Document:

Unassociated Document

    EMPLOYMENT
      AGREEMENT

    

     

    This
      EMPLOYMENT AGREEMENT (this “Agreement”),
      dated
      as of ______________, 200_ between _____________________, residing at
      ____________________________ (“Executive”),
      and
      HLS Systems International, Ltd. a British Virgin Islands corporation having
      its
      principal office at 625 Broadway, Suite 1111, San Diego, CA 92101 (the
“Company”)

     

    WHEREAS,
      the Company believes that Executive provides unique management services for
      the
      Company and wishes to retain the continued services of Executive as its
      ______________________; and

     

    WHEREAS,
      the Company and Executive have reached an understanding with respect to the
      extension of Executive’s employment with the Company for a three year period
      commencing as of ___________, 200_ and

     

    WHEREAS,
      the Company and Executive desire to evidence their agreement in writing and
      to
      provide for the employment of Executive by the Company on the terms set forth
      herein.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the foregoing facts, the mutual covenants and
      agreements contained herein and other good and valuable consideration, the
      parties hereby agree as follows:

     

    1.  Employment,
      Duties and Acceptance.

     

    1.1  Effective
      as of ______________, 200_ the Company hereby agrees to the continued employment
      of Executive as its ___________________ hereby accepts such continued employment
      on the terms and conditions contained in the Agreement. During the term of
      this
      Agreement, Executive shall make himself available to the Company to pursue
      the
      business of the Company subject to the supervision and direction of the Board
      of
      Directors of the Company (the “Board”
or
      “Board
      of Directors”).

     

    1.2  The
      Board
      may assign Executive such general management and supervisory responsibilities
      and executive duties for the Company as are appropriate and commensurate with
      Executive’s position as __________________ of the Company (“____”)
      and
      would otherwise be consistent in stature and prestige with the responsibilities
      of a ______.

     

    1.3  Executive
      accepts such employment and agrees to devote substantially all of his business
      time, energies and attention to the performance of his duties; provided,
      however, that Executive may continue to be actively involved in educational
      and
      civic activities to the extent that such activities do not materially detract
      from the reasonable performance of his duties (such material detraction to
      be
      evidenced by a resolution approved by the majority of the Board and a written
      notice to Executive, in which event Executive shall have one hundred and twenty
      (120) days to reduce the level of such activities in a reasonable manner).
      The
      Company recognizes the value to it of Executive’s continued involvement in these
      activities and will reimburse Executive for reasonable expenses incurred by
      him
      in connection with such activities. Nothing herein shall be construed as
      preventing Executive from (i) making and supervising investments on a personal
      or family basis (including trusts, funds and investment entities in which
      Executive or members of his family have an interest) and (ii) serving on the
      Board of Directors of not more than three corporations involved primarily in
      “for profit” business activities; provided, however, that these activities do
      not materially interfere with the performance of his duties hereunder or violate
      the provisions of Section 4.4
      hereof.

     

    
      
        
        

      

      
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    2.  Compensation
      and Benefits.

     

    2.1  The
      Company shall pay to Executive a salary at an annual base rate of not less
      than
      $_______ for the first ___-year period during the term hereof . During
      Executive’s employment, salary will be paid not less frequently than every two
      weeks without the prior written consent of Executive. Executive’s annual base
      rate will be reviewed one month prior to the commencement of the third year
      for
      purposes of determining what the new base salary will be.

     

    2.2  The
      Company shall also pay to Executive such bonuses as may be determined from
      time
      to time by the Compensation Committee of the Board of Directors. The amount
      of
      annual bonus payable to Executive may vary at the discretion of the Compensation
      Committee of the Board of Directors; provided, however, that the total bonus
      shall not exceed 50% of Executive’s annual base rate under
      Section 2.1
      as of
      the date the bonus is awarded. In determining the annual bonus to be paid to
      Executive, the Compensation Committee may, among other factors they believe
      to
      be appropriate, consider, and give varying degrees of importance to, Executive’s
      contribution to the following:

     

    (a)  growth
      in
      the Company’s per share value;

     

    (b)  achievement
      by the Company of specific identified targets selected by the Committee from
      time to time;

     

    (c)  the
      attraction and retention of key executive personnel by the Company;

     

    (d)  satisfaction
      of the Company’s capital requirements;

     

    (e)  the
      establishment of strategic direction and significant Company goals;
      and

     

    (f)  such
      other criteria as the Compensation Committee deems to be relevant.

     

    2.3  Executive
      shall be entitled to such insurance and other benefits including, among others,
      medical and disability coverage and life insurance as are afforded to other
      senior executives of the Company, subject to applicable waiting periods and
      other conditions which may be generally applicable. The Company also shall
      purchase if possible (i) long term disability insurance of not less than 50%
      of
      Executive’s then current annual salary and (ii) split dollar life insurance with
      coverage of not less than $1.0 million. The beneficiary of these policies shall
      be designated by Executive and these policies shall be transferred to Executive
      or his designees by the Company at his written request.

     

    
      
        
        

      

      
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    2.4  Executive
      shall be entitled to five weeks of vacation in each calendar year and to a
      reasonable number of other days off for religious and personal
      reasons.

     

    2.5  Executive
      shall be entitled, at his option, to maintain a suitable automobile for business
      use. The Company shall reimburse Executive for the costs of leasing such
      automobile and for all other costs associated with the use of the vehicle,
      including insurance costs, repairs and maintenance.

     

    2.6  The
      Company will pay or reimburse executive for all transportation, hotel and other
      expenses incurred by Executive on business trips (including business or first
      class air travel on scheduled flights of more than two (5) consecutive hours)
      and for all other ordinary and reasonable out-of-pocket expenses actually
      incurred by him in the conduct of the business of the Company against itemized
      vouchers submitted with respect to any such expenses.

     

    2.7  Executive
      agrees that his services shall be rendered primarily at the Company’s executive
      offices which shall be located in, or within thirty (30) miles of, the Company’s
      current executive offices located in ______________________.

     

    2.8  The
      Company shall not move its executive offices without Executive’s written
      consent. If such consent is provided, the Company will reimburse Executive
      for
      the following, which may be taxable to Executive:

     

    (a)  Usual
      and
      customary expenses incurred if Executive sells his home himself or through
      a
      broker; however, reimbursement for the broker’s commission (if Executive
      utilizes the services of a broker) may not exceed six (6) percent of the sales
      proceeds;

     

    (b)  Reasonable
      expenses incurred in moving furniture, normal household goods and personal
      belongings to the new location and incidental expenses related to the
      move;

     

    (c)  Reasonable
      expenses (including travel and hotel) while house-hunting, including four trips
      to the new location with Executive’s spouse and children;

     

    (d)  Reasonable
      and customary closing costs incurred in buying Executive’s new home;
      and

     

    (e)  Reasonable
      temporary living expenses incurred while awaiting occupancy in Executive’s new
      quarters.

     

    3.  Term
      and Termination.

     

    3.1  The
      term
      of this Agreement commences as of ______________, 200_ and shall continue until
      ______________, 200_ unless sooner terminated as herein provided.

     

    3.2  If
      Executive dies during the term of this Agreement, this Agreement shall thereupon
      terminate, except that the Company shall pay to the legal representative of
      Executive’s estate the base salary due Executive pursuant to Section 2.1 hereof
      through the first anniversary of Executive’s death (or the scheduled expiration
      under Section 3.1, if earlier than the first anniversary date) as well as a
      pro
      rata allocation of bonus payments under Section 2.2 based on the days of service
      during the year of death, and all amounts owing to Executive at the time of
      termination, including for previously accrued but unpaid bonuses, expense
      reimbursements and accrued but unused vacation pay.

     

    
      
        
        

      

      
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    3.3  If
      Executive shall be rendered incapable by an incapacitating illness or disability
      (either physical or mental) of complying with the terms, provisions and
      conditions hereof on his part to be performed for a period in excess of 180
      consecutive days during any consecutive twelve (12) month period, then the
      Company, at its option, may terminate this Agreement by written notice to
      Executive (the “Disability
      Notice”)
      delivered prior to the date Executive resumes the rendering of services
      hereunder; provided, however, if requested by Executive (or a representative
      thereof) such termination shall not occur until after examination of Executive
      by a medical doctor (retained by the Company with the consent of Executive
      which
      consent shall not be unreasonably withheld) who certifies in a written report
      to
      the Board with a copy of such report delivered simultaneously to Executive
      that
      Executive is and shall be incapable of performing his duties for in excess
      of
      two additional months because of the continuing existence of such incapacitating
      illness or disability. Notwithstanding such termination, the Company (a) shall
      make a payment to Executive of a pro rata allocation of payments under Section
      2.2 based on the days of service during the year in which the Disability Notice
      is delivered and (b) shall pay to Executive the base salary due Executive
      pursuant to Section 2.1 hereof through the second anniversary of the date of
      such notice (the “Disability
      Period”),
      less
      any amount Executive receives for such period from any Company-sponsored or
      Company-paid for source of insurance, disability compensation or governmental
      program. The Company shall also pay to Executive all amounts owing to Executive
      at the time of termination, including for previously accrued but unpaid bonuses,
      expense reimbursements and accrued but unused vacation pay.

     

    3.4  The
      Company, by notice to Executive, may terminate this Agreement for Cause. As
      used
      herein, “Cause”
means
      (a) the refusal in bad faith by Executive to carry out specific written
      directions of the Board, (b) intentional fraud or dishonest action by Executive
      in his relations with the Company (“dishonest” for these purposes shall mean
      Executive’s knowingly making of a material misstatement to the Board for the
      purpose of obtaining direct personal benefit); or (c) the conviction of
      Executive of any crime involving an act of significant moral turpitude after
      appeal or the period for appeal has elapsed without an appeal being filed by
      Executive. Notwithstanding the foregoing, no Cause for termination shall be
      deemed to exist with respect to Executive’s acts described in clause (a) or (b)
      above, unless the Board shall have given written notice to Executive (after
      five
      (5) days advance written notice to Executive and a reasonable opportunity to
      Executive to present his views with respect to the existence of Cause),
      specifying the Cause with particularity and , within twenty (20) business days
      after such notice, Executive shall not have disputed the Board’s determination
      or in reasonably good faith taken action to cure or eliminate prospectively
      the
      problem or thing giving rise to such Cause, provided, however, that a repeated
      breach after notice and cure, of any provision of clause (a) or (b) above,
      involving the same or substantially similar actions or conduct, shall be grounds
      for termination for cause upon not less than five (5) days additional notice
      from the Company.

     

    
      
        
        

      

      
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    3.5  Executive,
      by notice to the Company, may terminate this Agreement if a Good Reason exists.
      For purposes of this Agreement, “Good
      Reason”
means
      the occurrence of any of the following circumstances without Executive’s prior
      express written consent: (a) a material adverse change in the nature of
      Executive’s title, duties or responsibilities with the Company that represents a
      demotion from his title, duties or responsibilities as in effect immediately
      prior to such change; (b) a material breach of this Agreement by the Company;
      (c) a failure by the Company to make any payment to Executive when due, unless
      the payment is not material and is being contested by the Company, in good
      faith; (d) a liquidation, bankruptcy or receivership of the Company; or (e)
      if
      Executive is at any time not a member of the Board of Directors of the Company
      and a member of the Executive Committee thereof (if such a committee exists),
      unless he voluntarily resigns therefrom; or (f) any person or entity other
      than
      the Company and/or any officers or directors of the Company as of the date
      of
      this Agreement acquires securities of the Company other than from Executive
      or
      his affiliates (in one or more transactions) having 51% or more of the total
      voting power of all the Company’s securities then outstanding.

     

    Notwithstanding
      the foregoing, no Good Reason shall be deemed to exist with respect to the
      Company’s acts described in clauses (a), (b) or (c) above, unless Executive
      shall have given written notice to the Company specifying the Good Reason with
      reasonable particularity and, within twenty (20) business days after such
      notice, the Company shall not have cured or eliminated the problem or thing
      giving rise to such Good Reason; provided, however, that a repeated breach
      after
      notice and cure of any provision of clauses (a), (b) or (c) above involving
      the
      same or substantially similar actions or conduct, shall be grounds for
      termination for Good Reason without any additional notice from
      Executive.

     

    3.6  In
      the
      event that Executive terminates this Agreement for Good Reason, pursuant to
      the
      provisions of paragraph 3.5, or the Company terminates this Agreement without
      Cause, as defined in paragraph 3.4, the Company shall continue to pay to
      Executive (or in the case of his death, the legal representative of Executive’s
      estate or such other person or persons as Executive shall have designated by
      written notice to the Company), all payments, compensation and benefits required
      under paragraph 2 hereof through the earlier of (y) two (2) years from the
      date
      of termination or (z) through the term of this Agreement; provided, however,
      that Executive’s insurance coverage shall terminate upon Executive becoming
      covered under a similar program by reason of employment elsewhere. If
      Executive’s employment is terminated for Good Reason or without Cause, Executive
      shall have no duty to mitigate awards paid or payable to him pursuant to this
      subsection, and any compensation paid or payable to Executive from sources
      other
      than the Company will not offset or terminate the Company’s obligation to pay to
      Executive the full amounts pursuant to this subsection 3.6.

     

    4.  Protection
      of Confidential Information; Non-Competition.

     

    4.1  Executive
      acknowledges that:

     

    (a)  As
      a
      result of his current employment with the Company, Executive will obtain secret
      and confidential information concerning the business of the Company and its
      subsidiaries and affiliates (referred to collectively in this Article 4 as
      the
“Company”),
      including, without limitation, financial information, designs and other
      proprietary rights, trade secrets and know-how, customers and sources
      (“Confidential
      Information”).

     

    
      
        
        

      

      
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    (b)  The
      Company will suffer substantial damage which will be difficult to compute if,
      during the period of his employment with the Company or thereafter, Executive
      should enter a business competitive with the Company or divulge Confidential
      Information.

     

    (c)  The
      provisions of this Agreement are reasonable and necessary for the protection
      of
      the business of the Company.

     

    4.2  Executive
      agrees that he will not at any time, either during the term of this Agreement
      or
      thereafter, divulge to any person or entity any Confidential Information
      obtained or learned by him as a result of his employment with the Company,
      except (i) in the course of performing his duties hereunder, (ii) to
      the extent that any such information is in the public domain other than as
      a
      result of Executive’s breach of any of his obligations hereunder,
      (iii) where required to be disclosed by court order, subpoena or other
      government process or (iv) if such disclosure is made without Executive’s
      knowing intent to cause material harm to the Company. If Executive shall be
      required to make disclosure pursuant to the provisions of clause (iii) of the
      preceding sentence, Executive promptly, but in no event more than 72 hours
      after
      learning of such subpoena, court order, or other government process, shall
      notify, by personal delivery or by electronic means, confirmed by mail, the
      Company and, at the Company’s expense, Executive shall: (a) take reasonably
      necessary and lawful steps required by the Company to defend against the
      enforcement of such subpoena, court order or other government process, and
      (b)
      permit the Company to intervene and participate with counsel of its choice
      in
      any proceeding relating to the enforcement thereof.

     

    4.3  Upon
      termination of his employment with the Company, Executive will promptly deliver
      to the Company all memoranda, notes, records, reports, manuals, drawings,
      blue-prints and other documents (and all copies thereof) relating to the
      business of the Company and all property associated therewith, which he may
      then
      possess or have under his control; provided, however, that Executive shall
      be
      entitled to retain one copy of such documents for his personal use and
      records.

     

    4.4  During
      the period commencing ______________, 200_ and terminating three years after
      termination of employment, Executive, without the prior written permission
      of
      the Company, shall not, anywhere in the People’s Republic of China, (i) enter
      into the employ of or render any services to any person, firm or corporation
      engaged in any business which is directly in competition with the Company’s
      principal existing business at the time of termination (“Competitive
      Business”);
      (ii)
      engage in any Competitive Business as an individual, partner, shareholder,
      creditor, director, officer, principal, agent, employee, trustee consultant,
      advisor or in any other relationship or capacity; (iii) employ, or have or
      cause
      any other person or entity to employ, any person who was employed by the Company
      at the time of termination of Executive’s employment by the Company (other than
      Executive’s personal secretary and assistant); or (iv) solicit, interfere with,
      or endeavor to entice away from the Company, for the benefit of a Competitive
      Business, any of its customers. Notwithstanding the foregoing, Executive shall
      not be precluded from investing and managing the investment of, his or his
      family’s assets in the securities of any corporation or other business entity
      which is engaged in a Competitive Business if such securities are traded on
      a
      national stock exchange or in the over-the-counter market and if such investment
      does not result in his beneficially owning, at any time, more than 5% of any
      class of the publicly-traded equity securities of such Competitive Business;
      provided, however, that for a period commencing ______________, 200_ and
      terminating three years after termination of Executive’s employment (except for
      investments in a class of securities trading on public markets), Executive
      shall
      refer to the Company for consideration (before any other party) any and all
      opportunities to acquire or purchase, or otherwise make equity or debt
      investments in, companies primarily involved in a Competitive Business if such
      opportunities becomes known to Executive while he is the _______________ of
      the
      Company. If the Company determines not to exploit any opportunity referred
      to in
      the foregoing sentence, the Company shall determine what, if anything, should
      be
      done with such opportunity. Executive shall not be entitled to any compensation,
      as a finder or otherwise, if either the Company or Executive introduces such
      opportunity to other persons, it being understood that all such compensation
      shall be paid to the Company. Notwithstanding the foregoing, in the event the
      Company terminates this Agreement without cause or if Executive terminates
      this
      Agreement for Good Reason under Section 3.5 hereof, Executive’s obligations
      under this Section 4.4 shall terminate one month following
      termination.

     

    
      
        
        

      

      
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    4.5  If
      Executive commits a breach of any of the provisions of Sections 4.2 or 4.4,
      the
      Company shall have the right:

     

    (a)  to
      have
      the provisions of this Agreement specifically enforced by any court having
      equity jurisdiction, it being acknowledged and agreed by Executive that the
      services being rendered hereunder to the Company are of a special, unique and
      extraordinary character and that any breach or threatened breach will cause
      irreparable injury to the Company and that money damages will not provide an
      adequate remedy to the Company; and

     

    (b)  to
      require Executive to account for and pay over to the Company all monetary
      damages determined by a non-appealable decision by a court of law to have been
      suffered by the Company as the result of any actions constituting a breach
      of
      any of the provisions of Section 4.2 or 4.4, and Executive hereby agrees to
      account for and pay over such damages to the Company (up to the maximum of
      all
      payments made under the Agreement).

     

    4.6  If
      Executive shall violate any covenant contained in Section 4.4, the duration
      of
      such covenant so violated shall be automatically extended for a period of time
      equal to the period of such violation.

     

    4.7  If
      any
      provision of Sections 4.2 or 4.4 is held to be unenforceable because of the
      scope, duration or area of its applicability, the tribunal making such
      determination shall not have the power to modify such scope, duration, or area,
      or all of them and such provision or provisions shall be void ab
      initio.

     

    5.  Miscellaneous
      Provisions.

     

    5.1  All
      notices provided for in this Agreement shall be in writing, and shall be deemed
      to have been duly given when delivered personally to the party to receive the
      same, when transmitted by electronic means, or when mailed first class postage
      prepared, by certified mail, return receipt requested, addressed to the party
      to
      receive the same at his or its address set forth below, or such other address
      as
      the party to receive the same shall have specified by written notice given
      in
      the manner provided for in this Section 5.1. All notices shall be deemed to
      have
      been given as of the date of personal delivery, transmittal or mailing
      thereof.

     

    
      
        
        

      

      
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    If
      to
      Executive:                   
 __________________

    __________________

    __________________

    __________________

    

    If
      to the
      Company: 
__________________

    __________________

    __________________

    __________________

     

    5.2  In
      the
      event of any claims, litigation or other proceedings arising under this
      Agreement (including, among others, arbitration under Section 3.4), Executive
      shall be reimbursed by the Company within thirty (30) days after delivery to
      the
      Company of statements for the costs incurred by Executive in connection with
      the
      analysis, defense and prosecution thereof, including reasonable attorneys’ fees
      and expenses; provided, however, that Executive shall reimburse the Company
      for
      all such costs if it is determined by a non-appealable final decision of a
      court
      of law that Executive shall have acted in bad faith with the intent to cause
      material damage to the Company in connection with any such claim, litigation
      or
      proceeding.

     

    5.3  The
      Company, shall to the fullest extent permitted by law, indemnify Executive
      for
      any liability, damages, losses, costs and expenses arising out of alleged or
      actual claims (collectively, “Claims”)
      made
      against Executive for any actions or omissions as an officer and/or director
      of
      the Company or its subsidiary. To the extent that the Company obtains director
      and officers insurance coverage for any period in which Executive was an
      officer, director or consultant to the Company, Executive shall be a named
      insured and shall be entitled to coverage thereunder.

     

    5.4  The
      provision of Article 4, Sections 5.2 and 5.3 and any provisions relating to
      payments owed to Executive after termination of employment shall survive
      termination of this Agreement for any reason.

     

    5.5  This
      Agreement and the Stock Option Agreements executed simultaneously herewith
      set
      forth the entire agreement of the parties relating to the employment of
      Executive and are intended to supersede all prior negotiations, understandings
      and agreements. No provisions of this Agreement or the Stock Option Agreements
      may be waived or changed except by a writing by the party against whom such
      waiver or change is sought to be enforced. The failure of any party to require
      performance of any provision hereof or thereof shall in no manner affect the
      right at a later time to enforce such provision.

     

    5.6  All
      questions with respect to the construction of this Agreement, and the rights
      and
      obligations of the parties hereunder, shall be determined in accordance with
      the
      law of the State of California applicable to agreements made and to be performed
      entirely in California.

     

    
      
        
        

      

      
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    5.7  This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      assigns of the Company. This Agreement shall not be assignable by Executive,
      but
      shall inure to the benefit of and be binding upon Executive’s heirs and legal
      representatives.

     

    5.8  Should
      any provision of this Agreement become legally unenforceable, no other provision
      of this Agreement shall be affected, and this Agreement shall continue as if
      the
      Agreement had been executed absent the unenforceable provision.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	 EXECUTIVE	 	HLS
              SYSTEMS INTERNATIONAL LTD.
	 	 	 	 	 
	
               By:
                

            	 	 	
               By:
                

            	 
	 

              Title
                

            	
              
                

              

            	 	
               Title

            	
              
                
 

            
	 

               

            	
              
 	 	 	
              
 

    

     

     

    
      
        
        

      

      
        9Exhibit
      4.1

    

    ADVANCES
      AND SECURITY AGREEMENT

    

    This
      ADVANCES
      AND SECURITY AGREEMENT
      (this
“Agreement”),
      dated
      as of the earlier of the date of execution by the Bank (as hereinafter defined)
      and July 15, 2004, is entered into between Slavie Federal Savings Bank, a
      federal savings and loan association organized under the laws of the United
      States of America and located in the state of Maryland, having its principal
      place of business at 1614 Churchville Road, Bel Air, MD 21015-4804 (the
“Borrower”)
      and
      the Federal Home Loan Bank of Atlanta, a corporation organized and existing
      under the laws of the United States, having its principal office at 1475
      Peachtree Street, N.E., Atlanta, Georgia 30309 (the “Bank”).

    

    WHEREAS,
      the Borrower desires from time to time to participate in the Bank’s credit
      programs under the terms of this Agreement, and the Bank is authorized to extend
      credit to the Borrower pursuant to the provisions of the Federal Home Loan
      Bank
      Act, as now and hereafter amended (the “Act”),
      and
      the regulations and guidelines of the Federal Housing Finance Board (the
“Board”)
      or
      any
      successor entity, as now and hereafter in effect (collectively, the
“Regulations”);
      

    

    WHEREAS,
      the Bank requires that extensions of credit by the Bank be secured pursuant
      to
      this Agreement, and the Borrower and any Obligor (as hereinafter defined) joined
      to this Agreement from time to time, as provided herein, agree to provide the
      security the Bank requests in accordance with this Agreement; and

    

    WHEREAS,
      the Borrower and each other Obligor acknowledges, understands and agrees that
      (a) the Bank shall not have any obligation or commitment (under this Agreement,
      the Credit and Collateral Policy, or otherwise) to approve any application
      by
      the Borrower for Advances, Credit Products, Derivative Transactions, or Other
      Products, (b) the terms and conditions of any Advances, Credit Products,
      Derivative Transactions, or Other Products which the Bank may make or issue,
      except for any such terms and conditions specified in a Confirmation, may change
      after the date made or
      issued,
      in connection with a modification to the Bank’s Credit and Collateral Policy as
      provided in Section 6.01 of this Agreement, and (c) the Bank, in its sole
      discretion, may modify the Credit and Collateral Policy from time to time after
      the date of this Agreement and need not obtain any further consent from any
      Obligor in order for those modifications to become binding upon each
      Obligor.

    

    NOW
      THEREFORE, the Borrower and the Bank agree as follows: 

    

    
      
        
        

      

      
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    ARTICLE
      I: DEFINITIONS

    

    Section
      1.01 Definitions As
      used
      herein, the following terms shall have the following meanings:

    

    (A)
       “Advances”
      means
      any and all loans or other similar extensions of credit, heretofore, note or
      hereafter granted by the Bank to, on behalf of, or for the account of, the
      Borrower.

    

    (B)
       “Affiliate”
      means an
      affiliate of the Borrower which (i) has been accepted by the Bank, in its sole
      discretion, as a person which may pledge collateral to the Bank and otherwise
      support the obligations of the Borrower to the Bank hereunder and (ii) has
      entered into a Joinder Agreement. The Affiliate and the Borrower are hereinafter
      jointly referred to as the “Obligors.”

    

    (C)
       “Application”
      means an
      application or other writing, in such form or forms as shall be specified by
      the
      Bank from time to time, by which the Borrower requests an Advance or a Credit
      Product, and by which an Obligor requests a Derivative Transaction or an Other
      Product.

    

    (D)
       “Borrowed
      Money” means,
      with respect to any Person, without duplication (a) all indebtedness for
      borrowed money, (b) all obligations of such Person evidenced by bonds,
      debentures, notes or similar instruments, or upon which interest payments are
      customarily made, (c) that portion of obligations with respect to capital leases
      that is properly classified as a liability on a balance sheet in conformity
      with
      GAAP, (d) any obligations of such Person issued or assumed as the deferred
      purchase price of property or services purchased by such Person (other than
      trade debt incurred in the ordinary course of business and due within six months
      of the incurrence thereof or evidenced by a note or other instrument), (e)
      all
      Borrowed Money of others secured by (or for which the holder of such Borrowed
      Money has an existing right, contingent or otherwise, to be secured by) any
      lien
      on, or payable out of the proceeds of production from, any property or asset
      owned, held or acquired by such Person regardless of whether the indebtedness
      secured thereby shall have been assumed by that Person or is nonrecourse to
      the
      credit of that Person, (f) all
      guaranty obligations of such Person in respect of any Borrowed Money of any
      other person, (g) the maximum amount of all standby letters of credit issued
      or
      bankers’ acceptances facilities created for the account of such Person and,
      without duplication, all drafts drawn thereunder (to the extent unreimbursed),
      (h) the principal balance outstanding under any synthetic lease, tax retention
      operating lease, off-balance sheet loan or similar off-balance sheet financing
      product us any accrued interest thereon, and (i) the Borrowed Money of any
      partnership or unincorporated joint venture in which such Person is a general
      partner or joint venturer.

    

    (E)
       “Borrowing
      Documents” means
      this Agreement (as amended by any and all Joinder Agreements and any and all
      Collateral Pledge Amendments), all Applications, all Confirmations, and all
      Supplemental Documentation.

    

    
      
        
        

      

      
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    (F)
       “Capital
      Stock”
      means
      all of the capital stock in the Bank held by the Borrower and all payments
      which
      have been or hereafter are made on account of subscriptions to and all unpaid
      dividends on such capital stock.

    

    (G)
       “Collateral”
      means
      (i) all property, including the products and proceeds thereof, heretofore
      assigned, transferred or pledged to the Bank by any Obligor as collateral for
      an
      Advance, a Credit Product, a Derivative Transaction, an Other Product or any
      other Liability prior to the date hereof and (ii) all Capital Stock, Deposits,
      Residential First Mortgage Collateral, Commercial Mortgage Collateral,
      Multifamily Mortgage Collateral, Government and Agency Securities Collateral,
      HELOC and Second Mortgage Collateral, Other Securities Collateral and Other
      Collateral, including the products and proceeds thereof, which is now or
      hereafter pledged to the Bank pursuant to Section 3.01 hereof or any Joinder
      Agreement.

    

    (H)
       “Collateral
      Maintenance Level”
      means
      the aggregate dollar amount equal to such percentage(s) as the Bank may specify
      from time to time of all Liabilities (1) for Advances and Credit Products;
      (2)
      with respect to Derivative Transactions for which an Obligor is required to
      maintain Collateral; and (3) with respect to any Other Product or under any
      Borrowing Documents. The Bank may increase or decrease the Collateral
      Maintenance Level at any time as provided in the Credit and Collateral Policy,
      and such increase or decrease, as specified by the Bank, will apply to all
      existing as well as after-arising Liabilities.

    

    (I)  “Collateral
      Pledge Amendment”
      means a
      Collateral Pledge Amendment, substantially in the form attached hereto as
      Exhibit B, whereby the Obligors and the Bank have agreed to amend the collateral
      pledge provisions of Section 3.01 (ii) hereof as provided therein.

    

    (J)  “Commercial
      Mortgage Collateral”
      means
      all notes, bonds, instruments, mortgages, deeds of trust, deeds to secure debt,
      security agreements, policies and certificates of insurance, guarantees,
      evidences of recordation, applications, underwriting materials, surveys,
      appraisals, approvals, permits, notices, opinions of counsel, loan servicing
      data and all other electronically stored and written records or materials
      relating to fully-disbursed loans held by any Obligor secured by a first lien
      on
      property improved by one or more commercial buildings, together with all rights
      and interests associated with such loans and documents, including all legal,
      beneficial, residual and servicing rights, and any endorsements or assignments
      thereof.

    

    (K)
       “Confirmation”
      means a
      confirmation, in such form or forms as the Bank may generate from time to time,
      by which the Bank agrees to, confirms and provides any additional terms with
      respect to any Advance, Credit Product, Derivative Transaction, or Other
      Product.

    

    (L)
       “Credit
      and Collateral Policy”
      means
      the policies and procedures of the Bank governing the administration of its
      credit and other programs, including the requirements for maintenance of
      collateral to secure extensions of credit by the Bank, as any such policies
      and
      procedures may be amended, supplemented, restated or otherwise modified from
      time to time hereafter, in accordance with Section 6.01.

    

    (M)
       “Credit
      Products”
      means
      any and all commitments or obligations under which the Bank agrees to make
      payments on behalf of or for the account of the Borrower, including letters
      of
      credit, guarantees or other arrangements intended to facilitate transactions
      between the Borrower and third parties, or under which the Bank enters into
      a
      credit or financial accommodation, agreement or other arrangement with the
      Borrower, irrespective of whether the Bank’s obligation is contingent or
      conditional.

    

    
      
        
        

      

      
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    (N)
       “Deposits” means
      all
      deposit accounts maintained by any Obligor with the
      Bank,
      all money, cash, checks, drafts, notices, bills, bills of exchange and bonds
      deposited therein or credited thereto, any increases, renewals, extensions,
      substitutions and replacements thereof, whether or not deposited in any such
      deposit account and all statements, certificates, passbooks and instruments
      representing any such deposit account.

    

    (O)
       “Derivative
      Transactions”
      means
      all interest rate swaps, all interest rate caps, floors and collars, all
      currency exchange transactions, all options and all similar transactions entered
      into between the Bank and any Obligor.

    

    (P)
       “GAAP”
      means
      generally accepted accounting principles.

    

    (Q)  “Government
      and Agency Securities Collateral” means
      mortgage-backed securities (including participation certificates) issued by
      the
      Federal Home Loan Mortgage Corporation or the Federal National Mortgage
      Association, obligations guaranteed by the Government National Mortgage
      Association, and obligations issued or guaranteed by the United States or an
      agency thereof.

    

    (R)
       “HELOC
      and Second Mortgage Collateral” means
      all
      notes, bonds, instruments, mortgages, deeds of trust, deeds to secure debt,
      security agreements, policies and certificates of insurance or guarantees,
      evidences of recordation, applications, underwriting materials, surveys,
      appraisals, approvals, permits, notices, opinions of counsel and loan servicing
      data and all other electronically stored and written records or materials
      relating to home equity lines of credit held by any Obligor, loans held by
      any
      Obligor secured by a junior lien on one-to-four unit single-family dwellings,
      or
      other similar loans held by any Obligor which have not been fully disbursed,
      together with all rights and interests associated with such loans and documents,
      including all legal, beneficial, residual and servicing rights, and any
      endorsements or assignments thereof.

    

    (S)
       “Joinder
      Agreement”
      means a
      joinder agreement, substantially in the form attached hereto as Exhibit A,
      whereby an Obligor has agreed in writing to be primarily, jointly and severally
      liable for all obligations of all of the Obligors to the Bank under this
      Agreement and to pledge Collateral satisfactory to the Bank as security for
      such
      obligations.

    

    (T)
       “Lendable
      Collateral Value” means
      an
      amount equal to such percentage as the Bank shall from time to time, in its
      sole
      discretion, ascribe in the Credit and Collateral Policy to the market value
      or
      unpaid principal balances (as the Bank may specify or define) of Qualifying
      Collateral.

    

    (U)
       “Liabilities”
      means
      all fees, expenses, obligations, liabilities or indebtedness of any Obligor
      to
      the Bank, due or to become due, direct or indirect, absolute or contingent,
      joint or several, now existing or hereafter at any time created, arising or
      incurred, under this Agreement, any Application, Confirmation, Supplemental
      Documentation, Advance, Derivative Transaction, Credit Product, Other Product
      or
      Deposit, including any overdrafts or other charges in connection therewith,
      or
      under any other obligation for any other service provided by the Bank, including
      any obligations under indemnification provisions in any agreement or document
      between any Obligor and the Bank, and any renewal, extension or substitution
      of
      any such obligations, liabilities and indebtedness, including reasonable
      attorneys’ fees of the Bank in the collection thereof and the enforcement of
      ally remedies with respect to any Collateral therefor.

    

    
      
        
        

      

      
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    (V)
       “Material
      Adverse Effect” means
      (a)
      a material adverse effect upon the business, operations, properties, assets
      or
      condition (financial or otherwise) of any Obligor or (b) the impairment of
      the
      ability of any Obligor to perform its obligations under any Borrowing Document
      to which it is a party or of Bank to enforce any Borrowing Document or collect
      any of the Liabilities. In determining whether any individual event would result
      in a Material Adverse Effect, notwithstanding that such event does not of itself
      have such effect, a Material Adverse Effect shall be deemed to have occurred
      if
      the cumulative effect of such event and all other then existing events would
      result in a Material Adverse Effect.

    

    (W)
       “Multifamily
      Mortgage Collateral”
      means
      all notes, bonds, instruments, mortgages, deeds of trust, deeds to secure debt,
      security agreements, policies and certificates of insurance, guarantees,
      evidences of recordation, applications, underwriting materials, surveys,
      appraisals, approvals, permits, notices, opinions of counsel, loan servicing
      data and all other electronically stored and written records or materials
      relating to the fully-disbursed loans held by any Obligor secured by a first
      lien on property improved by one or more multifamily buildings, together with
      all rights and interests associated with such loans and documents, including
      all
      legal, beneficial, residual and servicing rights, and any endorsements or
      assignments thereof.

    

    (X)
       “Obligors”
      means,
      collectively, the Borrower and any Affiliate joined hereunder as provided
      herein.

    

    (Y)
       “Other
      Collateral”
      means
      such items of personal property, other than Capital Stock, Deposits, Residential
      First Mortgage Collateral, Commercial Mortgage Collateral, Multifamily Mortgage
      Collateral, Government and Agency Securities Collateral, HELOC and Second
      Mortgage Collateral, and Other Securities Collateral, that are offered by any
      Obligor as Collateral and are specifically accepted by the Bank as Collateral;
      provided, Other Collateral may from time to time include specific items of
      Residential First Mortgage Collateral, Commercial Mortgage Collateral,
      Multifamily Mortgage Collateral and HELOC and Second Mortgage Collateral which
      are identified and offered by an Obligor as Collateral and are specifically
      accepted by the Bank as Collateral,

    

    (Z)
       “Other
      Products”
      means
      all products and services, other than an Advance, Credit Product or Derivative
      Transaction, offered by the Bank to any Obligor from time to time, including
      correspondent banking services, mortgage purchase programs and affordable
      housing and community investment products and services.

    

    
      
        
        

      

      
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    (AA) “Other
      Securities Collateral”
      means
      securities (other than Government and Agency Securities Collateral) representing
      unsubordinated interests in, or collateralized by first lien security interests
      in, both the interest and principal payments on first lien residential
      mortgages.

    

    (BB) “Person”
      means an
      individual, partnership, corporation, trust, joint venture, joint stock company,
      limited liability company, association, unincorporated organization,
      governmental authority, or any other entity.

    

    (CC) “Qualifying
      Collateral”
      means
      Collateral, other than Capital Stock and Deposits, which is eligible as
      collateral to support the origination of Advances, Credit Products, Derivative
      Transactions and Other Products under the terms and conditions of the Act,
      the
      Regulations and the Credit and Collateral Policy, and which satisfies such
      other
      requirements for lending as may be established by the Bank.

    

    (DD) “Residential
      First Mortgage Collateral” means
      all
      notes, bonds, instruments, mortgages, deeds of trust, deeds to secure debt,
      security agreements, policies and certificates of insurance or guarantees,
      evidences of recordation, applications, underwriting materials, surveys,
      appraisals, approvals, permits, notices, opinions of counsel and loan servicing
      data and all other electronically stored and written records or materials
      relating to fully-disbursed loans held by any Obligor secured by a first lien
      on
      one-to-four unit single family dwellings, together with all rights and interests
      associated with such loans and documents, including all legal, beneficial,
      residual and servicing rights, and any endorsements or assignments
      thereof.

    

    (EE) “Supplemental
      Documentation”
      means
      any document, agreement or other writing (other than this Agreement) between
      the
      Bank and an Obligor relating to Deposits, Advances, Credit Products, Derivative
      Transactions and Other Products, including reimbursement agreements, mortgage
      purchase documents, wire transfer agreements, automated clearinghouse
      agreements, agreements related to the loans held for sale program, International
      Swap Dealers Association (“ISDA”)
      master
      agreements, schedules to ISDA master agreements and credit support annexes
      to
      ISDA master agreements.

    

    Section
      1.02 Other
      Definitional Provisions.
      References to “Sections,”
      “Subsections”
      and
      “Exhibits”
shall
      be to Sections, Subsections and Exhibits, respectively, of this Agreement unless
      otherwise specifically provided. Any of the terms defined in Section 1.01 may,
      unless the context otherwise requires, be used in the singular or the plural
      depending on the reference. In this Agreement, “hereof,” “herein,” “hereto,”
“hereunder” and the like mean and refer to this Agreement as a whole and not
      merely to the specific section, paragraph or clause in which the respective
      word
      appears; words importing any gender include the other gender; references to
      “writing” include printing, typing, lithography, facsimile, electronic and other
      means of reproducing words or other data in a tangible visible form; the words
      “including,” “includes” and “include” shall be deemed to be followed by the
      words “without limitation”; references to agreements and other contractual
      instruments shall be deemed to include subsequent amendments, assignments,
      and
      other modifications thereto, but only to the extent such amendments, assignments
      and other modifications are not prohibited by the terms of this Agreement;
      references to Persons include their respective permitted successors and assigns
      or, in the case of governmental Persons, Persons succeeding to the relevant
      functions of such Persons; and all references to statutes and related
      regulations shall include any amendments of same and any successor statutes
      and
      regulations.

    

    
      
        
        

      

      
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    ARTICLE
      II: ADVANCES AGREEMENT

    

    Section
      2.01 Documentation.
      Subject
      to Section 6.03 hereof, the Borrower may apply to the Bank for Advances, Credit
      Products, Derivative Transactions and Other Products in accordance with the
      Credit and Collateral Policy. The final terms of any Advance, Credit Product,
      Derivative Transaction or Other Product shall be conclusively established by
      this Agreement and any Confirmation and Supplemental Documentation related
      thereto. Any Obligor shall be estopped from asserting any claim or defense
      with
      respect to the terms applicable to any Advance, Credit Product, Derivative
      Transaction or Other Product unless, within the earlier of (i) any time period
      specified in any Confirmation or Supplemental Documentation relating thereto
      and
      (ii) two (2) business days of receipt of the final documents relating to such
      product or service, the Borrower delivers to the Bank a written notice
      specifying the disputed term(s) or condition(s) of the Advance, Credit Product,
      Derivative Transaction or Other Product. Upon the request of the Bank, or as
      provided in the Credit and Collateral Policy, the Borrower shall sign and
      deliver to the Bank a promissory note or notes and such other Supplemental
      Documentation in such form as the Bank may reasonably require evidencing any
      Advance, Credit Product, Derivative Transaction or Other Product. Unless
      otherwise agreed by the Bank in writing, all Advances shall be made by crediting
      the Borrower’s demand deposit accounts with the Bank. All Borrowing Documents
      shall be deemed to have been executed and delivered in Atlanta, Georgia, and
      all
      payments made under the Borrowing Documents shall be deemed to have been made
      in
      Atlanta, Georgia. The Bank’s obligation to fund any portion of any approved
      Advance, issue any approved letter of credit, guaranty or financial
      accommodation relating to a Credit Product or continue under any Derivative
      Transaction or Other Product shall be subject to (i) continuing compliance
      by
      the Obligors with the terms and provisions of this Agreement (ii) there having
      occurred no Event of Default hereunder and (iii) the continuing satisfaction
      by
      the Obligors of the credit and collateral considerations of the Bank and the
      eligibility requirements and policies prescribed in the Act, the Regulations
      and
      the Credit and Collateral Policy.

    

    Section
      2.02 Repayment
      of Liabilities.
      Each
      Obligor agrees to repay all Liabilities in accordance with this Agreement,
      the
      Credit and Collateral Policy and the terms and conditions of the Confirmation
      and Supplemental Documentation evidencing such Liabilities. Interest shall
      be
      paid on all Liabilities at the times specified by the Bank in the Credit and
      Collateral Policy and in the Confirmation or Supplemental Documentation and
      shall be charged for each day that such Liabilities ate outstanding at the
      rate
      applicable to such Liabilities. Each Obligor shall pay to the Bank, immediately
      and without demand, interest on any past due principal of and interest on any
      Liabilities at an interest rate which is the greater of (i) the rate applicable
      to such Liabilities plus one percent or (ii) the rate in effect and being
      charged by the Bank from time to time on overdrafts on demand deposit accounts
      of its members, but in no event more than any applicable limit established
      by
      the Regulations (the “Default
      Rate”).
      The
      Borrower shall ensure that, on any day on which any payment is due to the Bank
      with respect to any Liabilities, whether by maturity, prepayment or
      acceleration, the Borrower’s demand deposit account(s) with the Bank has an
      available balance in an amount at least equal to the amounts then due and
      payable to the Bank, and the Borrower hereby authorizes the Bank to debit the
      Borrower’s demand deposit account(s) with the Bank for all amounts due and
      payable with respect to any Liabilities and for all other amounts due and
      payable hereunder. In the event that the available balance in the Borrower’s
      demand deposit account(s) is insufficient to pay such due and payable amounts,
      the Bank may, without notice to or request from any Obligor, apply any other
      deposits, credits, or monies of any Obligor then in the possession of the Bank
      to the payment of amounts due and payable. Each Obligor agrees that, in the
      event that any such debit results in any of the Borrower’s accounts with the
      Bank being overdrawn, the Obligor shall immediately reimburse the Bank for
      such
      overdraft amount and pay overdraft charges thereon at the Default Rate, in
      addition to any minimum fees for overdrafts imposed by the Bank from time to
      time. All payments with respect to Liabilities shall be applied fast to any
      fees or
      charges applicable thereto and to interest due thereon, in such order as the
      Bank may determine, and then to any principal amount thereof that is then due
      and payable.

    

    
      
        
        

      

      
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    Section
      2.03 Payment
      of Prepayment Charges.
      All
      prepayment fees and charges described in the Credit and Collateral Policy,
      or in
      any Application, Confirmation or Supplemental Documentation, shall be payable
      at
      the time of any voluntary or involuntary payment of all or part of the principal
      of any Liabilities prior to the originally scheduled maturity thereof, including
      without limitation payments that are made as a part of a liquidation of any
      Obligor or that become due by operation of law or as a result of an acceleration
      pursuant to Section 5.02 hereof, whether such payment is made by any Obligor,
      by
      a conservator, receiver, liquidator or trustee of or for any Obligor, or by
      any
      successor to or any assignee of any Obligor.

    

    Section
      2.04 Compliance
      with the Credit and Collateral Policy.
      Each
      Obligor hereby agrees to comply at all times with the Credit and Collateral
      Policy.

    

    ARTICLE
      III: SECURITY AGREEMENT

    

    Section
      3.01 Creation
      of Security Interest.
      As
      security for all Liabilities, the Borrower hereby assigns, transfers, and
      pledges to the Bank, and grants to the Bank a security interest in, (i) all
      property heretofore assigned, transferred or pledged by the Borrower to the
      Bank
      as collateral securing Liabilities and other obligations of the Borrower prior
      to the date hereof, (ii) except as otherwise provided in a Collateral Pledge
      Amendment, all of the Capital Stock, Deposits, Residential First Mortgage
      Collateral, Commercial Mortgage Collateral, Multifamily Mortgage Collateral
      and
      HELOC and Second Mortgage Collateral now or hereafter owned by the Borrower
      and
      (iii) all of the Government and Agency Securities Collateral, Other Securities
      Collateral, and Other Collateral, specifically identified by the Borrower to
      the
      Bank as Qualifying Collateral and accepted by the Bank, and all proceeds and
      products of any items of the Collateral described in clauses (i) through (iii)
      above. In addition, as security for all Liabilities, each Affiliate will assign,
      transfer and pledge to the Bank, and grant to the Bank a security interest
      in,
      the Collateral set forth in its Joinder Agreement.

    

    Section
      3.02 Representations
      and Warranties Concerning Collateral.
      Each
      Obligor represents and warrants to the Bank, as of the date hereof, the date
      of
      each Advance, Credit Product, Derivative Transaction or Other Product, and
      the
      date of delivery of each collateral report required under Section 3.07(A)
      hereof, as follows:

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (A)
      The
      Obligor owns and has marketable title to the Collateral pledged by it hereunder
      and has the right and authority to grant a security interest in such Collateral
      and to subject all of such Collateral to this Agreement;

    

    (B)
      The
      information given from time to time by the Obligor as to each item of Collateral
      pledged by it hereunder is true, accurate and complete in all material
      respects;

    

    (C)
      The
      Obligors own Qualifying Collateral with a Lendable Collateral Value at least
      equal to the Collateral Maintenance Level;

    

    (D)
      The
      lien of the Residential First Mortgage Collateral, Commercial Mortgage
      Collateral and Multifamily Mortgage Collateral on the real property securing
      such Collateral is a first, prior and perfected lien under applicable
      law;

    

    (E)
      The
      Obligor has not conveyed or otherwise created, and there does not otherwise
      exist, any participation interest or other direct, indirect, legal, or
      beneficial interest, lien or encumbrance in any Collateral on the part of any
      Person other than the Bank and the Obligor, except that the Obligor may sell
      or
      otherwise dispose of Collateral not necessary to meet the requirements of
      Section 3.03(A), and not otherwise reported to the Bank as Qualifying Collateral
      for purposes of meeting the requirements of Section 3.03(A), to the extent
      such
      sale or disposition is made to a person not controlling, controlled by or in
      common control with any Obligor;

    

    (F)
      No
      account debtor or other obligor owing any obligation to the Obligor with respect
      to any Qualifying Collateral necessary to meet the collateral maintenance
      requirement in Section 3.03(A) hereof, or otherwise reported to the Bank as
      Qualifying Collateral for purposes of meeting the requirements of Section
      3.03(A), has or shall have any defenses, offsetting claims, or other rights
      affecting the right of the Obligor or the Bank to enforce the terms of such
      Qualifying Collateral, and no default, (or conditions that, with the passage
      of
      time of the giving of notice or both, would constitute a default) exist under
      any such Qualifying Collateral; and

    

    (G)
      No
      part of any real property or interest in real property that is included within
      the Collateral contains or is subject to the effects of toxic or hazardous
      materials or other hazardous substances (including those defined in the
      Comprehensive Environmental Response Compensation and Liability Act of 1980,
      as
      amended, 42 U.S.C. §9601, et seq.; the Hazardous Materials Transportation Act,
      49 U.S.C. §1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
§6901 et seq.; and in the regulations adopted and publications promulgated
      pursuant to said laws) the presence of which could subject the Bank to any
      liability under applicable state or Federal law or local ordinance either at
      any
      time that such property is pledged to the Bank or upon the enforcement by the
      Bank of its security interest therein.

    

    
      
        
        

      

      
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    Section
      3.03 Collateral
      Maintenance Requirement.

    

    (A)
      The
      Obligors shall at all times maintain Qualifying Collateral which has a Lendable
      Collateral Value that is at least equal to the Collateral Maintenance Level.
      In
      addition, the Obligors agree to maintain such additional amounts of Collateral
      as may be required by the Bank in order to protect the Bank’s security position
      with respect to the outstanding Liabilities of the Obligors to the
      Bank.

    

    (B)
      All
      documents and other matters pertaining to the Qualifying Collateral necessary
      to
      meet the requirements of Section 3.03(A), or otherwise reported to the Bank
      as
      Qualifying Collateral for purposes of meeting the requirements of Section
      3.03(A), must be satisfactory to the Bank and, if not, the Bank may refuse
      to
      accept such Qualifying Collateral of may assign such Qualifying Collateral
      a
      Lendable Collateral Value less than the Lendable Collateral Value otherwise
      applicable under the Credit and Collateral Policy.

    

    (C)
      No
      Obligor shall assign, pledge, transfer, create any lien, encumbrance or security
      interest in, sell, or otherwise dispose of any Collateral; provided,
      however,
      (i) an
      Obligor may sell or otherwise dispose of Collateral not necessary to meet the
      requirements of Section 3.03(A) and not otherwise reported to the Bank as
      Qualifying Collateral for purposes of meeting the requirements of Section
      3.03(A), so long as no Event of Default has occurred and is continuing and
      such
      Collateral is sold to a person not controlling, controlled by or in common
      control with any Obligor and (ii) upon the written request of the Obligors,
      the
      Bank will agree to release such Collateral as shall be mutually agreeable to
      the
      Bank and the Obligors so long as such Collateral to be released is not necessary
      to meet the requirements of Section 3.03(A) and not otherwise reported to the
      Bank as Qualifying Collateral for purposes of meeting the requirements of
      Section 3.03(A).

    

    Section
      3.04 Holding
      of Collateral.

    

    (A)
      Each
      Obligor shall hold any Collateral in its possession in such manner as reasonably
      identifies the security interest of the Bank and as the Bank shall further
      direct.

    

    (B)
      Except for Collateral required to be delivered to the Bank or its custodian
      as
      required hereunder, Collateral shall be held by each Obligor in its possession
      (except as otherwise provided herein) in trust for the benefit of, and subject
      to the direction, and control of, the Bank and shall be physically safeguarded
      by the Obligor in accordance with reasonable commercial procedures. To the
      extent that any Obligor enters into any custodial arrangement with respect
      to
      the Collateral, the Obligor shall notify the Bank in writing of such
      arrangement, shall provide the Bank with copies of all agreements evidencing
      such arrangement, which shall be satisfactory to the Bank in all respects,
      and
      shall cause such agreements to provide that the custodian holds the Collateral
      for the benefit of the Bank and no other person and that the custodian shall
      accept instructions from the Bank with respect to the Collateral. Without
      limitation of the foregoing, each Obligor shall take all action necessary or
      desirable to protect and preserve the Collateral and the Bank’s interest
      therein, including, the collection of payments under all mortgages and under
      any
      insurance, assuring that all mortgages are serviced in accordance with the
      standards of a reasonable and prudent mortgagee and compliance with all
      requirements with respect to the Collateral set forth in the Credit and
      Collateral Policy.

    

    
      
        
        

      

      
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    (C)
      Any
      Collateral which is a security or other investment property shall be delivered
      to the Bank, together with such assignments, powers and other documents as
      the
      Bank shall require in connection with its perfected, first-priority security
      interest in such Collateral. With respect to any uncertificated securities
      pledged to the Bank as Collateral hereunder, the delivery requirements contained
      in this Agreement shall be satisfied by the transfer of a perfected,
      first-priority security interest in such securities to the Bank, such transfer
      to be effected in such manner and to be evidenced by such documents as shall
      be
      reasonably specified by the Bank.

    

    Section
      3.05 Delivery
      of Collateral.

    

    (A)
      Promptly upon the Bank’s written or oral request, or as provided in the Credit
      and Collateral Policy, the Obligors shall deliver to the Bank, or to a custodian
      designated by the Bank, such Qualifying Collateral as may be necessary so that
      the Lendable Collateral Value of Qualifying Collateral held by the Bank, or
      such
      custodian, meets or exceeds the Collateral Maintenance Level at all times.
      Collateral delivered to the Bank shall be endorsed and assigned, as appropriate,
      in such form as reasonably specified by the Bank and together with such
      information with respect to such Collateral as the Bank shall
      request.

    

    (B)
      Each
      Obligor agrees to pay to the Bank such reasonable fees and charges as may be
      assessed by the Bank to cover the Bank’s overhead and other costs relating to
      the receipt, holding and redelivery of Collateral and other reasonable expenses,
      disbursements and advances incurred or made by the Bank in connection therewith
      (including the reasonable compensation and the expenses and disbursements of
      any
      custodian, consultant or appraiser that may be appointed by the Bank hereunder,
      and the agents and legal counsel of the Bank and of such
      custodian).

    

    Section
      3.06 Collateral
      Reports; Access to Collateral.

    

    (A)
      At
      the times provided in the Credit and Collateral Policy, and promptly after
      any
      additional requests by the Bank, each Obligor shall deliver to the Bank such
      information, reports, verification reviews and schedules with respect to the
      Collateral, the Qualifying Collateral and compliance with this Agreement and
      the
      Credit and Collateral Policy as provided in the Credit and Collateral Policy,
      or
      as the Bank shall request, all in form and substance as prescribed by the Bank.
      

    

    (B)
      Each
      Obligor shall provide the Bank with such financial reports and other information
      relating to the Obligor’s financial condition as the Bank may reasonably
      request.

    

    (C)
      Each
      Obligor shall give the Bank, its agents and representatives access at reasonable
      times and locations to the Collateral, and to the Obligor’s books and records of
      account relating to such Collateral, for the purpose of the Bank or its agents
      and representatives examining, verifying or reconciling the Collateral and
      the
      Obligor’s reports to the Bank thereon. At the Bank’s request, the Obligors shall
      make any or all documents and information pertaining to the Collateral available
      to the Bank, its agents and representatives at reasonable times and locations
      for their inspection and approval. Each Obligor shall make adequate working
      facilities available to the Bank, its agents and representatives for purposes
      of
      such verifications and reviews. Reasonable fees and charges may be assessed
      to
      the Obligors by the Bank to cover overhead and other costs relating to such
      verifications and reviews, including, any costs and expenses of third parties
      engaged by the Bank for such purposes.

    

    
      
        
        

      

      
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    (D)
      If
      any Obligor becomes aware or has reason to believe that the Lendable Collateral
      Value of the Obligors’ Qualifying Collateral has fallen below the Collateral
      Maintenance Level, that a contingency exists which with the lapse of time could
      result in the Obligors’ failure to meet the Collateral Maintenance Level, or any
      event has occurred which could reasonably be expected to have a material adverse
      effect on the operations or financial condition of the Obligor, such Obligor
      shall immediately notify the Bank.

    

    (E)
      Each
      Obligor shall notify the Bank prior to (i) any change in the Obligor’s name,
      charter or organizational documents, jurisdiction of organization or form of
      organization and (ii) any event that could result in a change in the Obligor’s
“location” as defined in the Uniform Commercial Code.

    

    Section
      3.07 Additional
      Documentation, Further Assurances.

    

    (A)
      Each
      Obligor shall, or the Bank may, in lieu of the Obligor, make, execute, record
      and deliver such agreements, financing statements, notices, assignments,
      listings, powers, and other documents with respect to the Collateral and the
      Bank’s first-priority security interest therein and in such form as the Bank may
      reasonably require. Each Obligor shall, upon request of the Bank, immediately
      take such actions as the Bank shall deem necessary or appropriate to perfect
      the
      Bank’s first-priority security interest in the Collateral or otherwise to
      obtain, preserve, protect, enforce or collect the Collateral or the proceeds
      thereof.

    

    (B)
      The
      Bank may from time to time hereafter require any Obligor to provide
      representations, warranties, and undertakings, in addition to those contained
      herein, reasonably related to the securing, perfecting, maintaining or enforcing
      of the Bank’s rights and interests in the Collateral.

    

    Section
      3.08 Bank’s
      Responsibilities as to Collateral. The
      Bank’s duty as to the Collateral shall be solely to use reasonable care in the
      custody and preservation of the Collateral in its possession, which shall not
      include any steps necessary to preserve rights against prior parties nor the
      duty to send notices, perform services, or take any action in connection with
      the management of the Collateral. The Bank shall not have any responsibility
      or
      liability for the form, sufficiency, correctness, genuineness or legal effect
      of
      any instrument or document constituting a part of the Collateral, or any
      signature thereon or the description or misdescription, or value of property
      represented, or purported to be represented, by any such document or instrument.
      Each Obligor agrees that any and all Collateral may be removed by the Bank
      from
      the state or location where situated, and may be subsequently dealt with by
      the
      Bank as provided in this Agreement.

    

    
      
        
        

      

      
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    Section
      3.09 Bank’s
      Rights as to Collateral, Power of Attorney.
      At any
      time or times, at the expense of the Obligors, the Bank may in its discretion,
      before or after the occurrence of an Event of Default as defined in Section
      5.01
      hereof, in its own name or in the name of its nominee or of any Obligor, do
      any
      or all things and take any and all actions that are pertinent to the protection
      of the Bank’s interest hereunder and are lawful under applicable law, including,
      but not limited to, the following:

    

    (A)
      Terminate any consent given hereunder;

    

    (B)
      Notify obligors on any Collateral to make payments or tender performance thereon
      directly to the Bank;

    

    (C)
      Endorse any Collateral in any Obligor’s name;

    

    (D)
      Enter
      into any extension, compromise, settlement, or other agreement relating to
      or
      affecting any Collateral;

    

    (E)
      Take
      any action any Obligor is required to take or which is otherwise reasonably
      necessary to file a financing statement, take possession of Collateral, obtain
      control of Collateral or otherwise perfect a security interest in any or all
      of
      the Collateral.

    

    (F)
      Take
      any action any Obligor is permitted to take in connection with the Collateral,
      to the same extent as if the Bank were the originator of the
      Collateral;

    

    (G)
      Take
      control of any funds or other proceeds generated by the Collateral and use
      the
      same to reduce Liabilities as they become due; and

    

    (H)
      Cause
      the Collateral to be transferred to its name or the name of its
      nominee.

    

    Each
      Obligor hereby appoints the Bank as its true and lawful attorney, for and on
      behalf of the Obligor and in its name, place and stead, to prepare, execute
      and
      record endorsements and assignments to the Bank of all or any item of
      Collateral, giving or granting to the Bank, as such attorney, full power and
      authority to do or perform every lawful act necessary or proper in connection
      therewith as fully as the Obligor might or could do. Each Obligor hereby
      ratifies and confirms all that the Bank shall lawfully do or cause to be done
      by
      virtue of this special power of attorney. This special power of attorney is
      granted for a period commencing on the date hereof and continuing until the
      discharge of all Liabilities and all obligations of the Obligors hereunder
      regardless of any default by any Obligor, is coupled with an interest, and
      is
      irrevocable for the period granted.

    

    Section
      3.10 Proceeds
      of Collateral.
      Each
      Obligor, as the Bank’s agent, shall collect all payments when due on all
      Collateral. If the Bank so requires, each Obligor shall hold such collections
      separate from its other monies in one or more designated cash collateral
      accounts maintained at the Bank and apply them to the reduction of Liabilities
      as they become due; otherwise, the Bank consents to the Obligors’ use and
      disposition of all such collections.

    

    
      
        
        

      

      
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    ARTICLE
      IV. ADDITIONAL REPRESENTATIONS, 

    WARRANTIES
      AND COVENANTS

    

    Section
      4.01 General
      Representations and Warranties by the Obligors.
      Each
      Obligor hereby represents and warrants that, as of the date hereof, the date
      of
      each Advance, Credit Product, Derivative Transaction or Other Product, and
      the
      date of delivery of each collateral report required under Section 3.07(A)
      hereof:

    

    (A)
      The
      Obligor is not, and neither the execution of nor the performance of any of
      the
      transactions or obligations of the Obligor under this Agreement shall, with
      the
      passage of time, the giving of notice or otherwise, cause the Obligor to be:
      (i)
      in violation of its charter or articles of incorporation, by-laws, the Act
      or
      the Regulations, any other law of administrative regulation, or any court
      decree; or (ii) in default under or in breach of any material indenture,
      contract or other instrument or agreement to which the Obligor is a party or
      by
      which it or any of its property is bound;

    

    (B)
      The
      Obligor has full corporate power and authority and has received all corporate
      and governmental authorizations and approvals (including those required under
      the Act and the Regulations) as may be required to enter into and perform its
      obligations under this Agreement and to obtain any Derivative Transaction or
      Other Product, and the Borrower has full corporate power and authority and
      has
      received all corporate and governmental authorizations and approvals (including
      those required under the Act and the Regulations) as may be required to borrow
      each Advance and to obtain each Credit Product, Derivative Transaction and
      Other
      Product;

    

    (C)
      The
      information given by the Obligor herein or in any Application, Confirmation
      or
      Supplemental Documentation, or in any oral statement made in connection with
      transactions contemplated thereunder, is true, accurate and complete in all
      material respects;

    

    (D)
      The
      name, location (as defined in the Uniform Commercial Code) and corporate form
      of
      the Obligor is, and for the lesser of its entity existence or the four months
      prior to the date of this Agreement has been, the same as set forth in the
      opening paragraph of this Agreement or in a Joinder Agreement;

    

    (E)
      All
      financial statements concerning any Obligor which have been furnished to the
      Bank or will hereafter be furnished to the Bank pursuant to this Agreement
      or
      any Joinder Agreement, have been or will be prepared in accordance with GAAP
      consistently applied (except as disclosed therein) and do or will present fairly
      the financial condition of the entities covered thereby as at the dates thereof
      and the results of their operations for the periods then ended, subject to,
      in
      the case of unaudited financial statements, the absence of footnotes and
      year-end adjustments;

    

    (F)
      Since
      the date of the most recent audited financial statements of any Obligor referred
      to in Section 4.01 (E) above, there have been no events or changes in facts
      or
      circumstances affecting any Obligor which individually or in the aggregate
      have
      had or could reasonably be expected to have a Material Adverse
      Effect;

    

    
      
        
        

      

      
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    (G)
      (i)
      No Obligor is the subject of any review or audit by any governmental of
      regulatory investigation concerning the violation or possible violation of
      any
      law, and (ii) there are no judgments outstanding against any Obligor or
      affecting any property of any Obligor, nor is there any action, charge, claim,
      demand, suit, proceeding, petition, governmental investigation or arbitration
      now pending or, to the best knowledge of Borrower after due inquiry, threatened
      against or affecting any Obligor or any property of any Obligor which could
      reasonably be expected to result in any Material Adverse Effect;

    

    (H)
      None
      of the proceeds of any Advance (or other credit extension hereunder) will be
      used in connection with any “reportable transaction” within the meaning of
      Treasury Regulation Section 1.6011-4(b) or in connection with any “potentially
      abusive tax shelter” within the meaning of Section 6112(b) of the Internal
      Revenue Code of 1986, as amended; and

    

    (I)
      Each
      Borrowing Document is and will remain (notwithstanding any amendment thereto
      occurring after the date of this Agreement) the legally valid and binding
      obligation of each Obligor, enforceable in accordance with its
      terms.

    

    Section
      4.02 General
      Covenants by the Obligors.
      Until
      the termination of this Agreement and the indefeasible satisfaction in full
      of
      all of the Liabilities:

    

    (A)
      To
      the extent that the Borrower relies upon the Lendable Collateral Value of
      Qualifying Collateral owned by an Affiliate in obtaining or maintaining any
      Advance (or other extension of credit under the Borrowing Documents), the
      Borrower will use, directly or indirectly, all of the proceeds of such Advance
      (or other extension of credit) for the benefit of such Affiliate;
      and

    

    (B)
      Each
      Obligor will (a) comply with (i) the requirements of all applicable laws, rules,
      regulations and orders of any governmental authority (including, laws, rules,
      regulations and orders relating to taxes, employer and employee contributions,
      securities, employee retirement and welfare benefits, environmental protection
      matters, employee health and safety and credit protection, anti--predatory
      and
      fair lending) as now in effect and which may be imposed in the future in all
      jurisdictions in which such Obligor is now doing business or may hereafter
      be
      doing business and (ii) the obligations, covenants and conditions contained
      in
      all binding contracts of such Obligor, as applicable, other than those laws,
      rules, regulations, orders and provisions of such contracts the noncompliance
      with which could not be reasonably expected to have, either individually or
      in
      the aggregate, a Material Adverse Effect, and (b) maintain or obtain all
      licenses, qualifications and permits now held or hereafter required to be held
      by such Obligor, for which the loss, suspension, revocation or failure to obtain
      or renew, could reasonably be expected to have, either individually or in the
      aggregate, a Material Adverse Effect. This subsection shall not preclude any
      Obligor from contesting any taxes or other payments, if they are being
      diligently contested in good faith in a manner which stays enforcement thereof
      and if appropriate expense provisions have been recorded in conformity with
      GAAP.

    
      
        
        

      

      
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    ARTICLE
      V: DEFAULT; REMEDIES

    

    Section
      5.01 Events
      of Default.
      Each of
      the following events shall constitute an Event of Default
      hereunder:

    

    (A)
      Failure of any Obligor to pay when due any interest on or principal of any
      Liabilities; or 

    

    (B)
      Failure of any Obligor to perform any promise or obligation or to satisfy any
      condition of liability contained herein, or in any Application, Confirmation
      or
      Supplemental Documentation, or the occurrence of a default or an event of
      default under any Supplemental Documentation; or 

    

    (C)
      Evidence coming to the attention of the Bank that any representation, statement,
      covenant or warranty made or furnished in any manner to the Bank by or on behalf
      of any Obligor in connection with this Agreement or any Application,
      Confirmation, Supplemental Documentation, Liabilities of Collateral was false
      in
      any material respect when made or furnished; or

    

    (D)
      The
      issuance of any tax, levy, seizure, attachment, garnishment, levy of execution,
      or other process with respect to the Collateral which has not been stayed;
      or

    

    (E)
      Any
      suspension of payment by any Obligor to any creditor of sums due or the
      occurrence of any event which results in another creditor having the right
      to
      accelerate the maturity of any indebtedness of any Obligor under any security
      agreement, indenture, loan agreement, or comparable undertaking; or

    

    (F)
      Appointment of a conservator, receiver, or similar official for any Obligor
      of
      any subsidiary of any Obligor, of any Obligor’s property, entry of a judgment or
      decree adjudicating any Obligor or any subsidiary of any Obligor insolvent
      or
      bankrupt or an assignment by any Obligor or any subsidiary of any Obligor for
      benefit of creditors; or

    

    (G)
      Sale
      by any
      Obligor of all or a material part of any Obligor’s assets or the taking of any
      other action by any Obligor to liquidate or dissolve; or

    

    (H)
      Termination for any reason of the Borrower’s membership in the Bank, failure of
      the borrower to comply with the stock purchase requirements of the Bank in
      effect from time to time, or the Borrower’s ceasing to be eligible to become a
      member of the Bank or any Obligor ceasing to be eligible to pledge Collateral
      or
      support the obligations of the Borrower hereunder under the Act, the Regulations
      or the Credit and Collateral Policy; or

    

    (I)
      Merger, consolidation or other combination of any Obligor with an entity that
      is
      not a member of the Bank if the nonmember entity is the surviving entity;
      or

     

    
      
        
        

      

      
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    (J)
      Any
      Obligor or any of its respective directors or senior officers is criminally
      indicted or convicted of or under a felony or a crime involving fraud against
      or
      in relation to such Obligor; or 

    

    (K)
      The
      Bank reasonably and in good faith determines that a Material Adverse Effect
      has
      occurred.

    

    Section
      5.02 Acceleration;
      Other Remedies. Upon
      the
      occurrence of an Event of Default, in addition to any other remedies provided
      herein, in any Supplemental Documentation or at law or in equity, the Bank
      may
      at its option, by a notice to the Borrower, declare all or any part(s) of the
      Liabilities and accrued interest thereon, including any prepayment fees or
      charges which are applicable thereto, to be immediately due and payable, without
      presentment, demand, protest, or any further notice. Furthermore, upon the
      occurrence of an Event of Default, the Bank shall have all of the rights and
      remedies provided by applicable law, which shall include, but not be limited
      to,
      all of the remedies of a secured party under the Uniform Commercial Code as
      in
      effect in the State of Georgia. In addition, the Bank may take immediate
      possession of any of the Collateral or any part thereof wherever the same may
      be
      found. The Bank may sell, assign and deliver the Collateral or any part thereof
      at public or private sale for such price as the Bank deems appropriate without
      any liability for any loss due to decrease in the market value of the Collateral
      during the period held. The Bank shall have the right to purchase all or part
      of
      the Collateral at such sale. If the Collateral includes insurance or securities
      which will be redeemed by the issuer upon surrender, or any accounts or deposits
      in the possession of the Bank, the Bank may realize upon such Collateral without
      notice to any Obligor. If any notification of intended disposition of any of
      the
      Collateral is required by applicable law, such notification shall be deemed
      reasonable and properly given if given as provided by applicable law or in
      accordance with Section 6.06 hereof at least ten days before any such
      disposition. The proceeds of any sale shall be applied in the order that the
      Bank, in its sole discretion, may choose, subject to applicable law. Each
      Obligor agrees that the Bank may exercise any and all of its rights of setoff
      upon the occurrence of an Event of Default. Notwithstanding any other provision
      hereof, upon the occurrence of any Event of Default at any time when all or
      part
      of the Liabilities shall be the subject of a guarantee by a third party for
      the
      Bank’s benefit, and there shall be other outstanding obligations of any Obligor
      to the Bank that are not so guaranteed, but that are secured by the Collateral,
      then any sums realized by the Bank from the Collateral, or from any other
      collateral pledged or furnished to the Bank by any Obligor under any other
      agreement, shall be applied first to the satisfaction of such other
      nonguaranteed obligations and then to such Obligor’s guaranteed obligations
      hereunder, Each Obligor agrees to pay all the costs and expenses of the Bank
      in
      the collection of the Liabilities and enforcement of the Bank’s rights and
      remedies in case of default, including, reasonable attorneys’ fees. The Bank
      shall, to the extent required by law, apply any surplus, after (i) payment
      of
      the Liabilities, (ii) provision for repayment to the Bank of any amounts to
      be
      paid or advanced under Other Credit Products, and (iii) payment of all costs
      of
      collection and enforcement, to the claims of person(s) legally entitled thereto,
      with any remaining surplus paid to the Borrower. Each Obligor shall be liable
      to
      the Bank for any deficiency remaining.

    

    
      
        
        

      

      
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    Section
      5.03 Certain
      Provisions as to Sale of Collateral.
      The
      Bank may, from time to time, attempt to sell certain Collateral by means of
      a
      private placement. In so doing, the Bank may restrict the bidders and
      prospective purchasers to those who will represent and agree that they are
      purchasing for investment only and not for distribution or otherwise impose
      restrictions deemed appropriate by the Bank for the purpose of complying with
      the requirements of applicable securities laws. The Bank may solicit offers
      to
      buy such Collateral, for cash or otherwise, from a limited number of investors
      deemed by the Bank to be responsible parties who might be interested in
      purchasing such Collateral. If the Bank solicits offers from not less than
      three
      such investors, then the acceptance by the Bank of the highest offer obtained
      therefrom (whether or not three offers are obtained) shall be deemed to be
      a
      commercially reasonable method of disposing of the Collateral.

    

    ARTICLE
      VI: MISCELLANEOUS

    

    Section
      6.01 Changes
      to Credit and Collateral Policy.
      The
      Bank reserves the right to amend, supplement, restate or otherwise modify the
      Credit and Collateral Policy (each, a “Policy
      Modification”)
      at
      any
      time, in its sole discretion, without the consent of any Obligor, and each
      Obligor hereby (i) acknowledges and agrees that this Agreement shall be deemed
      to have been amended by each such Policy Modification, (ii) acknowledges and
      agrees that each such Policy Modification shall apply to all Advances, Credit
      Products, Derivative Transactions and Other Products (whether outstanding on
      the
      date of such Policy Modification or issued after the date thereof) and (iii)
      agrees to be bound by each and every Policy Modification occurring on, prior
      to,
      or after the date of this Agreement. Each Policy Modification shall become
      effective immediately upon adoption by the Bank; provided,
      however,
      the
      Borrower shall have ten days after such effective date to cure any Event of
      Default caused by such Policy Modification. The Bank shall provide notice of
      any
      Policy Modification by displaying the revised Credit and Collateral Policy
      on
      the portion of the Bank’s website accessible to members of the Bank.
      Notwithstanding the provisions of this section, the Bank shall not amend,
      supplement, restate or otherwise modify the terms and conditions of any Advance,
      Credit Product, Derivative Transaction or Other Product specified in a
      Confirmation, without the consent of the Borrower.

    

    Section
      6.02 Assignment.
      Each
      Obligor hereby gives the Bank the full right, power and authority to pledge
      or
      assign to any party all or part of the Liabilities, together with all or any
      part of the Collateral, as security for consolidated Federal Home Loan Bank
      obligations issued pursuant to the provisions of the Act or for any other
      purpose authorized by the Act, the Regulations or the Federal Housing Finance
      Board. In case of any such pledge or assignment, the Bank shall have no further
      responsibility with respect to Collateral transferred to the pledgee or
      assignee. The Obligors may not (whether voluntarily, involuntarily, by operation
      of law or otherwise) assign or transfer any of their rights or obligations
      hereunder or with respect to any Advance, Credit Product, Derivative Transaction
      or Other Product without the express prior written consent of the Bank. The
      Bank
      may at any time, subject to applicable law, sell, assign, grant participations
      in, or otherwise transfer to any other person, firm or corporation, including
      another Federal Home Loan Bank, all or part of the Liabilities outstanding
      hereunder. Each Obligor hereby acknowledges and agrees that any such disposition
      shall give rise to a direct obligation of the Obligor to such assignee,
      participant or transferee. Each Obligor hereby authorizes the Bank and each
      assignee, participant or transferee, in case of default by any Obligor
      hereunder, to proceed directly, by right of setoff, banker’s lien, or otherwise,
      against any assets of any Obligor which may at the time of such default be
      in
      the respective hands of the Bank or any such assignee, participant or
      transferee. Each Obligor further agrees that the Bank may furnish any
      information pertaining to any Obligor which is in the possession of the Bank
      to
      any prospective assignee, participant or transferee to assist it in evaluating
      such assignment, participation or transfer provided that any non-public
      information reasonably designated in writing to the Bank by any Obligor as
      constituting non-public information shall be furnished to such prospective
      assignee, participant or transferee on a confidential basis. Nothing contained
      herein shall be deemed to grant to any third party any rights
      hereunder.

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    Section
      6.03 Discretion
      of the Bank to Grant or Deny Advances.
      Nothing
      contained herein or in any documents describing the Bank’s credit program and
      credit policies, including the Credit and Collateral Policy, shall be construed
      as an agreement or commitment on the part of the Bank to grant Advances or
      enter
      into Credit Products, Derivative Transactions or Other Products. No Obligor,
      except the Borrower, shall have any right to apply to the Bank for Advances
      or
      Credit Products. The right and power of the Bank in its discretion to either
      grant or deny any Advance, Credit Product, Derivative Transaction or Other
      Product requested hereunder is hereby expressly reserved. The determination
      by
      the Bank of Lendable Collateral Value and the Collateral Maintenance Level
      shall
      not constitute a determination by the Bank that the Borrower may obtain
      Advances, Credit Products, Derivative Transactions or Other Products in amounts
      up to such Lendable Collateral Value and Collateral Maintenance
      Level.

    

    Section
      6.04 Amendment:
      Waivers. No
      modification, amendment or waiver of any provision of this Agreement (other
      than
      the provisions of the Credit and Collateral Policy incorporated by reference
      herein) or consent to any departure therefrom shall be effective unless in
      a
      writing executed by a responsible officer of the party against whom such change
      is asserted and shall be effective only in the specific instance and for the
      purpose of which given. No notice to or demand on any Obligor in any case shall
      entitle any Obligor to any other or further notice or demand in the same, or
      similar or other circumstances. Any forbearance, failure or delay by the Bank
      in
      exercising any right, power or remedy hereunder shall not be deemed to be a
      waiver thereof, and any single or partial exercise by the Bank of any right,
      power or remedy hereunder shall not preclude the further exercise thereof.
      Every
      right, power and remedy of the Bank shall continue in full force and effect
      until specifically waived by the Bank in writing.

    

    Section
      6.05 Consent
      to jurisdiction.
      In any
      action or proceeding brought by the Bank or any Obligor in order to enforce
      any
      right or remedy under this Agreement, the parties hereby consent to, and agree
      that they will submit to, the nonexclusive jurisdiction of the United States
      District Court for the Northern District of Georgia or, if such action or
      proceeding may not be brought in Federal court, the jurisdiction of the courts
      of the State of Georgia located in the City of Atlanta.

    

    Section
      6.06 Notices.
      Except
      as provided in the last sentence of this Section, any written notice, advice,
      request, consent or direction given, made or withdrawn pursuant to this
      Agreement (other than notice by the Bank of a Policy Modification) shall be
      in
      writing, and shall be given by first class mail, postage prepaid, by telecopy
      or
      other facsimile transmission, or by private courier or delivery service. All
      non-oral notices shall be deemed given when actually received at the principal
      office of the Bank or the Borrower (for all Obligors), as appropriate. All
      notices shall be designated to the attention of an office or section of the
      Bank
      or of the Borrower if the Bank or the Borrower has made a request for the notice
      to be so addressed. Any notice by the Bank to the Borrower pursuant to Section
      3.06 hereof may be oral and shall be deemed to have been duly given to and
      received by the Borrower at the time of the oral communication.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    Section
      6.07 Signatures
      of Obligors.
      For
      purposes of this Agreement, documents shall be deemed signed by each Obligor
      when a signature (electronic or manual) of an authorized signatory or an
      authorized facsimile thereof appears on the document. The Bank may rely on
      any
      signature (electronic or manual) or facsimile thereof which reasonably appears
      to the Bank to be the signature of an authorized person, including signatures
      appearing on documents transmitted electronically to and reproduced mechanically
      at the Bank. The Secretary or an Assistant Secretary of each Obligor shall
      from
      time to time certify to the Bank on forms provided by the Bank the names and
      specimen signatures of the persons authorized to apply on behalf of the Borrower
      to the Bank for Advances and commitments for Advances and otherwise act for
      and
      on behalf of the Obligors in accordance with this Agreement. The Obligors shall
      promptly notify the Bank of any changes to such certifications, and until
      receipt of such notice, the Bank shall be authorized to rely on the
      authorizations in such current certifications. Such certifications are
      incorporated herein and made a part of this Agreement and shall continue in
      effect until expressly revoked or amended in writing by the Obligors,
      notwithstanding that subsequent certifications may authorize additional persons
      to act for and on behalf of the Obligors.

    

    Section
      6.08 Applicable
      Law; Severability. In
      addition to the terms and conditions specifically set forth herein and in any
      Application, Confirmation or Supplemental Documentation, this Agreement and
      all
      Advances, Credit Products, Derivative Transactions and Other Products shall
      be
      governed by the statutory and common law of the United States and, to the extent
      Federal law incorporates or defers to state law, the laws (exclusive of the
      choice of law provisions) of the State of Georgia. Notwithstanding the
      foregoing, the Uniform Commercial Code as in effect in the State of Georgia
      shall be deemed applicable to this Agreement and any Application, Confirmation
      and Supplemental Documentation and to any Advance, Credit Product, Derivative
      Transaction or Other Product and shall govern the attachment and perfection
      of
      any security interest granted hereunder or thereunder. In the event that any
      portion of this Agreement, or any Application, Confirmation or Supplemental
      Documentation, conflicts with applicable law, such conflict shall not affect
      other provisions of this Agreement or such Application, Confirmation or
      Supplemental Documentation, which may be given effect without the conflicting
      provision, and to this end the provisions of this Agreement and any Application,
      Confirmation and Supplemental Documentation are declared to be
      severable.

    

    Section
      6.09 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the successors
      and
      permitted assigns of the Obligors and the Bank.

    

    Section
      6.10 Entire
      Agreement.
      This
      Agreement, together with any Confirmation or Supplemental Documentation, and
      any
      amendments or addenda thereto executed by the Bank and the Obligors, embody
      the
      entire agreement and understanding between the parties hereto relating to the
      subject matter hereof and supersedes all prior agreements between such parties
      that relate to such subject matter. If, prior to the date of this Agreement,
      the
      Borrower and the Bank have entered into an Agreement for Advances and Security
      Agreement with Blanket Floating Lien (as amended) or an Advances, Specific
      Collateral Pledge and Security Agreement (each, a “Prior
      Agreement”),
      then
      this Agreement shall amend and restate the Prior Agreement in its entirety
      as
      the date hereof.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    Section
      6.11 Attorneys’
      Fees.
      Each
      Obligor agrees to pay all charges and expenses incurred by Bank (including
      reasonable attorneys’ fees and expenses) in connection with the administration
      of the Borrowing Documents, any investigation by Bank in respect of any
      Borrowing Document, the enforcement, protection or preservation of any right
      or
      claim of Bank, the termination of this Agreement or any other Borrowing
      Document, the termination of any liens of Bank on the Collateral, or the
      collection of any amounts due under the Borrowing Documents. If Bank uses
      in-house counsel for any of these purposes, each Obligor further agrees that
      its
      Liabilities under the Borrowing Documents includes reasonable charges for such
      work commensurate with the fees that would otherwise be charged by outside
      legal
      counsel selected by Bank for the work performed.

    

    Section
      6.12 Indemnification
      of the Bank.
      Each
      Obligor hereby indemnifies and agrees to defend (with counsel acceptable to
      the
      Bank) and hold harmless the Bank and each of its directors, officers, agents
      and
      employees (each, an “Indemnitee’”)
      from
      and against any liability, loss, cost or expense (including reasonable
      attorneys’ fees and expenses for both in-house and outside counsel) incurred in
      connection with any claim, damage, suit, arbitration, action, proceeding,
      investigation, pre-filing settlement discussion or negotiation, or any other
      matter, whenever taking place, and suffered by any one or more of the
      Indemnitees (collectively, “Losses”
or
      in
      which any one or mote of the Indemnitees may ever be or become involved (whether
      as a party, witness or otherwise), in connection with, or in any way relating
      to, any Liability, this Agreement, any Borrowing Document, any Advance, any
      Credit Product, any Derivative Transaction, or any Other Product and including
      any Loss (a) arising from any Obligor’s failure to observe, perform or discharge
      any of its covenants, obligations, agreements or duties under this Agreement
      or
      any other Borrowing Document, (b) arising from the breach of any of the
      representations or warranties contained in any Borrowing Document, (c) relating
      to claims of any Person with respect to any Collateral, or (d) arising from
      any
      Obligor’s failure to comply with any federal, state, or local statute,
      regulation, ordinance or other provision of law; provided, an Indemnitee shall
      not be indemnified for Losses to the extent they result solely from the gross
      negligence or willful misconduct of such Indemnitee. Notwithstanding any
      contrary provision in any Borrowing Document, obligations of each Obligor under
      this Section 6.12 shall survive the payment in full of the Liabilities and
      the
      termination of this Agreement.

    

    [Signatures
      appear on following page.]

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Borrower and Bank have caused this Agreement to be signed
      in
      their names by their duly authorized officers as of the date fast above
      mentioned.

    

    

    SLAVIE
      FEDERAL SAVINGS BANK

    

    

    By:/s/
      Philip E.
      Logan                                                

    Name:
      Philip E. Logan

    Title:
      President & CEO

    

    By:/s/
      Charles E. Wagner,
      Jr.                                   

    Name:
      Charles E. Wagner, Jr.

    Title:
      Sr.
      Vice-President and Chief Lending Officer
       

    

    

    

    FEDERAL
      HOME LOAN BANK OF ATLANTA

    

    

    By:/s/
      Charles I.
      Abbitt                                            

    Name:
      Charles I. Abbitt

    Title:
      Senior Vice President

    

    By:/s/
      Christy R.
      Cleare                                           

    Name:
      Christy R. Cleare

    Title:
      Vice President

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    FEDERAL
      HOME LOAN BANK OF ATLANTA

    

    BORROWER
      ACKNOWLEDGEMENT

    AND
      NOTARIZATION

    

    STATE
      OF
      MARYLAND

    
      
        	 	ss:

      

    

    County
      of
      Harford

    

    On
      this
      1st
      day of
      July, 2004, before me personally came PHILIP E. LOGAN and CHARLES E. WAGNER,
      JR., to me known, who being by me duly sworn, did depose and state that they
      are
      the PRESIDENT & CEO and SENIOR VICE PRESIDENT of Slavie Federal Savings Bank
      (the “Borrower”);
      and
      that they are signing their names thereto in my presence by order of the Board
      of Directors or other governing body of the Borrower and that said PHILIP E.
      LOGAN and CHARLES E. WAGNER, JR. acknowledge the execution of said instrument
      to
      be the voluntary act and deed of the Borrower.

    

    /s/
      Sophie T.
      Wittelsberger                              

    Notary
      Public Signature

    

    Notary
      Public in and 

    for
      the
      State of Maryland

    

    (NOTARY
      PUBLIC’S SEAL)

    

    My
      commission expires: 3/1/2007

     

    
      
        
        

      

      
        23

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