LOAN AGREEMENT between U.S. BANK NATIONAL ASSOCIATION and PINNACLE BANK

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LOAN AGREEMENT




between




U.S. BANK NATIONAL ASSOCIATION


and


PINNACLE BANK

Dated as of February 4, 2015

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Page

1.	DEFINITIONS
	1.1	Defined Terms	1
	1.2	Certain UCC and Accounting Terms; Interpretations	9
	1.3	Exhibits and Schedules Incorporated	9
2.	CREDIT FACILITY
	2.1	The Loan	9
	2.2	The Note	9
	2.3	Payments and Maturity Date	9
	2.4	Fee	9
	2.5	The Closing	10
	2.6	Interest Matters	10
	2.7	Certain Provisions Regarding Taxes, Yield Protection and Illegality	10
	2.8	Payments	13
3.	DISBURSEMENT
	3.1	Disbursement	13
	3.2	Closing Deliveries	13
	3.3	Conditions to Each Borrowing Tranche	14
4.	GENERAL REPRESENTATIONS AND WARRANTIES
	4.1	Organization and Authority	15
	4.2	No Impediment to Transactions	16
	4.3	Purposes of the Loan	17
	4.4	Financial Condition	17
	4.5	Title to Properties	19
	4.6	No Material Adverse Change	19
	4.7	Legal Matters	19
	4.8	Borrower Status	21
	4.9	No Misstatement	22
	4.10	Representations and Warranties Generally	22
5.	GENERAL COVENANTS, CONDITIONS AND AGREEMENTS
	5.1	Compliance with Transaction Documents	22
	5.2	Material Transactions	22
	5.3	Subsidiary Bank Shares	24
	5.4	Business Operations	24
	5.5	Compliance with Laws	25
	5.6	Lender Expenses	27
	5.7	Inspection Rights	27
6.	REPORTING
	6.1	Annual	28
	6.2	Quarterly	28
	6.3	Compliance Certificate	28
	6.4	Copies of Other Reports and Correspondence	28
	6.5	Proceedings	28
	6.6	Event of Default; Material Adverse Change	28
	6.7	Issuance of Borrower Capital Instruments	28
	6.8	Other Information Requested by Lender	28
	6.9	Electronic Delivery of Reporting Materials	29

7.	FINANCIAL COVENANTS
	7.1	Capitalization	29
	7.2	Risk‑Based Capital	29
	7.3	Nonperforming Assets to Capital	29
	7.4	Reserves to Nonperforming Loans	29
	7.5	Minimum Fixed Charge Coverage Ratio	29
	7.6	Liquidity	29
8.	BORROWER'S DEFAULT
	8.1	Borrower's Defaults and Lender's Remedies	30
	8.2	Protective Advances	32
	8.3	Other Remedies	32
	8.4	No Lender Liability	32
	8.5	Lender's Fees and Expenses	32
9.	MISCELLANEOUS
	9.1	Release; Indemnification	33
	9.2	Assignment and Participation	33
	9.3	Prohibition on Assignment	33
	9.4	Time of the Essence	33
	9.5	No Waiver	34
	9.6	Severability	34
	9.7	Usury; Revival of Liabilities	34
	9.8	Notices and Electronic Communications	35
	9.9	Successors and Assigns	36
	9.10	No Joint Venture	36
	9.11	Brokerage Commissions	36
	9.12	Publicity	36
	9.13	Documentation	36
	9.14	Additional Assurances; Right of Set‑off	36
	9.15	Entire Agreement	37
	9.16	Choice of Law, Jurisdiction and Venue	37
	9.17	No Advisory or Fiduciary Responsibility	38
	9.18	No Third Party Beneficiary	38
	9.19	Legal Tender of United States	38
	9.20	Captions; Counterparts	38
	9.21	Knowledge; Discretion	38
	9.22	PFP Loan Consent	38
	9.23	WAIVER OF CONSEQUENTIAL DAMAGES, ETC	39
	9.24	WAIVER OF RIGHT TO JURY TRIAL	39

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4.1.2            States of Operation; Capitalization

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This LOAN AGREEMENT (this "Agreement") is dated as of February 4, 2015, and is made by and between PINNACLE BANK, a Tennessee state-chartered bank ("Borrower"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association ("Lender").

R E C I T A L S:

 

 

 

 

THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows:

A G R E E M E N T:

 

 

"Accounting Event" means a determination by Borrower that Borrower is required, in accordance with rules, regulations and other applicable guidance of the FDIC and the FRB (after giving effect to the implementation of anticipated changes in the capital regulations intended to implement Basel III) that apply to Borrower, to reduce its total capital for the purposes of calculating the Borrower's Total Risk-Based Capital Ratio as contemplated in Section 7.2 by any goodwill or embedded goodwill associated with Borrower's investment in the BHG Units.

"Affiliate(s)" means, with respect to any Person, such Person's immediate family members, partners, members or parent and subsidiary corporations or other business entities, and any other Person directly or indirectly Controlling, Controlled by, or under common Control with, said Person, and their respective Affiliates, members, partners, shareholders, directors, officers, employees, agents and representatives.  For the avoidance of doubt, BHG and Borrower shall not be considered Affiliates of each other unless and until PFP, directly or indirectly (including through Borrower or any other corporation or entity directly or indirectly Controlled by PFP), owns in excess of 50% of BHG's outstanding Equity Interests or otherwise Controls BHG.

"Allowance for Loan Losses" has the meaning ascribed to such term in Section 7.4.

"Anti-Corruption Laws" means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries or Affiliates from time to time concerning or relating to bribery or corruption.

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"Applicable Margin" means on any determination date as provided in this Agreement, the rate per annum set forth opposite the then outstanding unpaid principal amount under the Loan as reflected below.  Each change in the Applicable Margin shall apply during the interest rate determination period commencing on or after the first day of the month following the effective date of such change.  Notwithstanding the foregoing, during the interest rate determination period commencing on the date of the Disbursement, the Applicable Margin shall mean 1.95%.

"Assignee Lender" has the meaning ascribed to such term in Section 9.2.

"Attributable Indebtedness" means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease.

"Bankruptcy Code Provisions" has the meaning ascribed to such term in Section 8.1.1.15.

"BHG Units" has the meaning ascribed to such term in the recitals hereto.

"Borrower" has the meaning ascribed to such term in the preamble hereto and shall include any successor to Pinnacle Bank or such other Person that shall assume the obligations of the borrower under the Transaction Documents in accordance with the express terms of such Transaction Documents.

"Borrower 2013 Financial Statements" has the meaning ascribed to such term in Section 4.4.1.

"Borrower 2013 Financial Statements Date" has the meaning ascribed to such term in Section 4.4.1.

"Borrower Financial Statements" has the meaning ascribed to such term in Section 4.4.

"Borrower's Accountant" means KPMG, LLP or such other nationally recognized firm of certified public accountants selected by PFP and Borrower as shall from time to time audit PFP's and Borrower's financial statements.

"Borrower's Liabilities" means Borrower's obligations under this Agreement and any other Transaction Documents.

"Borrowing Notice" means a properly completed notice in a form acceptable to Lender in accordance with its disbursement procedures set forth in this Agreement.

"Borrowing Tranche" means a disbursement of proceeds under the Loan pursuant to this Agreement and, where applicable, the renewal of any such disbursement or portion thereof pursuant to this Agreement.

"Business Day" means a day of the week (but not a Saturday, Sunday or a legal holiday under the laws of the State of Tennessee or any other day on which banking institutions located in Tennessee are authorized or required by law or other governmental action to close) on which the New York, New York offices of Lender are open to the public for carrying on substantially all of its business functions.  Unless specifically referenced in this Agreement as a Business Day, all references to "days" shall be to calendar days.

"Capitalized Leases" means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

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"CFPB" means the Consumer Financial Protection Bureau and any successor to such agency.

"Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation, treaty or related official guidance from or issued by any governmental or similar authority, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any governmental or similar authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental or similar authority; provided, however, that, notwithstanding anything herein to the contrary, (x) the ▇▇▇▇‑▇▇▇▇▇ ▇▇▇▇ Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued.

"Closing" means the meaning ascribed to such term in Section 2.5.

"Closing Date" means the date of this Agreement.

"Code" means the Internal Revenue Code of 1986, as amended or recodified.

"Condition or Release" means any presence, use, storage, transportation, discharge, disposal, release or threatened release of any Hazardous Materials.

"Control" means the possession, directly or indirectly, of the power to direct, cause or significantly influence the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  "Controlling" and "Controlled" have meanings correlative thereto.

"Default Rate" has the meaning ascribed to such term in Section 2.6.1.

"Disbursement" has the meaning ascribed to such term in Section 3.2.

"Disclosure Schedule" means, in aggregate, the disclosures contemplated herein as included in the Disclosure Schedule, which has been delivered in connection with the execution of this Agreement.

"Employee Benefit Plan" means an "employee benefit plan" within the meaning of Section 3(3) of ERISA.

"Equity Interest" means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and regardless of whether such shares, warrants, options, rights or other interests are outstanding on any date of determination.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended or recodified.

"ERISA Affiliate" means any person (as defined in Section 3(9) of ERISA) which together with Borrower would be a member of the same "controlled group" within the meaning of Sections 414(b), (c), (m) and (o) of the Code.

"Event of Default" and "Default" have the meaning ascribed to such terms in Section 8.1.1.

"FDIC" means the Federal Deposit Insurance Corporation and any successor to such agency and shall include any other Governmental Agency that serves as the primary federal banking regulator of Borrower from time to time when the Loan is outstanding.

"FDI Act" means the Federal Deposit Insurance Act, as amended or recodified.

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"Fixed Charge Coverage Ratio" has the meaning ascribed to such term in Section 7.5.

"FRB" means the Board of Governors of the Federal Reserve System and any other Governmental Agency that serves as the primary federal banking regulator of PFP from time to time when the Loan is outstanding.

"GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

"Governmental Agency(ies)" means, individually or collectively, any federal, state, county or local governmental department, commission, board, regulatory authority or agency including the FRB, the TDFI, the FDIC, the CFPB and the SEC.

"Guarantee" means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the first Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness of the payment or performance of such Indebtedness, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness of any other Person,  regardless of whether such Indebtedness is assumed by the first Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary Indebtedness, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term "Guarantee" as a verb has a corresponding meaning.

"Hazardous Materials" means oil, flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radiologically enhanced or contaminated materials, hazardous wastes, toxic or contaminated substances or similar materials, including any substances which are "hazardous substances," "hazardous wastes," "hazardous materials" or "toxic substances" under any Hazardous Materials Laws and/or other applicable environmental laws, ordinances or regulations.

"Hazardous Materials Claims" has the meaning ascribed to such term in Section 4.7.7.

"Hazardous Materials Laws" mean any laws, regulations, permits, licenses or requirements pertaining to the protection, preservation, conservation or regulation of the environment which relates to real property, including:  the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right‑to‑Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws and comparable laws of other jurisdictions or orders and regulations.

"Indebtedness" means, as to any Person at a particular time, without duplication, all of the following, regardless of whether included as indebtedness or liabilities in accordance with GAAP:

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(c)              net obligations of such Person under any Swap Contract (other than any Swap Contract entered into in good faith in the ordinary course of business consistent with past practice among Borrower and its customers);

provided, however, Indebtedness shall not include:

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non‑recourse to such Person.  The amount of any net obligation under any Swap Contract (other than any Swap Contract entered into in good faith in the ordinary course of business consistent with past practice among Borrower and its customers) on any date shall be deemed to be the Swap Termination Value thereof as of such date.

"Instructions" means disbursement instructions given by Borrower to Lender specifying the manner in which proceeds of the Loan, if any, should be disbursed at Closing.

"Interim Financial Statements" has the meaning ascribed to such term in Section 4.4.1.

"Junior Subordinated Debentures" means either collectively or individually, as applicable (a) the Floating Rate Junior Subordinated Deferrable Interest Debentures due 2034, issued by PFP, (b) the Junior Subordinated Notes due 2035, issued by PFP, (c) the Floating Rate Junior Note due 2036, issued by PFP, (d) the Floating Rate Junior Subordinated Deferrable Interest Debentures due 2037, issued by PFP.

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"Lender" has the meaning ascribed to such term in the preamble hereto.

"Liquid Assets" has the meaning ascribed to such term in Section 7.6.

"Loan" has the meaning ascribed to such term in the recitals hereto.

"Material Adverse Effect" means a material adverse change in, or a material adverse effect on, the financial condition, business or operations of the Borrower and its Subsidiaries, taken as a whole.

"Maturity Date" means February 28, 2020.

"Maximum Principal Amount" has the meaning ascribed to such term in the recitals hereto.

"New York Banking Day" means any date (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.

"Nonperforming Assets" has the meaning ascribed to such term in Section 7.3.

"Nonperforming Loans" has the meaning ascribed to such term in Section 7.4.

"Note" shall mean a promissory note in the form attached as Exhibit A hereto in the original principal amount of the Loan, as amended, restated, supplemented or modified from time to time, and each note delivered in substitution or exchange for such note.

"OFAC" means the U.S. Department of the Treasury's Office of Foreign Assets Control, and any successor thereto.

"PATRIOT Act" means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to time, and any successor statute.

 "Permitted Lien" means:

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"Person" means an individual, a corporation (regardless of whether for profit), a partnership, a limited liability company, a joint venture, an association, a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental Agency) or any other entity or organization.

"PFP" has the meaning ascribed to such term in the recitals hereto and shall include any successor to Pinnacle Financial Partners, Inc.

"Property" means any real property owned or leased by Borrower or any Subsidiary but shall not include real property that was acquired by Borrower (including any Subsidiary of Borrower) as a result of its collection efforts relating to bona fide loans made to unrelated borrowers of the Borrower.

"Reprice Date" means the first day of each month.  If the initial advance under this Note occurs other than on the Reprice Date, the initial one-month LIBOR rate shall be that one-month LIBOR rate in effect two New York Banking Days prior to the date of the initial advance, which rate plus the Applicable Margin shall be in effect until the next Reprice Date.  Bank's internal records of applicable interest rates shall be determinative in the absence of manifest error.

"Required Liquidity Amount" has the meaning ascribed to such term in Section 7.6.

"RICO Related Law" means the Racketeer Influenced and Corrupt Organizations Act of 1970 or any other federal, state or local law for which forfeiture of assets is a potential penalty.

"Sanctioned Country" means, at any time, any country or territory which is itself the subject or target of any comprehensive Sanctions.

"Sanctioned Person" means, at any time, (a) any Person or group listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any Person or group operating, organized or resident in a Sanctioned Country, (c) any agency, political subdivision or instrumentality of the government of a Sanctioned Country, or (d) any Person 50% or more owned, directly or indirectly, by any of the above.

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"Sanctions" means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her Majesty's Treasury of the United Kingdom.

"SEC" means the United States Securities and Exchange Commission and any successor to such agency.

"Subsidiary" means any corporation or other entity of which any Controlling Equity Interest is directly or indirectly owned by Borrower (or where expressly indicated, PFP); provided, however, that for avoidance of doubt, BHG shall not be considered a Subsidiary unless and until Borrower, directly or indirectly (including through any other entity directly or indirectly Controlled by Borrower), owns in excess of 50% of BHG's outstanding Equity Interests or is otherwise required to treat BHG as a consolidated entity in Borrower's financial statements in accordance with GAAP.

"Subsidiary Bank Shares" has the meaning ascribed to such term in the recitals hereto and shall include the capital stock and other Equity Interests of any depository institution that is a successor to the Borrower.

"Swap Contract" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross‑currency rate swap transactions, currency options, spot contracts or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), regardless of whether any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement.

"Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap 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 ▇▇▇▇‑to‑market value(s) for such Swap Contracts, as determined based upon one or more mid‑market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include Lender or any Affiliate of Lender).

"Synthetic Lease Obligation" means the monetary obligation of a Person under (a) a so‑called synthetic, off‑balance sheet or tax retention lease or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Bankruptcy Code Provisions to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

"Tangible Primary Capital" has the meaning ascribed to such term in Section 7.3.

 "TDFI" means the Tennessee Department of Financial Institutions and any successor to such agency.

"Total Risk‑Based Capital Ratio" has the meaning ascribed to such term in Section 7.2.

"Transaction Documents" means this Agreement, the Note and those other documents and instruments (including all agreements, instruments, certificates and documents executed by and/or on behalf of Borrower in connection with this Agreement and the Note) entered into or delivered in connection with or relating to the Loan.  Transaction Documents shall also include any Swap Contract between Borrower and Lender or any Affiliate of Lender.

"UCC" shall mean the Uniform Commercial Code as enacted in the State of New York, as amended or recodified.

"Unmatured Event of Default" means an event or circumstance that with the passage of time, the giving of notice or both could become a Default or Event of Default.

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2.6.1 Default Interest.  Notwithstanding the rates of interest and the payment dates specified in this Section 2.6, effective immediately upon the occurrence and during the continuance of any Event of Default, the principal balance of the Loan then outstanding and, to the extent permitted by applicable law, any interest payments not paid within five days after the same becomes due shall bear interest payable upon demand at a rate that is 3% per annum in excess of the rate of interest otherwise payable under this Agreement (the "Default Rate").  In addition, all other amounts due to Lender (whether directly or for reimbursement) under this Agreement or any of the other Transaction Documents if not paid within 5 Business Days after written notice from Lender that the same has become due, shall thereafter bear interest at the foregoing Default Rate.  Finally, any amount due on the Maturity Date that is not then paid shall also bear interest thereafter at the Default Rate.

2.6.2 Computation of Interest.  Interest shall be computed on the basis of the actual number of days elapsed in the period during which interest accrues and a year of 360 days.  In computing interest, the date of funding shall be included and the date of payment (with respect to the amount timely paid on such date) shall be excluded; provided, however, that if any funding is repaid on the same day on which it is made, one day's interest shall be paid thereon.  The parties hereto intend to conform strictly to applicable usury laws as in effect from time to time during the term of the Loan.  Accordingly, if the transaction contemplated hereby would be usurious under applicable law (including the laws of the United States of America, or of any other jurisdiction whose laws may be mandatorily applicable), then, in that event, notwithstanding anything to the contrary in this Agreement or the Note, Borrower and Lender agree that the aggregate of all consideration that constitutes interest under applicable law that is contracted for, charged or received under or in connection with this Agreement shall under no circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be credited to Borrower by Lender (or if such consideration shall have been paid in full, such excess refunded to Borrower by Lender).

 

2.7.1 Changes; Legal Restrictions.  In the event the adoption of or any change in any law, treaty, rule, regulation, guideline or the interpretation or application thereof by a Governmental Agency (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) either (a) subjects Lender to any tax (other than income taxes or franchise taxes not specifically based on loan transactions), duty or other charge of any kind with respect to any LIBOR rate Borrowing Tranche or changes the basis of taxation (other than with respect to income taxes or franchise taxes not specifically based on loan transactions) of payments to Lender of principal, fees, interest or any other amount payable in connection with a LIBOR rate Borrowing Tranche, or (b) imposes on Lender any other condition materially more burdensome in nature, extent or consequence than those in existence as of the date of this Agreement, and the result of any of the foregoing is to increase the cost to Lender of making, renewing or maintaining any LIBOR rate Borrowing Tranches or to reduce any amount receivable thereunder; then, in any such case, Borrower shall promptly pay to Lender, as applicable, upon demand, such amount or amounts as may be necessary to compensate Lender for any such additional cost incurred or reduced amounts received.

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2.7.2 LIBOR Rate Lending Unlawful.  If Lender shall determine (which determination shall, upon notice thereof to Borrower, be conclusive and binding in the absence of readily demonstrable error that the adoption of or any change in any law, treaty, rule, regulation, guideline or in the interpretation or application thereof by any Governmental Agency makes it unlawful for Lender to make or maintain any LIBOR rate Borrowing Tranche, (a) the obligation of Lender to make or continue any LIBOR rate Borrowing Tranche shall, upon such determination, forthwith be suspended until Lender shall notify Borrower that the circumstances causing such suspension no longer exist, and (b) if required by such law, interpretation or application, all LIBOR rate Borrowing Tranches shall automatically convert into non-LIBOR rate Borrowing Tranches in a manner that the interest rate thereon will reasonably approximate the total interest rate payable immediately prior to such circumstance as reasonably determined by Lender.

2.7.3 Unascertainable Interest Rate.  If Lender shall have determined in good faith that adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBOR rate Borrowing Tranches, then, upon notice from Lender to Borrower, the obligations of Lender to make or continue LIBOR rate Borrowing Tranches shall forthwith be suspended, and thereafter the Loan shall continue as non-LIBOR rate Borrowing Tranches in a manner that the interest rate thereon will reasonably approximate the total interest rate payable immediately prior to such circumstance as reasonably determined by Lender until Lender shall notify Borrower that the circumstances causing such suspension no longer exist.  Lender will give such notice when it determines, in good faith, that such circumstances no longer exist; provided, however, that Lender shall not have any liability with respect to any delay in giving such notice.

2.7.4 Funding Losses.  In the event Lender shall incur any loss or expense (including, without limitation, any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by Lender to make or maintain any LIBOR rate Borrowing Tranche) as a result of any continuance, repayment or prepayment of the principal amount of, or failure to make or termination of, any LIBOR rate Borrowing Tranche on a date other than the scheduled last day of the LIBOR period applicable thereto, then, upon the written notice of such from Lender to Borrower, Borrower shall reimburse Lender (without duplication, including under Section 2.7.5.6) for such loss or expense within three Business Days after receipt of such notice.  Such written notice (which shall include calculations in reasonable detail) shall be conclusive and binding in the absence of readily demonstrable error.

2.7.5 Increased Costs; Reserves on LIBOR Rate Borrowing Tranches.

 

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2.8.1 Prepayment.  Subject to Section 2.7.4 hereof and the immediately following sentence, Borrower may, upon at least one Business Day's notice to Lender, prepay, without penalty, all or a portion of the principal amount outstanding under the Note in a minimum aggregate amount of $100,000 or any larger integral multiple of $100,000 by paying the principal amount to be prepaid, together with unpaid accrued interest thereon to the date of prepayment.  So long as no Event of Default or Unmatured Event of Default has occurred and is continuing and Borrower has no unsatisfied obligations under the Transaction Documents, prepayments shall be applied to the scheduled principal installment payable in respect of the Loan as directed by Borrower.  Amounts that are prepaid under the Note may not be reborrowed

  

 

2.8.2 Manner and Time of Payment.  All payments of principal, interest and fees hereunder payable to Lender shall be made, without condition or reservation of right and free of set‑off or counterclaim, in U.S. dollars and by wire transfer (pursuant to Lender's written wire transfer instructions) of immediately available funds delivered to Lender not later than 12:00 noon  (Eastern time) on the date due.  Funds received by Lender after that time and date shall be deemed to have been paid on the next succeeding Business Day.

 

2.8.3 Payments on Non‑Business Days.  Whenever any payment to be made by Borrower hereunder shall be stated to be due on a day that is not a Business Day, payments shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder.

 

2.8.4 Application of Payments.  All payments received by Lender from or on behalf of Borrower shall be applied first to amounts due to Lender to reimburse Lender's costs and expenses, including those pursuant to Section 5.6 or Section 8.5 and, second to accrued interest under the Note, and third to principal amounts outstanding under the Note; provided, however, subject to Section 8.1.2 of this Agreement, that after the date on which the final payment of principal with respect to the Loan is due or following and during any Event of Default, all payments received on account of Borrower's Liabilities shall be applied in whatever order, combination and amounts as Lender, in its sole and absolute discretion, decides, to all costs, expenses and other indebtedness owing to Lender under the Transaction Documents.

 

 

3.1        Disbursement.  Following the Closing and the delivery of all items required by Section 3, at such time as all of the terms and conditions in Section 3.3 have been satisfied by Borrower and Borrower has executed and delivered to Lender each of the Transaction Documents and any other related documents in form and substance reasonably satisfactory to Lender, Lender shall disburse to Borrower an amount up to the Maximum Principal Amount.  In the event Borrower fails to satisfy any disbursement conditions, Borrower nevertheless shall pay all costs and expenses incurred by Lender in connection with the transactions contemplated herein promptly upon receipt of an invoice therefor from Lender.

 

3.2        Closing Deliveries.  In conjunction with and as additional (but independent) supporting evidence for certain of the covenants, representations and warranties made by Borrower herein, at the Closing and as a condition of the disbursement to be made pursuant to this Agreement (the "Disbursement"), Borrower shall deliver or cause to be delivered to Lender each of the following, each of which shall be in form and substance satisfactory to Lender, in its sole and absolute discretion:

3.2.1 Searches. Such UCC, tax lien and judgment searches regarding Borrower pertaining to the jurisdictions in which Borrower is organized and headquartered.

 

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      3.3.1 Default.  There exists an Event of Default or Unmatured Event of Default.

        3.3.2 Representations and Warranties.  Any representation or warranty of Borrower contained herein or any information set forth in the recitals hereto, shall not be true on and as of the date of any Borrowing Tranche, with the same effect as though such representations and warranties had been made, or such information had been presented, on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date.

           3.3.3 Approvals.  All necessary or appropriate actions and proceedings have not been taken in connection with, or relating to, the transactions contemplated hereby (including the acquisition by Borrower of the BHG Units) and all documents incident thereto have not been completed and tendered for delivery, in substance and form reasonably satisfactory to Lender, including if appropriate in the opinion of Lender, Lender's failure to have received evidence of any necessary approvals from Governmental Agencies.

           3.3.4 Other Documents.  Lender has not received in substance and form reasonably satisfactory to Lender, all instruments, certificates, affidavits, schedules, resolutions, opinions, notes, and/or other documents that are provided for hereunder.

           3.3.5 Legislation or Proceedings.  Any legislation has been passed or any suit or other proceeding has been instituted the effect of which is to prohibit, enjoin (or to declare unlawful or improper) or otherwise materially and adversely affect, in Lender's sole and absolute judgment, Borrower's performance of its obligations hereunder, or any litigation or governmental proceeding has been instituted or threatened against Borrower or any Subsidiary or any of their officers or shareholders that could reasonably be expected to be determined adversely and, if so determined, to have a Material Adverse Effect.

Lender's refusal to disburse any proceeds of the Loan on account of the provisions of this Section 3.3 shall not alter or diminish any of Borrower's other obligations hereunder or otherwise prevent any breach or default of Borrower hereunder from becoming an Event of Default.  Each renewal of a Borrowing Tranche hereunder shall constitute an affirmation that Borrower has performed, observed and complied with its covenants, conditions and agreements contained herein in all material respects.

 

 

4.1.1 Organization Matters.  Each of Borrower and the Subsidiaries is duly organized, validly existing and chartered under the laws of the jurisdiction of its organization, and has all requisite power and authority, corporate or otherwise, to own, operate and lease its properties and to carry on its business as now being conducted, except, with respect to Subsidiaries and not with respect to the Borrower, where the failure of such Subsidiary to have the requisite power and authority, corporate or otherwise, to own, operate and lease its properties and to carry on its business as now being conducted would not have a Material Adverse Effect.  Borrower has the power and authority to enter into this Agreement and the other Transaction Documents to which it is a party.  The deposit accounts of Borrower are insured by the FDIC to the fullest extent permitted by applicable law.  PFP (a) is a corporation duly organized and validly existing under the laws of the State of Tennessee; (b) is duly qualified as a foreign corporation and in good standing in the State of Tennessee and all jurisdictions in which it is doing business except where the failure to so qualify would not have a Material Adverse Effect; (c) has all requisite power and authority, corporate or otherwise, to own, operate and lease its properties and to carry on its business as now being conducted; and (d) is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.  Borrower and PFP have made payment of all applicable franchise and similar taxes in the State of Tennessee, and in all of the other respective jurisdictions in which they are incorporated, chartered or qualified, prior to delinquency, except for any such taxes (i) where the failure to pay such taxes would not have a Material Adverse Effect, (ii) the validity of which is being contested in good faith and (iii) for which proper reserves have been set aside on the books of Borrower or PFP, as the case may be.

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4.1.2 Business Locations and Capital Stock of Borrower.  Section 4.1.2 of the Disclosure Schedule correctly sets forth (a) the state or states in which Borrower owns, leases, operates, maintains, controls or otherwise has an interest in any branch offices, loan production offices, deposit production offices, remote service units for the production of deposits or loans, or any ATMs, and the state or states in which Borrower owns or leases any Property used in its operations, and (b) a list of each class of stock of Borrower as well as the owners of record and beneficial owners thereof, including the number of shares held by each, and, except as otherwise stated in Section 4.1.2 of the Disclosure Schedule, there is no plan, agreement or understanding providing for, or contemplating, the issuance of any additional shares of capital stock of Borrower.  All of the Subsidiary Bank Shares have been duly authorized, legally and validly issued, fully paid and nonassessable and the Subsidiary Bank Shares are owned by PFP free and clear of all pledges, liens, security interests, charges or encumbrances, and following the Closing Date, PFP will own the Subsidiary Bank Shares free and clear of all pledges, liens, security interests, charges or encumbrances.  No Subsidiary Bank Shares have been issued in violation of any shareholder's preemptive rights.  Except as otherwise stated in Section 4.1.2 of the Disclosure Schedule, there are no outstanding options, rights, warrants or other agreements or instruments obligating Borrower to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of its capital stock or other Equity Interests.

 

4.2.1 Transaction is Legal and Authorized.  The borrowing of the principal amount of the Loan, the execution of this Agreement and the other Transaction Documents and compliance by Borrower or any Subsidiary, as applicable, with all of the provisions of this Agreement and of the other Transaction Documents are within the corporate and other powers of Borrower or such Subsidiary, as applicable.  This Agreement and the other Transaction Documents to which Borrower or such Subsidiary, as applicable, is a party have been duly authorized, executed and delivered by Borrower or any Subsidiary, as applicable, and are the legal, valid and binding obligations of Borrower or such Subsidiary, as applicable, enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or limiting creditors' rights or equitable principles generally.

4.2.2 No Defaults or Restrictions.  Neither the execution and delivery of the Transaction Documents nor compliance with their terms and conditions will (a) violate, conflict with or result in a material breach of, or constitute a material default under: (i) the charter or bylaws of Borrower or PFP; (ii) any of the terms, obligations, covenants, conditions or provisions of any corporate restriction or of any indenture, mortgage, deed of trust, pledge, bank loan or credit agreement, or any other material agreement or instrument to which Borrower is now a party or by which Borrower or any of its properties may be bound or affected; (iii) any judgment, order, writ, injunction, decree or demand of any court, arbitrator, grand jury, or Governmental Agency applicable to Borrower; or (iv) any statute, rule or regulation applicable to Borrower, or (b) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any property or asset of Borrower or PFP except in the case of (a)(ii), (a)(iii), (a)(iv) and (b), such violations, conflicts, breaches, defaults, liens, charges or encumbrances as would not have a Material Adverse Effect.  Neither Borrower nor PFP is in material default in the performance, observance or fulfillment of any of the terms, obligations, covenants, conditions or provisions contained in any material indenture or other agreement creating, evidencing or securing Indebtedness of any kind or pursuant to which any such Indebtedness is issued, or other agreement or instrument to which Borrower or PFP is a party or by which Borrower or PFP or their properties may be bound or affected.

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4.2.3 Governmental Consent.  No governmental orders, permissions, consents, approvals or authorizations are required to be obtained by Borrower or PFP and no registrations or declarations are required to be filed by Borrower or PFP in connection with, or contemplation of, the execution and delivery of, and performance under, this Agreement and the other Transaction Documents or the acquisition by Borrower of the BHG Units that have not already been obtained or completed.

 

4.3.1 Use of Proceeds.  Borrower shall use the proceeds of the Loan solely to fund the purchase of the BHG Units and no proceeds may be used for general corporate purposes.  Borrower will not use any part of the proceeds of the Loan (a) directly or indirectly to purchase or carry any margin security or reduce or retire any indebtedness originally incurred to purchase any such margin security within the meaning of Regulation U of the FRB, or (b) so as to involve Borrower or Lender in a violation of Regulation U of the FRB. Borrower agrees to execute, or cause to be executed, all instruments necessary to comply with all of the requirements of Regulation U of the FRB. Further, Borrower will not request or use any part of the proceeds of the Loan, and the Borrower shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of the Loan (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or (ii) in any manner that would result in the violation of any applicable Sanctions.

4.3.2 Usury.  None of the amounts to be received by Lender as interest under the Note pursuant to the terms of the Note and the other Transaction Documents is usurious or illegal under any applicable law.

 

4.4.1  Borrower Financial Statements.  Borrower has delivered to Lender copies of the consolidated financial statements of PFP (which financial statements shall include the financial statement accounts and information of Borrower) as of and for the year ended December 31, 2013 (the "Borrower 2013 Financial Statements Date"), audited by Borrower's Accountant (the "Borrower 2013 Financial Statements").  The Borrower 2013 Financial Statements are true and correct in material respects, have been prepared in accordance with the respective books of account and records of PFP and its Subsidiaries, have been prepared in accordance with GAAP applied on a basis consistent with prior periods, and fairly and accurately present, in all material respects, the financial condition of PFP and its Subsidiaries and their assets and liabilities and the results of their operations as of such date and for the fiscal year then ended.  In addition, Borrower has delivered to Lender copies of the call reports filed by Borrower and copies of the quarterly financial reports filed by the PFP with the applicable federal regulator, in each case for the quarterly period ending September 30, 2014 (such call reports and regulatory filings, "Interim Financial Statements" and together with the Borrower 2013 Financial Statements, the "Borrower Financial Statements").  The Interim Financial Statements are true and correct in material respects and have been prepared in accordance with the respective books of account and records of PFP and Borrower and their Subsidiaries, as the case may be, and in accordance with applicable banking regulations, rules and guidelines on a basis consistent with prior periods, and fairly and accurately present in all material respects the financial condition of PFP and Borrower, as the case may be, and their respective assets and liabilities and the results of their respective operations as of such date and for the period(s) covered thereby, subject to year-end adjustments and the absence of notes.  The Borrower Financial Statements contain and reflect provisions for taxes, reserves and other liabilities of Borrower in accordance with GAAP and applicable banking regulations, rules, and guidelines, respectively.  Neither PFP nor Borrower has any material debt, liability or obligation of any nature (whether accrued, contingent, absolute or otherwise) required to be provided for or disclosed under GAAP that is not provided for or disclosed in the Borrower Financial Statements.

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4.4.2  Absence of Default.  No event has occurred that either of itself or with the lapse of time or the giving of notice or both, would give any creditor of Borrower the right to accelerate the maturity of any indebtedness of Borrower for borrowed money.  Borrower is not in default under any other lease, agreement or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, except for such defaults as would not have a Material Adverse Effect.

4.4.3  Loans. To Borrower's knowledge, each loan having an outstanding balance of more than $5,000,000 and reflected as an asset of Borrower in the Borrower Financial Statements is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or limiting creditors' rights or equitable principles generally. As of the date hereof and the date of any quarterly compliance certificate delivered under Section 6.3, to Borrower's knowledge, (a) no obligor named therein is seeking to avoid the enforceability of the terms of any loan having an unpaid balance (principal and accrued interest) in excess of $5,000,000, and (b) no loan having an unpaid balance (principal and accrued interest) in excess of $5,000,000 is subject to any valid defense, offset or counterclaim.

4.4.4 Allowance for Loan and Lease Losses.  The allowance for loan and lease losses shown in the Borrower Financial Statements is adequate to provide for losses, net of recoveries relating to loans previously charged off, on loans and leases outstanding as of the date of such statements or reports.

4.4.5  Solvency.  After giving effect to the consummation of the transactions contemplated by this Agreement, Borrower has capital sufficient to carry on its business and transactions and all businesses and transactions in which it is about to engage and is solvent and able to pay its debts as they mature.  No transfer of property is being made and no indebtedness is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of Borrower or any Subsidiary.

4.4.6  Subordination.  The Junior Subordinated Debentures are expressly or structurally subordinate and junior in all respects (including, with respect to the right of payment) to the Loan to the extent provided in each applicable indenture pursuant to which the Junior Subordinated Debentures were issued.  The Loan expressly or effectively constitutes "Senior Indebtedness" or "Senior Debt", as applicable, and as defined in each such applicable indenture.

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4.5.1  Owned Property.  PFP, Borrower and their Subsidiaries have, respectively, good and marketable fee title to all the Property reflected in the Borrower Financial Statements, and good and marketable title to all other property and assets reflected in the Borrower Financial Statements, except for (a) real property and other assets acquired and/or being acquired from debtors in full or partial satisfaction of obligations owed to Borrower, (b) property or other assets leased by Borrower or any Subsidiary, and (c) property and assets sold or otherwise disposed of for their fair market value subsequent to the date of the Borrower Financial Statements.  Except for property and other assets acquired and/or being acquired from debtors in full or partial satisfaction of obligations owed to Borrower and property or other assets leased by Borrower or any Subsidiary, all property and assets of any kind (real or personal, tangible or intangible) of Borrower and any Subsidiary are free from any liens, encumbrances or defects in title, except for (a) Permitted Liens and (b) such defects in title as would not be reasonably expected to have a Material Adverse Effect.  Except as identified in Section 4.5.1 of the Disclosure Schedule or as may be filed in connection with any Permitted Lien, no financing statement under the UCC that names Borrower or PFP as debtor has been filed and neither Borrower nor PFP has signed any financing statement or any pledge agreement authorizing any secured party thereunder to file any such financing statement.

4.5.2  Leased Property.  For Property leased by Borrower or any Subsidiary and necessary in the ordinary course of the business of Borrower and its Subsidiaries, Borrower and each such Subsidiary enjoy peaceful and undisturbed possession under all of such Leases under which they are operating, all of which permit the customary operations of Borrower and any Subsidiary, as applicable.  None of such Leases is in material default that could have a Material Adverse Effect.

 

 

4.7.1  Compliance with Law.  Borrower and the Subsidiaries have complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any instrumentality or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties, except where any such failure to comply could not reasonably be expected to have a Material Adverse Effect.

4.7.2  Taxes.  Borrower and each Subsidiary have filed all United States income tax returns and all material state and municipal tax returns that are required to be filed, and have paid, or made adequate provision for the payment of, all material taxes that have become due pursuant to said returns or pursuant to any assessment received by Borrower or any Subsidiary, prior to delinquency, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided.  To the knowledge of Borrower there is not pending any audit, assessment or other proposed action or inquiry of the Internal Revenue Service with respect to any material United States income tax liability of Borrower or any Subsidiary.  To Borrower's knowledge, Borrower and each Subsidiary have withheld amounts from their employees, shareholders or holders of public deposit accounts and have complied in all material respects with the tax withholding provisions of applicable federal, state and local laws and each has filed all federal, state and material local returns and reports for all years for which any such return or report would be due with respect to employee income tax withholding, social security, unemployment taxes, income and other taxes and all payments or deposits with respect to such taxes have been made in all material respects within the time period required by law.

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4.7.3  Regulatory Enforcement Actions. Except as set forth in Section 4.7.3 of the Disclosure Schedule, as of the Closing Date none of Borrower, any Subsidiary or any of their respective officers or directors is operating under any restrictions, agreements, memoranda, commitments (other than restrictions of general application) or any other actions of the type described in Section 8.1.1.9 imposed by any Governmental Agency, nor are any such restrictions threatened or agreements, memoranda or commitments being sought by any Governmental Agency.

4.7.4  Pending Litigation.  Except as otherwise disclosed in Section 4.7.4 of the Disclosure Schedule and in PFP's most recent annual report filed on Form 10‑K and quarterly report on Form 10-Q, there are no actions, suits, proceedings or written agreements pending, or, to Borrower's knowledge, threatened in writing, against Borrower or any Subsidiary at law or in equity or before or by any federal, state, municipal, or other governmental department, commission, board, or other administrative agency, domestic or foreign, that, either separately or in the aggregate, could reasonably be expected to be determined adversely and, if so determined, to have a Material Adverse Effect; and none of Borrower or any Subsidiary is in default with respect to any order, writ, injunction, or decree of, or any written agreement with, any court, commission, board or agency, domestic or foreign, if and to the extent that, either separately or in the aggregate, such default(s) could reasonably be expected to have a Material Adverse Effect.

4.7.5  RICO.  There are no suits, actions or proceedings pending or, to Borrower's knowledge, threatened against Borrower or any Subsidiary, or any of the principals thereof, under a RICO Related Law.

4.7.6  ERISA.  All Employee Benefit Plans (as defined in Section 3(3) of ERISA) established or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes are in material compliance with applicable requirements of ERISA, and are in material compliance with applicable requirements (including qualification and non‑discrimination requirements) of the Code for obtaining the tax benefits the Code thereupon permits with respect to such plans.  Each Employee Benefit Plan that is a group health plan (within the meaning of Section 5000(b)(1) of the Code) complies with and has been maintained and operated in material compliance with each of the requirements of Section 4980B of the Code.  Neither Borrower nor any ERISA Affiliate has failed to make on a timely basis any required contributions or to pay on a timely basis any amounts with respect to any Employee Benefit Plan or ERISA or any other applicable law.  No "reportable event" or non‑exempt "prohibited transaction," as defined in ERISA, has occurred and is continuing as to any Employee Benefit Plan and no excise taxes have been incurred or security is required with respect to any Employee Benefit Plan.  No Employee Benefit Plan has, or as of the Closing Date will have, any amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA) for which Borrower or any ERISA Affiliate could be liable to any Person under Title IV of ERISA if any such plan were terminated.  All Employee Benefit Plans are funded in accordance with Section 412 of the Code (if applicable).  There would be no obligations under Title IV of ERISA relating to any Employee Benefit Plan that is a multiemployer plan if any such plan were terminated or if Borrower or any ERISA Affiliate withdrew from any such plan.  Except as set forth in Section 4.7.6 of the Disclosure Schedule, and except as required by Section 4980B of the Code or applicable state insurance laws, neither Borrower nor any ERISA Affiliate has promised any employee medical coverage after termination of employment, or promised medical coverage to any former employee or other individual not employed by Borrower or any ERISA Affiliate, and neither Borrower nor any ERISA Affiliate maintains or contributes to any plan or arrangement providing medical benefits to employees after their termination of employment or any other individual not employed by Borrower or any ERISA Affiliate.

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4.7.7  Environmental.  Except as set forth in Section 4.7.7 of the Disclosure Schedule, no Property is or, to Borrower's knowledge, has been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal or transportation of any Hazardous Materials other than those used, stored and released by Borrower within an office in the ordinary course of business, and neither Borrower nor any Subsidiary has engaged in any such activities each outside of those performed in the ordinary course of business within an office.  Each Property, and Borrower and each Subsidiary, are in compliance with all Hazardous Materials Laws.  Except as set forth in Section 4.7.7 of the Disclosure Schedule, there are no claims or actions ("Hazardous Materials Claims") pending or, to Borrower's knowledge, threatened, nor have there been any such claims or actions in the past, against Borrower or any Subsidiary or, to Borrower's knowledge, any Property by any Governmental Agency or by any other Person relating to any Hazardous Materials or pursuant to any Hazardous Materials Law.

4.7.8  Anti-Corruption Laws; Sanctions; Anti-Terrorism Laws.

 

4.8.1  Non‑Foreign Status.  Borrower is not a nonresident alien for purposes of U.S. income taxation and is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as said terms are defined in the Code or regulations promulgated thereunder).

4.8.2  Investment Company Act.  Borrower is not an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.

4.8.3  No Burdensome Agreements.  None of Borrower or any Subsidiary is a party to any agreement, instrument or undertaking or subject to any other restriction (a) that could reasonably be expected to have a Material Adverse Effect, or (b) under or pursuant to which Borrower or any Subsidiary is or will be required to place (or under which any other Person may place) a lien (other than Permitted Liens) upon any of its properties securing indebtedness either upon demand or upon the happening of a condition, with or without such demand.

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5.2.1  Merger, Consolidation and Sale of Assets.  Without the prior written consent of Lender, neither Borrower nor PFP shall consolidate with or merge with any Person (except for consolidations or mergers (a) in which Borrower and PFP, as applicable, is the surviving entity or (b) with any Subsidiary of Borrower or PFP) or sell, lease or otherwise transfer all or substantially all of its assets to, any Person.

5.2.2  Restricted Payments.  Without the prior written consent of Lender, Borrower shall not redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock or other Equity Interests.

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5.2.3  Incurring Debt; Liens.  Without the prior written consent of Lender, which consent shall not be unreasonably withheld, Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to (a) create, assume, incur, have outstanding, or in any manner become liable in respect of any Indebtedness other than (i) as reflected in Section 5.2.3 of the Disclosure Schedule (including any refinancings, renewals, amendments and extensions thereof); (ii) Indebtedness of any Person acquired by Borrower or PFP that is subordinated to the Indebtedness under this Agreement as long as Borrower is in compliance both before and after giving effect to such acquisition with the covenants contained in Article 7 of this Agreement and no Event of Default exists or would result from such acquisition; (iii) Indebtedness incurred under Swap Contracts entered into by PFP, Borrower or any Subsidiary in the ordinary course of business to hedge or mitigate risks to which PFP, Borrower or any Subsidiary is exposed in the conduct of its business or the management of its liabilities, including Borrower's Indebtedness incurred under this Agreement; and (iv) with respect to obligations of the type specifically excluded from the definition of "Indebtedness" in this Agreement, or (b) create, assume, incur, suffer or permit to exist any mortgage, pledge, deed of trust, encumbrance (including the lien or retained security title of a conditional vendor), security interest, assignment, lien or charge of any kind or character upon or with respect to any of their real or personal property, including any capital stock owned by Borrower whether owned at the date hereof or hereafter acquired other than Permitted Liens.  Borrower shall not in any manner permit any "affiliate" (as defined in Regulation W of the rules and regulations promulgated by the FRB and Sections 23A and 23B of the Federal Reserve Act) of Borrower to become liable to Borrower in respect of any Indebtedness other than Indebtedness owed by the PFP or any "affiliate" of Borrower not in material violation of Regulation W of the rules and regulations promulgated by the FRB (as amended, supplemented or otherwise modified).

5.2.4  Asset Sales.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to dispose of by sale, assignment, lease or otherwise, property or assets now owned or hereafter acquired if such property or assets plus all other properties and assets sold, leased, transferred or otherwise disposed of during the 12‑month period ending on the date of such sale, lease or other disposition shall have an aggregate value of more than 10% of the consolidated assets of Borrower as reflected in the most recent balance sheet delivered to Lender (pursuant to Section 6 hereof) prior to the commencement of such period, except (a) that each of Borrower and its Subsidiaries may sell, assign, lease, transfer or otherwise dispose of  assets in good faith in the ordinary course of its respective business, (b) Borrower and its Subsidiaries may sell, assign, lease, transfer or otherwise dispose of property or assets to Borrower or a Subsidiary of Borrower, (c) Borrower and its Subsidiaries may sell, assign, lease, transfer or otherwise dispose of property or assets that are obsolete or no longer useful in Borrower's or such Subsidiary's business, (d) Borrower and each Subsidiary may sell, assign, transfer or otherwise dispose of loans held for sale in the ordinary course of its business, and (e) Borrower and each Subsidiary may sell, assign, lease, transfer or otherwise dispose of assets received upon or in lieu of foreclosure and upon assets no longer subject to leases for the financing of personal property.

5.2.5  Subsidiary Capital Stock Matters.  Except in connection with the dissolution and wind-down of Borrower's current Subsidiary that is a real estate investment trust, Borrower shall not permit or allow any Subsidiary to, redeem, repurchase, acquire or make a liquidating payment (other than to Borrower or to any Subsidiary) with respect to any of its capital stock or other outstanding securities or otherwise change its capital structure.

5.2.6  Making Loans.  Borrower shall not, nor shall it cause, permit or allow any Subsidiary to, make any loans or advances, whether secured or unsecured, to any Person, other than loans or advances made by Borrower in the ordinary course of business and in accordance in all material respects with safe and sound banking practices and applicable laws and regulations.

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5.2.7 Other Matters.  Borrower shall notify Lender of any of the following at least 10 days prior to the effectiveness thereof, or, in the case of matters described in clause (c) below for which 10 days' pre-effectiveness notice is not given to Borrower, as soon as practicable: (a) any change in the name of Borrower; (b) any change in the headquarters or principal place of business of PFP, Borrower or any Subsidiary; and (c) the issuance, execution or adoption of any formal or informal (whether voluntary or involuntary) regulatory action with respect to PFP or Borrower at the request of any Governmental Agency; and (d) any material change in the capital structure of Borrower.

 

5.3.1  Encumbrance.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to directly or indirectly create, assume, incur, suffer or permit to exist any pledge, encumbrance, security interest, assignment, lien or charge of any kind or character on any Subsidiary Bank Shares. Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to sell, transfer, issue, reissue, exchange or grant any option with respect to any Subsidiary Bank Shares other than sales, transfers, issuances, reissuances, exchanges or grants to Borrower or any Subsidiary or PFP, as appropriate.

5.3.2  Dilution.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to cause or allow the percentage of Subsidiary Bank Shares owned directly or indirectly by PFP to diminish as a percentage of the outstanding capital stock of Borrower.

 

5.4.1  Compliance with Transaction Documents.  Borrower shall not breach or fail to perform or observe in any material respect any of the terms and conditions of the Note or any other Transaction Document.  For purposes of this Agreement, any failure by Borrower to pay any amounts under the Agreement, the Note or any other Transaction Document when due (taking into account any applicable cure period) shall be deemed to be material.

5.4.2  Affiliate Transactions.  Other than transactions between or among PFP, Borrower and the Subsidiaries of each, Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to enter into any transaction including the purchase, sale or exchange of property or the rendering of any service, with any Affiliate except in the ordinary course of business and in accordance with applicable laws and regulations, and pursuant to the reasonable requirements of Borrower's or such Affiliate's business and upon fair and reasonable terms consistent with applicable laws and regulations and no less favorable to Borrower or such Affiliate than would be obtained in a comparable arm's length transaction with a Person not an Affiliate.

5.4.3  Insurance.  At its sole cost and expense, Borrower will maintain, and will cause each Subsidiary to maintain, bonds and insurance to such extent, covering such risks and with such deductibles and self-insurance as are usual and customary for owners of similar businesses and properties in the same general area in which Borrower or such Subsidiary operates, including insurance for fire and other risks insured against by extended coverage, public liability insurance, workers' compensation insurance.  All such bonds and policies of insurance shall be in a form, in an amount and with issuers/insurers recognized as adequate by prudent business persons.

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5.5.1  Generally.  Borrower shall comply and cause each Subsidiary to comply in all material respects with all applicable statutes, rules, regulations, orders and restrictions in respect of the conduct of their respective businesses and the ownership of their respective properties, except in such instances in which the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

              5.5.2  Regulated Activities. Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to (a) engage in any business or activity not permitted by all applicable laws and regulations, including the FDI Act and any regulations promulgated thereunder, or (b) make any loan or advance secured by the capital stock of another bank or depository institution, or, in connection therewith, acquire the capital stock, assets or obligations of or any interest in another bank or depository institution, in each case under this clause (b), other than in the ordinary course of business and in accordance with applicable laws and regulations.

5.5.4  ERISA.  As soon as possible, and in any event within 10 Business Days, after: (a) Borrower or any ERISA Affiliate knows that with respect to any Employee Benefit Plan, a "prohibited transaction," a "reportable event," or any other event or condition that could subject Borrower or any ERISA Affiliate to liability under ERISA or the Code; or (b) the institution of steps by Borrower or any ERISA Affiliate to withdraw from, or the institution of any steps by any party to terminate, any Employee Benefit Plan; has or may have occurred, Borrower shall deliver to Lender a certificate of a responsible officer setting forth the details of such matter, the action that Borrower proposes to take with respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service, the U.S. Department of Labor, or the Pension Benefit Guaranty Corporation.  For purposes of this covenant, Borrower shall be deemed to have knowledge of all facts known by the fiduciaries of any Employee Benefit Plan of Borrower or any ERISA Affiliate.

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5.5.5  Environmental Matters.  Borrower shall: (a) exercise, and cause each Subsidiary to exercise, due diligence in order to comply with all Hazardous Materials Laws; (b) promptly advise Lender in writing and in reasonable detail of (i) any Condition or Release required to be reported to any Governmental Agency under any applicable Hazardous Materials Laws with respect to any Property, (ii) any and all non-privileged written communications with respect to Hazardous Materials Claims or any Condition or Release required to be reported to any Governmental Agency with respect to any Property, (iii) any remedial action taken by Borrower or any other Person in response to (A) any Hazardous Material on, under or about any Property, the existence of which is reasonably likely to give rise to a Hazardous Materials Claim, or (B) any Hazardous Materials Claim that could reasonably be expected to have a Material Adverse Effect, (iv) Borrower's discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Property that could cause such Property or any part thereof to be subject to any materially adverse restrictions on the ownership, occupancy, transferability or use thereof under any Hazardous Materials Law, and (v) any request for information with respect to any Property from any Governmental Agency indicating that such agency has initiated an investigation as to whether Borrower or any Subsidiary may be potentially responsible for a Condition or Release or threatened Condition or Release of Hazardous Materials; (c) at its own expense, provide copies of such documents as Lender may reasonably request in relation to any matters disclosed pursuant to this Section 5.5.5; (d) promptly take any and all necessary remedial action in connection with any Condition or Release or threatened Condition or Release on, under or from any Property in order to comply with all applicable Hazardous Materials Laws.  In the event Borrower or any Subsidiary undertakes any remedial action with respect to such Hazardous Material on, under or about any Property, Borrower or such Subsidiary shall conduct and complete such remedial action in compliance with all applicable Hazardous Materials Laws and in accordance with the policies, orders and directives of all Governmental Agencies.  Borrower shall permit Lender, from time to time and in its sole and absolute discretion, to retain, at Borrower's expense, an independent professional consultant to review any report relating to Hazardous Materials prepared by or for Borrower or any Subsidiary, and at reasonable times and subject to reasonable conditions to conduct its own investigation of any Property, and if reasonably requested by Lender, Borrower agrees to use commercially reasonable efforts to obtain permission for Lender's professional consultant to conduct its own investigation of any Property and shall cause each Subsidiary to do the same.  If reasonably requested by Lender, Borrower shall grant to Lender, its agents, employees, consultants, and contractors the right to enter into or on to, at reasonable times, any Property to perform such tests on such Property as are reasonably necessary to conduct such investigation.  Borrower shall promptly notify Lender of (1) any acquisition of stock, assets, or property by Borrower or any Subsidiary that reasonably would be expected to expose Borrower or any Subsidiary to, or result in, a Hazardous Materials Claim that would have a Material Adverse Effect or that would be expected to have a Material Adverse Effect on any governmental authorization, license, permit or approval then held by Borrower or any Subsidiary, and (2) any proposed action outside the normal course of business to be taken by Borrower or any Subsidiary to commence industrial or other operations that could subject Borrower or any Subsidiary to additional laws, rules or regulations, including laws, rules and regulations requiring additional environmental permits or licenses.

5.5.6  Environmental Indemnity.  Borrower hereby agrees to defend, indemnify and hold harmless Lender, its directors, officers, employees, agents, successors and assigns (including any participants in the Loan) from and against any and all losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses (including attorney's fees and expenses) Lender may incur as a direct or indirect consequence of (a) any Hazardous Materials Claim or any other violation of a Hazardous Materials Law, or (b) the use, generation, manufacture, storage, disposal, threatened disposal, transportation or presence of Hazardous Materials in, on, under or about the Property or otherwise by Borrower or any Subsidiary.  Borrower's duty and obligations to defend, indemnify and hold harmless Lender shall survive the cancellation of the Note and any other Transaction Documents.

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5.5.7 Corporate Existence.  Except in connection with a consolidation or merger in compliance with Section 5.2.1, Borrower shall do or cause to be done all things necessary to maintain, preserve and renew its corporate existence and its rights and franchises, and comply with all related laws applicable to Borrower.

5.5.8 USA Patriot Act Matters.  Borrower shall not, nor shall it cause, permit or allow, any Subsidiary or Affiliate (a) to be or become subject at any time to any law, regulation, or list of any Government Agency (including the OFAC list) that prohibits or limits Lender from making any advance or extension of credit to the Borrower or from otherwise conducting business with the Borrower, or (b) to fail to provide documentary or other evidence of Borrower's identity as may be reasonably requested by Lender at any time to enable Lender to verify Borrower's identity or to comply with any applicable law or regulation, including Section 326 of the Patriot Act.  The Borrower will, and will cause each Subsidiary or Affiliate to, comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Anti-Corruption Laws and applicable Sanctions.

 

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6.            REPORTING.  For so long as the Loan or any obligation of Borrower to Lender in connection therewith is outstanding, Borrower shall furnish and deliver or cause to be furnished and delivered to Lender:

 

 

 

6.3            Compliance Certificate.  Borrower shall furnish Lender, at the same time as the financial reports referred to in Sections 6.1 and 6.2(a), a quarterly compliance certificate in the form attached as Exhibit C hereto.  Such quarterly compliance certificate shall be signed by the Chief Executive Officer, President, Chief Financial Officer or Treasurer of Borrower and shall also contain, in a form and with such specificity as is reasonably satisfactory to Lender, such additional information as Lender shall have reasonably requested by Borrower prior to the submission thereof.

 

 

 

 

 

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8.1.1 Events of Default.  Regardless of whether Borrower has given the required notice under Section 6.6, the occurrence of one or more of the following will constitute a "Default" and each of the events described below shall be an "Event of Default" under this Agreement:

 

 

 

 

 

 

 

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8.1.2 Lender's Remedies.  Upon the occurrence of any Event of Default, Lender shall have the right, if such Event of Default shall then be continuing, in addition to all the remedies conferred upon Lender by law or equity or the terms of any Transaction Document, to do any or all of the following, concurrently or successively, without notice to Borrower; provided, however, upon the occurrence of an Event of Default identified in any of Sections 8.1.1.13  through 8.1.1.15, the unpaid principal amount under the Loan, all interest and all other amounts outstanding under this Agreement or any other Transaction Document shall automatically become due and payable without further act of Lender:

 

 

 

 

 

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if to Borrower:

▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇

Attn:  ▇▇▇ ▇. ▇▇▇▇▇▇▇▇

Telephone No.:  (▇▇▇) ▇▇▇-▇▇▇▇

Fax No.:  (▇▇▇) ▇▇▇-▇▇▇▇

 

if to Lender:

U.S. Bank National Association ▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇  ▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Portfolio Manager Telephone No.:  (▇▇▇) ▇▇▇-▇▇▇▇ Fax No.:  (▇▇▇) ▇▇▇-▇▇▇▇ E‑Mail Address:  ▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇

And to:

▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇  ▇▇▇▇▇
Attn:  ▇▇▇▇▇ ▇. del Hierro, P.C.
Telephone No.:  (312) 862‑3222
Fax No.:  (312) 862‑2200
E‑Mail Address: ▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇

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or to such other address or addresses as the party to be given notice may have furnished in writing to the party seeking or desiring to give notice, as a place for the giving of notice, provided that no change in address shall be effective until seven days after being given to the other party in the manner provided for above.  Any notice given in accordance with the foregoing shall be deemed given when delivered personally or, if mailed, five Business Days after it shall have been deposited in the United States mails as aforesaid or, if sent by overnight courier, the Business Day following the date of delivery to such courier.  Notices and other communications to Lender hereunder may be delivered or furnished by electronic communication (including e‑mail and Internet or intranet websites) pursuant to procedures approved by Lender.  Either Lender or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.  Unless Lender otherwise prescribes, (i) notices and other communications sent to an e‑mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e‑mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e‑mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

 

 

 

 

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9.16.1 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

9.16.2 SUBMISSION TO JURISDICTION.  EACH OF BORROWER AND LENDER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK, NEW YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY RIGHT ANY PARTY HERETO MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AGAINST THE OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

9.16.3 WAIVER OF VENUE.  EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IN ANY COURT REFERRED TO IN SECTION 9.16.2.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

9.16.4 SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.8.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

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[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their duly authorized representatives as of the date first above written.

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FORM OF PROMISSORY NOTE

$40,000,000.00		New York, New York
		Date: February 4, 2015

FOR VALUE RECEIVED, the undersigned, PINNACLE BANK, a Tennessee chartered  bank ("Borrower"), promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association, and any holder hereof from time to time ("Lender"), at such place as may be designated in writing by Lender, the principal sum of FORTY MILLION AND NO/100THS DOLLARS ($40,000,000.00) (or so much thereof that has been advanced and remains outstanding), with interest thereon as hereinafter provided.  This note (this "Note") is issued pursuant to the terms of that certain Loan Agreement of even date herewith by and between Borrower and Lender, as amended, restated, supplemented or modified from time to time (the "Loan Agreement").  All capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Loan Agreement.

Interest shall accrue on all sums as advanced and outstanding from time to time under this Note and Loan Agreement as set forth in the Loan Agreement.  Such interest shall be due and payable as set forth in the Loan Agreement.

The outstanding principal balance of this Note, together with all accrued and unpaid interest, shall be due and payable on the Maturity Date.  Additional principal payments shall be made in accordance with the provisions of the Loan Agreement.

This Note is issued pursuant to the terms of the Loan Agreement.  If an Event of Default shall occur and be continuing, the principal of this Note together with all accrued interest thereon may, at the option of the holder hereof, immediately become due and payable on demand; provided, however, that if any document related to this Note provides for automatic acceleration of payment of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in accordance with the terms of that document.

Unless otherwise provided in the Loan Agreement, all payments on account of the indebtedness evidenced by this Note shall be first applied to the payment of costs and expenses of Lender that are due and payable, then to past‑due interest on the unpaid principal balance and the remainder to principal.

This Note may be prepaid only upon those terms and conditions set forth in the Loan Agreement.

From and after the Maturity Date, or such earlier date as all sums owing on this Note become due and payable by acceleration or otherwise, or after the occurrence of an Event of Default as provided in the Loan Agreement, interest shall be computed on all amounts then due and payable under this Note at the Default Rate as provided in the Loan Agreement.

If any attorney is engaged by Lender to enforce or defend any provision of this Note or any of the other Transaction Documents, or as a consequence of any Default or Event of Default, with or without the filing of any legal action or proceeding, then Borrower shall pay to Lender immediately upon demand all attorneys' fees and expenses, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance owing hereunder as if such unpaid attorneys' fees and expenses had been added to the principal.

No previous waiver and no failure or delay by Lender or Borrower in acting with respect to the terms of this Note or any of the other Transaction Documents shall constitute a waiver of any breach, default or failure of condition under this Note, the Loan Agreement or any of the other Transaction Documents.  A waiver of any term of this Note or any of the other Transaction Documents or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.  In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the Loan evidenced by this Note, the terms of the Loan Agreement shall prevail.

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Except as otherwise provided in the Loan Agreement, Borrower expressly waives present­ment, demand, notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses or losses and interest thereon, notice of late charges, and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note. In addition, Borrower expressly agrees that this Note and any payment coming due hereunder may be extended from time to time without in any way affecting the liability of any such party hereunder.

Time is of the essence with respect to every provision hereof.  This Note shall be construed and enforced in accordance with the laws of the State of New York, except to the extent that federal laws preempt the laws of the State of New York, and all persons and entities in any manner obligated under this Note consent to the jurisdiction of any Federal or State court having situs in New York, New York and having proper venue, and also consent to service of process by any means authorized by New York or Federal law.  Any reference contained herein to attorneys' fees and expenses shall be deemed to be to reasonable fees and expenses and to include all reasonable fees and expenses of third-party attorneys and the reasonable fees and expenses of any other experts or consultants.

All agreements between Borrower and Lender (including this Note and the Loan Agreement, and any other documents securing all or any part of the indebtedness evidenced hereby, if any) are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to Lender exceed the amount collectible at the highest lawful rate of interest permissible under applicable law.  If, from any circumstances whatsoever, fulfillment of any provision hereof, the Loan Agreement or any other documents securing all or any part of the indebtedness evidenced hereby at the time performance of such provisions shall be due, shall involve exceeding the limit of validity prescribed by law that a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest permissible under such applicable laws, and if, for any reason whatsoever, Lender shall ever receive as interest an amount that would be deemed unlawful under such applicable law, such interest shall be automatically applied to the payment of the principal of this Note (regardless of whether then due and payable) and not to the payment of interest or refunded to Borrower if such principal has been paid in full.

Any notice that either party hereto may be required or may desire to give hereunder shall be governed by the notice provisions of the Loan Agreement.

[Remainder of Page Intentionally Left Blank]

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EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER.  BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.  BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER'S COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE TRANSACTION DOCUMENTS, (c) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN AND (d) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

IN WITNESS WHEREOF, the undersigned has executed this Note or caused this Note to be executed by its duly authorized representative as of the date first above written.

PINNACLE BANK






By:
        Name:   [•]
        Title:     [•]

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The undersigned, the ____________________ of Pinnacle Bank ("Borrower"), hereby delivers this certificate pursuant to Section 6.3 of that certain Loan Agreement dated as of February 4, 2015, between Borrower and U.S. Bank National Association (as amended, restated, supplemented or otherwise modified from time to time, the "Agreement") and certifies as of the date hereof as follows:

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Capitalized terms in this Quarterly Compliance Certificate that are otherwise undefined shall have the meanings given them in the Agreement.

Dated:  [•]

PINNACLE BANK






By:                                                                                                  
       Name:  [•]
       Title:    [•]

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ANNEX A


TO


QUARTERLY COMPLIANCE CERTIFICATE

 

A.		Risk-Based Capital Adequacy Guidelines. (Sections 7.1 and 7.2) (as of the fiscal quarter ending _________, 201__)
1.		Borrower
		(Primary Federal Regulator Capital Guidelines) _____ In Compliance _____Not In Compliance
		[minimum capital category required: “well capitalized”]
		[minimum required total risk-based capital ratio: 12%]
B.		Maximum Nonperforming Assets. (Section 7.3) (as of the fiscal quarter ending _________, 201__)
1.		Total Nonperforming Assets		$	__________
2.		Tangible Primary Capital		$	__________
3.		NPAs divided by Tangible Primary Capital [B.1 divided by B.2]			_________%
		[maximum permitted - 18%]
C.		Minimum Reserves to Nonperforming Loans. (Section 7.4) (as of the fiscal quarter ending _________, 201__)
1.		Allowance for Loan and Leases Losses		$	__________
2.		Nonperforming Loans		$	__________
3.		ALLLs divided by NPLs [C.1 divided by C.2]			_________%
		[minimum required ALLL: 100% of NPLs]

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D.		Minimum Fixed Charge Coverage Ratio. (Section 7.5) [PFP ONLY] (as of the fiscal quarter ending _________, 201__)
1.		Net Income of PFP (on a consolidated basis)		$	__________
2.		Amount of Goodwill Amortized by PFP		$	__________
3.		Cash distributions or declarations by PFP		$	__________
4.		Interest Expense (contractually due)		$	__________
5.		[E.1. plus E.2. plus E.4. minus E.3.]		$	__________
6.		Interest Expense (contractually due)		$	__________
7.		Required Principal Payments (PFP)		$	__________
8.		Annual Principal Amount - PFP Loan		$	2,500,000
9.		[E.6. plus E.7. plus E.8.]		$	__________
10.		Fixed Charge Coverage Ratio [E.5. divided by E.9.]			______ to 1.00
		[minimum required fixed charge coverage ratio (rolling four quarter basis - 1.25 to 1.00]

 

E.		Minimum Liquidity. (Section 7.6) (as of the fiscal quarter ending _________, 201__)
1.		Liquid Assets		$	__________
2.		Required Loan Payments (next four quarters)		$	__________
		[minimum required Liquid Assets - 200% of E.2.]

 

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