Business Loan And Security Agreement

EXHIBIT 10.8



SUNTRUST BANK








BUSINESS LOAN AND SECURITY AGREEMENT

Dated As of

JUNE 8, 2001

Among



COMMUNITY BANKSHARES, INC.,
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST,



Steve Adams, J. Alton Wingate and Elton Collins, not in their individual capacities, but solely as Trustees of the Community Bankshares, Inc. Employee Stock Ownership Plan and Trust, and





SUNTRUST BANK


















BUSINESS LOAN AND SECURITY AGREEMENT

THIS BUSINESS LOAN AND SECURITY AGREEMENT, dated as of June 8, 2001, by and among COMMUNITY BANKSHARES, INC., a Georgia corporation (together with its successors, the " Borrower "), COMMUNITY BANKSHARES, INC. Employee Stock Ownership Plan and Trust (the " Trust "), a Trust created and existing under that certain Employee Stock Ownership Plan and Trust Agreement dated as of December 29, 1995, and effective as of January 1, 1995 (as the same may be amended, supplemented, restated or otherwise modified and in effect from time to time, the " Trust Agreement "), between the Borrower and Steve Adams, J. Alton Wingate and Elton Collins, collectively as trustee (together with any successor trustees under the Trust Agreement, and forming a part of the COMMUNITY BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN (the " ESOP "), and SUNTRUST BANK, a Georgia banking corporation (together with endorsees, successors and assigns, the " Bank ").

BACKGROUND

The Borrower desires to establish with the Bank a credit facility providing for Advances in the maximum principal amount of $2,000,000 that upon the Conversion Date shall convert to a term loan. The proceeds of such loan shall be used by the Borrower to fund a loan to the Trust to finance the Trust92s acquisition of certain currently issued shares of the common stock of the Borrower. The Bank is willing to establish the foregoing credit facilities on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the promises herein contained, and each intending to be legally bound hereby, the parties agree as follows:

ARTICLE I. DEFINITIONS

SECTION 1.01. Definitions . The terms as defined in this Section 1.01 shall, for all purposes of this Agreement and any amendment hereto (except as herein otherwise expressly provided or unless the context otherwise requires), have the meanings set forth herein (terms defined in the singular to have the same meanings when used in the plural and vice versa ):

" Affiliate " of any Person means (i) any other Person which directly, or indirectly through one or more intermediaries, controls such Person, (ii) any other Person which directly, or indirectly through one or more intermediaries, is controlled by or is under common control with such Person, or (iii) any other Person of which such Person owns, directly or indirectly, 20% or more of the common stock or equivalent equity interests. As used herein, the term "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.








" Bank Prime Rate " means that rate of interest announced by Bank from time to time as its "Prime Rate". Bank lends at rates above and below Bank Prime Rate, which is but one of several rate basis used by Bank.

" Borrower Stock " means the shares of the Borrower92s common stock to be purchased by the Trust from the Stockholders with the proceeds of the ESOP Loan.

" Capital Expenditures " means for any period the sum of all capital expenditures incurred during such period by the Borrower and its Subsidiaries, as determined in accordance with generally accepted accounting principles consistently applied.

" Code " means the Internal Revenue Code of 1986, as amended, or any successor Federal tax code.

" Collateral Assignment " means that certain Assignment of ESOP Note and Master Stock Pledge dated an even date herewith by and between Borrower and Bank.

" Commitment " means that certain commitment letter dated April 30, 2001.

" Controlled Group " means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code.

" Debt " of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under capital leases, (v) all obligations of such Person to reimburse any bank or other Person in respect of amounts payable under a banker92s acceptance, (vi) all Redeemable Preferred Stock of such Person (in the event such Person is a corporation), (vii) all obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or similar instrument, (viii) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of others Guaranteed by such Person.

" Default " means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

" DOL " means the United States Department of Labor and any successor Federal agency having similar powers.

" Dollars " or " $ " means dollars in lawful currency of the United States of America.

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" Domestic Business Day " means any day except a Saturday, Sunday or other day on which commercial banks in Georgia are authorized by law to close.

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor law, including any rules or regulations promulgated thereunder. Any reference to any provision of ERISA shall also be deemed to be a reference to any successor provision or provisions thereof.

" ESOP Contribution " means all tax deductible payments made to the Trust for the purpose of enabling it to payoff the ESOP Loan, which are ultimately used by the Trust to make payments under the ESOP Note (and, in turn, used by the Borrower to make payments under the Note).

" ESOP Loan " means the loan evidenced by the ESOP Note.

" ESOP Loan Agreement " means that Loan and Security Agreement between the Trust and Borrower, dated as of even date herewith, governing the terms and conditions of the ESOP Loan, as such agreement shall be modified, amended, supplemented, restated, extended, consolidated, renewed or replaced and in effect from time to time.

" ESOP Loan Documents " shall mean the ESOP Loan Agreement, ESOP Note, the ESOP Master Pledge Agreement, and any other document now or at any time hereafter evidencing, relating to, securing or guaranteeing the ESOP Note, as any of the same may be amended, restated, modified, replaced or extended from time to time.

" ESOP Note " means collectively that term loan note of the Trust payable to Borrower, dated as of an even date herewith, and all promissory notes delivered in substitution or exchange therefor, in each case as the same shall be modified, amended, supplemented, restated, extended, consolidated, renewed or replaced and in effect from time to time.

" ESOP Master Pledge Agreement " means that ESOP Master Stock Pledge Agreement, dated as of an even date herewith, given by the Trust to the Borrower, pursuant to which the Trust has pledged to the Borrower, as security for the payment and performance of the Trust92s obligations to the Borrower under the ESOP Loan, all of the Borrower Stock, as such agreement shall be amended, supplemented, restated or otherwise modified and in effect from time to time.

" ESOP Transaction " means the execution, delivery and performance by the respective parties thereto of the ESOP Loan Documents, the borrowing of the ESOP Loan by the Trust from the Borrower and the use by the Trust of the proceeds of the ESOP Loan to finance such acquisition of the Borrower Stock collectively from the Stockholders.

" Event of Default " shall have the meaning assigned to such term in Section 7.01 .

" Fiscal Year " means any fiscal year of the Borrower.



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" Governmental Authority " means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, or any instrumentality of any of the foregoing. The term "Governmental Authority" shall include, without limitation, the IRS and the DOL.

" Guarantee " by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to secure, purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning.

" Investment " means any investment in any Person, whether by means of purchase or acquisition of obligations or securities of such Person, capital contribution to such Person, loan or advance to such Person, making of a time deposit with such Person, Guarantee or assumption of any obligation of such Person or otherwise, except for ordinary banking transactions in the ordinary course of business.

" IRS " means the United States Internal Revenue Service and any successor Federal agency having similar powers.

" Lien " means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

" Loan Documents " means this Agreement, the Note, the Collateral Assignment and any other document evidencing or securing the Note.

" Margin Stock " means " margin stock " as defined in Regulations T, U or X of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.

" Multiemployer Plan " shall have the meaning set forth in Section 4001(a)(3) of ERISA.

" Note " shall mean Note A.

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" Note A " means that certain promissory note dated an even date herewith made by Borrower in favor of Bank in the original maximum principal amount of $2,000,000.

" Obligations " means all indebtedness, obligations and liabilities to the Bank existing on the date of this Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, of the Borrower under this Agreement or any other Loan Document.

" PBGC " means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

" Permitted Encumbrances " means:

(a) Liens in favor of the Bank ;

(b) Liens for taxes or assessments or other governmental charges or levies if not yet due and payable or, if due and payable, if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained ;

(c) Liens imposed by law, such as mechanics92 materialmen92s, landlords92, warehousemen92s, and carriers92 Liens, securing obligations incurred in the ordinary course of business which are not yet due and payable or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established ;

(d) Liens under workers92 compensation, unemployment insurance, Social Security, or similar legislation ;

(e) Liens, deposits, or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), leases (permitted under the terms of this Agreement), public or statutory obligations, surety, stay, appeal, indemnity, performance, or other similar bonds, or other similar obligations arising in the ordinary course of business ;

(f) Judgment and other similar Liens arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings ;

(g) Easements, rights-of-way, restrictions, and other similar encumbrances which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment by the Borrower or any Subsidiary of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto ;

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(h) Liens incidental to the conduct of banking business, not incurred in connection with the borrowing of money, arising out of transactions in federal funds, repurchase agreements, interbank credit facilities, bank deposits, or other obligations to customers or depositors of the Borrower92s Subsidiaries .

(i) Liens incurred in connection with the borrowing by a Subsidiary from the Federal Reserve Bank, or the Federal Home Loan Bank, in the ordinary course of business; and

(j) Liens for purchase money security interests or Liens incurred in connection with any conditional sale or other title retention agreement or capital lease .

" Person " means any individual, joint venture, corporation, company, voluntary association, partnership, trust, joint stock company, unincorporated organization, association, government, or any agency, instrumentality, or political subdivision thereof, or any other form of entity or organization.

" Plan " means at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by a member of the Controlled Group for employees of any member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions.

" Prior Loan Agreement " means that certain Amended and Restated Revolving Credit/Term Loan Agreement by and between Borrower herein and Bank herein dated as of July 31, 2000, together with all documentation delivered and collateral provided in connection therewith and any modification or renewals thereof, the terms of which are incorporated herein by this reference thereto.

" Redeemable Preferred Stock " of any Person means any preferred stock issued by such Person which is at any time either (i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or (ii) redeemable at the option of the holder thereof.

" Reportable Event " has the meaning given such term in Section 4043(b) of Title V of ERISA.

" Stockholders " means collectively all Persons who may sell shares of Borrower92s common stock to the Trust.

" Subsidiary " of a Person means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or

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indirectly owned by such Person. Unless otherwise indicated, all references herein to Subsidiaries refer to Subsidiaries of the Borrower.

SECTION 1.02. Accounting Terms and Determinations . Unless otherwise specified herein, all terms of an accounting character used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in material accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes reasonably approved by Bank) with the most recent audited financial statements of the Borrower and its Subsidiaries delivered to the Bank .

SECTION 1.03. References . Except as otherwise expressly provided in this Agreement: the words " herein ," " hereof ," "hereunder" and other words of similar import refer to this Agreement as a whole, including the Schedule hereto which is a part hereof, and not to any particular Section, Article, paragraph or other subdivision; the singular includes the plural and the plural includes the singular; " or " is not exclusive; the words " include ," " includes " and " including " are not limiting; a reference to any agreement or other contract includes past and future permitted supplements, amendments, modifications and restatements thereto or thereof; a reference to an Article, Section, paragraph or other subdivision is a reference to an Article, Section, paragraph or other subdivision of this Agreement; a reference to any law includes any amendment or modification to such law and any rules and regulations promulgated thereunder; a reference to a Person includes its permitted successors and assigns; any right may be exercised at any time and from time to time; and, except as otherwise expressly provided therein, all obligations under any agreement or other contract are continuing obligations throughout the term of such agreement or contract .

ARTICLE II. THE CREDITS

SECTION 2.01. Commitment to Lend . The Bank agrees to lend to Borrower up to a maximum of $2,000,000, in accordance with the terms of the Commitment and this Agreement. The Bank shall have no obligation to advance funds in excess of such amount or on terms not otherwise provided in this Agreement. To the extent of any conflict between the terms of the Commitment and the terms of this Agreement, the terms of this Agreement shall govern .

SECTION 2.02. Loan Amount : Up to a maximum of Two Million and 00/100 Dollars ($2,000,000.00) (the " Maximum Advance ") to Borrower, solely for the purposes of advances (each, an " Advance " and together, the " Advances ") for the purchase by the Trust of Borrower Stock from the Stockholders .

Advances : Advances shall be funded pursuant to this Paragraph and calculated pursuant to an " Advance Schedule ", attached hereto as Exhibit A-1 , and a " Requisition Form ," attached hereto as Exhibit A-2 . The Advance Schedule and the Requisition Form shall be provided by the Bank and completed by an authorized officer of Borrower. All requests for an Advance shall be supported by a corresponding pledge of the Borrower Stock purchased with the proceeds of such Advance subject to that certain ESOP Master Stock Pledge Agreement dated as of an even date herewith, a copy of which is attached hereto as Exhibit A-3 , which has

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been assigned to the Bank in accordance with that certain Assignment of ESOP Note and Master Stock Pledge dated as of an even date herewith, a copy of which is attached hereto as Exhibit A-4 . In no event shall the sum of all Advances exceed the Maximum Advance.

SECTION 2.03. Interest Rate . The interest rate of the Note up to the Conversion Date (as defined hereinbelow) shall be the Bank Prime Rate minus one percent (1.0%), as more fully set forth in the Note. The interest rate of the Note on the Conversion Date and thereafter shall be a rate to be determined by Borrower and Bank as of the Conversion Date .

SECTION 2.04. Closing Fee . The customary closing fee has been waived by the Bank .

SECTION 2.05. Optional Prepayments . The Borrower may prepay the Note, in whole or in part, without penalty. Any prepayment of principal on the Note shall first be applied to any outstanding fees, penalties, expenses and interest owed to Bank on any obligation of Borrower to Bank under the Loan Documents, and shall then be applied against any installments of principal in their inverse order of maturity .

SECTION 2.06. Payment and Conversion Provisions . Prior to the Conversion Date, interest only shall be due on the Note, payable quarterly on July 31, 2001; October 31, 2001; January 31, 2002; and April 30, 2002. For purposes of this Agreement, the " Conversion Date " shall be May 1, 2002. Following the Conversion Date, the then current balance of the Note shall be repaid according to a schedule of equal and fully amortizing quarterly payments of principal plus accrued interest commencing on the last day of the first calendar quarter following the Conversion Date (July 31, 2002), which payment amount shall be set on the Conversion Date, with the number of payments determined by calculating the number of calendar quarters remaining between the Conversion Date and April 30, 2006. The entire principal balance and all accrued but unpaid interest on the Note shall be due and payable on June 30, 2006 if not sooner paid .

SECTION 2.07. General Provisions Concerning Payments . All payments of Borrower shall be made in Federal or other funds immediately available to the Bank at its office in Atlanta, Georgia, not later than 1:00 p.m., Eastern time. Funds received after 1:00 p.m. shall be deemed to have been paid on the next following Domestic Business Day. Whenever any payment shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day.

SECTION 2.08. Computation of Interest . All interest due under this Note on or prior to the Conversion Date shall be computed by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance and multiplied by the actual number of days the principal balance is outstanding. All interest due under this Note after the Conversion Date shall be computed by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance and multiplied by the actual number of days the principal balance is outstanding.

SECTION 2.09. INTENTIONALLY DELETED

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SECTION 2.10. Collateral Assignment . Borrower shall grant a first priority security interest to the Bank pursuant to the Collateral Assignment in the (a) ESOP Note, (b) the ESOP Loan Documents, and (c) all collateral securing the ESOP Note including, without limitation, the Borrower92s Stock. Any security interest in the Borrower Stock, and any other collateral securing the ESOP Note, shall be subject to the terms of the ESOP .

ARTICLE III. INTENTIONALLY DELETED

ARTICLE IV. CONDITIONS TO BORROWING

SECTION 4.01. The obligation of the Bank hereunder is subject to the satisfaction of the following conditions :

(a) receipt by the Bank from the Borrower of a duly executed counterpart of this Agreement signed by the Borrower and the Trustees on behalf of the Trust ;

(b) receipt by the Bank of the duly executed Note ;

(c) receipt by the Bank of (i) an opinion of counsel for the Borrower and (ii) an opinion of counsel for the Trustee, both in forms acceptable to Bank covering such matters relating to the transactions contemplated hereby as the Bank may reasonably request ;

(d) receipt by the Bank of all documents which the Bank may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of this Agreement, the Note and the other Loan Documents, and any other matters relevant hereto, all in form and substance satisfactory to the Bank, including without limitation a certificate of incumbency of the Borrower, signed by the Secretary or an Assistant Secretary of the Borrower, certifying as to the names, true signatures and incumbency of the officer or officers of the Borrower authorized to execute and deliver the Loan Documents, and certified copies of the following items: (i) the Borrower92s Articles of Incorporation, (ii) the Borrower92s Bylaws, (iii) a certificate of the Secretary of State (or other appropriate office) of the jurisdiction of the Borrower92s incorporation as to the good standing of the Borrower as a corporation of such jurisdiction, and (iv) the action taken by the Board of Directors of the Borrower authorizing the Borrower92s execution, delivery and performance of this Agreement, the Note and the other Loan Documents to which the Borrower is a party ;

(e) the Bank shall have received (i) the original fully executed ESOP Loan Documents (ii) the Collateral Assignment, (iii) stock certificates evidencing all of the shares of the Borrower Stock, registered in the name of the Trust, together with stock powers duly executed in blank, (iv) a copy of all documents related to the ESOP Transaction, each certified on such date, (v) a copy of the action of the Trustees authorizing the borrowing of the ESOP Loan thereunder, and (vi) the written legal opinion of each of the Borrower92s counsel and the Trustee92s counsel concerning the due authorization, execution, delivery and enforceability of the ESOP, the Trust Agreement, the ESOP Loan Documents, and containing such other opinions as the Bank may reasonably require .

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ARTICLE V. REPRESENTATIONS AND WARRANTIES

SECTION 5.01. The Borrower represents and warrants that :

(a) Corporate Existence and Power . The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, is duly qualified to transact business in every jurisdiction where, by the nature of its business, such qualification is necessary, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the failure to so qualify or obtain such licenses, authorizations, consents and approvals would not have a materially adverse effect .

(b) Corporate and Governmental Authorization; Contravention . The execution, delivery and performance by the Borrower of this Agreement, the Note, the other Loan Documents and performance of Borrower in the ESOP Transaction (i) are within the Borrower92s corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) require no action by or in respec ...