Document:

Exhibit 10.b

 

PURCHASE AND ASSUMPTION AGREEMENT

Between

FOUR OAKS BANK & TRUST COMPANY

(“Seller”)

and

FIRST BANK

(“Purchaser”)

 

 

 

 

    	 

    	 

    

PURCHASE AND ASSUMPTION AGREEMENT

	ARTICLE I	TRANSFER OF ASSETS AND LIABILITIES	1
	 	Section 1.1	Transferred Assets	1
	 	Section 1.2	Purchase Price	2
	 	Section 1.3	Deposit Liabilities	4
	 	Section 1.4	Loans Transferred	7
	 	Section 1.5	Employee Matters	10
	 	Section 1.6	Safe Deposit Business	12
	 	Section 1.7	Records and Data Processing; Security	12
	 	Section 1.8	Taxes and Fees; Proration of Certain Expenses	13
	 	Section 1.9	Real Property Matters	13
	 	Section 1.10	Defects in Tangible Personal Property	16
	ARTICLE II	CLOSING AND EFFECTIVE TIME	16
	 	Section 2.1	Effective Time	16
	 	Section 2.2	Closing	16
	 	Section 2.3	Post-Closing Adjustments	18
	ARTICLE III	INDEMNIFICATION	19
	 	Section 3.1	Seller’s Indemnification of Purchaser	19
	 	Section 3.2	Purchaser’s Indemnification of Seller	20
	 	Section 3.3	Claims for Indemnity	20
	 	Section 3.4	Limitations on Indemnification	20
	 	Section 3.5	Exclusive Remedy	21
	ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF SELLER	21
	 	Section 4.1	Corporate Organization	21
	 	Section 4.2	No Violation	21
	 	Section 4.3	Corporate Authority	22
	 	Section 4.4	Enforceable Agreement	22
	 	Section 4.5	No Brokers	22
	 	Section 4.6	Loans	22
	 	Section 4.7	Real and Tangible Personal Property	22
	 	Section 4.8	Compliance with Certain Laws	23
	 	Section 4.9	Litigation	24
	 	Section 4.10	Books and Records	24
	 	Section 4.11	Community Reinvestment Act Representation	24
	 	Section 4.12	Limitation of Representations and Warranties	24
	 	Section 4.13	Seller’s Knowledge	24
	ARTICLE V	REPRESENTATIONS AND WARRANTIES OF PURCHASER	24
	 	Section 5.1	Corporate Organization	24
	 	Section 5.2	No Violation	25
	 	Section 5.3	Corporate Authority	25
	 	Section 5.4	Enforceable Agreement	25
	 	Section 5.5	No Brokers	25

 

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	ARTICLE VI	OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME	25
	 	Section 6.1	Access to Information	25
	 	Section 6.2	Delivery of Magnetic Media Records	26
	 	Section 6.3	Application for Regulatory Approval	26
	 	Section 6.4	Conduct of Business; Maintenance of Properties; Insurance	26
	 	Section 6.5	No Solicitation by Seller	27
	 	Section 6.6	Further Actions	28
	 	Section 6.7	Fees and Expenses	28
	 	Section 6.8	Public Announcements	28
	 	Section 6.9	Tax Reporting	28
	 	Section 6.10	Telephone Forwarding	28
	 	Section 6.11	ATM/Debit Cards	28
	ARTICLE VII	CONDITIONS TO PURCHASER’S OBLIGATIONS	29
	 	Section 7.1	Representations and Warranties True	29
	 	Section 7.2	Real Property	29
	 	Section 7.3	Obligations Performed	29
	 	Section 7.4	No Adverse Litigation	29
	 	Section 7.5	Regulatory Approval	30
	ARTICLE VIII	CONDITIONS TO SELLER’S OBLIGATIONS	30
	 	Section 8.1	Representations and Warranties True	30
	 	Section 8.2	Obligations Performed	30
	 	Section 8.3	No Adverse Litigation	30
	 	Section 8.4	Regulatory Approval	30
	ARTICLE IX	TERMINATION	31
	 	Section 9.1	Methods of Termination	31
	 	Section 9.2	Procedure Upon Termination	32
	 	Section 9.3	Payment of Expenses	32
	ARTICLE X	MISCELLANEOUS PROVISIONS	32
	 	Section 10.1	Amendment and Modification	32
	 	Section 10.2	Waiver or Extension	32
	 	Section 10.3	Assignment	33
	 	Section 10.4	Confidentiality	33
	 	Section 10.5	Time of Essence	33
	 	Section 10.6	Notices	33
	 	Section 10.7	Counterparts	34
	 	Section 10.8	Headings	34
	 	Section 10.9	Governing Law	34
	 	Section 10.10	Sole Agreement	34
	 	Section 10.11	Severability	34
	 	Section 10.12	Parties In Interest	34

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PURCHASE AND ASSUMPTION AGREEMENT

THIS PURCHASE
AND ASSUMPTION AGREEMENT (this “Agreement”) is entered into as of September 26, 2012 between Four Oaks Bank &
Trust Company, a North Carolina chartered bank having its principal offices in Four Oaks, North Carolina (“Seller”),
and First Bank, a North Carolina chartered bank having its principal offices in Troy, North Carolina (“Purchaser”).

RECITALS:

A.             Seller
wishes to divest, upon the terms and conditions set forth herein, certain assets and certain deposit and other liabilities of two
branches of Seller located at 1401 Fayetteville Road, Rockingham, North Carolina (the “Rockingham Branch”), and at
105 Commerce Avenue, Southern Pines, North Carolina (the “Southern Pines Branch”) (collectively the “Branches”).

B.             Purchaser
wishes to buy such assets and assume such liabilities upon the terms and conditions set forth herein.

NOW, THEREFORE,
in consideration of the premises and mutual agreements hereinafter set forth, Seller and Purchaser agree as follows:

ARTICLE
I

TRANSFER OF ASSETS AND LIABILITIES

Section
1.1          Transferred Assets.

		(a)	As of the Effective Time (as defined in Section 2.1) and upon the terms and conditions set forth
herein, Seller will sell, assign, transfer, convey and deliver to Purchaser, and Purchaser will purchase from Seller, all of the
transferable rights, title and interest of Seller in the following assets associated with the Branches and identified in this Agreement
and the Schedules and Exhibits hereto, and not otherwise excluded from sale pursuant to the provisions of Subsection 1.1(b) or
Section 1.10 (collectively, the “Transferred Assets”):

		(1)	subject to Section 1.9 hereof, all transferable right, title and interest of Seller in and to all
real estate and improvements thereon (including buildings located on any leased land) at the Rockingham Branch (the “Real
Property”), together with all rights and appurtenances pertaining thereto;

		(2)	the furniture, fixtures, leasehold improvements, equipment and other tangible personal property
located on or affixed to the Real Property as listed on Schedule 1.1(a)(2) (collectively, the “Tangible Personal Property”);

    	 

    	 

    
	

		(3)	all equipment leases for equipment located at the Rockingham Branch and listed on Schedule 1.1(a)(3)
(together with related maintenance agreements, the “Equipment Leases”);

		(4)	all safe deposit contracts and leases for the safe deposit boxes located at the Branches as of
the Effective Time (the “Safe Deposit Contracts”);

		(5)	all Loans as defined herein and transferred pursuant to Section 1.4;

		(6)	all coins and currency located at the Rockingham Branch as of the Effective Time (the “Coins
and Currency”);

		(7)	originals or copies of all records of Seller pertaining to the Loans, all deposit accounts, and
any other customer relationships transferred to Purchaser; and

		(8)	Seller’s rights in and to the use of the current telephone numbers of the Branches.

		(b)	Excluded from the assets, properties and rights being transferred, conveyed and assigned to Purchaser
under this Agreement are the assets listed on Schedule 1.1(b) hereto, Seller’s rights in and to the name “Four
Oaks Bank & Trust Company,” Seller’s rights to and interest in software installed on computers and computer hardware
located at the Rockingham Branch, Seller’s right to recover assets charged off by Seller prior to the Effective Time, including,
without limitation, charged off loans and demand deposit overdrafts, demand deposit overdrafts outstanding more than thirty (30)
days and not covered by overdraft or bounce protection, and any of Seller’s corporate logos, trademarks, trade names, signs,
paper stock, forms and other supplies containing any such logos, trademarks or trade names, and trade names and logos of third
parties with whom Seller has contracted to provide services to its customers (the “Excluded Assets”). Seller shall
remove the Excluded Assets from the Rockingham Branch on or prior to the Effective Time or, as soon thereafter as practicable.
Seller shall use due care in removing the Excluded Assets at its own cost and shall make any repairs necessitated by Seller’s
negligence in removing the Excluded Assets.

		(c)	In the event that (i) a loan account that would otherwise be included in the definition of “Loans”
is secured by a deposit liability or security account that is not included in the Deposit Liabilities, or (ii) a deposit liability
that would otherwise be included in the definition of “Deposit Liability” secures a loan account that is not purchased
by Purchaser, such loan account, deposit liability and/or security account shall be excluded from the Transferred Assets and Deposit
Liabilities.

Section
1.2          Purchase Price.

		(a)	As consideration for the purchase of the Transferred Assets, Purchaser shall pay Seller a purchase
price (the “Purchase Price”) equal to the sum of the following:

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		(1)	The aggregate Net Book Value (as defined in Section 1.2(d) hereof) as of the Effective Time for
the Real Property and the Tangible Personal Property;

		(2)	A premium for the Deposit Liabilities (as defined in Section 1.3(a)) and franchise value related
to the Branches equal to one percent (1.0 %) of the Deposit Liabilities, excluding accrued interest, based on the 30-day average
for the 30 days prior to and including the day before the Closing; provided, however, that the total premium payable
by Purchaser under this Section 1.2(a)(2) shall not exceed $628,000 in the aggregate;

		(3)	The aggregate Loan Value (as defined in Section 1.2(d) hereof) as of the Effective Time for the
Loans as set forth in Section 1.4; and

		(4)	The aggregate face amount of the Coins and Currency.

		(b)	In addition, Purchaser shall assume, as of the Effective Time (as defined in Section 2.1), all
of the duties, obligations and liabilities of Seller relating to the Real Property, the Equipment Leases, the Safe Deposit Contracts,
transferred Loans and Deposit Liabilities (including all accrued interest relating thereto) (the “Assumed Liabilities”);
provided, that any cash items paid by Seller and not cleared prior to the Effective Time shall be the responsibility of
Seller, subject to the terms of Section 1.3; provided, further, that notwithstanding anything in this Agreement to
the contrary, in no event shall Purchaser assume any liability arising from any act or omission of Seller prior to the Effective
Time that would otherwise constitute a breach of any representation or warranty of Seller hereunder. Thereafter, Purchaser shall
fully and timely discharge the duties and obligations of Seller relating to all periods from and after the Closing Date with respect
to the Assumed Liabilities as may arise under applicable laws, regulations, agreements and rules of automated clearing houses and
other payment systems which relate thereto, and in accordance with the terms of account agreements or other agreements with depositors
applicable to such accounts as such terms and agreements are in effect on the Closing Date, except such terms as, under applicable
law and agreement, may be changed after the Closing Date.

		(c)	Seller shall prepare a balance sheet (the “Pre-Closing Balance Sheet”) in accordance
with generally accepted accounting principles consistently applied as of a date not earlier than 30 calendar days prior to the
Effective Time anticipated by the parties reflecting the assets to be sold and assigned hereunder and the liabilities to be transferred
and assumed hereunder, all based on the estimated Net Book Value or Loan Value, as applicable, of Transferred Assets and estimated
Assumed Liabilities as of the Effective Time. Seller agrees to pay to Purchaser at the Closing (as defined in Section 2.1), in
immediately available funds, the excess amount of the amount of Deposit Liabilities assumed by Purchaser pursuant to Subsection
(b) above, as reflected by the Pre-Closing Balance Sheet, over the aggregate Purchase Price computed in accordance with Subsection
(a) above, as reflected by the Pre-Closing Balance Sheet. Amounts paid at Closing shall be subject to subsequent adjustment based
on the Post-Closing Balance Sheet (as defined in Section 2.3).

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		(d)	For purposes of this Agreement, “Net Book Value” means an asset’s historical
cost, net of accumulated depreciation, as reflected on the books and records of Seller as of the Closing Date.

For purposes of this Agreement,
“Loan Value” means, with respect to a Loan (as defined in Section 1.4) and as of a date, the outstanding principal
balance of any such Loan plus accrued interest thereon, net of the interest in such Loan of any participant, as of such date.

Section
1.3          Deposit Liabilities.

		(a)	“Deposit Liabilities” shall mean all of Seller’s duties, obligations and liabilities
relating to the deposit accounts (except as set forth in Section 1.3(b)) located at the Branches as of the Effective Time (including
accrued but unpaid or uncredited interest thereon). A projected list of the Deposit Liabilities is attached as Schedule 1.3(a),
which shall be updated as soon as practicable after Closing.

		(b)	Except for those liabilities and obligations specifically assumed by Purchaser under Section 1.2(b)
above, Purchaser is not assuming any other liabilities or obligations of Seller. Liabilities not assumed include, but are not limited
to, the following:

		(1)	Seller’s official checks, cashier’s checks, letters of credit, money orders, interest
checks and expense checks issued prior to closing, gift cards, consignments of U.S. Government “E” and “EE”
bonds, and any and all traveler’s checks.

		(2)	Liabilities or obligations of Seller with respect to any litigation, suits, claims, demands or
governmental proceedings arising, commenced or made known to Seller prior to Closing or arising from events occurring prior to
Closing.

		(3)	Deposit accounts associated with lines of credit that do not become transferred Loans.

		(4)	Deposit accounts associated with qualified retirement plans where Seller is the trustee of such
plan or the sponsor of a prototype plan used by such plan.

		(5)	Deposit accounts associated with Seller’s national or regional account relationships, if
any.

		(6)	Self-directed individual retirement accounts, if any, it being understood that all other types
of IRA Deposit Liabilities are intended to be transferred.

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		(7)	Deposit accounts with negative balances that the Purchaser elects not to assume by so notifying
the Seller within 30 calendar days after the Closing Date.

		(c)	Seller does not represent or warrant that any deposit customers whose accounts are assumed by Purchaser
will become or continue to be customers of Purchaser after the Effective Time.

		(d)	Purchaser agrees to pay in accordance with law and customary banking practices all properly drawn
and presented checks, drafts and withdrawal orders presented to Purchaser by mail, over-the-counter or through the check clearing
system of the banking industry, by depositors of the accounts assumed, whether drawn on the check, withdrawal or draft forms provided
by Seller or by Purchaser, and in all other respects to discharge, in the usual course of the banking business, the duties and
obligations of Seller with respect to the balances due and owing to the depositors whose accounts are assumed by Purchaser.

		(e)	If, after the Effective Time, any depositor, instead of accepting the obligation of Purchaser to
pay the Deposit Liabilities assumed, shall demand payment from Seller for all or any part of any such assumed Deposit Liabilities,
Seller shall not be liable or responsible for making any such payment; provided, however, that if Seller shall pay
the same, Purchaser agrees to reimburse Seller for any payments. Seller shall not be deemed to have made any representations or
warranties to Purchaser with respect to any checks, drafts or withdrawal orders processed after the Effective Time drawn on such
Deposit Liabilities, and any such representations or warranties implied by law are hereby expressly disclaimed. Seller and
Purchaser shall make arrangements to provide for the daily settlement with immediately available funds by Purchaser of checks,
drafts, withdrawal orders, returns and other items presented to and paid by Seller within 60 calendar days after the Effective
Time and drawn on or chargeable to accounts that have been assumed by Purchaser; provided, however, that Seller shall
be held harmless and indemnified by Purchaser for acting in accordance with such arrangements. For a period of 60 calendar days
after the Closing Date, Seller agrees to notify Purchaser within one business day of any return items exceeding $2,500.

		(f)	Purchaser agrees, at its cost and expense, (1) to assign new account numbers to depositors of assumed
accounts, if necessary, (2) to notify such depositors, on or before the Effective Time, in a form and on a date mutually acceptable
to Seller and Purchaser, of Purchaser’s assumption of Deposit Liabilities, and (3) to furnish such depositors with checks
on the forms of Purchaser and with instructions to utilize Purchaser’s checks and to destroy unused check, draft and withdrawal
order forms of Seller. (If Purchaser so elects, Purchaser may offer to buy from such depositors their unused Seller check, draft
and withdrawal order forms.) In addition, Seller will notify its affected customers by letter of the pending assignment of the
Deposit Liabilities to Purchaser, which notice shall be at Seller’s cost and expense and shall be in a form and mailed at
a time mutually agreeable to Seller and Purchaser.

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		(g)	Purchaser agrees to pay promptly to Seller an amount equivalent to the amount of any checks, drafts
or withdrawal orders credited to an assumed account as of the Effective Time that are properly returned to Seller after the Effective
Time.

		(h)	As of and after the Effective Time, Purchaser will assume and discharge Seller’s duties and
obligations in accordance with the terms and conditions and laws, rules and regulations that apply to the certificates, accounts
and other Deposit Liabilities assumed under this Agreement. At the Effective Time, Seller shall provide to Purchaser a written
listing of each stop payment order, tax lien, levy, garnishment, pledge, guardianship agreement, or other hold or restriction then
in effect with respect to any of the Deposit Liabilities (the “Holds”), and Purchaser shall honor and comply with the
terms of all valid Holds described in the above list. If, following receipt of such list, Purchaser makes any payment in violation
of any such Hold, then it shall be solely liable for such payment and shall indemnify, hold harmless, and defend Seller from and
against all claims, losses and liabilities, including reasonable attorneys’ fees and expenses, arising out of any such payment.
In the event that Purchaser shall make any payment in violation of a Hold initiated prior to the Effective Time but not reflected
in the above list, then Seller shall be solely liable for such payment and shall indemnify, hold harmless and defend Purchaser
from and against all claims, losses, and liabilities, including reasonable attorneys’ fees and expenses, arising out of any
such payment.

		(i)	As of and after the Effective Time, Purchaser will maintain and safeguard in accordance with applicable
law and sound banking practices all account documents, deposit contracts, signature cards, deposit slips, canceled items and other
records related to the Deposit Liabilities assumed under this Agreement, subject to Seller’s right of access to such records
as provided in this Agreement.

		(j)	Seller will render a final statement to each depositor of an account assumed under this Agreement
as to transactions occurring through the Effective Time; provided, however, that Seller shall not be obligated to
render a final statement on any account not ordinarily receiving periodic statements in the ordinary course of Seller’s business.
Seller will be entitled to impose normal fees and service charges on a per-item basis at Closing, but Seller will not impose
periodic fees or blanket charges in connection with such final statements.

		(k)	Seller will timely provide to Purchaser 1099 data for Purchaser to comply with all laws, rules
and regulations regarding 2012 tax reporting of transactions of such assumed accounts through the Effective Time.

		(l)	As of the Effective Time, Purchaser, at its expense, will notify all Automated Clearing House (“ACH”)
originators of the transfers and assumptions made pursuant to this Agreement; provided, however, that Seller may,
at its option, notify all such originators itself (on behalf of Purchaser). For a period of 60 calendar days beginning at the Effective
Time, Seller will honor all ACH items related to accounts assumed under this Agreement which are routed or presented to Seller.
Seller will make no charge to Purchaser for honoring such items and will electronically transmit such ACH data to Purchaser. If
Purchaser cannot receive an electronic transmission, Seller will make available to Purchaser at Seller’s operations center
receiving items from the ACH tapes containing such ACH data. Items routed or presented after the 60-day period shall be returned
to the presenting party. Seller and Purchaser shall make arrangements to provide for the daily settlement with immediately available
funds by Purchaser of any ACH items honored by Seller, and Seller shall be held harmless and indemnified by Purchaser for acting
in accordance with this arrangement to accept ACH items.

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		(m)	With respect to Deposit Liabilities in IRAs, Seller will use reasonable efforts and will cooperate
with Purchaser in taking any action reasonably necessary or appropriate to accomplish the appointment of Purchaser (or an Affiliate
of Purchaser designated by Purchaser) as successor custodian or trustee or the delegation to Purchaser (or an Affiliate of Purchaser)
of Seller’s authority and responsibility as custodian of all such IRA deposits except self-directed IRA deposits, including,
but not limited to, sending to the depositors thereof appropriate notices, cooperating with Purchaser (or such Affiliate) in soliciting
consents from such depositors, executing assignments reasonably satisfactory to Purchaser, and filing any appropriate applications
with applicable regulatory authorities. If any such delegation is made to Purchaser (or such Affiliate), Purchaser (or such Affiliate)
will perform all of the duties so delegated and comply with the terms of Seller’s agreement with the depositor of the IRA
deposits affected thereby. For purposes of this Agreement, “Affiliate” means, with respect to any Person, any other
Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control
with, such Person, and the term “control” (including the terms “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through owners of voting securities, by contract or otherwise. For purposes of this Section
1.3(m), “Person” means any individual, entity, partnership, joint venture or trust.

If, notwithstanding the foregoing,
as of the Closing Date, Purchaser shall be unable to retain deposit liabilities in respect of an IRA or the account holder has
notified Seller or Purchaser of the account holder’s objection to Purchaser acting as custodian or trustee of such IRA, such
deposit liabilities shall be excluded from Deposit Liabilities for purposes of this Agreement.

Section
1.4          Loans Transferred.

		(a)	Seller will transfer to Purchaser as of the Effective Time, subject to the terms and conditions
of this Agreement, all of Seller’s right, title and interest in (including collateral relating thereto) the loans set forth
on Schedule 1.4(a), as such may be updated from time to time prior to the Effective Time in accordance with this Section
1.4 (collectively, the “Loans”); provided, however, that in no event shall the Loans include any loans
described in Subsection (b) below. Prior to the Effective Time, Seller shall inform Purchaser of any loans set forth on Schedule
1.4(a) that become “Identified Loans” (as defined below). Between the date hereof and the date that is 45 calendar
days after the Effective Time (the “Option Period”), Purchaser will have the option to remove such Identified Loans
from Schedule 1.4(a), subject to the cure process described in Section 1.4(b) below. During the Option Period, Purchaser
shall have the option to add any of the loans assigned to the Branches as of the Effective Time to Schedule 1.4(a) and such
loans shall become Loans, with it agreed that Seller will continue to assign loans to the Branches up to the Effective Time in
accordance with past practices. Notwithstanding the foregoing, the aggregate outstanding balance of the Loans on Schedule 1.4(a)
shall not exceed $32 million as of the last day of the Option Period.

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The Loans (as well as any security
interest related thereto) shall be transferred by means of a blanket (collective) assignment and not individually (except as may
be otherwise required by law). Purchaser shall inform Seller not less than 45 calendar days prior to the proposed Closing of any
case in which filing information relating to any collateral for the Loans set forth on Schedule 1.4(a) as of the date hereof
will be required for preparation of any assignments of liens; provided, that for Loans added to Schedule 1.4(a) during
the Option Period, Purchaser shall inform Seller prior to the expiration of the Option Period.

		(b)	Notwithstanding the foregoing Section 1.4(a), after the Effective Time and prior to the expiration
of the Option Period, Purchaser shall notify Seller in writing of the existence of any of the following material defects relating
to the Loans (such defects, the “Material Loan Defects,” and any such Loan being called an “Identified Loan”):

		(1)	Any file, document or record, which is material to the enforceability of a Loan, has been lost
or is missing;

		(2)	A Loan was not originated or has not been administered in compliance in all material respects with
applicable laws or the files, documents, and records pertaining to such Loan are not legal, valid and binding or do not contain
the true signature of an obligor;

		(3)	Seller’s rights in any collateral are not perfected or enforceable, or the priority of such
rights are not as reflected on Seller’s records; provided, however, that the absence of any such right of Seller
in the collateral securing such a Loan must have a material impact on the foreclosure of the Loan in the event of a default; or

		(4)	A Loan meets any of the conditions set forth in Section 1.4(c) as of the date set forth in each
such condition.

Following receipt of any such
notice with respect to Material Loan Defects identified prior to the expiration of the Option Period and at any time prior to the
date of notification to the customers of the assignment of the Loans pursuant to applicable law, Seller may in its sole discretion
attempt to cure any such Material Loan Defect described in this Section 1.4(b) to Purchaser’s reasonable satisfaction. If
Seller is unable or unwilling to cure such Material Loan Defect to Purchaser’s reasonable satisfaction, Purchaser shall have
the right to reject such Identified Loan in which case such Identified Loan shall not constitute a “Loan.”

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Notwithstanding anything in
this Agreement to the contrary, Seller shall not be required to provide access to or disclose information where such access or
disclosure would violate or prejudice the legal rights of any customer or employee or attorney-client privilege or would be contrary
to law, rule, regulation or any legal or regulatory order or process or any fiduciary duty or binding agreement entered into prior
to the date of this Agreement.

		(c)	Notwithstanding anything in this Section 1.4 to the contrary, in no event shall the Loans include:

		(1)	as of immediately prior to the Effective Time, nonaccruals (which term shall mean loans in which
the collateral securing same has been repossessed, or in which repossession efforts have been instituted, or claim and delivery
or foreclosure proceedings have been filed) and classified loans;

		(2)	loans 60 calendar days or more past due as of immediately prior to the Effective Time;

		(3)	loans upon which insurance has been force-placed as of immediately prior to the Effective Time;

		(4)	loans in connection with which the borrower has filed a petition for relief under the United States
Bankruptcy Code prior to the Effective Time;

		(5)	specific loan loss reserves.

For the avoidance of doubt,
and to the extent any loans described in subsection (c) above are included on Schedule 1.4(a), this subsection (c) shall
supersede such inclusion and such loans shall not constitute “Loans.”

		(d)	Seller and Purchaser agree that Purchaser will become the beneficiary of credit life insurance
written on direct consumer installment Loans and debt cancellation and disability coverage agreements written on any Loans. If
Purchaser becomes the beneficiary of credit life insurance or debt cancellation and disability coverage written on any Loans, Seller
and Purchaser agree to cooperate in good faith to develop a mutually satisfactory method by which the current insurer will make
rebate payments to and satisfy claims of the holders of such certificates of insurance after the Effective Time. The parties’
obligations in this Section 1.4 are subject to any restrictions contained in existing insurance contracts as well as applicable
laws and regulations. The parties shall cooperate to resolve any issues related to payment of premiums. If the parties determine
that loans subject to debt cancellation and disability coverage cannot be adequately serviced by Purchaser, the parties shall exclude
such Loans from purchase hereunder.

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		(e)	In connection with the transfer of any Loans requiring notice to the borrower, Purchaser and Seller
agree to comply with all notice and reporting requirements of the Loan documents or of any law or regulation.

		(f)	All Loans transferred to Purchaser shall be valued at their Loan Value, such value to include accrued
interest.

		(g)	All Loans will be transferred without recourse to Purchaser and without any warranties or representations,
expressed or implied, including, without limitation, warranties as to their collectability or the creditworthiness of any of the
obligors of such Loans.

		(h)	Purchaser will, at its expense, issue new coupon books for payment of Loans for which Seller provides
coupon books and will instruct obligors to utilize Purchaser’s coupons and to destroy coupons furnished by Seller.

		(i)	For a period of 60 calendar days after the Effective Time, Seller will forward to Purchaser loan
payments received by Seller. Purchaser shall reimburse Seller upon demand for checks returned on payments forwarded to Purchaser;
however, to the extent possible, Seller will deduct the amount of such returned checks from any amounts owed by Seller to Purchaser.

		(j)	As of the Effective Time, Seller shall transfer and assign all files, documents and records related
to the Loans (the “Records”) to Purchaser, and Purchaser will be responsible thereafter for maintaining and safeguarding
all the Records in accordance with applicable law and sound banking practices.

		(k)	If the balance due on any Loan purchased pursuant to this Section 1.4 has been reduced by Seller
as a result of a payment by check received prior to the Effective Time, which item is returned after the Effective Time, the asset
value represented by the Loan transferred shall be correspondingly increased and an amount in cash equal to such increase shall
be paid by Purchaser to Seller promptly upon demand.

		(l)	Seller shall grant to Purchaser as of the Effective Time a limited power of attorney, in substantially
the form attached as Exhibit 1.4(l) (the “Power of Attorney”).

Section
1.5          Employee Matters.

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		(a)	Purchaser shall offer employment to all employees that (i) are set forth in Schedule 1.5
and (ii) are employed by Seller at the Branches as of the Effective Time (the “Employees”), in their then-respective
current functional positions and locations, with remuneration not less than levels at the Effective Time and benefits generally
equivalent to benefits offered by Purchaser to similarly situated employees of Purchaser. Purchaser shall complete and deliver
to Seller such Schedule 1.5 on or prior to the 90th calendar day after the date hereof and in any event no later
than two calendar days prior to Closing. Purchaser will consider positions for Employees not listed on Schedule 1.5 and
may offer such Employees positions at Purchaser’s branches located within forty-five (45) miles of the Branch where such
Employee is currently employed. Employees who become employees of Purchaser as of the Effective Time (“Transferred Employees”)
shall receive full credit for their prior service with Seller (and with other entities to the extent service with any such entity
is treated by Seller as service with it) under Purchaser’s benefit plans and policies, including its vacation and sick leave
policies, to the same extent as if the service had been with Purchaser. As of the Effective Time, the Transferred Employees and
their dependents, if any, covered under Seller’s health insurance plan before the Effective Time shall be covered under Purchaser’s
health insurance plan without being subject to any pre-existing condition limitations or exclusions. Transferred Employees shall
not be required to satisfy the deductible and employee payments required by Purchaser’s comprehensive medical and/or dental
plans for the calendar year of the Effective Time (i) to the extent of amounts previously credited during such calendar year under
comparable plans maintained by Seller, or (ii) to the extent the same are waived in their entirety by the applicable insurer, as
determined by the applicable insurer in its sole discretion. With respect to Purchaser’s qualified and nonqualified pension
plans, Transferred Employees shall receive full credit for prior service with Seller (and with other entities to the extent service
with any such entity is treated by Seller as service with it) for purposes of determining their participation eligibility and vesting
rights to the same extent as if the service had been with Purchaser. Benefits under Purchaser’s pension plans for Transferred
Employees shall be determined solely with reference to service with Purchaser. Notwithstanding any of the foregoing, the Transferred
Employees will not be eligible to participate in the First Bancorp Employees’ Pension Plan.

		(b)	Purchaser will provide to any Transferred Employee whom it terminates without cause at any time
within one year following the Closing, severance pay in an amount equal to the greater of (i) two weeks’ pay for every full
year of service to Seller (and with other entities to the extent service with any such entity is treated by Seller as service with
it) at his or her current salary or (ii) four weeks’ pay at his or her current salary. Purchaser’s determination of
the presence or absence of cause under this Section 1.5(b) shall be conclusive absent bad faith, and its calculations of severance
pay shall be conclusive absent manifest error.

		(c)	Seller makes no representations or warranties about whether any of the Employees will become and
remain employed by Purchaser after the Effective Time. Seller will use commercially reasonable efforts to maintain the Employees
as employees of Seller at the Branches until the Effective Time. Purchaser shall have no responsibilities or rights with respect
to any employee of Seller whose employment shall be terminated for any reason prior to the Effective Time or who shall elect not
to become an employee of Purchaser. Seller agrees that, for a period of 12 months after the Effective Time, it will not solicit
for employment any Transferred Employee who remains employed by Purchaser; provided, however, that such prohibition
shall not apply to solicitations which are directed to the general public.

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		(d)	Following the Closing, all Employees that are not Transferred Employees will remain employees of
Seller (the “Retained Employees”). In connection with any termination of the Retained Employees by Seller, Seller will
provide severance pay in an amount consistent with Seller’s policies and previous practice. Purchaser shall have no obligations
or liabilities with respect to the Retained Employees, including without limitation, wages, salaries, payroll taxes, employee benefits,
and severance benefits; provided, however, in the event the number of Transferred Employees is less than ten (10)
Employees, Purchaser agrees to pay Seller an amount equal to (i) $7,000 multiplied by (ii) the difference between (A) ten (10)
and (B) the number of Transferred Employees.

		(e)	Seller shall permit Purchaser to train prospective Transferred Employees of the Branches before
Closing with regard to Purchaser’s operations, policies and procedures at Purchaser’s sole cost and expense, and Purchaser
shall reimburse Seller for any incremental employee wages related to periods of time during which the employees are trained, including
overtime pay resulting from such training. This training may, as mutually agreed upon by Seller and Purchaser, take place at the
Branches or other mutually agreed upon location and may take place during business hours; provided, however, that
any training that occurs shall be conducted in a manner not disruptive to operation of the Branches.

Section
1.6          Safe Deposit Business.

		(a)	As of the Effective Time, Purchaser will assume and discharge Seller’s obligations with respect
to the safe deposit box business at the Branches in accordance with the terms and conditions of contracts or rental agreements
related to such business, and Purchaser will maintain all facilities necessary for the use of such safe deposit boxes by persons
entitled to use them.

		(b)	As of the Effective Time, Seller shall transfer and assign the records related to such safe deposit
box business to Purchaser, and Purchaser shall maintain and safeguard all such records and be responsible for granting access to
and protecting the contents of safe deposit boxes at the Branches.

		(c)	Safe deposit box rental payments (not including late payment fees) collected by Seller before the
Effective Time shall be prorated as of the Effective Time.

Section
1.7          Records and Data Processing; Security.

		(a)	As of the Effective Time, Purchaser shall become responsible for maintaining the files, documents
and records referred to in this Agreement. Purchaser will preserve and safekeep them as required by applicable law and sound banking
practice. After the Effective Time, Purchaser will permit Seller and its representatives, at reasonable times and upon reasonable
notice, to examine, inspect, copy and reproduce (at Seller’s expense) any such files, documents or records as Seller deems
reasonably necessary.

		(b)	As of the Effective Time, Seller will permit Purchaser and its representatives, at reasonable times
and upon reasonable notice, to examine, inspect, copy and reproduce (at Purchaser’s expense) files, documents or records
retained by Seller regarding the Transferred Assets and Assumed Liabilities as Purchaser deems necessary.

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		(c)	It is understood that certain of Seller’s records may be available only in the form of photocopies,
film copies or other non-original and non-paper media.

		(d)	As of the Effective Time, Purchaser shall solely be responsible for the security of and insurance
on all persons and property located in or about the Rockingham Branch.

Section
1.8          Taxes and Fees; Proration of Certain Expenses.

Purchaser shall
be responsible for the payment of all fees and taxes related to this transaction, provided, that Purchaser shall not be
responsible for, or have any liability with respect to, taxes on any income to Seller arising out of the transactions herein, and
Seller agrees that it shall pay, or represents that it has paid, in a timely manner any and all such income taxes. Purchaser shall
not be responsible for any income tax liability of Seller arising from the business or operations of the Branches before the Effective
Time, and Seller shall not be responsible for any tax liabilities of Purchaser arising from the Transferred Assets or Assumed Liabilities
after the Effective Time. Utility payments, telephone charges, personal property taxes, rent, salaries, deposit insurance premiums,
other ordinary operating expenses of the Branches and other expenses related to the liabilities assumed or assets purchased hereunder
shall be prorated between the parties as of the Effective Time. To the extent any such item has been prepaid by Seller for a period
extending beyond the Effective Time, there shall be a proportionate monetary adjustment in favor of Seller.

Section
1.9          Real Property Matters.

		(a)	Seller agrees to deliver to Purchaser, as soon as reasonably possible after the execution of this
Agreement but no later than ten (10) business days from the date of execution of this Agreement, copies of all title and/or lease
information in possession of Seller, including without limitation (i) title information in possession of Seller, including, but
not limited to, title insurance policies, attorneys’ opinions on title, surveys, covenants, deeds, notes and mortgages and
easements relating to the Real Property, and (ii) reports, surveys, notices, correspondence or other information known to Seller
that relate to the environmental condition of the Real Property or violations of laws or regulations relating to the environment.
Such delivery shall constitute no warranty by Seller as to the accuracy or completeness thereof or that Purchaser is entitled to
rely thereon.

		(b)	At its option and expense, Purchaser may cause to be conducted, within forty-five (45) calendar
days after the date of this Agreement (the “Study Period”), (i) a title examination, physical survey, zoning compliance
review, and structural inspection of the Real Property and improvements thereon (the “Property Examination”) and (ii)
site inspections, regulatory analyses and Phase I environmental assessments of the Real Property, together with such other studies
and analyses as Purchaser shall deem necessary or desirable (the “Environmental Survey”); provided, however,
that without the prior written consent of Seller, Purchaser shall not conduct any soil, surface water or groundwater sampling (“Intrusive
Testing”).

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		(c)	If, in the course of the Property Examination or Environmental Survey, Purchaser discovers a “Material
Property Defect” (as defined in Section 1.9(d) below) with respect to the Real Property, Purchaser will give prompt written
notice thereof to Seller (but in any event prior to 5:00 p.m. on the last day of the Study Period) describing the facts or conditions
constituting the Material Property Defect and the measures which Purchaser reasonably believes are necessary to correct such Material
Property Defect. If Purchaser provides Seller with written notice of a Material Property Defect within the Study Period, then Seller
and Purchaser shall promptly discuss and seek to reach agreement as to an acceptable cure or other resolution of the asserted Material
Property Defect. Seller shall respond to Purchaser’s notice before 5:00 p.m. on the tenth (10th) business day
after its receipt, advising Purchaser whether Seller elects to cure the Material Property Defect. If Seller elects to cure, then
Seller shall proceed with such cure and shall complete such cure within thirty (30) calendar days thereafter or within such additional
period as shall be agreed upon by Seller and Purchaser, provided, that completion of the cure shall be a condition to Purchaser’s
obligation to close.

If Seller elects not to cure
or is not able to cure any Material Property Defect with respect to the Real Property and the Purchaser and Seller are otherwise
unable to agree on how the Material Property Defect will be addressed in order to effect Closing on the Real Property, or if Seller
does not consent to any Intrusive Testing reasonably proposed by Purchaser with respect to the Real Property, then Purchaser shall
have the option exercisable upon written notice to Seller delivered at least ten (10) business days prior to Closing to (i) waive
the Material Property Defect; or (ii) purchase the Transferred Assets (other than the Real Property) and assume the Deposits associated
with the affected Branch but, lease such Real Property “as is” without any representation or warranty or liability
for existing environmental damage, maintenance, taxes or insurance for a period of up to twelve (12) months, on a month-by-month
basis, at a reasonable cost and with reasonable terms to be agreed upon by Seller and Purchaser, in order to allow for relocation
of the business of such Branch to another facility.

		(d)	For purposes of this Agreement a “Material Property Defect” with regard to the Property
Examination shall include:

		(1)	the existence of any uninsurable lien (other than the lien of real property taxes not yet due and
payable), encumbrance, easement, covenant, or other restriction, title imperfection or title irregularity, or the existence of
any facts or condition that constitutes a material breach of Seller’s representations and warranties contained in Section
4.7 below, in any such case that will materially affect Purchaser’s use of the Real Property for the purpose of the operation
of a branch bank or materially affects the value or marketability of the Real Property;

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		(2)	the encroachment by an improvement on the Real Property onto other property or onto any easement,
a violation of any setback requirement, the encroachment of an improvement on any other property onto the Real Property, or the
existence of a zoning restriction that does not permit use of the Real Property as a branch banking facility without grandfathering
or variance and without site plan review or the construction of any additional improvements; or

		(3)	the existence of any structural defect or state of disrepair in the improvements on the Real Property
(including any equipment, fixtures or other components related thereto) that would cost at least $50,000 to repair or correct.

For purposes of this Section
1.9, a “Material Property Defect” with regard to the Environmental Survey shall include the existence of facts or circumstances
relating to the Rockingham Branch demonstrating that any action, including the discharge, disposal, release, or emission by any
person of any “Hazardous Material” (as defined below) detected in, on, or under the Real Property in a concentration
that violates any applicable Environmental Law (as defined below), has been taken or not taken, or a condition or event likely
has occurred or exists, with respect to the Real Property which constitutes or would constitute a violation of any Environmental
Law, as to which Purchaser reasonably believes, based on the advice of legal counsel or other consultants, could become responsible
or liable for assessment, removal, remediation, monetary damages, or civil, criminal or administrative penalties or other corrective
action and in connection with which the amount of expense or liability which it could incur or for which it could become responsible
or liable following consummation of the transactions contemplated by this Agreement at any time or over a period of time could
equal or exceed $10,000 in the aggregate.

		(e)	For purposes of this Agreement, “Environmental Laws” shall include all federal, state,
and local statutes, regulations, ordinances, orders, decrees, and similar provisions having the force or effect of law relating
to or imposing liability, responsibility, or standards of conduct applicable to environmental, health, or safety conditions and/or
releases of Hazardous Materials affecting the Real Property, including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act; the Superfund Amendment and Reauthorization Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Hazardous Materials Transportation Act; the Resource Conservation and Recovery Act; the Clean Water Act; the Clean Air
Act; the Toxic Substances Control Act; the Oil Pollution Act; the Coastal Zone Management Act; any “Superfund” or “Superlien”
law; the North Carolina Oil Pollution and Hazardous Substances Control Act; the North Carolina Solid Waste Management Act; and
the North Carolina Water and Air Resources Act; including any amendments thereto from time to time; all contractual agreements
and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment,
including, without limitation, all standards of conduct and bases of obligations relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling, reporting, testing, processing, discharge, release,
threatened release, control or clean-up of any Hazardous Substances.

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		(f)	For purposes of this Agreement, “Hazardous Material” means any materials, substances,
wastes, chemical substances, or mixtures presently listed, defined, designated, or classified as hazardous, toxic, or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or quantity, including, but not limited to, any pesticides,
pollutants, contaminants, toxic chemicals, oil or other petroleum products or byproducts, asbestos or materials containing (or
presumed to contain) asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, lead or lead containing paint, radon,
or radioactive material.

Section
1.10          Defects in Tangible Personal Property.

Purchaser will be
given the opportunity to conduct such other investigations and inspections of the Tangible Personal Property of Seller at the Branches,
as Purchaser may reasonably deem appropriate; provided, however, that Purchaser must conduct any such review within
forty-five (45) calendar days from the date of this Agreement or, in the case of items that become Tangible Personal Property of
Seller at the Branches after such review, within a reasonable time following identification of such Tangible Personal Property
and before the Closing. If Purchaser reasonably determines in good faith that any such Tangible Personal Property is unsuitable
for Purchaser’s use or of materially less value than its Net Book Value, Purchaser shall have no obligation to accept, assume,
or pay for such Tangible Personal Property and such Tangible Personal Property shall not be Transferred Assets, and the Preliminary
Closing Statement or the Final Closing Statement shall be adjusted accordingly.

ARTICLE
II

CLOSING AND EFFECTIVE TIME

Section
2.1          Effective Time.

The purchase of
assets and assumption of liabilities provided for in this Agreement shall occur at a closing (the “Closing”) to be
held at a mutually agreeable time and location (i) within 15 calendar days following the date of all approvals by regulatory agencies
and after all statutory waiting periods have expired, or (ii) on the day that is the five month anniversary of the date of this
Agreement, whichever is later, or at such earlier date on which the parties shall mutually agree.  The parties agree to cause
the Closing to occur as expeditiously as reasonably practical after all conditions to Closing have been met. The effective time
(the “Effective Time”) shall be 5:00 p.m. local time on the day on which the Closing occurs (the “Closing Date”).

Section
2.2          Closing.

		(a)	All actions taken and documents delivered at the Closing shall be deemed to have been taken and
delivered simultaneously, and no action shall be deemed taken nor any document delivered until all have been taken and delivered.

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		(b)	At the Closing, subject to all the terms and conditions of this Agreement, Seller shall execute,
where appropriate, and deliver or make reasonably available to Purchaser:

		(1)	The general warranty deed and related documentation or lease and related documentation required
pursuant to Section 1.9(c);

		(2)	A Bill of Sale, in substantially the form attached as Exhibit 2.2(b)(2) (the “Bill
of Sale”), transferring to Purchaser all of Seller’s interest in the Tangible Personal Property and other assets;

		(3)	An Assignment and Assumption Agreement, in substantially the form attached as Exhibit 2.2(b)(3)
(the “Assignment and Assumption Agreement”), assigning Seller’s interest in the Equipment Leases, the Safe Deposit
Contracts, the Loans and Deposit Liabilities;

		(4)	Consents from third persons that are required to effect the assignments set forth in the Assignment
and Assumption Agreement, including, but not limited to, the lessors under the Equipment Leases (to the extent required by such
leases);

		(5)	Seller’s keys to the safe deposit boxes and Seller’s records related to the safe deposit
box business at the Rockingham Branch;

		(6)	Seller’s files and records related to the Loans;

		(7)	Seller’s records related to the Deposit Liabilities assumed by Purchaser;

		(8)	Immediately available funds in the net amount shown as owing to Purchaser by Seller on the Closing
Statement, if any;

		(9)	The Coins and Currency;

		(10)	Such of the other assets to be purchased as shall be capable of physical delivery;

		(11)	A certificate of a proper officer of Seller, dated as of the Closing Date, certifying the fulfillment
of all conditions which are the obligation of Seller and that all of the representations and warranties of Seller set forth in
this Agreement remain true and correct in all material respects as of the Effective Time;

		(12)	A certified copy of a resolution of the Board of Directors of Seller, or its Executive Committee,
approving this Agreement and the transactions contemplated hereby;

		(13)	Such certificates and other documents as Purchaser and its counsel may reasonably require to evidence
(i) the receipt by Seller of all necessary corporate and regulatory authorizations and approvals for the consummation of the transactions
provided for in this Agreement, (ii) the transfer and sale to Purchaser of the Assets and (iii) the perfection of Purchaser’s
security interest in the Loans;

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		(14)	A Closing Statement, substantially in the form attached as Exhibit 2.2(b)(14) (the “Closing
Statement”); and

		(15)	The Power of Attorney substantially in the form attached as Exhibit 1.4(l).

It is understood
that the items listed in Subsections (b)(5), (9) and (10) shall be transferred after the Branches have closed for business on the
Closing Date and that the records listed in Subsections (b)(6) and (7) will be transferred as soon as practicable after the Closing,
but in no event more than five (5) business days after the Closing. For purposes of this Agreement, the term “business day”
shall mean any day that Seller is open for business.

		(c)	At the Closing, subject to all the terms and conditions of this Agreement, Purchaser shall execute,
where appropriate, and deliver to Seller:

		(1)	The Assignment and Assumption Agreement;

		(2)	A certificate and receipt acknowledging the delivery and receipt of possession of the property
and records referred to in this Agreement;

		(3)	Immediately available funds in the net amount shown as owing to Seller by Purchaser on the Closing
Statement, if any;

		(4)	A certificate of a proper officer of Purchaser, dated as of the Closing Date, certifying the fulfillment
of all conditions which are the obligation of Purchaser and that all of the representations and warranties of Purchaser set forth
in this Agreement remain true and correct in all material respects as of the Effective Time;

		(5)	A certified copy of a resolution of the Board of Directors of Purchaser, or its Executive Committee,
approving this Agreement and the transactions contemplated hereby;

		(6)	Such certificates and other documents as Seller and its counsel may reasonably require to evidence
the receipt by Purchaser of all necessary corporate and regulatory authorizations and approvals for the consummation of the transactions
provided for in this Agreement; and

		(7)	The Closing Statement.

		(d)	All instruments, agreements and certificates described in this Section 2.2 shall be in form and
substance reasonably satisfactory to the parties’ respective legal counsel.

Section
2.3          Post-Closing Adjustments.

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		(a)	Not later than 100 calendar days after the Effective Time, Seller shall deliver to Purchaser a
balance sheet dated as of the Effective Time and prepared in accordance with generally accepted accounting principles consistently
applied reflecting the Transferred Assets and the Assumed Liabilities (including any adjustments to the same required by Section
1.4) (the “Post-Closing Balance Sheet”). Additionally, Seller shall deliver to Purchaser within such 100-day period
a list of Loans purchased, individually identified by account number, which list shall be appended to the Bill of Sale. Seller
shall afford Purchaser and its accountants and attorneys the opportunity to review all work papers and documentation used by Seller
in preparing the Post-Closing Balance Sheet. On or before the 15th business day following delivery of the Post-Closing
Balance Sheet (the “Adjustment Payment Date”), Seller and Purchaser shall effect the transfer of any funds as may be
necessary to reflect changes in such assets and liabilities between the Pre-Closing Balance Sheet and the Post-Closing Balance
Sheet, together with interest thereon computed from the Effective Time to the Adjustment Payment Date at the applicable Federal
Funds Rate (as hereinafter defined).

		(b)	In the event that a dispute arises as to the appropriate amounts to be paid to either party on
the Adjustment Payment Date, each party shall pay to the other on such Adjustment Payment Date all amounts other than those as
to which a dispute exists. Any disputed amounts retained by a party which are later found to be due to the other party shall be
paid to such other party promptly upon resolution with interest thereon from the Adjustment Payment Date to the date paid at the
applicable Federal Funds Rate. In the event of an unresolved dispute, either party may submit the matter to a firm of certified
public accountants mutually agreeable to Seller and Purchaser (the “Mediator”), which shall determine such dispute
in accordance with the terms and conditions of this Agreement within 30 calendar days after the submission. The parties shall each
pay one-half of the fees and expenses of the Mediator, except that the Mediator may assess the full amount of its fees and expenses
against either party if it determines that such party negotiated the Post-Closing Balance Sheet in bad faith. The Post-Closing
Balance Sheet, as agreed upon by the parties and determined under this Subsection, shall be final and binding upon the parties.

		(c)	The “Federal Funds Rate” shall mean the rate quoted for Federal Funds in the Money
Rates Column of the Wall Street Journal, adjusted daily, for the period beginning with the first calendar day following the Effective
Time and ending with the Adjustment Payment Date.

ARTICLE
III

INDEMNIFICATION

Section
3.1          Seller’s Indemnification of Purchaser.

Subject to limitations
in this Article III, Seller shall indemnify, hold harmless and defend Purchaser from and against any costs, expenses, liabilities,
losses or damages, including without limitation reasonable attorneys’ fees and expenses, but excluding consequential, punitive,
exemplary, special or incidental damages (a “Loss”) incurred by Purchaser and caused by any breach by Seller of any
representation or warranty contained herein, and any Loss arising out of any claims, actions, suits or proceedings commenced prior
to the Effective Time or arising out of events occurring prior to the Effective Time relating to operations at the Branches, except
to the extent of liabilities expressly assumed or payable hereunder by Purchaser. Claims for indemnity must be made within the
time frame set forth in Section 3.3(a).

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Section
3.2          Purchaser’s Indemnification of Seller.

Subject to limitations
in this Article III, Purchaser shall indemnify, hold harmless and defend Seller from and against any Loss incurred by Seller and
caused by any breach by Purchaser of any representation or warranty contained herein and any Loss arising out of any claims, actions,
suits or proceedings arising out of events occurring following the Effective Time relating to the Transferred Assets or Assumed
Liabilities. Claims for indemnity must be made within the time frame set forth in Section 3.3(a).

Section
3.3          Claims for Indemnity.

		(a)	A claim for indemnity under Sections 3.1 or 3.2 of this Agreement shall be made by the claiming
party prior to the expiration of one (1) year after the Effective Time by giving a notice of claim to the other party. Such notice
shall set forth in reasonable detail the basis upon which such claim for indemnity is made. In the event that any such claim is
timely made, the indemnity relating to such claim shall survive until the claim is resolved. Claims not made within such one-year
period shall cease and no indemnity shall be made therefor.

		(b)	In the event that prior to the expiration period set forth in Section 3.3(a), any person or entity
not a party to this Agreement shall make any demand or claim or file or threaten to file any lawsuit, which demand, claim or lawsuit
may result in any liability, damage or loss to one party hereto of the kind for which such party is entitled to indemnification
pursuant to Section 3.1 or 3.2, then, after notice is provided by the indemnified party to the indemnifying party of such demand,
claim or lawsuit, the indemnifying party shall have the option, at its cost and expense, to retain counsel for the indemnified
party to defend any such demand, claim or lawsuit. In the event that the indemnifying party shall fail to respond within ten (10)
business days after receipt of such notice of any such demand, claim or lawsuit, then the indemnified party shall retain counsel
and conduct the defense of such demand, claim or lawsuit as it may in its discretion deem proper, at the cost and expense of the
indemnifying party. In effecting any settlement of any such demand, claim or lawsuit, an indemnified party shall act in good faith,
shall consult with the indemnifying party and shall enter into only such settlement as the indemnifying party shall approve (the
indemnifying party’s approval will be implied if it does not respond within ten (10) business days of its receipt of the
notice of such settlement offer).

Section
3.4          Limitations on Indemnification.

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Notwithstanding
anything to the contrary contained in this Article III, neither party shall have been deemed to have incurred any Loss with respect
to a claim under this Article III until the Loss arising from such claim exceeds $1,000. Notwithstanding anything to the contrary
contained in this Article III, no indemnification shall be required to be made by either party unless and until the aggregate amount
of all claims for indemnity by the other party exceeds $35,000, in which case the party shall thereupon be entitled to indemnification
for all amounts in excess of such threshold. Notwithstanding anything to the contrary contained in this Article III, the maximum
liability of each party, in the aggregate, under this Agreement shall not exceed ten percent (10%) of the Purchase Price. Each
of the parties hereto acknowledges and agrees that the foregoing limitations contained in this Section 3.4 do not apply to Losses
for fraud, criminal activity or willful misconduct. IN ADDITION, THE PARTIES SHALL HAVE NO OBLIGATIONS UNDER THIS ARTICLE III FOR
ANY CONSEQUENTIAL, PUNITIVE, EXEMPLARY, SPECIAL OR INCIDENTAL DAMAGES OR LOSSES THE INDEMNIFIED PARTY MAY SUFFER AS THE RESULT
OF ANY DEMAND, CLAIM OR LAWSUIT.

Section
3.5          Exclusive Remedy.

The parties acknowledge
and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal
activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement)
for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the
subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article III. In furtherance
of the foregoing, each party hereby waives, to the fullest extent permitted under law, any and all rights, claims and causes of
action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating
to the subject matter of this Agreement it may have against the other parties hereto and their affiliates and each of their respective
representatives arising under or based upon any statute, law, decree, regulation or order of any governmental authority, except
pursuant to the indemnification provisions set forth in this Article III. Nothing in this Section 3.5 shall limit any party’s
right to seek and obtain any equitable relief to which any party shall be entitled or to seek any remedy on account of any party’s
fraudulent, criminal or intentional misconduct.

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller makes no
representations or warranties to Purchaser except as specifically set forth in this Article IV. Seller hereby represents and warrants
to Purchaser as follows:

Section
4.1          Corporate Organization.

Seller is a North
Carolina banking corporation and a state chartered member of the Federal Reserve System, validly existing and in good standing
under the laws of North Carolina. Seller has the corporate power and authority to own its properties, to carry on its business
as currently conducted and to effect the transactions contemplated herein.

Section
4.2          No Violation.

The Branches have
been operated in all material respects in accordance with applicable laws, rules and regulations. The execution, delivery and performance
of this Agreement by Seller does not, and will not, (i) violate any provision of its charter or bylaws, (ii) violate any provision
of any material agreement or any other material restriction of any kind to which Seller is a party or by which Seller is bound,
(iii) any provision which will result in a default under, or which will cause the acceleration of the maturity of, any material
obligation or loan to which Seller is a party, or (iv) subject to the receipt of the necessary regulatory approvals of the
transactions provided in this Agreement, violate or constitute a breach of, or default under, any law, rule, regulation, judgment,
decree, ruling or order of any court, government or governmental agency to which Seller is subject or under any agreement or instrument
of Seller, or to which Seller is subject or is a party or by which Seller is otherwise bound, or to which any of the Transferred
Assets, the Deposit Liabilities, the Equipment Leases, the Safe Deposit Contracts or the Loans (except for any required consents
in respect of the transactions herein contemplated) or the Branches are subject, which violation, breach, contravention or default
referred to in this clause would be materially disadvantageous or burdensome to Purchaser or could impair the validity or consummation
of this Agreement or the transactions contemplated hereby.

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Section
4.3          Corporate Authority.

The execution and
delivery of this Agreement, and the consummation of the transactions contemplated herein, have been duly authorized by Seller,
and no further corporate authorization is necessary for Seller to consummate the transactions contemplated hereunder.

Section
4.4          Enforceable Agreement.

This Agreement has
been duly authorized, executed and delivered by Seller and is the legal, valid and binding agreement of Seller, enforceable against
Seller in accordance with its terms subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

Section
4.5          No Brokers.

In the negotiation
of this Agreement, there has been no participation or intervention by any person, firm or corporation engaged by Seller, other
than Raymond James, that would give rise to any claim against Purchaser for a finder’s fee, commission, or similar payment.

Section
4.6          Loans.

(i)          Seller has
good title to each Loan being purchased by Purchaser and each is a valid loan in conformity with applicable laws and regulation
in all material respects; (ii) the documentation relating to each Loan accurately reflects the payment history, the outstanding
balance of the Loan, and all receipts pertaining to the Loan from the obligor(s) thereof and all credits to which such obligor(s)
are entitled in all material respects; (iii) to Seller’s knowledge, all signatures on and executions of any documents by
Seller in connection with each Loan are genuine; (iv) with respect to each Loan that is secured, Seller has a valid and enforceable
lien on the collateral described in the documents relating to such Loan, and such lien has the priority described in Seller’s
loan files relating to such Loan (except as enforceability may be limited by bankruptcy laws and other similar laws relating to
creditors’ rights and principles of equity); (v) no material taxes or other liability of Seller shall accrue against or be
collected from Purchaser out of any Loan by reason of the purchase thereof by Purchaser; (vi) Seller has paid or caused to be paid
any and all material license, franchise, intangible, stamp or other tax or fee due and owing to any state where a Loan originated,
or any political subdivision thereof, arising from or growing out of the acquisition, collection or holding of any such Loan; and
(vii) neither Seller nor any of its agents, officers, employees or representatives in any manner has been guilty of any civil or
criminal fraud with respect to the creation of any such Loan or with respect to the transfer, assignment and sale of the same to
Purchaser hereunder.

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Section
4.7          Real and Tangible Personal Property.

		(a)	Seller makes the following representations regarding the Real Property:

		(1)	Seller has not received any notice of any condemnation or eminent domain proceedings or negotiations
for the purchase of the Real Property in lieu of condemnation, and to Seller’s Knowledge, no condemnation or eminent domain
proceedings or negotiations have been commenced or threatened in connection with the Branches.

		(2)	Except as specifically set forth herein or disclosed to Purchaser in writing within 30 business
days after the execution of this Agreement, Seller has not entered into any agreement regarding the Real Property, and the Real
Property is not subject to any claim, demand, suit, lien, proceeding or litigation of any kind (including any pursuant to environmental
laws, rules or regulations), pending or outstanding, or to the knowledge of Seller, threatened or likely to be made or instituted,
which would in any way be binding upon Purchaser or its successors or assigns or materially affect or limit Purchaser’s or
its successors’ or assigns’ use and enjoyment of the Real Property or which would materially limit or restrict Purchaser’s
right or ability to enter into this Agreement and consummate the sale and purchase contemplated hereby.

		(3)	As to the Real Property owned by Seller, Seller has or will have at Closing good and marketable
fee simple title to the Real Property and, immediately prior to the Effective Time, will own the Real Property outright subject
to no mortgage, pledge, lien, security interest, lease, charge, encumbrance or conditional sales or other title retention agreement
except for real property taxes not yet due and payable, and easements and rights of way which do not materially interfere with
the use of the Real Property as a Branch. The Real Property complies with applicable zoning regulations.

		(b)	Except as disclosed in any Phase I and/or other environmental reports made available by Seller
to Purchaser, to the knowledge of Seller without further inspection, Seller has not been nor is in material violation of Environmental
Law as to the Real Property. Seller makes no representation as to the accuracy of the Phase I environmental reports made available
to Purchaser.

		(c)	Seller owns, and will convey to Purchaser at the Closing, all of Seller’s right, title and
interest to all of the Tangible Personal Property free and clear of any claims, mortgages, liens, security interests, pledges or
encumbrances of any kind, except as may otherwise be set forth in this Agreement.

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Section
4.8           Compliance with Certain Laws.

The Deposits and
Loans were opened, extended or made, and have been maintained, in all material respects in accordance with all applicable federal
and state laws, regulations, rules and orders.

Section
4.9           Litigation.

There are no actions,
suits or proceedings pending, or to Seller’s knowledge, threatened, against Seller related to the Transferred Assets or the
transactions contemplated by this Agreement.

Section
4.10          Books and Records.

Since December 31,
2010, the books, accounts, and records of the Branches have been maintained as required by law in all material respects, in accordance
with sound banking practices, and in a manner consistent with past practices, which, as they relate to financial accounting, is
in accordance with generally accepted accounting principles to the extent applicable.

Section
4.11          Community Reinvestment Act Representation.

Seller is in compliance
with the Community Reinvestment Act and its implementing regulations, and there are no threatened or pending actions, proceedings,
or allegations by any person or regulatory agency which may cause any regulatory authority to deny any application required to
be filed pursuant to this Agreement. In addition, Seller has not been advised of any supervisory concerns regarding its compliance
with the Community Reinvestment Act.

Section
4.12           Limitation of Representations and Warranties.

Except as may be
expressly represented or warranted in this Agreement by Seller, Seller makes no representations or warranties whatsoever with regard
to any asset being transferred to Purchaser or any liability or obligation being assumed by Purchaser or as to any other matter
or thing.

Section
4.13          Seller’s Knowledge.

For the purposes
of this Agreement, Seller’s knowledge is limited to the actual and current knowledge of President and Chief Executive Officer
Ayden R. Lee, Jr., Chief Banking Officer Jeff D. Pope, and the Branch Managers for each of the Rockingham Branch and the Southern
Pines Branch.

ARTICLE
V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby
represents and warrants to Seller as follows:

    	24

    	 

    

Section
5.1          Corporate Organization.

Purchaser is a North
Carolina chartered bank duly organized, validly existing and in good standing under the laws of the State of North Carolina. Purchaser
has the corporate power and authority to own the Transferred Assets, to assume the Assumed Liabilities and to effect the transactions
contemplated herein.

Section
5.2          No Violation.

The execution, delivery
and performance of this Agreement by Purchaser does not, and will not, (i) violate any provision of its charter or bylaws,
(ii) violate any provision of any material agreement or any other material restriction of any kind to which Purchaser is a party
or by which Purchaser is bound, (iii) any provision which will result in a default under, or which will cause the acceleration
of the maturity of, any material obligation or loan to which Purchaser is a party, or (iv) subject to the receipt of the necessary
regulatory approvals of the transactions provided in this Agreement, violate or constitute a breach of, or default under, any law,
rule, regulation, judgment, decree, ruling or order of any court, government or governmental agency to which Purchaser is subject
or under any agreement or instrument of Purchaser, or to which Purchaser is subject or is a party or by which Purchaser is otherwise
bound, which violation, breach, contravention or default referred to in this clause would be materially disadvantageous or burdensome
to Seller or could impair the validity or consummation of this Agreement or the transactions contemplated hereby.

Section
5.3          Corporate Authority.

The execution and
delivery of this Agreement, and the consummation of the transactions contemplated herein, will have been duly authorized by Purchaser
prior to the Effective Time, and no further corporate authorization on the part of Purchaser is necessary to consummate the transactions
contemplated hereunder.

Section
5.4          Enforceable Agreement.

This Agreement has
been duly authorized, executed and delivered by Purchaser and is the legal, valid and binding agreement of Purchaser enforceable
against Purchaser in accordance with its terms subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

Section
5.5          No Brokers.

In the negotiation
of this Agreement, there has been no participation or intervention by any person, firm or corporation engaged by Purchaser, other
than Sandler O’Neill, that would give rise to any claim against Seller for a finder’s fee, commission, or similar payment.

ARTICLE
VI

OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME

Section
6.1          Access to Information.

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		(a)	Seller shall afford to the officers and authorized representatives of Purchaser, upon prior notice
and subject to Seller’s normal security requirements, access to the properties, books and records of the Branches in order
to facilitate the consummation of the transactions herein contemplated; provided, that such access shall be at reasonable
times during normal business hours and shall not interfere with the normal business and operations of the Branches or the affairs
of Seller relating to the Branches. Nothing in this Section 6.1 shall require Seller to breach any obligation of confidentiality
or to reveal any proprietary information, trade secrets or marketing or strategic plans. It is understood that certain of Seller’s
records may be available only in the form of photocopies, film copies or other non-original and non-paper media.

		(b)	Seller and Purchaser each acknowledge and agree that any information provided to it is subject
to the terms of the Confidentiality Agreement dated December 17, 2010, between Seller and Purchaser (the “Confidentiality
Agreement”).

Section
6.2          Delivery of Magnetic Media Records.

Seller shall prepare
or cause to be prepared, at its expense, and make available to Purchaser at Seller’s data processing center magnetic media
records in Seller’s field format not later than 45 calendar days after the execution of this Agreement, and further shall
make available to Purchaser such records updated two times as of mutually agreeable dates prior to the Closing Date and as of the
Closing Date, which records shall contain the information related to the items described in Subsections 2.2(b)(6) and (b)(7). Such
updated records shall be made available at such time after Closing as agreed to by the parties. Seller may, with the consent of
Purchaser, provide such reports in paper format instead of magnetic media format.

Section
6.3          Application for Regulatory Approval.

Within 30 calendar
days following the execution of this Agreement, Purchaser shall prepare and file applications required by law with the appropriate
regulatory authorities for approval to purchase the Transferred Assets and assume the Assumed Liabilities and to effect in all
other respects the transactions contemplated herein. Purchaser agrees to process such applications in a diligent manner and on
a priority basis and to provide Seller promptly with a copy of such applications as filed (except for any confidential portions
thereof) and all material notices, orders, opinions, correspondence and other documents with respect thereto, and to use its best
efforts to obtain all necessary regulatory approvals. Purchaser knows of no reason why such applications should not receive all
such approvals. Purchaser shall promptly notify Seller upon receipt by Purchaser of notification that any application provided
for hereunder has been denied. Seller shall provide such assistance and information to Purchaser as shall be reasonably necessary
for Purchaser to comply with the requirements of the applicable regulatory authorities.

Section
6.4          Conduct of Business; Maintenance of Properties; Insurance.

		(a)	From the date hereof until the Effective Time, Seller covenants that it will:

		(1)	Carry on, or cause to be carried on, the business of the Branches substantially in the same manner
as on the date hereof, including maintenance of records in accordance with past practices, use all reasonable efforts to preserve
intact its current business organization, and preserve its business relationships with depositors, customers and others having
business relationships with it and whose accounts are held at the Branches; provided, that Seller need not, in its sole
discretion, advertise or promote new or substantially new customer services in the principal market areas of the Branches;

    	26

    	 

    
	

		(2)	Cooperate with and assist Purchaser in assuring the orderly transition of the Transferred Assets
and Assumed Liabilities to Purchaser from Seller; and

		(3)	Maintain the Real Property and the Tangible Personal Property in its current condition, ordinary
wear and tear excepted.

		(b)	Between the date hereof and the Effective Time, Seller shall not, without the prior consent of
Purchaser:

		(1)	Increase or agree to increase the salary, remuneration, compensation or other employment benefits
of the Employees other than in accordance with Seller’s customary policies or bank-wide changes consistent with past practices,
or pay or agree to pay any uncommitted bonus to any such Employees other than regular bonuses granted based on historical practice;

		(2)	Change any pricing on deposit accounts at the Branches on other than a regional basis, except as
may be required in the ordinary course of business consistent with past practices;

		(3)	Materially increase the staffing levels at the Branches or effect changes in branch personnel employed
as of the Effective Time other than in the ordinary course of business consistent with past practices; or

		(4)	Sell or transfer any assets or liabilities related to the Branches, except in the ordinary course
of business.

Notwithstanding the foregoing,
Seller may enter into any agreement to sell or lease all transferable right, title and interest of Seller in and to all real estate
and improvements thereon (including buildings located on any leased land) at the Southern Pines Branch, together with all rights
and appurtenances pertaining thereto other than Transferred Assets; provided, that such sale or lease shall not be consummated
prior to the Closing Date.

		(c)	As of the Effective Time, Seller will discontinue its insurance coverage maintained in connection
with the Rockingham Branch and the activities conducted thereon. Purchaser shall be responsible for all insurance protection for
the Rockingham Branch premises and the activities conducted thereon immediately following the Effective Time. Pending the Closing,
risk of loss shall be the responsibility of Seller.

    	27

    	 

    
	

Section
6.5          No Solicitation by Seller.

In consideration
of the purchase of the Transferred Assets and assumption of the Assumed Liabilities by Purchaser, neither Seller nor its Affiliates
(including their respective directors, officers, employees or principal shareholders), successors or assigns will, for a period
of twelve (12) months after the Closing Date, solicit, on behalf of itself or others, deposits from customers whose Deposits are
assumed by Purchaser hereunder; provided, however, that nothing contained in this Section 6.5 shall be deemed to
prohibit general solicitations in (i) newspapers, (ii) television or (iii) radio, or mass mailings not specifically directed or
targeted to customers of the Branches.

Section
6.6          Further Actions.

Each party hereto
shall execute and deliver such instruments and take such other actions as the other party may reasonably require in order to carry
out the intent of this Agreement.

Section
6.7          Fees and Expenses.

Except as otherwise
provided herein, each party shall be responsible for its own attorneys’ and accountants’ fees and expenses and other
expenses arising in connection with this Agreement and the transactions contemplated thereby.

Section
6.8          Public Announcements.

Seller and Purchaser
agree that, from the date hereof, neither shall make any public announcement or public comment, regarding this Agreement or the
transactions contemplated herein without first obtaining the approval of the substance and timing of such announcement or comment
by the other party hereto, which approval shall not be unreasonably withheld or delayed, except that nothing contained in this
Agreement shall prevent the parties hereto, or the respective holding company of each party hereto, from making any disclosure
legally required to comply with any applicable securities laws and regulations or the rules and regulations of any securities exchange
upon which the securities of the parties hereto, or the respective holding company of each party hereto, are listed. Further, Seller
and Purchaser acknowledge the sensitivity of this transaction to the Employees, and no announcements or communications with the
public or the Employees shall be made without the prior approval of Seller.

Section
6.9          Tax Reporting.

Seller shall provide
Purchaser all 1099 data for Purchaser to comply with all 2012 tax reporting obligations in connection with Transferred Assets and
Assumed Liabilities on or before the Effective Time, and Purchaser shall comply with all tax reporting obligations with respect
to the Transferred Assets and Assumed Liabilities after the Effective Time.

Section
6.10          Telephone Forwarding.

Seller shall take
all necessary steps to cause the current main telephone number for the Southern Pines Branch to roll to Purchaser’s bank
branch located at the Pinecrest Plaza shopping center for a period of three (3) months after the Closing Date.

Section
6.11          ATM/Debit Cards.

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Seller will provide
Purchaser with a list of ATM access/debit cards issued  by Seller to depositors associated with the Deposit Liabilities and
a data processing record in a format reasonably agreed to by the parties containing all addresses therefor, no later than forty-five
(45) calendar days after the date of this Agreement.  At or promptly after the Closing, Seller will provide Purchaser with
a revised data processing record.  Seller shall render ATM access/debit cards issued by Seller inactive as of the Effective
Time.  Purchaser shall reissue ATM access/debit cards to depositors associated with the Deposit Liabilities prior to the Closing
Date, which cards shall be effective as of the Effective Time.

ARTICLE
VII

CONDITIONS TO PURCHASER’S OBLIGATIONS

The obligations
of Purchaser to complete the transactions contemplated in this Agreement are conditioned upon fulfillment, on or before the Closing,
of each of the following conditions:

Section
7.1          Representations and Warranties True.

The representations
and warranties made by Seller in this Agreement shall be true in all material respects on and as of the Effective Time as though
such representations and warranties were made at and as of such time, except to the extent otherwise provided herein or consented
to by Purchaser; provided, however, if a representation or warranty was made as of a specific date, such representation
or warranty shall be understood to have been made on and as of such date.

Section
7.2          Real Property.

Purchaser shall
have received either (a) a general warranty deed with appropriate documentary stamps affixed conveying each piece of Real Property
to Purchaser subject to all matters of record in the public registries of the counties in which each of the Real Property is located,
together with such other instruments and documents as may be reasonably required by Purchaser’s title insurance company in
order to meet its requirements to issue a commercial title insurance policy with respect to the Real Property, and Seller shall
have filed or recorded (or provided to Purchaser for filing and recording) any and all documents necessary to duly vest an equitable
title in the Real Property in Purchaser or (b) in the event that (i) Seller is unable to deliver the documentation required in
clause (a) above or (ii) as required by Section 1.9(c), a lease for a period of up to twelve (12) months, on a month-by-month basis,
at a reasonable cost and with reasonable terms to be agreed upon by Seller and Purchaser “as is” without any representation
or warranty or liability for existing environmental damage, maintenance, taxes or insurance.

Section
7.3          Obligations Performed.

Seller shall (a)
deliver or make available to Purchaser those items required by Section 2.2, and (b) perform and comply in all material respects
with all obligations and agreements required by this Agreement to be performed or complied with by it prior to or on the Effective
Time.

Section
7.4          No Adverse Litigation.

    	29

    	 

    

As of the Effective
Time, no action, suit or proceeding shall be pending or threatened against Purchaser or Seller which might materially and adversely
affect the transactions contemplated hereunder.

Section
7.5          Regulatory Approval.

		(a)	Purchaser shall have received all necessary regulatory approvals of the transactions provided in
this Agreement, all notice and waiting periods required by law to pass shall have passed, no proceeding to enjoin, restrain, prohibit
or invalidate such transactions shall have been instituted or threatened, and any conditions of any such regulatory approval shall
have been met.

		(b)	Such approvals shall not have imposed any condition which is materially disadvantageous or burdensome
to Purchaser.

ARTICLE
VIII

CONDITIONS TO SELLER’S OBLIGATIONS

The obligations
of Seller to complete the transactions contemplated in this Agreement are conditioned upon fulfillment, on or before the Closing,
of each of the following conditions:

Section
8.1          Representations and Warranties True.

The representations
and warranties made by Purchaser in this Agreement shall be true in all material respects at and as of the Effective Time as though
such representations and warranties were made at and as of such time, except to the extent otherwise provided herein or consented
to by Seller; provided, however, if a representation or warranty was made as of a specific date, such representation
or warranty shall be understood to have been made on and as of such date.

Section
8.2          Obligations Performed.

Purchaser shall
(a) deliver to Seller those items required by Section 2.2 and (b) perform and comply in all material respects with all obligations
and agreements required by this Agreement to be performed or complied with by it prior to or on the Effective Time.

Section
8.3          No Adverse Litigation.

As of the Effective
Time, no action, suit or proceeding shall be pending or threatened against Purchaser or Seller which might materially and adversely
affect the transactions contemplated hereunder.

Section
8.4          Regulatory Approval.

		(a)	Purchaser shall have received from the appropriate regulatory authorities approval of the transactions
contemplated herein, waiting periods required by law to pass shall have passed, no proceeding to enjoin, restrain, prohibit or
invalidate such transactions shall have been instituted or threatened, and any conditions of any such regulatory approval shall
have been met.

    	30

    	 

    
	

		(b)	Such approvals shall not have imposed any condition which is materially disadvantageous or burdensome
to Seller.

ARTICLE
IX

TERMINATION

Section
9.1          Methods of Termination.

This Agreement may be terminated
in any of the following ways:

		(a)	by either Purchaser or Seller, in writing five calendar days in advance of such termination, if
the Closing has not occurred by May 31, 2013; provided, that the failure to close is not caused by the default of the party
seeking to terminate this Agreement;

		(b)	at any time on or prior to the Effective Time by the mutual consent in writing of Purchaser and
Seller;

		(c)	by Purchaser in writing if the conditions set forth in Article VII (with the exception of delivery
of items required to be delivered at Closing) of this Agreement shall not have been met by Seller or waived in writing by Purchaser
within 30 calendar days following the date all required approvals by regulatory agencies have been received and after all statutory
waiting periods have expired;

		(d)	by Seller in writing if the conditions set forth in Article VIII of this Agreement shall not have
been met by Purchaser or waived in writing by Seller within 30 calendar days following the date all required approvals by regulatory
agencies have been received and after all statutory waiting periods have expired;

		(e)	any time prior to the Effective Time, by Purchaser or Seller in writing if the other shall have
been in breach of any representation and warranty in any material respect (as if such representation and warranty had been made
on and as of the date hereof and on the date of the notice of breach referred to below), or in breach of any covenant, undertaking
or obligation contained herein, and such breach has not been cured by the earlier of 30 calendar days after the giving of notice
to the breaching party of such breach or the Effective Time; provided, however, that there shall be no cure period
in connection with any breach of Section 6.3, so long as such breach by Purchaser was not caused by any action or inaction of Seller,
and Seller may terminate this Agreement immediately if regulatory applications are not filed within 30 calendar days after the
date of this Agreement as provided in that Section;

		(f)	by either party in writing at any time after any applicable regulatory authority has denied approval
of any application of Purchaser for approval of the transactions contemplated herein; or

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		(g)	by Seller or Purchaser in writing if the anticipated aggregate Loan Value of the Loans set forth
on Schedule 1.4(a), as updated pursuant to Section 1.4 is less than $18,000,000.

Section
9.2          Procedure Upon Termination.

In the event of
termination pursuant to Section 9.1 and except as otherwise stated therein, written notice thereof shall be given to the other
party, and this Agreement, except as provided in Section 6.1(b), shall terminate, immediately upon receipt of such notice unless
an extension is consented to by the party having the right to terminate. If this Agreement is terminated as provided herein,

		(a)	each party will return all documents, work papers and other materials of the other party, including
photocopies or other duplications thereof, relating to this transaction, whether obtained before or after the execution hereof,
to the party furnishing the same; and

		(b)	all information received by either party hereto with respect to the business of the other party
(other than information which is a matter of public knowledge or which has heretofore been published in any publication for public
distribution or filed as public information with any governmental authority) shall not at any time be used for any business purpose
by such party or disclosed by such party to third persons.

Section
9.3          Payment of Expenses.

Should the transactions
contemplated herein not be consummated due to termination of this Agreement pursuant to Section 9.1(e), in addition to such damages
as may be recoverable at law or in equity, the non-breaching party shall be entitled to recover from the breaching party, upon
demand, itemization and documentation, its reasonable outside legal, accounting, consulting and other out-of-pocket expenses.

ARTICLE
X

MISCELLANEOUS PROVISIONS

Section
10.1          Amendment and Modification.

The parties hereto,
by mutual consent of their duly authorized officers, may amend, modify and supplement this Agreement in such manner as may be agreed
upon by them in writing.

Section
10.2          Waiver or Extension.

Except with respect
to required approvals of the applicable governmental authorities, either party, by written instrument signed by a duly authorized
officer, may extend the time for the performance of any of the obligations or other acts of the other party and may waive (a) any
inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto
or (b) compliance by the other party with any of the undertakings, obligations, covenants or other acts contained herein.

    	32

    	 

    

Section
10.3          Assignment.

This Agreement and
all of the provisions hereof shall be binding upon, and shall inure to the benefit of, the parties hereto and their permitted assigns,
but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other.

Section
10.4          Confidentiality

Seller and Purchaser
agree that the Confidentiality Agreement shall survive the execution hereof and the consummation of the transactions contemplated
herein.

Section
10.5          Time of Essence.

TIME IS OF THE ESSENCE
WITH RESPECT TO THE OBLIGATIONS TO BE PERFORMED UNDER THIS AGREEMENT.

Section
10.6          Notices.

All notices, requests,
demands, consents and other communications provided for hereunder and under the related documents shall be in writing and transmitted
by nationally recognized air courier (charges prepaid), faxed, or personally delivered (with receipt thereof acknowledged), effective
upon receipt, to the applicable party at the address indicated below:

	If to Seller:	Four Oaks Bank & Trust Company

6114 U.S. 301 South

Post Office Box 309

Four Oaks, North Carolina 27524

Attn: Ayden R. Lee, Jr.

Telephone: (919) 963-2177

Fax: (919) 963-2768

	With a copy to:	Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.

150 Fayetteville Street, Suite 2300

Raleigh, North Carolina 27601

Attn: John L. Jernigan

Telephone: (919) 821-1220

Fax: (919) 821-6800

	If to Purchaser: 	First Bank

341 North Main Street

Troy, North Carolina 27371

Attn: Jerry L. Ocheltree

Telephone: (910) 576-6171

Fax: (910) 576-1070

    	33

    	 

    

	With a copy to:	Robinson, Bradshaw & Hinson

Attn: Henry H. Ralston

101 North Tryon St., Suite 1900

Charlotte, North Carolina 28246

Telephone: (704) 377-8313

Fax: (704) 373-3913

or, as to each party, at such other
address as shall be designated by such party by notice to the other party complying with the terms of this Section.

Section
10.7          Counterparts.

This Agreement may
be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement and any subsequent amendment hereto may be delivered either by a party or
its counsel by facsimile machine or by PDF document via email to the other party or its counsel, and the signatures so transmitted
shall be deemed to constitute original signatures and are binding on the party so signing. After any such transmission, the parties
shall further deliver to each other original or hard copies, with original signatures, of this Agreement or any such amendment,
but such further delivery, or failure thereof, shall not affect the validity or timing of this Agreement or any such amendment.

Section
10.8          Headings.

The headings of
the Sections and Articles of this Agreement are inserted for convenience only and shall not constitute a part thereof.

Section
10.9          Governing Law.

This Agreement shall
be governed by, and construed in accordance with, the laws of the State of North Carolina.

Section
10.10        Sole Agreement.

Except for the Confidentiality
Agreement, this Agreement and the exhibits and attachments hereto represent the sole agreement between the parties respecting the
transactions contemplated hereby, and all prior or contemporaneous written or oral proposals, agreements in principle, representations,
warranties and understandings between the parties with respect to such matters are superseded hereby and merged herein.

Section
10.11         Severability.

If any provision
of this Agreement is invalid or unenforceable, the balance of this Agreement shall remain in effect.

Section
10.12         Parties In Interest.

    	34

    	 

    

Nothing in this
Agreement, express or implied, including, without limitation the provisions of Section 1.5, is intended or shall be construed to
confer upon or give to any person (other than the parties hereto, their successors and permitted assigns) any rights or remedies
under or by reason of this Agreement, or any term, provision, condition, undertaking, warranty, representation, indemnity, covenant
or agreement contained herein.

[Signature Page Follows.]

    	35

    	 

    

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

SELLER:

FOUR OAKS BANK &
Trust Company

By: /s/ Ayden R. Lee, Jr.

Name: Ayden R. Lee, Jr.

Title: Chairman/President/CEO

PURCHASER:

FIRST BANK

By: /s/ Jerry L. Ocheltree

Name: Jerry L. Ocheltree

Title: President

    	36

    	 

    

 

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

SCHEDULE AND EXHIBIT LIST

	Schedule No.	Description
	1.1(a)(2)	Tangible Personal Property
	1.1(a)(3)	Equipment Leases
	1.1(b)	Excluded Assets
	1.3(a)	Deposit Liabilities
	1.4(a)	Loans
	1.5	Employees
	Exhibit No.	Description
	1.4(l)	Power of Attorney
	2.2(b)(2)	Form of Bill of Sale
	2.2(b)(3)	Form of Assignment and Assumption Agreement
	2.2(b)(14)	Form of Closing Statement

    	 

    	 

    

 

SCHEDULE 1.1(a)(2)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

Tangible Personal Property

    	 

    	 

    

 

SCHEDULE 1.1(a)(3)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

Equipment Leases

    	 

    	 

    

 

 

SCHEDULE 1.1(b)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

Excluded Assets

 

    	 

    	 

    

 

SCHEDULE 1.3(a)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

Deposit Liabilities

    	 

    	 

    

 

SCHEDULE 1.4(a)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

Loans

    	 

    	 

    

 

SCHEDULE 1.5

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

Employees

    	 

    	 

    

 

EXHIBIT 1.4(l)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

POWER OF ATTORNEY

THIS POWER OF ATTORNEY
is dated as of the____________ day of __________ 2012, by Four Oaks Bank & Trust Company, a North Carolina chartered bank
(“Seller”), to be effective as of 5:00 p.m. on __________ _______, 2012.

W I T N E S S E T H:

WHEREAS, Seller
and ________________ (“Purchaser”) have entered into a Purchase and Assumption Agreement dated as of _______________,
2012 (the “Agreement”), which provides for the sale by Seller to Purchaser of certain personal property; and

WHEREAS, in a Bill
of Sale to Purchaser dated ___________, 2012 (the “Bill of Sale”), Seller has agreed, from time to time, at the request
of Purchaser to execute, acknowledge and deliver to Purchaser any and all instruments, documents, endorsements, assignments, information,
materials and other papers that may be reasonably required to (i) transfer to Purchaser certain Assets (as defined in the Bill
of Sale) being acquired by Purchaser pursuant to the Agreement, including loans and the collateral therefor to the extent of Seller’s
interest in such collateral and files and records relating to such loans, (ii) enable Purchaser to bill, collect, service and administer
the loans transferred thereby and (iii) give full force and effect to the intent and purpose of the Bill of Sale.

NOW, THEREFORE, for good
and valuable consideration, receipt of which is hereby acknowledged, Seller hereby irrevocably appoints and authorizes the President
or any Vice President, or the Secretary or any Assistant Secretary, of Purchaser as its attorney-in-fact solely for the purpose
of endorsing and recording, pursuant to the Bill of Sale, certificates of title for vehicles, amendments to financing statements,
continuation statements, financing statements, assignments of deeds of trust and similar documents related to the Transferred Assets
transferred pursuant to the Bill of Sale, provided, that such power of attorney is not intended to and does not convey to
Purchaser any right to endorse or record any documents relating to collateral other than collateral transferred pursuant to the
Bill of Sale as described in the preceding paragraph.

 

IN WITNESS WHEREOF,
Seller has caused this Power of Attorney to be duly executed by its duly authorized officer as of the day and year first above
written.

    	 

    	 

    

 

 

	WITNESSES:	 	 FOUR OAKS BANK & TRUST
    COMPANY
	 	 	 
	 	 	By: 	 
	 	 	 	 
	 	 	Its: 	 

 

STATE OF NORTH CAROLINA

JOHNSTON COUNTY

Before me, the undersigned
Notary Public, in and for the State and County aforesaid, duly commissioned, qualified and acting, personally appeared ____________________,
with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), and who, upon oath, acknowledged
him/herself to be ____________________ of Four Oaks Bank & Trust Company, a North Carolina chartered bank, and s/he, as such
officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of
the bank by him/herself as such officer

WITNESS my hand
and official seal of office at ____________________, ________________, North Carolina, this the ____ day of ____________________,
2012.

	 	 
	 	 	Notary Public
	My commission expires:	 	 

    	 

    	 

    

 

EXHIBIT 2.2(b)(2)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

BILL OF SALE

THIS BILL OF SALE
is dated as of the ____ day of ______________, 2012, by Four Oaks Bank & Trust Company, a North Carolina chartered bank (“Seller”).

W I T N E S S E T H:

WHEREAS, Seller
and First Bank, a North Carolina chartered bank (“Purchaser”), have entered into a Purchase and Assumption Agreement
dated as of _____________, 2012 (the “Agreement”), which provides for the sale by Seller to Purchaser of certain real
and personal property and loans related to Seller’s offices located at 1401 Fayetteville Road, Rockingham, North Carolina,
and at 105 Commerce Avenue, Southern Pines, North Carolina, all as set forth in the Agreement. Capitalized terms used but not otherwise
defined herein shall have the meanings given such terms in the Agreement.

NOW, THEREFORE,
Seller, for good and valuable consideration, receipt of which is hereby acknowledged, does hereby grant, bargain, sell, assign,
set over, convey and transfer to Purchaser all of its right, title and interest in and to the following assets (the “Assets”):
the Tangible Personal Property, Coins and Currency (as defined in the Agreement), and all of Seller’s files and records related
to the Loans and Deposit Liabilities (as defined in the Agreement).

This Bill of Sale
is subject to the terms of the Agreement. Seller agrees that the representations, warranties, covenants, agreements and indemnities
contained in the Agreement shall not be superseded hereby but shall remain in full force and effect to the full extent provided
therein. In the event of any conflict or inconsistency between the terms of the Agreement and the terms hereof, the terms of the
Agreement shall govern.

IN WITNESS WHEREOF,
Seller has caused this Bill of Sale to be duly executed by its duly authorized officers as of the day and year first above written.

	 	FOUR OAKS BANK & TRUST COMPANY

 
	 	By: 	 
	 	Name: 	 
	 	Title: 	 

 

    	 

    	 

    

 

EXHIBIT 2.2(b)(3)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT
AND ASSUMPTION AGREEMENT is entered into as of the ____ day of _______________, 2012, by and between Four Oaks Bank & Trust
Company, a North Carolina chartered bank (“Seller”), and First Bank, a North Carolina chartered bank (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller
and Purchaser have entered into a Purchase and Assumption Agreement dated as of _____________, 2012 (the “Agreement”),
which provides for the assignment by Seller of all of its rights and interests in and to certain deposit accounts and other liabilities
related to Seller’s office located at the Branches as defined in the Agreement, and the assumption by Purchaser of Seller’s
liabilities and obligations thereunder, all as set forth in the Agreement. Capitalized terms used but not otherwise defined herein
shall have the meanings given such terms in the Agreement.

NOW, THEREFORE,
in consideration of the foregoing, and for other good and valuable consideration, receipt of which is hereby acknowledged by Seller
and Purchaser, Seller hereby assigns, transfers and sets over to Purchaser all of Seller’s rights and interest in and to,
and Purchaser hereby assumes all of Seller’s liabilities and obligations in connection with, the following assets (the “Assets”);

	 	(a)	the Deposit Liabilities;

	 	(b)	the Loans;

	 	(c)	the Equipment Leases; and

	 	(d)	the Safe Deposit Contracts.

This Assignment
and Assumption Agreement shall be binding upon, and shall inure to the benefit of, Seller, Purchaser, and each of their successors
and assigns and shall be subject to the terms and conditions of the Agreement. In the event of a conflict between any of the terms
and provisions hereof and the Agreement, the Agreement shall be deemed to control. The Seller makes the representations and warranties
with respect to the Assets contained in the Agreement.

This Assignment
and Assumption Agreement, and the rights and obligations of the parties hereunder, shall be governed by, and construed in accordance
with, the laws of the State of North Carolina.

    	 

    	 

    

IN WITNESS WHEREOF,
the parties hereto have caused this Assignment and Assumption Agreement to be executed by their duly authorized officers as of
the day and year first above written.

 

	 	FOUR OAKS BANK & TRUST COMPANY
	 	By: 	 
	 	Name: 	 
	 	Title: 	 
	 	 
	 	FIRST BANK
	 	By: 	 
	 	Name: 	 
	 	Title: 	 

 

    	 

    	 

    

 

EXHIBIT 2.2(b)(14)

PURCHASE AND ASSUMPTION AGREEMENT

Between

Four Oaks Bank & Trust Company

and First Bank

CLOSING STATEMENT

(Pre-Closing Balance Sheet as of ______________)

	Cash due Purchaser for:	 	 	 	 
	Deposit liability (including	 	 	 	 
	accrued interest)	 	$	 	 
	Total Cash due Purchaser	 	$	 	 
	Cash due Seller for:	 	 	 	 
	Coins and Currency	 	 	 	 
	Premium for Deposit Liabilities	 	 	 	 
	Loans (including accrued interest)	 	 	 	 
	Employee severance payments	 	 	 	 
	Prepayments	 	 	 	 
	Total Cash due Seller	 	$	 	 
	Net cash due Purchaser	 	$	 	 

[Signature Page Follows.]

    	 

    	 

    

 

Seller and Purchaser
hereby approve the Closing Statement and agree to make subsequent adjustments to the extent necessary in accordance with Section
2.3 of the Purchase and Assumption Agreement between Seller and Purchaser dated as of ___________, 2012.

This the ____ day of _______________,
2012.

	 	FOUR OAKS BANK & TRUST COMPANY
	 	By: 	 
	 	Name: 	 
	 	Title: 	 
	 	 
	 	FIRST BANK
	 	By: 	 
	 	Name: 	 
	 	Title:Exhibit 10.1 - AIP

		
			Exhibit 10.1
		

		
			 
		

		
			The Pantry, Inc. Annual Incentive Program
		

		
			(As amended and approved on 
		

		
			November 6, 2012)
		

		
			 
		

		
			The Pantry, Inc. Annual Incentive Program (the “Program”) is a compensatory program under The Pantry, Inc. 2007 Omnibus Plan that was originally established on November 25, 2008 by the Compensation and Organization Committee (the “Committee”) of the Board of Directors of The Pantry, Inc. (the “Company”). The Program provides for performance-based cash awards to certain of the Company’s employees, including its executive officers. Executive officers are eligible for awards under the Program based on threshold, target, and maximum performance levels set by the Committee, and the actual award amounts, if any, will therefore vary depending on the achievement of certain performance goals by the Company. The Program’s performance cycle is concurrent with the Company’s fiscal year.
		

		
			 
		

		
			The Committee approved the following performance measures and their respective weights for the Company’s executive officers because the Committee believes that these performance measures would be key indicators of the Company’s overall financial and operating results during each fiscal year:
		

		
			 
		

			
					
						Measures and Definitions

					
					
						Weighting

				
	
					
						Sales Growth: Merchandise comparable store sales growth year over year

					
					
						40%

				
	
					
						Inside Net Profit Contribution :  Merchandise gross profit dollars minus store operating expenses and  general and administrative expenses 

					
					
						35%

				
	
					
						Fuel gross margin dollars: Fuel revenues minus fuel cost of goods sold

					
					
						25%

				

		
			 
		

		
			An Adjusted EBITDA Qualifier pursuant to which no amount will be paid if a designated Adjusted EBITDA level is not achieved. We define Adjusted EBITDA as net income (loss) before interest expense, net, gain (loss) on extinguishment of debt, income taxes, impairment charges and depreciation and amortization.
		

		
			 
		

		
			Under the Program, each performance measure, other than the Adjusted EBITDA Qualifier, generally operates independently of the other measure. That is, if the Adjusted EBITDA Qualifier is met, an award may be paid when the threshold performance level is achieved for a single measure, without regard to results for the other measure, except that awards in excess of 100% of the target amount for any individual measure will not be made unless the threshold performance levels for both Inside Net Profit Contribution and Fuel Gross Profit Dollars are met. The Committee approved the targets for each performance measure based upon the Company’s approved internal budget estimates.
		

		
			 
		

		
			Under the Program, the target award opportunity for the Company’s Chief Executive Officer will be 100% of his or her annual base salary as initially approved by the Committee for the applicable fiscal year and will not include any additional salary increases for such fiscal year; the target award opportunity for each of the Company’s other executive officers will be 60% of his or her annual base salary as initially approved by the Committee for the applicable fiscal year and will not include any additional salary increases for such fiscal year.
		

		
			 
		

		
			Actual award payouts for the Company’s executive officers can vary from 50% of target awards for achieving or exceeding the threshold performance level to 200% of target awards for achieving the maximum performance level. For any performance greater than the threshold performance level and less than the maximum performance level but not equal to the target performance level, the appropriate payout percentage will be interpolated in a method approved by the Committee. For any performance below the threshold performance level, the appropriate payout percentage is 0%.The Committee may make award payouts or otherwise increase, reduce, or eliminate payouts that would otherwise be made under the Program in its sole discretion. 
		

		

		

		 

		

			1

		

		

			 

		

 

		
		

		
			Executive officers who join the Company during a fiscal year will have any award amounts for that fiscal year prorated, except that no executive officer hired in the last month of a fiscal year will be eligible to receive an award under the Program for that fiscal year. Participants must be employed on the date awards are paid in order to receive a payout, except that: (i) participants whose employment is terminated by the Company without cause will receive a prorated bonus when and if it is earned: and (ii) participants whose employment is terminated due to death or disability or as otherwise determined by the Committee in its discretion may have their award amounts prorated and paid on the date other awards are paid in the discretion of the Committee.
		

		 

		

			2

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