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CSBQ > SEC Filings for CSBQ > Form 8-K on 1-Apr-2013All Recent SEC Filings

Show all filings for CORNERSTONE BANCSHARES INC | Request a Trial to NEW EDGAR Online Pro



Entry into a Material Definitive Agreement, Termination of a Material

Item 1.01 Entry Into a Material Definitive Agreement.

On March 27, 2013, Cornerstone Bancshares, Inc. (the "Company") and First Tennessee Bank National Association (the "Lender") entered into a loan agreement, pursuant to which the Company borrowed $1,740,000 (the "First Tennessee Loan Agreement") from the Lender. The material terms of the First Tennessee Loan Agreement are:

(1) principal amount due and payable on March 25, 2014;

(2) interest payable quarterly beginning June 27, 2013 at 2% per annum;

(3) 100% cash-secured;

(4) no financial covenants;

(5) unpaid principal and interest could be declared immediately due and payable upon a default under the First Tennessee Loan Agreement, including a default in payment or a material adverse change in the Company's financial condition.

The proceeds of the First Tennessee Loan Agreement were used on March 27, 2013 to pay off the amount due under the Fifth Modification of Loan Documents effective April 1, 2011 between the Company and FDIC as receiver for Silverton Bank, N.A. (the "Silverton Loan Agreement"), thereby terminating the Silverton Loan Agreement.

The material terms of the Silverton Loan Agreement were:

(1) remaining principal outstanding prior to termination: $1,740,000;

(2) principal payable semi-annually in installments of $435,000 until July 10, 2014;

(3) interest payable quarterly at an annual rate equal to the greater of (i) the prime rate plus 3%, or (ii) 6.50%;

(4) secured by all issued and outstanding shares of the Company's wholly owned subsidiary, Cornerstone Community Bank.

Item 1.02 Termination of a Material Definitive Agreement.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in response to this Item 1.02.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant..

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in response to this Item 2.03.


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