowers and on a statutory basis with respect to Guarantors and do and will fairly present the financial condition of each Borrower, its consolidated Subsidiaries, if any, and Guarantors on the dates thereof and results of operations for the periods covered thereby and discloses all liabilities (including contingent liabilities) of any kind of such Borrower and such Guarantor. 

(b)Since the date of the most recent financial statements furnished to Agent and/or any Lender, there has not been any material adverse change in the financial condition, business or operations of any Borrower or any Guarantor. 

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(c)All financial statements and other statements, documents and information furnished by Borrowers or Guarantors, or any of them, to Agent and/or any Lender in connection with this Agreement and the Notes and the transactions contemplated hereunder do not and will not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading.  Each Borrower and each Guarantor has disclosed to Agent in writing any and all facts which materially and adversely affect the business, properties, operations or condition, financial or otherwise, of such Borrower or such Guarantor, or such Borrower’s or such Guarantor’s ability to perform its obligations under this Agreement and the Notes. 

Section  4.10          Taxes.  Each Borrower and each Guarantor has filed and will file all tax returns which are required to be filed and has paid or will pay when due all taxes, license and other fees with respect to the Collateral and the business of such Borrower and such Guarantor except taxes contested in good faith for which adequate reserves have been established by such Borrower on its Books and Records. 

Section  4.11          Indebtedness.  No Borrower has presently outstanding indebtedness or obligations including contingent obligations and obligations under leases of property from others, except Permitted Indebtedness. 

Section  4.12          Investments.  No Borrower has direct or indirect Subsidiaries or Affiliates, or investments in or loans to any other Person (other than Consumer Purpose Loans), except as described in Schedule 4.12 attached hereto and made part hereof. 

Section  4.13          ERISA.  Each Borrower, any Subsidiary, and Guarantors and each member of the controlled group of corporations (as such term “controlled group of corporations” is defined in Section 1563 of the Internal Revenue Code of 1986, as amended) of which such Borrower and such Guarantor is a member, is in compliance in all material respects with all applicable provisions of ERISA and the regulations promulgated thereunder.  No reportable event, as such term (hereinafter called a “Reportable Event’) is defined in Title IV of ERISA, has occurred with respect to, nor has there been terminated, any Plan maintained for employees of any Borrower, any Subsidiary, any Guarantor or any member of the controlled group of corporations of which a Borrower or a Guarantor is a member. 

Section  4.14          Hazardous Wastes, Substances and Petroleum Products. 

(a)Each Borrower (i) has received all permits and filed all notifications necessary to carry on its respective business; and (ii) is in compliance in all respects with all Environmental Control Statutes. 

(b)No Borrower has given any written or oral notice to the Environmental Protection Agency (“EPA”) or any state or local agency with regard to any actual or imminently threatened removal, spill, release or discharge of hazardous or toxic wastes, substances or petroleum products or properties owned or leased by such Borrower or in connection with the conduct of its business and operations. 

(c)No Borrower has received notice that it is potentially responsible for costs of clean-up of any actual or imminently threatened spill, release or discharge of hazardous or toxic wastes  

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or substances or petroleum products pursuant to any Environmental Control Statute.

Section  4.15          Solvency.  Each Borrower is, and after receipt and application of the first and each subsequent Advance will be, solvent such that (a) the fair value of its assets (including without limitation the fair salable value of such Borrower’s Intangible Assets) is greater than the total amount of its liabilities, including without limitation, contingent liabilities, (b) the present fair salable value of its assets (including without limitation the fair salable value of its Intangible Assets) is not less than the amount that will be required to pay the probable liability on its debts as they become absolute and matured, and (c) it is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business.  No Borrower intends to, or believes that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature, and is not engaged in a business or transaction, or about to engage in a business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice and industry in which it is engaged.  For purposes of this Section 4.15, in computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that reasonably can be expected to become an actual matured liability. 

Section  4.16          Business Location.  As of the date hereof, each Borrower’s address set forth on Schedule 4.16 attached hereto and made part hereof is the location of such Borrower’s principal place of business and such address, together with the addresses set forth on Schedule 4.16 attached hereto and made part hereof, and the location of all other places of business of each Borrower and the names in which each Borrower conducts business at each such location are set forth in Schedule 4.16 attached hereto and made part hereof. 

Section  4.17          Capital Stock.  All of the issued and outstanding capital stock or other ownership interest of each Borrower is owned as described on Schedule 4.17 attached hereto and made part hereof, and all such ownership interests are fully paid and non-assessable. 

Section  4.18          No Extension of Credit for Securities.  No Borrower is, nor will it be, engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying or trading in any margin stocks or margin securities (within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System) or other securities, and no part of the proceeds of the Loan hereunder has been or will be applied for the purpose of purchasing or carrying or trading in any such stock or securities or of refinancing any credit previously extended, or of extending credit to others, for the purpose of purchasing or carrying any such margin stock, margin securities or other securities in contravention of such Regulations. 

Section  4.19          Sanctions.  (a) No member of the Borrowing Group is a Sanctioned Target; (b) no member of the Borrowing Group is owned or controlled by, or is acting or purporting to act for or on behalf of, directly or indirectly, a Sanctioned Target; (c) each member of the Borrowing Group has instituted, maintains and complies with policies, procedures and controls reasonably designed to assure compliance with Sanctions; and (d) to the best of Borrowers’ knowledge, after due care and inquiry, no member of the Borrowing Group is under investigation for an alleged violation of Sanction(s) by a Governmental Authority that enforces Sanctions.  Borrowers shall notify Agent in writing not more than one (1) Business Day after first becoming aware of any breach of this Section. 

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Section  4.20          Anti-Money Laundering and Anti-Corruption Laws.  (a) Each member of the Borrowing Group has instituted, maintains and complies with policies, procedures and controls reasonably designed to assure compliance with Anti-Money Laundering Laws and Anti-Corruption Laws; and (b) to the best of Borrowers’ knowledge, after due care and inquiry, no member of the Borrowing Group is under investigation for an alleged violation of Anti-Money Laundering Laws or Anti-Corruption Laws by a Governmental Authority that enforces such laws. 

Section  4.21          Beneficial Ownership Certification. As of the date of this Agreement, the information included in the Beneficial Ownership Certification is true and correct in all respects. 

ARTICLE 5
CONDITIONS TO LOAN

Section  5.1          Documents to be Delivered to Agent Prior to Effectiveness.  Prior to the effectiveness of this Agreement, Borrowers shall deliver or cause to be delivered to Agent (all documents to be in form and substance satisfactory to Agent in its sole and absolute discretion): 

(a)Credit Documents.  This Agreement, the Notes and all other Credit Documents duly and properly executed by the parties thereto; 

(b)Searches.  Uniform Commercial Code, tax, judgment, PBGC and EPA searches against each Borrower in those offices and jurisdictions as Agent shall reasonably request which shall show that no financing statement, liens, or assignments or other filings have been filed or remain in effect against each Borrower or any Collateral except for Permitted Liens and those other Liens, financing statements, assignments or other filings with respect to which the secured party or existing lender (i) has delivered to Agent Uniform Commercial Code termination statements or other documentation evidencing the termination of its Liens and security interests in Collateral, (ii) has agreed in writing to release or terminate its Lien and security interest in Collateral upon receipt of proceeds of the Advances or (iii) has delivered a Subordination Agreement to Agent with respect to its Lien and security interest in the Collateral, all in a form and substance satisfactory to Agent in its sole discretion; 

(c)Organizational Documents.  A copy of each Borrower’s and Entity Guarantor’s (A) organization documents, certified as of a recent date by such Person’s secretary (or other appropriate officer), and (B) bylaws, partnership agreement or operating agreement, as applicable, certified as of a recent date by such Person’s secretary (or other appropriate officer); together with certificates of good standing in such Person’s state of organization and in each jurisdiction in which such Person is qualified to do business, each dated within 30 days from the date of this Agreement; 

(d)Authorization Documents.  A certified copy of resolutions of each Borrower’s and Entity Guarantor’s board of directors, members, managers or partners, as applicable, authorizing the execution, delivery and performance of the Notes, this Agreement and all other Credit Documents, the pledge of the Collateral to Agent as security for the Loan made hereunder and the borrowing evidenced by the Notes and designating the appropriate officers to execute and deliver the Credit Documents; 

(e)Incumbency Certificates.  A certificate of each Borrower’s and Entity’s  

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Guarantor’s secretary (or other appropriate officer) as to the incumbency and signatures of officers of such Person signing this Agreement, the Notes and other Credit Documents, as applicable;

(f)Opinion of Counsel.  Agent shall have received a written opinion of Borrowers’ and Guarantors’ counsel addressed to Agent and Lenders in form and substance satisfactory to Agent in its sole discretion; 

(g)Officer’s Certificate.  A certificate, dated the date of this Agreement, signed by the President of each Borrower, to the effect that (i) all representations and warranties set forth in this Agreement are true and correct as of the date hereof in all material respects and (ii) no Default or Event of Default hereunder has occurred, each Borrower’s seal being affixed to such certificate and each Borrower’s secretary attesting thereto; 

(h)Guaranties.  The Guaranties duly executed by each Guarantor; 

(i)Financial Statements. A copy of each of the reports required pursuant to Section 6.2 of this Agreement for the period most recently ended prior to the date hereof together with a covenant compliance certificate; 

(j)Availability Statement.  A completed Availability Statement; 

(k)Insurance.  Evidence of Borrowers’ self-insurance and other insurance issued by a reputable carrier with respect to each Borrower’s fire, casualty, liability, and other insurance covering its Property, and any key owner/operator insurance; 

(l)Access Agreement.  The Access Agreement duly executed by the parties thereto; and 

(m)Other Documents.  Such additional documents as Agent reasonably may request. 

Section  5.2          Conditions to all Advances.  The obligation of Lenders to make each subsequent Advance hereunder pursuant to Section 2.1 is conditioned upon (a) the continuing accuracy of the representations and warranties made by Borrowers under this Agreement in all material respects; and (b) the absence, after giving effect to such Advance and the receipt of the proceeds thereof and the retirement of any indebtedness then being retired out of the proceeds of such Advance, of any Default or Event of Default. 

 

ARTICLE 6
AFFIRMATIVE COVENANTS

In addition to the covenants contained in Article 3 and 4 of this Agreement relating to the Collateral, until all Obligations have been indefeasibly satisfied in full and the Commitments have expired or otherwise have been terminated, each Borrower covenants and agrees as follows:

Section  6.1          Place of Business and Books and Records.  Each Borrower will promptly advise Agent in writing of (a) the establishment of any new places of business by such Borrower and of the discontinuance of any existing places of business of such Borrower; (b) the creation of any new  

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Subsidiaries and (c) the acquisition and or use of any trade name or trade style.

Section  6.2          Reporting Requirements.  Borrowers will deliver to Agent: 

(a)within 30 days after the end of each month, company prepared consolidated and consolidating financial statements of Borrowers’ business for such previous month, consisting of a balance sheet, income statement and consolidating schedules as of the end of such month, all in reasonable detail, prepared in accordance with GAAP consistently applied, subject to year-end adjustments, together with a covenant compliance certificate;  

(b)within 120 days after the close of each fiscal year, (i) consolidated and consolidating financial statements of Borrowers and their consolidated Subsidiaries for the fiscal year then ended consisting of a balance sheet, income statement and statement of cash flow of Borrowers and their consolidated Subsidiaries as of the end of such fiscal year, all in reasonable detail, including all supporting schedules and footnotes, prepared in accordance with GAAP consistently applied, and shall be audited and certified without qualification by an independent certified public accountant selected by Borrowers and acceptable to Agent and accompanied by the unqualified opinion of such accountant; (ii) cause Agent to be furnished at the time of completion thereof, a copy of any management letter for Borrowers and their consolidated Subsidiaries prepared by such certified public accounting firm, (iii) a covenant compliance certificate and (iv) an Annual Compliance Certificate executed by the president or chief executive officer of each Borrower; 

(c)on or before June 1 of each calendar year, (i) consolidated financial statements of Guarantors for the fiscal year then ended consisting of a balance sheet, income statement and statement of cash flow of Guarantors as of the end of such fiscal year, all in reasonable detail, including all supporting schedules and footnotes, prepared in accordance with statutory accounting requirements consistently applied, and shall be audited and certified without qualification by an independent certified public accountant selected by Guarantors and acceptable to Agent and accompanied by the unqualified opinion of such accountant and (ii) cause Agent to be furnished at the time of completion thereof, a copy of any management letter for Guarantors prepared by such certified public accounting firm; 

(d)within 30 days after the end of each month (or more frequently as requested by Agent from time to time), an Availability Statement (together with all supporting schedules), a Schedule of Receivables and Assignment, an aging of Receivables, a covenant compliance certificate, delinquency reports, books and records consisting of data tape information (which shall include, without limitation, credit scores), static pool report, and such other documentation as and information Agent may require; 

(e)on or before May 31 of each calendar year, a copy of the operating budget or plan prepared by management of Borrowers including, without limitation, a balance sheet and profit and loss statement of Borrowers for the greater of two (2) years or through the Maturity Date, in form and detail reasonably acceptable to Agent, together with a summary of the material assumptions made in the preparation of such annual budget or plan; 

(f)on or before November 20 of each calendar year after calendar year 2019, and on or before December 1, 2019 for calendar year 2019, copies of documentation submitted to the applicable Governmental Authority in the State of Georgia with respect to the Reinsurance Credit  

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Facilities and authorization of Entity Guarantors to make extraordinary dividends and/or lines of credit;

(g)at Agent’s request from time to time and at any time, copies of Borrowers’ and Guarantors’ corporate income tax returns, including any schedules attached thereto, filed with the Internal Revenue Service or applicable state governmental agency; 

(h)at Agent’s request from time to time and at any time, such other financial information and reports concerning Borrowers, Guarantors and their businesses and property. 

Section  6.3          Books and Records.  Borrowers will keep accurate and complete Books and Records concerning the Collateral and all transactions with respect thereto consistent with sound business practices (including, without limitation, accurately account for insurance commissions) and will comply with Agent’s reasonable requirements, from time to time in effect, including those concerning the submission of reports on all items of Collateral including those which are deemed to be delinquent.  The form of delinquency reports, the frequency with which such reports shall be submitted to Agent (which in any case shall be no less frequently than monthly) and the standards for determining which Collateral transactions are deemed delinquent for this purpose, shall at all times be satisfactory to Agent.  Agent shall have the right at any time and from time to time during regular business hours, at Borrowers’ expense, to inspect, audit, and copy the Books and Records of Borrowers and inspect and audit any Collateral. 

Section  6.4          Financial Covenants.  Borrowers shall maintain, or cause to be maintained, the following financial covenants (based on consolidated financial statements of Borrowers and their consolidated Subsidiaries unless otherwise indicated): 

(a)EBITDA Ratio.  As of the end of each calendar month, an EBITDA Ratio of not less than 1.75 to 1.00. 

(b)Asset Quality.  As of the end of each calendar month, an Asset Quality of not more than 20%. 

(c)Allowance for Loan Losses.  At all times the aggregate value of their Allowance for Loan Losses, as calculated in accordance with GAAP, in an amount not less than an amount acceptable to the independent certified public accountant auditing Borrowers’ financial statements. 

(d)Liquidity.  As of the end of each calendar month, Liquidity of at least $100,000,000.   

(e)Charge-off Policy.  Receivables must be charged off (on a monthly basis) with respect to which no payment due and owing thereunder has been made for a period that is equal to or greater than 180 days, as determined on a contractual basis. 

(f)Minimum Tangible Net Worth.  As of the end of each calendar month, a minimum Tangible Net Worth of at least $200,000,000 (such amount to be increased on an annual basis upon Agent’s receipt of Borrowers’ audited financial statements by an amount equal to 75% of Borrowers’ net income (less Permitted Tax Distributions, Insurance Premium Dividends and dividends permitted pursuant to Section 7.2(e)) for the prior fiscal year, commencing with the fiscal year ending December 31, 2019).   

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(g)Funded Debt to Adjusted Tangible Net Worth Ratio.  As of the end of each calendar month, a Funded Debt to Adjusted Tangible Net Worth Ratio of not more than 3.00 to 1.00.   

Notwithstanding the foregoing, (x) Borrowers’ failure to comply with Section 6.4(c) or Section 6.4(e) shall not, in itself, constitute an Event of Default so long as such shortfalls or losses are deducted, as contemplated by the terms of this Agreement, in the determination of the other financial covenants contained herein, (y) the determination of the covenants contained in this Section 6.4 shall exclude any asset or liability associated with Statement of Financial Accounting Standard No. 133 and (z) Borrowers’ failure to comply with (i) Section 6.4(a) as a result of maintaining an EBITDA Ratio of no more than 25 basis points less than the required EBITDA Ratio, (ii) RESERVED, (iii) Section 6.4(f) as a result of maintaining a minimum Tangible Net Worth of not less than 99% of the required minimum Tangible Net Worth or (iv) Section 6.4(g) as a result of maintaining a Funded Debt to Adjusted Tangible Net Worth Ratio greater than 3.00 to 1.00 but not more than 3.25 to 1.00, shall not constitute an Event of Default under Section 8.3(b) unless such failure continues for more than 1 consecutive calendar month; provided, however, clause (z) shall not in any event be effective as an exception to the Event of Default described in Section 8.3(b) more than 2 times per calendar year.

Section  6.5          Compliance With Applicable Law. 

(a)All Receivables shall comply in all material respects with all applicable material federal, state and local laws, rules, regulations, proclamations, statutes, orders and interpretations at the time when Agent obtains any interest therein pursuant to this Agreement. 

(b)Each Borrower shall comply in all material respects with all applicable material local, state and federal laws and regulations applicable to its business including without limitation the Consumer Finance Laws, Environmental Control Statutes, and all laws and regulations of the Local Authorities, and the provisions and requirements of all franchises, permits, certificates of compliance and approval issued by regulatory authorities and other like grants of authority held by Borrowers; and notify Agent immediately (and in detail) of any actual or alleged failure to comply with or perform, breach, violation or default under any such laws or regulations or under the terms of any of such franchises or licenses, grants of authority, or of the occurrence or existence of any facts or circumstances which with the passage of time, the giving of notice or otherwise could create such a breach, violation or default or could occasion the termination of any of such franchises or grants of authority. 

(c)With respect to the Environmental Control Statutes, Borrowers shall notify Agent when, in connection with the conduct of Borrowers’ business or operations, any Person (including, without limitation, EPA or any state or local agency) provides oral or written notification to any Borrower or any Subsidiary with regard to an actual or imminently threatened removal, spill, release or discharge of hazardous or toxic wastes, substances or petroleum products; and notify Agent immediately (and in detail) upon the receipt by any Borrower of an assertion of liability under the Environmental Control Statutes, of any actual or alleged failure to comply with or perform, breach, violation or default under any such statutes or regulations or of the occurrence or existence of any facts, events or circumstances which with the passage of time, the giving of notice, or both, could create such a breach, violation or default. 

(d)In addition to the foregoing, each Borrower shall, and each Borrower shall ensure that each member of the Borrowing Group will, comply with Sanctions, Anti-Money  

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Laundering Laws, and Anti-Corruption Laws.

Section  6.6          Notice of Certain Events.  Borrowers will promptly notify Agent of (a) the occurrence of any Default or Event of Default or (b) any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in such certification. 

Section  6.7          Existence, Properties.  Borrowers will (a) do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises and comply with all laws applicable to it; (b) maintain, preserve and protect all franchises, licenses and trade names and preserve all the remainder of its property used or useful in the conduct of its business; and (c) maintain in effect insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as shall be consistent with prudent business practices in the industry or otherwise self-insure each business location of Borrowers in a manner reasonably acceptable to Agent, and furnish to Agent from time to time, upon their request therefor, evidence of same. 

Section  6.8          Payment of Indebtedness; Taxes.  Borrowers will (a) pay all of their indebtedness and obligations promptly and in accordance with normal terms; and (b) pay and discharge or cause to be paid and discharged promptly all taxes, assessments, and governmental charges or levies imposed upon it or upon its income and profits, or upon any of its property, real, personal or mixed, or upon any part thereof, before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided, however, that Borrowers shall not be required to pay and discharge or to cause to be paid and discharged any such indebtedness, tax, assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings and Borrowers shall have set aside on their books adequate reserves (as may be required in accordance with GAAP) with respect to any such indebtedness, tax, assessment, charge, levy or claim, so contested. 

Section  6.9          Notice Regarding Any Plan.  Borrowers shall furnish to Agent: 

(a)as soon as possible, and in any event within 10 days after any senior officer of Borrowers know or have reason to know that any Reportable Event has occurred with respect to any Plan maintained in whole or in part for the employees of a Borrower or any of their Subsidiaries, a statement of the President or Treasurer of Borrowers setting forth details as to such Reportable Event and the action which is proposed to be taken with respect thereto, together with a copy of the notice of such Reportable Event given to the Pension Benefit Guaranty Corporation; and 

(b)promptly after receipt thereof, a copy of any notice which a Borrower may receive from the Pension Benefit Guaranty Corporation relating to the intention of a Borrower to terminate any Plan maintained in whole or in part for the benefit of employees of any Borrower or any of their Subsidiaries or to appoint a trustee to administer any such Plan. 

Section  6.10          Other Information.  From time to time upon request of Agent, Borrowers will furnish to Agent such additional information and reports regarding the Collateral and the operations, businesses, affairs, prospects and financial condition of Borrowers and their Subsidiaries as Agent may request. 

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Section  6.11          Litigation, Enforcement Actions and Requests for Information.  Borrowers will promptly notify Agent (a) of any litigation or action instituted or, to Borrowers’ knowledge, threatened in writing against any Borrower or any of their Subsidiaries or Guarantors where the amount in controversy, in Borrowers’ reasonable judgment, will or may exceed $100,000; (b) of the entry of any judgment or lien against any property of Borrower, in an amount of $100,000 or more as to any separate action, litigation, judgment or lien instituted, threatened or entered or in an aggregate amount of $300,000 or more as to all actions, litigation, judgments, or liens instituted, threatened or entered; (c) any enforcement action or investigation instituted or, to Borrowers’ knowledge, threatened, in writing, against any Borrower or any of their Subsidiaries by any Governmental Authority, including without limitation any proceeding or action to be commenced by the filing of a stipulation and consent; (d) receipt by any Borrower or any of their Subsidiaries of an “Early Warning Notice,” “Notice and Opportunity to Respond and Advise” or “Civil Investigative Demand” from the Consumer Financial Protection Bureau or similar notice or request from any other Governmental Authority; or (e) the occurrence of a Regulatory Event. 

Section  6.12          Business Location, Legal Name and State of Organization.  Borrowers shall notify Agent: at least 30 days prior to: (i) any proposed change in a Borrower’s principal place of business, a Borrower’s legal name or a Borrower’s state of organization; (ii)  the change in the names in which a Borrower or any Subsidiary conducts business at each such location; and (iii) the change of a Borrower’s jurisdiction of organization. 

Section  6.13          Operations.  Borrowers shall maintain satisfactory credit underwriting and operating standards, including, with respect to each obligor of each Receivable, the completion of an adequate investigation of such obligor and a determination that the credit history and anticipated performance of such obligor is and will be satisfactory and meets the standards generally observed by prudent finance companies.  

Section  6.14          Further Assurances.  Borrowers shall from time to time execute and deliver to Agent such other documents and shall take such other action as may be requested by Agent in order to implement or effectuate the provisions of, or more fully perfect the rights granted or intended to be granted by Borrowers to Agent pursuant to the terms of this Agreement, the Notes or any other Credit Documents. 

Section  6.15          Chattel Paper/Jurisdictions. 

(a) Borrowers represent and warrant to Agent and Lenders that (i) Borrowers are sophisticated consumer lenders and reinsurance corporations, (ii) Borrowers employ attorneys with regulatory experience, and (iii) Borrowers’ internal attorneys regularly consult with multiple different attorneys at outside law firms on regulatory matters including but not limited to the content and form of Borrowers’ Receivable documentation.  If Agent has reasonable cause (which it articulates in writing to Borrowers) to believe it necessary for Borrowers to undertake a regulatory review of Receivable documentation of Borrowers and their Subsidiaries, then Borrowers shall employ one or more of these firms to provide such review at Borrowers sole cost and expense (which firm shall be reasonably acceptable to Agent).  However, in no event shall Agent request such a review more than one (1) time per calendar year so long as no Event of Default has occurred.  Borrowers shall provide Agent with copies of such review within sixty (60) days after each such request with the results of such documentation.   

(b)Borrowers shall promptly (i) notify Agent of either (A) Borrowers or any of  

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their Subsidiaries conducting business in any new jurisdiction, and (B) Borrowers or any of their Subsidiaries making any material modifications to its respective Receivable documentation outside of the ordinary course of business and (ii) upon the request of Agent, provide Agent a list of jurisdictions in which Borrowers and their Subsidiaries conduct business and licenses held in each such jurisdiction.

 

Section 6.17Reinsurance Credit Facilities; Extraordinary Dividends.  Borrowers shall (a) furnish to Agent promptly after receipt thereof copies of any notices or other communications received from Governmental Authorities in the State of Georgia with respect to Reinsurance Credit Facilities and authorization of Entity Guarantors to make extraordinary dividends and (b) have the ability to fully access $92,000,000 of extraordinary dividends and/or lines of credit from Entity Guarantors, and the applicable Governmental Authorities in the State of Georgia shall not have disapproved any such payment. 

 

ARTICLE 7
NEGATIVE COVENANTS

Each Borrower covenants and agrees with Agent and Lenders that until all Obligations have been indefeasibly satisfied in full and the Commitments have expired or otherwise have been terminated, no Borrower will do any of the following without the prior written consent of Agent:

Section  7.1          Payments to and Transactions with Affiliates.  (a) Make any loan, advance, extension of credit or payment to any Affiliate, officer, employee, member, manager, shareholder or director of any Borrower or any Affiliate outside the ordinary course of business, except as described in Schedule 4.12 attached hereto and made part hereof and the payment of insurance premiums for a split dollar insurance policy for Roger Guimond, or (b) enter into any other transaction, including, without limitation, the purchase, sale, lease or exchange of property, or the rendering or any service, to or with any Affiliate or any shareholder, officer, or employee of any Borrower or any Affiliate, and except for other transactions with or services rendered to any Affiliate of a Borrower in the ordinary course of business and pursuant to the reasonable requirements of the business of such Affiliate and upon terms found by the board of directors of a Borrower to be fair and reasonable and no less favorable to a Borrower than such Borrower would obtain in a comparable arms’ length transaction with a Person not affiliated with or employed by a Borrower; provided, however, that Borrowers may in any event pay reasonable compensation to any such employee or officer in the ordinary course of Borrowers’ business consistent and commensurate with industry custom and practice for the services provided by such Person. 

Section  7.2          Restricted Payments.  Make any Restricted Payment except for (a) Permitted Tax Distributions, (b) Insurance Premium Dividends, (c) payments of principal and interest on Subordinated Debt not otherwise prohibited under the subordination provisions applicable to such Subordinated Debt, (d) payments of principal and interest on Other Debt, (e) payments of principal and interest on the Reinsurance Credit Facilities and (f) an annual distribution to the shareholders of Borrowers the proceeds of which shall be used solely for contributions to the Cheek Family Foundation in an amount not to exceed the lesser of (i) $10,000,000 or (ii) twenty five percent (25%) of the annual net income of Borrowers as determined in accordance with GAAP based upon the annual audited financial statements delivered to Agent pursuant to Section 6.2(b), provided immediately prior to and after giving effect to any distribution or payment no Default or Event of Default shall exist. 

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Section  7.3          Indebtedness.  Borrow any monies or create any Debt except for Permitted Indebtedness. 

Section  7.4          Guaranties.  Guarantee or assume or agree to become liable in any way, either directly or indirectly, for any additional indebtedness or liability of others except to endorse checks or drafts in the ordinary course of business. 

Section  7.5          Nature of Business.  Engage in any business other than the business in which such Borrower currently is engaged or make any material change in the nature of the financings which such Borrower extends, (including without limiting the generality of the foregoing, matters relating to size, type, term, nature and dollar amount). 

Section  7.6          Negative Pledge.  Assign, discount, pledge, grant a Lien in or otherwise encumber any Receivables or the Collateral except as contemplated by Section 7.15 of this Agreement. 

Section  7.7          Investments.  Make any investments in any other Person except as described in Schedule 4.12 attached hereto and made part hereof; or enter into any new business activities or ventures not related to such Borrower’s business existing as of the date of this Agreement; or create or form any Subsidiary. 

Section  7.8          Compliance with Formula.  Permit the aggregate amount of all Advances outstanding at any time to exceed the Borrowing Base. 

Section  7.9          Mergers, Divestitures.  Except as permitted by Section 7.13 of this Agreement, acquire all or substantially all of the assets or shares of stock of or other equity interest in any Person, or be a party to any consolidation or merger. 

Section  7.10          Use of Proceeds.   

(a)Use the proceeds of any Advance or other extension of credit made hereunder for any purpose other than consistent with the terms and conditions hereof, for their lawful and permitted purposes (including that no part of the proceeds of the loans made to Borrowers will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors of the United States Federal Reserve). 

(b)Use, and shall ensure that each member of the Borrowing Group will not, directly or indirectly use any of the credit to fund, finance or facilitate any activities, business or transactions: (i) that are prohibited by Sanctions, (ii) that would be prohibited by U.S. Sanctions if conducted by a U.S. Person, or (iii) that would be prohibited by Sanctions if conducted by Agent or any Lender, or any other party hereto.  Borrowers shall notify Agent in writing not more than one (1) Business Day after first becoming aware of any breach of this Section. 

(c)Use, and shall ensure that each member of the Borrowing Group will not, directly or indirectly use any of the credit to fund, finance or facilitate any activities, business or transactions that would be prohibited by Anti-Money Laundering Laws or Anti-Corruption Laws. 

Section  7.11          Ownership and Management.  Allow any Borrower to be owned and controlled directly or indirectly by any Person other than shareholders, members and senior  

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management that own and control such Borrower as of the date of this Agreement.

Section  7.12          Amendment to Subordinated Debt.  (a) Amend or permit the amendment of any of the documents and instruments evidencing Subordinated Debt or (b) make any prepayment on account of such Subordinated Debt which is not otherwise allowed to be made under the subordination provisions applicable to such Subordinated Debt.  Notwithstanding anything in this Agreement to the contrary, Borrowers are permitted to amend their Proxy Statements and related documents in connection with its Senior Demand Notes, Variable Rate Subordinated Debentures and Commercial Paper. 

Section  7.13          Bulk Purchases.  In any purchase transaction, purchase Receivables in an aggregate amount exceeding $5,000,000 without prior written consent of Agent. 

Section  7.14          Guarantor Dividends.  Permit any Guarantor to make any redemptions, repurchases, dividends or distributions of any kind with respect to a Guarantor’s stock to any Person other than a Borrower. 

Section  7.15          Asset Sales.  Sell, transfer or otherwise dispose of any Property (including the Collateral) other than sales in the ordinary course of business, of ineligible Receivables which have been charged-off pursuant to Section 6.4(e) so long as no Event of Default or Default then exists. 

Section  7.16          Deposit Accounts.  Open or maintain any primary operating deposit account other than the primary operating deposit account maintained with South State Bank listed on Schedule 7.16 attached hereto without the prior written consent of Agent. 

Section  7.17          Source of Repayment and Collateral.  Fund any repayment of the credit with proceeds, or provide as collateral any property, that is directly or indirectly derived from any transaction or activity that is prohibited by Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws, or that could otherwise cause Agent or any Lender to be in violation of Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws. 

Section  7.18          Franklin Securities, Inc.  Permit Franklin Securities, Inc. to conduct any business or operations or own any Property other than Property with an aggregate value not to exceed $1,000. 

 

ARTICLE 8
EVENTS OF DEFAULT

Each of the following events shall constitute an Event of Default under this Agreement:

Section  8.1          Failure to Make Payments.  The failure of Borrowers to make any payment of (a) principal when due or (b) interest under the Notes or this Agreement or any other payment hereunder or in respect of any other Obligation within 5 days of when due. 

Section  8.2          Information, Representations and Warranties.  Any financial statement, written information furnished or representation or warranty, certificates, document or instrument made or given by any Borrower or any Guarantor or furnished in connection herewith shall be false, misleading or incorrect in any material respect, provided, however, that should any representation or  

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warranty by Borrowers under Section 4.1(a) be false, misleading or incorrect with respect to the Receivables, such default shall not, in itself, constitute an Event of Default so long as the aggregate amount of such Receivables failing to meet the representations and warranties in Section 4.1(a) at any time does not exceed 1.0% of the gross Receivables of Borrowers.

Section  8.3          Covenants.  The failure of any Borrower or any Guarantor to observe, perform or comply with (a) any of the covenants contained Sections 6.3 (first sentence), 6.5, 6.7 or 6.8 of this Agreement and such failure continues for 30 days following the earlier of notice from Agent to Borrowers of such failure or Borrowers’ knowledge of such failure or (b) any other covenant contained in this Agreement or any other Credit Document. 

Section  8.4          Collateral.  At any time after the grant to Agent for the benefit of Lenders of a security interest in or Lien upon any Collateral, Agent’s interest therein shall for any reason cease to be a valid and subsisting first priority Lien in favor of Agent and/or a valid and perfected first priority security interest in and to the Collateral purported to be covered thereby having the priority set forth therein. 

Section  8.5          Defaults Under Other Agreements.  Any default by any Borrower or any Guarantor under any agreement to which such Borrower or such Guarantor is a party and with respect to which the amount claimed exceeds $2,500,000, singly or in the aggregate. 

Section  8.6          Certain Events.  The occurrence of any of the following with respect to any Borrower or any Guarantor: 

(a)Voluntary Proceedings.  It shall (i) apply for or consent to the appointment of a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) be generally not paying its debts as such debts become due as defined in the United States Bankruptcy Code, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the Bankruptcy Code, (v) fail to controvert in a timely or appropriate manner, or acquiesce in writing to, any petition filed against it in any involuntary case under the Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing. 

(b)Involuntary Proceeding.  A proceeding or case shall be commenced against it without its application or consent in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding up, or composition or readjustment of debts, of it, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for it or of all or any substantial part of its assets, or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case shall continue undismissed or unstayed and in effect, for a period of 90 days, or an order for relief against it shall be entered in an involuntary case under the Bankruptcy Code. 

(c)Reportable and Other Events.  (i) The occurrence of any Reportable Event which Agent determines in good faith constitutes grounds for the termination of any Plan by the Pension Benefit Guaranty Corporation (“PBGC”) or for the appointment by the United States District Court of a trustee to administer any Plan; (ii) the institution by the PBGC of proceedings to terminate any Plan; or (iii) the failure of Borrower, or any Subsidiary to meet the minimum funding standards established in Section 412 of the Internal Revenue Code of 1986, as amended. 

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Section  8.7          Possession of Collateral.  A judgment creditor of any Borrower shall take possession or file proceedings to attempt to take possession of any of the Collateral with a value in excess of an amount equal to 1.0% of the gross Receivables of Borrowers by any means including without limitation, by levy, distraint, replevin, self-help, seizure or attachment. 

Section  8.8          Guarantor.  Any Guarantor shall repudiate, purport to revoke or fail to perform any such Guarantor’s obligations under such Guarantor’s Guaranty. 

Section  8.9          Credit Documents.  An event of default following the expiration of any cure period (however defined) shall occur under any Credit Document or under any other security agreement, guaranty, mortgage, deed of trust, assignment or other instrument or agreement securing or supporting any obligation of any Borrower under this Agreement or under the Notes. 

Section  8.10          Hedging Agreements. Any default by Borrowers under any Hedging Agreement. 

Section  8.11          Material Adverse Change.  Agent or Required Lenders determine in good faith that a material adverse change in the business, operations, property (including the Collateral), prospects or financial condition of any Borrower or any Guarantor shall occur. 

Section  8.12          Level Two Regulatory Event.  The occurrence of a Level Two Regulatory Event which remains unvacated, undischarged, unbonded or unstayed by appeal or otherwise for a period of thirty (30) days from the date of its entry which Agent or Required Lenders determine in good faith that a material adverse change in the business, operations, property (including the Collateral), prospects or financial condition of any Borrower or any Guarantor shall occur as a result thereof. 

ARTICLE 9
REMEDIES OF AGENT AND WAIVER

Section  9.1          Agent’s Remedies.  Upon the occurrence of any Event of Default or Default, Agent may, or at the direction of Required Lenders shall, cease making Advances hereunder.  Upon the occurrence of an Event of Default, Agent may, or at the direction of Required Lenders shall, (i) immediately terminate this Agreement or (ii) declare the Obligations immediately due and payable.  Upon such occurrence and/or declaration, Agent shall have, in addition to the rights and remedies given to it by the Notes, this Agreement and the other Credit Documents, all the rights and remedies of a secured party as provided in the UCC (regardless of whether such Code has been adopted in the jurisdiction where such rights and remedies are asserted) and without limiting the generality of the foregoing, Agent may, in addition to all the rights conferred upon it by law, exercise one or more of the following rights successively or concurrently: (a) to take possession of the Collateral, or any evidence thereof, proceeding without judicial process or by judicial process, (b) to lawfully dispose of the whole or any part of the Receivables or any other Collateral, or any other Property, instrument or document pledged as security for any Obligation at public or private sale, without advertisement or demand upon Borrowers, or upon any obligor of Receivables, the Collateral, or any other security, the same being hereby waived, except to the extent otherwise required by law, with the right on the part of Agent or their respective nominees to become the purchaser thereof as provided by law absolutely freed and discharged from any equity of redemption, and all trusts and other claims whatsoever; (c) after deduction of all reasonable legal and other costs and expenses  

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permitted by law, including attorneys’ fees, to apply the Collateral or all or any portion of proceeds thereof on account of, or to hold as a reserve against, all Obligations; (d) terminate any Interest Period; and (e) to exercise any other rights and remedies available to it by law or agreement.  Any remainder of the proceeds after indefeasible satisfaction in full of the Obligations shall be distributed as required by applicable law.  Notice of any sale or disposition of Collateral shall be given to Borrowers at least 10 Business Days before any intended public sale or the time after which any intended private sale or other disposition of the Collateral is to be made, which Borrowers agree shall be reasonable notice of such sale or other disposition.  Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 8.6(a) or (b) hereof, the Commitments shall immediately terminate and the Loan made pursuant to this Agreement and all other Obligations, together with all accrued interest, shall be immediately due and payable in full without presentment, demand, or protest or notice of any kind, all of which Borrowers hereby expressly waive.

Section  9.2          Waiver and Release by Borrowers.  To the extent permitted by applicable law, each Borrower: (a) waives each of the following in connection with Agent’s exercise of rights and remedies following the occurrence of an Event of Default under this Agreement: (i) presentment and protest of the Notes and this Agreement or any Receivables held by Agent on which any Borrower is any way liable and (ii) notice and opportunity to be heard, after acceleration in the manner provided in Article 9 of this Agreement, before exercise by Agent of the remedies of self-help or set-off permitted by law or by any agreement with any Borrower, and except where required hereby or by law, notice of any other action taken by Agent; and (b) releases Agent, Lenders and their respective officers, attorneys, agents and employees from all claims for loss or damage caused by any act or omission on the part of Agent, Lenders or their respective officers, attorneys, agents and employees, except willful misconduct or gross negligence. 

Section  9.3          No Waiver.  Neither the failure nor any delay on the part of Agent or any Lender to exercise any right, power or privilege under the Notes or this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other further exercise of any right, power or privilege. 

Section  9.4          Application of Proceeds.  Notwithstanding any other provisions of this Agreement or any other Credit Document to the contrary, following acceleration of the Obligations after the occurrence of an Event of Default, all amounts collected or received by Agent or any Lender on account of the Obligations (whether in an insolvency or bankruptcy case or proceeding or otherwise) or any other amounts outstanding under any of the Credit Documents or in respect of the Collateral shall be paid over or delivered as follows: 

 

FIRST, to the payment of all costs, fees, expenses, and other amounts owing to Agent, pursuant to Section 10.7, in connection with enforcing the rights of Agent and Lenders under the Credit Documents, any protective advances made by Agent with respect to the Collateral under or pursuant to the terms of the Credit Documents;

 

SECOND, to payment of any costs, fees or expenses owed to Agent or to any Wells Fargo Affiliate hereunder or under any other Credit Document;

 

THIRD, to the payment of all costs, fees, expenses of each of Lenders owing hereunder in connection with enforcing its rights under the Credit Documents;

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FOURTH, to the payment of all Obligations consisting of accrued fees and interest payable to Lenders hereunder (excluding amounts relating to Bank Products);

 

FIFTH, to the payment of the outstanding principal amount of the Obligations (excluding amounts relating to Bank Products);

 

SIXTH to the payment of all liabilities and obligations now or hereafter arising from or in connection with respect to any Bank Products, any fees, premiums and scheduled periodic payments due with respect thereto and any interest accrued thereon;

 

SEVENTH, to all other Obligations which shall have become due and payable under the Credit Documents and not repaid pursuant to clauses “FIRST” through ‘SIXTH” above; and 

 

EIGHTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.

 

In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; and (b) each of Lenders shall receive an amount equal to its pro rata share (based on the proportion that its then outstanding Loans and Obligations outstanding of amounts available to be applied pursuant to clauses “THIRD,” “FOURTH,” “FIFTH,” “SIXTH” and “SEVENTH” above).

 

ARTICLE 10
MISCELLANEOUS

Section  10.1          Indemnification and Release Provisions.  Each Borrower hereby agrees to defend Agent, Lenders and their directors, officers, agents, employees and attorneys from, and hold each of them harmless against, any and all losses, liabilities (including without limitation settlement costs and amounts, transfer taxes, documentary taxes, or assessments or charges made by any governmental authority), claims, damages, interests, judgments, costs, or expenses, including without limitation, reasonable fees and disbursements of attorneys, incurred by any of them arising out of or in connection with or by reason of this Agreement, the making of the Loan or any Collateral, or any other Credit Document, or related transaction, including without limitation, any and all losses, liabilities, claims, damages, interests, judgments, costs or expenses relating to or arising under any Consumer Finance Laws or Environmental Control Statute or the application of any such statute to Borrowers’ properties or assets.  Each Borrower hereby releases Agent, Lenders and their respective directors, officers, agents, employees and attorneys from any and all claims for loss, damages, costs or expenses caused or alleged to be caused by any act or omission on the part of any of them, other than such loss, damage cost or expense which has been determined by a court of competent jurisdiction to have been caused by the breach of contract, gross negligence or willful misconduct of Agent and Lenders.  All obligations provided for in this Section 10.1 shall survive any termination of this Agreement or the Commitments and the repayment of the Loan. 

Section  10.2          Amendments.   

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(a)Neither the amendment or waiver of any provision of this Agreement or any other Credit Document, nor the consent to any departure by Borrowers therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, or if Lenders shall not be parties thereto, by the parties thereto and consented to by the Required Lenders, and each such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall unless in writing and signed by all Lenders, do any of the following except as expressly provided in this Agreement: (a) modify the definition of Maximum Principal Amount, (b) modify the Commitments of Lenders or subject Lenders to any additional obligations, (c) reduce the interest on any Note, (d) postpone any date fixed for any payment in respect of principal of, or interest on, any Note or any fees hereunder, (e) change the percentage of the Commitments, or any minimum requirement necessary for Lenders or the Required Lenders to take any action hereunder, (f) amend or waive this Section 10.2, or change the definition of Required Lenders, (g) except as otherwise expressly provided in this Agreement, and other than in connection with the financing, refinancing, sale or other disposition of any Property of Borrowers permitted under this Agreement, release any Liens in favor of Lenders on any portion of the Collateral, (h) permit Borrowers or any Guarantor to delegate, transfer or assign any of its obligations to any Lender, (i) release or compromise the obligations of Borrowers or any Guarantor to any Lender, or (j) amend the definition of “Advance Rate” or “Borrowing Base” (or any defined term used in either such definition), or increase any advance rate, or (k) amend or waive Section 7.11 and, provided, further, that no amendment, waiver or consent affecting the rights or duties of Agent under any Credit Document shall in any event be effective, unless in writing and signed by Agent, as applicable, in addition to Lenders required hereinabove to take such action.  Notwithstanding any of the foregoing to the contrary, the consent of Borrowers shall not be required for any amendment, modification or waiver of the provisions of Article 11.  In addition, Borrowers and Lenders hereby authorize Agent to modify this Agreement by unilaterally amending or supplementing Schedule I from time to time in the manner requested by Borrowers, Agent or any Lender in order to reflect any assignments or transfers of the Loans as provided for hereunder; provided, however, that Agent shall promptly deliver a copy of any such modification to Borrowers and each Lender.  Without regard to any other provision hereof, if any Lender (for such purpose, a “Dissenting Lender”) dissents to any action Agent desires to take requiring either the unanimous consent of Lenders or the consent of Required Lenders or fails to respond to Agent within 5 Business Days of Agent’s request for a consent, either Borrowers (if no Event of Default or Default is outstanding and with the prior written consent of Agent) or Agent may compel such Dissenting Lender to assign its entire Commitment (either to one or more existing Lenders or other financial institution(s) who is to become a Lender pursuant to the terms hereof) so long as (i) such Dissenting Lender receives written notice of such intended assignment (and the proposed effective date thereof) within 120 days of its providing its dissent to Agent or such Dissenting Lender failing to respond to Agent within the required 15 Business Day period and the effective date of such intended assignment is not later than 10 days thereafter and (ii) the Dissenting Lender receives full payment on the effective date of such assignment of its entire portion of the outstanding Obligations, with accrued interest and unpaid fees to such date (but excluding any otherwise applicable early termination fee under Section 2.8(a) hereof). 

(b)Notwithstanding anything contained in clause (a) above, any other provision of this Agreement or whether there exists a Default or Event of Default, Agent may at its discretion and without the consent of Required Lenders, voluntarily permit the outstanding Advances at any time to exceed the Borrowing Base by up to 1.0% of the Borrowing Base (the “Out of Formula Loans”). 

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(c) If Agent is willing in its sole and absolute discretion to permit such Out of Formula Loans, such Out of Formula Loans shall be payable on demand and shall bear interest at 2.50% per annum above the rate otherwise applicable to the Advances; provided, however, that, if Agent, on behalf of Lenders, permits Out of Formula Loans (and thereafter continues to make, on behalf of Lenders, Advances under such conditions), neither Agent nor Lenders shall be deemed to have changed the limits contained in Section 2.1.  If Agent permits such Out of Formula loans, then any payment or prepayment made by Borrowers shall be applied first to the amount of the Out-of-Formula Loan principal, then to the Out-of-Formula Loan interest, and then as provided in Section 2.8. 

Section  10.3          APPLICABLE LAW.  THIS AGREEMENT AND ALL DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 

Section  10.4          Notices.  All communications provided for hereunder shall be in writing and shall be deemed to have been delivered, if delivered in person, or sent by certified mail, postage pre-paid, return receipt requested, by reliable overnight courier, by facsimile or by e-mail (with a copy by other method permitted hereunder), as follows: 

If to Agent: 

 

Wells Fargo Bank, N.A. 

123 South Broad Street, 5th Floor

MAC: Y1379-059

Philadelphia, Pennsylvania 19109

Attn:  Mr. William M. Laird, Senior Vice President 

Facsimile: (215) 670-6120 

E-mail:  billlaird@wellsfargo.com 

 

With a copy to: 

 

Blank Rome LLP 

One Logan Square 

Philadelphia, Pennsylvania 19103 

Attn: Kevin J. Baum, Esquire 

Facsimile: (215) 832-5612 

E-mail:  baum@blankrome.com 

 

If to Borrowers: 

 

1st Franklin Financial Corporation
135 East Tugalo Street 

Toccoa, Georgia  30577
Attn:Mr. A.R. Guimond 

Facsimile: (706) 886-7953 

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E-mail:  arguimond@1ffc.com 

 

With a copy to: 

 

1st Franklin Financial Corporation

1019 S. Perry Street 

Montgomery, AL 36104-5049 

Attn: C.E. Vercelli, Jr., General Counsel 

Facsimile: (334) 834-8807

E-mail:  cvercelli@1ffc.com

 

or to such other address as any party shall specify to the other party in writing in accordance with this Section 10.4.

Section  10.5          Termination and Release.  This Agreement shall not terminate until all amounts due under the Notes, this Agreement and any other Credit Document and other Obligations, together with all interest and costs due, shall have been indefeasibly paid in full and the Commitments have expired or otherwise have been terminated.  Upon such termination and payment, the Collateral securing the Loan, the Notes, this Agreement and the other Obligations shall be released from the provisions of this Agreement and any right, title and interest of Agent in or to the same shall cease.  Thereafter, Agent agrees to deliver to Borrowers such documents as Borrowers reasonably request to release of record any security interest or lien of Agent in the Collateral. 

 

Section  10.6          Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.  Signature by facsimile or electronic transmission shall bind the parties hereto. 

Section  10.7          Costs, Expenses and Taxes.  Borrowers agree to pay immediately upon demand legal fees and out-of-pocket expenses of Agent related to the preparation, negotiation, documentation, execution, filing or delivery of this Agreement or any other Credit Document and any and all waivers, amendments or modifications of any of the Credit Documents or any of the terms and provisions thereof and, following any Default or Event of Default hereunder, any and all audits and required inspections permitted under this Agreement or any other Credit Documents.  Borrowers shall also pay immediately upon demand therefor all fees (including without limitation, legal fees and expenses), costs and other expenses incurred by Agent and Lenders in connection with collection of the Loan, the maintenance or preservation of the security interest in the Collateral, the sale, disposition or other realization on the Collateral, or the enforcement of Agent’s and Lenders’ rights hereunder or under any Credit Document.  In addition, Borrowers shall also pay any and all stamp and other taxes or filing fees payable or determined to be payable in connection with the execution and delivery of the Notes and this Agreement, the Collateral and other documents to be delivered hereunder, and agrees to save Agent and Lenders harmless from and against any and all liabilities with respect to or resulting from any delay in payment or omission to pay such taxes. 

Section  10.8          Participations and Assignments. 

(a)This Agreement shall bind and inure to the benefit of each signatory, its  

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successors and assigns; provided, however that, Borrowers shall not have the right to assign or delegate their obligations and duties under this Agreement or any other Credit Documents or any interest therein except with the prior written consent of Agent and Lenders.

(b)Notwithstanding subsection (c) of this Section 10.8, nothing herein shall restrict, prevent or prohibit any Lender from (i) pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank or (ii) granting assignments or participations in such Lender’s Loans hereunder to its parent and/or to any affiliate of such Lender or to any existing Lender or affiliate thereof.  Any Lender may make, carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an affiliate of such Lender except to the extent such transfer would result in increased costs to Borrower. 

(c)Each Lender may, with the prior written consent of Agent and (if no Default or Event of Default is outstanding) with the consent of Borrowers, assign to one or more banks or other financial institutions all or a portion of its rights and obligations under this Agreement and the Notes; provided that Wells Fargo Bank, N.A. may assign to one or more banks or other financial institutions up to fifty percent (50%) of its Commitment as of the date hereof without the prior written consent of Lenders or Borrowers.  In connection with each assignment: (i) the parties thereto shall execute and deliver to Agent, for its acceptance (if properly completed and executed in accordance with the terms hereof) and recording in its books and records, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3,500 to be paid by the assignee, (ii) no such assignment shall be for less than $10,000,000 or, if less, the entire remaining Commitment of such Lender, each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of both the Commitment of such Lender and all Loans of such Lender.  Upon such execution and delivery of the Assignment and Acceptance to Agent, from and after the date specified as the effective date in the Assignment and Acceptance (“Acceptance Date”), (x) the assignee thereunder shall be a party hereto, and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, such assignee shall have the rights and obligations of a Lender hereunder and (y) the assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than any rights it may have pursuant to Section 10.1 which will survive) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto). 

(d)Within 10 days after demand by Agent, Borrowers shall execute and deliver to Agent in exchange for any surrendered Note or Notes (which the assigning Lender agrees to promptly deliver to Borrowers) a new Note or Notes to the order of the assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new Note or Notes to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder.  Such new Note or Notes shall re-evidence the indebtedness outstanding under the old Notes or Notes and shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes and shall otherwise be in substantially the form of the Note or Notes subject to such assignments. 

(e)Each Lender may, with the prior written consent of Agent, but without the consent of any other Lender or Borrowers, sell participations to one or more parties (a “Participant”)  

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in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Loans owing to it and the Note or Notes held by it); provided that if such Lender obtains the consents required under this clause (e) then (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment to Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) Borrowers, Agent, and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (v) such Lender shall not transfer, grant, assign or sell any participation under which the Participant shall have rights to approve any amendment or waiver of this Agreement.  

(f)Each Lender agrees that, without the prior written consent of Borrowers and Agent, it will not make any assignment or sell a participation hereunder in any manner or under any circumstances that would require registration or qualification of, or filings in respect of, any Advance, Note or other Obligation under the securities laws of the United States of America or of any jurisdiction. 

(g)In connection with the efforts of any Lender to assign its rights or obligations or to participate interests, Agent or such Lender may disclose any information in its possession regarding Borrowers, their finances and/or Property.  By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. 

(h)Notwithstanding anything in this Agreement to the contrary, under no circumstances shall Agent or any Lender provide any information regarding this Agreement (including related documents), the Receivables, the financial statements, affairs, policies, or business operations of Borrower to any Affiliate or otherwise related company that competes with Borrower or is engaged in the business of consumer finance lending outside the ordinary course of Agent’s or such Lender’s business in administering loans in such Person’s portfolio.  Without limiting the generality of the preceding sentence, Agent and Lenders shall not disclose any information about Borrower of any kind  

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or character to Wells Fargo Financial Resources, Inc., Wells Fargo Financial, or any other consumer finance company outside the ordinary course of Agent’s or such Lender’s business in administering loans in such Person’s portfolio; provided, however, prior to the occurrence of an Event of Default, Agent shall not disclose any customer specific information to such Affiliates.

Section  10.9          Effectiveness of Agreement.  Anything to the contrary in this Agreement notwithstanding, the provisions hereof shall not be effective until this Agreement is: (a) duly executed, and delivered by authorized officers of Borrowers to Agent; and (b) duly signed by an authorized officer of Agent. 

Section  10.10          JURISDICTION AND VENUE.  IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, BORROWERS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN MANHATTAN, NEW YORK AND AGREE NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH COUNTY.  BORROWERS AGREE THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON IT BY MAILING A COPY THEREOF BY REGISTERED MAIL, POSTAGE PREPAID, TO BORROWERS.  THE PREVAILING PARTY IN ANY SUCH JUDICIAL PROCEEDING SHALL BE ENTITLED TO THE PAYMENT OF ITS LEGAL FEES AND EXPENSES IN CONNECTION THEREOF BY THE OTHER PARTY. 

Section  10.11          WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR AGENT AND LENDERS TO ENTER INTO THIS AGREEMENT. 

Section  10.12          REVIEW BY COUNSEL.  BORROWERS ACKNOWLEDGE THAT THEY HAVE HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND, SPECIFICALLY, SECTIONS 10.10 AND 10.11 HEREOF, AND FURTHER ACKNOWLEDGE THAT THE MEANING AND EFFECT OF THE FOREGOING WAIVER OF JURISDICTION AND VENUE OBJECTION AND JURY TRIAL HAVE BEEN FULLY EXPLAINED TO BORROWERS BY THEIR COUNSEL. 

Section  10.13          Exchanging Information.  Subject to Section 10.8(h), Agent, Lenders, Wells Fargo & Company and all direct and indirect subsidiaries of Agent, Lenders or Wells Fargo & Company may exchange and share any and all information they may have in their possession regarding Borrowers and their Affiliates with Agent’s and Lenders’ prospective participants, affiliates, accountants, lawyers and other advisors, Agent, Lenders, Wells Fargo & Company and all direct and indirect subsidiaries of Agent, Lenders or Wells Fargo & Company, and Borrowers waive any right of confidentiality it may have with respect to such exchange of such information. 

Section  10.14          Acknowledgment of Receipt.  Each Borrower acknowledges receipt of a  

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copy of this Agreement, the Notes, each Credit Document and each other document and agreement executed by Borrowers in connection with the Agreement or the Obligations.

Section  10.15          Patriot Act Notice.  Each Lender that is subject to the requirements of the Patriot Act hereby notifies Borrowers that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Borrowers, which information includes the name and address of Borrowers and other information that will allow such Lender to identify Borrowers in accordance with the Patriot Act.  In addition, if Agent is required by law or regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for Borrowers and Guarantors and (b) OFAC/PEP searches and customary individual  background checks for the Borrowers’ senior management and key principals, and Borrowers agree to cooperate in respect of the conduct of such searches and further agrees that the reasonable costs and charges for such searches shall constitute expenses hereunder and be for the account of Borrowers. 

Section  10.16          Recognition of the U.S. Special Resolution Regimes. 

(a)In the event that any Lender that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Lender of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States of America or a state of the United States of America. 

(b)In the event that any Lender that is a Covered Entity or a BHC Act Affiliate of such Lender becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Lender are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States of America or a state of the United States of America. 

ARTICLE 11
AGENT

Section  11.1          Appointment of Agent. 

(a)Each Lender hereby designates Wells Fargo Bank, N.A. as Agent to act as herein specified.  Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of a Note or participation, shall be deemed irrevocably to authorize Agent to take such action on its behalf under the provisions of this Agreement and the Notes and any other Credit Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto.  Agent shall hold all Collateral and all payments of principal, interest, fees (other than the administrative fee payable solely for the account of Agent pursuant to Section 2.9 hereof), charges and expenses received pursuant to this Agreement or any other Credit Document for the ratable benefit of Lenders except as otherwise provided herein.  Agent may perform any of its duties hereunder by or through its agents or employees. 

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(b)The provisions of this Article 11 are solely for the benefit of Agent and Lenders, and Borrowers shall not have any duties under this Section 11 or any rights as a third party beneficiary of any of the provisions hereof (except for the applicable provision of Section 11.9(a)).  In performing its functions and duties under this Agreement, Agent shall act solely as agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for Borrowers. 

(c)Borrowers, Agent and Lenders hereby covenant and agree that First Horizon Bank shall be the syndication agent (“Syndication Agent”), but that in such capacity, Syndication Agent shall have no rights, duties, responsibilities, obligations, liabilities, responsibilities or duties, except for those received, undertaken or incurred by Syndication Agent in its capacity as a Lender.  No duty, responsibility, right or option granted to Agent in this Agreement and Credit Documents is delegated or transferred, in whole or in part, to Syndication Agent and no compensation payable to Agent shall be shared with, or paid to, Syndication Agent. Syndication Agent shall not be entitled to any fees or reimbursement of expenses except as Syndication Agent shall otherwise be entitled in its capacity as a Lender. 

Section  11.2          Nature of Duties of Agent.  Agent shall have no duties or responsibilities except those expressly set forth in this Agreement.  Neither Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted by it as such hereunder or in connection herewith, unless caused by its or their gross negligence or willful misconduct.  The duties of Agent shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein. 

Section  11.3          Lack of Reliance on Agent. 

(a)Independently and without reliance upon Agent, each Lender, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial or other condition and affairs of Borrowers in connection with the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of Borrowers, and, except as expressly provided in this Agreement, Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of Advances or at any time or times thereafter.  In addition to the foregoing, Agent agrees to provide summary reports to Lenders in connection with inspections and audits performed under Section 6.3 for informational purposes only and Agent shall not be responsible for the accuracy of any information contained therein. 

51

(b)Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, collectability, priority or sufficiency of this Agreement, the Notes, the Credit Documents or the financial or other condition of Borrowers.  Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or the Notes, or the financial condition of Borrowers, or the existence or possible existence of any Default or Event of Default, unless specifically requested to do so in writing by any Lender. 

Section  11.4          Certain Rights of Agent.  Without limiting Agent’s rights and discretion under any provision hereof, Agent shall have the right to request instructions from the Required Lenders or, as required, each of Lenders.  If Agent shall request instructions from the Required Lenders or each of Lenders, as the case may be, with respect to any act or action (including the failure to act) in connection with this Agreement, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders or each of Lenders, as the case may be, and Agent shall not incur liability to any Person by reason of so refraining.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders or each of Lenders, as the case may be. 

Section  11.5          Reliance by Agent.  Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, facsimile, telex teletype or telecopier message, e-mail or other electronic transmission, cablegram, radiogram, order or other documentary, teletransmission or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person.  Agent may consult with legal counsel (including counsel for Borrowers with respect to matters concerning Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. 

Section  11.6          Indemnification of Agent.  To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will reimburse and indemnify Agent, in proportion to its respective Commitment, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including reasonable counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in any way relating to or arising out of this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from Agent’s gross negligence or willful misconduct. 

Section  11.7          Agent in its Individual Capacity.  With respect to its obligation to lend under this Agreement, the Advances made by it and the Notes issued to it and all of its rights and obligations as a Lender hereunder and under other Credit Documents, Agent shall have the same rights and powers hereunder as any other Lender or holder of a Note or participation interests and may exercise the same as though it was not performing the duties specified herein; and the terms “Lenders”, “Required Lenders”, “holders of Notes”, or any similar terms shall, unless the context clearly otherwise indicates, include Agent in its individual capacity.  Agent may accept deposits from, lend money to, acquire equity interests in, and generally engage in any kind of banking, trust, financial  

52

advisory or other business with Borrowers or any Affiliate of Borrowers as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrowers for services in connection with this Agreement and otherwise without having to account for the same with Lenders.

Section  11.8          Holders of Notes.  Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with Agent.  Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor. 

Section  11.9          Successor Agent. 

(a)Agent may, upon 5 Business Days notice to Lenders and Borrowers, resign at any time (effective upon the appointment of a successor Agent pursuant to the provisions of this Section 11.9(a)) by giving written notice thereof to Lenders and Borrowers.  Upon any such resignation, the Required Lenders shall have the right, upon 5 days notice, to appoint a successor Agent.  If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving of notice of resignation, then, upon 5 days notice, the retiring Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a bank or other financial institution which maintains an office in the United States, or a commercial bank organized under the laws of the United States of America or of any State thereof, or any affiliate of such bank or trust or other financial institution which is engaged in the banking business, having a combined capital and surplus of at least $500,000,000; provided, however, that Required Lenders may, upon 5 days notice, replace any such successor Agent appointed by a retiring Agent.   

(b)Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this Article 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.  In the event Agent or its assets are taken over by any state or federal agency having jurisdiction over Agent or its assets, a majority of the Lenders other than Agent may appoint a successor to Agent. 

Section  11.10          Collateral Matters. 

(a)Each Lender authorizes and directs Agent to accept the other Credit Documents for the benefit of Lenders.  Agent is hereby authorized, on behalf of all Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action, in its sole discretion, with respect to any Collateral or Credit Document which may be necessary or appropriate to perfect and maintain perfected or enforce the Liens upon the Collateral granted pursuant to this Agreement. 

(b)Lenders hereby authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent upon any Collateral (i) upon termination of the Commitments  

53

and payment in immediately available funds and satisfaction of all of the Obligations at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting Property being sold or disposed of upon receipt of the proceeds of such sale by Agent if the sale or disposition is permitted under this Agreement or any other Credit Document or is made by Agent in the enforcement of its rights hereunder following the occurrence of an Event of Default or (iii) if approved, authorized or ratified in writing by the Required Lenders, unless such release is required to be approved by all Lenders hereunder; provided, however, that Agent may, in its discretion, upon request by Borrowers, release Agent’s Liens on Collateral value in the aggregate not in excess of $1,000,000 during any one year period without the prior written approval or authorization of any of the other Lenders.  Upon request by Agent at any time, Lenders will confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to this Section 11.10(b).

(c)Agent shall have no obligation whatsoever to Lenders or to any other Person to assure that the Collateral exists or is owned by Borrowers or is cared for, protected or insured or that the Liens granted to Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Agent in this Section 11.10 or in any of the Credit Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent’s own interest in the Collateral as one of Lenders and that Agent shall have no duty or liability whatsoever to Lenders, except for its gross negligence or willful misconduct. 

Section  11.11          Delivery of Information.  Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, agreements, notices, communications or other information received by Agent from Borrowers, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Credit Document except (a) as specifically provided in this Agreement or any other Credit Document and (b) as requested from time to time in writing by any Lender with respect to documents, instruments, notices or other written communications from Borrowers received by and in the possession of Agent. 

Section  11.12          Defaults.  Agent shall not be deemed to have knowledge of the occurrence of a Default or Event of Default (other than the non-payment of principal of or interest on the Loan to the extent the same is required to be paid to Agent for the account of Lenders) unless Agent has actual knowledge thereof or has received notice from a Lender or Borrowers specifying such Default or Event of Default and stating that such notice is a “Notice of Default.”  In the event that Agent has such knowledge of or receives such a notice of the occurrence of a Default or Event of Default, Agent shall give prompt notice thereof to Lenders.  Agent shall (subject to Article 9) take such action with respect to such Default or Event of Default or refrain from taking such action, with respect to such Default or Event of Default as Agent shall deem advisable in the best interest of Lenders and shall, without limiting Agent’s rights or discretion under this Agreement, use reasonable efforts under the circumstances to consult with Lenders before taking any material enforcement action; and provided further that Agent shall not be required to take any such action which it determines to be contrary to law. 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE(S)]

54

IMPORTANT: READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.  YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

 

Dated the date and year first set forth above

	BORROWER:

	1ST FRANKLIN FINANCIAL CORPORATION

 

 

By:/s/ A. R. Guimond, Jr.                                                      

Name:A. Roger Guimond, Jr.                                                       

Title:Executive Vice President and CFO                     

 

	 

	 

[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

S-1

116549.01097/122059808v.9

	 

	 

	AGENT:

	WELLS FARGO BANK, N.A.

 

 

By:/s/ William M. Laird                                                               

Name:William M. Laird                                                                          

Title:SVP                                                                                                                  

 

[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

S-2

116549.01097/122059808v.9

	LENDERS:

	WELLS FARGO BANK, N.A.

 

 

By:/s/ William M. Laird                                                              

Name:William M. Laird                                                                         

Title:SVP                                                                                                                 

 

FIRST HORIZON BANK

 

 

By:/s/ Jake McCrary                                                                        

Name:Jake McCrary                                                                                    

Title:Vice President                                                                                  

 

[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

S-3

116549.01097/122059808v.9

EXHIBITS

 

Exhibit A:Form of Annual Compliance Certificate 

Exhibit B:Form of Availability Statement 

Exhibit C:RESERVED 

Exhibit D:Form of Subordination Agreement 

Exhibit E:Modification Policy 

Exhibit F:Underwriting Policy 

Exhibit G:Charge-off Policy 

 

SCHEDULES

 

Schedule I:Lenders 

Schedule II:Permitted Debt 

Schedule III:Permitted Liens 

Schedule 4.2:Organization and Good Standing 

Schedule 4.7:Litigation 

Schedule 4.12:Investments and Subsidiaries 

Schedule 4.16:Locations of Borrower 

Schedule 4.17:Capital Stock  

Schedule 7.16:Deposit Accounts 

SCHEDULE I

 

Commitments

 

	Lenders

	Commitment Percentage

	Commitment Amount

	 

	 

	 

	Wells Fargo Bank, N.A.

123 South Broad Street, 5th Floor

MAC: Y1379-059

Philadelphia, Pennsylvania

Attn:  Mr. William M. Laird, Senior Vice President

Facsimile: (215) 670-6120

 

	75%

	$150,000,000

	First Horizon Bank

165 Madison Avenue, Suite 1000

Memphis, Tennessee 38103

Attn:  Mr. Jake McCrary, Vice President

Facsimile:  (901) 523-4566

 

	25%

	$50,000,000

	 

TOTAL

	 

100%

	 

$200,000,000Exhibit 10.1

 

VIRGINIA BANKERS ASSOCIATION

 

MODEL NON-QUALIFIED
DEFERRED COMPENSATION PLAN

 

FOR EXECUTIVES

 

(As Restated Effective
January 1, 2017)

 

    	 	 	 

     

    

 

	TABLE OF CONTENTS

	 	 	 	 	Page
	ARTICLE I
	Definition of Terms
	 
	1.1	 	Act	 	1
	1.2	 	Administrator	 	1
	1.3	 	Adoption Agreement	 	1
	1.4	 	Affiliate	 	1
	1.5	 	Beneficiary	 	2
	1.6	 	Benefit Commencement Date	 	2
	1.7	 	Board	 	2
	1.8	 	Change in Control	 	2
	1.9	 	Code	 	2
	1.10	 	Compensation	 	2
	1.11	 	Deferral Account or Deferral Accounts	 	2
	1.11(a)	 	Employee Deferral Account	 	2
	1.11(b)	 	Employer Deferral Account	 	2
	1.11(c)	 	Predecessor Plan Account	 	3
	1.12	 	Deferral Benefit	 	3
	1.13	 	Deferred Compensation Election	 	3
	1.14	 	Deferral Contributions	 	3
	1.15	 	Effective Date of the Plan	 	3
	1.16	 	Effective Date of the Restatement of the Plan	 	3
	1.17	 	Eligible Employee	 	3
	1.18	 	Employee	 	3
	1.19	 	Employer	 	3
	1.20	 	Fund	 	3
	1.21	 	Participant	 	4
	1.22	 	Plan	 	4
	1.23	 	Plan Sponsor	 	4
	1.24	 	Plan Year	 	4
	1.25	 	Rabbi Trust	 	4
	1.26	 	Restated Plan  	 	4
	1.27	 	Section 409A	 	4
	1.28	 	Separation from Service	 	4
	1.29	 	Termination of Employment  	 	4
	1.30	 	Trustee	 	4
	1.31	 	Valuation Date	 	4
	1.32	 	VBA Plan	 	4
	 	 	 	 	 
	ARTICLE II
	Eligibility and Participation
	 	 	 	 	 
	2.1	 	Eligibility	 	5
	2.2	 	Notice Regarding Active Participation	 	5
	2.3	 	Length of Participation	 	5
	2.4	 	Termination of Active Participation	 	5

 

    	 	 	 

     

    

 

	ARTICLE III
	Employee Contributions
	 
	3.1	 	Deferred Compensation Election	 	5
	3.2	 	Timing of Deferred Compensation Election	 	7
	3.3	 	Crediting of Employee Deferral Contributions	 	8
	3.4	 	Automatic Cancellation of Deferred Compensation Election
    upon Receipt of Hardship Withdrawal	 	8
	3.5	 	Cancellation of Deferred Compensation Election upon
    Disability	 	8
	 	 	 	 	 
	ARTICLE IV
	Employer Contributions
	 
	4.1	 	Employer Contribution Allocations	 	9
	4.2	 	Employment Taxes	 	9
	 	 	 	 	 
	ARTICLE V
	Deemed Earnings and Accounting
	 
	5.1	 	Fund Divisions	 	9
	5.2	 	Participant Investment Directions	 	10
	5.3	 	Crediting of Deemed Earnings	 	10
	5.4	 	Subtractions from Deferral Account	 	11
	5.5	 	Expenses Charged to Deferral Accounts	 	11
	5.6	 	Equitable Adjustment in Case of Error or Omission	 	11
	5.7	 	Statement of Benefits	 	11
	 	 	 	 	 
	ARTICLE VI
	Vesting
	 
	6.1	 	Vesting in Employee Deferral Account and Predecessor
    Plan Account	 	11
	6.2	 	Vesting in Employer Non-Elective Deferral Account	 	11
	6.3	 	Vesting in Employer Matching Deferral Account	 	11
	6.4	 	Forfeiture of Benefits	 	12
	6.5	 	No Restoration of Forfeited Benefits	 	13
	 	 	 	 	 
	ARTICLE VII
	Beneficiary Designation
	 
	7.1	 	Beneficiary Designation	 	13
	 	 	 	 	 
	ARTICLE VIII
	Retirement Dates
	 
	8.1	 	Normal Retirement Date	 	14
	8.2	 	Delayed Retirement Date	 	14
	8.3	 	Early Retirement Date	 	14
	8.4	 	Disability Retirement Date	 	14
	8.5	 	Use of Retirement Date Definitions	 	14

 

    		
- ii -

	 

     

    

 

	ARTICLE IX
	Time and Form of Payment
	 
	9.1	 	Time of Payment	 	14
	9.2	 	Form of Payment	 	15
	9.3	 	Permissible Changes to Benefit Commencement Date and/or
    Form of Payment	 	16
	9.4	 	Lump-Sum Payments and Periodic Installments	 	16
	9.5	 	Permissible Cash Out by Lump-Sum Payment	 	17
	9.6	 	Benefit Determination and Payment Procedure	 	17
	9.7	 	Payments to Minors and Incompetents	 	17
	9.8	 	Distribution of Benefit When Distributee Cannot Be
    Located	 	17
	 	 	 	 	 
	ARTICLE X
	Withdrawals
	 
	10.1	 	Hardship Withdrawals	 	18
	10.2	 	Distributions in the Event of Income Inclusion	 	18
	10.3	 	No Other Withdrawals Permitted	 	18
	 	 	 	 	 
	ARTICLE XI
	Claims Procedure
	 
	11.1	 	Initial Claim	 	19
	11.2	 	Appeals	 	21
	11.3	 	Time Calculation	 	23
	11.4	 	Definitions	 	24
	11.5	 	Authorized Representatives	 	24
	 	 	 	 	 
	ARTICLE XII
	Funding
	 
	12.1	 	Funding	 	24
	12.2	 	Use of Rabbi Trust Permitted	 	24
	 	 	 	 	 
	ARTICLE XIII
	Plan Administrator
	 
	13.1	 	Appointment of Plan Administrator	 	25
	13.2	 	Plan Sponsor as Plan Administrator	 	25
	13.3	 	Procedure if a Committee	 	25
	13.4	 	Action by Majority Vote if a Committee	 	25
	13.5	 	Appointment of Successors	 	25
	13.6	 	Duties and Responsibilities of Plan Administrator	 	25
	13.7	 	Power and Authority	 	25
	13.8	 	Availability of Records	 	26
	13.9	 	No Action with Respect to Own Benefit	 	26
	 	 	 	 	 
	ARTICLE XIV
	Amendment and Termination of
    Plan
	 
	14.1	 	Amendment or Termination of the Plan	 	26
	14.2	 	Effect of Employer Merger, Consolidation, or Liquidation	 	26

 

    		-iii-
	 

     

    

 

	ARTICLE XV
	Participation by Additional Employers
	 
	15.1	 	Adoption by Additional Employers	 	27
	15.2	 	Termination Events with Respect to Employers Other
    Than the Plan Sponsor	 	27

 

	ARTICLE XVI
	Miscellaneous
	 
	16.1	 	Nonassignability	 	27
	16.2	 	Right to Require Information and Reliance Thereon	 	27
	16.3	 	Notices and Elections	 	28
	16.4	 	Delegation of Authority	 	28
	16.5	 	Service of Process	 	28
	16.6	 	Governing Law	 	28
	16.7	 	Binding Effect	 	28
	16.8	 	Severability	 	28
	16.9	 	No Effect on Employment Agreement	 	28
	16.10	 	Gender and Number	 	28
	16.11	 	Titles and Captions	 	28
	16.12	 	Construction	 	28
	16.13	 	Nonqualified Deferred Compensation Plan Omnibus Provision	 	29

 

    		- iv -	 

     

    

 

VIRGINIA BANKERS ASSOCIATION

MODEL NON-QUALIFIED
DEFERRED COMPENSATION PLAN

 FOR EXECUTIVES

(As Restated Effective January
1, 2017)

 

An
employer desiring to adopt the Plan should complete the necessary information in the Adoption Agreement. Any plan restatement
using the form of this Model Non-Qualified Deferred Compensation Plan affects amounts that were deferred or that became vested
on or after January 1, 2005. The terms of this document are effective January 1, 2017. Unless otherwise elected in Option 3(b)(2)(C)
of the Adoption Agreement, all amounts deferred and vested prior to January 1, 2005 remain subject to the terms of the plan document
as in effect on December 31, 2004.

 

The
Virginia Bankers Association cannot guarantee that any Plan adopted by an employer will be deemed to satisfy, or will actually
satisfy, the requirements of the Internal Revenue Code or ERISA applicable to non-qualified "top-hat" deferred compensation
plans. Employers considering the use of the Plan must recognize that neither the Virginia Bankers Association nor its affiliates
or any of their employees or representatives can give any legal advice as to the acceptability or application of the Plan in any
particular situation, and that employers should consult their own attorney for such advice. The establishment, operation, and
the related tax consequences of the adoption and maintenance of a non-qualified "top- hat" deferred compensation plan
are the responsibilities of the employer and its own legal counsel.

 

ARTICLE I

Definition of Terms

 

The following
words and terms as used in this Plan shall have the meaning set forth below, unless a different meaning is clearly required by
the context:

 

1.1           “Act”: The Employee Retirement Income Security Act of 1974, as the same may be amended from time to
time, or the corresponding sections of any subsequent legislation which replaces it, and, to the extent not inconsistent therewith,
the regulations issued thereunder.

 

1.2           “Administrator”: The Plan Administrator named and serving in accordance with ARTICLE XIII hereof, and
any successor or additional Administrator appointed and serving in accordance herewith, all as selected in Option 2(b) of the
Adoption Agreement or as appointed, resigned or removed by separate instrument attached thereto.

 

1.3           “Adoption Agreement”: The adoption agreement, and any amendment thereto, which sets forth certain elections
and representations of the Plan Sponsor and any participating Employer and by execution of which the Plan Sponsor and any participating
Employer adopt the Plan.

 

1.4           “Affiliate”: Each of the following business entities or other organizations (whether or not incorporated)
which during the relevant period is treated (but only for the portion of the period so treated and for the purpose and to the
extent required to be so treated) together with the Employer as a single employer pursuant to the following sections of the Code
(as modified where applicable by Section 415(h) of the Code):

 

1.4(a)       Any
corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which includes
the Employer, and

 

1.4(b)      Any trade or business
(whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Employer.

 

    		

	 

     

    

 

1.5           “Beneficiary”: The person or persons designated by a Participant or otherwise entitled pursuant to ARTICLE
VII to receive benefits under the Plan attributable to such Participant after the death of such Participant.

 

1.6            “Benefit
Commencement Date”: The date or dates designated or provided for in Option 8(a) of the Adoption Agreement. Notwithstanding
the foregoing, the Benefit Commencement Date for the Employer Non-Elective Deferral Account shall be the Participant’s Separation
from Service. If earlier than any Benefit Commencement Date designated or elected, a Participant’s Benefit Commencement
Date shall be the date such Participant is determined to be Disabled as that term is defined in subparagraph 8.4(b).

 

1.7     
      “Board”: The present and any succeeding Board of Directors of
the Plan Sponsor, unless such term is used with respect to a particular Employer and its Employees or Participants, in which
event it shall mean the present and any succeeding Board of Directors of that Employer.

 

1.8           “Change
in Control”: A change in the ownership, change in effective control, or change in the ownership of a substantial portion
of the assets of the Plan Sponsor as defined in Treasury Regulation Section 1.409A-3(i)(5) or its successor or as otherwise defined
as a special provision in Option 3(b)(3) of the Adoption Agreement.

 

1.9           “Code”:
The Internal Revenue Code of 1986, as the same may be amended from time to time, or the corresponding section of any subsequent
Internal Revenue Code, and, to the extent not inconsistent therewith, regulations issued thereunder.

 

1.10         “Compensation”:
A Participant’s (a) annual base salary as more specifically designated in Option 4(a) of the Adoption Agreement (referred
to as “Salary”) and (b) bonuses and incentive pay as more specifically designated in Option 4(a) of the Adoption Agreement
(together, referred to as “Bonus”) including that portion of such compensation which is electively deferred under
this Plan or any other plan of the Employer such as a 401(k) plan for such Plan Year or reduced pursuant to a salary reduction
election permitted under Section 125 of the Code, but excluding any such compensation deferred from a prior period or any expense
reimbursements, allowances, or benefits not normally paid in cash to the Participant.

 

1.11         “Deferral
Account” or “Deferral Accounts”: The unfunded, bookkeeping account(s) maintained on the books of the Employer
for each Participant which reflects his interest in amounts attributable to Deferral Contributions and the deemed earnings or
losses thereon determined pursuant to paragraph 5.3, consisting of the following:

 

1.11(a)    “Employee Deferral Account”: The account or accounts attributable to Employee Deferral Contributions made pursuant
to paragraph 3.1, subtractions pursuant to paragraph 5.4, and deemed earnings or losses thereon determined pursuant to paragraph
5.3. A separate accounting shall be made for Employee Deferral Contributions for each Plan Year and earnings attributable thereto.

 

1.11(b)    “Employer Deferral Account”: The account or accounts attributable to contributions made by the Employer, consisting
of the following subaccounts, for which a separate accounting shall be made for each contribution type for each Plan Year and
earnings attributable thereto:

 

(i)               “Employer
Non-Elective Deferral Account”: The subaccount attributable to Employer Non-Elective Contributions made pursuant to
Option 5(a) of the Adoption Agreement and paragraph 4.1 of the Plan and the earnings attributable thereto. If applicable, a subdivision
of the Employer Non-Elective Deferral Account shall be maintained to reflect Employer Non-Elective Contributions and the earnings
attributable thereto until such time as the subaccount becomes fully vested.

 

(ii)              “Employer
Matching Deferral Account”: The subaccount attributable to Employer Matching Contributions made pursuant to Option 5(a)
of the Adoption Agreement and paragraph 4.1 of the Plan and the earnings attributable thereto. If applicable, a subdivision of
the Employer Matching Deferral Account shall be maintained to reflect Employer Matching
Contributions and the earnings attributable thereto until such time as the subaccount becomes fully vested.

 

    	 	- 2 -	 

     

    

 

1.11(c)
“Predecessor Plan Account”: The account or accounts attributable to any elective or non-elective deferral of
remuneration by or on behalf of the Participant under any “top-hat” deferred compensation plan previously maintained
by the Employer that is merged into or transferred to the Plan.

 

For purposes of this restatement
of the Plan, unless elected in Option 3(b)(2)(C) of the Adoption Agreement, Deferral Accounts do not include accounts under the
Plan attributable to amounts deferred and vested before January 1, 2005. Such accounts are considered grandfathered and are subject
to the rules of Plan as in effect on December 31, 2004.

 

1.12         “Deferral
Benefit”: The sum of the vested balances of Participant’s Deferral Accounts as of the most recent Valuation Date
(or as otherwise provided herein).

 

1.13         “Deferred
Compensation Election”: The election made by the Participant pursuant to paragraph 3.1 of the Plan.

 

1.14         “Deferral
Contributions”: That portion of a Participant’s Compensation which is deferred under the Plan and/or the non-elective
or matching contributions made under the Plan by the Employer.

 

1.15        “Effective
Date of the Plan”: The date or dates specified in Option 3(a) (or in Option 1(f), in the case of an adopting Employer)
of the Adoption Agreement.

 

1.16        “Effective Date of the Restatement of the Plan”: The date or dates specified in Option 3(b)(2) of the
Adoption Agreement.

 

1.17        “Eligible
Employee”: Any Employee included within the definition of Eligible Employee as more specifically designated in Option
4(b) of the Adoption Agreement; provided, however, in order to be an Eligible Employee, the Employee must be in
the “highly compensated group”. The term “highly compensated group” means a select group of management
or highly compensated employees as described and used in Sections 201(2), 301(a)(3), and 401(a)(1) of the Act.

 

1.18        “Employee”:
Any individual employed in the service of the Employer as a common law employee of the Employer.

 

1.19        “Employer”: The Plan Sponsor and those Affiliates named in Option 1(f) of the Adoption Agreement as
adopting the Plan, collectively, unless the context indicates otherwise.

 

1.20        “Fund”:

 

1.20(a)     If a Rabbi Trust is established and maintained for the Plan, that Rabbi Trust, which shall consist of the Fund divisions described
in paragraph 5.1. Notwithstanding the foregoing, any reference to the Fund is intended only for purposes of providing a measurement
of Deferral Benefits and Deferral Account balances and is not intended to segregate assets or identify assets that may or must
be used to satisfy benefit liabilities under the Plan.

 

1.20(b)     If a Rabbi Trust is not established and maintained for the Plan, that separate bookkeeping account maintained by the Plan Sponsor
to make deemed investments of Deferral Contributions, which shall consist of the Fund divisions described in paragraph 5.1.

 

    	 	- 3 -	 

     

    

 

1.21         “Participant”:
An Eligible Employee or other person qualified to participate in the Plan for so long as he is considered a Participant as provided
in ARTICLE II hereof.

 

1.22         “Plan”:
This document, including the Appendices hereto, as contained herein or duly amended all as adopted by the Plan Sponsor through
the Adoption Agreement.

 

 1.23         “Plan Sponsor”: The employer named in Option 1(a) of the Adoption Agreement.

 

1.24         “Plan
Year”: The twelve consecutive month period commencing upon the first day of January of each year; provided, however,
in the event that this is a Restated Plan which was maintained previously on the basis of a different plan year, the prior plan
year and short plan year needed to effect the plan year change shall be as set forth in Option 4(c) of the Adoption Agreement.

 

 1.25         “Rabbi Trust”: A trust fund described in paragraph 12.2 and established or maintained for the Plan.

 

1.26         “Restated Plan”: The Plan, if it is elected in Option 3(b)(2) of the Adoption Agreement that the Plan
is adopted as an amendment or restatement of a “top-hat” deferred compensation plan previously maintained by the Employer.

 

1.27         “Section 409A”: Section 409A of the Code, including the regulations promulgated thereunder, and any
other applicable published guidance of the Internal Revenue Service for Section 409A of the Code.

 

1.28         “Separation
from Service”: The death, retirement or other Termination of Employment with the Employer and all Affiliates (whether
or not the Affiliate is an adopting Employer) for reasons other than Disability as defined in subparagraph 8.4(b). For purposes
hereof the employment relationship is treated as continuing intact while the individual is on military leave, sick leave or other
bona fide leave of absence if the period of leave does not exceed six (6) months, so long as the individual’s right to reemployment
is provided either by statute or by contract. If the period exceeds six (6) months and the individual’s right to reemployment
is not provided by contract or statute, then the employment relationship is deemed to terminate on the first date immediately
following such six-month period.

 

1.29         “Termination
of Employment”: Facts and circumstances indicating a date beyond which the Employer does not intend for the Employee
to provide more than insignificant services for the Employer (regardless of whether provided as an Employee or as an independent
contractor) and Affiliates (whether or not the Affiliate is a participating Employer). For purposes hereof, whether any services
are more than insignificant will be determined in accordance with the provisions of Section 409A. Unless otherwise stated in Option
3(b)(3) of the Adoption Agreement, if the level of bona fide service the Employee would perform after such date will permanently
decrease to no more than twenty percent (20%) of the average level of bona fide service over the preceding thirty-six (36) months,
such services shall be treated as insignificant and a Termination of Employment will be deemed to occur, unless facts and circumstances
indicate that the Employee continues to be treated as an Employee for other purposes. With respect to a Participant who provides
services for the Employer both as an Employee and a member of the Board, services as a member of the Board shall not be taken
into account in determining whether a Participant has experienced a Separation from Service under this Plan.

 

 1.30         “Trustee”: The person(s) serving from time to time as trustee of any Rabbi Trust.

 

1.31         “Valuation
Date”: Each business day (based on the days the underlying investment funds are valued and transactions are effectuated
in the applicable financial markets) of the Plan Year (which Valuation Date is sometimes referred to as a “daily”
valuation date), or such other dates as the Administrator may designate from time to time.

 

 1.32         “VBA Plan”: The Virginia Bankers Association Master Defined Contribution Plan and Trust.

 

    	 	- 4 -	 

     

    

 

ARTICLE II

Eligibility and
Participation

 

2.1           Eligibility.
Each Eligible Employee shall be eligible to participate in the Plan effective as provided for in Option 4(d) of the Adoption Agreement.

 

2.2           Notice
Regarding Active Participation. The Administrator shall give notice of eligibility to each Eligible Employee.

 

2.3           Length
of Participation. Each Eligible Employee shall automatically become a Participant upon his timely filing a Deferred Compensation
Election or other election to participate and remain a Participant as long as he is entitled to future benefits under the terms
of the Plan.

 

2.4           Termination
of Active Participation. Subject to compliance with Section 409A and paragraphs 3.4 or 3.5, a Participant who is an active
Participant for an applicable contribution election period (that is, the calendar year generally or the period for which Bonuses
are determined, as applicable) shall cease to be an active Participant for the applicable year or period, as the case may be,
if and when he ceases to be an Eligible Employee during the applicable year or period, in which case he may not again become an
active Participant until a subsequent calendar year or period for which Bonuses are determined, as applicable. A leave of absence
(whether paid or unpaid) which does not result in a Separation from Service shall not be considered cessation of status as an
Eligible Employee for this purpose.

 

ARTICLE III

Employee Contributions

  

3.1           Deferred
Compensation Election.

 

3.1(a)       Subject to the restrictions and conditions hereinafter provided, an Eligible Employee shall be entitled to elect to defer, as
an Employee Deferral Contribution with respect to a Plan Year, an amount of his Compensation which is specified by and in accordance
with his direction in his Deferred Compensation Election for such Plan Year. Any such election must be filed with the Administrator
at the time required under paragraph 3.2.

 

3.1(b)      Deferred Compensation Elections shall be subject
to the following rules:

 

(i)              A
separate Deferred Compensation Election must be filed for each Plan Year;

 

 (ii)             Each Deferred Compensation Election must specify the following:

 

(A)          The
Plan Year to which it relates;

 

 (B)           The amount or percentage of Compensation to be deferred;

 

(C)           The
Compensation from which the Employee Deferral Contribution shall be withheld, if appropriate;

 

(D)           If Option 8(a)(2) of the Adoption Agreement is selected, the Benefit Commencement Date, which date (I) may be one of the
dates permitted in Option 8(a)(2)(A) of the Adoption Agreement and (II) shall be irrevocable;

 

    	 	- 5 -	 

     

    

 

(E)           If permitted in Option 8(a)(2)(A)(vi), whether the Benefit Commencement Date shall be accelerated upon a Change in Control,
if a Change in Control occurs prior to the Benefit Commencement Date otherwise elected;

 

(F)            If Option 8(b)(2) of the Adoption Agreement is selected, the form of payment (and if periodic installments are elected,
the duration and frequency of the installments), which election shall be irrevocable; and

 

 (G)           Such other information as the Administrator may require.

 

(iii)            A Participant shall have no unilateral right to change or terminate his Deferred Compensation Election once the annual
filing deadline established by the Administrator has passed, which deadline shall be no later than the dates prescribed in paragraph
3.2.

 

(iv)           The Benefit Commencement Date and form of payment election made in the Deferred Compensation Election with respect to the
Employee Deferral Account for any Plan Year shall also apply to each subdivision of the Employer Matching Deferral Account for
the same Plan Year.

 

3.1(c)       Each Employee Deferral Contribution is intended to be an elective salary reduction amount which shall be deducted from a Participant’s
Compensation otherwise payable to him for a Plan Year by way of Salary or Bonus. Unless otherwise approved by the Administrator:

 

(i)              Employee
Deferral Contribution of Salary shall be withheld from annual salary on a pro rata basis throughout the Plan Year (or remainder
of the Plan Year, in the case of an Eligible Employee who first becomes a Participant after the first day of the Plan Year or
if the Effective Date of the Plan is after the first day of the Plan Year); and

 

(ii)             Unless
otherwise specifically stated in the Deferred Compensation Election filed by the Participant, Employee Deferral Contributions
of Bonus shall be withheld on a first dollar basis from the Bonus before any part is paid to the Participant. However, the Deferred
Compensation Election filed by the Participant may, if permitted by the Administrator, provide that the Employee Deferral Contribution
of Bonus be withheld after a threshold level of Bonus has been paid to the Participant in cash.

 

3.1(d)      Paired Plan. Notwithstanding any provision of the Plan to the contrary, if the Plan Sponsor has elected in Option 3(c)
of the Adoption Agreement that this Plan is intended to be paired with a qualified deferred compensation plan (a “Paired
Plan”), then the Employee Deferral Contribution and any associated Employer Matching Contribution for a Plan Year of
a Participant who is also a participant in such Paired Plan shall be transferred to the Paired Plan by the Employer no later than
March 15 following the Plan Year, subject to the following provisions:

 

(i)             The
election to participate in a paired arrangement must be made in the Deferred Compensation Election for the Plan Year and shall
be irrevocable.

 

(ii)            The
amount of the Employee Deferral Contribution transferred shall not exceed the lesser of the limit with respect to elective deferrals
under Section 402(g)(1)(A), (B) and (C) of the Code, taking into account catch-up contributions allowed under Section 414(v)(2)(B)(i)
of the Code, or the amount of the elective deferral permitted after application of the actual deferral percentage limitation or
any other applicable limitation in such Paired Plan.

 

(iii)           The
amount of the Employer Matching Contribution transferred shall not exceed the lesser of the limit with respect to elective
deferrals under Section 402(g)(1)(A), (B) and (C) imposed on the Paired Plan or the amount of matching contributions
permitted after application of the actual contribution percentage limitation or any other applicable limitation in such
Paired Plan.

 

    	 	- 6 -	 

     

    

 

3.1(e)       Employment taxes required to be withheld on any Employee Deferral Contributions shall be withheld from Compensation that is not
being deferred in a manner determined by the Employer. However, if necessary, the Administrator may reduce the Employee Deferral
Contribution as needed to comply with applicable employment tax withholding requirements.

 

3.2          Timing
of Deferred Compensation Election.

 

3.2(a)       With respect to the Plan Year in which the Effective Date of the Plan or the effective date of coverage as described in Option
4(d) of the Adoption Agreement occurs (“first year of eligibility”), in order to make Employee Deferral Contributions
with respect to such Plan Year, an Eligible Employee who is a newly Eligible Employee must file a Deferred Compensation Election
with the Administrator within thirty (30) days of such Effective Date of the Plan or effective date of coverage. The Deferred
Compensation Election shall be effective to defer Compensation for services performed in pay periods after the pay period in which
it is filed. For this purpose:

 

(i)              Compensation
based on a performance period (such as an annual bonus) is deemed earned ratably throughout the period for which earned.

 

(ii)             An
Eligible Employee’s first year of eligibility is the year in which he first becomes eligible to participate in any account
balance type deferred compensation plan, within the meaning of Section 409A, maintained by the Employer or any Affiliate.

 

(iii)            If
all amounts owed an Employee from all account balance plans maintained by the Plan Sponsor and its Affiliates subject to Section
409A have been paid to the Employee and if the Employee has become ineligible to accrue further benefits, then if he thereafter
becomes an Eligible Employee, the year in which he again becomes an Eligible Employee may be treated as his first year of eligibility.

 

(iv)            If a Participant is not an Eligible Employee for at least twenty-four (24) consecutive months, then if he thereafter becomes
an Eligible Employee, the year in which he again becomes an Eligible Employee may be treated as his first year of eligibility.

 

3.2(b)      With respect to Plan Years beginning on or after the first year of eligibility, in order to make Employee Deferral Contributions
of Salary with respect to such a Plan Year, an Eligible Employee must file a Deferred Compensation Election with the Administrator
prior the annual filing deadline established by the Administrator, which deadline must be in the calendar year immediately preceding
the year in which the Salary relates. The Deferred Compensation Election for Salary shall be effective as of the first day of
the Plan Year in which the services that give rise to the Salary to be deferred are rendered.

 

3.2(c)      With respect to Plan Years beginning on or after the first year of eligibility, in order to make Employee Deferral Contributions
of Bonus with respect to the Plan Year, an Eligible Employee must file a Deferred Compensation Election with the Administrator
prior to the annual filing deadline established by the Administrator, which deadline must be in the calendar year or, if different
and permitted by the Administrator (as evidenced by the applicable Deferred Compensation Election form) where the Bonus is earned
on the basis of the Plan Sponsor’s fiscal year, the Plan Sponsor’s fiscal year immediately preceding the applicable
year in which the period to which the Bonus relates commences.

 

    	 	- 7 -	 

     

    

 

3.2(d)       Notwithstanding
subparagraph 3.2(c), if elected in Option 4(e) of the Adoption Agreement, the Administrator may permit a Deferred
Compensation Election relating to a Bonus which is Performance-Based Compensation (within the meaning of Section
409A(a)(4)(B)(iii) of the Code) based on services performed over a period of at least twelve (12) consecutive months to be
made prior to the annual filing deadline established by the Administrator, which deadline must be not later than six (6)
months prior to the end of the period for which the Bonus is earned, so long as the Eligible Employee has been continuously
employed by the Employer from the later of the date the performance criteria are established or the performance period begins
through the date of the election. For this purpose, performance-based compensation must be based on pre-established
organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive
months, provided the criteria are established in writing no later than ninety (90) days after the beginning of the period of
service to which the Bonus and performance relate and the outcome is substantially uncertain at the time the performance
criteria are established, as more specifically described in Treasury Regulation Section 1.409A-1(e).

 

3.3          Crediting
of Employee Deferral Contributions. Employee Deferral Contributions shall be credited to an Employee Deferral Account
as of the date an amount equal to each Employee Deferral Contribution is credited on the accounting records of the Plan as directed
by the Administrator, which date shall be no later than the end of the calendar month following the month the Compensation from
which such contribution is deducted would otherwise have been paid to the Participant and may be as soon as the date as of which
the amount would otherwise have been paid to the Participant.

 

3.4          Automatic Cancellation of Deferred Compensation Election upon Receipt of Hardship Withdrawal.

 

3.4(a)       In the event of an Unforeseeable Emergency withdrawal (as described in paragraph 10.1), any Deferred Compensation Election shall
be cancelled (rather than postponed or delayed) prospectively so that no further deferrals from Salary or Bonus shall be made
during the remainder of the Plan Year in which the withdrawal occurred.

 

3.4(b)      In the event of a 401(k) hardship withdrawal, any Deferred Compensation Election shall be cancelled (rather than postponed or
delayed) prospectively so that no further deferrals from Salary or Bonus shall be made during the remainder of the Plan Year in
which the withdrawal occurred. Any Deferred Compensation Election for the succeeding Plan Year shall not be effective until the
401(k) required cancellation period ends.

 

3.4(c)       The Participant whose Deferred Compensation Election is cancelled pursuant to this paragraph must file a new Deferred Compensation
Election in order to commence or recommence making deferrals under the Plan from his Salary or Bonus.

 

3.4(d)       For purposes hereof, the following terms have
the following meanings:

 

(i)              A
 “401(k) hardship withdrawal” is a hardship withdrawal from any 401(k) Plan which requires a suspension of employee
contributions and elective deferrals in order to satisfy the regulations under Section 401(k) of the Code.

 

(ii)             The
 “401(k) required cancellation period” means a six-month period (or other stated period in the applicable 401(k)
Plan) during which employee contributions and elective deferrals must be suspended as a result of receipt of a 401(k) hardship
withdrawal in order to satisfy the regulations under Section 401(k) of the Code.

 

(iii)            A
 “401(k) Plan” means any deferred compensation plan intended to meet the requirements of Section 401(k) of the
Code and maintained by the Employer or any Affiliate.

 

3.5           Cancellation of Deferred Compensation Election upon Disability.

 

3.5(a)       If elected in
Option 4(f) of the Adoption Agreement, in the event of Disability, any Deferred Compensation Election shall be cancelled
(rather than postponed or delayed) prospectively so that no further deferrals from Salary or Bonus shall be made during the
remainder of the Plan Year provided such cancellation occurs by the later of the end of the Participant’s taxable year
or the fifteenth (15th) day of the third (3rd)
month following the date the Participant incurs the Disability.

 

    	 	- 8 -	 

     

    

 

3.5(b)       For purposes hereof, “Disability” shall mean any medically determinable physical or mental impairment which
results in the Participant’s inability to perform the duties of his position or any substantially similar position and can
be expected to result in death or to last for a continuous period of not less than six (6) months. The determination of Disability
shall be made by the Administrator, on the advice of one or more physicians appointed and approved by the Employer, and the Administrator
shall have the right to require further medical examinations from time to time to determine whether there has been any change
in the Participant’s condition.

 

ARTICLE IV

Employer Contributions

 

4.1          Employer
Contribution Allocations.

 

4.1(a)       If elected in Option 5(a)(2) of the Adoption Agreement, the Employer Non-Elective Contributions for each Plan Year shall be allocated
to the Employer Non-Elective Deferral Accounts of Participants described in Option 5(a)(2) of the Adoption Agreement in the manner
and as of the date set forth in Option 5(a)(2) of the Adoption Agreement.

 

4.1(b)       If elected in Option 5(a)(3) of the Adoption Agreement, the Employer Matching Contributions for each Plan Year shall be allocated
to the Employer Matching Deferral Accounts of Participants described in Option 5(a)(3) of the Adoption Agreement in the manner
and as of the date set forth in Option 5(a)(3) of the Adoption Agreement.

 

4.1(c)       Notwithstanding anything to the contrary herein, each Deferral Contribution of the Employer is not intended to be an actual contribution
by the Employer, but rather is only a bookkeeping amount credited for benefit determination purposes under the Plan.

 

4.1(d)      The Employer may from time to time make a discretionary contribution to the Plan on behalf of one or a group of Participants.
At the time the contribution is made the Employer will specify how such amounts are allocated among the Participants accounts
and the timing of such allocation.

 

4.2          Employment
Taxes. Employment taxes required to be withheld on any Employer Contributions shall be withheld from Compensation that
is not being deferred in a manner determined by the Employer. However, if necessary, the Administrator may reduce the Employer
Contributions needed to comply with applicable employment tax withholding requirements.

 

ARTICLE V

Deemed Earnings
and Accounting

 

5.1          Fund
Divisions.

 

5.1(a)     It is contemplated that the Fund will be considered to be held in divisions (sometimes referred to as “divisions of the
Fund”, “Fund divisions” or “investments funds” herein) as hereinafter provided,
and each Participant’s Deferral Benefit shall be subdivided to reflect its deemed interest in each Fund division.

 

    	 	- 9 -	 

     

    

 

5.1(b)      The Administrator shall establish from time to time the Fund divisions which shall be maintained in the Fund, which are designed
to mirror the investment options available under the VBA Plan, to the extent legally practical, with alternate funds designated
where collective investment funds may not be offered under a nonqualified plan.

 

5.1(c)       If the Plan Sponsor permits investment in a Company Stock Fund, the availability, restrictions, limitations, and special rules
relating to such investment shall be established by the Plan Sponsor from time to time and communicated to Participants and to
the Administrator.

 

5.2          Participant Investment Directions. The Deferral Benefit of a Participant in the Plan shall be divided or
allocated to reflect the amount of each such Participant’s deemed interest in each Fund division as hereinafter provided
for the purpose of determining the earnings or loss to be credited to his Deferral Account, but any such direction shall not give
the Participant any right, title or interest in any specific asset or assets of the Fund.

 

5.2(a)       If and to the extent permitted in Option 10(a) of the Adoption Agreement, upon becoming a Participant without a contribution investment
direction in force, a Participant may direct that future contributions and Deferral Account balances shall be invested in the
funds available for directed investment as selected in Option 10(b) of the Adoption Agreement by filing an “investment direction”
with the Administrator in accordance with the procedures established by the Administrator. The Administrator (or its designee)
generally will process investment directions on a current basis after received, but shall not be obligated to process any investment
directions on a retroactive basis.

 

5.2(b)      If or to the extent a Participant (or if deceased, his Beneficiary) has no investment direction in effect, his Deferral Accounts
shall be invested in the default fund designated by the Administrator from time to time.

 

5.2(c)       The Administrator may, on a uniform and non-discriminatory basis from time to time, set or change the advance notice requirement
for effecting investment directions, may limit the number of investment direction changes made in a Plan Year, may limit investment
directions, if any, which can be made by telephone, electronically or through the internet, may impose blackout periods for changes,
may temporarily or permanently suspend the offering of an investment fund, and generally may change any of the investment direction
procedures or options from time to time and at any time.

 

5.3          Crediting
of Deemed Earnings.

 

5.3(a)      As of each Valuation Date, there shall be credited to each Participant’s Deferral Account an amount representing deemed
earnings or loss on the “valuation balance” of each such account in accordance with procedures adopted by the Administrator
from time to time.

 

5.3(b)      Such deemed earnings or loss shall be determined
as follows:

 

(i)              For
periods during which a Fund is maintained and Plan benefits may be paid therefrom because the Plan Sponsor or any other Employer
is not insolvent, such earnings or loss shall be based on the net investment rate of return or loss of the Fund division(s) in
which the Participant’s Deferral Benefit under the Plan is considered invested for the period, determined separately for
each Fund division and the portion of the Participant’s Deferred Benefit considered invested in each such Fund division,
based on the Participant’s applicable or deemed investment directions pursuant to paragraph 5.2. The net investment rate
of return or loss means earnings or loss (including valuation changes and charges for expenses) for the period of the Fund compared
to the aggregate valuation balances sharing in those earnings or loss.

 

(ii)              For
periods during which the Fund is not maintained or Plan benefits may not be paid therefrom because the Plan Sponsor or any
other Employer is insolvent, such earnings or loss shall be based on an annual rate determined for each Plan Year and equal
to the 1 year U.S. Treasury Rate as of the December 31 immediately preceding the Plan Year.

 

    	 	- 10 -	 

     

    

 

5.3(c)       Notwithstanding the other provisions of this ARTICLE V, whenever the Plan accounting is based on daily Valuation Dates, the valuation
adjustments to Participants’ accounts shall be effected on such basis and subject to such rules and procedures as the Administrator
may determine to reflect daily accounting.

 

5.4          Subtractions
from Deferral Account. All distributions (including any withheld income or other taxes) and withdrawals shall be subtracted
from a Participant’s Deferral Account and the applicable subdivision thereof when made.

 

5.5          Expenses
Charged to Deferral Accounts. Notwithstanding any other provision of the Plan to the contrary, expenses incurred in the
administration of the Plan and the Rabbi Trust may be charged to Deferral Accounts on either a pro rata basis or a per capita
basis, and/or may be charged to the Deferral Account of the affected Participant(s) and Beneficiary(ies) (which term is intended
to include any alternate payee(s)) on a usage basis (rather than to all Deferral Accounts), as directed by the Administrator.
Without limiting the foregoing, some or all of the reasonable expenses attendant to the determinations needed with respect to
and making of withdrawals, the calculation of benefits payable under different Plan distribution options and the distribution
of Plan benefits may be charged directly to the Deferral Account of the affected Participant and Beneficiary, and different rules
(i.e., pro rata, per capita, or direct charge to Deferral Accounts) may apply to different groupings of Participants and Beneficiaries.

 

5.6          Equitable
Adjustment in Case of Error or Omission. Where an error or omission is discovered in the Deferral Account of a Participant,
the Administrator shall be authorized to make such equitable adjustment as the Administrator deems appropriate.

 

5.7          Statement
of Benefits. Within a reasonable time after the end of each calendar quarter and at the date a Participant’s Deferral
Benefit or death benefit becomes payable under the Plan, the Administrator shall provide to each Participant (or, if deceased,
to his Beneficiary) a statement of the benefit under the Plan.

 

ARTICLE VI

Vesting

 

6.1          Vesting
in Employee Deferral Account and Predecessor Plan Account. A Participant’s rights to the balance in his Employee
Deferral Account and, unless provided otherwise in Option 3(b)(3) of the Adoption Agreement, in his Predecessor Plan Account shall
be fully vested and nonforfeitable at all times, and his Separation from Service shall not diminish the amount payable to the
Participant or his Beneficiary.

 

6.2          Vesting
in Employer Non-Elective Deferral Account. A Participant shall have a vested interest in a percentage of his Employer
Non-Elective Deferral Account determined in accordance with the vesting provisions selected in Option 6(a)(1) of the Adoption
Agreement.

 

6.3          Vesting
in Employer Matching Deferral Account. A Participant shall have a vested interest in a percentage of his Employer Matching
Deferral Account determined in accordance with the vesting provisions selected in Option 6(a)(2) of the Adoption Agreement.

 

    	 	- 11 -	 

     

    

 

6.4          Forfeiture
of Benefits.

 

6.4(a)      Notwithstanding
any contrary provision hereof, a Participant’s Employer Deferral Account shall be irrevocably forfeited upon the occurrence
of any the following events (as defined in subparagraph 6.4(b)):

 

(i)              The
Participant’s termination of employment with the Employer for “cause”;

 

(ii)             The
Participant’s entering into “competition”, or his making an “unauthorized disclosure of confidential information”,
after his termination of or retirement from employment with the Employer, in which case all payments to, or with respect to, the
Participant shall cease and all payments made to the Participant or his Beneficiary under the Plan since the occurrence of such
event of forfeiture shall be returned to the Employer (provided however, forfeiture shall not occur upon a Participant’s
entering into competition following a Change in Control); or

 

(iii)            The
discovery, after the Participant’s termination of or retirement from employment with Employer or death, of “cause”
for his termination or of his “unauthorized disclosure of confidential information” prior to his termination, retirement
or death, in which case all payments under the Plan to, or with respect to, the Participant shall cease and all payments previously
made to the Participant or his Beneficiary under the Plan shall be returned to the Employer.

 

All determinations hereunder shall be made by the
Administrator, in its sole and absolute discretion.

 

6.4(b)      For purposes of subparagraph 6.4(a):

 

(i)              “Cause” means the willful gross misconduct of the Participant which is materially injurious to the Employer
or any Affiliate, including but not limited to the Participant’s knowingly or intentionally providing the Employer with
materially false reports concerning the Participant’s business interests or employment-related activities, making materially
false representations relied on by the Employer in furnishing information to shareholders and the Securities Exchange Commission,
willfully concealing unauthorized material conflicts of interest in the discharge of duties owed by the Participant to the Employer,
willfully causing a serious violation by the Employer of state or federal laws, theft or misappropriation of the assets of the
Employer, or conviction of a felony (excluding traffic violations).

 

(ii)             “Competition” means engaging by the Participant, without the written consent of the Board or a person
authorized thereby, in a business as a more than one percent (1%) stockholder, an officer, a director, an employee, a partner,
an agent, a consultant, or any other individual or representative capacity (unless the Participant’s duties, responsibilities,
and activities, including supervisory activities, for or on behalf of such business, are not related in any way to such “competitive
activity”) if it involves:

 

(A)           Engaging
in, or entering into services or providing advice pertaining to, any line of business that the Employer or any Affiliate actively
conducts or develops in the same geographic area (generally, within a one hundred (100) mile radius of the Employer’s principal
place of business), or

 

(B)           Employing
or soliciting for employment any employees of the Employer or any Affiliate.

 

(iii)          “Unauthorized
disclosure of confidential information” means the disclosure by the Participant, without the written consent of the
Board or a person authorized thereby, to any person other than as required by law or court order, or other than to an authorized
employee of the Employer or an Affiliate, or to a person to whom disclosure is necessary or appropriate in connection with the
performance by the Participant of his duties as an employee or director of the Employer or an Affiliate (including, but not limited
to, disclosure to the Employer’s or an Affiliate’s outside counsel, accountants or bankers of financial data properly
requested by such persons and approved by an authorized officer of the Employer), any confidential information of the Employer
or any Affiliate with respect to any of the products, services, customers, suppliers, marketing techniques, methods or future
plans of the Employer or any Affiliate; provided, however, that:

 

    	 	- 12 -	 

     

    

 

(A)          Confidential information shall not include any information known generally to the public (other than as a result of unauthorized
disclosure by the Participant) or any information of a type not otherwise considered confidential by persons engaged in the same
business or a business similar to that conducted by the Employer or any Affiliate; and

 

(B)           The Participant shall be allowed to disclose confidential information to his attorney solely for the purpose of ascertaining
whether such information is confidential within the intent of the Plan, but only so long as the Participant both discloses to
his attorney the provisions of this paragraph and agrees not to waive the attorney-client privilege with respect thereto.

 

6.5          No
Restoration of Forfeited Benefits. There shall be no restoration of forfeited benefits.

 

ARTICLE VII

Beneficiary Designation

 

7.1          Beneficiary
Designation.

 

7.1(a)       Each Participant shall be entitled to designate a Beneficiary to receive any unpaid Deferral Benefit hereunder by filing a designation
in writing with the Administrator on the form provided for such purpose. Any Beneficiary designation shall be effective only if
signed and dated by the Participant and delivered to the Administrator prior to the time of the Participant’s death. Any
Beneficiary designation shall remain effective until changed or revoked hereunder.

 

7.1(b)       Any Beneficiary designation may include multiple, contingent or successive Beneficiaries and may specify the proportionate distribution
to each Beneficiary. If multiple Beneficiaries are designated, absent any other provision by the Participant, those named or the
survivor of them shall share equally in any amounts payable hereunder.

 

7.1(c)       A Beneficiary designation may be changed by the Participant at any time, or from time to time, by filing a new designation in
writing with the Administrator.

 

7.1(d)       If a Participant dies without having designated a Beneficiary, or if the Beneficiary so designated has predeceased the Participant
or cannot be located by the Administrator, then the Participant’s spouse or, if none, the executor or the administrator
of his estate shall be deemed to be his Beneficiary.

 

7.1(e)       If a Beneficiary shall survive the Participant but die before the Participant’s remaining benefit under the Plan has been
distributed, then, absent any other provision by the Participant, the unpaid balance thereof shall be distributed to the such
other beneficiary named by the deceased Beneficiary to receive his interest or, if none, to the estate of the deceased Beneficiary.

 

    	 	- 13 -	 

     

    

 

 

ARTICLE VIII

Retirement Dates

 

8.1           Normal Retirement Date. The Normal Retirement Date designated in Option 7(a) of the Adoption Agreement.

 

8.2           Delayed
Retirement Date. A Participant who continues in the active employment of the Employer beyond his Normal Retirement Date
shall continue to participate in the Plan, and his Delayed Retirement Date shall be the first day of the calendar month coinciding
with or next following the date of his Separation from Service.

 

8.3           Early
Retirement Date. If elected in Option 7(b) of the Adoption Agreement, a Participant who has satisfied the age and service
requirements selected in Option 7(b) of the Adoption Agreement may retire from the employment of the Employer prior to his Normal
Retirement Date and his Early Retirement Date shall be the first day of the calendar month coinciding with or next following the
date of such Separation from Service.

 

8.4
          Disability Retirement Date.

 

8.4(a)
     If elected in Option 7(c) of the Adoption Agreement, a Participant who, while an Eligible Employee, is totally and permanently
disabled, as hereinafter determined, and who has satisfied the age and service requirements selected in Option 7(c) of the Adoption
Agreement, may retire from the employment of the Employer prior to his Normal Retirement Date and his Disability Retirement Date
shall be the first day of the calendar month coinciding with or next following the date as of which he is determined to be totally
and permanently disabled.

 

8.4(b)
     A Participant shall be totally and permanently disabled if the Participant is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than twelve (12) months. The determination of total and permanent disability shall
be made by the Administrator, on the advice of one or more physicians appointed and approved by the Employer, and the Administrator
shall have the right to require further medical examinations from time to time to determine whether there has been any change in
the Participant’s condition. A Participant shall be deemed disabled if determined to be totally disabled by the Social Security
Administration.

 

8.5           Use
of Retirement Date Definitions. Retirement Date definitions, other than Normal Retirement Date, are set forth in the Plan
for the sole purpose of defining Participants entitled to share in Employer Contributions if elected in Option 5(a)(2)(B) or 5(a)(3)(B)
of the Adoption Agreement.

 

ARTICLE IX

Time and Form
of Payment

 

9.1           Time
of Payment.

 

9.1(a)       A Participant’s Deferral Benefit, if any, shall become payable to the Participant, if then alive, on his Benefit
Commencement Date.

 

(i)             The
Benefit Commencement Date for the Employer Non-Elective Deferral Account shall be the Participant’s Separation from Service.

 

(ii)            If
Option 8(a)(1) of the Adoption Agreement is selected, the Benefit Commencement Date for all other Deferral Accounts (excluding
the Employer Non-Elective Deferral Account) shall be the first day of the calendar quarter next following the date selected in
Option 8(a)(1) of the Adoption Agreement.

 

    	 	- 14 -	 

     

    

 

(iii)           If
Option 8(a)(2) of the Adoption Agreement is selected, the Participant may select the Benefit Commencement Date for all other Deferral
Accounts (excluding the Employer Non-Elective Deferral Account) within the guidelines set forth in Option 8(a)(2) of the Adoption
Agreement. The Benefit Commencement Date for any subdivision of the Employer Matching Deferral Account related to a Plan Year
shall be the same as that provided for or elected under the Plan for the subdivision of a Participant’s Employee Deferral
Account related to the same Plan Year.

 

(iv)          In
the absence of any valid Benefit Commencement Date election, payment will be made on the Participant’s Separation from Service.

 

9.1(b)      In the event of the Participant’s death before his Benefit Commencement Date, the Participant’s Deferral Benefit shall
become payable to the Beneficiary on the first day of the calendar quarter following the date of the Participant’s death
or as soon as practicable thereafter, but in no case later than December 31 of the first year following the year of the Participant’s
death.

 

9.1(c)      Notwithstanding
the foregoing provisions of this paragraph:

 

 (i)            Payment to a Participant shall be delayed as required by Section 409A in the case of a Participant who, with respect to the Employer, is a “specified employee” of a corporation any stock of which is publicly traded on an established securities market or otherwise as provided in Section 409A(2)(B)(i) of the Code. For this purpose, specified employees shall be identified on the date and the identification shall be effective as provided in Option 4(g)(1) of the Adoption Agreement. The delayed payment requirement will be applied as provide in Option 4(g)(2) of the Adoption Agreement.

 

 (ii)           Payment may be delayed for a reasonable period in the event the payment is not administratively practical due to events beyond the recipient’s control such as where the recipient is not competent to receive the benefit payment, there is a dispute as to amount due or the proper recipient of such benefit payment, additional time is needed to calculate the payment, or the payment would jeopardize the solvency of the Employer.

 

 (iii)          Payment shall be delayed in the following circumstances:

 

(A)             
Where the Administrator reasonably anticipates that a delay in payment is necessary to comply with Federal securities laws
or other applicable laws; or

 

(B)              
Where the Administrator reasonably determines that a delay is permissible for other events or conditions under applicable
published guidance of the Internal Revenue Service for Section 409A;

 

provided that any payment
delayed by operation of this clause (iii) will be made at the earliest date at which the Administrator reasonably anticipates that
the payment will not be limited or will cease to be so delayed.

 

9.2
          Form of Payment.

 

9.2(a)      Payment of any Employer Non-Elective Deferral
Account will be made in a single lump sum.

 

9.2(b)      If Option 8(b)(1) of the Adoption Agreement is selected, a Participant shall be paid the Deferral Benefit (excluding the
Employer Non-Elective Deferral Account), if any, to which he is entitled, commencing at the applicable time provided in
paragraph 9.1, in the form selected in Option 8(b)(1) of the Adoption Agreement and, if applicable, over a period selected in
Option 8(b)(1) of the Adoption Agreement.

 

    	 	- 15 -	 

     

    

 

9.2(c)      If Option 8(b)(2) of the Adoption Agreement is selected, a Participant shall be paid the Deferral Benefit (excluding the Employer
Non-Elective Deferral Account), if any, to which he is entitled, commencing at the applicable time provided in paragraph 9.1, in
the form selected by the Participant within the guidelines set forth in Option 8(b)(2) of the Adoption Agreement.

 

9.2(d)      If Option 8(c)(1) of the Adoption Agreement is selected, in the event of the Participant’s death before his Benefit
Commencement Date, the Beneficiary shall be paid the Deferral Benefit (excluding the Employer Non-Elective Deferral Account),
if any, to which he is entitled, commencing at the applicable time provided in paragraph 9.1, in the form selected in Option
8(c)(1) of the Adoption Agreement and, if applicable, over a period selected in Option 8(c)(1) of the Adoption Agreement.

 

9.2(e)      If Option 8(c)(2) of the Adoption Agreement is selected, in the event of the Participant’s death before his Benefit
Commencement Date, the Beneficiary shall be paid the Deferral Benefit (excluding the Employer Non-Elective Deferral Account),
if any, to which he is entitled, commencing at the applicable time provided in paragraph 9.1, in the form selected by the
Participant within the guidelines set forth in Option 8(c)(2) of the Adoption Agreement.

 

9.2(f)       In
the absence of any valid form of payment election, payment will be made in a single lump sum.

 

9.3          Permissible
Changes to Benefit Commencement Date and/or Form of Payment. Any election of a Benefit Commencement Date applicable to
a subdivision of a Deferral Account or a form of payment applicable to a subdivision of a Deferral Account may be changed only
if the election to change: (a) is not effective until at least twelve (12)  
months after the date filed, (b) delays the Benefit Commencement Date for at least five (5) years, and (c) is filed at
least twelve (12) months before benefits would otherwise commence. Notwithstanding the above, the requirement to delay the Benefit
Commencement Date for at least five (5) years in (b) above shall not apply in the case of any election to change a payment on
account of Disability (as defined in paragraph 8.4(b)), death or Unforeseeable Emergency (as defined in paragraph 10.1). For purposes
of changes to the time or form of payment, in the event a Participant elects to receive payment of his benefit in periodic installments,
the installment payment as a whole will be treated as a single payment.

 

9.4
          Lump-Sum Payments and Periodic Installments.

 

9.4(a)      If a lump-sum payment is permitted under the Plan, the amount of a lump-sum payment to or with respect to a Participant shall be
determined by reference to the Deferral Benefit as of the last Valuation Date (or other time of valuation hereunder) immediately
preceding the date of payment.

 

9.4(b)      If periodic installment payments are permitted under the Plan, the amount of each periodic installment payment shall be the lesser
of:

 

(i)            The
quotient obtained by dividing (A) the amount of such Participant’s vested Deferral Account held in the applicable subdivision,
determined as though a lump-sum payment were being made as of the last Valuation Date of the calendar quarter preceding the date
of payment of such installment, by (B) the number of installment payments then remaining to be made; or

 

 (ii)          The amount of such vested Deferral Benefit at such time.

 

9.4(c)      In the event that a Participant who has begun to receive periodic installment payments again becomes an
Employee of the Employer, his periodic installments shall continue regardless of his return to employment with the
Employer.

 

    	 	- 16 -	 

     

    

 

9.5           Permissible
Cash Out by Lump-Sum Payment. Notwithstanding the time and form of benefit payment provisions of paragraphs 9.1 and
9.2, a Participant’s vested Deferral Benefit may be cashed out in a lump-sum payment in an amount equal to the vested
balance in the Participant’s Deferral Accounts if (a) the payment will constitute a payout of the
Participant’s entire interest in this Plan and all similar arrangements that are treated as a single plan under
Treasury Regulation Section 1.409A-1(c)(2); (b) the payment is made on or before the later of December 31 of the calendar
year in which the Participant’s Separation from Service occurs, or the fifteenth (15th)
day of the third (3rd) month following the Participant’s Separation from Service;
and (iii) the payment of the entire vested Deferral Benefit is not over the limit set forth in Section 402(g) of the Code
applicable to the Plan Year in which the cash out occurs.

 

9.6
         Benefit Determination and Payment Procedure.

 

9.6(a)     The Administrator shall make all determinations concerning eligibility for benefits under the Plan, the time or terms of payment,
and the form or manner of payment to the Participant or the Participant’s Beneficiary, in the event of the death of the Participant.
The Administrator shall promptly notify the Employer and, where payments are to be made from a Rabbi Trust, the Trustee thereof
of each such determination that benefit payments are due and provide to the Employer and, where applicable, such Trustee all other
information necessary to allow the Employer or such Trustee, as the case may be, to carry out said determination, whereupon the
Employer or such Trustee, as the case may be, shall pay such benefits in accordance with the Administrator’s determination.

 

9.6(b)     Benefit payments shall normally be made from the Fund to such payee(s), in such amounts, at such times and in such manner as the
Administrator shall from time to time direct; provided, however, that the Employer may advance any payment due subject
to a right of reimbursement from the Fund.

 

9.6(c)     Notwithstanding any other provision of the Plan, the Administrator shall delay any benefit payment (including any withdrawal pursuant
to ARTICLE X) if in the Administrator’s judgment the payment would not be deductible under Section 162(m) of the Code and
the delay will permit the deductibility of the payment, in which case the delayed payment shall be made as soon as it is possible
to do so within the deduction limits of Section 162(m) of the Code but in no event later then the end of the Employer’s fiscal
year in which the Employer or the Administrator reasonably anticipates, or should reasonable anticipate, that the payment would
be deductible or, any earlier time required under Section 409A.

 

9.6(d)     The Employer or Trustee may deduct from payments under the Plan such reasonable amount as it shall deem necessary, based upon information
provided by the Administrator upon which the payor may rely, to pay any federal, state, or local income, employment, or other taxes
attributable to the payment or required to be withheld from the payment.

 

9.7           Payments
to Minors and Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is
adjudged to be legally incapable of giving valid receipt and discharge for such benefits, or is deemed so by the Administrator,
benefits will be paid to such person as the Administrator may designate for the benefit of such Participant or Beneficiary. Such
payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete
discharge of any liability for such payments under the Plan.

 

9.8            Distribution
of Benefit When Distributee Cannot Be Located. If any payment made under the Plan is returned unclaimed, the payor shall
notify the Administrator and shall dispose of the payment as the Administrator shall direct. The Administrator shall make all
reasonable attempts to determine the whereabouts of a Participant or Beneficiary entitled to benefits under the Plan, including
the mailing by certified mail of a notice to the last known address shown on the Employer’s or the Administrator’s
records. If the Administrator is unable to locate such a Participant or Beneficiary entitled to benefits hereunder, the Employer
will issue a payment in the appropriate amount and in the name of the Participant or Beneficiary, and the Employer will retain
such benefit payment on behalf of the Participant or Beneficiary, without any adjustment for interest or deemed earnings, subject
to any applicable statute of escheats not preempted by the Act.

 

    	 	- 17 -	 

     

    

 

ARTICLE X

Withdrawals

 

10.1           Hardship Withdrawals. If permitted in Option 9(a) of the Adoption Agreement, in the event of any Unforeseeable
Emergency and upon written request of the Participant (or, if subsequent to his death, his Beneficiary), the Administrator in its
sole discretion may direct the payment in one lump sum to the Participant or his Beneficiary of all or any portion of the Participant’s
vested Deferral Benefit which the Administrator determines is necessary to alleviate the financial need related to the Unforeseeable
Emergency. For purposes hereof:

 

10.1(a)   An “Unforeseeable Emergency” means an unforeseeable emergency as defined in Section 409A and generally means
a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s
spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Section 152 of the Code, without
regard to Section 152(b)(1), (b)(2), and (d)(1)(B)) thereof); loss of the Participant’s or the Participant’s Beneficiary’s
property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for
example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant or Beneficiary.

 

10.1(b)   Examples of what may be considered an Unforeseeable Emergency include the imminent foreclosure of or eviction from the Participant’s
or Participant’s Beneficiary’s primary residence, the need to pay for medical expenses, including non-refundable deductibles,
as well as for the costs of prescription drug medication, the need to pay for the funeral expenses of the Participant’s spouse,
Beneficiary, or the Participant’s dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1),
(b)(2), and (d)(1)(B)) thereof). Except as otherwise provided this subparagraph 10.1(b), the purchase of a home and the payment
of college tuition are not Unforeseeable Emergencies.

 

10.1(c)   The existence of an Unforeseeable Emergency shall be determined by the Administrator on the basis of the facts and circumstances
of each case.

 

10.1(d)   Distributions because of an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the need (which
may include amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to
result from the distribution), taking in to account the potential that the need is or may be relieved through reimbursement or
compensation by insurance or otherwise, by liquidation of the Participant’s, to the extent the liquidation of such assets
would not cause an Unforeseeable Emergency, or by cessation of deferrals under the Plan (if the Plan provides for cancellation
of a Deferred Compensation Election upon a payment due to an Unforeseeable Emergency). The determination of amounts reasonably
necessary to satisfy the need is not required to take into account any additional compensation that, due to the Unforeseeable Emergency,
is available under another nonqualified deferred compensation plan but has not actually been paid, or that is available, due to
the Unforeseeable Emergency, under another plan that would provide for deferred compensation except due to the application of the
effective date provisions of Section 409A.

 

10.2          Distributions
in the Event of Income Inclusion. If any portion of a Deferral Account under the Plan is required to be included in income
by the Participant or Beneficiary prior to receipt due to a failure of the Plan to comply with the requirements of Section 409A,
the Administrator may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser
of (a) the portion of the Deferral Account required to be included in income as a result of such failure or (b) the unpaid vested
Deferral Account.

 

10.3           No
Other Withdrawals Permitted. No withdrawals or other distributions shall be permitted except as provided in ARTICLE IX
or this ARTICLE X.

 

    	 	- 18 -	 

     

    

 

ARTICLE XI

Claims Procedure

 

11.1          Initial
Claim. A Participant or Beneficiary (the “claimant”) shall have the right to request any benefit under
the Plan by filing a written claim for any such benefit with the Administrator on a form provided or approved by the Administrator
for such purpose. The Administrator (or a claims administrator appointed by the Administrator) shall give such claim due consideration
and shall either approve or deny it in whole or in part. The following procedure shall apply:

 

11.1(a)   The Administrator (or a claims administrator appointed by the Administrator) may schedule and hold a hearing.

 

11.1(b)   If the claim is not a Disability Benefit Claim, within ninety (90) days following receipt of such claim by the Administrator, notice
of any approval or denial thereof, in whole or in part, shall be delivered to the claimant or his duly authorized representative
or such notice of denial shall be sent by mail (postage prepaid) to the claimant or his duly authorized representative at the address
shown on the claim form or such individual’s last known address. The aforesaid ninety (90) day response period may be extended
to one hundred eighty (180) days after receipt of the claimant’s claim if special circumstances exist and if written notice
of the extension to one hundred eighty (180) days indicating the special circumstances involved and the date by which a decision
is expected to be made is furnished to the claimant or his duly authorized representative within ninety (90) days after receipt
of the claimant’s claim.

 

11.1(c)   If the claim is a Disability Benefit Claim, within forty-five (45) days following receipt of such claim by the Administrator, notice
of any approval or denial thereof, in whole or in part, shall be delivered to the claimant or his duly authorized representative
or such notice of denial shall be sent by mail to the claimant or his duly authorized representative at the address shown on the
claim form or such individual’s last known address. The aforesaid forty- five (45) day response period may be extended to
seventy-five (75) days after receipt of the claimant’s claim if it is determined that such an extension is necessary due
to matters beyond the control of the Plan and if written notice of the extension to seventy-five (75) days indicating the circumstances
involved and the date by which a decision is expected to be made is furnished to the claimant or his duly authorized representative
within forty-five (45) days after receipt of the claimant’s claim. Thereafter, the aforesaid seventy-five (75) day response
period may be extended to one hundred five (105) days after receipt of the claimant’s claim if it is determined that such
an extension is necessary due to matters beyond the control of the Plan and if written notice of the extension to one hundred five
(105) days indicating the circumstances involved and the date by which a decision is expected to be made is furnished to the claimant
or his duly authorized representative within seventy-five (75) days after receipt of the claimant’s claim. In the event of
any such extension, the notice of extension shall specifically explain, to the extent applicable, the standards on which entitlement
to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve
those issues, and the claimant shall be afforded at least forty-five (45) days within which to provide any specified information
which is to be provided by the claimant.

 

11.1(d)  Any
notice of denial shall be written in a manner calculated to be understood by the claimant and shall:

 

(i)            Set
forth a specific reason or reasons for the denial,

 

(ii)           Make
reference to the specific provisions of the Plan document or other relevant documents, records or information on which the denial
is based,

 

(iii)           Describe
any additional material or information necessary for the claimant to perfect the claim and explain why such material or information
is necessary,

 

(iv)           Explain
the Plan’s claim review procedures, including the time limits applicable to such procedures (which are generally
contained in paragraph 11.2), and provide a statement of the claimant’s right to bring a civil action in state or
federal court under Section 502(a) of the Act following an adverse determination on review of the claim denial,

 

    	 	- 19 -	 

     

    

 

(v)           In the case of a Disability Benefit Claim filed before January 1, 2018 (and thereafter if the final regulation published
in 81 Fed. Reg. 92316 (Dec. 19, 2016) is not yet effective for claims filed as of such date):

 

(A)               If
an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either
provide the specific rule, guideline, protocol or other similar criterion, or provide a statement that such a rule, guideline,
protocol or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline,
protocol or other criterion will be provided free of charge to the claimant or his duly authorized representative upon request
in writing, and

 

(B)                If
the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either
provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s
medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing; and

 

(vi)          In the case of a Disability Benefit Claim filed on or after January 1, 2018 (to the extent the final regulation published
in 81 Fed. Reg. 92316 (Dec. 19, 2016) is effective for claims filed on and after such date):

 

(A)               Provide
a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (1) the views, presented
by the claimant to the Plan, of health care professionals treating the claimant and vocational professionals who evaluated the
claimant, (2) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the
initial claim, without regard to whether the advice was relied upon in making the benefit determination, and (3) a disability
determination regarding claimant, presented by claimant to the Plan, made by the Social Security Administration,

 

(B)               If
the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either
provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s
medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing,

 

(C)               Either
provide the specific internal rules, guidelines, protocols, standards or other similar criteria relied upon in making the adverse
determination, or, alternatively, provide a statement that such rules, guidelines, protocols, standards or other similar criteria
do not exist,

 

(D)               Provide
a statement that reasonable access to and copies of, all documents, records and other information relevant to the claimant’s
claim will be provided free of charge to the claimant or his duly authorized representative upon request in writing, and

 

(E)                Be
provided in a culturally and linguistically appropriate manner as described in applicable regulations.

 

    	 	- 20 -	 

     

    

 

11.2           Appeals.
A Participant or Beneficiary whose claim filed pursuant to paragraph 11.1 has been denied, in whole or in part, may, within
sixty (60) days (or one hundred eighty (180) days in the case of a Disability Benefit Claim) following receipt of notice of
such denial, make written application to the Administrator for a review of such claim, which application shall be filed with
the Administrator. For purposes of such review, the following procedure shall apply:

 

11.2(a)   The Administrator (or a claims administrator appointed by the Administrator) may schedule and hold a hearing.

 

11.2(b)   The claimant or his duly authorized representative shall be provided the opportunity to submit written comments, documents, records,
and other information relating to the claim for benefits.

 

11.2(c)   The claimant or his duly authorized representative shall be provided, upon request in writing and free of charge, reasonable access
to, and copies of, all documents, records, and other information relevant to such claim and may submit to the Administrator written
comments, documents, records, and other information relating to such claim.

 

11.2(d)   The Administrator (or a claims administrator appointed by the Administrator) shall make a full and fair review of any denial of
a claim for benefits, which shall include:

 

(i)            Taking
into account all comments, documents, records, and other information submitted by the claimant or his duly authorized representative
relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination,

 

(ii)           In the case of a Disability Benefit Claim filed before January 1, 2018 (and thereafter if the final regulation published
in 81 Fed. Reg. 92316 (Dec. 19, 2016) is not yet effective for claims filed as of such date):

 

(A)              Providing for a review that does not afford deference to the initial claim denial and that is conducted by an appropriate
named fiduciary of the Plan who is neither the individual who made the claim denial that is the subject of the review, nor the
subordinate of such individual,

 

(B)              In
making its decision on a review of any claim denial that is based in whole or in part on a medical judgment, including determinations
with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary
or appropriate, consulting with a health care professional who has appropriate training and experience in the field of medicine
involved in the medical judgment,

 

(C)               Providing to the claimant or his authorized representative, either upon request in writing and free of charge or automatically,
the identification of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the claim
denial that is the subject of the review, without regard to whether the advice was relied upon in making the benefit determination,
and

 

(D)              Ensuring
that the health care professional engaged for purposes of a consultation under clause (iv)(B)(II) of this subparagraph shall be
an individual who is neither an individual who was consulted in connection with the claim denial that is the subject of the review,
nor the subordinate of any such individual,

 

    	 	- 21 -	 

     

    

 

(iii)          In the case of a Disability Benefit Claim filed on or after January 1, 2018 (to the extent the final regulation published
in 81 Fed. Reg. 92316 (Dec. 19, 2016) is effective for claims filed on and after such date):

 

(A)             Provide
that before the Plan can issue an adverse benefit determination on review, the Administrator shall provide the claimant, free
of charge, with any new or additional evidence considered, relied upon, or generated by the Plan, insurer, or other person making
the benefit determination (or at the direction of the Plan, insurer or such other person) in connection with the claim; such evidence
must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination
on review is required to be provided under subparagraph 11.2(f) to give the claimant a reasonable opportunity to respond prior
to that date; and

 

(B)              Provide
that, before the Plan can issue an adverse benefit determination on review based on a new or additional rationale, the Administrator
shall provide the claimant, free of charge, with the rationale; the rationale must be provided as soon as possible and sufficiently
in advance of the date on which the notice of adverse benefit determination on review is required to be provided under subparagraph
11.2(f) to give the claimant a reasonable opportunity to respond prior to that date.

 

11.2(e)    If
the claim is not a Disability Benefit Claim, the decision on review shall be issued promptly, but no later than sixty (60)
days after receipt by the Administrator of the claimant’s request for review, or one hundred twenty (120)  days
after such receipt if a hearing is to be held or if other special circumstances exist and if written notice of the extension
to one hundred twenty (120) days indicating the special circumstances involved and the date by which a decision is
expected to be made on review is furnished to the claimant or his duly authorized representative within sixty (60) days after
the receipt of the claimant’s request for a review.

 

11.2(f)    If the claim is a Disability Benefit Claim, the decision on review shall be issued promptly, but no later than forty-five (45)
days after receipt by the Administrator of the claimant’s request for review, or ninety (90) days after such receipt if a
hearing is to be held or if other special circumstances exist and if written notice of the extension to ninety (90) days indicating
the special circumstances involved and the date by which a decision is expected to be made on review is furnished to the claimant
or his duly authorized representative within forty-five (45) days after the receipt of the claimant’s request for a review.

 

11.2(g)   The decision on review shall be in writing, shall be delivered or mailed by the Administrator to the claimant or his duly authorized
representative in the manner prescribed in subparagraph 11.1 for notices of approval or denial of claims, shall be written in a
manner calculated to be understood by the claimant and shall in the case of an adverse determination:

 

		(i)	Include the specific reason or reasons for the adverse
determination,

 

		(ii)	Make reference to the specific provisions of the Plan on which the adverse determination is based,

 

		(iii)	Include a statement that the claimant is entitled to
receive, upon request in writing and free of charge, reasonable access to, and copies of, all documents, records, and other information
relevant to the claimant’s claim for benefits,

 

		(iv)	Include a statement of the claimant’s right to
bring a civil action in state or federal court under Section 502(a) of the Act following the adverse determination on review,

 

		(v)	In the case of a Disability Benefit Claim filed before
January 1, 2018 (and thereafter if the final regulation published in 81 Fed. Reg. 92316 (Dec. 19, 2016) is not yet effective for
claims filed as of such date):

 

    	 	- 22 -	 

     

    

 

(A)              If
an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either
provide the specific rule, guideline, protocol or other similar criterion, or provide a statement that such a rule,
guideline, protocol or other similar criterion was relied upon in making the adverse determination and that a copy of such
rule, guideline, protocol or other criterion will be provided free of charge to the claimant or his duly authorized
representative upon request in writing,

 

(B)              If
the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either
provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s
medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing, and

 

(vi)          In
the case of a Disability Benefit Claim filed on or after January 1, 2018 (to the extent the final regulation published in 81 Fed.
Reg. 92316 (Dec. 19, 2016) is effective for claims filed on and after such date):

 

(A)              Provide
a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (1) the views, presented
by the claimant to the Plan, of health care professionals treating the claimant and vocational professionals who evaluated the
claimant, (2) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the
adverse determination review, without regard to whether the advice was relied upon in making the benefit determination, and (3)
a disability determination regarding claimant, presented by claimant to the Plan, made by the Social Security Administration,

 

(B)               If
the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either
provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s
medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing,

 

(C)               Either
provide the specific internal rules, guidelines, protocols, standards or other similar criteria relied upon in making the adverse
determination, or, alternatively, provide a statement that such rules, guidelines, protocols, standards or other similar criteria
do not exist, and

 

(D)               Be
provided in a culturally and linguistically appropriate manner as described in applicable regulations.

 

The Administrator’s decision made in good faith
shall be final.

 

11.3          Time
Calculation. The period of time within which a benefit determination initially or on review is required to be made shall
begin at the time the claim or request for review is filed in accordance with the procedures of the Plan, without regard to whether
all the information necessary to make a benefit determination accompanies the filing. In the event that a period of time is extended
as permitted pursuant to this paragraph due to the failure of a claimant or his duly authorized representative to submit information
necessary to decide a claim or review, the period for making the benefit determination shall be tolled from the date on which
the notification of the extension is sent to the claimant or his duly authorized representative until the date on which the claimant
or his duly authorized representative responds to the request for additional information.

 

    	 	- 23 -	 

     

    

 

 11.4          Definitions. For purposes of the Plan’s claims procedure:

 

11.4(a) A
 “Disability Benefit Claim” is a claim for a Plan benefit whose availability is conditioned on a
determination of disability and where the Plan’s claim’s adjudicator must make a determination of disability in
order to decide the claim. A claim is not a Disability Benefit Claim where the determination of disability is made by a party
(other than the Plan’s claim’s adjudicator or other fiduciary) outside the Plan for purposes other than making a
benefit determination under the Plan (such as a determination of disability by the Social Security Administration or under
the Employer’s long term disability plan).

 

11.4(b)
A document, record, or other information shall be considered “relevant” to a claimant’s claim if such
document, record, or other information (i) was relied upon in making the benefit determination, (ii) was submitted, considered,
or generated in the course of making the benefit determination, without regard to whether such document, record, or other information
was relied upon in making the benefit determination, (iii) demonstrates compliance with the administrative processes and safeguards
required in making the benefit determination, or (iv) in the case of a Disability Benefit Claim, constitutes a statement of policy
or guidance with respect to the Plan concerning the denied treatment option or benefit for the claimant’s diagnosis, without
regard to whether such advice or statement was relied upon in making the benefit determination.

 

11.5          Authorized
Representatives. The Administrator may establish reasonable procedures for determining whether a person has been authorized
to act on behalf of a claimant.

  

ARTICLE XII

Funding

 

12.1       Funding.

 

12.1(a)    The undertaking to pay benefits hereunder shall be an unfunded obligation payable solely from the general assets of the Employer
and subject to the claims of the Employer’s creditors. The Deferral Accounts shall be maintained as book reserve accounts
solely for accounting purposes.

 

12.1(b)   Except as provided in the Rabbi Trust established as permitted in paragraph 12.2, nothing contained in the Plan and no action taken
pursuant to the provisions of the Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between
the Employer and the Participant or his Beneficiary or any other person. To the extent that any person acquires a right to receive
payments from the Employer under the Plan, such rights shall be no greater than the right of any unsecured general creditor of
the Employer.

 

12.1(c)   Where more than one Employer participates in the Plan, the funding and payment provisions hereof shall apply separately to each
such Employer.

 

12.1(d)   The Plan Sponsor may in its discretion make the payment of any or all benefits under the Plan in lieu of payment by one or more
Employer. Where the Plan Sponsor makes payments on behalf of other Employers, the Plan Sponsor may require contributions by participating
Employers to the Plan Sponsor at such times (whether before, at or after the time of payment), in such amounts and or such basis
as it may from time to time determine in order to defray the cost of benefits and administration of the Plan.

 

12.2       Use
of Rabbi Trust Permitted. Notwithstanding any provision herein to the contrary, the Plan Sponsor may in its sole discretion
elect to establish and fund a Rabbi Trust for the purpose of providing benefits under the Plan.

 

    	 	- 24 -	 

     

    

 

ARTICLE XIII

Plan Administrator

 

13.1           Appointment
of Plan Administrator. The Plan Sponsor may appoint one or more persons to serve as the Plan Administrator (the “Administrator”)
for the purpose of carrying out the duties specifically imposed on the Administrator by the Plan and the Code. In the event more
than one person is appointed, the persons shall form a committee for the purpose of functioning as the Administrator of the Plan.
The person or committeemen serving as Administrator shall serve for indefinite terms at the pleasure of the Plan Sponsor, and
may, by thirty (30) days prior written notice to the Plan Sponsor, terminate such appointment. The Plan Sponsor shall inform the
Trustee of any such appointment or termination, and the Trustee may assume that any person appointed continues in office until
notified of any change.

 

13.2         
Plan Sponsor as Plan Administrator. In the event that no Administrator is appointed or in office pursuant
to paragraph 13.1, the Plan Sponsor shall be the Administrator.

 

13.3         
Procedure if a Committee. If the Administrator is a committee, it shall appoint from its members a Chair and
a Secretary. The Secretary shall keep records as may be necessary of the acts and resolutions of such committee and be prepared
to furnish reports thereof to the Plan Sponsor and the Trustee. Except as otherwise provided, all instruments executed on behalf
of such committee may be executed by its Chair or Secretary, and the Trustee may assume that such committee, its Chair or Secretary
are the persons who were last designated as such to them in writing by the Plan Sponsor or its Chair or Secretary.

 

13.4         
Action by Majority Vote if a Committee. If the Administrator is a committee, its action in all matters, questions
and decisions shall be determined by a majority vote of its members qualified to act thereon. They may meet informally or take
any action without the necessity of meeting as a group.

 

13.5         
Appointment of Successors. Upon the death, resignation or removal of a person serving as, or on a committee
which is, the Administrator, the Employer may, but need not, appoint a successor.

 

13.6         
Duties and Responsibilities of Plan Administrator. The Administrator shall have the following duties and responsibilities
under the Plan:

 

13.6(a)   The Administrator shall be responsible for the fulfillment of all relevant reporting and disclosure requirements set forth in the
Plan, the Code, and the Act, the distribution thereof to Participants and their Beneficiaries and the filing thereof with the appropriate
governmental officials and agencies.

 

13.6(b)  
The Administrator shall maintain and retain necessary records respecting its administration of the Plan and matters upon
which disclosure is required under the Plan, the Code, and the Act.

 

13.6(c)   The Administrator shall make any elections for the Plan required to be made by it under the Plan, the Code, and the Act.

 

13.7        
Power and Authority.

 

13.7(a)   The Administrator is hereby vested with all the power and authority necessary in order to carry out its duties
and responsibilities in connection with the administration of the Plan imposed hereunder. For such purpose, the
Administrator shall have the power to adopt rules and regulations consistent with the terms of the Plan.

 

13.7(b)   The Administrator shall exercise its power and authority in its discretion. The Administrator has the discretionary authority to
construe the Plan, correct defects, supply omissions, or reconcile inconsistencies to the extent necessary to effectuate the Plan
and such action shall be conclusive. It is intended that a court review of the Administrator’s exercise of its power and
authority with respect to matters relating to claims for benefits by, and to eligibility for participation in and benefits of,
Participants and Beneficiaries shall be made only on an arbitrary and capricious standard. Benefits under the Plan will be paid
only if the Administrator decides in its discretion that the applicant is entitled to them.

 

    	 	- 25 -	 

     

    

 

13.7(c)   The Administrator is empowered to settle claims against the Plan and to make such equitable adjustments in a Participant’s
or Beneficiary’s rights or entitlements under the Plan as it deems appropriate in the event an error or omission is discovered
or claimed in the operation or administration of the Plan.

 

13.8         
Availability of Records. The Employer and the Trustee shall, at the request of the Administrator, make available
necessary records or other information they possess which may be required by the Administrator in order to carry out its duties
hereunder.

 

13.9          No
Action with Respect to Own Benefit. No Administrator who is a Participant shall take any part as the Administrator in
any discretionary action in connection with his participation as an individual. Such action shall be taken by the remaining Administrator,
if any, or otherwise by the Plan Sponsor.

 

ARTICLE XIV

Amendment and
Termination of Plan

 

14.1           Amendment
or Termination of the Plan.

 

14.1(a)   The Plan may be terminated at any time by the Board, subject to the restrictions imposed by and consistent with applicable provisions
of Section 409A. The Plan may be amended in whole or in part from time to time by the Board effective as of any date specified,
subject to the restrictions imposed by and consistent with applicable provisions of Section 409A. No amendment or termination shall
operate to decrease a Participant’s vested Deferral Benefit as of the earlier of the date on which the amendment or termination
is approved by the Board or the date on which an instrument of amendment or termination is signed on behalf of the Plan Sponsor.
No amendment shall increase the Trustee’s duties or obligations or decrease its compensation unless contained in an amendment
of, or document expressly pertaining to, the Rabbi Trust which includes the Trustee’s written consent or for which the Trustee’s
written consent is separately obtained. Any such termination of or amendment to the Plan may provide for the acceleration of payment
of benefits under the Plan to one or more Participants or Beneficiaries. Any such termination of or amendment to the Plan shall
be in writing and shall be adopted pursuant to action by the Board (including pursuant to any standing authorization for any officer,
director or committee to adopt amendments) in accordance with its applicable procedures, including where applicable by majority
vote or consent in writing.

 

14.1(b)   In addition, and as an alternative, to amendment of the Plan by action of the Board, but subject to the limitations on
amendment contained in subparagraph 14.1(a), the Administrator shall be and is hereby authorized to adopt on behalf of the
Board and to execute any technical amendment or amendments to the Plan which in the opinion of counsel for the Plan Sponsor
are required by law and are deemed advisable by the Administrator and to so adopt and execute any other discretionary
amendment or amendments to the Plan which are deemed advisable by the Administrator so long as any such amendments do not, in
view of the Administrator, materially affect the eligibility, vesting or benefit accrual or allocation provisions of the
Plan.

 

14.1(c)   Termination of the Plan shall mean termination of active participation by Participants, but shall not mean immediate payment of
all vested Deferral Benefits unless the Plan Sponsor so directs, subject to the restrictions imposed by and consistent with applicable
provisions of Section 409A. On termination of the Plan, the Board of the Plan Sponsor may provide for the acceleration of payment
of the vested Deferral Benefits of all affected Participants on such basis as it may direct.

 

14.2          Effect
of Employer Merger, Consolidation, or Liquidation. Notwithstanding the foregoing provisions of this ARTICLE XIV, the
merger or liquidation of any Employer into any other Employer or the consolidation of two (2) or more of the Employers shall
not cause the Plan to terminate with respect to the merging, liquidating or consolidating Employers, provided that the Plan
has been adopted or is continued by and has not terminated with respect to the surviving or continuing Employer.

 

    	 	- 26 -	 

     

    

 

ARTICLE XV

Participation
by Additional Employers

 

15.1         
Adoption by Additional Employers. Any Affiliate of the Plan Sponsor may adopt the Plan with the consent of
the Board of the Plan Sponsor and approval by its Board.

 

15.2
          Termination Events with Respect to Employers Other Than
the Plan Sponsor.

 

15.2(a)
The Plan shall terminate with respect to any Employer other than the Plan Sponsor, and such Employer shall automatically cease
to be a participating Employer in the Plan, upon the happening of any of the following events, subject to the restrictions imposed
by and consistent with applicable provisions of Section 409A:

 

(i)            The
Employer ceasing to be an Affiliate; or

 

(ii)           Action
by the Board or Chief Executive Officer of the Plan Sponsor terminating an Employer’s participation in the Plan and specifying
the date of such termination. Notice of such termination shall be delivered to the Administrator and the former participating
Employer.

 

15.2(b)   Termination of the Plan with respect to any Employer shall mean termination of active participation in the Plan of the
Participants employed by such Employer, but shall not mean immediate payment of all vested Deferral Benefits with respect to
the Employees of such Employer unless the Plan Sponsor so directs consistent with applicable provisions of Section 409A. On
termination of the Plan with respect to any Employer, the Administrator may provide for the acceleration of payment of the
vested Deferral Benefits of all affected Participants and Beneficiaries of that former participating Employer on such basis
as it may direct.

  

ARTICLE XVI

Miscellaneous

 

16.1          Nonassignability.
The interests of each Participant or Beneficiary under the Plan are not subject to claims of the Participant’s or Beneficiary’s
creditors; and neither the Participant, nor his Beneficiary, shall have any right to sell, assign, transfer or otherwise convey
the right to receive any payments hereunder or any interest under the Plan, which payments and interest are expressly declared
to be nonassignable and nontransferable and any attempt to assign or transfer any benefit hereunder shall be void ab initio.

 

16.2          Right
to Require Information and Reliance Thereon. The Employer and Administrator shall have the right to require any Participant,
Beneficiary or other person receiving benefit payments to provide it with such information, in writing, and in such form as it
may deem necessary to the administration of the Plan and may rely thereon in carrying out its duties hereunder. Any payment to
or on behalf of a Participant or Beneficiary in accordance with the provisions of the Plan in good faith reliance upon any such
written information provided by a Participant or any other person to whom such payment is made shall be in full satisfaction of
all claims by such Participant and his Beneficiary; and any payment to or on behalf of a Beneficiary in accordance with the provision
so the Plan in good faith reliance upon any such written information provided by such Beneficiary or any other person to whom
such payment is made shall be in full satisfaction of all claims by such Beneficiary.

 

    	 	- 27 -	 

     

    

 

16.3
        Notices and Elections.

 

16.3(a)    Except as provided in subparagraph 16.3(b), all notices required to be given in writing and all elections, consents, applications
and the like required to be made in writing, under any provision of the Plan, shall be invalid unless made on such forms as may
be provided or approved by the Administrator and, in the case of a notice, election, consent or application by a Participant or
Beneficiary, unless executed by the Participant or Beneficiary giving such notice or making such election, consent or application.

 

16.3(b)   Subject to limitations under applicable provisions of the Code or the Act, the Administrator is authorized in its discretion to
accept other means for receipt of effective notices, elections, consents, applications and/or other forms or communications by
Participants and/or Beneficiaries, including but not limited to electronic transmissions through interactive on-line transmissions,
e-mail, voice mail, recorded messages on electronic telephone systems, and other permissible methods, on such basis and for such
purposes as it determines from time to time.

 

16.4          Delegation of Authority. Whenever the Plan Sponsor or any other Employer is permitted or required to perform
any act, such act may be performed by its President or Chief Executive Officer or other person duly authorized by its President
or Chief Executive Officer or the Board of the Employer.

 

 16.5          Service of Process. The Administrator shall be the agent for service of process on the Plan.

 

16.6         
Governing Law. The Plan shall be construed, enforced, and administered in accordance with the laws of the
Commonwealth of Virginia, and any federal law which preempts the same.

 

16.7         
Binding Effect. The Plan shall be binding upon and inure to the benefit of the Employer, its successors and
assigns, and the Participant and his Beneficiary (and their heirs, executors, administrators and legal representatives).

 

16.8         
Severability. If any provision of the Plan should for any reason be declared invalid or unenforceable by a
court of competent jurisdiction, the remaining provisions shall nevertheless remain in full force and effect.

 

16.9         
No Effect on Employment Agreement. The Plan shall not be considered or construed to modify, amend, or supersede
any employment or other agreement between the Employer and the Participant heretofore or hereafter entered into unless so specifically
provided.

 

16.10       
Gender and Number. In the construction of the Plan, the masculine shall include the feminine or neuter and
the singular shall include the plural and vice-versa in all cases where such meanings would be appropriate.

 

16.11      
Titles and Captions. Titles and captions and headings herein have been inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof.

 

16.12       
Construction. The Plan and Fund are intended to be construed as a “plan which is unfunded and is maintained
by the employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated
employees,” within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Act, and shall be interpreted and administered
accordingly.

 

    	 	- 28 -	 

     

    

 

16.13      
Nonqualified Deferred Compensation Plan Omnibus Provision.

 

16.13(a)  It
is intended that any compensation, benefits or other remuneration which is provided pursuant to or in connection with the
Plan which is considered to be nonqualified deferred compensation subject to Section 409A shall be provided and paid in a
manner, and at such time and in such form, as complies with the applicable requirements of Section 409A to avoid a plan
failure described in Section 409A(a)(1) of the Code, including without limitation, deferring payment until the occurrence of
a specified payment event described in Section 409A(a)(2) of the Code and to avoid the unfavorable tax consequences provided
therein for non-compliance, and that, notwithstanding any other provision thereof or document pertaining to any such
compensation, benefit or other remuneration subject to the provisions of Section 409A, each provision of any plan, program or
arrangement (including without limitation the Plan) relating to the provision of such compensation, benefit or other
remuneration to or with respect to the Eligible Employee, shall be so construed and interpreted.

 

16.13(b)
It is specifically intended that all elections, consents and modifications thereto under the Plan will comply with the requirements
of Section 409A (including any transition or grandfather rules thereunder). The Administrator is authorized to adopt rules or regulations
deemed necessary or appropriate in connection therewith to anticipate and/or comply the requirements of Section 409A (including
any transition or grandfather rules thereunder).

 

16.13(c)
It is also intended that if any compensation, benefits or other remuneration which is provided pursuant to or in connection with
the Plan is considered to be nonqualified deferred compensation subject to Section 409A but for being earned and vested as of December
31, 2004, then no material modification of the Plan after October 3, 2004 shall apply to such Plan benefits which are earned and
vested as of December 31, 2004 unless such modification expressly so provides.

 

16.14(d)
Notwithstanding the foregoing, the Participant, the Beneficiary, and any successor in interest shall be solely responsible and
liable for the satisfaction of all taxes and penalties that may be imposed on the Participant, the Beneficiary, or any successor
in interest in connection with this Plan (including any taxes and penalties under Section 409A); and neither the Plan Sponsor,
the Employer, the Administrator nor any Affiliate shall have any obligation to indemnify or otherwise hold the Participant, the
Beneficiary, or any successor in interest harmless from any or all of such taxes or penalties.

 

September 1, 2017

 

    	 	- 29 -	 

     

    

 

 

NON-QUALIFIED DEFERRED
COMPENSATION PLAN FOR EXECUTIVES

(As Restated Effective
January 1, 2018)

 ADOPTION AGREEMENT

 

(Updated Form January 1, 2020)

 

This Adoption Agreement
is the companion document that allows an employer to sponsor and adopt the Virginia Bankers Association Model Non-Qualified Deferred
Compensation Plan for Executives (the “Plan”). Each Employer named below hereby adopts the Plan through this Adoption
Agreement (the “Adoption Agreement”), to be effective as of the date(s) specified below, and elects the following specifications
and provides the following information relating thereto.

 

In completing this Adoption Agreement,
if additional space is required, insert additional sheets.

 

Adoption Agreement Contents

 

	 	 	Page
	Option 1	Employer(s) Adopting Plan	1
	Option 2	General Plan Information	1
	Option 3	Status of Plan and Effective Date(s)	2
	Option 4	Definitions and Other Optional Provisions	3
	Option 5	Employer Contributions	8
	Option 6	Vesting	10
	Option 7	Retirement Dates	11
	Option 8	Time and Form of Payments	12
	Option 9	Hardship Withdrawals	15
	Option 10	Participant Deemed Investment Direction	15

 

 

	1.	EMPLOYER(S) ADOPTING PLAN.

 

	(a) Name of Plan Sponsor:

                                                                                Village Bank and Trust Financial Corp
	(b) Plan Sponsor’s Telephone       Number:
 (804) 897-3900
	(c) Address of Plan Sponsor:

                                                                                13319 Midlothian Turnpike

                                                                                Midlothian, VA 23113
	(d) Plan Sponsor’s EIN: 
 54-1896366
	(e) Plan Sponsor’s Tax Year 

      End:
 12/31

	(f)	Other Participating Employers Adopting the Plan:

 

	x	(1)	All Affiliates are automatically participating Employers
    in the Plan, except for the following:
	 	 	 
	 	 	 
	 	 	 
	 ̈	(2)	Each participating Employer is listed individually on the attachment
    captioned “List of Participating Employers,” which shall be updated as needed from time to time in compliance
    with ARTICLE XV of the basic plan document.

 

 

	2.	GENERAL PLAN INFORMATION.

 

	(a) Name of Plan:
	VBA Executive's Non-Qualified Plan for Village Bank and Trust Financial Corp
	(b) Name, Address and EIN of Plan Administrator(s): [If other than Plan Sponsor, appointment must be by resolution]
	Village Bank & Trust Financial Corp

 

     

     

    

 

 

	3.	STATUS OF PLAN AND EFFECTIVE DATE(S).

 

	(a) Effective
    Date of Plan: The Effective Date of the Plan is	January 	 	1	,	2009	.	 

 

	(b) Plan
    Status. The adoption of the Plan through this Adoption Agreement is:

 

	 ̈	(1)	Initial Establishment.
    The initial adoption and establishment of the Plan.
	 	 	 
	x	(2)	Restated Plan.
    An amendment and restatement of the Plan (a Restated Plan).

 

	(A)	Effective Date of this Restatement. The Effective Date of this Restatement is	January 	 	1	,	 2020	.

 

	(B)	Prior Plan. The Plan was last maintained under
document dated___________________ , _______ and was known as the _______
	 	     ____________________________________________________________________________________________________
	 	____________________________________________________________________________________________________
	 	____________________________________________________________________________________________________
	 	___________________________________________________________________________________________.

 

	(C)	409A Transitional Provisions (grandfathering election):

 

	 ̈	Election NOT to Grandfather Pre-January 1, 2005 Vested
Balances. If this Option is elected, all Deferral Accounts shall be subject to the rules set forth in the post-December 31,
2004 restatements.
	 	 
	 	If the Option is not elected,
the Deferral Accounts attributable to transfers from predecessor plans prior to December 31, 2004 and contributions that are vested
as of December 31, 2004 shall be segregated from the Deferral Accounts attributable to contributions that are not vested as of
December 31, 2004 and to contributions and transfers made on and after January 1, 2005. The terms of the Plan in effect on and
after January 1, 2005 shall only apply to transfers and contributions that are not vested as of December 31, 2004 and to contributions
and transfers made on and after January 1, 2005.

 

	x	(3)	Special or Other Transitional Provisions.
[Use attachment if additional space is needed]

 

		[Enter
any special provisions including alternate definitions or other transitional provisions relating to any Predecessor Plan Account
and the Plan as restated] See attachment
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

 

	 ̈	(c)	 If elected, this Plan is intended to be paired with
a qualified cash or deferred arrangement as described in subparagraph 3.1(d) of the basic plan document.

 

		If Elected – Name of the paired plan	 

 

    	 	 2 	 

     

    

 

 

	4.	DEFINITIONS AND OTHER OPTIONAL PROVISIONS.

 

	(a) Compensation Paragraph 1.10	 	Compensation is used throughout the basic plan document for different purposes. The following specific rules apply.

 

		(1)	General Definition.
    The Compensation definition in paragraph 1.10 of the basic plan document is modified as follows:
	 	 	 
	 	 	(A)          Salary. Base salary and base wages subject to the following modifications or limitations:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	[Consider whether to fix
        the date for determining Salary. Consider whether to revise to exclude reductions for 401(k) and cafeteria plan contributions.
        Other revisions may be desired.]
	 	 	 
	 	 	(B)          Discretionary or Other Bonus. All discretionary or other Bonuses unless otherwise provided:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	[List excluded bonus or
        incentive programs. The Plan Sponsor may elect a Special Deferral Election Period for Performance-Based Compensation.]
	 	 	 
	 	(2)	Specific Definitions.
    When used with respect to each type of contribution under the Plan, Compensation shall include:
	 	 	 
	 	 	(A)          Employee Deferral Contributions. [Check all that apply]
	 	 	 
	 	 	x           (a)          Salary.
	 	 	 
	 	 	x           (b)          Bonuses.
	 	 	 
	 	 	x           (c)          Commissions
	 	 	 
	 	 	x           (d)          Other.	401k
    refund
	 	 	 	[Describe – In defining Compensation for deferral purposes, please note that elections to defer
compensation generally must be made in the year prior to performance period for which the right to the compensation arises. Plan
Sponsors should consult with counsel in determining the types of compensation and any special timing rules.]

 

    	 	 3 	 

     

    

 

			(B)      Employer
                                         Non-Elective Contributions. [Check all that apply]
	 	 	 
	 	 	 ̈       (a)          Salary.
	 	 	 
	 	 	 ̈       (b)          Bonuses.
	 	 	 
	 	 	 ̈       (c)          Commissions
	 	 	 
	 	 	 ̈       (d)          Other.	 
	 	 	 	[Describe – In defining Compensation for deferral purposes, please note that elections to defer
compensation generally must be made in the year prior to performance period for which the right to the compensation arises. Plan
Sponsors should consult with counsel in determining the types of compensation and any special timing rules.]
	 	 	 	 
	 	 	(C)      Employer Matching Contributions. [Check all that apply]
	 	 	 
	 	 	 ̈       (a)          Salary.
	 	 	 
	 	 	 ̈       (b)          Bonuses.
	 	 	 
	 	 	 ̈       (c)          Commissions
	 	 	 
	 	 	 ̈       (d)          Other.	 
	 	 	 	[Describe – In defining Compensation for deferral purposes, please note that elections to defer
compensation generally must be made in the year prior to performance period for which the right to the compensation arises. Plan
Sponsors should consult with counsel in determining the types of compensation and any special timing rules.]

 

	(b) Eligible
    Employee Paragraph 1.17	Eligible Employee shall mean only the following: 
	 	 
	 	 ̈	(1)	Determination by Board.
    Any individual who is designated as an Eligible Employee by resolution of the  ̈
    Plan Sponsor’s  ̈ Employer’s Board.     A copy of the
    resolution shall be attached to and incorporated by     reference     into the Plan.
	 	 	 	 
	 	 ̈	(2)	Determination by CEO.
    Any individual who is designated in writing as an Eligible Employee by resolution of the  ̈
    Plan Sponsor’s  ̈ Employer’s     Chief Executive Officer. A copy
    of the Chief Executive Officer’s designation     shall be attached to and incorporated by     reference into the
    Plan.
	 	 	 	 
	 	 ̈	(3)	Determined by Classification or Grade.
    Any individual who is classified under the Employer’s personnel practices and policies as employed in the following
    grades or classifications:
	 	 	 	 
	 	 	 	 

 

    	 	 4 	 

     

    

 

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	[List executive classification to be included in plan
coverage]
	 	 	 	 
	 	x	(4)	Determined by Position or Title.
    Any individual who is employed in the following positions with the Employer:
	 	 	 	All SVP and above; VP, as approved by the CEO
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	[List the executive positions to be included in plan
coverage]

 

	(c) Plan Year Paragraph 1.24	In the case of a
    Restated Plan which prior to the Effective Date of this Restatement was maintained on the basis of a Plan Year beginning on a
    date other than January 1, the Plan Year shall begin on ____, ___and end on ________, _________, with the short Plan Year
    beginning on _____________, ______and ending on December 31, _______. Thereafter, the Plan Year shall be the 12-month period
    beginning each January 1.
	 	 	 	 

	(d) Effective Date of Coverage Paragraph 2.1	The effective date of coverage for an Eligible Employee shall be [Check one]
	 	 
	 	x	(1)	Immediate.
    The first day of the first payroll period beginning on or after the date the individual became an Eligible Employee.
	 	 	 	 
	 	 ̈	(2)	Monthly. The
    first day of the first payroll period beginning on or after the first day of_______ [Complete with 1st,
    2nd,     or other] month next following the date the individual became an Eligible Employee.
	 	 	 	 
	 	 ̈	(3)	Semi-Annually.
    The first day of the Plan Year or the first day of the seventh month of the Plan Year on or next following the date the individual
    became an Eligible Employee.
	 	 	 	 
	 	 ̈	(4)	Annually. The
    first day of the Plan Year on or next following the date the individual became an Eligible Employee.
	 	 	 	 
	 ̈    (e)
    Special Election Period for Performance-Based Compensation              Subparagraph 3.2(d)	If this
Option is elected, the Plan Sponsor may permit Eligible Employees to make Deferred Compensation Elections with respect to Performance-Based
Compensation prior to the annual filing deadline established by the Administrator which deadline shall be no later than six (6)
months prior to the end of the period for which such Bonus is earned, as described in subparagraph 3.2(d) of the basic plan document.
	 	 
	 	Otherwise,
except for new participants, all Deferred Compensation Elections for all Bonuses must be made prior to the annual filing deadline
established by the Administrator, which deadline shall be no later than the end of the calendar year or end of the Plan Sponsor’s
fiscal year, immediately preceding the applicable year to which the Bonus relates.
	 	 

 

    	 	 5 	 

     

    

 

		In order to be Performance-Based Compensation, (i) the Bonus must be earned over a period of at least twelve (12) months, (ii) the Bonus must be based on pre- established organizational or individual performance criteria for which the outcome is substantially uncertain at the time of establishment, (iii) such criteria are established in writing no later than ninety (90) days after the beginning of the period of service to which the Bonus and performance relate, and (iv) such criteria are not substantially certain to be met at the time established. See more specific definition in Treas. Reg. 1.409A-1(e).
	 	 
	x    (f)
    Cancellation of Deferred Compensation Election For Disability               Paragraph 3.5	If this Option is elected, the
    Plan Sponsor:
	 	 ̈	(1)	Mandatory Cancellation.
    Will cancel the Deferred Compensation Election of an Eligible Employee who experiences a Disability as defined in subparagraph
    3.5(b).
	 	 	 	 
	 	x	(2)	Optional Cancellation.
    May permit an Eligible Employee who experiences a Disability as defined in subparagraph 3.5(b)
    to cancel his Deferred Compensation Election.
	 	 	 	 
	 	 	If this Option is not selected, no cancellation
will be required or permitted upon the occurrence of a Disability.
	 	 	 
	(g) Rules Relating to “Specified
    Employee”     Delay Subparagraph 9.1(c)	For
purposes of applying the 6-month delay required by Section 409A for a Participant who is a “specified employee” (i.e.,
a “key employee” of any publicly- traded company):
	 	 
	 	(1)	Specified Employee Identification Date. Specified employees shall be identified in the following manner: [Check one of
the following and complete, if applicable]
	 	 	 
	 	 	 ̈	(A)          Established
    By Board Action or Other Document of Plan Sponsor. The identification date and its effective
    date shall be established by the Plan Sponsor through the document set forth below, which may be an action of its Board or
    other written document:______________________
	 	 	 	 
	 	 	 	[Describe document establishing
specified employee identification date]
	 	 	 	 
	 	 	x	(B)          Default
    Dates in Regulations. The identification date shall be December 31 and effective for distributions
    to be made during the 12-month period beginning on or after the following April 1, as provided in Treas. Reg. 1.409A-1(i).
	 	 	 	 
	 	 	 ̈	(C)          Alternative
    Identification Date. The identification date shall be ___________ (identification
    date) and effective for distributions to be made during the 12-month period beginning on or after the following _________________
    [enter date not later than the first day of the 4th month following the identification date]
	 	 	 	 
	 	 	The Specified
    Employee Identification Date must be the same date for all deferred compensation plans, programs, and agreements of the Plan
    Sponsor and its Affiliates.

 

    	 	 6 	 

     

    

 

		(2)	Compensation
    to be Used in Determining Specified Employees. Specified employees are (A) the 50 highest paid officers (or if less, the
    greater of 3 or 10% of employees) with compensation in excess of $175,000 (for 2017) (as adjusted from time to time), (B)
    1% owners with compensation in excess of $150,000, or (C) 5% owners. The definition of compensation for this purpose shall
    be determined in the following manner: [Check one of the following and complete, if applicable]
	 	 	 
	 	 	 ̈	(A)          Board
    Action or Other Document of Plan Sponsor. The compensation used to identify specified employees
    shall be established by the Plan Sponsor though the document set forth below which may be an action of its Board or other
    written document that applies to all deferred compensation plans, programs, and agreements of the Plan Sponsor and its Affiliates.
    _______________________________________
	 	 	 	 
	 	 	 	[Describe document establishing
compensation definition]
	 	 	 	 
	 	 	x	(B)          VBA Plan.
    The compensation used to identify specified employees shall be the Total Compensation definition elected under the VBA Plan.
	 	 	 	 
	 	 	 ̈	(C)          Alternative
Compensation Definition. The compensation used to determine specified employees shall be determined
in the following manner ____________________
	 	 	 	 
	 	 	 	______________ [Describe
the document establishing compensation definition or describe compensation based on an acceptable definition under Section 415
of the Code]
	 	 	 	 
	 	(3)	Payment Rules Following Required Delay Period. Upon the expiration of
the required 6-month delay: [Check one of the following]
	 	 	 
	 	 	x	(A)          Catch-Up
    Missed Payments. Payments to which a specified employee would otherwise have been entitled
    during the 6-month delay will be accumulated and paid on the first day of the 7th month following the date of Separation from
    Service for reasons other than death.
	 	 	 	 
	 	 	 ̈	(B)          Each Payment Delayed.
    Each payment to which a specified employee would otherwise have been entitled during the 6-month delay will be delayed for
    6 months.

 

    	 	 7 	 

     

    

 

	 ̈    (h) Rules Relating to Final Check of Year	If
this Option is elected, Compensation payable after the last day of the calendar year solely for services performed during the final
payroll period which contains the last day of the year will be treated as Compensation for services performed in the taxable year
in which the payroll period began.
	 	 
	 	If
this Option is not elected, Compensation payable after the last day of the calendar year solely for services performed during the
final payroll period which contains the last day of the year will be treated as Compensation for services performed in the subsequent
taxable year in which the payment is made.
	 	 
	 	Any
change in election relating to the final check of the Participant’s taxable year may not be effective for 12 months from
the date the amendment is adopted and executed.
	 	 	 	 

 

	5.	EMPLOYER CONTRIBUTIONS.

 

	(a) Employer
    Contributions Paragraph 4.1	The following contributions by the Employer are elected:
	 	 
	 	 ̈	(1)	None.
    Employer contributions are not permitted.
	 	 	 	 
	 	x	(2)	Employer Non-Elective Contribution.
	 	 	 	 
	 	 	(A)	Amount. Each Employer shall make an Employer Non- Elective Contribution
for each Plan Year in such amount, if any, which the Employer shall determine.
	 	 	 	 
	 	 	x	(i)	Flexible Formula - Such amount, if any, which the Board of the Employer shall determine by
resolution.
	 	 	 	 	 
	 	 	 ̈	(ii)	Compensation Formula
    - ______% [Insert percentage] of the Compensation for such Plan Year, plus any additional amount
    that the Board of the Employer shall determine by resolution.
	 	 	 	 	 
	 	 	 ̈	(iii)	Fixed Amount  - $_________________ [Insert amount], plus any additional amount that the Board of the Employer shall determine by
    resolution.
	 	 	 	 	 
	 	 	 ̈	(iv)	Other - ___________________________________
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	(B)	Participants Entitled to Employer Non-Elective Contribution. The
Employer Non-Elective Contribution shall be allocated to the Employer Non-Elective Deferral Account of Participants who [Select
applicable provisions which shall apply conjunctively unless otherwise noted]

 

    	 	 8 	 

     

    

 

	 	 	x 	(i)	
        Are employed as Eligible Employees
for at least _6____________ [Insert number of months] full calendar months in such Plan Year.

	 	 	 	 	 
	 	 	 ̈ 	(ii)	Are Eligible Employees at any time during such Plan Year.
	 	 	 	 	 
	 	 	x 	(iii)	Are Eligible Employees on the last day of such Plan Year.
	 	 	 	 	 
	 	 	 ̈ 	(iv)	If they died while Eligible Employees or retired on a Disability, Early, Normal or Delayed Retirement Date while an Eligible Employee during such Plan Year [Check one]
	 	 	 	 	 
	 	 	 	 ̈ 	(a)	But only if they are employed as an Eligible Employee for at least
    __________ [Insert     number of months] full calendar months in such Plan Year.
	 	 	 	 	 	 
	 	 	 	x 	(b)	Regardless of the number of months employed during such Plan Year.
	 	 	 	 	 	 
	 	 	 ̈ 	(v)	Other - : 	 	                       
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	x 	(3)	Employer Matching Contributions.
	 	 	 	 
	 	 	(A) 	Amount. Each Employer shall make an Employer
Matching Contribution for each Plan Year in an amount equal to the following percentage(s) of each Participant’s Deferral
Contribution for such Plan Year [Check one]
	 	 	 	 	 
	 	 	 ̈	(i)	Straight Percentage - _______% [Insert
    percentage] of his Compensation contributed to the Plan (up to a maximum of _____% of such Compensation).
	 	 	 	 	 
	 	 	 ̈	(ii)	Contribution
    Weighted Percentage - ________% [Insert percentage] of the first________% [Insert percentage]
    of his Compensation contributed to the Plan and ________% of his Compensation contributed to the Plan (up to a maximum of ________%
    of such Compensation).
	 	 	 	 	 
	 	 	x	(iii)	
        Other - :
	any 401(k) match lost
due to ADP/ACP contribution

	 	 	 	 	restrictions
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

    	 	 9 	 

     

    

 

	 	(B)	Participants Entitled to Employer Matching Contribution. The Employer Matching Contribution shall be allocated to the Employer Matching Deferral Account of Participants who [Select applicable provisions which shall apply conjunctively unless otherwise noted]

 

	 	x	(i)	Are employed as an Eligible
    Employee for at least six (6) [Insert number of months] full calendar months in such Plan Year.

 

	 	 ̈	(ii)	Are Eligible Employees at any time during such Plan Year.

 

	 	x	(iii)	Are Eligible Employees on the last day of such Plan Year.

 

	 	 ̈	(iv)	If they died while an Eligible Employee or retired on a Disability, Early, Normal or Delayed Retirement Date while an Eligible Employee during such Plan Year [Check one]

 

	 	 	 ̈	(a)	But only if they are employed as an Eligible Employee for at least
    ______ [Insert number of months] full calendar months in such Plan Year.

 

	 	 	 ̈	(b)	Regardless of the number of months employed during such Plan Year.

 

	 	 ̈ 	(v)	Other - : 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

 

	6.	VESTING.

 

 

	 	(a)	Vesting Schedule Paragraphs 6.2 and 6.3	The following vesting schedule shall apply to the Employer Deferral Account Paragraphs 6.2 and 6.3 [Check one, and complete where applicable]  

 

	 	x	(1)	Employer Non-Elective Deferral Account. The following vesting schedule shall apply to the Employer Non-Elective Deferral Account [Check one, and complete where applicable

 

	 	 	x 	
        (A) Apply
        Rules Described in Qualified Plan. A Participant is vested in his Employer Non-Elective Deferral Account under the
        Plan in the same manner and applying the same rules applicable to employer profit sharing or other non- matching contributions
        under the following qualified retirement plan maintained by the Employer: VBA Defined Contribution Plan for Village
        Bank & Trust Financial Corp

 

    	 	 10 	 

     

    

 

	 	 	 	 
	 	 	 ̈	(B) Always 100% Vested. A
    Participant shall always have a non-forfeitable right to 100% of his Employer Non- Elective Deferral
    Account.

 

	 	 	 ̈ 	(C) Other
    Applicable Rules. A Participant shall be vested in his Employer Non-Elective Deferral Account in accordance with the
    following rules: _________________________________
	 	 	 	 
	 	 	 	 
	 	 	 	[Describe vesting provisions, including automatic vesting provisions, applicable schedule and rules
for counting service]

 

	 	x 	(2)	Employer Matching Deferral Account. The following vesting schedule shall apply to the Employer Matching Deferral Account [Check one, and complete where applicable]

 

	 	 	x	(A) Apply Rules Described in Qualified Plan.
    A Participant is vested in his Employer Matching Deferral Account under the Plan in the same manner and applying the same
    rules applicable to matching contributions made under the following qualified retirement plan maintained by the Employer:
    VBA Defined Contribution Plan for Village Bank and Trust Financial
    Corp
	 	 	 	 
	 	 	 	 

 

	 	 	 ̈	(B) Always 100% Vested. A
    Participant shall always have a     non-forfeitable right to 100% of his Employer Matching Deferral Account.

 

	 	 	 ̈	(C) Other Applicable Rules. A Participant shall be vested in his
Employer Matching Deferral Account in accordance with the following rules: ____________________________________
	 	 	 	 
	 	 	 	 
	 	 	 	[Describe vesting provisions, including automatic vesting provisions, applicable schedule and rules for counting service]

 

 

	7.	RETIREMENT DATES.

 

	 	(a)	Normal Retirement Date Paragraph 8.1	A Participant’s Normal Retirement Date shall be
    the day the Participant reaches age 65.

 

	 	(b)	Early Retirement Date Paragraph 8.3	[Select and complete applicable provision(s)]

 

	 	x	(1)	None.

 

	 	 ̈	(2)	No age requirement.

 

	 	 ̈	(3)	Age requirement of _____________ years.

 

	 	 ̈ 	(4)	No service requirement.
	 	 	 	 
	 	 ̈ 	(5)	Service requirement of ____________ years of continuous
    full-time service with the Employer.

 

    	 	 11 	 

     

    

 

	 	 	 	 
	 	(c)	Disability Retirement Date Paragraph 8.4	[Select and complete applicable provision(s)]
	 	 	 	 
	 	 	 	 	x	(1)	No age requirement.
	 	 	 	 	 	 	 
	 	 	 	 	o	(2)	Age requirement of ________________ years.
	 	 	 	 	 	 	 
	 	 	 	 	x	(3)	No service requirement.
	 	 	 	 	 	 	 
	 	 	 	 	o	(4)	Service requirement of ________________ years of continuous full-time service with the Employer.
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	8.	TIME AND FORM OF PAYMENTS.	 
	 	 	 
	 	(a)	Time of Payment Paragraph 9.1	The Employer Non-Elective Deferral Account shall be paid on the Participant’s Separation from Service. The Benefit Commencement Date for all other benefits will be determined as follows:
	 	 	 	 
	 	 	 	[Check one, and complete where applicable]
	 	 	 	 
	 	 	 	o	(1)	Selected By Plan Sponsor.      The Plan Sponsor selects the following time of payment: [Select one]
	 	 	 	 	 	 
	 	 	 	 	o	(A)	Normal Retirement Date. The later of the Participant’s Normal Retirement Date under the Plan or his Separation from Service (for reasons other than death).
	 	 	 	 	 	 	 
	 	 	 	 	o	(B)	Separation from Service. The Participant’s Separation from Service for whatever reason.
	 	 	 	 	 	 	 
	 	 	 	 	o	(C)	Six Months Following Separation from Service. Six months following the Participant’s Separation from Service (for reasons other than death).
	 	 	 	 	 	 	 
	 	 	 	 	 	If elected here o, the Plan Sponsor elects for payment to be accelerated upon a Change in Control, but only with respect to contributions made after this Adoption Agreement is executed, unless the Plan Sponsor previously made such an election under Option 3(b)(3).
	 	 	 	 	 	 
	 	 	 	x	(2)	Selected By Participant. The date selected by the Participant in accordance with the following:
	 	 	 	 	 	 
	 	 	 	 	 	(A)	Participant’s Options. The Participant may elect that his Benefit Commencement Date be based on:
	 	 	 	 	 	 	 
	 	 	 	 	 	x	(i)	The later of his Normal Retirement Date or his x Separation from Service (for reasons other than death) or o six months following his Separation from Service (for reasons other than death). [Select one]

 

    	 	 12 	 

     

    

 

	 	 	 	x 	(ii)	x His Separation from
    Service (for reasons other than death), or [ ̈] six months following his Separation from Service (for
    reasons other than death).  [Select one]
	 	 	 	 	 	 
	 	 	 	x	(iii)	A date certain stated clearly in his Deferred Compensation Election form which shall be without regard to when his employment with the Employer ends.
	 	 	 	 	 	 
	 	 	 	x	(iv)	The earlier of a date certain or  x  his  Separation from
    Service (for reasons other than death) or  ̈ six months following his
    Separation from Service (for reasons other than death).  [Select one]
	 	 	 	 	 	 
	 	 	 	x	(v)	Change in Control. The Participant may elect to have payment accelerated upon a Change in Control.
	 	 	 	 	 	 
	(b)    Form of Payment to Participant Paragraph 9.2	The Employer Non-Elective Deferral Account shall be paid in a single lump sum. The form of payment to the Participant for all other benefits will be determined as follows:  [Check one, and complete where applicable]
	 	 
	 	 ̈	(1)	Selected  By  Plan  Sponsor. The Plan Sponsor  selects the following form of payment: [Select one]
	 	 	 	 
	 	 	 ̈	(A) Lump Sum. Deferral Benefits will be paid to the Participant in a single, lump-sum payment.
	 	 	 	 
	 	 	 ̈	(B)  Periodic Installments. Deferral Benefits will be paid to the Participant in annual periodic installment payments made over the following period:  [Select one]
	 	 	 	 
	 	 	 	 ̈	(i)	Five (5) years.
	 	 	 	 	 	 
	 	 	 	 ̈	(ii)	Ten (10) years.
	 	 	 	 	 	 
	 	 	 	 ̈	(iii)	Fifteen (15) years.
	 	 	 	 	 	 
	 	 	 	 ̈	(iv)	Twenty (20) years.
	 	 	 	 	 	 
	 	x	(2)	Selected By Participant. The Participant may elect from among the following forms of payment [Select options to be available to Participants]
	 	 	 	 
	 	 	x	(A)	Lump Sum. Deferral Benefits may be paid to the Participant in a single, lump-sum payment.

 

    	 	 13 	 

     

    

 

	 	 	x	(B)	Periodic Installments.
Deferral Benefits may be paid to the Participant in annual periodic installment payments made over the following periods:
	 	 	 	 	 
	 	 	 	x	(i)          Five
(5) years.
	 	 	 	 	 
	 	 	 	x	(ii)         Ten
(10) years.
	 	 	 	 	 
	 	 	 	x	(iii)        Fifteen
(15) years.
	 	 	 	 	 
	 	 	 	x	(iv)        Twenty
(20) years.
	 	 	 	 
	(c)  Form of Payment to Beneficiary
    Paragraph 9.2	Any unpaid portion
    of the Employer Non-Elective Deferral Account shall be paid in a single lump sum to the Beneficiary. The form of payment to
    the Beneficiary for all other unpaid benefits will be determined as follows: [Check one, and complete where applicable]
	 	 
	 	 ̈	(1)	Selected By Plan Sponsor.
    The Plan Sponsor selects the following form of payment to the Beneficiary: [Select one]
	 	 	 	 
	 	 	 ̈	(A) Lump Sum. Deferral Benefits will be paid to the Beneficiary in a single, lump-sum payment.
	 	 	 	 
	 	 	 ̈	(B) Periodic Installments. Deferral Benefits will be paid to the Beneficiary in annual periodic installment payments made over the following period: [select one]
	 	 	 	 
	 	 	 	 ̈	(i)          Five
(5) years.
	 	 	 	 
	 	 	 	 ̈	(ii)         Ten
(10) years.
	 	 	 	 
	 	 	 	 ̈	(iii)        Fifteen
(15) years.
	 	 	 	 
	 	 	 	 ̈	(iv)        Twenty
(20) years.
	 	 	 	 
	 	x	(2)	Selected By Participant.
    The Participant may elect the form of payment to the Beneficiary from among the following forms of payment [Select options
    to be available to Participants]
	 	 	 	 
	 	 	x	(A)	Lump Sum.
Deferral Benefits may be paid to the Beneficiary in a single, lump-sum payment.
	 	 	 	 
	 	 	x	(B)	Periodic Installments.
Deferral Benefits may be paid to the Beneficiary in annual periodic installment payments made over the following periods:
	 	 	 	 
	 	 	 	x	(i)          Five
(5) years.
	 	 	 	 
	 	 	 	x	(ii)         Ten
(10) years.
	 	 	 	 
	 	 	 	x	(iii)        Fifteen
(15) years.
	 	 	 	 
	 	 	 	x	(iv)        Twenty
(20) years.

 

    	 	 14 	 

     

    

 

	 	 	 
	9.	HARDSHIP WITHDRAWALS.	 
	 	 	 
	 	(a)	Availability Generally Paragraph 10.1	A Participant [Check one]
	 	 	 	 
	 	 	 	o	(1)	Not Permitted. May not make Hardship Withdrawals.
	 	 	 	 	 	 
	 	 	 	x	(2)	Permitted.  May
    make a Hardship Withdrawal for an Unforeseeable Emergency from the following accounts [Check one or more]
	 	 	 	 	 	 
	 	 	 	 	 	x	(A)	Employee Deferral Account.
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 ̈	(B)	Employer Matching Deferral Account.
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 ̈	(C)	Employer Non-Elective Deferral Account.
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 ̈	(D)	Predecessor Plan Account.
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	10.	PARTICIPANT DEEMED INVESTMENT DIRECTION.	 	 	 	 
	 	 	 	 	 	 	 	 
	 	(a)	Availability Generally Paragraph 5.2	A Participant [Check one]
	 	 	 	 
	 	 	 	 
	 	 	 	 ̈	(1)	Not Permitted. May not make deemed investment directions.
	 	 	 	 	 	 
	 	 	 	x	(2)	Permitted.   May make deemed investment directions for the following accounts (“directable accounts”) [Check one or more]
	 	 	 	 	 	 	 	 
	 	 	 	 	 	x	(A)	Employee Deferral Account.
	 	 	 	 	 	 	 	 
	 	 	 	 	 	x	(B)	Employer Matching Deferral Account.
	 	 	 	 	 	 	 	 
	 	 	 	 	 	x	(C)	Employer Non-Elective Deferral Account.
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 ̈	(D)	Predecessor Plan Account.
	 	 	 	 	 	 	 	 
	 	(b)	Permissible Investments	Unless the Plan Sponsor elects a different option below, a Participant’s directable accounts may be invested in the investment funds which are designed to mirror the investment options available under the VBA Plan as adopted by the Plan Sponsor, to the extent legally practical, with alternate funds designated where collective investment funds may not be offered under a nonqualified plan.
	 	 	 	 	 	 	 	 
	 	 	 	 ̈	(1)	VBA Plan Plus Company Stock. In addition to the funds available under the VBA Plan, a Company Stock Fund will also be available for directed investment.
	 	 	 	 	 	 
	 	 	 	x	(2)	VBA Plan Without Company Stock.  Regardless of whether a  Company Stock Fund is available under the VBA Plan, no Company Stock Fund will be available for directed investment.
	 	 	 	 	 	 
	 	 	 	 ̈ 	(3)	Company Stock Only. In lieu of the funds available under the VBA Plan, a Company Stock Fund will be the only fund available for directed investment.
	 	 	 	 	 	 

 

    	 	 15 	 

     

    

 

IN WITNESS WHEREOF, each Employer, by its duly authorized representatives, has executed this Adoption
Agreement this _____ day of ______, 2 _____.

 

	 	 	 
	 	 	[Enter Name of Plan Sponsor]
	 	 	 
	 	 	 
	 	 	By	 
	 	 	 	Its	 
	 	 	 

 

	[SEAL]	 	 
	 	 	 
	ATTEST:	 	 
	 	 	 
	 	 	 
	Its	 	 	 
	 	 	 
	 	 	 	 

 

	 	 	 
	 	 	[Enter Name of Employer]
	 	 	 
	 	 	By	 
	 	 	 	Its	 
	 	 	 

 

 

	[SEAL]	 	 
	 	 	 
	ATTEST:	 	 
	 	 	 
	 	 	 
	Its	 	 	 
	 	 	 	 

 

	 	 	 
	 	 	[Enter Name of Employer]
	 	 	 
	 	 	By	 
	 	 	 	Its	 
	 	 	 

 

 

	[SEAL]	 	 
	 	 	 
	ATTEST:	 	 
	 	 	 
	 	 	 
	Its	 	 	 
	 	 	 	 

 

    	 	 16 	 

     

    

 

#3(a)(3) Attachment to Village Bank NQDC Executive Plan 01/01/2020

 

 

 

 

Deferred Compensation Plan – Change in Control
Definition

 

For purposes of this Plan, the term “Change in Control” shall mean (i) the acquisition by
any “person” or “group” (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), other than Kenneth R. Lehman, the Plan Sponsor, any subsidiary of the Plan Sponsor,
or any employee benefit plan of the Plan Sponsor or any Plan Sponsor subsidiary, directly or indirectly, as “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act) of securities of the Plan Sponsor representing fifty percent (50%) or more of
either the then outstanding shares of common stock or the combined voting power of the then outstanding securities of the Plan
Sponsor; (ii) the acquisition by Kenneth R. Lehman, individually or as part of a group, as “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act) of securities of the Plan Sponsor representing sixty-six and two-thirds percent (66 2/3%)
or more of either the then outstanding shares of common stock or the combined voting power of the then outstanding securities of
the Plan Sponsor; (iii) either a majority of the directors of the Plan Sponsor elected at the Plan Sponsor’s most recent
annual stockholders meeting shall have been nominated for election other than by or at the direction of the “incumbent directors”
of the Plan Sponsor, or the “incumbent directors” shall cease to constitute a majority of the directors of the Plan
Sponsor (the term “incumbent director” shall mean any director who was a director of the Plan Sponsor on the Effective
Date of the Restatement of the Plan and any individual who becomes a director of the Plan Sponsor subsequent to such Effective
Date and who is elected or nominated by or at the direction of at least two-thirds of the then incumbent directors); (iv) the Plan
Sponsor consummates a reorganization, merger, share exchange, consolidation or other business combination (a “Reorganization”)
with any other “person” or “group” (as defined in Sections 13(d) and 14(d) of the Exchange Act) or affiliate
thereof, other than a Reorganization that would result in the outstanding common stock of the Plan Sponsor immediately prior thereto
continuing to represent, either by remaining outstanding or by being converted into common stock of the surviving entity or a parent
or affiliate thereof, at least fifty percent (50%) of the common stock of the Plan Sponsor or such surviving entity or a parent
or affiliate thereof outstanding immediately after the Reorganization; or (v) a plan of complete liquidation of the Plan Sponsor
or an agreement for the sale or disposition by the Plan Sponsor of all or substantially all of the Plan Sponsor’s assets.

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