REVOLVING CREDIT NOTE

 

 

 

 

Exhibit 10.1

 

Amended and Restated Loan Agreement

 

 

 

REVOLVING CREDIT NOTE

 

 

$4,000,000.00                                                                                                                                                                                                                                                                                                                                                          Charlotte, North Carolina

 April 30, 2009

 

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

 

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

 

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

 

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

 

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

 

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

 

 

                                                                                                                        WITNESS:                                                        SOUTHERN FIRST BANCSHARES, INC.

 

 

                                                                                                                        By:                                                                        By:                                                                           

                                                                                                                        Name:                                                                    Name:                                                                      

                                                                                                                        Title:                                                                      Title:                                                                        

 

 

TERM NOTE

 

 

$5,000,000.00                                                                                                                                                                                                                                                                                                                                                          Charlotte, North Carolina

April 30, 2009

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

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

 

                                                                                                                                            WITNESS:                                                        SOUTHERN FIRST BANCSHARES, INC.

 

 

                                                                                                                                             By:                                                                    By:                                                       

                                                                                                                                            Name:                                                                Name:                                                   

                                                                                                                                            Title:                                                                  Title:                                                     

 

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AMENDED AND RESTATED STOCK PLEDGE AGREEMENT

 

 

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

 

W I T N E S S E T H:

 

 

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

 

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

 

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

 

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

 

 

 

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

Section 2.          Covenants. Representations and Warranties. The Borrower represents and warrants to the Lender as follows:

 

(a)                There are no restrictions on the pledge or transfer of any of the Pledged Shares, other than restrictions referenced on the face of any certificates evidencing the Pledged Shares.

 

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

 

(c)         The Pledged Shares are free and clear of any security interests, pledges, liens, encumbrances, charges, agreements, claims or other arrangements or restrictions of any kind, except as referenced in Section 2(a) above; and the Borrower will not incur, create, assume or permit to exist any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever on any of the Pledged Shares or assign, pledge or otherwise encumber any right to receive income from the Pledged Shares, other than in favor of the Lender.

 

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

 

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

 

Section 3. Voting Rights and Transfer.

 

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

Agreement or any document or agreement executed in connection herewith.

 

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

 

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

 

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Section 4.       Default.

 

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

 

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

 

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

 

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

 

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

 

Section 5.      Dividends. Interest and Premiums . The Borrower will have the right to receive all cash dividends, interest and premiums declared and paid on the Pledged Shares prior to the occurrence of any Event of Default. In the event any additional shares are issued to the Borrower as a stock dividend or in lieu of interest on any of the Pledged Shares, as a result of any split ofany of the Pledged Shares, by reclassification or otherwise, any certificates evidencing any such additional shares will be immediately delivered to the Lender and such shares will be subject to this Agreement and a part of the Pledged Shares to the same extent as the original Pledged Shares. At any time after the occurrence of an Event of Default, the Lender shall be entitled to receive all cash or stock dividends, interest and premiums declared or paid on the Pledged Shares, all of which shall be subject to the Lender's rights under Section 5 above.

 

Section 6.      Further Assurances . The Borrower hereby irrevocably authorizes the Lender, at any time and from time to time, to execute (on behalf of the Borrower), file and record against the Borrower any notice, financing statement, continuation statement, amendment statement, instrument, document or agreement under the VCC that the Lender may consider necessary or desirable to create, preserve, continue, perfect or validate any security interest granted hereunder or to enable the Lender to exercise or enforce its rights hereunder with respect to such security interest. Without limiting the generality of the foregoing, the Borrower hereby irrevocably appoints the Lender as the Borrower's attorney-in-fact to do all acts and things in the Borrower's name that the Lender may deem necessary or desirable. This power of attorney is coupled with an interest with full power of substitution and is irrevocable. The Borrower hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.

 

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

 

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

 

Section 9.        Miscellaneous .

 

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

 

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

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

 

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

 

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

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

 

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

 

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

 

[INTENTIONALLY LEFT BLANK]

 

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

 

 

                                                                                                                                                Witness:                                                            SOUTHERN FIRST BANCSHARES, INC.

 

 

                                                                                                                                                By:                                                                    By:                                                                   

                                                                                                                                                Name:                                                                Name:   James M. Austin, III                       

                                                                                                                                                Title:                                                                  Title:      Chief Financial Officer                   

 

 

 

                                                                                                                                                                                                                            Silverton Bank, National Association

 

 

 

                                                                                                                                                                                                                            By:                                                                   

                                                                                                                                                                                                                                        Timothy S. Beck

                                                                                                                                                                                                                                         Senior Vice President

 

AMENDED AND RESTATED LOAN AGREEMENT

 

 by and between

 

SOUTHERN FIRST BANCSHARES, INC.

 

and

 

SILVERTON BANK, NATIONAL ASSOCIATION

 

DATED APRIL 30. 2009

 

AMENDED AND RESTATED LOAN AGREEMENT

 

 

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

 

W I T N E S S E T H:

 

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

 

WHEREAS, the Borrower has requested the Lender to amend and restate the Existing Loan Agreement in order to, among other things, extend credit to the Borrower in an aggregate principal amount of up to $9,000,000.00, the proceeds of which will be used (i) to refinance existing Indebtedness to the Lender and (ii) for working capital and general corporate purposes; and

 

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

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

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

 

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

 

 

"Applicable Rate" shall mean the rate per annum equal to the Prime Rate plus 0.50%; provided , however , that in no event shall the Applicable Rate be less than 4.0%.

 

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

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

 

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

 

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

 

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

 

"Borrowing Availability Amount" means, for the period of determination, the net present value of Cash Flow Available to Service Lender Debt based on a five (5) year amortization and current contractual interest rates, as determined by the Lender in its sole, reasonable discretion.

 

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

 

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

 

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

 

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

 

2

 

"Cash Flow Available to Service Lender Debt" means, for the period of determination, the sum of (a) the quotient of (i) Cash Flow Available to Service Debt divided by (ii) 1.00 minus (y) the sum of (i) Debt Service plus (ii) Distributions paid or accrued, in each case determined for the Borrower only in accordance with GAAP.

 

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

 

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

 

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

 

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

 

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

regulations, decisions and other official interpretations in connection therewith.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

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

 

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

 

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

 

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

 

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

 

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

 

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

indebtedness to any Person of any and every kind and nature, whether primary, secondary, direct, indirect, absolute, contingent, fixed or otherwise, heretofore, now and/or from time to time hereafter owing, due or payable, however evidenced, created, incurred, acquired or owing and however arising, whether under written or oral agreement, by operation of law or otherwise. Without in any way limiting the generality o the foregoing, Indebtedness specifically includes (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other similar instruments, (iii) any Trust Preferred Indebtedness, (iv) obligations to pay the deferred purchase price of property or services, (v) all obligations under a Capital Lease and the amount of such Indebtedness shall be the aggregate amount of Capitalized Lease Obligations with respect to such Capital Lease, (vi) all net obligations under any Hedging Obligations and all obligations (contingent or otherwise) under any letter of credit, banker's acceptance, Guaranty or indemnification agreement and (vii) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (vi) above; provided, however, that for the avoidance of doubt, Indebtedness shall not include any Indebtedness arising out of clauses (i), (ii), (iii) or (vii) of the definition of Banking Liabilities incurred in the ordinary course of any Bank Subsidiary's business. The amount of any net obligation with respect to any Hedging Obligation on any date shall be deemed to be the Swap Termination Value thereof as of such date. For purposes of calculating the Debt Service Coverage Ratio, the amount of Indebtedness arising out of (a) any Hedging Obligations or (b) any Indebtedness described in clauses (a), (e) and (g) of Section 6.02 hereof shall be excluded from the definition of Indebtedness. For purposes of Section 6.02 hereof, the amount of any Hedging Obligations shall be excluded from the definition of indebtedness.

 

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

 

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

 

5 

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

 

"Law" shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Official Body.

 

"Lender" shall mean as set forth in the preamble hereof and its successors and assigns.

 

"Lien" shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature including, but not limited to, any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security for Indebtedness.

 

"Loan" or "Loans" shall mean, singularly or collectively as the context may require, the Revolving Credit Loans, the Term Loan and any other credit extended to the Borrower by the Bank in accordance with Article II hereof.

 

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

 

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

 

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

 

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

 

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

 

"Maturity Date" shall mean (i) with respect to the Revolving Credit Facility, the Revolving Credit Maturity Date and (ii) with respect to the Term Loan, the Term Loan Maturity Date.

 

"Maximum Rate" shall mean that as set forth in Section 2.04(d) hereof.

 

6 

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

 

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

 

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

 

"Non-Performing Assets Ratio" shall mean, for the period of determination, the ratio of Non-Performing Assets divided by (ii) the sum of(a) total loans (not gross loans, net of deferred fees) and (b) other real estate owned, in each case determined and consolidated for the Borrower and its Bank Subsidiaries in accordance with GAAP.

 

"Note" or "Notes" shall mean, singularly or collectively as the context may require, the Revolving Credit Note, the Term Note and any other note or notes of the Borrower executed and delivered pursuant to this Agreement, together with all extensions, renewals, refinancings or refundings in whole or in part, as amended, modified or supplemented from time to time.

 

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

 

"Office", when used in connection with the Lender, shall mean its designated office located at 1111 Metropolitan Avenue, Suite 650, Charlotte, North Carolina 28204 or such other office of the Lender as the Lender may designate in writing from time to time.

 

"Official Body" shall mean any government or political subdivision or any agency, authority, bureau, central bank, board, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

 

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

 

"Permitted Liens" shall mean: (a) Liens for taxes, assessments, or governmental charges, carriers', warehousemen's, repairmen's, mechanics', materialmen's and other like Liens, which are either not delinquent or are being contested in good faith by appropriate proceedings which will prevent foreclosure of such Liens, and against which adequate cash reserves have been provided; (b) easements, restrictions, minor title irregularities and similar matters which have no material adverse effect upon the ownership and use of the affected Property; (c) Liens or deposits in connection with worker's compensation, unemployment insurance, social security or other insurance or to secure customs duties, public or statutory obligations in lieu of surety, stay or appeal bonds, or to secure performance of contracts or bids, other than contracts for the payment of money borrowed, or deposits required by law as a condition to the transaction of business or other Liens or deposits of a like nature made in the ordinary course of business; (d) Liens in favor of the Lender pursuant to the Loan Documents; (e) Liens evidenced by conditional sales, purchase money mortgages or other title retention agreements on, or leases with respect to, machinery and equipment (acquired in the ordinary course of business and otherwise permitted to be acquired hereunder) which are created at the time of the acquisition of such property solely for the purposes of securing the Indebtedness incurred to finance the cost of such property, provided no such Lien shall extend to any property other than the property so acquired and identifiable proceeds; and (I) Liens to secure, or which are granted in connection with, Banking Liabilities of the Borrower or a Bank Subsidiary.

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

"Revolving Credit Note" shall mean the Revolving Credit Note of the Borrower executed and delivered pursuant to Section 2.0 I (b) of this Agreement, together with all extensions, renewals, refinancings or refundings, in whole or in part, as such Revolving Credit Note may be amended, modified or supplemented from time to time.

 

"Shares" shall mean one hundred percent (100%) of the issued and outstanding capital stock of Southern First.

 

"Southern First" shall mean Southern First Bank, National Association, a wholly-owned subsidiary of the Borrower.

 

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

 

8

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

 

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

 

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

 

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

 

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

 

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

 

"Tier 2 Capital" s