COMMUNITY BANKSHARES INC /GA/
EXH. 10.10 - AMENDED AND RESTATED TERM LOAN AGT.
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>termloan.txt
<DESCRIPTION>EXH. 10.10 - AMENDED AND RESTATED TERM LOAN AGT.
<TEXT>

                                                                   Exhibit 10.10

            AMENDED AND RESTATED REVOLVING CREDIT/TERM LOAN AGREEMENT
            ---------------------------------------------------------

         THIS AMENDED AND RESTATED REVOLVING CREDIT/TERM LOAN AGREEMENT IS dated
as of July 31, 2000 between COMMUNITY  BANKSHARES,  INC., a Georgia corporation,
whose principal place of business is at 400 North Main Street, Cornelia, Georgia
30531 (the  "Borrower")  and SUNTRUST  BANK,  f/k/a SUNTRUST  BANK,  ATLANTA,  a
Georgia  banking  corporation  whose  principal  place of business is at 25 Park
Place,  Atlanta,  Georgia  30303  (the  "Lender").  This  Amended  and  Restated
Revolving  Credit/Term Loan Agreement renews the Revolving Credit (the "Maturing
Revolving  Credit")  under and  supersedes  the Amended and  Restated  Revolving
Credit /Term Loan Agreement between the parties dated July 31, 1999. The parties
hereto hereby agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         SECTION 1.01.  DEFINED TERMS. As used in this Agreement,  the following
terms have the following  meanings  (terms  defined in the singular to have same
meaning when used in the plural and vice versa):

         "Additional Term Loan" has the meaning assigned to such term in Section
2.06.

         "Additional Term Maturity Date" means July 31, 2004.

         "Additional Term Note" has the meaning assigned to such term in Section
2.07.

         "Affiliate" means any Person (1) which directly or indirectly controls,
or is  controlled  by,  or is  under  common  control  with  the  Borrower  or a
Subsidiary;  (2) which  directly or indirectly  beneficially  owns or holds five
percent  (5.0%)  or more of any  class of voting  stock of the  Borrower  or any
Subsidiary;  or (3) five percent  (5.0%) or more of the voting stock of which is
directly  or  indirectly  beneficially  owned  or  held  by  the  Borrower  or a
Subsidiary. The term "control" means the possession,  directly or indirectly, of
the power to direct or cause the direction of the  management  and policies of a
Person  whether  through the  ownership of voting  securities,  by contract,  or
otherwise.

         "Agreement" means this Amended and Restated Revolving  Credit/Term Loan
Agreement, as amended, supplemented, or modified from time to time.


<PAGE>

         "Bank" means each  Subsidiary  of Borrower that is listed on Exhibit A,
attached hereto and incorporated herein, and any Subsidiary acquired by Borrower
from time to time  after the date  hereof,  which is a  banking  association  or
banking corporation organized under either the laws of the United States or of a
state in the United States.

         "Business  Day" means any day other than a Saturday,  Sunday,  or other
day on which  commercial  banks in Georgia are  authorized  or required to close
under the laws of the State of Georgia.

         "Call  Reports"   means,   with  respect  to  any  Bank,   such  Bank's
Consolidated  Reports of Condition and Income filed with such Bank's  applicable
federal Regulatory Authority.

         "Capital  Lease"  means  all  leases  which  have  been  or  should  be
capitalized  on the books of the lessee in accordance  with  generally  accepted
accounting principles.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations and published interpretations thereof.

         "Collateral" means all property which is subject to the Lien granted by
any  Loan  Document,   including,  without  limitation,  the  personal  property
identified and described on Exhibit B attached hereto and incorporated herein.

         "Commonly   Controlled   Entity"  means  an  entity,   whether  or  not
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or 414(c) of the Code.

         "Debt"  means  without  duplication  (1)  indebtedness  or liability of
Borrower or any  Subsidiaries for borrowed money; (2) obligations of Borrower or
any  Subsidiaries  evidenced  by  bonds,  debentures,  notes,  or other  similar
instruments;  (3) obligations of Borrower or any  Subsidiaries  for the deferred
purchase  price of property  or  services  (including  trade  obligations);  (4)
obligations of Borrower or any Subsidiaries as lessee under Capital Leases;  (5)
liabilities  of  Borrower  or any  Subsidiaries  in respect of  unfunded  vested
benefits under Plans covered by ERISA; (6) all guarantees,  endorsements  (other
than for  collection or deposit in the ordinary  course of  business),  interest
rate swaps, and other contingent  obligations of Borrower or any Subsidiaries to
purchase, to provide funds for payment, to supply funds to invest in any Person


                                       2
<PAGE>

or entity,  or  otherwise to assure a creditor  against  loss  (except  loans or
letters of credit made or issued in the ordinary  course of  business);  and (7)
obligations of Borrower or any Subsidiaries, other than obligations as a lender,
secured by any Liens, whether or not the obligations have been assumed. The term
"Debt" does not include any deposit liabilities of any Bank.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time,  and the  regulations  and published  interpretations
thereof.

         "Event of Default"  means any of the events  specified in Section 8.01,
provided that any  requirement  for the giving of notice,  the lapse of time, or
both, or any other condition, has been satisfied.

         "Existing  Term  Loan"  means that  portion  of the credit  established
pursuant to the 1996 Agreement which remains  outstanding  pursuant  thereto and
under the Existing Term Note.

         "Existing  Term Note" has the meaning  assigned to such term in Section
2.05.

         "GAAP" means  generally  accepted  accounting  principles in the United
States.

         "Governmental  Authority" means any nation or government,  any state or
political subdivision thereof and any entity exercising executive,  legislative,
judicial,   regulatory,   or  administrative   functions  of  or  pertaining  to
government.

         "Lien" means the charge,  encumbrance,  security interest,  or right of
the Lender in property created by any Loan Document or any other mortgage,  deed
of  trust,  pledge,  security  interest,   hypothecation,   assignment,  deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority, or
other security agreement or preferential arrangement,  charge, or encumbrance of
any kind or nature whatsoever  (including,  without limitation,  any conditional
sale  or  other  title   retention   agreement,   any  financing   lease  having
substantially the same economic effect as of the foregoing, or the filing of any
financing  statement under the Uniform  Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).

         "Loan" means collectively, the Revolving Credit, the Existing Term Loan
and the  Additional  Term Loan,  as such  terms are  defined,  respectively,  in
Sections 2.01, 2.03 and 2.06 of this Agreement.


                                       3
<PAGE>


         "Loan Documents"  means this Agreement,  the Revolving Credit Note, the
Existing Term Note, the Additional  Term Note,  the Security  Agreement,  or any
deed to  secure  debt,  mortgage,  deed of  trust,  pledge  agreement,  security
agreement,  or other  agreement  evidencing or securing the Loan (two or more of
the  foregoing  being  also  referred  to  collectively   herein  as  the  "Loan
Documents").

         "Multiemployer  Plan" means a Plan  described in Section  4001(a)(3) of
ERISA.

         "1996 Agreement" means the Revolving  Credit/Term Loan Agreement by and
between Borrower and Lender dated January 10, 1996, as amended, supplemented, or
modified from time to time.

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

         "Person" means an individual, partnership, corporation, business trust,
joint  stock  company,  trust,   unincorporated   association,   joint  venture,
governmental authority, or other entity of whatever nature.

         "Plan" means any pension plan which is covered by Title IV of ERISA and
in  respect  of  which  the  Borrower  or a  Commonly  Controlled  Entity  is an
"employer" as defined in Section 3(5) of ERISA.

         "Prime  Rate" means the rate of interest  announced  by the Lender from
time to time as its prime commercial lending rate, which rate is not necessarily
the lowest rate of interest charged by the Lender to its borrowers.

         "Principal Office" means the Lender's office at 25 Park Place, Atlanta,
Georgia 30303.

         "Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.

         "Real  Estate  Owned" has the meaning  assigned to such term in Section
4.15.

         "Regulatory  Authority" or "Regulatory  Authorities"  means the Federal
Reserve Board and, as  applicable,  the  Department of Banking of a state of the



                                       4
<PAGE>

United States,  the Federal  Deposit  Insurance  Corporation,  the Office of the
Comptroller  of the Currency and any other agency with  regulatory  control over
Borrower, any Bank or any other Subsidiary.

         "Reportable Event" means any of the events set forth in Section 4043 of
ERISA.

         "Revolving  Credit"  has the  meaning  assigned to such term in Section
2.01.

         "Revolving Credit Note" shall have the meaning assigned to such term in
Section 2.01.01

         "Revolving Maturity Date" means July 31,2001.

         "Security  Agreement"  means the Amended and Restated  Stock Pledge and
Security Agreement executed by Borrower in favor of Lender dated July 21, 1997.

         "Subsidiary"  means, as to the Borrower,  a corporation of which shares
of stock having  ordinary  voting power (other than stock having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are, at the time,  owned, or the
management of which corporation is otherwise controlled, directly or indirectly,
through  one or  more  intermediaries,  or  both,  by  the  Borrower.  The  term
"Subsidiary" shall specifically include the Banks.

         "Tier I Capital"  means those  components of the equity  capital of the
Borrower or of any Bank which, in the aggregate,  constitute the core or primary
capital of the Borrower or Bank, as those  components are determined and defined
from  time  to  time  by  the  Federal   Regulatory   Authority  having  primary
jurisdiction over the Borrower or any Bank.

         "Tier II Capital"  means those  components of the equity capital of the
Borrower or of any Bank which,  in the aggregate,  constitute the  supplementary
capital of the Borrower or Bank, as those  components are determined and defined
from  time  to  time  by  the  Federal   Regulatory   Authority  having  primary
jurisdiction over the Borrower or any Bank.

         "Total  Capital"  means the total of the  amounts of Tier I Capital and
Tier II Capital that qualify,  under the  applicable  regulations of the Federal
Regulatory  Authority having primary jurisdiction over the Borrower or any Bank,



                                       5
<PAGE>

for  inclusion  in  the  computation  of  leverage   capital   requirements  and
risk-weighted capital requirements.

         "Total  Non-Performing  Assets" means the sum of (i) all loans that are
at least 90 days past due and (ii) all non-accrual loans.

         SECTION 1.02.  ACCOUNTING  TERMS. All accounting terms not specifically
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
financial  statements  referred  to in  Section  4.04,  and all  financial  data
submitted  pursuant to this Agreement  shall be prepared in accordance with such
principles.

                                   ARTICLE II

                          AMOUNT AND TERMS OF THE LOAN

         SECTION  2.01.  REVOLVING  CREDIT.  Subject  to and upon the  terms and
conditions set forth in this Agreement,  the Lender hereby establishes until the
Revolving Maturity Date a revolving credit facility in favor of the Borrower not
to  exceed  THREE  MILLION  AND  NO/100  DOLLARS  ($3,000,000.00)  in  aggregate
principal  at any one time  outstanding  (the  "Revolving  Credit").  Within the
limits of the  Revolving  Credit,  the Borrower  may borrow,  repay and reborrow
under the Revolving  Credit pursuant to the terms of this  Agreement;  provided,
however,  the  Borrower may neither  borrow nor  reborrow  should there exist an
Event of Default.

         SECTION 2.01.01.  REVOLVING  CREDIT NOTE. The Borrower's  obligation to
pay interest and repay principal  under the Revolving  Credit shall be evidenced
by its Promissory Note (the "Revolving Credit Note") a copy of which is attached
hereto and incorporated herein as Exhibit D.

         SECTION 2.02.  INTEREST ON THE REVOLVING CREDIT.  Interest shall accrue
on all advances  under the  Revolving  Credit and shall be computed at an annual
rate of  interest  equal to the Prime Rate  minus one  percent  (1.0%).  Accrued
interest  on the  Revolving  Credit  shall  be  paid  on the  last  day of  each
consecutive three month period, commencing October 31, 2000 and on the Revolving
Maturity Date.

         SECTION 2.03.  EXISTING TERM LOAN.  The Existing Term Loan shall remain
outstanding and subject to the terms of the Existing Term Note and  the terms of


                                       6
<PAGE>

this  Agreement.  As of the date of this  Agreement  the  outstanding  principal
amount of the Existing Term Loan is $77,049.96.

         SECTION 2.04.  INTEREST ON THE EXISTING TERM LOAN.  The Borrower  shall
pay interest to the Lender on the outstanding and unpaid principal amount of the
Existing  Term Loan made at a rate per annum  equal to the Prime  Rate minus one
percent (1%).

         SECTION 2.05.  EXISTING TERM NOTE. The  Borrower's  obligation to repay
the Existing  Term Loan shall be evidenced  by its  Revolving  Credit/ Term Note
dated January 10, 1996 (the "Term  Note")a copy of which is attached  hereto and
incorporated herein as Exhibit D-1.

         SECTION 2.06.  ADDITIONAL TERM LOAN.  Subject to and upon the terms and
conditions set forth in this Agreement,  the Lender hereby establishes until the
Additional Term Loan Maturity Date a term loan facility in favor of the Borrower
in the original  principal  amount of Nine Hundred  Thousand and no/100  Dollars
($900,000.00)(the   "Additional  Term  Loan").   The  principal  amount  of  the
Additional  Term  Loan  represents  the  outstanding  principal  balance  of the
Maturing Revolving Credit as of the date of this Agreement.

         SECTION 2.07.  ADDITIONAL  TERM NOTE. The Borrower's  obligation to pay
interest and repay  principal  under the Additional Term Loan shall be evidenced
by the Term Note (the "Additional Term Note") a copy of which is attached hereto
and incorporated herein as Exhibit D-2.

         SECTION  2.08.  PRINCIPAL  AND INTEREST ON  ADDITIONAL  TERM LOAN.  The
principal  amount of the Additional Term Loan shall be repaid by the Borrower in
sixteen (16) consecutive  equal  installments,  each in an amount equal to Fifty
Six Thousand Twenty Five and no/100 Dollars ($56,025.00), which shall be due and
payable on a quarterly  basis.  The first such installment of principal shall be
due and  payable on  October  31,  2000 and on the last day of each  consecutive
three month period  thereafter  through and including the  Additional  Term Loan
Maturity  Date. The Borrower  shall pay interest on the  outstanding  and unpaid
principal  balance of the  Additional  Term Loan with each  quarterly  principal
payment.  Interest  shall be computed at an annual rate of interest equal to the
Prime Rate minus one percent (1.0%).

         SECTION 2.09.  CHANGES IN INTEREST RATE.  With respect to the Revolving
Credit,  Existing  Term Loan and  Additional  Term  Loan:  (i) any change in the


                                       7
<PAGE>

interest rate resulting  from a change in the Prime Rate shall become  effective
as of the  opening of business on the day on which such change in the Prime Rate
shall become effective; (ii) Interest shall be calculated on the basis of a year
of three hundred  sixty (360) days for the actual  number of days  elapsed;  and
(iii) Any principal amount not paid when due (at maturity,  by acceleration,  or
otherwise) shall bear interest thereafter until paid in full, payable on demand,
at a rate which shall be two percent (2.0%) above the rate which would otherwise
be applicable.

         SECTION 2.10.  METHOD OF PAYMENT.  The Borrower shall make each payment
under this  Agreement  or the Loan,  on the date when due in lawful money of the
United States to the Lender at its  Principal  Office in  immediately  available
funds. The Borrower hereby  authorizes the Lender,  if and to the extent payment
is not made when due under this  Agreement  or the Loan,  to charge from time to
time  against  any  account of the  Borrower  with the Lender any amount so due.
Whenever  any  payment  to be made under this  Agreement  or the Loan,  shall be
stated to be due on a day other than a Business  Day, such payment shall be made
on the next  succeeding  Business Day, and such  extension of time shall in such
case be included in the computation of payment of interest.

         SECTION 2.11.  USE OF PROCEEDS.  Any and all proceeds of the Loan shall
be used by the Borrower for general corporate  purposes.  The Borrower will not,
directly  or  indirectly,  use any  part of such  proceeds  for the  purpose  of
purchasing  or carrying any margin  stock within the meaning of  Regulation U of
the Board of Governors of the Federal  Reserve System or to extend credit to any
Person for the purpose of purchasing  or carrying any such margin stock,  or for
any purpose which violates,  or is inconsistent with, Regulation X of such Board
of Governors.

                                   ARTICLE III

                                    ADVANCES

         SECTION 3.01. ADVANCES. The Borrower shall give the Lender at least one
(1)  Business  Day's  telephone  notice of a  requested  disbursement  under the
Revolving  Credit,  specifying  the date the  disbursement  is requested and the
amount   thereof.   The  Lender  may  rely  upon  such  telephone   request  for
disbursements  received  from the  individual(s)  identifying  themselves as and
purporting to be Mr. Harry Stephens,  Chief  Financial  Officer of the Borrower.


                                       8
<PAGE>

The telephone request for disbursement  should be promptly  confirmed in writing
by Borrower by mailing or transmitting by facsimile  transmission a confirmation
to the Lender at the address  designated  hereinafter,  as may be amended.  Upon
fulfillment of the applicable  conditions set forth below, and provided that (i)
the request for disbursement does not cause the Borrower to exceed the aggregate
principal  amount of the Revolving  Credit and (ii) no Event of Default  exists,
the Lender will make such disbursements available to the Borrower in immediately
available  funds by crediting the amount thereof to the Borrower's  account,  or
other designated account, with the Lender.

         SECTION 3.02.  CONDITIONS  PRECEDENT TO INITIAL ADVANCE. The obligation
of the Lender to make the initial advance under the Revolving  Credit is subject
to the condition  precedent that the Lender shall have received on or before the
day of such advance each of the following, in form and substance satisfactory to
the Lender and its counsel:

         (1) REVOLVING  CREDIT NOTE. The Revolving  Credit Note duly executed by
the Borrower;

         (2) ADDITIONAL TERM NOTE. The Additional Term Note duly executed by the
Borrower.

         (3) SECURITY  AGREEMENT.  The Security  Agreement  shall remain in full
force and effect.

         (4) EVIDENCE OF ALL CORPORATE ACTION BY THE BORROWER.  Certified (as of
the  date of  this  Agreement)  copies  of all  corporate  action  taken  by the
Borrower,  including  resolutions  of its Board of  Directors,  authorizing  the
execution,  delivery,  and  performance  of the Loan  Documents to which it is a
party and each other document to be delivered pursuant to this Agreement;

         (5) INCUMBENCY AND SIGNATURE CERTIFICATE OF THE BORROWER. A certificate
(dated as of the date of this Agreement) of the Secretary of Borrower certifying
the names and true signatures of officers of the Borrower authorized to sign the
Loan  Documents  to which it is a party  and each of the other  documents  to be
delivered by the Borrower under this Agreement;

         (6) OPINION OF COUNSEL FOR THE BORROWER. [Intentionally Omitted]


                                       9
<PAGE>

         (7) OFFICER'S  CERTIFICATE.  A certificate  signed by a duly authorized
officer of Borrower dated the date of this Agreement,  in substantially the form
of Exhibit F;
   --------

         (8)  ADDITIONAL  DOCUMENTATION.  Such  other  approvals,  opinions,  or
documents as the Lender may reasonably request;

         (9) REQUEST FOR ADVANCE. A request for advance pursuant to Section 3.01
hereof;

         (10) REGULATORY APPROVAL.  Copies of any and all necessary Governmental
Authority or Regulatory Authority approvals;

         SECTION  3.03.   CONDITIONS  PRECEDENT  TO  SUBSEQUENT  ADVANCES.   The
obligation of the Lender to make subsequent  advances under the Revolving Credit
is subject to the conditions  precedent that the Lender shall have received,  in
form and substance satisfactory to it, each of the following documents, and that
each of the conditions  described below is fulfilled to the  satisfaction of the
Lender:  (i) if  applicable,  a request  for advance  pursuant  to Section  3.01
hereof;  and (ii) the  representations  and  warranties  contained in Article IV
hereof and each of the other  Loan  Documents  shall be correct in all  material
respects  on and as of the date of the  request  for the advance and the date of
the  advance (if  applicable),  with the same effect as though made on and as of
those  dates,  except to the extent  that such  representations  and  warranties
relate solely to an earlier date, and on each of such dates,  no event,  act, or
condition shall have occurred or be continuing, or would result from the advance
requested which  constitutes an Event of Default or would constitute an Event of
Default but for the  requirement  that notice be given or time elapse,  or both.
The  submission by the Borrower of an oral or written  request for advance shall
constitute  a  representation  and warranty as to the  correctness  of the above
facts, and if requested by the Lender with respect to the advance requested, the
Borrower shall furnish to the Lender a written  certificate of an officer of the
Borrower,  satisfactory  in  form  and  substance  to  the  Lender,  as  to  the
correctness of the above facts as a condition precedent to such advance.


                                       10
<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         In order to induce the Lender to enter into the  Agreement  and to make
advances under the Revolving Credit, the Borrower represents and warrants to the
Lender that:

         SECTION 4.01. INCORPORATION,  GOOD STANDING, AND DUE QUALIFICATION. The
Borrower  and  each  of  its  non-bank   Subsidiaries  is  a  corporation   duly
incorporated,  validly  existing,  and in good  standing  under  the laws of the
jurisdiction of its incorporation. Each of the Banks set forth on Exhibit A is a
banking  corporation  and is  duly  organized,  validly  existing,  and in  good
standing under the laws of the state of incorporation  listed on such Exhibit A.
The Borrower and each of its  Subsidiaries has the corporate power and authority
to own its assets and to  transact  the  business  in which it is now engaged or
proposed to be engaged;  and is duly qualified as a foreign  corporation  and in
good  standing  under  the  laws  of  each  other  jurisdiction  in  which  such
qualification is required.

         SECTION 4.02. CORPORATE POWER AND AUTHORITY.  The execution,  delivery,
and  performance  by the Borrower of the Loan  Documents and the creation of the
security  interest  provided  for under the  Security  Agreement  are within the
Borrower's  corporate  powers  and have been duly  authorized  by all  necessary
corporate  action and do not and will not (1) require any consent or approval of
the  stockholders  of the Borrower;  (2) contravene  the  Borrower's  charter or
bylaws;  (3) violate any  provision  of any law,  rule,  regulation  (including,
without limitation, Regulations U and X of the Board of Governors of the Federal
Reserve System), order, writ, judgment,  injunction,  decree, determination,  or
award presently in effect having applicability to the Borrower;  (4) result in a
breach  of or  constitute  a  default  under  any  indenture  or loan or  credit
agreement or any other  agreement,  lease,  or instrument to which Borrower is a
party or by which it or its properties may be bound or affected;  (5) result in,
or require,  the creation or imposition of any Lien,  except as  contemplated by
the Security Agreement,  upon or with respect to any of the properties now owned
or  hereafter  acquired  by the  Borrower;  or (6) cause the  Borrower  to be in
default under any such law, rule, regulation, order, writ, judgment, injunction,
decree,  determination,  or award of any such  indenture,  agreement,  lease, or
instrument.


                                       11
<PAGE>

         SECTION 4.03.  LEGALLY  ENFORCEABLE  AGREEMENT.  This Agreement is, and
each of the other Loan Documents are legal,  valid,  and binding  obligations of
the Borrower,  and  enforceable  against the Borrower in  accordance  with their
respective  terms,  except to the extent that such enforcement may be limited by
(i) applicable bankruptcy, insolvency, liquidation,  reorganization,  moratorium
or other similar laws affecting  creditors' rights  generally,  and (ii) general
principles of equity (whether applied in a proceeding at law or in equity).

         SECTION 4.04. FINANCIAL  STATEMENTS.  The consolidated balance sheet of
the  Borrower  and its  Subsidiaries  as of  December  31,  1999 and the related
consolidated  statements of income,  shareholder's equity, and cash flows of the
Borrower  and  its  Subsidiaries  for  the  fiscal  year  then  ended,  and  the
accompanying  footnotes,  together with the opinion thereon,  dated December 31,
1999 of Mauldin & Jenkins,  independent certified public accountants,  copies of
which have been  furnished  to the Lender,  are  complete and correct and fairly
present the financial  condition of the Borrower and its Subsidiaries as at such
dates and the results of the operations of the Borrower and its Subsidiaries for
the periods covered by such  statements,  all in accordance with GAAP; and since
December 31, 1999,  there has been no material  adverse  change in the condition
(financial  or  otherwise),  business,  or  operations  of the  Borrower  or any
Subsidiary. There are no liabilities of the Borrower or any Subsidiary, fixed or
contingent, which are material but are not reflected in the financial statements
or in the notes thereto,  other than liabilities  arising in the ordinary course
of  business  since  December  31,  1999.  No  information,  exhibit,  or report
furnished by the Borrower to the Lender in  connection  with the approval of the
Loan or negotiation of this Agreement contains any material misstatement of fact
or omitted to state a material fact or any fact  necessary to make the statement
contained therein not materially misleading.

         SECTION 4.05.  LABOR DISPUTES AND ACTS OF GOD. Neither the business nor
the  properties  of the  Borrower or any  Subsidiary  are  affected by any fire,
explosion,  accident,  strike, lockout or other labor dispute,  drought,  storm,
hail, earthquake,  embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance)  materially  and adversely  affecting such
business or properties or the operation of the Borrower or such Subsidiary.

         SECTION 4.06. OTHER AGREEMENTS. Neither the Borrower nor any Subsidiary
is a party to any indenture,  loan,  credit agreement,  regulatory  agreement or
imposition,  or to any lease or other agreement or instrument, or subject to any


                                       12
<PAGE>

charter or corporate  restriction  which could have a material adverse effect on
the  business,  properties,  assets,  operations,  or  conditions,  financial or
otherwise,  of the Borrower or any  Subsidiary or the ability of the Borrower to
carry  out its  obligations  under  the Loan  Documents  to which it is a party.
Neither the Borrower nor any Subsidiary is in material default in any respect in
the  performance,   observance,  or  fulfillment  of  any  of  the  obligations,
covenants, or conditions contained in any agreement or instrument to which it is
a party.

         SECTION 4.07. LITIGATION. Except as is set forth expressly on Exhibit G
attached hereto, no action or proceeding is pending or, threatened  against,  or
affecting,  the  Borrower or any of its  Subsidiaries  before any court,  board,
commission, governmental agency, or arbitrator, which may, in any one case or in
the aggregate, materially adversely affect the financial condition,  operations,
properties,  or business of the Borrower or any Subsidiary or the ability of the
Borrower to perform its  obligation  under the Loan  Documents  to which it is a
party.

         SECTION  4.08.  NO DEFAULTS ON  OUTSTANDING  JUDGMENTS  OR ORDERS.  The
Borrower and its Subsidiaries have satisfied all material judgments, and neither
the Borrower  nor any  Subsidiary  is in default  with respect to any  judgment,
writ, injunction, decree, rule, or regulation of any court, arbitrator, federal,
state, municipal, or other governmental  authority,  commission,  board, bureau,
agency, or instrumentality,  domestic or foreign, which default shall materially
and   adversely   affect  the  business  or   properties  of  Borrower  and  its
Subsidiaries.

         SECTION  4.09.  OWNERSHIP AND LIENS.  The Borrower and each  Subsidiary
have title to, or valid  leasehold  interests  in, all of their  properties  and
assets,  real and personal,  including the  properties  and assets and leasehold
interests  reflected  in the  financial  statements  referred to in Section 4.04
(other  than any  properties  or assets  disposed of in the  ordinary  course of
business),  and none of the  properties  and assets owned by the Borrower or any
Subsidiary and none of their leasehold  interests is subject to any Lien, except
such as may be permitted pursuant to Section 6.01 of this Agreement.

         SECTION  4.10.  SUBSIDIARIES  AND  OWNERSHIP OF STOCK.  The  Borrower's
audited and consolidated financial statement for the fiscal year ending December
31, 1999,  as provided to the Lender,  includes a complete and accurate  list of
the Subsidiaries of the Borrower.  All of the outstanding  capital stock of each


                                       13
<PAGE>

Subsidiary  has been validly  issued,  is fully paid and  nonassessable,  and is
owned by the Borrower free and clear of all Liens.

         SECTION 4.11.  ERISA.  With respect to each Plan maintained by Borrower
and each  Subsidiary,  the Borrower and each Subsidiary are in compliance in all
material respects with all applicable  provisions of ERISA. Neither a Reportable
Event nor a Prohibited  Transaction  has occurred and is continuing with respect
to any Plan; no notice of intent to terminate a Plan has been filed, nor has any
Plan been terminated;  no circumstances exist which constitute grounds entitling
the PBGC to  institute  proceedings  to  terminate,  or  appoint  a  trustee  to
administer,  a Plan, nor has the PBGC instituted any such  proceedings;  neither
the Borrower  nor any Commonly  Controlled  Entity has  completely  or partially
withdrawn from a Multiemployer  Plan; the Borrower and each Commonly  Controlled
Entity have met their minimum funding  requirements  under ERISA with respect to
all of their Plans, and the present value of all vested benefits under each Plan
exceeds the fair market value of all Plan assets allocable to such benefits,  as
determined on the most recent  valuation date of the Plan and in accordance with
the  provisions of ERISA;  and neither the Borrower nor any Commonly  Controlled
Entity has incurred any liability to the PBGC under ERISA.

         SECTION 4.12. OPERATION OF BUSINESS.  The Borrower and its Subsidiaries
possess all licenses, permits, franchises, patents, copyrights,  trademarks, and
trade names,  or rights thereto,  necessary in all material  respects to conduct
their  respective  businesses  substantially  as now  conducted and as presently
proposed to be  conducted,  and the  Borrower  and its  Subsidiaries  are not to
Borrower's knowledge, in violation of any valid rights of others with respect to
any of the foregoing.

         SECTION 4.13.  TAXES.  The Borrower and each of its  Subsidiaries  have
filed all tax returns (federal,  state, and local) required to be filed and have
paid all taxes,  assessments,  and governmental charges and levies shown thereon
to be due, including interest and penalties.  The federal income tax liabilities
of the Borrower and its Subsidiaries have been finally  determined and satisfied
for all taxable years up to and  including  the taxable year ended  December 31,
1999.

         SECTION 4.14. ABSENCE OF UNDISCLOSED  LIABILITIES.  Except as reflected
in the audited  consolidated  balance  sheet of  Borrower  at December  31, 1999
(including the notes thereto), as of December 31, 1999, neither Borrower nor any
Subsidiary had any material liability or obligation whatsoever, whether accrued,
absolute,  contingent,  or otherwise that should,  in accordance with GAAP, have


                                       14
<PAGE>

been  disclosed in such financial  statements and notes thereto.  Since December
31,  1999,  neither  Borrower  nor any  Subsidiary  has  incurred  any  material
liability or obligation,  except for liabilities and obligations incurred in the
ordinary  course of business or that will not have a material  adverse effect on
Borrower.

         SECTION 4.15.  ENVIRONMENT.  The Borrower and each Subsidiary have duly
complied  in all  material  respects  with,  and their  businesses,  operations,
assets,  equipment,  property,  leaseholds,  other real estate  owned,  or other
facilities  are in compliance in all material  respects  with, the provisions of
all  federal and state,  environmental,  health,  and safety  laws,  codes,  and
ordinances,  and all rules and regulations promulgated  thereunder.  Neither the
Borrower nor any  Subsidiary  has received  notice of, nor knows of or suspects,
facts  which  might   constitute   any   violations  of  any  federal  or  state
environmental,  health, or safety laws,  codes, or ordinances,  and any rules or
regulations  promulgated thereunder with respect to its businesses,  operations,
assets (including but not limited to real property loan collateral),  equipment,
property,  leaseholds, or other facilities.  Set forth in Exhibit H is a list of
all real  property  owned by Borrower  and/or the  Subsidiaries  other than real
property  acquired pursuant to foreclosure of a lien in favor of Borrower or any
Subsidiary  (or by deed in lieu thereof)  ("Real Estate Owned") or leased by the
Borrower and its Subsidiaries,  wherever located, and a brief description of the
business conducted at such location.

         SECTION   4.16.   GOVERNMENTAL   APPROVAL.   All   permits,   consents,
authorizations, approvals, declarations, notifications, filings or registrations
with any Governmental Authority or Regulatory Authority or any third party which
are necessary in all material  respects in connection  with the  consummation of
this transaction have been obtained on or before the date hereof.

         SECTION 4.17.  REGULATORY  COMPLIANCE AND NOTICE OF REGULATORY  ACTION.
The Borrower and each Subsidiary are in compliance in all material respects with
all  laws,  statutes,   ordinances,  and  governmental  rules,  regulations,  or
requirements relating to or affecting their business or operations. There are no
outstanding   notices  of  charges,   cease-and-desist   orders   (temporary  or
otherwise),  or orders to take  affirmative  action  issued by any  Governmental
Authority or Regulatory  Authority  against the Borrower,  any Bank or any other
Subsidiary,  or any director,  officer,  employee or agent of the Borrower,  any
Bank or any other  Subsidiary.  No agreement or memorandum of understanding  has


                                       15
<PAGE>

been entered into between any Governmental Authority or Regulatory Authority and
the  Borrower,  any  Bank or any  other  Subsidiary  or any  director,  officer,
employee or agent of the Borrower,  any Bank or any other Subsidiary.  No notice
of intention to remove from office or notice of intention to suspend from office
has been served upon any  officer or director of the  Borrower,  any Bank or any
other Subsidiary by any Governmental Authority or Regulatory Authority.

         SECTION 4.18.  SECURITIES  ACTIVITIES.  The Borrower has not issued any
securities  except as were (a) duly registered under the Securities Act of 1933,
as  amended,   and  applicable  blue  sky  laws,  or  (b)  validly  exempt  from
registration.

         SECTION 4.19.  DEPOSIT INSURANCE.  Each Bank is an "insured  depository
institution"  within  the  meaning of  Section 3 (c)(2) of the  Federal  Deposit
Insurance Act, as amended.


                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

         So long as the Revolving Credit Note, the Existing Term Note and/or the
Additional  Term Note shall  remain  unpaid or Borrower is  permitted to request
advances under the Revolving Credit, the Borrower will:

         SECTION  5.01.  USE OF PROCEEDS.  Use the proceeds of the Loan only for
the purposes set forth  herein,  and will furnish the Lender such evidence as it
may reasonably require with respect to such use.

         SECTION  5.02.  MAINTENANCE  OF EXISTENCE.  Preserve and maintain,  and
cause each Subsidiary to preserve and maintain, its corporate existence and good
standing  in the  jurisdiction  of its  incorporation,  and  qualify  and remain
qualified,  and cause each  Subsidiary  to qualify  and remain  qualified,  as a
foreign  corporation in each  jurisdiction in which the ownership of property or
the nature of its  business  makes such  qualification  necessary  or  required,
except where such failure to qualify shall not  materially  or adversely  affect
the Borrower and its Subsidiaries taken as a whole.

         SECTION 5.03.  MAINTENANCE OF RECORDS.  Keep, and cause each Subsidiary
to keep,  adequate records and books of account,  in which complete entries will

                                       16
<PAGE>

be made in accordance with GAAP consistently  applied,  reflecting all financial
transactions of the Borrower and its Subsidiaries.

         SECTION 5.04. MAINTENANCE OF PROPERTIES.  Maintain, keep, and preserve,
and cause each Subsidiary to maintain, keep, and preserve, all of its properties
(tangible  and  intangible)  necessary  or useful in the  proper  conduct of its
business in good working order and condition, ordinary wear and tear excepted.

         SECTION 5.05. CONDUCT OF BUSINESS.  Continue, and cause each Subsidiary
to continue,  to engage in a business of the same general type as now  conducted
by it on the date of this Agreement.

         SECTION  5.06.  MAINTENANCE  OF  INSURANCE.  Maintain  and see that its
Subsidiaries maintain, or cause to be maintained, insurance coverages including,
but not limited to, bankers' blanket bonds, public liability insurance, and fire
and extended  coverage  insurance on all assets owned by them,  all in such form
and amounts,  and with such  insurers,  as are  reasonably  satisfactory  to the
Lender.

         SECTION 5.07.  COMPLIANCE WITH LAWS.  Comply, and cause each Subsidiary
to  comply,   in  all  material   respects  with  all  applicable  laws,  rules,
regulations,  orders,  and material  agreements to which they are subject,  such
compliance to include,  without limitation,  maintaining  adequate cash reserves
for the payment of, and paying  before the same  become  delinquent,  all taxes,
assessments,  and  governmental  charges  imposed  upon it or upon its  property
except as contested in good faith.

         SECTION 5.08. RIGHT OF INSPECTION. At any reasonable time and from time
to time with prior  notice,  permit  the Lender or any agent or  representatives
thereof to examine and make copies of and  abstracts  from the records and books
of account of, and visit the properties of, the Borrower and any Subsidiary, and
to  discuss  the  affairs,  finances,  and  accounts  of the  Borrower  and  any
Subsidiary  with  any  of  their  respective  officers  and  directors  and  the
Borrower's independent accountants.

         SECTION 5.09. DEPOSIT  INSURANCE.  The Borrower will cause each Bank to
maintain  federal  deposit  insurance and to be a member of the Federal  Deposit
Insurance Corporation (or any successor thereto).


                                       17
<PAGE>

         SECTION 5.10. REPORTING REQUIREMENTS. Furnish to the Lender:

         (1)  QUARTERLY  FINANCIAL  STATEMENTS.  As soon as available and in any
event within  forty-five  (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Borrower, interim unaudited consolidated and
unconsolidated  balance  sheets of Borrower,  and related  statements of income,
shareholders  equity  and  cash  flows of the  Borrower  for the  prior  quarter
prepared in accordance with GAAP.

         (2) CALL REPORTS. As soon as available,  and in any event within thirty
(30) days after the end of each fiscal  quarter of the  Borrower,  copies of all
Call  Reports of the  Borrower  and each Bank as filed with the Federal  Deposit
Insurance  Corporation (or any successor  thereto) and/or the Comptroller of the
Currency  (or any  successor),  signed by the  chief  financial  officer  of the
Borrower and each Bank.

         (3) ANNUAL FINANCIAL STATEMENTS.  As soon as available and in any event
within one  hundred  twenty  (120) days after the end of each fiscal year of the
Borrower,  consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries  as  of  the  end  of  such  fiscal  year  and   consolidated   and
consolidating statements of income,  shareholder's equity, and cash flows of the
Borrower and its Subsidiaries for such fiscal year, all in reasonable detail and
stating in comparative form the respective  figures for the  corresponding  date
and period in the prior fiscal year and all prepared in accordance with GAAP and
accompanied by an opinion thereon  acceptable to the Lender by Mauldin & Jenkins
or other accountants selected by the Borrower and acceptable to the Lender;

         (4) F.R.Y.-6  ANNUAL  REPORT.  As soon as  available,  and in any event
within ten (10) days after the filing thereof, a copy of the Borrower's F.R.Y.-6
Annual Report to the Federal Reserve System.

         (5) MANAGEMENT  LETTERS.  Promptly upon receipt thereof,  copies of any
reports  submitted to the Borrower or any  Subsidiary by  independent  certified
public accountants in connection with examination of the financial statements of
the Borrower or any Subsidiary made by such accountants;

         (6)  CERTIFICATE OF NO DEFAULT.  Within  forty-five (45) days after the
end of each of the quarters of each fiscal year of the  Borrower,  a certificate
of the chief  financial  officer of the Borrower,  substantially  in the form of
Exhibit I attached  hereto and made a part  hereof (a)  certifying,  inter alia,
---------                                                            ----------


                                       18
<PAGE>

that (i) the representations  and warranties  contained in Article IV hereof and
in each of the Loan Documents remain true and correct (except to the extent that
such  representations and warranties relate solely to an earlier date), (ii) the
Borrower and Subsidiaries are in compliance with the covenants set forth herein,
and (iii) no Event of Default has occurred and is continuing  or, if an Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action  which is proposed  to be taken with  respect  thereto;  and (b) with
computations  demonstrating  compliance with the covenants  contained in Article
VII;

         (7) ACCOUNTANT'S REPORT. Simultaneously with the delivery of the annual
financial  statements  referred  to in  Section  5.10(3),  a  statement  of  the
independent  public  accountants  to the effect that, in making the  examination
necessary for the audit of such  statements,  they have obtained no knowledge of
any  condition  or event  which  constitutes  an Event  of  Default,  or if such
accountants  shall  have  obtained  knowledge  of any such  condition  or event,
specifying in such  certificate each such condition or event, of which they have
knowledge and the nature and status thereof;

         (8) NOTICE OF  LITIGATION.  Promptly  after the  commencement  thereof,
notice of all actions,  suits, and proceedings  before any court or governmental
department,  commission, board, bureau, agency, or instrumentality,  domestic or
foreign, affecting the Borrower or any Subsidiary which, if determined adversely
to the Borrower or such Subsidiary,  could have a material adverse effect on the
financial  condition,   properties,  or  operations  of  the  Borrower  or  such
Subsidiary;

         (9) NOTICE OF EVENTS OF DEFAULT.  The  Borrower  will notify the Lender
immediately  if it becomes aware of the occurrence of any Event of Default or of
any fact, condition,  or event that only with the giving of notice or passage of
time,  or both,  could  become an Event of  Default,  or of the  failure  of the
Borrower to observe any of its undertakings hereunder;

         (10) ERISA REPORTS. As soon as possible, and in any event within thirty
(30) days after the Borrower knows or has reason to know that any  circumstances
exist that  constitute  grounds  entitling the PBGC to institute  proceedings to
terminate a Plan with respect to the Borrower or any Commonly Controlled Entity,
and  promptly,  but in any event within five (5) Business Days of receipt by the
Borrower or any  Commonly  Controlled  Entity of notice that the PBGC intends to
terminate a Plan or appoint a trustee to administer the same, and promptly,  but


                                       19
<PAGE>

in any event within five (5) Business  Days of the receipt of notice  concerning
the  imposition  of withdrawal  liability in excess of ONE HUNDRED  THOUSAND AND
NO/100  DOLLARS  ($100,000.00)  with  respect to the  Borrower  or any  Commonly
Controlled  Entity, the Borrower will deliver to the Lender a certificate of the
chief financial  officer of the Borrower  setting forth all relevant details and
the action which the Borrower proposes to take with respect thereto;

         (11)  PROXY  STATEMENTS,  ETC.  Promptly  after the  sending  or filing
thereof, copies of all proxy statements, financial statements, and reports which
the  Borrower or any  Subsidiary  sends to its  stockholders,  and copies of all
regular,  periodic,  and special reports, and all registration  statements which
the Borrower or any Subsidiary files with the Securities and Exchange Commission
or any  Governmental  Authority which may be substituted  therefor,  or with any
national securities exchange;

         (12)  REPORTS TO  REGULATORY  AGENCIES.  Promptly  after the sending or
filing of the same,  copies of all call  reports  and other  reports,  including
without  limitation   responses  to  administrative   enforcement  actions,  and
modifications or amendments thereto, that the Borrower or its Subsidiaries sends
or files with any Regulatory Authority; and

         (13) NOTICE OF REGULATORY ACTION.  Promptly,  written notice of (i) the
issuance  of  any  notice  of  charges,  cease-and-desist  order  (temporary  or
otherwise), or order to take affirmative action by any Governmental Authority or
Regulatory Authority against the Borrower, any Bank or any other Subsidiary,  or
any director,  officer, employee or agent of the Borrower, any Bank or any other
Subsidiary, (ii) the service of any notice of intention to remove from office or
notice of  intention  to suspend  from office by any  Governmental  Authority or
Regulatory  Authority upon any director or officer of the Borrower,  any Bank or
any other  Subsidiary,  (iii) the  issuance  of a notice of  termination  of the
status of any Bank as an  insured  bank  under  the  Federal  Deposit  Insurance
Corporation  Act, as amended,  or (iv) the  entering  into of any  agreement  or
memorandum of  understanding  between any  Governmental  Authority or Regulatory
Authority and the Borrower,  any Bank or any other Subsidiary,  or any director,
officer, employee or agent of the Borrower, any Bank or any other Subsidiary.

         (14) ADVERSE CHANGES.  Promptly after the occurrence  thereof and in no
event later than ten (10) days  thereafter,  full  disclosures  of any  material


                                       20
<PAGE>

adverse  changes  in  the  finances  or  business  of  Borrower  or  any  of its
Subsidiaries.

         (15)  GENERAL  INFORMATION.   Such  other  information  respecting  the
condition  or  operations,  financial  or  otherwise,  of  the  Borrower  or any
Subsidiary as the Lender may from time to time reasonably request.

         SECTION 5.11. ENVIRONMENT.  Be and remain, and cause each Subsidiary to
be and remain,  in all material  respects,  in compliance with the provisions of
all  federal  and  state  environmental,  health,  and  safety  laws,  codes and
ordinances,  and all rules and  regulations  issued  thereunder;  and notify the
Lender immediately of any notice of an environmental complaint received from any
governmental agency or any other party.

         SECTION  5.12.  CAPITAL  ADEQUACY.  Maintain,  and  cause  each Bank to
maintain,  at all times, the minimum levels of regulatory  capital  necessary to
maintain the regulatory  capital  classification of "Well  Capitalized," as such
term is defined by the applicable Regulatory Authority.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

         So long as the Revolving Credit Note, the Existing Term Note and/or the
Additional  Term Note shall  remain  unpaid or Borrower is  permitted to request
advances under the Revolving Credit, the Borrower will not:

         SECTION 6.01. LIENS.  Create,  incur and assume, or suffer to exist, or
permit any Subsidiary to create,  incur,  assume,  or suffer to exist,  any Lien
upon or with respect to any of its properties  (including,  without  limitation,
any Lien  upon  all or any part of the  common  or  capital  stock of any of the
Banks), now owned or hereafter acquired, except:

         (1) Liens in favor of the Lender;

         (2) 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;


                                       21
<PAGE>

         (3)  Liens   imposed  by  law,  such  as   mechanics',   materialmen's,
landlords',  warehousemen's,  and carriers' 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;

         (4) Liens under workers' compensation,  unemployment insurance,  Social
Security, or similar legislation;

         (5) 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;

         (6) 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;

         (7)   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;

         (8) 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  Borrower's
Subsidiaries.

         (9) 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;

         (10) Those Liens specified in Exhibit J attached hereto and made a part
hereof; and                            ---------

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


                                       22
<PAGE>

         SECTION 6.02.  DEBT.  Create,  incur,  assume,  or suffer to exist,  or
permit any Subsidiary to create,  incur,  assume,  or suffer to exist, any Debt,
except:

         (1) Debt of the Borrower under this Agreement or the Loan;

         (2) Debt  described  in Exhibit  K, and any  renewals,  extensions,  or
refinancings of existing Debt on commercially  reasonable  terms(but there shall
be no voluntary prepayments of such Debt);

         (3) Debt of a Subsidiary  to the Federal  Reserve  Bank, or the Federal
Home Loan Bank, in the ordinary course of business;

         (4) Accounts payable to trade creditors for goods or services which are
not aged more than sixty (60) days from the billing  date and current  operating
liabilities  (other than for borrowed  money) which are not more than sixty (60)
days past due, in each case  incurred in the  ordinary  course of  business,  as
presently  conducted,  and paid within the specified time,  unless  contested in
good faith and by appropriate proceedings; and

         (5) Debt of the Borrower or any  Subsidiary  secured by purchase  money
liens and security  interests  permitted by Section 6.01 (11),  which Debt shall
not exceed  FOUR  HUNDRED  THOUSAND  AND  NO/100  DOLLARS  ($400,000.00)  in the
aggregate at any one time outstanding.

         SECTION  6.03.  MERGERS,  ACQUISITIONS,  ETC.  Wind up,  liquidate,  or
dissolve  itself,  reorganize,  merge,  or consolidate  with or into, or convey,
sell,  assign,  transfer,  lease,  or  otherwise  dispose  of  (whether  in  one
transaction  or in a series of  transactions)  all or  substantially  all of its
assets (whether now owned or hereafter  acquired) to any Person,  acquire all or
substantially  all of the assets or the  business of any Person,  or commence or
acquire any new business not conducted by it on the date of this  Agreement,  or
permit any  Subsidiary to do so, except that the Borrower or any  Subsidiary may
merge into,  consolidate  with or acquire any other Person provided in each case
that  immediately  after  giving  effect  thereto,  no event  shall occur and be
continuing  which  constitutes a Default or an Event of Default and, in the case
of any such merger with any other Person to which the Borrower or any Subsidiary
is a party,  the Borrower or its  Subsidiary is the surviving  corporation.  The
Lender, in its sole discretion, may consent in writing to additional exceptions.


                                       23
<PAGE>

         SECTION 6.04.  LEASES.  Create,  incur,  assume, or suffer to exist, or
permit  any  Subsidiary  to  create,  incur,  assume,  or suffer  to exist,  any
obligation  as lessee for the rental or hire of any real or  personal  property,
except:  (1) leases existing on the date of this Agreement and any extensions or
renewals  thereof;  (2) leases  (other than Capital  Leases) which do not in the
aggregate  require the Borrower and its Subsidiaries on a consolidated  basis to
make payments  (including  taxes,  insurance,  maintenance,  and similar expense
which the Borrower or any  Subsidiary  is required to pay under the terms of any
lease) in any fiscal year of the Borrower in excess of FOUR HUNDRED THOUSAND AND
NO/100 DOLLARS ($400,000.00); (3) leases between the Borrower and any Subsidiary
or between any Subsidiaries.  The Lender, in its sole discretion, may consent in
writing to additional exceptions.

         SECTION 6.05. SALE AND LEASEBACK.  Sell, transfer, or otherwise dispose
of, or permit any  Subsidiary to sell,  transfer,  or otherwise  dispose of, any
real or personal  property to any Person and  thereafter  directly or indirectly
lease back the same or similar property.

         SECTION 6.06.  DIVIDENDS.  After the date hereof, make any distribution
in respect of its capital stock or purchase,  or redeem or otherwise acquire any
shares of its outstanding  capital stock unless such action has been approved by
the necessary  Regulatory  Authorities,  and further provided such distribution,
redemption or acquisition  shall not impair  Borrower's  ability to service Debt
nor  create  or result  in the  occurrence  of an Event of  Default  under  this
Agreement or any other Loan Document.

         SECTION 6.07. SALE OF ASSETS.  Sell, lease, assign,  transfer,  pledge,
mortgage,  encumber,  or otherwise dispose of, or permit any Subsidiary to sell,
lease, assign, transfer,  pledge,  mortgage,  encumber, or otherwise dispose of,
any  of  its  now  owned  or  hereafter  acquired  assets  (including,   without
limitation,  shares of stock and indebtedness of Subsidiaries,  receivables, and
leasehold interest), except: (1) inventory disposed of in the ordinary course of
business;  (2) the sale or other  disposition of assets no longer used or useful
in the conduct of its business; (3) that any Subsidiary may sell, lease, assign,
or otherwise  transfer its assets to the Borrower or to any other  subsidiary in
the ordinary course of business consistent with past practices; and (4) sales of


                                       24
<PAGE>

loans in the ordinary  course of business and sales of Real Estate Owned and all
other foreclosed  assets.  The Lender,  in its sole  discretion,  may consent in
writing to additional exceptions. The Borrower further agrees not to enter into,
or permit any  Subsidiary to enter into,  an agreement  with or  undertaking  in
favor of any Person,  other than the Lender,  to refrain  from taking any action
prohibited by this Section 6.07.

         SECTION 6.08. GUARANTIES, ETC. Assume, guarantee, endorse, or otherwise
be or become  directly  or  contingently  responsible  or liable,  or permit any
Subsidiary to assume, guarantee,  endorse, or otherwise be or become directly or
contingently responsible or liable (including,  but not limited to, an agreement
to purchase any obligation,  stock, assets,  goods, or services, or to supply or
advance any funds,  assets,  goods, or services,  or an agreement to maintain or
cause such  Person to  maintain  a minimum  working  capital  or net  worth,  or
otherwise to assure the creditors of any person against loss) for obligations of
any Person,  except  guaranties by  endorsement  of negotiable  instruments  for
deposits  or  collection  or  similar  transactions  in the  ordinary  course of
business  and  except  pursuant  to  letters  of credit or other  similar  items
(banker's  acceptances,  etc.)  issued  by the Banks in the  ordinary  course of
business.

         SECTION 6.09. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including,  without limitation,  the purchase,  sale, or exchange of property or
the rendering of any services,  with any Affiliate,  or permit any Subsidiary to
enter into any transaction,  including,  without limitation, the purchase, sale,
or exchange of property or the  rendering  of any service,  with any  Affiliate,
except in the ordinary course of and pursuant to the reasonable  requirements of
the Borrower's or such Subsidiary's business,  upon fair and reasonable terms no
less  favorable  to the  Borrower  or such  Subsidiary  than  would  obtain in a
comparable  arm's-length  transaction  with a Person  not an  Affiliate,  and in
compliance with all applicable regulatory and statutory requirements.

                                   ARTICLE VII

                               FINANCIAL COVENANTS

         So long as the Revolving Credit Note, the Existing Term Note and/or the
Additional  Term Note shall  remain  unpaid or Borrower is  permitted to request
advances under the Revolving Credit:


                                       25
<PAGE>

         SECTION  7.01.  CAPITAL  EXPENDITURES.  Neither  the  Borrower  nor the
Borrower's bank  Subsidiaries  will make any  expenditures  for fixed or capital
assets if, after giving effect thereto,  the aggregate of all such  expenditures
made by the Borrower or any bank Subsidiary would exceed FOUR MILLION AND NO/100
DOLLARS  ($4,000,000.00)  during any fiscal year of  Borrower.  Bank may, in its
sole discretion, approve in writing exceptions to this restriction.

         SECTION  7.02.  CAPITAL  ADEQUACY.  Maintain,  and  cause  each Bank to
maintain,  at all times, the minimum levels of regulatory  capital  necessary to
maintain the regulatory  capital  classification of "Well  Capitalized," as such
term is defined by the applicable Regulatory Authority.

         SECTION 7.03.  RETURN ON ASSETS.  Income from  operations  after taxes,
divided by average  assets,  on a consolidated  basis shall not be less than one
and one-tenth percent (1.10%).

         SECTION 7.04.  RETURN ON EQUITY.  Income from  operations  after taxes,
divided by average equity, on a consolidated basis shall not be less than twelve
percent (12.0%).

         SECTION 7.05. [Intentionally Omitted].

         SECTION 7.06. [Intentionally Omitted].

         SECTION 7.07. [Intentionally Omitted].

         SECTION 7.08. RESERVES.  Each Bank shall maintain at all times reserves
equal to the greater of (i) one and thirty-five  one hundredths  percent (1.35%)
of total loans,  (ii) one hundred fifty percent  (150%) of Total  Non-Performing
Assets, or (iii) the minimum amount required by its primary regulator.

         SECTION 7.09. ASSET QUALITY.  The ratio of loans 90 days past due + non
accrual  loans plus other real estate owned divided by net loans plus other real
estate owned for each Bank shall not exceed one and five tenths percent (1.5%).

         SECTION  7:10.  CONSOLIDATED  TANGIBLE  EQUITY.  Consolidated  Tangible
Equity for  Borrower  and its  Subsidiaries  shall be  greater  than or equal to
$38,000,000.00.  For  purposes of this  Agreement,  Tangible  Equity  shall mean
equity minus intangibles.


                                       26
<PAGE>

         SECTION   7.11.   CONSOLIDATED   TANGIBLE   EQUITY  TO  TOTAL   ASSETS.
Consolidated  Tangible Equity for Borrower and its Subsidiaries shall be greater
than or  equal  to 8% of the  total  consolidated  assets  of  Borrower  and its
Subsidiaries.

         SECTION  7.12.  MINIMUM  LIQUIDITY  REQUIREMENTS.   Borrower  and  each
Subsidiary shall maintain at least the minimum levels of liquidity  required for
each such entity by any applicable Regulatory Authority.


                                  ARTICLE VIII

                                EVENTS OF DEFAULT

         SECTION 8.01. EVENTS OF DEFAULT. An Event of Default shall be deemed to
exist if any of the following events shall occur:

         (1) The Borrower  shall fail to pay the  principal  of, or interest on,
the Loan or any other  indebtedness  or  obligations,  whether  now  existing or
hereafter created,  payable or owing to the Lender,  within five (5) days of the
respective due date;

         (2) Any  representation,  warranty or certification made or deemed made
by the Borrower in this Agreement,  the Security Agreement,  or any of the other
Loan Documents, or which is contained in any certificate,  document, opinion, or
financial or other  statement  furnished at any time under or in connection with
any Loan Document, shall prove to have been incorrect, incomplete, or misleading
in any material respect on or as of the date made or deemed made;

         (3) The Borrower  shall fail to perform or observe any term,  covenant,
condition or agreement  contained  herein or in any other of the Loan  Documents
and such failure  remains  unremedied  for thirty (30) days after the earlier of
its discovery by the Borrower or written  notice  thereof to the Borrower by the
Lender;

         (4) Any Event of  Default as defined  (and after  giving  effect to any
applicable  notice and/or cure periods) in any other of the Loan Documents shall
occur;

         (5) The Borrower or any of its  Subsidiaries  shall (a) fail to pay any
indebtedness  for borrowed money (other than the Loan or any other  indebtedness



                                       27
<PAGE>

or obligation,  whether now existing or hereafter  created,  payable or owing to
the  Lender)  in  excess  of TWO  HUNDRED  FIFTY  THOUSAND  AND  NO/100  DOLLARS
($250,000.00) of the Borrower or such  Subsidiary,  as the case may be, when due
(whether by scheduled maturity,  required prepayment,  acceleration,  demand, or
otherwise);  or (b) fail to perform or observe any term, covenant,  or condition
on its part to be  performed  or  observed  under any  agreement  or  instrument
relating to any such indebtedness, when required to be performed or observed, if
the effect of such failure to perform or observe is to accelerate,  or to permit
the acceleration of, after the giving of notice or passage of time, or both, the
maturity of such indebtedness, whether or not such failure to perform or observe
shall be waived by the  holder of such  indebtedness;  or any such  indebtedness
shall be declared to be due and payable,  or required to be prepaid  (other than
by a regularly  scheduled  required  prepayment),  prior to the stated  maturity
thereof and Borrower or its Subsidiaries fails to pay such indebtedness in full;

         (6) The Borrower or any of its  Subsidiaries  (a) shall  generally  not
pay, or shall be unable to pay, or shall admit in writing its  inability  to pay
its debts as such debts  become  due;  or (b) shall make an  assignment  for the
benefit of creditors,  or petition or apply to any tribunal for the  appointment
of a custodian, receiver, or trustee for it or a substantial part of its assets;
or (c) shall  commence  any  proceeding  under any  bankruptcy,  reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction,  whether now or hereafter in effect; or (d) shall have had any
such petition or application  filed or any such proceeding  commenced against it
in which an order for relief is entered or an  adjudication  or  appointment  is
made, and which remains  undismissed  for a period of sixty(60) days or more; or
(e) shall take any corporate  action  indicating its consent to, approval of, or
acquiescence in any such petition, application,  proceeding, or order for relief
or  the  appointment  of a  custodian,  receiver,  or  trustee  for  all  or any
substantial part of its properties;  or (f) shall suffer any such custodianship,
receivership, or trusteeship to continue undischarged for a period of sixty (60)
days or more;

         (7) One or more judgments,  decrees, or orders for the payment of money
in excess of ONE  MILLION  AND NO/100  DOLLARS($1,000,000.00)  in the  aggregate
shall be rendered  against  the  Borrower  or any of its  Subsidiaries,  and the
amount of said judgment(s) not covered by Borrower's or Subsidiaries'  insurance
is in excess of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00), and such


                                       28
<PAGE>

judgments,  decrees,  or orders shall continue  unsatisfied  and in effect for a
period of thirty  (30)  consecutive  days  without  being  vacated,  discharged,
satisfied, or stayed or bonded pending appeal;

         (8) The Security  Agreement  shall at any time after its  execution and
delivery  and for any  reason  cease (a) to create a valid and  perfected  first
priority  security  interest in and to the  property  purported to be subject to
such  Security  Agreement;  or (b) to be in full  force  and  effect or shall be
declared  null and void,  or the  validity or  enforceability  thereof  shall be
contested  by the  Borrower,  or the  Borrower  shall  deny it has  any  further
liability or obligation under the Security Agreement, or the Borrower shall fail
to perform any of its obligations under the Security Agreement;

         (9) Any of the  following  events  shall occur or exist with respect to
the Borrower  and any Commonly  Controlled  Entity under ERISA:  any  Reportable
Event shall occur;  complete or partial  withdrawal from any Multiemployer  Plan
shall take place; any Prohibited  Transaction shall occur; a notice of intent to
terminate a Plan shall be filed, or a Plan shall be terminated; or circumstances
shall exist which constitute grounds entitling the PBGC to institute proceedings
to terminate a Plan, or the PBGC shall institute such  proceedings;  and in each
case  above,  such  event or  condition,  together  with  all  other  events  or
conditions,  if any,  could subject the Borrower to any tax,  penalty,  or other
liability  which in the  aggregate  may exceed FIVE HUNDRED  THOUSAND AND NO/100
DOLLARS ($500,000.00); or

         (10) If any Governmental  Authority  asserts or creates a Lien upon any
or all of the assets,  equipment,  property,  leaseholds, or other facilities of
the  Borrower  by reason  of the  occurrence  of a  hazardous  discharge  or any
environmental  complaint;  or if any  Governmental  Authority  asserts  a  claim
against the Borrower  and/or its assets,  equipment,  property,  leaseholds,  or
other facilities for damages or cleanup costs relating to a hazardous  discharge
or an  environmental  complaint;  provided,  however,  that such claim shall not
constitute a default if, within ten (10) Business Days of the occurrence  giving
rise to the claim, (a) the Borrower can prove to the Lender's  satisfaction that
the Borrower has  commenced  and is diligently  pursuing  either:  (i) a cure or
correction of the event which constitutes the basis for the claim, and continues
diligently to pursue such cure or  correction to completion or (ii)  proceedings
for any injunction,  a restraining order, or other appropriate  emergency relief
preventing such Governmental  Authority from asserting such claim,  which relief


                                       29
<PAGE>

is granted  within ten (10) Business Days of the  occurrence  giving rise to the
claim and the injunction,  order, or emergency relief is not thereafter resolved
or reversed on appeal;  and (b) in either of the foregoing events,  the Borrower
has posted a bond,  letter of credit,  or other security  satisfactory  in form,
substance,  and  amount  to  both  the  Lender  and the  Governmental  Authority
asserting  the claim to secure the proper and complete cure or correction of the
event which constitutes the basis for the claim;

         (11) If the  Borrower  or any  Bank,  or the  directors,  officers,  or
employees thereof,  becomes subject to any regulatory  enforcement action, which
includes without limitation,  a memorandum of understanding,  written agreement,
supervisory  directive,  capital directive,  removal action, or cease and desist
order,  which regulatory  enforcement  action limits or restricts the ability of
Borrower or any Bank to engage in its normal business;

         (12)  Borrower  shall  fail  to  maintain  senior   management   having
sufficient  skill and experience in Borrower's  industry to manage  Borrower and
each Subsidiary competently and efficiently.

         (13) If the ownership of Borrower as presently constituted shall change
such that more than  twenty-five  percent (25%) of the outstanding  voting stock
shall be  transferred to any Person other than (i) an existing  shareholder  who
prior to the transfer owned not less than  twenty-five  (25%) of the outstanding
voting stock of Borrower or (ii) an immediate  family member of the transferring
shareholder.

         (14) Any Bank  shall be  unable  or shall be  deemed  to be  unable  to
declare  and  distribute  dividends  as a  result  of  restrictions  imposed  by
applicable regulation or by any Regulatory Authority.

         SECTION 8.02.  REMEDIES UPON EVENT OF DEFAULT Upon the occurrence of an
Event of Default, the Lender may:

         (1) By  notice  to the  Borrower,  declare  the Loan  and all  interest
thereon,  and all other amounts payable under this Agreement to be forthwith due
and payable,  whereupon the Loan, all such interest,  and all such amounts shall
become and be forthwith due and payable,  without presentment,  demand, protest,
or further notice of any kind, all of which are hereby  expressly  waived by the
Borrower;

                                       30
<PAGE>

         (2) At any time and from time to time,  without  notice to the Borrower
(any such notice being expressly waived by the Borrower),  set off and apply (i)
any and all deposits (general or special, time or demand,  provisional or final)
at any time held by the Lender, and (ii) other indebtedness at any time owing by
the Lender to or for the credit or the account of the  Borrower  against any and
all of the  obligations  of the Borrower,  now or hereafter  existing under this
Agreement, or any other Loan Document, irrespective of whether or not the Lender
shall have made any demand under this Agreement,  or under any other of the Loan
Documents and although such obligations may be unmatured;

         (3)  Exercise  from  time to  time  any and  all  rights  and  remedies
available  to a secured  party  when a debtor  is in  default  under a  security
agreement as provided in the Uniform Commercial Code of Georgia, or available to
Lender under any other applicable law or in equity, including without limitation
the right to any deficiency remaining after disposition of the Collateral;

         (4) At its option,  and without notice or demand of any kind,  exercise
from time to time any and all other  rights and  remedies  available to it under
this Agreement or any of the other Loan Documents;

         (5)  Borrower  shall  pay  all of the  reasonable  costs  and  expenses
incurred by Lender in enforcing  its rights under this  Agreement  and the other
Loan Documents.  In the event any claim under this Agreement or under any of the
other Loan Documents is referred to an attorney for collection,  or collected by
or  through  an  attorney  at law,  Borrower  will be liable  to Lender  for all
expenses  incurred by it in seeking to enforce its rights  hereunder,  under any
other of the Loan Documents or in the Collateral,  including without  limitation
reasonable attorneys' fees; and

         (6) Any  proceeds  from  disposition  of any of the  Collateral  may be
applied by Lender  first to the payment of all  expenses  and costs  incurred by
Lender in enforcing the rights of Lender under each of the Loan Documents and in
collecting,  retaking, holding, preparing the Collateral for and advertising the
sale or  other  disposition  of and  realizing  upon the  Collateral,  including
without limitation  reasonable attorneys' fees actually incurred, as well as all
other  legal  expenses  and court  costs.  Any balance of such  proceeds  may be
applied  by  Lender  toward  the  payment  of the  Loan  and in  such  order  of
application  as the Lender  may from time to time  elect.  Lender  shall pay the


                                       31
<PAGE>

surplus, if any, to Borrower.  Borrower shall upon demand pay the deficiency, if
any, to Lender.

                                   ARTICLE IX

                                  MISCELLANEOUS

         SECTION 9.01. AMENDMENTS, ETC. No amendment, modification, termination,
or waiver of any  provision  of any Loan  Document  to which the  Borrower  is a
party,  nor consent to any  departure by the Borrower  from any Loan Document to
which it is a party, shall in any event be effective unless the same shall be in
writing  and  signed by the Lender , and then such  waiver or  consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

         SECTION  9.02.  NOTICES,  ETC.  All  notices  and other  communications
provided for under this Agreement and under the other Loan Documents shall be in
writing (including telex and facsimile  transmissions) and mailed or transmitted
or delivered as follows:

         If to the Borrower:

         400 North Main Street
         Cornelia, Georgia 30531
         Attention: Mr. Harry Stephens

         Executive Vice President & Chief Financial Officer

         Facsimile:(706) 776-1423

         If to the Lender:

         25 Park Place
         Mail Code: 121
         Atlanta, Georgia 30303
         Attention: Southeastern Financial Institutions

         Facsimile:(404)581-1775

or, as to each party, at such other address as shall be designated by such party
in a written  notice to the other party  complying as to delivery with the terms
of this Section 9.02. Except as otherwise  provided in this Agreement,  all such
notices and  communications  shall be effective when deposited in mails or sent,
answer back received via  telecopier,  with the original  deposited in the mail,
respectively, addressed as aforesaid, except that notices to the Lender pursuant

                                       32
<PAGE>

to the  provisions of Section 3.01 shall not be effective  until received by the
Lender.

         SECTION 9.03. NO WAIVER.  No failure or delay on the part of the Lender
in exercising any right,  power, or remedy granted  hereunder shall operate as a
waiver  thereof;  nor shall any single or partial  exercise  of any such  right,
power, or remedy preclude any other or further  exercise thereof or the exercise
of any other right, power, or remedy hereunder.

         SECTION 9.04.  SUCCESSORS AND ASSIGNS.  This Agreement shall be binding
upon  and  inure  to the  benefit  of the  Borrower  and the  Lender  and  their
respective  successors  and assigns,  except that the Borrower may not assign or
transfer  any of its rights  under any Loan  Document to which the Borrower is a
party without the prior written consent of the Lender.

         SECTION 9.05. COSTS, EXPENSES, AND TAXES. The Borrower agrees to pay on
demand all costs and  expenses  incurred  by the Lender in  connection  with the
preparation,  execution,  delivery,  filing,  and  administration  of  the  Loan
Documents,  and  of any  amendment,  modification,  or  supplement  to the  Loan
Documents, including, without limitation, the fees and out-of-pocket expenses of
counsel for the Lender incurred in connection with advising the Lender as to its
rights and responsibilities  hereunder. The Borrower also agrees to pay all such
costs  and  expenses,  including  court  costs and  other  litigation  expenses,
incurred in connection with enforcement of the Loan Documents, or any amendment,
modification, or supplement thereto, whether by negotiation,  legal proceedings,
or otherwise.  In addition,  the Borrower  shall pay any and all stamp and other
taxes and fees  payable  or  determined  to be payable  in  connection  with the
execution,  delivery, filing, and recording of any of the Loan Documents and the
other  documents to be delivered  under any such Loan  Documents,  and agrees to
hold the Lender harmless from and against any and all  liabilities  with respect
to or resulting from any delay in paying or omission to pay such taxes and fees.
This provision shall survive termination of this Agreement.

         SECTION  9.06.  INTEGRATION.  This  Agreement  and the  Loan  Documents
contain the entire agreement  between the parties relating to the subject matter
hereof and supersede all oral statements and prior writing with respect thereto.

         SECTION  9.07.  INDEMNITY.   The  Borrower  hereby  agrees  to  defend,
indemnify,  and hold the Lender  harmless  from and  against any and all claims,
damages,  judgments,   penalties,  costs,  and  expenses  (including  reasonable


                                       33
<PAGE>

attorney's  fees and  litigation  expenses  actually  incurred  now or hereafter
arising  from the  aforesaid  enforcement  of this clause)  arising  directly or
indirectly  from the  activities of the Borrower and its  Subsidiaries,  and its
predecessors in interest,  or arising directly or indirectly from the Borrower's
or any  Subsidiaries',  or any  predecessors  in  interest's,  violation  of any
environmental  protection,  health,  or safety  law,  whether  such  claims  are
asserted by any  governmental  agency or any other person.  This indemnity shall
survive termination of this Agreement.

         SECTION  9.08.  GOVERNING  LAW.  This  Agreement  and  the  other  Loan
Documents  shall be governed by, and construed in accordance  with,  the laws of
the State of Georgia and the applicable laws of the United States of America.

         SECTION 9.09.  SEVERABILITY  OF  PROVISIONS.  Any provision of any Loan
Document which is prohibited or unenforceable  in any jurisdiction  shall, as to
such  jurisdiction,  be  ineffective  to  the  extent  of  such  prohibition  or
unenforceability  without  invalidating  the  remaining  provisions of such Loan
Document or affecting the validity or  enforceability  of such  provision in any
other jurisdiction.

         SECTION  9.10.  HEADINGS.  Article  and  Section  headings  in the Loan
Documents are included in such Loan  Documents for the  convenience of reference
only and shall not  constitute a part of the  applicable  Loan Documents for any
other purpose.

         SECTION  9.11.  JURY TRIAL WAIVER.  THE LENDER AND THE BORROWER  HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING,  CLAIM, OR COUNTERCLAIM,  WHETHER
IN CONTRACT OR TORT,  AT LAW OR IN EQUITY,  ARISING OUT OF OR IN ANY WAY RELATED
TO THIS AGREEMENT OR THE LOAN DOCUMENTS.  NO OFFICER OF THE LENDER HAS AUTHORITY
TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.






                     [REMAINDER OF PAGE INTENTIONALLY BLANK]



                                       34
<PAGE>



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

                                 COMMUNITY BANKSHARES, INC.

                                 By: /s/ J. Alton Wingate
                                    --------------------------------------------
                                 Title:  Chairman, Pres. & CEO

                                 And: /s/ Harry L. Stephens
                                     -------------------------------------------
                                 Title:  Executive Vice President & CFO



                                 SUNTRUST BANK

                                 By:  /s/ James E. Rountree
                                    --------------------------------------------
                                 Title: First Vice President

                                 And: /s/ Evans N. Long, III
                                     -------------------------------------------
                                 Title: Corporate Banking Officer




                                       35
<PAGE>



                                    EXHIBIT A
                                    ---------

                                      BANKS
                                      -----


         NAME OF INSTITUTION                         STATE OF INCORPORATION
         -------------------                         ----------------------

1.   Community Bank & Trust - Habersham                    Georgia

2.   Community Bank & Trust - Jackson                      Georgia

3.   Community Bank & Trust - Alabama                      Alabama

4.   Community Bank & Trust - Troup                        Georgia


<PAGE>

                                    EXHIBIT B
                                    ---------


                                   COLLATERAL
                                   ----------

50,000  shares of the capital stock of Community  Bank & Trust - Habersham  more
particularly  described  in the Amended and  Restated  Stock Pledge and Security
Agreement dated July 21, 1997.


<PAGE>


                                    EXHIBIT D
                                    ---------

                              REVOLVING CREDIT NOTE
                              ---------------------

$3,000,000.00                                                      July 31, 2000
\                                                               Atlanta, Georgia


         FOR VALUE RECEIVED,  the  undersigned,  Community  Bankshares,  Inc., a
Georgia  corporation  (the  "Borrower"),  hereby promises to pay to the order of
SUNTRUST BANK (the "Bank"),  at its Principal  Office  located at 25 Park Place,
Atlanta,  Georgia the  principal  amount of THREE  MILLION AND NO/ ONE HUNDRETHS
DOLLARS ($3,000,000.00) or so much thereof as may be from time to time disbursed
hereunder,  in lawful money of the United  States and in  immediately  available
funds.  This Revolving Credit Note is executed and delivered as a renewal of the
Revolving Credit under the Loan Agreement hereinafter defined.

         Prior to the Revolving Maturity Date, the Borrower may request Advances
to be made pursuant to this Note and repay such Advances in accordance  with the
Amended and Restated Revolving  Credit/Term Loan Agreement of even date herewith
between Borrower and Bank (as amended from time to time, the "Loan  Agreement").
Interest shall accrue and be paid upon such Advances in accordance with the Loan
Agreement.  Accrued but unpaid interest shall be payable on the last day of each
consecutive three month period commencing  October 31, 2000 and on the Revolving
Maturity  Date.  The entire  principal  balance  shall be due and payable on the
Revolving Maturity Date.

         Any  amount of  principal  hereof  which is not paid  when due  (giving
effect  to  any  applicable  grace  period),  whether  at  stated  maturity,  by
acceleration,  or  otherwise,  shall bear  interest from the date when due until
said principal  amount is paid in full,  payable on demand,  at a rate per annum
equal at all times to two percent  (2%) above the rate which would  otherwise be
applicable. Any change in the interest rate resulting from a change in the Prime
Rate shall be effective at the  beginning of the day on which such change in the
Prime Rate shall become effective.

         If any payment  under this Note  becomes due and payable on a day other
than a  Business  Day,  the  maturity  thereof  shall  be  extended  to the next
succeeding  Business  Day,  and  interest  shall be payable  thereon at the rate
herein specified during such extension.

         Terms used herein  which are defined in the Loan  Agreement  shall have
their defined meanings when used herein. The Loan Agreement, among other things,
contains  provisions  for  acceleration  of the  maturity  of this Note upon the
happening of certain stated events. This Note is secured by a Security Agreement
referred  to in the Loan  Agreement,  reference  to which is  hereby  made for a
description of the collateral  provided for under the Security Agreement and the
rights of the Borrower and the Bank with respect to such collateral.

         In  addition  to  and  not  in  limitation  of the  foregoing  and  the
provisions  of the  Loan  Agreement,  the  Borrower  further  agrees  to pay all
expenses of collection, including reasonable attorneys' fees, if this Note shall
be  collected  by  law  or  through  an  attorney  at  law,  or  in  bankruptcy,
receivership, or other court proceedings.


<PAGE>


         TIME IS OF THE ESSENCE UNDER THIS NOTE. This Note has been delivered in
Atlanta,  Georgia,  and shall be  governed  by and  construed  under the laws of
Georgia.

         PRESENTMENT,  PROTEST,  AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY THE
BORROWER.


         IN WITNESS  WHEREOF,  the  Borrower has caused this Note to be executed
and delivered by its duly authorized officer as of the date first above written.


                                    Community Bankshares, Inc.

                                    By:
                                        ----------------------------------------

                                       Title:
                                              ----------------------------------

                                    And:
                                         ---------------------------------------

                                       Title:
                                              ----------------------------------

<PAGE>

                                   EXHIBIT D-2
                                   -----------

                                    TERM NOTE
                                    ---------

                                                                   July 31, 2000
$900,000.00                                                     Atlanta, Georgia


         FOR VALUE  RECEIVED,  the  undersigned  Community  Bankshares,  Inc., a
Georgia  corporation  (the  "Borrower"),  hereby promises to pay to the order of
SUNTRUST  BANK, a Georgia  banking  corporation  (the  "Bank") at its  principal
office at Twenty-Five Park Place, Atlanta, Georgia 30303, or at such other place
as the  holder  hereof  may  designate  by notice in  writing  to  Borrower,  in
immediately available funds in lawful money of the United States of America, the
principal sum of NINE HUNDRED  THOUSAND AND 00/100  DOLLARS  (U.S.  $900,000.00)
with  interest  as shall be due and  payable  in  accordance  with that  certain
Amended  and  Restated  Revolving  Credit/Term  Loan  Agreement  by and  between
Borrower and Bank, dated as of even date herewith (as amended from time to time,
the "Loan Agreement").

         The principal  amount of this Term Note shall be repaid in sixteen (16)
consecutive  equal  installments,  each in an amount equal to Fifty Six Thousand
Twenty Five and no/100 Dollars ($56,025.00), which shall be due and payable on a
quarterly  basis.  The first  such  installment  of  principal  shall be due and
payable on October 31, 2000 and on the last day of each consecutive  three month
period thereafter  through and including the Additional Term Loan Maturity Date.
Borrower shall pay interest on the  outstanding  principal  balance at the Prime
Rate minus one percent  (1.0%) in  accordance  with the Loan  Agreement.  If any
payment  under  this Term Note  becomes  due and  payable  on a day other than a
Business  Day, the  maturity  thereof  shall be extended to the next  succeeding
Business Day, and interest shall be payable thereon at the rate herein specified
during such extension. This Term Note evidences indebtedness incurred under, and
is subject to the terms and  provisions  of, the Loan  Agreement,  to which Loan
Agreement reference is hereby made for a statement of said terms and provisions.
This Term Note is entitled to the  benefits and security as provided in the Loan
Agreement.  Terms used herein which are defined in the Loan Agreement shall have
their defined meanings when used herein.

         Upon the occurrence and during the continuation of any Event of Default
as  provided  in the Loan  Agreement,  the Bank may  declare  the entire  unpaid
principal  balance  hereof and all accrued  interest to be  immediately  due and
payable in the manner and with the effect  provided in the Loan  Agreement,  and
may thereafter exercise any of the remedies referred to in the Loan Agreement or
existing under applicable law.


<PAGE>






         In  addition  to  and  not  in  limitation  of the  foregoing  and  the
provisions of the Loan Agreement,  Borrower  further agrees to pay all costs and
expenses of collection,  including reasonable attorneys' fees, if this Term Note
shall be  collected  by law or through an  attorney  at law,  or in  bankruptcy,
receivership or other court proceedings.

         This Term Note has been  executed  in  Atlanta,  Georgia,  and shall be
governed by and construed under the laws of the State of Georgia.

         TIME IS OF ESSENCE.  PRESENTMENT,  PROTEST  AND NOTICE OF DISHONOR  ARE
HEREBY WAIVED.

         IN WITNESS  WHEREOF,  the Borrower has caused this Term Note to be duly
executed in its name and its corporate  seal to be hereunto  affixed by its duly
authorized officers as of the date first above written.

                                    COMMUNITY BANKSHARES, INC.



                                    By:
                                       -----------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------



                                    And:
                                        ----------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                                                         [CORPORATE SEAL]


                                    EXHIBIT F
                                    ---------

                              OFFICER'S CERTIFICATE
                              ---------------------

         The undersigned certifies that he is of Community Bankshares, Inc. (the
"Company")  and that as such he is familiar with the business and affairs of the
Company and is authorized to execute this  Certificate on behalf of the Company,
and,  with  reference to the Amended and  Restated  Revolving  Credit/Term  Loan
Agreement (the "Loan Agreement") dated as of July 31, 2000,  between the Company
and SunTrust Bank, that he duly has made such  investigations  as were necessary
for the provision of this Certificate and the  certifications,  representations,
and  warranties   contained  herein  and  that  he  hereby  further   certifies,
represents, and warrants as follows:

         1.              That the representations and warranties of the  Company
                  contained in Article IV of the Loan  Agreement  and  otherwise
                  made in writing by or on behalf of the  Company in  connection
                  with the transactions  contemplated by the Loan Agreement, and
                  the schedules and exhibits attached to the Loan Agreement, are
                  true and correct on and as of the date hereof; and

         2.              That the Company has performed and  complied  with  all
                  agreements  and  conditions  contained  in the Loan  Agreement
                  required to be performed  or complied  with by it, and that on
                  and as of the date hereof no  condition  or lapse of time,  or
                  both,  will  constitute  an Event of  Default  as  defined  in
                  Article VIII of the Loan Agreement.

         3.              That neither the execution,  delivery,  and performance
                  of the Loan  Agreement  or of the Note nor  fulfillment  of or
                  compliance with the terms and provisions thereof will conflict
                  with,  or result in a breach  of, the  terms,  conditions,  or
                  provisions of or constitute a default under,  or result in any
                  violation of, any other  agreement to which the Company or any
                  of its  Subsidiaries  is subject.  Neither the Company nor any
                  Subsidiary  is  a  party  to,  or  otherwise  subject  to  any
                  provision contained in, any instrument evidencing indebtedness
                  of the  Company or such  Subsidiary,  any  agreement  relating
                  thereto,  or any other contract or agreement  which limits the
                  amount of, or otherwise imposes  restrictions on the incurring
                  of the type of debt to be evidenced by the Note.

         4.              That there  has been  no material adverse change in the
                  assets,  liabilities,   financial  positions,   operations  or
                  business prospects of Borrower since December 31, 1999.

         Capitalized terms not otherwise defined herein are defined as set forth
in the Loan Agreement.

         WITNESS the seal of the Company and the  signature of the  undersigned,
as of this _____ day of __________, __________________.


                                          By:___________________________________
                                          Name/Title: __________________________

<PAGE>

                                    EXHIBIT G
                                    ---------

                             SCHEDULE OF LITIGATION
                             ----------------------


                                      NONE


<PAGE>


                                    EXHIBIT H
                                    ---------

                          SCHEDULE OF REAL ESTATE OWNED
                          -----------------------------
<TABLE>
<CAPTION>

                                                            COMMUNITY BANKSHARES
                                                            FIXED ASSET SCHEDULE

                                                             CURRENT BOOK VALUE
                                                       BUILDING      LAND        TOTAL
<S>                                                     <C>         <C>       <C>
HABERSHAM

2 Irvin St., Cornelia (branch office)                    58,246           0      58,246

400 North Main St., Cornelia (main office)              274,974     145,307     420,281
534 N. Main St., Cornelia (operations center)           349,390           0     349,390
111 N. Washington St., Clarkesville (branch office)     138,439      50,652     189,091
536 N. Main St., Cornelia (future expansion)            130,500           0     130,500
Hwy. 441 By-Pass, Cornelia (ATM property)                     0      75,424      75,424
Hwy. 441 N., Cornelia (unimproved property)                   0     242,372     242,372
                                                                              ---------

         Habersham Total Buildings and Land                                   1,465,304

JACKSON

17 N. Elm Street, Commerce (main office)                585,145       2,500     587,645

TROUP

201 Broad St., LaGrange (main office)                   408,407     405,650     814,057

ALABAMA

202 N. Powell St., Union Springs (main office)          512,175      65,196     577,371
</TABLE>


<PAGE>


                                    EXHIBIT I
                                    ---------

                  CERTIFICATE OF NO DEFAULT AND RELATED MATTERS
                  ---------------------------------------------

         The  undersigned,   being,   respectively,   the   ______________   and
_______________ of , a ____________ corporation  ("Borrower"),  hereby give this
Certificate  to SunTrust Bank ("Bank")  pursuant to Section 5.10 of that certain
Amended and Restated  Revolving  Credit/Term  Loan Agreement dated July 31, 2000
between  Borrower  and Bank (the  "Loan  Agreement";  unless  otherwise  defined
herein,  the capitalized  terms shall have the meanings  ascribed thereto in the
Loan Agreement) hereby certify as follows:

1.       They are, respectively, _____________________ and _____________________
         of Borrower and, in such  capacities,  are  authorized and empowered to
         issue this Certificate for and on behalf of Borrower.

2.       The  representations  and  warranties of Borrower set forth in the Loan
         Agreement  and  any  other  of the  documents  executed  in  connection
         therewith, the terms of which are incorporated herein by reference, are
         true and correct in all material  respects on and as of the date hereof
         with the same effect as though made and on as of the date hereof.

3.       The Borrower is, on the date hereof,  in compliance  with all the terms
         and provisions set forth in the Loan Agreement and the other  documents
         executed in connection therewith.

4.       On the date  hereof,  no default or Event of Default,  nor any event or
         condition which with notice, lapse of time, or any combination thereof,
         would  constitute  such  an  Event  of  Default,  has  occurred  or  is
         continuing.

5.       The  quarterly  financial  statements  delivered  herewith  pursuant to
         Section 5.09 of the Loan Agreement  present the financial  condition of
         Borrower and its Subsidiaries  fairly and accurately and not misleading
         in the context in which presented.

6.       Borrower and its  Subsidiaries  are in  compliance  with the  financial
         covenants  set  forth  in  Article  VII of the Loan  Agreement  and the
         following computations demonstrate compliance therewith:

                           [list relevant financial covenants]

7.       No regulatory or other impediment exists which would impair or prohibit
         the payment of dividends by the Banking Subsidiaries to the Bank.

8.       No  litigation,   investigation,   proceeding,   injunction,   writ  or
         restraining  order or  regulatory  enforcement  action  is  pending  or
         threatened.



<PAGE>


         IN WITNESS  WHEREOF,  the  undersigned  have set their hands and seals,
this _____ day of _____________, ____________________.




                                       ___________________________________(SEAL)

                                       Name/Title:
                                                  ------------------------------



                                       ___________________________________(SEAL)

                                       Name/Title:
                                                  ------------------------------

<PAGE>


                                    EXHIBIT J
                                    ---------

                                 PERMITTED LIENS
                                 ---------------

                                      None


<PAGE>



                                    EXHIBIT K
                                    ---------

                                 PERMITTED DEBT

                                      None

</TEXT>
</DOCUMENT>
