Document:

ex10-1.htm

    EXHIBIT
10.1

     

    EMPLOYMENT
AGREEMENT

     

    

    This
Employment Agreement (the “Agreement”) is entered into as of August 11, 2008 by
and between Iron Mountain Incorporated, a Delaware corporation (“Iron
Mountain”), and Robert Brennan, of Sherborn, Massachusetts
(“Executive”).

    

    Whereas,
Iron Mountain desires to continue to employ Executive to perform services on and
subject to the terms and conditions set forth in this Agreement;
and

    

    Whereas,
Executive desires to continue to be employed by Iron Mountain on and subject to
the terms and conditions set forth in this Agreement;

    

    Now
therefore, Iron Mountain and Executive agree as follows:

    

    1.           Employment; Position;
Duties.

    

    a)           Employment.  Executive’s
continued employment with Iron Mountain under the terms of this Agreement shall
be effective as of  the date first written above.

    

    b)           Position.  Executive
shall serve as Chief Executive Officer of Iron Mountain.  Executive
shall report at all times to the Board of Directors of Iron Mountain (the
“Board”).

    

    c)           Duties.  Executive
shall perform the duties customarily associated with the office of Chief
Executive Officer and perform such other duties as may be assigned to him from
time to time by the Board that are generally consistent with the duties normally
performed by the most senior executives of comparable entities and shall have
all the authority customarily provided to a Chief Executive
Officer.  Executive shall devote substantially his full business time
and best efforts to the performance of his duties hereunder and the business and
affairs of Iron Mountain and its affiliates and will not undertake or engage
without the consent of the Board in any other employment, occupation or business
enterprise other than one in which he is a passive
investor.  Executive shall be based in Iron Mountain’s corporate
offices, but may be required to travel extensively within and outside the United
States.

    

    2.           Compensation and
Benefits.  Iron Mountain shall pay Executive the following
compensation and benefits for all services rendered by him under this
Agreement:

    

    a)           Base
Salary.  Iron Mountain will pay Executive a Base Salary at the
annualized rate of Nine Hundred Thousand Dollars ($900,000.00).  The
Base Salary may be increased, but not decreased, by the Board from time to time
in its sole discretion.  The Base Salary shall be paid to Executive
minus withholdings as required by law and other deductions 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    authorized
by Executive.  The Base Salary will be paid in equal installments at
Iron Mountain’s regular payroll intervals, but not less often than
monthly.

    

    b)           Bonus.  Executive
shall be eligible to earn an annual bonus in accordance with the terms and
conditions of the Iron Mountain Incorporated 2006 Senior Executive Incentive
Plan, as modified or replaced from time to time (the “SEIP”).  Iron
Mountain will pay any bonus earned by Executive in the normal course when
bonuses of other senior executives are paid; provided, however, that any such
bonus shall be paid on or prior to March 15th of the
year (the “Payment Year”) following the calendar year in which the bonus was
earned.  Notwithstanding the foregoing, if Iron Mountain has not
released its audited financial results for the prior year by March 15th of the
Payment Year, the bonus due, if any, for the prior fiscal year shall be paid no
later than 60 days after release of the audited financial results for such prior
fiscal year.

    

    c)           Special 2008
Bonus.  Executive will be eligible to earn a one-time special
bonus for 2008 in the target amount of twenty-five percent (25%) of his Base
Salary for 2008, and prorated based on Executive assuming the office of Chief
Executive Officer on June 5, 2008.  The Compensation Committee of
the Board shall determine the amount of such bonus in its sole
discretion.  Iron Mountain will pay the bonus, if any, in the normal
course when bonuses of other senior executives are paid; provided, however, that
any such bonus shall be paid on or prior to March 15,
2009.  Notwithstanding the foregoing, if Iron Mountain has not
released its audited financial results for 2008 by March 15, 2009, the bonus
due, if any, in respect of 2008 shall be paid no later than 60 days after
release of the audited financial results for 2008.

    

    d)           Vacation.  Executive
will earn four (4) weeks of paid vacation per calendar year, which shall accrue
ratably on a monthly basis.  Executive’s rights with regard to his
accrued vacation shall be in accordance with Iron Mountain’s policy, as it may
be amended from time to time.

    

    e)           Benefits.  Executive
shall be eligible to participate in all benefit plans and arrangements that Iron
Mountain may offer from time to time to its executive officers, in accordance
with the terms of those plans and arrangements.

    

    f)           Business
Expenses.  Iron Mountain will reimburse Executive for all
reasonable and usual business expenses incurred by him in the performance of his
duties hereunder in accordance with Iron Mountain’s expense reimbursement
policy.

    

    3.           Termination.  This
Agreement and Executive’s employment with Iron Mountain may be terminated as
follows.

    

    a)           Death.  This
Agreement shall terminate automatically upon Executive’s death.

    

    b)           Disability.  Iron
Mountain may terminate Executive’s employment in the event that he shall be
prevented, by illness, accident, disability or any other physical or mental
condition (to be determined by means of a written opinion of a competent medical
doctor chosen 

     

    
      
         

      

      
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    by mutual
agreement of Iron Mountain and Executive or his personal representative(s)) from
substantially performing his duties and responsibilities hereunder for one or
more periods totaling ninety (90) consecutive days or one hundred and twenty
(120) days in the aggregate in any twelve (12) month period.

    

    c)           By Iron Mountain for
Cause.  Iron Mountain may terminate Executive’s employment for
“Cause” immediately upon written notice to Executive.  For purposes of
this Agreement, “Cause” shall mean any of: (i) fraud, embezzlement or theft
against Iron Mountain or any of its subsidiaries or affiliates; (ii) Executive
is convicted of, or pleads guilty or no contest to, a felony; (iii) Executive
breaches a fiduciary duty owed to Iron Mountain; (iv) Executive materially
breaches any material policy of Iron Mountain or its subsidiaries, including but
not limited to the Code of Conduct or Insider Trading Policy; (v) willful
nonperformance by Executive (other than by reason of illness) of his material
duties hereunder and failure to remedy such nonperformance within ten (10)
business days following written notice from the Board identifying the
nonperformance and the actions required to cure it; or (vi) Executive commits an
act of gross negligence, engages in willful misconduct or otherwise acts with
willful disregard for the best interests of Iron Mountain or any of its
affiliates.

    

    d)           By Iron Mountain Other Than
For Death, Disability or Cause.  Iron Mountain may terminate
Executive’s employment for any reason other than for Cause, disability or death
upon written notice to Executive.

    

    e)           By Executive For Good Reason
or Any Reason.  Executive may terminate his employment at any
time, with or without Good Reason, upon thirty (30) days prior written notice to
Iron Mountain.  For purposes of this Agreement, “Good Reason” shall
mean that any of the following occurs without Executive’s prior written
consent:  (i) a material diminution of Executive’s position and/or the
assignment of Executive to duties and responsibilities that are materially
inconsistent with his position; (ii) a material diminution by Iron Mountain in
the total annual compensation that Executive is eligible to receive; or (iii) a
relocation of Iron Mountain’s principal business office of more than fifty (50)
miles from its current location.

    

    4.           Payment Upon
Termination.  In the event that Executive’s employment with
Iron Mountain terminates, Iron Mountain will pay Executive the
following:

    

    a)           Termination for Any
Reason.  In the event that Executive’s employment terminates
for any reason, Iron Mountain shall pay him for the following items that were
earned and accrued but unpaid as of the date of termination: (i) Executive’s
Base Salary earned through the date of termination; (ii) a cash payment for all
accrued, unused vacation calculated at Executive’s then Base Salary rate and any
accrued but unpaid bonuses due Executive for the prior fiscal year; (iii)
reimbursement for any unpaid business expenses; and (iv) such
other benefits and payments to which Executive may be entitled by law or
pursuant to the benefit plans of Iron Mountain then in effect.  These
amounts will be paid promptly and, in any event, on or prior to March 15th of the
year following the year of Executive’s termination of employment.

    

    
      
         

      

      
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    b)           Termination by Iron Mountain
Without Cause or By Executive For Good Reason.  In addition to
the payments provided for in Section 4(a), in the event that (i) Iron Mountain
terminates Executive’s employment without Cause pursuant to Section 3(d) or
Executive terminates his employment with Iron Mountain within three (3) months
of a Good Reason event pursuant to Section 3(e); (ii) Executive complies fully
with all of his obligations under Sections 5, 6, and 7 of this Agreement and
(iii) Executive executes, delivers to Iron Mountain and does not revoke a
general release (in a form reasonably acceptable to Iron Mountain) releasing and
waiving any and all claims that he has or may have against Iron Mountain, its
subsidiaries and affiliates, and each of their respective directors, officers,
employees, agents, successors and assigns with respect to his employment with
Iron Mountain (other than the obligations of Iron Mountain set forth herein
which specifically survive the termination of his employment), Iron Mountain
will provide Executive with the following severance benefits:

    

    (i)  Beginning on
Executive’s termination of employment and continuing until six (6) months have
expired after Executive’s termination of employment, equal monthly installments
based on Executive’s last Base Salary rate in accordance with Iron Mountain’s
usual payroll schedule; provided, however, that such payments shall be capped at
an amount equal to two times the limit under Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the “Code”), for the year of his termination
of employment, all such payments intended to qualify for the exception contained
in Treas. Reg. § 1.409A-1(b)(9)(iii).

    

    (ii)  Beginning when six (6)
months have expired after Executive’s termination of employment and terminating
one (1) year after such date, equal monthly installments, with the total of such
installments equal to (A) one (1) year of Base Salary at Executive’s last Base
Salary rate less (B) the total payments that have been made to Executive
pursuant to clause (i).

    

    All
payments due hereunder shall be reduced by withholding as required by law, or as
elected by the Executive.

    

    (iii)  Iron Mountain will
pay the monthly cost to provide Executive and his dependents with health, dental
and vision coverage comparable to that then offered by Iron Mountain until the
earlier of (x) the date on which Executive becomes eligible for coverage under
another employer’s group plans or (y) two (2) years.  Such coverage
will be under Iron Mountain’s group health, dental and vision plans for so long
as Executive is eligible to participate in such plans pursuant to “COBRA”
continuation coverage and, thereafter, under as comparable an individual
insurance policy as is available for the remainder of the two (2) year
period.  Executive agrees to promptly notify Iron Mountain when he
becomes eligible for coverage under another employer’s group plans.

    

    (iv)  Iron Mountain will pay
Executive a Bonus for the calendar year in which the termination occurs in an
amount equal to the average bonus paid to Executive under the SEIP in the two
(2) years preceding the termination of his employment. The Bonus will be paid on
the first day following the expiration of six (6) months from the termination
date.  The Bonus provided for in this Section 4(b)(4) shall be in lieu
of, and shall constitute full satisfaction 

     

    
      
         

      

      
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    of, any
payment that Executive might have earned in accordance with the SEIP for the
year in which his termination occurs.

    

    (v)           Unless
the right to payment or the amount of any payment set forth in this subsection
(b) is the subject of a dispute, the general release which is a condition
precedent to the payment of any benefits set forth in this subsection (b) shall
be executed within the applicable consideration period required by law or sixty
(60) days following Executive’s separation from service (defined below),
whichever is shorter, or the Executive shall forfeit the benefits
hereunder.  Further, all payments under this subsection (b) shall be
complete within two (2) years of Executive’s separation from service (defined
below).

    

    5.           Confidentiality.  Executive
agrees that he will not at any time, during or after his employment by Iron
Mountain, without Iron Mountain’s prior written consent, reveal or disclose to
any person outside of Iron Mountain, or use for his own benefit or the benefit
of any other person or entity, any confidential information concerning the
business or affairs of Iron Mountain, its subsidiaries or affiliates, or
concerning any of its customers or employees (“Confidential
Information”).  For purposes of this Agreement, Confidential
Information shall include all information that Iron Mountain considers
confidential, including but not limited to, financial information or plans;
sales and marketing information or plans; business or strategic plans; salary,
bonus or other personnel information of any type; information concerning methods
of operation; proprietary systems or software; legal or regulatory information;
cost and pricing information or policies; information concerning new or
potential products or markets; research and/or analysis; and information
concerning new or potential customers.  Confidential Information shall
not include information that already is available to the public through no act
of Executive and salary, bonus or other personnel information specific to
Executive.  This paragraph shall not be construed so as to interfere
with Executive’s right to use his general knowledge, experience, memory and
skills, whenever and wherever acquired, in any other
employment.  Notwithstanding the forgoing, Executive may comply with
legal process; provided, however, that if Executive anticipates making such a
disclosure to comply with legal process, he agrees to provide Iron Mountain with
ten (10) days written notice or, if such notice is not practicable under the
circumstances, with as much written notice as is practicable.

    

    6.           Return of Iron Mountain
Property. Executive agrees that
all Confidential Information, however or whenever produced, shall be the sole
property of Iron Mountain or such other entity to which it relates, and shall
not be removed by him (or anyone acting at his direction or on his behalf) from
Iron Mountain’s custody or premises without Iron Mountain’s prior written
consent, except as required in the performance of his duties and
responsibilities under this Agreement.  Upon the termination of
Executive’s employment, or otherwise upon the request of Iron Mountain,
Executive will promptly deliver to Iron Mountain all copies of all documents,
equipment, property or materials of any type in his possession, custody or
control, that belong to Iron Mountain, its subsidiaries or its affiliates,
and/or that contain, in whole or in part, any Confidential
Information.

    

    7.           Restrictive
Covenants.  Executive understands and agrees that, by virtue of
his employment hereunder, he has had, and will continue to have, substantial
access to and impact on the good will, confidential information and other
legitimate business interests of Iron 

     

    
      
         

      

      
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    Mountain,
and that he therefore is in a position to have a substantial adverse impact on
those business interests should he engage in business in competition with Iron
Mountain after his employment hereunder terminates.  Accordingly,
Executive agrees that he will comply with the following
restrictions.  These terms are intended to continue in full force and
effect in the event that there is any change, whether material or immaterial, in
Executive’s position, responsibilities and/or compensation and the term “Iron
Mountain” is intended to include Iron Mountain’s subsidiaries and
affiliates.

    

    a)           Noncompetition.  During
the term of this Agreement and for a period of three (3) years after Executive’s
employment under this Agreement terminates for any reason, Executive shall not,
directly or indirectly, for his own account, or in any capacity on behalf of any
other third person or entity, whether as an officer, director, employee,
partner, joint venturer, consultant, investor or otherwise, engage, or assist
others engaged, in whole or in part, in any business which directly competes
with Iron Mountain anywhere in the world.  For the purposes of this
Section 7(a), a person or entity shall be deemed to “directly
compete” with Iron Mountain if it is engaged in the business of electronic and
physical data and records storage management; document imaging, management and
business process outsourcing related to customer solutions and applications for
document storage; escrow services; shredding and other document destruction
services; related consulting services or any other service or line of business
that Iron Mountain may be engaged in or is actively planning or preparing to
engage in at the time of termination of Executive’s employment with Iron
Mountain.  Any investment Executive may make in such a business shall
not be considered to give rise to a violation of this covenant if (A) the
following three conditions are met: (i) the stock of such business is publicly
traded; (ii) Executive’s equity interest in such business does not exceed two
percent (2%) of the aggregate outstanding equity interests of such business; and
(iii) Executive does not otherwise participate in the board of directors or
comparable governing body, management or operational affairs of such business;
or (B) such investment is an indirect investment through a venture capital or
and/or private equity fund; provided that Executive shall (i) be a limited
partner, member or stockholder of such fund, (ii) own less than two percent (2%)
of the aggregate outstanding equity interests of such fund and (iii) not
participate in the board of directors or comparable governing body, management
or operational affairs of such fund or the underlying competing
business.

    

    b)           Nonsolicitation of
Customers.  During the term of this Agreement and for a period
of three (3) years after Executive’s employment under this Agreement terminates
for any reason, Executive shall not solicit or accept business that would
“directly compete” with Iron Mountain (as defined in Section 7(a)) from any (i)
customers of Iron Mountain that were customers at the time of the termination of
Executive’s employment hereunder or (ii) any prospective customers of Iron
Mountain who, within the six (6) month period prior to the termination of
Executive’s employment hereunder, were directly solicited by Executive or where,
directly or indirectly, in whole or in part, Executive supervised or
participated in solicitation activities related to such prospective customers.
Executive also agrees that he will not induce any such customer or prospective
customer of Iron Mountain to limit or terminate its business relationship with
Iron Mountain.

     

                          c)           Non-hire of
Employees.  During the term of this Agreement and for a period
of two (2) years after Executive’s employment under this Agreement terminates
for any reason, Executive shall not, directly or indirectly, whether through his
own efforts, or in any way 

     

    
      
         

      

      
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    assisting
or employing the assistance of any other person or entity, hire, retain on a
consultant basis, recruit or solicit any employee or consultant of Iron Mountain
or induce any such employee or consultant to terminate his or her employment or
other relationship with Iron Mountain.  For the avoidance of doubt,
Executive’s provision of an oral or written reference to a prospective employer
of an Iron Mountain employee or consultant upon request of such employee or
consultant so long as Executive is not affiliated in any way with the entity to
which the reference is addressed shall not, in and of itself, be a violation of
this Section 7(c).

    

    8.           Assignment.  This
Agreement and the rights and obligations of the parties hereto shall bind and
inure to the benefit of any successor of Iron Mountain by reorganization, merger
or consolidation and any assignee of all or substantially all of its business
and properties.  Neither this Agreement nor any rights or benefits
hereunder may be assigned by Executive, except that, upon Executive’s death, his
earned and unpaid economic benefits will be paid to his heirs or
beneficiaries.

    

    9.           Interpretation and
Severability.  It is the express intent of the parties that:
(a) in case any one or more of the provisions contained in this Agreement shall
for any reason be held to be excessively broad as to duration, geographical
scope, activity or subject, such provision shall be construed by limiting and
reducing it as determined by a court of competent jurisdiction, so as to be
enforceable to the fullest extent compatible with applicable law; and (b) in
case any one or more of the provisions contained in this Agreement cannot be so
limited and reduced and for any reason is held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.

    

    

    10.           Notices.  Any
notice that Iron Mountain or Executive are required to give the other under this
Agreement shall be in writing and shall be sufficiently given if personally
delivered, sent by facsimile or other means of confirmed electronic submission
or sent by recognized overnight courier service, or by certified mail, return
receipt requested to the other party at the following address or at such other
address as either party may from time to time designate in
writing.  The date of actual delivery of any notice under this Section
10 shall be deemed to be the date of receipt thereof.

    

    a)           If
to Executive, to, him at his address as specified in the payroll records ofIron
Mountain

    

    b)           If
to Iron Mountain, to:

    

    Iron
Mountain Incorporated

    745
Atlantic Avenue

    Boston,
Massachusetts  02111

    Attn:  General
Counsel

    

    11.           Waiver.  No
consent to or waiver of any breach or default in the performance of any
obligation hereunder shall be deemed or construed to be a consent to or waiver
of any other 

     

    
      
         

      

      
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    breach or
default in the performance of any of the same or any other obligations
hereunder.  No waiver hereunder shall be effective unless it is in
writing and signed by the waiving party.

     

    12.           Complete Agreement;
Modification.  This Agreement sets forth the entire agreement
of the parties with respect to the subject matter hereof, and supersedes any
previous oral or written communications, negotiations, representations,
understandings or agreements between them, except for those provisions in the
Iron Mountain Employee Confidentiality, Inventions and Non-Competition Agreement
dated October 28, 2004 between Executive and Iron Mountain (the “2004 NDA”) to
the extent that the 2004 NDA  imposes obligations in addition to those
set forth herein.  Any
modification of this Agreement shall be effective only if set forth in a written
document signed by Executive and a duly authorized representative of Iron
Mountain.

     

    13.           Headings.  The
headings of the Sections hereof are inserted for convenience only and shall not
be deemed to constitute a part, or affect the meaning, of this
Agreement.

     

    14.           Counterparts.  This
Agreement may be signed in two (2) counterparts, each of which shall be deemed
an original and both of which shall together constitute one
agreement.

     

    15.           Choice of Law;
Jurisdiction.

     

    a)           The
validity, interpretation and performance of this Agreement shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Massachusetts,
without regard to conflict of law principles.

     

    b)           Except
as set forth in subsection 15(c) below, any controversy, dispute or claim
arising out of this Agreement, or the breach  hereof, shall be settled
by final and binding arbitration to be conducted by an arbitration tribunal in
Boston, Massachusetts, pursuant to the rules of the American Arbitration
Association.  The arbitration tribunal shall consist of three
arbitrators.  The party initiating arbitration shall nominate one
arbitrator in the request for arbitration and the other party shall nominate a
second in the answer thereto within the time allotted by the
rules.  The two arbitrators so named will then jointly appoint the
third arbitrator.  If the answering party fails to timely nominate its
arbitrator, or if the arbitrators named by the parties fail to agree on the
third arbitrator within twenty (20), the office of the American Arbitration
Association in Boston, Massachusetts shall make the necessary appointments of
such arbitrator(s). The decision or award of the arbitration tribunal (by a
majority determination, or if there is no majority, then by the determination of
the third arbitrator, if any) shall be final and application may be made to any
competent court to confirm or vacate such decision or award.  In the
event of any procedural matter not covered by the aforesaid rules, the
procedural law of the Commonwealth of Massachusetts shall govern.  The
arbitration panel may award legal fees and costs to the prevailing
party.

     

    c)           The
provisions of Section 15(b) of this Agreement shall not preclude Iron Mountain
from seeking equitable relief from any court having jurisdiction with respect to
any disputes or claims relating to or arising out of Sections 5, 6 and 7 of this
Agreement.

     

    16.           Advice of Counsel; No
Representations.  Executive acknowledges that he has been
advised to review this Agreement with his own legal counsel, that prior to
entering into this Agreement, he has had the opportunity to review this
Agreement with his attorney and that Iron 

     

    
      
         

      

      
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    Mountain
has not made any representations, warranties, promises or inducements to
Executive concerning the terms, enforceability or implications of this Agreement
other than as are contained in this Agreement.

     

    17.           Contract
Fees.  Iron Mountain will pay Executive’s reasonable legal fees
and expenses incurred in receiving advice with respect to the drafting and
negotiation of this Agreement.

     

     

    18.           Amendment of Option
Agreements.  Iron Mountain has granted Executive several
options (the “Options”) to purchase the common stock of Iron Mountain, par value
$0.01 (the “Common Stock”), pursuant to option agreements between Iron Mountain
and Executive (each, an “Option Agreement”).  Section 3(c) of each of
the following Option Agreements ((1) dated April 27, 2005 for 349,719 shares of
Common Stock, (2) dated March 2, 2007 for 360,560 shares of Common and (3) dated
June 5, 2008 for 322,318 shares of Common Stock, each as adjusted for stock
dividends since the date of grant) is hereby amended and restated to read in its
entirety as follows:

     

     

    “(c)  this
Option may not be exercised after the four hundred and fiftieth (450th) day
following the date of termination of the Relationship between the Optionee and
the Company.”

     

     

    Section
3(c) of the Option Agreement dated March 2, 2007 for 367,917 shares of Common
Stock is hereby amended and restated to read in its entirety as
follows:

     

     

    “(c)  this
Option may not be exercised after the four hundred and fiftieth (450th) day
following the date of termination of the Relationship between the Optionee and
the Company; provided, however, that if the Relationship terminates on or after
December 2, 2015, the Option shall remain exercisable until the later of 60 days
following termination of the Relationship or March 2, 2017, except that if the
Relationship terminates by reason of the Optionee’s death or total and permanent
disability (as determined by the Board on the basis of medical advice
satisfactory to it) on or after December 2, 2015, the unexercised portion of the
Option that is otherwise exercisable on the date of termination of the
Relationship shall remain exercisable thereafter until the later to occur of one
(1) year or March 2, 2017.”

     

     

    19.           Section
409A.  It is the intention of the parties that no payment or
entitlement pursuant to this Agreement will give rise to any adverse tax
consequences to any person pursuant to Section 409A of the Code and this
Agreement shall be interpreted, applied and, to the minimum extent necessary,
amended to achieve that intention.

     

     

    a)           Reimbursements and Direct
Payment of Expenses.  Any reimbursements due or expenses to be
paid under any provision of this Agreement shall be paid not later than March 15
of the year following the year in which the expense is incurred.  Any
reimbursement or right to direct payment of Executive’s expense in one calendar
year shall not affect the amount that may be reimbursed or paid for in any other
calendar year and a reimbursement or payment of Executive’s expense (or right
thereto) may not be exchanged or liquidated for another benefit or
payment.

     

    
      
         

      

      
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    b)           Specified Employee
Delay.  In the case of any payment on termination (other than
in the event of death or disability within the meaning of Section 409A of the
Code or in compliance with the requirements of Treas. Reg. § 1.409A-1(b)(9)(iii)
or (v) or of any successor thereto or any other provision that exempts a
payment from Section 409A of the Code; and except as provided in Section 4(b)(i)
above) while Executive is a specified employee within the meaning of Section
409A of the Code, in no event will such payment be made earlier than six (6)
months after the date his employment terminates.  In the event that,
due to Section 409A of the Code, Executive does not receive one or more cash
payments that would otherwise be due during such six (6) month period, all such
delayed payments will be made on the first day after the six (6) month
anniversary of his employment termination, and thereafter any remaining payments
shall be made in accordance with the previously agreed-upon
schedule.

     

     

    c)           Separation from
Service.  If any of the benefits set forth in this Agreement
are deferred compensation under Section 409A of the Code, any termination of
employment triggering payment of such benefits must constitute a “separation
from service” under Section 409A of the Code before, subject to Section 19(b) of
this Agreement, distribution of such benefits can commence.  For
purposes of clarification, this paragraph shall not cause any forfeiture of, or
increase in, benefits on the part of the Executive, but shall only act as a
delay until such time as a “separation from service” occurs.

     

     

    d)           Code
References.  Any reference in this Agreement to Section 409A of
the Code shall also include any proposed, temporary or final regulations, or any
other guidance, promulgated with respect to such Section by the U.S. Department
of the Treasury or the Internal Revenue Service.

     

    IN
WITNESS WHEREOF, Iron
Mountain and Executive have executed this Agreement as of the day and year first
set forth above.

    

    IRON
MOUNTAIN INCORPORATED

    

    

    By:   /s/ C. Richard
Reese

    Name:  C.
Richard Reese

    Title:    Executive
Chairman

    

    

    

    /s/ Robert
Brennan

    Robert
Brennan

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    -10-Unassociated Document

    Exhibit
10.42

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    CONFORMED
COPY

    

    

    

    

    

    

    

    

    

    

    REVOLVING
CREDIT AGREEMENT

    

    

    dated as
of May 27, 2008

    

    

    between

    

    

    FNB
UNITED CORP.

    as
Borrower

    

    

    and

    

    

    SUNTRUST
BANK

    as
Lender

    

    

    

    

    

     

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    

    
      	 
      	 
      	
              Page

            
	
              ARTICLE
      I.  DEFINITIONS; CONSTRUCTION

            	
              1

            
	 
      	 
      	 
      
	
              Section
      1.1.

            	
              Definitions

            	
              1

            
	
              Section
      1.2.

            	
              Accounting
      Terms and Determination

            	
              8

            
	
              Section
      1.3.

            	
              Terms
      Generally

            	
              9

            
	 
      	 
      	 
      
	
              ARTICLE
      II.  AMOUNT AND TERMS OF THE REVOLVING
COMMITMENT

            	
              9

            
	 
      	 
      	 
      
	
              Section
      2.1.

            	
              Revolving
      Loans and Revolving Credit Note

            	
              9

            
	
              Section
      2.2.

            	
              Procedure
      for Revolving Loans

            	
              9

            
	
              Section
      2.3.

            	
              Optional
      Reduction and Termination and/or Extension of  Revolving
      Commitment

            	
              9

            
	
              Section
      2.4.

            	
              Repayment
      and Prepayments of Revolving Loans

            	
              10

            
	
              Section
      2.5.

            	
              Interest
      on Loans

            	
              10

            
	
              Section
      2.6.

            	
              Intentionally
      Omitted

            	
              11

            
	
              Section
      2.7.

            	
              Computation
      of Interest

            	
              11

            
	
              Section
      2.8.

            	
              Inability
      to Determine Interest Rates

            	
              11

            
	
              Section
      2.9.

            	
              Illegality

            	
              11

            
	
              Section
      2.10.

            	
              Increased
      Costs

            	
              11

            
	
              Section
      2.11.

            	
              Payments
      Generally

            	
              12

            
	
              Section
      2.12.

            	
              Funding
      Indemnity

            	
              12

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              ARTICLE
      III. CONDITIONS PRECEDENT TO REVOLVING LOANS

            	
              12

            
	 
      	 
      	 
      
	
              Section
      3.1.

            	
              Conditions
      to Initial Revolving Loan

            	
              12

            
	
              Section
      3.2.

            	
              Each
      Revolving Loan

            	
              13

            
	 
      	 
      	 
      
	
              ARTICLE
      IV. REPRESENTATIONS AND WARRANTIES

            	
              13

            
	 
      	 
      	 
      
	
              Section
      4.1.

            	
              Existence;
      Power

            	
              14

            
	
              Section
      4.2.

            	
              Organizational
      Power; Authorization

            	
              14

            
	
              Section
      4.3.

            	
              Governmental
      Approvals; No Conflicts

            	
              14

            
	
              Section
      4.4.

            	
              Financial
      Statements

            	
              14

            
	
              Section
      4.5.

            	
              Litigation
      Matters

            	
              14

            
	
              Section
      4.6.

            	
              Compliance
      with Laws and Agreements

            	
              14

            
	
              Section
      4.7.

            	
              Investment
      Company Act, Etc.

            	
              15

            
	
              Section
      4.8.

            	
              Taxes

            	
              15

            
	
              Section
      4.9.

            	
              Margin
      Regulations

            	
              15

            
	
              Section
      4.10.

            	
              ERISA

            	
              15

            
	
              Section
      4.11.

            	
              Disclosure

            	
              15

            
	
              Section
      4.12.

            	
              Subsidiaries

            	
              15

            
	
              Section
      4.13.

            	
              Dividend
      Restrictions; Other Restrictions

            	
              15

            
	
              Section
      4.14.

            	
              Capital
      Measures

            	
              16

            
	
              Section
      4.15.

            	
              FDIC
      Insurance

            	
              16

            
	
              Section
      4.16.

            	
              OFAC

            	
              16

            
	
              Section
      4.17.

            	
              Patriot
      Act.

            	
              16

            

    

    

    i

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 
      	 
      	 
      
	
              ARTICLE
      V.  AFFIRMATIVE COVENANTS

            	
              16

            
	 
      	 
      	 
      
	
              Section
      5.1.

            	
              Financial
      Statements and Other Information

            	
              16

            
	
              Section
      5.2.

            	
              Notices
      of Material Events

            	
              18

            
	
              Section
      5.3.

            	
              Existence;
      Conduct of Business

            	
              18

            
	
              Section
      5.4.

            	
              Compliance
      with Laws, Etc.

            	
              18

            
	
              Section
      5.5.

            	
              Books
      and Records.

            	
              18

            
	
              Section
      5.6.

            	
              Visitation,
      Inspection, Etc.

            	
              19

            
	
              Section
      5.7.

            	
              Maintenance
      of Properties; Insurance

            	
              19

            
	
              Section
      5.8.

            	
              Use
      of Proceeds

            	
              19

            
	 
      	 
      	 
      
	
              ARTICLE
      VI.  FINANCIAL COVENANTS

            	
              19

            
	 
      	 
      	 
      
	
              Section
      6.1.

            	
              Return
      on Average Assets

            	
              19

            
	
              Section
      6.2.

            	
              Ratio
      of Nonperforming Assets to Total Loans and OREO

            	
              19

            
	
              Section
      6.3.

            	
              Capital
      Measures

            	
              19

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              ARTICLE
      VII.  NEGATIVE COVENANTS

            	
              20

            
	 
      	 
      	 
      
	
              Section
      7.1.

            	
              Indebtedness

            	
              20

            
	
              Section
      7.2.

            	
              Negative
      Pledge

            	
              21

            
	
              Section
      7.3.

            	
              Fundamental
      Changes

            	
              21

            
	
              Section
      7.4.

            	
              Restricted
      Payments

            	
              22

            
	
              Section
      7.5.

            	
              Restricted
      Agreements

            	
              22

            
	
              Section
      7.6

            	
              Investments,
      Etc

            	
              22

            
	 
      	 
      	 
      
	
              ARTICLE  VIII.  EVENTS
      OF DEFAULT

            	
              23

            
	 
      	 
      	 
      
	
              Section
      8.1.

            	
              Events
      of Default

            	
              23

            
	 
      	 
      	 
      
	
              ARTICLE
      IX.  MISCELLANEOUS

            	
              25

            
	 
      	 
      	 
      
	
              Section
      9.1.

            	
              Notices

            	
              25

            
	
              Section
      9.2.

            	
              Waiver;
      Amendments

            	
              26

            
	
              Section
      9.3.

            	
              Expenses;
      Indemnification

            	
              27

            
	
              Section
      9.4.

            	
              Successors
      and Assigns

            	
              28

            
	
              Section
      9.5.

            	
              Governing
      Law; Jurisdiction; Consent to Service of Process

            	
              29

            
	
              Section
      9.6.

            	
              Waiver
      of Jury Trial

            	
              29

            
	
              Section
      9.7.

            	
              Right
      of Setoff

            	
              29

            
	
              Section
      9.8.

            	
              Counterparts;
      Integration

            	
              29

            
	
              Section
      9.9.

            	
              Survival

            	
              29

            
	
              Section
      9.10.

            	
              Severability

            	
              29

            
	
              Section
      9.11.

            	
              Interest
      Rate Limitation

            	
              30

            
	
              Section
      9.12.

            	
              Patriot
      Act

            	
              30

            
	 
      	 
      	 
      

    

    

    ii

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    
      	
              Schedules

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Schedule
      4.5

            	 
      	
              -

            	 
      	
              Litigation
      Matters

            
	
              Schedule
      4.12

            	 
      	
              -

            	 
      	
              Financial
      Institution Subsidiaries

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Exhibits

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Exhibit
      A

            	 
      	
              -

            	 
      	
              Revolving
      Credit Note

            
	
              Exhibit
      2.2

            	 
      	
              -

            	 
      	
              Notice
      of Revolving Borrowing

            

    

    

    

    

    

    

    

    

    iii

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    REVOLVING CREDIT
AGREEMENT

    

    

    THIS REVOLVING CREDIT AGREEMENT
(this "Agreement") is made and entered into
as of May 27, 2008, by and between FNB UNITED CORP.,   a North
Carolina corporation (the “Borrower”), and
SUNTRUST BANK, a Georgia banking corporation (the "Lender").

    

    W I T N E S S E T
H:

    

    WHEREAS, the Borrower has
requested the Lender, and the Lender has agreed, subject to the terms and
conditions of this Agreement, to establish a 364-day revolving credit facility
in an original principal amount of $10,000,000;

    

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein contained, the
Borrower and the Lender agree as follows:

    

    

    ARTICLE
I

    

    DEFINITIONS;
CONSTRUCTION

    

    Section 1.1.  Definitions.  In
addition to the other terms defined herein, the following terms used herein
shall have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):

    

    “Acquisition”
shall mean any transaction or a series of related transactions for the
purpose of, or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of any Person, (b) the acquisition of greater than 50% of the capital stock,
partnership interest, membership interest or other equity of any Person, or
otherwise causing a Person to become a Subsidiary, or (c) a merger or
consolidation of, or any other combination with, another Person (other than a
Person that is a Subsidiary), provided that the Borrower or any Subsidiary is
the surviving entity.

    

     “Affiliate”
shall mean, as to any Person, any other Person that directly, or indirectly
through one or more intermediaries, Controls, is Controlled by, or is under
common Control with, such Person.

    

    “Availability
Period” shall mean the period from the Closing Date to the Commitment
Termination Date.

    

     “Base Rate”
shall mean the higher of (i) the per annum rate which the Lender publicly
announces from time to time to be its prime lending rate, as in effect from time
to time, and (ii) the Federal Funds Rate, as in effect from time to time,
plus one-half of one
percent (0.50%). The Lender's prime lending rate is a reference rate and does
not necessarily represent the lowest or best rate charged to
customers.  The Lender may make commercial loans or other loans at
rates of inter­est at, above or below the Lender's prime lend­ing
rate.  Each change in the Lender’s prime lending rate shall be
effective from and including the date such change is publicly announced as being
effective.

    

    “Base Rate
Loan” shall mean a Revolving Loan which bears interest at the Base
Rate.

    

    “Business
Day” shall mean (i) any day other than a Saturday, Sunday or other day on
which commercial banks in Atlanta, Georgia are authorized or required by law to
close and (ii) if such day relates to a borrowing or continuation of, a payment
or prepayment of principal or interest on, or an Interest Period for,
a

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

    Eurodollar
Loan or a notice with respect thereto, any day on which dealings in Dollars are
carried on in the London interbank market.

    

    “Call
Report” shall
mean, with respect to Financial Institution Subsidiary, the “Consolidated
Reports of Condition and Income” (FFIEC Form 031 or 041 or any successor form of
the Federal Financial Institutions Examination Council).

    

    “Change in
Control” shall mean (a) with respect to the Borrower,  the
occurrence of one or more of the following events: (i) any sale, lease, exchange
or other transfer (in a single transaction or a series of related transactions)
of all or substantially all of the assets of the Borrower to any Person or
"group" (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Commission thereunder in effect on the date hereof),  (ii) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or "group" (within the meaning of the Securities Exchange Act of 1934
and the rules of the Commission thereunder as in effect on the date hereof) of
25% or more of the outstanding shares of the voting stock of the Borrower or
(iii) occupation of a majority of the seats (other than vacant seats) on the
board of directors of the Borrower by Persons who were neither (A) nominated by
the current board of directors or (B) appointed by directors so nominated, or
(b) the Borrower shall own, directly or indirectly, less than 100% of the voting
stock of any Financial Institution Subsidiary.

    

    “Change in
Law” shall mean (i) the adoption of any applicable law, rule or
regulation after the date of this Agreement, (ii) any change in any applicable
law, rule or regulation, or any change in the interpretation or application
thereof, by any Governmental Authority after the date of this Agreement, or
(iii) compliance by the Lender (or for purposes of Section 2.10(b), by the Lender’s
holding company, if applicable) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.

    

    
      	
              “Closing
      Date” shall mean the date on which the conditions precedent set
      forth in Section
      3.1 and Section 3.2
      have been satisfied or waived in accordance with Section 9.2,
      and unless otherwise indicated, shall be the date of this
      Agreement.

            

    

    

    “Code”
shall mean the Internal Revenue Code of 1986, as amended and in effect from time
to time.

    

    “Commission”
shall mean the Securities and Exchange Commission, and any successor
thereto.

    

    “Commitment
Termination Date” shall mean May 22, 2009, or such later date as the
Revolving Commitment has been extended pursuant to Section 2.3, or earlier if
terminated pursuant to Section 2.3 or Section
8.1.

    

    “Control”
shall mean the power, directly or indi­rectly, to direct or cause the
direction of the man­agement and policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. The terms "Controlling",
"Controlled
by", and "under common
Control with" have meanings correlative thereto.

    

    “Default”
shall mean any condition or event that, with the giving of notice or the lapse
of time or both, would constitute an Event of De­fault.

    

    "Default
Interest" shall have the meaning set forth in Section 2.5(b).

    

    “Dollar(s)”
and the sign "$" shall
mean lawful money of the United States of America.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    “Environmental
Laws” shall mean all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
the management, Release or threatened Release of any Hazardous Material or to
health and safety matters.

    

    “Environmental
Liability” shall mean any liability, contingent or otherwise (including
any liability for damages, costs of environmental investigation and remediation,
costs of administrative oversight, fines, natural resource damages, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly resulting
from or based upon (a) any actual or alleged violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) any actual or alleged exposure to any
Hazardous Materials, (d) the Release or threatened Release of any Hazardous
Materials or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

    

    “ERISA”
shall mean the Employee Retirement Income Secu­rity Act of 1974, as amended
from time to time, and any successor statute.

    

    “ERISA
Affiliate” shall mean any trade or business (whether or not
incorporated), which, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for the purposes of
Section 302 of ERISA and Section  412 of the Code, is treated as a
single employer under Section 414 of the Code.

    

    "ERISA
Event" shall
mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Plan (other than an event for
which the 30-day notice period is waived); (b) the existence with respect to any
Plan of an “accumulated funding deficiency” (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Plan; (e) the receipt
by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator
appointed by the PBGC of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by the Borrower or any of its ERISA Affiliates of any liability with respect to
the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g)
the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt
by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

    

    “Eurodollar
Loan” shall mean a Revolving Loan which bears interest at a rate
determined by reference to LIBOR.

    

    “Event of
Default” shall have the meaning provided in
Article VIII.

    

     “Federal Funds
Rate” shall mean, for any day, the rate per annum (rounded upwards, if
necessary, to the next 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with member banks of the Federal Reserve System arranged by Federal
funds brokers, as published by the Federal Reserve Bank of New York on the next
succeeding Business Day or if such rate is not so published for any Business
Day, the Federal Funds Rate for such day shall be the average rounded upwards,
if necessary, to the next 1/100th of 1% of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by the Lender.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    “Financial
Institution Subsidiary” shall mean each of (a) CommunityONE Bank,
National Association, a national banking association, and (b) each other
Subsidiary of the Borrower existing on the Closing Date or thereafter formed or
acquired that is a depository institution with FDIC-insured
deposits.

    

    “Fiscal Quarter”
shall mean each fiscal quarter (including the fiscal quarter at the
fiscal year-end) of the Borrower and its Subsidiaries.

    

    “FR Report
Y-9C” shall mean the “Consolidated Financial Statements for Bank Holding
Companies-FR Y-9C” submitted by the Borrower as required by Section 5(c) of the
Bank Holding Company Act (12 U.S.C. 1844) and Section 225.5(b) of Regulation Y
[12 CFR 225.5(b)], or any successor or similar replacement report.

     

    “FR Report
Y9-LP” shall mean the “Parent Company Only Financial Statements for Large
Bank Holding Companies-FR Y-9LP” submitted by the Borrower as required by
Section 5(c) of the Bank Holding Company Act (12 U.S.C. 1844) and Section
225.5(b) of Regulation Y [12 CFR 225.5(b)], or any successor or similar
replacement report.

    

     “GAAP”
shall mean generally accepted accounting prin­ciples in the United States
applied on a consistent basis and subject to the terms of Section
1.2.

    

    “Governmental
Authority” shall mean the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

    

    “Hazardous
Materials” means
all explosive or radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.

    

    “Hedging
Agreements”
shall mean interest rate swap, cap or collar agreements, interest rate future or
option contracts, currency swap agreements, currency future or option contracts,
foreign exchange contracts (forward and/or spot), commodity agreements and other
similar agreements or arrangements designed to protect against fluctuations in
interest rates, currency values or commodity values.

    

    “Indebtedness”
of any Person shall mean, without dupli­cation (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business), (iv)
all obligations of such Person under any conditional sale or other title
retention agreement(s) relating to property acquired by such Person,
(v) all obligations of such Person under capital leases and all monetary
obligations of such Person under Synthetic Leases, (vi) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances or similar extensions of credit, (vii) all guarantees by such
Person of Indebtedness of others, (viii) all Indebtedness of a third party
secured by any Lien on property owned by such Person, whether or not such
Indebtedness has been assumed by such Person, (ix) all obligations of such
Person, contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any common stock of such Person, and (x) all net obligations
incurred by such Person under Hedging Agreements.

    

    “Interest
Period” shall mean, with
respect to any Eurodollar Loan, a period of three months, provided
that:

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    
      (i)    the
initial Interest Period for any such Loan shall commence on the date of such
Loan and each Interest Period occurring thereafter in respect of such Loan shall
commence on the day on which the next preceding Interest Period
expires;

    

    

    (ii)           if
any Interest Period would otherwise end on a day other than a Business Day, such
Interest Pe­riod shall be extended to the next succeeding Business Day,
unless such Business Day falls in another calendar month, in which case such
Interest Period would end on the next preceding Business Day;

    

    (iii)           any
Interest Period which begins on the last Business Day of a calendar month or on
a day for which there is no nu­merically corresponding day in the calendar
month at the end of such Interest Period shall end on the last Business Day of
such subsequent calendar month;

    

    
      	
               
      

            	
              (iv)

            	
              no
      Interest Period may extend beyond the Commitment Termination Date.

            

    

    

    “Investments”
shall have the meaning set forth in Section 7.6
hereof.

    

    "LIBOR "
shall mean for any applicable Interest Period with respect to a Eurodollar
Loan,  that rate per annum that is equal to the quotient
of:

    

    
      (i) the
rate per annum equal to the London interbank offered rate for deposits in U.S.
dollars for a three-month period, which rate appears on Reuters Screen LIBOR01
Page (or any successor page), or such similar service as determined by the
Lender that displays British Bankers' Association interest settlement rates for
deposits in U.S. Dollars, as of 11:00 A.M. (London, England time) two (2)
Business Days prior to the first day of such Interest Period; provided, that if no
such offered rate appears on such page, the rate used will be the per annum rate
of interest determined by the Lender to be the rate at which U.S. dollar
deposits for a three-month period are offered to the Lender in the London
Inter-Bank Market as of 10:00 A.M. (Atlanta, Georgia   time), on
the day which is two (2) Business Days prior to the first day of such Interest
Period, divided by

    

     

    (ii) a
percentage equal to 1.00 minus
the maximum reserve percentages (including any emergency, supplemental,
special or other marginal reserves) expressed as a decimal (rounded upward to
the next 1/100th of 1%) in effect on any day to which the Bank is subject with
respect to any Eurodollar loan pursuant to regulations issued by the Board of
Governors of the Federal Reserve System with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities" under Regulation
D).  This percentage will be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

     

    

    “Lien”
shall mean any mortgage, pledge, security inter­est, lien (statutory or
otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement,
or other arrangement having the practical effect of the foregoing or any
preference, priority or other security agree­ment or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having the same economic
effect as any of the foregoing).

    

    "Loan
Documents" shall mean, collectively, this Agree­ment, the Revolving
Credit Note, any Hedging Agreement entered into with Lender
in connection with the Indebtedness under this Agreement or the Revolving Credit
Note and any and all other instruments, agreements, documents and writings
executed by the Borrower in connection with any of the
foregoing.

    
      
         

      

      
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    “Material Adverse
Effect” shall mean, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences whether or not related, a material
adverse change in, or a material adverse effect on, (i) the business,
results of operations, finan­cial condition, assets, or
liabilities  of the Borrower and of the Borrower and its Subsidiaries
taken as a whole , (ii) the ability of the Borrower to perform any of its
obligations under the Loan Documents, (iii) the rights and remedies of the
Lender under any of the Loan Documents or (iv) the legality, validity or
enforceability of any of the Loan Documents.

    

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

    

    "Nonperforming
Assets" shall mean the sum of (a) Nonperforming Loans, (b) nonaccrual
investment securities and (c) Other Real Estate Owned (determined in accordance
with, and as set forth on, Borrower’s FR Report Y-9C).

    

    “Nonperforming
Loans” shall mean the sum of (a) nonaccrual loans and lease financing
receivables, (b) loans and lease financing receivables that are contractually
past due 90 days or more as to interest or principal and are still accruing
interest and (c) loans for which the terms have been modified due to a
deterioration in the financial position of the Borrower (determined in
accordance with, and as set forth on, Borrower’s FR Report Y-9C).

     

    

    “Notice of
Borrowing” shall have the meaning as set forth in Section
2.2.

    

    “Obligations”
shall mean all amounts owing by the Borrower to the Lender pursuant to or in
connection with this Agreement or any other Loan Document, including without
limitation, all principal, interest (including any interest accruing after the
filing of any petition in bankruptcy or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
all reimbursement obligations,  all net obligations under Hedging
Agreements, fees, expenses, indemnification and reimbursement payments, costs
and expenses (including all fees and expenses of counsel to the Lender incurred
pursuant to this Agreement or any other Loan Document), whether direct or
indirect, absolute or contingent, liquidated or unliqui­dated, now existing
or hereafter arising hereunder or thereunder, together with all renew­als,
extensions, modifications or refinancings thereof.

    

    “Other Real Estate
Owned” shall mean the sum of (a) real estate acquired in satisfaction of
debts previously contracted and (b) other real estate owned, as set forth on
Schedule HC-M of Borrower’s FR Report Y-9C.

     

    “Participant”
shall have the meaning set forth in Section 9.4(c).

    

     “Payment
Office” shall mean the office of the Lender located at 303 Peachtree
Street, Atlanta, Georgia 30308, or such other location as to which the Lender
shall have given written notice to the Borrower.

    

    “PBGC” shall mean the Pension
Benefit Guaranty Corpora­tion referred to and defined in ERISA, and any
successor entity performing similar functions.

    

     “Permitted
Encumbrances” shall mean

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (i)           Liens
imposed by law for taxes not yet due or which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves are being
maintained in accordance with GAAP;

    

    
      (ii)    statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and other Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;

    

    

    
      (iii)    pledges
and deposits made in the ordinary course of business in compliance with workers'
compensation, unemployment insurance and other social security laws or
regulations;

    

    

    
      (iv)    deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obli­gations of a like nature, in each case in the ordinary course of
business;

    

    

    
      (v)    judgment
and attachment liens not giving rise to an Event of Default or Liens created by
or existing from any litigation or legal proceeding that are currently being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP;
and

    

    

    
      (vi)    easements,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or materially interfere with the ordinary conduct of business
of the Borrower and its Subsidiaries taken as a whole;

    

    

    provided, that the
term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.

    

     “Person”
shall mean any individual, partnership, firm, corporation, association, joint
venture, limited liability company, trust or other entity, or any Governmental
Authority.

    

    “Plan”
means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.

    

     “Regulation D”
shall mean Regulation D of the Board of Governors of the Federal Reserve
System, as the same may be in effect from time to time, and any successor
regulations.

    

    “Release”
means any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or
fixture.

    

    “Responsible
Officer" shall mean any of the president, the chief executive officer,
the chief operating officer, the chief financial officer, the treasurer or a
vice president of the Borrower or such other representative of the Borrower as
may be designated in writing by any one of the foregoing with the consent of the
Lender; and, with respect to the financial covenants only, the chief financial
officer or the treasurer of the Borrower.

    

    “Revolving
Commitment”
shall mean the obligation of the Lender to make Revolving Loans to the Borrower
in an aggregate principal amount not exceeding $10,000,000.

    
      
         

      

      
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  “Revolving
Loan” shall mean a loan made by the Lender to the Borrower under its
Revolving Commitment, which will at all times be a Eurodollar Loan except under
circumstances set forth in Section 2.8 or Section 2.9
hereof.

    

    “Revolving Credit
Note” shall mean a promissory note of the Borrower payable to the order
of the Lender in the principal amount of the Revolving Commitment, in
substantially the form of Exhibit
A.

    

                     
      “Subsidiary”
shall mean, with respect to any Person (the “parent”),
any corporation, part­nership, joint venture, limited liability company,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, part­nership, joint venture, limited
liability company, association or other entity (i) of which
securities  or other ownership interests representing more than 30% of
the equity  or more than 30% of  the ordinary voting power,
or in the case of a partnership, more than 30% of the general partnership
interests are, as of such date, owned, Controlled or held, or (ii) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless
otherwise indicated, all references to "Subsidiary" hereunder shall mean a
Subsidiary of the Borrower.

    

    “Synthetic
Lease” of any Person shall mean (a) a lease designed to have the
characteristics of a loan for federal income tax purposes while obtaining
operating lease treatment for financial accounting purposes, or (b) an agreement
for the use or possession of property creating obligations that are not required
to appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person would be characterized by a court of competent
jurisdiction as indebtedness of such Person.

    

    “Tangible Net
Worth” shall mean, as of any date, the total shareholders’ equity of the
Borrower and its Subsidiaries that would be reflected on the Borrower's
consolidated balance sheet as of such date prepared in accordance with GAAP,
minus
the amount of all assets of the Borrower and its Subsidiaries that would be
classified as intangible assets (including without limitation goodwill and net
core deposit intangible) on the Borrower’s consolidated balance sheet as of such
date prepared in accordance with GAAP.

    

    “Total
Loans” shall mean for the Borrower on a consolidated basis the line
item  “Loans net of unearned income” set forth on the Borrower’s
consolidated balance sheet delivered pursuant to Section 5.1(a) and (b).

    

    “Withdrawal
Liability” shall mean liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

    

    Section 1.2.  Accounting
Terms and Determination.  Un­less otherwise defined or
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP as
in effect from time to time, applied on a basis consistent (except for such
changes approved by the Borrower's independent public accountants) with the most
recent audited consolidated financial statement of the Borrower delivered
pursuant to Section
5.1(a);
provided, that
if the Borrower notifies the Lender that the Borrower wishes to amend any
covenant in Article VI to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Lender notifies  the Borrower
that it wishes to amend Article VI for such purpose), then the Borrower's
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Lender.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    Section 1.3.  Terms
Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  The words "include", "includes" and "including" shall be
deemed to be followed by the phase "without limitation".  In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the word "to" means "to but
excluding". Unless the context requires otherwise (i) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (ii) any reference herein to any Person
shall be construed to include such Person's successors and permitted assigns,
(iii) the words "hereof", "herein" and "hereunder" and words of similar import
shall be construed to refer to this Agreement as a whole and not to any
particular provision hereof, (iv) all references to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles, Sections,
Exhibits and Schedules to this Agreement and (v) all references to a
specific time shall be construed to refer to the time in the city and state of
the Lender's principal office, unless otherwise indicated.

    

    

    ARTICLE II

    

    
       
AMOUNT AND TERMS OF THE
REVOLVING COMMITMEN

    

    

    Section 2.1.  Revolving
Loans and Revolving Credit Note.  (a) Subject to the terms and
conditions set forth herein, the Lender agrees to make Revolving Loans to the
Borrower, from time to time during the Availability Period, in
an aggregate principal amount outstanding at any time not to exceed the
Revolving Commitment. During the Availability Period, the Borrower shall be
entitled to borrow, prepay and reborrow Revolving Loans in accordance with the
terms and conditions of this Agreement; pro­vided, that
the Borrower may not borrow or reborrow should there exist a Default or Event of
Default.

    

    (b)           The
Borrower's obligation to pay the principal of, and interest on, Revolving Loans
shall be evidenced by the records of the Lender and by the Revolving Credit
Note.  The entries made in such records and/or on the schedule annexed
to the Revolving Credit Note shall be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded; provided, that the
failure or delay of the Lender in maintaining or making entries into any such
record or on such schedule or any error therein shall not in any manner affect
the obligation of the Borrower to repay the Revolving Loans (both principal and
unpaid accrued interest) in accordance with the terms of this
Agreement.

    

    Section
2.2.   Procedure
for Revolving Loans.  The Borrower shall give the Lender
written notice (or telephonic notice promptly confirmed in writing) of each
Revolving Loan substantially in the form of Exhibit 2.2 (a "Notice of
Borrowing") prior to 11:00 a.m. two (2) Business Days prior to which a
Revolving Loan is being requested. Each Notice of Borrowing shall be irrevocable
and shall specify:
(i) the principal amount of the Revolving Loan, (ii) the proposed date of the
Revolving Loan (which shall be a Business Day), and  (iii) if the
Revolving Loan is $1,000,000 or greater, its purpose (provided in sufficient
detail  that is  reasonably satisfactory to the
Lender).  The aggregate principal amount of each Revolving Loan shall
be not less than $500,000 or a larger multiple of $100,000, or in such lesser
amounts equal to the amount of the unused Revolving Commitment. Upon the
satisfaction of the applicable conditions set forth in Article III hereof, the
Lender will make the proceeds of each Revolving Loan available to the Borrower
at the Payment Office on the date specified in the applicable Notice of
Borrowing by crediting an account maintained by the Borrower with the Lender or
at the Borrower’s option, by effecting a wire transfer of such amount to an
account designated by the Borrower to the Lender.

    

    Section 2.3.  Optional
Reduction and Termination and/or Extension of Revolving
Commitment.

    
      
         

      

      
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    (a)           The
Revolving Commitment shall terminate on the Commitment Termination Date; provided, that the
Commitment Termination Date may be extended by the Lender for additional 364-day
periods in its sole discretion upon receiving a written request from the
Borrower not earlier than 60 days and not later than 45 days prior to then
existing Commitment Termination Date for an extension. Upon the receipt of such
request, the Lender shall use its best efforts to notify the Borrower not later
than 30 days prior to any Commitment Termination Date whether it will extend the
then existing Commitment Termination Date for an additional 364-day period;
provided, that
the failure of the Lender to give any such notice to the Borrower shall mean
that the then existing Commitment Termination Date will not be so
extended.

    

    (b)           Upon
at least two (2) Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) to the Lender (which notice shall be
irrevocable), the Borrower may reduce the Revolving Commitment in part or
terminate the Revolving Commitment in whole; provided, that (i)
any partial reduction pursuant to this Section 2.3 shall be
in an amount of at least $100,000 and any larger multiple of $50,000 and (ii) no
such reduction shall be permitted which would reduce the Revolving Commitment
(after giving effect thereto and any concurrent prepayments made under Section 2.4) to an
amount less than the outstanding Revolving Loans.

    

    Section 2.4.  Repayment
and Prepayments of Revolving Loans.

    

    (a)           The
outstanding principal amount of all Revolving Loans shall be due and payable
(together with accrued and unpaid interest thereon) on the Commitment
Termination Date.

    

    (b)           The
Borrower shall have the right at any time and from time to time to prepay any
Eurodollar Loan, in whole or in part, without premium or penalty, subject to
Section 2.12
hereof. Each partial prepayment shall be in an amount not less than $100,000 and
integral multiples thereof.

    

    (c)           Subject
to Sections 2.8
and 2.9, each
Eurodollar Loan shall automatically continue on the last day of an Interest
Period for another three-month Interest Period unless the Borrower elects to
repay in whole or in part such Eurodollar Loan on the last day of such Interest
Period. In the case of a partial repayment, such Eurodollar Loan shall be
continued for another one-month Interest Period in the principal amount
designated by the Borrower, subject to the minimum amounts specified in Section
2.2.

    

    Section 2.5.  Interest
on Loans.

    

    (a)           The
Borrower shall pay interest on each Eurodollar Loan at LIBOR, plus 1.50% per annum. If a
Base Rate Loan shall be outstanding under the circumstances set forth in Section 2.8 or 2.9, then the
Borrower shall pay interest on each Base Rate Loan at the Base Rate in effect
from time to time.

    

    (b)           While
an Event of Default exists or after acceleration, at the option of the Lender,
the Borrower shall pay interest ("Default
Interest") with respect to all Eurodollar Loans at the rate otherwise
applicable for the then-current Interest Pe­riod plus an additional 2% per
annum until the last day of such Interest Period, and thereafter, and with
respect to all Base Rate Loans and all other Obligations hereunder, at the Base
Rate, plus 2% per
annum.

    

    (c)           Interest
on the principal amount of all Revolving Loans shall accrue from and
includ­ing the date such Revolving Loans are made to but excluding the date
of any repay­ment thereof. Interest on all outstanding Eurodollar Loans
shall be payable on the last day of each Interest Period applicable thereto and
on the Commitment Termination Date. Interest on any Base Rate Loans shall be
payable on the last day of each calendar month and on the Commitment Termination
Date. All Default Interest shall be payable on demand.

    
      
         

      

      
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    (d)           The
Lender shall determine each interest rate applicable to the Revolving Loans
hereunder and shall promptly notify the Borrower of such rate in writing (or by
telephone, promptly con­firmed in writing).  Any such
determination shall be conclusive and binding for all purposes, absent manifest
error.

    

    Section 2.6.  Intentionally
Omitted.

    

    Section 2.7.  Computation
of Interest. All computations of interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable (to the extent computed on the basis of days
elapsed). Each determination by the Lender of an interest amount hereunder shall
be made in good faith and, except for manifest error, shall be final,
con­clusive and binding for all purposes.

    

    Section
2.8.   Inability
to Determine Interest Rates.  If prior to the commencement of
any Interest Period for any Eurodollar Loan, the Lender shall have determined
(which determination shall be conclusive and binding upon the Borrower) that (a) by reason of
circumstances affecting the relevant interbank market, ad­equate means do
not exist for ascertaining LIBOR, or (b) LIBOR does not adequately and fairly
reflect the cost to the Lender of making, funding or maintaining its Eurodollar
Loans, the Lender shall give written notice (or telephonic notice, promptly
confirmed in writing) to the Borrower as soon as practicable thereafter. Until
the Lender notifies the Borrower that the circumstances giv­ing rise to such
notice no longer exist, (x) the obligation of the Lender to make Eurodollar
Loans or to continue outstanding Revolving Loans as Eurodollar Loans shall be
suspended and (y) all such affected Eurodollar Loans shall be converted into
Base Rate Loans on the last day of the then current Interest Period unless the
Borrower elects to prepay such Revolving Loans in accordance with this
Agreement.

    

    Section 2.9.  Illegality.  If any Change in
Law shall make it unlawful or impossible for the Lender to make, maintain or
fund any Eurodollar Loan, the Lender shall promptly give notice thereof to the
Borrower, whereupon until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the obligation of
the Lender to make Eurodollar Loans, or to continue any outstanding Revolving
Loans as Eurodollar Loans, shall be suspended. Any new Revolving Loan shall be
made as a Base Rate Loan and all then outstanding Eurodollar Loans shall be
converted to a Base Rate Loan either (x) on the last day of the then current
Interest Period if the Lender may lawfully continue to maintain such Eurodollar
Loans to such date or (y) immediately if the Lender shall determine that it may
not lawfully continue to maintain such Eurodollar Loans to such
date.

    

    Section 2.10.  Increased
Costs.

    

    
      	
               
      

            	
              (a)

            	
              If
      any Change in Law shall:

            

    

    

    
      (i)           
impose,
modify or deem applicable any reserve, special deposit or similar requirement
that is not otherwise included in the determination of LIBOR hereunder against
assets of, deposits with or for the account of, or credit extended by, the
Lender (except any such reserve requirement reflected in the calculation of
LIBOR); or

    

    

    (ii)           impose
on the Lender or the eurodollar interbank market any other condition affecting
this Agreement or any Eurodollar Loans made by the Lender; and the result of the
foregoing is to increase the cost to the Lender of making, continuing or
maintaining a Eurodollar Loan or to reduce the amount received or receivable by
the Lender hereunder (whether of principal, interest or any other amount), then
the Borrower shall promptly pay, upon written notice from and demand by the
Lender, within five Business Days after the date of such notice and demand,
additional amount or amounts sufficient to compensate the Lender for such
additional costs incurred or reduction suffered.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    

    (b)           If
the Lender shall have determined that on or after the date of this Agreement any
Change in Law regarding capital requirements has or would have the ef­fect
of reducing the rate of return on the Lender's capital (or on the capital of the
Lender's parent corporation) as a consequence of its obligations here­under
to a level below that which the Lender or the Lender's parent corporation could
have achieved but for such Change in Law (taking into consideration the Lender's
policies or the policies of the Lender's parent corporation with respect to
capital adequacy) then, from time to time, within five (5) Business Days after
receipt by the Borrower of written de­mand by the Lender, the Borrower shall
pay to the Lender such additional amounts as will compensate the Lender or the
Lender's parent corporation for any such reduction suffered.

    

    (c)           A
certifi­cate of the Lender setting forth the amount or amounts necessary to
compensate the Lender or its parent corporation, as the case may be, specified
in paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be con­clusive, absent manifest error.  The Borrower shall
pay the Lender such amount or amounts within 10 days after receipt
thereof.

    

    (d)           Failure
or delay on the part of the Lender to demand compensation pursuant to this
Section shall not constitute a waiver of the Lender's right to demand such
compensation.

    

    Section
2.11.   Payments
Generally. The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, or of amounts payable under Section 2.10 or otherwise) prior to
12:00 noon, on the date when due, in immediately available funds, without
set-off or counterclaim. Any amounts received after such time on any date may,
in the discretion of the Lender, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest
thereon.  All such payments shall be made to the Lender at its Payment
Office.  If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be made payable for the period of such extension.  All
payments hereunder shall be made in Dollars.

    

    Section 2.12. Funding
Indemnity.  In the event of (a) the payment of any principal of
a Eurodollar Loan other than on the last day of the Interest Period applicable
thereto (including as a result of an Event of Default), or (b) the failure by
the Borrower to borrow, prepay, or continue any Eurodollar Loan on the date
specified in any applicable notice (regardless of whether such notice is
withdrawn or revoked), then, in any such event,  the Borrower shall
compensate the Lender, within five (5) Business Days after written demand from
the Lender,  for any loss, cost or expense attributable to such event.
In the case of a Eurodollar Loan, such loss, cost or expense shall be deemed to
include an amount determined by the Lender to be the excess, if any,
of  (A) the amount of interest that would have accrued on the
principal amount of such Eurodollar Loan if such event had not occurred at LIBOR
applicable to such Eurodollar Loan for the period from the date of such event to
the last day of the then current Interest Period therefor (or in the case of a
failure to borrow or continue, for the period that would have been the Interest
Period for such Eurodollar Loan) over (B) the amount of interest that would
accrue on the principal amount of such Eurodollar Loan for the same period if
LIBOR were set on the date such Eurodollar Loan was prepaid or converted or the
date on which the Borrower failed to borrow or continue
such  Eurodollar Loan.  A certifi­cate as to any
additional amount payable under this Section 2.12
submitted to the Borrower by the Lender shall be con­clusive, absent
manifest error.

    

    ARTICLE
III

    CONDITIONS PRECEDENT TO
REVOLVING LOANS

    

    Section
3.1.   Conditions
To Initial Revolving Loan.  The obligation of the Lender to
make the initial Revolving Loan hereunder is subject to the receipt by the
Lender of the following documents in form and substance reasonably satisfactory
to the Lender:

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    
      	
            	
              (a)

            	
              this
      Agreement duly executed and delivered by the
  Borrower;

            

    

    

    
      	
            	
              (b)

            	
              a
      duly executed Revolving Credit
Note;

            

    

    

    (c)           a
certificate of the Secretary or Assistant Secre­tary of the Borrower,
attaching and certifying copies of its bylaws and of the resolutions of its
board of directors, authorizing the execution, delivery and performance of the
Loan Documents and certifying the name, title and true signature of each officer
of the Borrower authorized to execute the Loan Documents;

    

    (d)           certified
copies of the articles of incorporation of the Borrower, together with good
standing certificates (or the equivalent) as may be avail­able from the
Secretary of State of the jurisdiction of incorporation of the Borrower and each
Subsidiary (and in the case of a Financial Institution Subsidiary which is a
national bank, from the Office of the Comptroller of the Currency) and each
other jurisdiction where the Borrower or such Subsidiary (other than a Financial
Institution Subsidiary which is a national bank) is required to be qualified to
do business as a foreign corporation;

    

    (e)           a
favorable written opinion of  Schell Bray Aycock Abel & Livingston
PLLC, counsel to the Borrower, addressed to the Lender, and covering such
matters relating to the Borrower, the Loan Documents and the transactions
contemplated therein as the Lender shall reasonably request; and

    

    (f)           a
duly executed funds disbursement agreement.

    

    Section
3.2.   Each
Revolving Loan.   The
obligation of the Lender to make each Revolving Loan is subject to the
satisfaction of the following conditions:

    

    (a)           at
the time of and immediately after giving effect to such Revolving Loan, no
Default or Event of Default shall exist;

    

    (b)           all
representations and warranties of the Borrower  herein shall be true
and correct in all material respects on and as of the date of such Revolving
Loan both before and after giving effect thereto;

    

    (c)           since
December 31, 2007, there shall have been no change which has had or could
reasonably be expected to have a Material Adverse Effect;

    

    (d)           the
Lender shall have received a duly executed Notice of Borrowing in accordance
with Section
2.2 hereof; and

    

    (e)           the
Lender shall have received such other docu­ments,  certificates,
information or legal opinions as it may reasonably request, all in form and
substance reasonably sat­isfactory to the Lender.

    

    The making of each Revolving Loan shall
be deemed to constitute a representation and warranty by the Borrower on the
date thereof as to the matters specified in paragraphs (a), (b) and (c) of this
Section 3.2.

    

    

    ARTICLE IV

    

    REPRESENTATIONS AND
WARRANTIES

    

    The
Borrower represents and warrants to the Lender as follows:

    
      
         

      

      
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    Section 4.1.  Existence;
Power. (a) Each of the Borrower and its Subsidiaries (other than
Community ONE Bank, any subsidiary organized as a Delaware or Connecticut
statutory trust in connection with the issuance of trust preferred securities
and Premier Investment Services, Inc. which is in the process of being
dissolved)  (i) is duly orga­nized, validly existing and in good
standing as a corporation under the laws of the jurisdiction of its
organization, (ii) ­has all requisite power and authority to carry on its
business as now conducted, and (iii) is duly qualified to do business, and
is in good standing, in each jurisdiction where such qualification is required,
except where a failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect.

    

    (b)
CommunityONE Bank, National Association, is a national bank chartered under the
laws of the United States and has all requisite power and authority to carry on
its business as now conducted.

    

    Section 4.2.  Organizational
Power; Authorization.  The execution, delivery and performance
by the Borrower of each of the Loan Documents are within the Borrower’s
corporate powers and have been duly authorized by all necessary corporate, and
if required, stockholder, action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by the Borrower will constitute, valid and binding
obligations of the Borrower, en­forceable against it in accordance with
their re­spective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.

    

    Section 4.3. Governmental
Approvals; No Conflicts. The execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents  (a) do not
require any consent or approval of, registration or filing with, or any action
by, any Governmental Authority, except those as have been obtained or made and
are in full force and effect, (b) will not violate any applicable law or
regulation or the articles of incorporation or by-laws of the Borrower or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, material agreement or other material instrument binding on
the Borrower or any of its Subsidiaries or any of its assets or give rise to a
right thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries, except Liens (if any)
created under the Loan Documents.

    

    Section 4.4.  Financial
Statements.  The Borrower has furnished to the Lender the
con­solidated balance sheet of the Borrower and its Subsidiaries as of
December 31, 2007 and the related consolidated statements of income, of
shareholders' equity and comprehensive income and of cash flows for the fiscal
year then ended, each as audited by Dixon Hughes PLLC.  Such financial
statements fairly present, in all material respects, the consolidated financial
position of the Borrower and its Subsidiaries as of such date and the
consolidated results of op­erations and cash flows for such period in
conformity with GAAP consistently applied. Since December 31, 2007, there have
been no changes with respect to the Borrower and its Subsidiaries which have had
or could reasonably
be expected to have, singly or in the aggregate, a Material Adverse
Effect.

    

    Section 4.5.  Litigation
Matters.  Except as set forth on Schedule 4.5 attached hereto,
no litigation, investigation or proceeding of or before any arbitrators or
Governmental Authorities is pending against, or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination that could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect or (ii) which in any manner draws
into question the validity or enforceability of this Agreement or any other Loan
Document.

    
      
         

      

      
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    Section 4.6. Compliance
with Laws and Agreements.  The Borrower and each Subsidiary is
in compliance with (a) all applicable laws (including without limitation all
federal and state banking statutes) and all rules, regulations (including
without limitation all federal and state banking regulations) and orders of any
Governmental Authority, and (b) all indentures, agreements or other instruments
binding upon it or its properties, except in each case where non-compliance,
either singly or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

    

    Section 4.7.  Investment
Company Act.  Neither the Borrower nor any of its Subsidiaries
is an "investment company", as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended.

    

    Section 4.8.  Taxes.  The
Borrower and its Subsidiaries have timely filed or caused to be filed all
Federal income tax returns and all other material tax returns that are
re­quired to be filed by them, and have paid all taxes shown to be due and
payable on such returns or on any assessments made against it or its property
and all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority, except (i) to the extent the failure to do so
would not have a Material Adverse Effect or (ii) where the same are
currently being contested in good faith by ap­propriate proceedings and for
which the Borrower or such Subsidiary, as the case may be, has set aside on its
books adequate reserves.

    

    Section 4.9.  Margin
Regulations.  None of the pro­ceeds of any of the Revolving
Loans will be used for "purchasing" or "carrying" any "margin stock" with the
respective meanings of each of such terms under Regulation U as now and from
time to time hereafter in effect or for any purpose that violates the provisions
of Regulation U.

    

    Section 4.10.  ERISA.  No
ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse
Effect.  The present value of all accumulated benefit obligations
under each Plan (based on the assumptions used for purposes of Statement of
Financial Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts,  exceed by more than
$500,000  the fair market value of the assets of all such Plan, and
the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial
Standards No. 87) did not,  as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $500,000 the fair market value of
the assets of all such underfunded Plans.

    

    Section 4.11.  Disclosure.
The Borrower has disclosed to the Lender all agreements, instruments, and
corporate or other restrictions to which the Borrower or any of its Subsidiaries
is subject, and all other matters known to any of them, that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect.  None of the reports (including without limitation all reports
that the Borrower is required to file with the Commission), financial
statements, certificates or other information furnished by or on behalf of the
Borrower to the Lender in connection with the negotiation of this Agreement or
any other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by any other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, taken as a whole, in light of the circumstances under which
they were made, not misleading.

    

    Section 4.12.  Subsidiaries.
Schedule 4.12 sets forth the name of, the ownership interest of the Borrower in,
and the jurisdiction of incorporation of, each Financial Institution Subsidiary
and each other Subsidiary (other than any subsidiary organized as a Delaware or
Connecticut statutory trust in connection with the issuance of trust preferred
securities and Premier Investment Services, Inc. which is in the process of
being dissolved), in each case as of the Closing Date.

    
      
         

      

      
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    Section 4.13. Dividend
Restrictions; Other Restrictions.  (a) No Financial Institution
Subsidiary has violated any applicable regulatory restrictions on dividends, and
no Governmental Authority has taken any action to restrict the payment of
dividends by any Financial Institution Subsidiary.

    

    (b) Neither the Borrower nor any
Subsidiary is under investigation by, or is operating under any restrictions
(excluding any restrictions on the payment of dividends referenced in subsection
(a) above) imposed by or agreed to with, any Governmental Authority, other than
routine examinations by such Governmental Authorities.

    

    Section 4.14.  Capital
Measures.  On the Closing
Date, both the Borrower and each Financial Institution Subsidiary have been, or
are deemed to have been, notified by the appropriate Governmental Authority
having regulatory authority over each of them that each of them is “adequately
capitalized”,  as determined in accordance with any regulations
established by such Governmental Authority.

    

    Section 4.15. FDIC
Insurance. The
deposits of each Financial Institution Subsidiary that is an “insured depository
institution” (within the meaning of § 12 U. S. C. 1831(c)) are insured by the
FDIC and no act has occurred that would adversely affect the status of such
Financial Institution Subsidiary as an FDIC insured bank.

    

    Section 4.16. OFAC. Neither the Borrower nor any
of its Subsidiaries (i) is a person whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of
such executive order, or is otherwise associated with any such person in any
manner violative of Section 2 or (iii) is a person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or
prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.

    

    Section 4.17. Patriot
Act. Each of the
Borrower and its Subsidiaries is in compliance, in all material respects, with
(i) the Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto and (ii) the Uniting And Strengthening America
By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA
Patriot Act of 2001).  No part of the proceeds of the Revolving Loans
will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as
amended.

    

    
 

    ARTICLE V

    

    AFFIRMATIVE
COVENANTS

    

    The
Borrower covenants and agrees that so long as the Lender has a Revolving
Commitment hereunder or the principal of and interest on any Revolving Loan or
any fee remains unpaid:

    

    Section 5.1.  Financial
Statements and Other Information. The Borrower will deliver to the
Lender:

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

                          (a)           as
soon as available and in any event within 90 days after the end of each fiscal
year of Borrower, a copy of the annual audited report for such fiscal year for
the Borrower and its Subsidiaries, containing a consolidated balance sheet and
the related consolidated statements of income, of shareholders' equity and
comprehensive income, and of cash flows (together with all footnotes thereto),
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and reported on by independent public
accountants of nationally recognized standing (without a "going concern" or like
qualification, exception or explanation  and without any qualification
or exception as to scope of such audit) to the effect that  such
financial statements present fairly in all material respects the financial
condition and the results of operations and cash flows on a consolidated basis
of the Borrower for such fiscal year in accordance with GAAP and that the
exami­nation by such accountants in connection with
such  financial statements has been made in accordance with generally
accepted auditing standards; provided, that the
requirements set forth in this clause (a) may be fulfilled by providing to the
Lender the report of the Borrower to the Commission on Form 10-K for the
applicable fiscal year;

    

    (b)           as
soon as avail­able and in any event within 45 days after the end of each of
the first three fiscal quarters of each fiscal year of the Borrower, an
unaudited balance sheet of the Borrower and its Subsidiaries on a consolidated
basis as of the end of such fiscal quarter and the related unaudited statements
of in­come and cash flows of the Borrower and its Subsidiaries on a
consolidated basis for such fiscal quarter and the then elapsed portion of such
fiscal year, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of Borrower's previous
fiscal year, all certified by the chief financial officer or treasurer of the Borrower as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes; provided, that the
requirements set forth in this clause (b) may be fulfilled by providing to the
Lender the report of the Borrower to the Commission on Form 10-Q for the
applicable fiscal quarter;

    

    (c)           concurrently
with the delivery of the financial statements referred to in clauses (a) and (b)
above, a certificate of a Responsible Officer, (i) certifying as to whether
there exists a Default or Event of De­fault on the date of such certificate,
and if a Default or an Event of Default then exists, specifying the details
thereof and the action which the Borrower has taken or proposes to take with
respect thereto, and (ii) setting forth in reasonable detail calculations
demonstrating compliance with Article VI;

    

    (d)           concurrently
with the delivery of the financial statements referred to in clauses (a) and (b)
above, duly executed copies of the Borrower’s then-current FR Report Y-9C and FR
Report Y-9LP and a duly executed copy of the then-current Call Report for each
Financial Institution Subsidiary;

    

    (e)           promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed with the Commission, or any
Governmental Authority succeeding to any or all functions of said Commission, or
with any national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; and

    

    (f)           promptly
following any request therefor, such other information regarding the results of
operations, business affairs and  financial condition of the Borrower
or any Subsidiary as the Lender may reasonably request.

    

    Documents
required to be delivered pursuant to Section 5.1(a) or (b) or Section 5.1(e) that are filed
with, or furnished to, the Commission electronically shall be deemed to have
been delivered to the Lender on the date (i) on which the Borrower posts such
documents or provides a link thereto on the Borrower’s website on the internet
at the website address set forth in Section 9.1 or (ii)
on which such documents are posted on the Borrower’s behalf on an internet or
intranet website, if any, to which the Lender has access; provided, that (A)
the Borrower shall deliver paper copies of such documents to the Lender if the
Lender so requests in writing

    
      
         

      

      
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    until a
further written notice is received by the Borrower from the Lender to cease
delivering paper copies and (B) the Borrower shall notify (which may be by
facsimile or electronic mail) the Lender of the posting of any such documents.
Notwithstanding anything contained herein, in every instance the Borrower shall
be required to provide paper copies of  the certificates required to
be delivered pursuant to Section 5.1(c)
hereof.

    

    Section 5.2.  Notices
of Material Events.  The Borrower will furnish to the Lender
prompt written notice of the following:

    

    
      	
               
      

            	
              (a)

            	
              the
      occurrence of any Default or Event of
Default;

            

    

    

    (b)           the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or, to the knowledge of the
Borrower, affecting the Borrower or any Subsidiary which could reasonably be
expected to result in a Material Adverse Effect;

    

    (c)           the
occurrence of any ERISA Event that alone, or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding
$500,000;

    

    (d)           any
material investigation of the Borrower or any Subsidiary by any Governmental
Agency having regulatory authority over the Borrower or any such Subsidiary
(other than routine examinations of the Borrower and/or any such
Subsidiary);

    

    (e)           the
issuance of any cease and desist order, written agreement, cancellation of
insurance or other public enforcement action by the FDIC or other Governmental
Authority having regulatory authority over the Borrower or any
Subsidiary;

    

    (f)           the
issuance of any memorandum of understanding or proposed disciplinary action by
or from any Governmental Authority having regulatory authority over the Borrower
or any Subsidiary, to the extent that the Borrower or any such Subsidiary is
permitted to disclose such information (provided that the Borrower shall take
all reasonable efforts to obtain any necessary regulatory
consents);

    

    (g)           any
other development that results in, or could reasonably be expected to result in,
a Material Adverse Effect.

    

    Each notice delivered under this
Section shall be accompanied by a written statement of a Responsible Officer
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

    

    Section 5.3.  Existence;
Conduct of Business.  The Borrower will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve,
renew and maintain in full force and effect its legal existence and its
respective rights, licenses, permits, privileges, fran­chises, patents,
copyrights, trademarks and trade names material to the conduct of its business
and will continue to engage in the same business as presently conducted or such
other businesses that are reasonably related thereto; provided, that
nothing in this Section shall prohibit any merger, consolidation, liquidation or
dissolution permitted under Section
7.3.

    

    Section 5.4.  Compliance
with Laws, Etc. The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and requirements of
any Governmental Authority (including without limitation all federal and state
banking statutes and regulations) applicable to its assets, except where the
failure to do so, either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.

    
      
         

      

      
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    Section 5.5.  Books and
Records. The Borrower will, and will cause each of its Subsidiaries to,
keep proper books
of record and account in which full, true and correct entries shall be made of
all dealings and transactions in relation to its business and activities to the
extent necessary to prepare the consolidated financial statements of Borrower in
conformity with GAAP.

    

    Section 5.6.  Visitation,
Inspection, Etc.  The Borrower will, and will cause each of its
Subsidiaries to, permit any representative of the Lender to visit and inspect
its properties, to examine its books and records and to make copies and take
ex­tracts therefrom, and to discuss its affairs, finances and ac­counts
with any of its officers and with its independent certified public accountants,
all at such reasonable times and as of­ten as the Lender may reasonably
request after rea­sonable prior notice to the Borrower.

    

    Section 5.7.  Maintenance
of Properties; Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to, (i) keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted,  except where
the failure to do so, either individually or it the aggregate, could not
reasonably be expected to result in a Material Adverse Effect and (ii) maintain
with financially sound and reputable insurance companies, insurance with respect
to its prop­erties and business, and the properties and business of its
Subsidiaries, against loss or damage of the kinds customarily insured against by
companies in the same or similar businesses operating in the same or similar
locations.

    

    (b) The
deposits of each Financial Institution Subsidiary will at all times be insured
by the Federal Deposit Insurance Corporation (“FDIC”).

    

    Section 5.8.  Use of
Proceeds .  The Borrower will use the proceeds of all Revolving
Loans for general working capital purposes. No part of the proceeds of any
Revolving Loan will be used, whether directly or indirectly, for any purpose
that would violate any rule or regulation of the Board of Governors of the
Federal Reserve System, including Regulation T, U or X.

    

    

    ARTICLE
VI

    

    FINANCIAL
COVENANTS

    

    The
Borrower covenants and agrees that so long as the Lender has its Revolving
Commitment hereunder or the principal of or interest on or any Revolving Loan
remains unpaid or any fee remains unpaid:

    

    Section 6.1. Return on
Average Assets. The Borrower on a consolidated basis will have at the end
of each Fiscal Quarter a Return on Average Assets (determined by reference to
the Borrower’s Form 10-Q or 10-K) of not less than 0.50%, determined by taking
the sum of the Return on Average Assets for such Fiscal Quarter and the previous
three Fiscal Quarters, divided by four
(4).

    

    Section 6.2.  Ratio of
Nonperforming Assets to Total Loans and OREO. The Borrower on a
consolidated basis will not permit at the end of each Fiscal Quarter
Nonperforming Assets (determined by reference to the Borrower’s FRY-9C Report)
to be greater than 2.00% of the sum of Total Loans (excluding loans held for
sale and determined by reference to the Borrower’s Form 10-Q or 10-K) and Other
Real Estate Owned (determined by reference to the Borrower’s FRY-9C
Report).

    

    Section 6.3.  Capital
Measures. (a) The
Borrower will have a Total Risk-based Capital Ratio of 9.50% or greater, a Tier
1 Risk-based Capital Ratio of 6.0% or greater, and a Tier 1Leverage Capital
Ratio of 5.0% or greater (each as defined by applicable  federal and
state regulations or orders), and will not be subject to any written agreement,
order, capital directive or prompt corrective action directive by
any

    
      
         

      

      
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    Governmental
Authority having regulatory authority over the Borrower or (ii) if required by
any Governmental Authority having regulatory authority over the Borrower, will
have such higher amounts of Total Risk-based Capital and Tier 1 Risk-based
Capital and/or such greater Leverage Capital Ratio as specified by such
Governmental Authority.

    

    (b) Not later than three (3) months
after the Closing Date, each Financial Institution Subsidiary will be “well
capitalized” for all applicable state and federal regulatory purposes at all
times, and such Financial Institution Subsidiary  (i) will have a
Total Risk-based Capital Ratio of 10.0% or greater,  a Tier 1
Risk-based Capital Ratio of 6.0% or greater, and a Tier 1 Leverage Capital Ratio
of 5.0% or greater (each as defined by applicable federal and state regulations
or orders) and not be subject to any written agreement, order, capital directive
or prompt corrective action directive by any Governmental Authority having
regulatory authority over such Financial Institution Subsidiary or (ii) if
required by any Governmental Authority having regulatory authority over such
Financial Institution Subsidiary  in order to remain “well
capitalized” and in compliance with all applicable regulatory requirements, will
have such higher amounts of Total Risk-based Capital and Tier 1 Risk-based
Capital and/or such greater Leverage Ratio as specified by such Governmental
Authority. For the period beginning on the Closing Date and ending three (3)
months thereafter, each Financial Institution Subsidiary  (i) will
have a Total Risk-based Capital Ratio of 9.5% or greater,  a Tier 1
Risk-based Capital Ratio of 6.0% or greater, and a Tier 1 Leverage Capital Ratio
of 5.0% or greater (each as defined by applicable federal and state regulations
or orders) and not be subject to any written agreement, order, capital directive
or prompt corrective action directive by any Governmental Authority having
regulatory authority over such Financial Institution Subsidiary.

    

    (c) Notwithstanding the foregoing, if
at any time any such Governmental Authority changes the definition of “well capitalized” either by
amending such ratios or otherwise, such amended definition, and any such amended
or new ratios, shall automatically be incorporated by reference into this
Agreement as the minimum standard for the Borrower (except with respect to it
Total Risk-based Capital Ratio, in which case the Lender has the right to amend
such ratio in subparagraph (a) above in its sole discretion) or any Financial
Institution Subsidiary, as the case may be, on and as of the date that any such
amendment becomes effective by applicable statute, regulation, order or
otherwise.

    

    

    ARTICLE  VII

    

    NEGATIVE
COVENANTS

    

    The
Borrower covenants and agrees that so long as the Lender has its Revolving
Commitment hereunder or the principal of or interest on any Revolving Loan
remains unpaid or any fee remains unpaid:

    

    Section 7.1.  Indebtedness.
The Borrower will not, and will not permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any Indebtedness, except:

    

    (a)           Indebtedness
created pursuant to the Loan Documents;

    

    (b)           Indebtedness
of Financial Institution Subsidiaries (i) to the Federal Reserve Board or to the
Federal Home Loan Bank Board, (ii) constituting federal funds purchased and
securities sold under agreements to repurchase incurred in the ordinary course
of business, or  (iii) otherwise incurred in the ordinary course of
their banking business;

    

    (c)           Indebtedness
constituting obligations of the Borrower and any Financial Institution
Subsidiary under debentures, indentures, trust agreements and guarantees in
connection with the issuance by such Persons of trust preferred
securities;

    
      
         

      

      
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    (d)           (i)
Indebtedness owed by the Borrower or any “affiliate” of the Borrower (as defined
in Regulation W of the FRB and sections 23A and 23B of the Federal Reserve Act)
to any Financial Institution Subsidiary not in violation of Regulation W of the
FRB (as amended, supplemented or otherwise modified), or (ii) Indebtedness owed
by any Subsidiary to the Borrower or (iii) Indebtedness owed by the Borrower or
any Subsidiary to a Subsidiary other than a Financial Institution
Subsidiary;

    

    (e)           Any
other Indebtedness that is subordinated to the Indebtedness under this Agreement
which contains terms, covenants and conditions in form and substance reasonably
satisfactory to the Lender as evidenced by its prior written approval
thereof;

    

    (f)           Indebtedness
incurred under (i) Hedging Agreements entered into in the ordinary course of
business to hedge or mitigate risks to which the Borrower or any Subsidiary is
exposed in the conduct of its business or the management of its liabilities and
(ii) Hedging Agreements entered into by any Financial Institution Subsidiary as
a counterparty in the ordinary course of its business; and

    

    (g)           Indebtedness
of any Person purchased in a permitted Acquisition as long as the Borrower is in
compliance both before and after such Acquisition with the covenants contained
in Article VI and no Default or Event of Default exists or would result from
such Acquisition, provided that the amount of such Indebtedness together with
the amount of such Indebtedness permitted in Section 7.1(c)(iii) shall not
exceed $5,000,000 in the aggregate.

    

    Section 7.2.  Negative
Pledge .  The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its
assets or property now owned or hereafter acquired, except:

    

     (a)           Liens
(if any) created in favor of the Lender pursuant to the Loan
Documents;

    

    
      	
               
      

            	
              (b)

            	
              Permitted
      Encumbrances;

            

    

    

    (c)           Liens
granted to secure any Indebtedness incurred pursuant to Section 7.1(c) ( as long
as in the case of Section 7.1(c)(ii), such Lien shall only extend to those
securities sold) and Section 7.1(e); and

    

    (d)           extensions,
renewals, or replacements of any Lien referred to in paragraphs (a), (b) and (c)
of this Section.

    

    Provided, that at no time and under
no circumstances will the Borrower permit any Lien on the capital stock of any
Financial Institution Subsidiary.

    

    Section 7.3.  Fundamental
Changes.

    

    (a)           The
Borrower will not, and will not permit any Subsidiary to, merge into or
consolidate into any other Person, or permit any other Person to merge into or
consolidate with it, or sell, lease, transfer or otherwise dispose of (in a
single transaction or a series of transactions) all or substantially all of its
assets (other than in the ordinary course of business) or all or substantially
all of the stock of any of its Subsidiaries or liquidate or
dissolve; provided, that if at the time thereof
and immediately after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing, (i) the Borrower or any Subsidiary may
merge with a Person which is not affiliated with the Borrower if the Borrower
(or such Subsidiary if the Borrower is not a party to such merger) is the
surviving Person, (ii) any Subsidiary may merge into another Subsidiary provided
that in the case of a Financial Institution Subsidiary, a Financial Institution
Subsidiary is the surviving Person, (iii) any Subsidiary may sell, lease,
transfer or dispose of its assets to (A)

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    the
Borrower,  (B) in the case of any Subsidiary that is not a Financial
Institution Subsidiary, to any other Subsidiary and (C) in the case of a
Financial Institution Subsidiary, to another  Financial Institution
Subsidiary or to a Subsidiary which is not a Financial Institution Subsidiary
provided that such Subsidiary is a direct or indirect Subsidiary of the selling
Financial Institution Subsidiary, (iv) any Subsidiary (other than a Financial
Institution Subsidiary) or the assets of any Subsidiary may be sold or otherwise
transferred so long as the aggregate value of such assets or of such Subsidiary
shall not exceed $500,000 in any fiscal year, provided, that any
Financial Institution Subsidiary may sell loans, investments or other assets in
the ordinary course of its business and (v) notwithstanding anything to the
contrary in any of the foregoing, the Borrower or any Subsidiary may enter into
a sale leaseback transaction of any of its real property, now owned or hereafter
acquired.

    

    (b)           The
Borrower will not, and will not permit any of its Subsidiaries to, engage to any
material extent in any business other than businesses of the type conducted by
the Borrower and its Subsidiaries on the date hereof and businesses reasonably
related thereto and any types of businesses that are expressly permitted by any
Governmental Authority having jurisdiction over the Borrower and/or any
Financial Institutions Subsidiary.

    

    Section 7.4.  Restricted
Payments. Upon the occurrence and
during the continuation of any Default or Event of Default, the Borrower will not, and will not permit its
Subsidiaries to, declare or make, or
agree to pay or make, directly or indirectly, any dividend on any class of its
stock, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, retirement, defeasance or
other acquisition of, any shares of common stock or Indebtedness subordinated to
the Obligations of the Borrower or any options, warrants, or other rights to
purchase such common stock or such Indebtedness, whether now or hereafter
outstanding; provided, that any
Subsidiary may pay dividends to the Borrower or to its parent company at any
time.

    

    Section 7.5.  Restrictive
Agreements.  The Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Subsidiary to create, incur or permit any Lien
upon any of its assets or properties, whether now owned or hereafter acquired,
or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to its common stock, to make or repay loans or
advances to the Borrower or any other Subsidiary, to guarantee Indebtedness of
the Borrower or any other Subsidiary or to transfer any of its prop­erty or
assets to the Borrower or any Subsidiary of the Borrower; provided, that (i)
the foregoing shall not apply to restrictions or conditions imposed by law or
by this Agreement or any other Loan Document, (ii) the foregoing shall
not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is sold and such
sale is permitted hereunder, and (iii) clause (a) shall not apply to customary
provisions in leases restricting the assignment thereof.

    

    Section 7.6.  Investments,
Etc  The Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly-owned Subsidiary prior to such merger),
any common stock, Indebtedness or other securities (including any option,
warrant, or other right to acquire any of the foregoing) of, make or permit to
exist any loans or advances to, Guarantee any obligations of, or make or permit
to exist any investment or any other interest in, any other Person (all of the
foregoing being collectively called "Investments"),
or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person that constitute a business unit,
except:

    

    (a)           Investments
existing on the date hereof (including Investments in Subsidiaries) that have
been disclosed to the Lender and/or that are set forth on the most current
financial statements that have been delivered to the Lender;

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    (b)           Investments
purchased in the ordinary course of business by any Financial Institution
Subsidiary;

    

    (c)           Investments
made by the Borrower in or to any Subsidiary and by any Subsidiary in or to the
Borrower or in or to another Subsidiary, including without limitation any such
Investment made in a Subsidiary established in connection with the issuance of
trust preferred securities;

    

    (d)           Investments
made for the purpose of making or consummating an Acquisition; provided, that
(i) after giving effect to such Acquisition, no Default or Event of Default
shall have occurred and be continuing, (ii) such Acquisitions are undertaken in
accordance with all applicable laws, and (iii) the prior written consent or
approval of such Acquisition of the board of directors or equivalent governing
body of the Person being acquired. Upon the Borrower or any Subsidiary’s
Investment of fifty percent or more of the voting stock any Person that is a
regulated financial institution, such Person shall become a Financial
Institution Subsidiary for purposes of this Agreement; and

    

    
      	
               
      

            	
              (e)

            	
              Other
      Investments permitted by applicable laws and regulations.

            

    

    

    

    

    ARTICLE VIII

    

    EVENTS OF
DEFAULT

    

    Section 8.1.  Events of
Default. If
any of the following events (each an "Event of Default")
shall occur:

    

    (a)           the
Borrower shall fail to pay any principal of any Revolving Loan when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment or otherwise; or

    

    (b)           the
Borrower shall fail to pay any interest on any Revolving Loan or any other
amount (other than an amount payable under clause (a) of this Article)
pay­able under this Agreement or any other Loan Document, when and as the
same shall become due and payable, and such failure shall continue unremedied
for a period of three (3) days; or

    

    (c)           any
representation or warranty made or deemed made by or on behalf of the Borrower
or any Subsidiary in or in connection with this Agreement or any other Loan
Document (including the Sched­ules attached thereto) and any amendments or
modifications hereof or waivers hereunder, or in any certificate, report,
financial statement or other document sub­mitted to the Lender by the
Borrower  or any representative of the Borrower  pursuant to
or in connection with this Agreement shall prove to be incorrect in any material
respect when made
or deemed made or submitted; or

    

    (d)           the
Borrower shall fail to observe or perform any covenant or agreement contained in
Section 5.2 (a)
or (e),
Section 5.3
(with respect to the Borrower’s existence), or Articles VI or VII;
or

    

    (e)           the
Borrower shall fail to observe or perform any covenant or agreement contained
(i) in this Agreement (other than those referred to in clauses (a), (b) and (d)
above), and such failure shall remain unremedied for 30 days after the
earlier of (x) any Responsible Officer of the Borrower becomes aware of
such failure, or (y)  notice thereof shall have been given to the Borrower
by the Lender or any Lender or (ii) in any other Loan Document (after taking
into consideration any applicable grace periods); or

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    (f)           the
Borrower or any Subsidiary (whether as primary obligor or as guarantor or other
surety) shall fail to pay any principal of or premium or interest on any
Indebtedness owed to the Bank (including without limitation any Hedging
Agreement or any letter of credit) in any amount or any other Indebtedness owed
to any other Person greater than $500,000  that is outstanding, when
and as the same shall become due and payable (whether at scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument evidencing such Indebtedness; or any other event shall occur or
condition shall exist under any agreement or instrument relating to such
Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or permit the acceleration of, the maturity of such
Indebtedness (without regard to whether such holders or other Person shall have
exercised or waived their right to do so); or any such Indebtedness shall be
declared to be due and payable; or required to be prepaid or redeemed
(other  than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or any offer to prepay, redeem, purchase or
defease such Indebtedness shall be required to be made, in each case prior to
the stated maturity thereof; or

    

    (g)           the
Borrower or any Subsidiary shall (i) commence a voluntary case or other
proceeding or file any petition seeking liquidation, reorganization or other
relief under any federal, state or foreign bankruptcy, insolvency or other
similar law now or hereafter in effect  or seeking the appointment of
a custodian, trustee, receiver, liquidator or other similar official of it or
any substantial part of its property, (ii) consent to the institution of , or
fail to contest in a timely and appropriate manner, any proceeding or petition
described in clause (i) of this Section, (iii) apply for or consent to the
appointment of a custodian, trustee, receiver, liquidator or other similar
official for the Borrower or any such Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, or (vi) take any action for the purpose of
effecting  any of the foregoing; or

    

    (h)           an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of the
Borrower or any  Subsidiary or its debts, or any substantial part of
its assets,  under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect  or (ii)
the appointment of a custodian, trustee, receiver, liquidator or other similar
official for the Borrower or any Subsidiary or for a substantial part of its
assets, and in any such case, such  proceeding or petition shall
remain undismissed for a period of 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or

    

    (i)           the
Borrower or any Subsidiary shall become unable to pay, shall admit in writing
its inability to pay, or shall fail to pay, its debts as they become due;
or

    

    (j)           an
ERISA Event shall have occurred that, in the opinion of the Lender, when taken
together with other ERISA Events that have occurred, could reasonably be
expected to result in liability to the Borrower and the Subsidiaries in an
aggregate amount exceeding $500,000; or

    

    (k)           any judgment or order for
the payment of money in excess of $500,000 in the aggregate shall be rendered
against the Borrower or any Subsidiary, and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order or (ii)
there shall be a period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

    

    (l)           any non-monetary judgment or order shall
be rendered against the Borrower or any Subsidiary that could reasonably be
expected to have a Material Adverse Effect, and there shall be a period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    

                       
(m)           a Change in
Control shall occur or exist; or

    

    (n)           any
Governmental Authority having regulatory authority over the Borrower or any
Subsidiary shall impose any restriction upon the payment of dividends from any
such Subsidiary to the Borrower; or

    

    (o)           any
Financial Institution Subsidiary shall cease for any reason to be an insured
bank under the Federal Deposit Insurance Act, as amended; or

    

    (p)           the
FDIC or any other federal or state regulatory authority shall issue a cease and
desist order or take other action of a disciplinary or remedial nature against
the Borrower or any Financial Institution Subsidiary  and such order
or other action could reasonably be expected to have a Material Adverse Effect
or there shall occur with respect to any Financial Institution Subsidiary any
event that is grounds for the required submission of a capital restoration plan
under 12 U. S. C. §1831o (e)(2) and the regulations thereunder; or

    

    (q)           the
Borrower or any Financial Institution Subsidiary shall enter into a punitive
written agreement with any Governmental Authority having regulatory authority
over such Person for any reason;

    

    then, and
in every such event (other than an event with respect to the Borrower or any
Subsidiary described in clause (g) or (h) of this Section) and at any time
thereafter during the continuance of such event, the Lender may, by notice to
the Borrower, take any or all of the follow­ing actions, at the same or
different times:
(i) terminate its Revolving Commitment; (ii) declare the
principal of and any accrued interest on the Revolving Loans, and all other
Obligations owing hereunder, to be, whereupon the same shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower and (iii) exercise all
remedies contained in any other Loan Document; and  that, if an Event
of Default specified in either clause (g) or (h)  shall occur, the
Revolving Commitment  shall automatically terminate and the principal
of the Revolving Loans then outstanding, together with accrued interest thereon,
and  all fees, and all other Obligations shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.

    

    ARTICLE IX

    

    MISCELLANEOUS

    

    Section 9.1.  Notices.

    

    (a)           Except
in the case of notices and other communications expressly permitted to be given
by telephone, all notices and other communications to any party herein to be
effective shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:

    

    
      	 
      	
              To
      the Borrower:

            	
              FNB
      United Corp.

            
	 
      	 
      	
              150
      South Fayetteville Street

            
	 
      	 
      	
              Asheboro,
      North Carolina 27203

            
	 
      	 
      	 
      
	 
      	 
      	
              Attn:
      Mark A. Severson, Treasurer

            
	 
      	 
      	
              Telephone
      Number: (336) 626-8351

            
	 
      	 
      	
              Fax
      Number: (336) 328-1633

            

    

    

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    

    
      	 
      	 
      	
              Email:
      mark.severson@myyesbank.com

            
	 
      	 
      	
              Website:
      www.myyesbank.com

            
	 
      	 
      	 
      
	 
      	
              To
      the Lender:

            	
              SunTrust
      Bank

            
	 
      	 
      	
              303
      Peachtree Street, 3rd
      Floor

            
	 
      	 
      	
              Atlanta,
      Georgia 30308

            
	 
      	 
      	 
      
	 
      	 
      	
              Attn:
      Susan Thigpen

            
	 
      	 
      	
              Telephone
      Number: (404) 588-7270

            
	 
      	 
      	
              Fax
      Number: (404) 581-1775

            
	 
      	 
      	
              Email:
      Susan.Thigpen@suntrust.com

            

    

    

    

    Notices
sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient).

    

    Any party
hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All
such notices and other communications shall, when transmitted by overnight
delivery, or faxed, be effective when delivered for overnight (next-day)
delivery, or transmitted in legible form by facsimile machine, respectively, or
if mailed, upon the third Business Day after the date deposited into the mails
or if delivered, upon delivery; provided, that
notices delivered to the Lender shall not be effective until actually received
by the Lender at its address specified in this Section 9.1. With
respect to any communications delivered or furnished by electronic communication
under Section
5.1, such communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement); provided, that if
such communications are not sent during the normal business hours of the
recipient, such communications shall be deemed to have been sent at the opening
of business on the next Business Day for the recipient, and (ii) 
communications posted to an internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such
communication is available and identifying the website address
therefor.

    

    (b)           Any
agreement of the Lender herein to receive certain notices by telephone or
facsimile is solely for the convenience and at the request of the
Borrower.  The Lender shall be entitled to rely on the authority of
any Person purporting to be a Person authorized by the Borrower to give such
notice and the Lender shall not have any liability to the Borrower or other
Person on account of any action taken or not taken by the Lender in reliance
upon such telephonic or facsimile notice.  The obligation of the
Borrower to repay the Revolving Loans and all other Obligations hereunder shall
not be affected in any way or to any extent by any failure of the Lender to
receive written confirmation of any telephonic or facsimile notice or the
receipt by the Lender of a confirmation which is at variance with the terms
understood by the Lender to be contained in any such telephonic or facsimile
notice.

    

    Section 9.2.  Waiver;
Amendments.

    

    (a)           No
failure or delay by the Lender in exercising any right or power hereunder or any
other Loan Document, and no course of dealing between the Borrower and the
Lender, shall
oper­ate as a waiver thereof, nor shall any single or partial exercise of
any such right or power or any abandonment or  discontinuance of steps
to enforce such right or power, preclude any other or further exercise thereof
or the exer­cise of any other right or power hereunder or
thereunder.  The rights and remedies of the Lender
hereunder

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    and under
the other Loan Documents are cumulative and are not exclu­sive of any rights
or remedies provided by law. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Revolving Loan shall not be
construed as a waiver of any Default or Event of Default, regardless of whether
the Lender may have had notice or knowledge of such Default or Event of Default
at the time.

    

    (b)           No
amendment or waiver of any provision of this Agreement or the other Loan
Documents, nor consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Borrower and the Lender and then such waiver or consent shall be effective only
in the specific instance and for the spe­cific purpose for which
given.

    

    Section 9.3.  Expenses;
Indemnification.

    

    (a)           The
Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of the
Lender (including, without limitation, the reasonable fees, charges and
disbursements of outside counsel and the allocated cost of inside counsel) in
connection with the preparation and administration of the Loan Documents and any
amendments, modifications or waivers thereof (whether or not the transactions
contemplated in this Agreement or any other Loan Document shall be consummated),
and (ii) all out-of-pocket costs and expenses (including, without limitation,
the reasonable fees, charges and disbursements of outside coun­sel and the
allocated cost of inside counsel) incurred by the Lender in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Revolving
Loans made hereunder, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Revolving
Loans.

    

                              (b)The Borrower shall indemnify the
Lender and each Affiliate of the Lender, and each officer, director, employee,
agents and advisors of the Lender and each Affiliate of the Lender (each, an
"Indemnitee")
against, and hold each of them harmless from, any and all costs, losses,
liabilities, claims, damages and related expenses, including the reasonable
fees, charges and disbursements of any counsel for any Indemnitee, which may be
incurred by any Indemnitee,  or asserted against any Indemnitee by the
Borrower or any third Person, arising out of, in connection with or as a result
of (i) the execution or delivery of any this Agreement or any other agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation  of any of the
transactions contemplated hereby, (ii) any Revolving Loan or any actual or
proposed use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned by the
Borrower  or any Subsidiary or any Environmental
Liability  related in any way to the Borrower or any Subsidiary or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether brought by the Borrower or any third Person and whether
based on contract, tort, or any other theory  and regardless of
whether any Indemnitee is a party thereto; provided,  that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined  by a
court of competent jurisdiction in a final and nonappealable judgment to have
resulted from the  gross negligence or willful misconduct of such
Indemnitee.

    

                              (c)The Borrower shall pay, and hold the
Lender harmless from and against, any and all present and future stamp,
documentary, and other similar taxes with re­spect to this Agreement and any
other Loan Documents, any collateral described therein, or any payments due
thereunder, and save the Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
taxes.

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

    (d)           To
the extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to actual or
direct damages) arising out of, in connection with or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the transactions
contemplated therein, any Loan or the Letter of Credit  or the use of
proceeds thereof.

    

    (e)           All
amounts due under this Section shall be payable promptly after written demand
therefor.

    

    Section 9.4. Successors
and Assigns.

    

    (a)           The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights hereunder without the
prior written consent of the Lender (and any attempted assignment or transfer by
the Borrower without such consent shall be null and void).

    

    (b)           The
Lender may at any time sell participations or assignments in all or a portion of
its rights and obligations under this Agreement and the other Loan Documents
(including all or a portion of its Revolving Commitment and the Revolving Loans
at the time owing to it).

    

    (c) The
Lender may at any time pledge or assign a security interest in all or any
por­tion of its rights under this Agreement and the Revolving Credit Note to
secure its obligations to a Federal Reserve Bank without complying with this
Section; provided, that no
such pledge or assignment shall release the Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

    

    

    Section 9.5.  Governing
Law; Jurisdic­tion; Consent to Service of Process.

    

    (a)           This
Agreement and the other Loan Documents shall be construed in accordance with and
be governed by the law (without giving effect to the conflict of law principles
thereof) of the State of North Carolina.

    

    (b)           The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the non-exclusive jurisdiction of any Federal and/or state court
(including without limitation the North Carolina Business Court, if
applicable)  located in the State of North Carolina and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or any other Loan Document or the transactions contemplated
hereby or thereby, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such North Carolina state court (including the North Carolina Business Court)
or, to the extent permitted by applicable law, such Federal court. Each of the
parties hereto agrees that a final nonappealable judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against the Borrower or its properties in the courts of
any jurisdiction.

    

    (c)           The
Borrower ir­­revocably and unconditionally waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action
or proceeding described in paragraph (b) of this Section and brought in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    

    (d)           Each
party to this Agreement irrevocably consents to the service of process in the
manner provided for notices in Section
9.1.  Nothing in this Agreement or in any other Loan Document
will affect the right of any party hereto to serve process in any other manner
permitted by law.

    

    Section 9.6.  WAIVER OF
JURY TRIAL.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

    

    Section
9.7.   Right of
Setoff.  In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, the Lender
shall have the right, at any time or from time to time upon the occurrence and
during the continuance of an Event of Default, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, to set off and apply against all deposits (general
or special, time or demand, provisional or final) of the Borrower at any time
held or other obligations at any time owing by the Lender to or for the credit
or the account of the Borrower against any and all Obligations held by the
Lender, irrespective of whether the Lender shall have made demand hereunder and
although such Obligations may be unmatured.  The Lender agrees
promptly to notify the Borrower after any such set-off and any application made
by the Lender; provided, that the
failure to give such notice shall not affect the validity of such set-off and
application.

    

    Section
9.8.   Counterparts;
Integration.  This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. This Agreement, the other Loan
Documents, and any separate letter agreement(s) relating to any fees payable to
the Lender constitute the entire agreement among the parties hereto and thereto
regarding the subject matters hereof and thereof and supersede all prior
agreements and understandings, oral or written, regarding such subject
matters.

    

    Section 9.9.  Survival.
All covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making  of any Revolving Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Revolving Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Revolving
Commitment has not expired or terminated.  The provisions of Sections 2.10 and
9.3 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Revolving Loans, the
expiration or termination of the Revolving Commitment or the termination of this
Agreement or any provision hereof.  All representations and warranties
made herein, in the cer­tifi­cates, reports, notices, and other
documents delivered pursu­ant to this Agreement shall survive the execution
and delivery of this Agreement and the other Loan Documents, and the making of
the Revolving Loans.

    

    Section 9.10.  Severability.  Any
provision of this Agreement ­or any other Loan Document held to be illegal,
invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without affecting the legality, validity or enforceability of the remaining
provisions hereof or thereof; and the illegality, invalidity or unenforceability
of a particular

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    provision
in a particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

    

    Section 9.11.  Interest
Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Revolving Loan,
together with all fees, charges and other amounts which may be treated as
interest on such Loan under applicable law (collectively, the "Charges"),
shall exceed the maximum lawful rate of interest (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved
by the Lender in accordance with applicable law, the rate of interest payable in
respect of such Revolving Loan hereunder, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate and, to the extent lawful,
the interest and Charges  that would have been payable in respect of
such Revolving Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to the Lender in
respect of other Revolving Loans or periods shall be increased (but not above
the Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Rate to the date of repayment, shall have been
received by the Lender.

    

    Section 9.12.  Patriot
Act.   The Lender
hereby notifies the Borrower that pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Patriot
Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow the Lender  to identify
the Borrower in accordance with the Patriot Act.  The Borrower shall,
and shall cause each of its Subsidiaries to, provide to the extent commercially
reasonable, such information and take such other actions as are reasonably
requested by the Lender in order to assist the Lender in maintaining compliance
with the Patriot Act.

    

    

    

    

    

    

    [Remainder
of Page Intentionally Left Blank]

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed under seal in the
case of the Borrower by their respective authorized officers as of the day and
year first above written.

    

    
      	 
      	
              FNB
      UNITED CORP.

            
	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Michael C. Miller

            
	 
      	 
      	
              Name:  Michael
      C. Miller

            
	 
      	 
      	
              Title:  President

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              [SEAL]

            
	 
      	 
      	 
      
	 
      	
              SUNTRUST
      BANK

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Susan M. Thigpen

            
	 
      	 
      	
              Name:  Susan
      M. Thigpen

            
	 
      	 
      	
              Title:  Director

            

    

    

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    

    SCHEDULE
4.5

    

    LITIGATION
MATTERS

    

    

    

    None

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    Schedule
4.5

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    SCHEDULE  4.12

    

    

    Financial Institution
Subsidiaries

    

    CommunityONE
Bank, National Association, a national banking association

    

    Other
Subsidiaries

    
      	 
      	 
      	 
      
	
              Name

            	
              Jurisdiction of
      Incorporation

            	
              Ownership

            
	 
      	 
      	 
      
	
              Dover
      Mortgage Company

            	
              North
      Carolina

            	
              100%
      by Bank

            
	
              First
      National Investor Services, Inc.

            	
              North
      Carolina

            	
              100%
      by Bank

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    Schedule
4.12

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    EXHIBIT
A

    REVOLVING CREDIT
NOTE

    

    
      	
              $10,000,000.00

            	
              Atlanta,
      Georgia

            

    

    May 27,
2008

    

    FOR VALUE RECEIVED, the undersigned,
FNB UNITED CORP.,  a North Carolina corporation (the “Borrower”), hereby promises to pay to
SunTrust Bank (the “Lender”) or its registered assigns
at its principal office or any other office that the Lender designates, on the
Commitment Termination Date (as defined in the Revolving Credit Agreement dated
as of May 27, 2008, as the same may be amended, supplemented or otherwise
modified from time to time, the “Credit
Agreement”),
between  the Borrower and  the Lender, the lesser of the
principal sum of Ten Million and no/100 Dollars ($10,000,000) and the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, in lawful money of the United States
of America in immediately available funds, and to pay interest from the date
hereof on the principal amount thereof from time to time outstanding, in like
funds, at said office, at the rate or rates per annum and payable on such dates
as provided in the Credit Agreement.  In addition, should legal action
or an attorney-at-law be utilized to collect any amount due hereunder, the
Borrower further promises to pay all costs of collection, including the
reasonable attorneys’ fees (determined at customary rates of the firm or firms
representing the Lender for hours actually worked, and not as a statutory
percentage of amounts outstanding under this Revolving Credit Note) of the
Lender.

    The Borrower promises to pay interest,
on demand, on any overdue principal and, to the extent permitted by law, overdue
interest from their due dates at a rate or rates provided in the Credit
Agreement.

    All borrowings evidenced by this
Revolving Credit Note and all payments and prepayments of the principal hereof
and the date thereof shall be endorsed by the holder hereof on the schedule
attached hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, that the
failure of the holder hereof to make such a notation or any error in such
notation shall not affect the obligations of the Borrower to make the payments
of principal and interest in accordance with the terms of this Revolving Credit
Note and the Credit Agreement.

    This Revolving Credit Note is issued in
connection with, and is entitled to the benefits of, the Credit Agreement which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain events, for prepayment of the principal
hereof prior to the maturity hereof and for the amendment or waiver of certain
provisions of the Credit Agreement, all upon the terms and conditions therein
specified.  THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

    

    
      	 
      	
              FNB
      UNITED CORP.

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            
	 
      	 
      	
              Title:

            
	 
      	 
      	 
      
	 
      	
              [SEAL]

            

    

    
 

    Exhibit
A-1

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    LOANS
AND PAYMENTS

    

    

    
      	
               

               

               

               

              Date

               

            	
               

               

               

              Amount
      and

              Type of
      Loan

            	
               

               

               

              Payments
      of

              Principal

            	
               

               

              Unpaid
      
Principal

              Balance
      of

              Note

               

            	
               

               

              Name
      of Person

              Making

              Notation

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    

    

    

    

    Exhibit
A-2

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    EXHIBIT
2.2

    

    

    

    

    

    SunTrust
Bank

    303
Peachtree Street, 3rd
Floor

    Atlanta,
Georgia 30308

    

    Attention:

    

    Dear
Sirs:

    

    Reference is made to the Revolving
Credit Agreement dated as of May 27, 2008  (as amended and in effect
on the date hereof, the “Credit Agreement”), between the undersigned, as
Borrower, and SunTrust Bank, as Lender.  Terms defined in the Credit
Agreement are used herein with the same meanings.  This notice
constitutes a Notice of Borrowing, and the Borrower hereby requests a Revolving
Loan under the Credit Agreement, and in that connection the Borrower specifies
the following information with respect to the Revolving Loan requested
hereby:

    

    (A)           Principal
amount of Revolving Loan:________________________

    

    (B)           Date
of Revolving Loan (which is a Business Day): _________________

    

    (C)           Purpose
(if larger than $500,000):_______________________________

    

    
      	
               
      

            	
              (D)

            	
              Location
      and number of Borrower’s account to which proceeds of Revolving Loan are
      to be disbursed:__________________________

            

    

     

    

    The Borrower hereby represents and
warrants that the conditions specified in paragraphs (a), (b) and (c) of Section
3.2 of the Credit Agreement are satisfied.

    

    
      	 
      	
              Very
      truly yours,

            
	 
      	 
      	 
      
	 
      	
              FNB
      UNITED CORP.

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            
	 
      	 
      	
              Title:

            

    

    

    

    

    

    

    

    

    

    Exhibit
2.2

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