Document:

Severance Protection Agreement (Jon S. Edwards)

  Exhibit 10.15
 SEVERANCE PROTECTION
AND NON-COMPETITION AGREEMENT
 THIS SEVERANCE PROTECTION AND NON-COMPETITION AGREEMENT (the “Agreement”) made as
of March 8, 1999, by and between ABC BANCORP (the “Company”), a Georgia corporation, and JON S. EDWARDS (the “Executive”), an
individual resident of the State of Georgia.
 WHEREAS, the Board of Directors of the Company (the “Board”) has determined
that it is essential and in the best interest of the Company and its shareholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control (as hereinafter defined) and to ensure his continued dedication
and efforts in such event without undue concern for his personal financial and employment security; 
 WHEREAS, in order to induce
the Executive to remain in the employ of the Company in the event of a threat or the occurrence of a Change in Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event
his employment is terminated as a result of, or in connection with, a Change in Control and to provide the Executive with certain other benefits whether or not the Executive’s employment is terminated; and
 WHEREAS, in consideration for the benefits provided to the Executive hereunder and as an inducement to the Company providing such benefits, the Executive
agrees that it is reasonable and fair to enter into certain restrictive covenants as hereinafter set forth.
 NOW, THEREFORE, in
consideration of the respective agreements of the parties contained herein, it is agreed as follows:
 1.         Term of Agreement. This Agreement shall commence as of March 8, 1999 and shall continue in effect until March 8, 2000; provided, however, that commencing on March 8, 2000, and on each March 8 thereafter, the term of this Agreement shall automatically be extended for one (1) year unless
either the Company or the Executive shall have given written notice to the other at least ninety (90) days prior thereto that the term of this Agreement shall not be so extended; and provided,
further, however, that notwithstanding any such notice by the Company not to extend, the term of this Agreement shall not expire prior to the expiration of
twelve (12) months after the occurrence of a Change in Control.
 
 

  2.         Definitions.
 2.1.      Accrued
Compensation. For purposes of this Agreement, “Accrued Compensation” shall mean an amount which shall include all amounts earned or accrued through the “Termination Date” (as hereinafter defined) but
not paid as of the Termination Date, including, without limitation, (i) base salary, (ii) reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of the Company during the period ending on the Termination Date, (iii)
vacation pay, and (iv) bonuses and incentive compensation (other than the “Pro Rata Bonus” (as hereinafter defined)).
 2.2.      Base Amount. For purposes of this Agreement, “Base Amount” shall mean the greater of the Executive’s annual base salary (a) at the rate
in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all amounts of his base salary that are deferred under the qualified and
non-qualified employee benefit plans of the Company or any other agreement or arrangement.
 2.3.      Bonus Amount. For purposes of this Agreement, “Bonus Amount” shall mean the average of the annual bonuses paid or payable to the Executive
during the three (3) full fiscal years ended prior to the Termination Date or, if greater, the three full fiscal years ended prior to the Change in Control (or, in each case, such lesser period for which annual bonuses were paid or payable to the
Executive).
 2.4.      Cause. For purposes of
this Agreement, a termination of employment is for “Cause” if the Executive has been convicted of a felony or a felony prosecution has been brought against the Executive or if the termination is evidenced by a resolution adopted in good
faith by two-thirds of the Board that the Executive (a) intentionally and continually failed substantially to perform his reasonably assigned duties with the Company (other than a failure resulting from the Executive’s incapacity due to
physical or mental illness or from the Executive’s assignment of duties that would constitute “Good Reason” as hereinafter defined) which failure continued for a period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or (b) intentionally engaged in conduct which is demonstrably and materially injurious to the Company;
provided, however, that (i) where the Executive has been terminated for Cause because a felony prosecution has been brought against him and no conviction
or plea of guilty or plea of nolo contendere or its equivalent results therefrom, then said termination shall no longer be deemed to have been for Cause and the Executive shall be entitled to all the benefits provided by Section 3.1(b) hereof from
and after the date on which the prosecution of the Executive has been dismissed or a judgement of acquittal has been entered, whichever shall first occur; and (ii) no termination of the Executive’s employment shall be for Cause as set forth in
clause (b) above until (x) there shall have been delivered to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (b) and specifying the particulars thereof in detail, and (y) the
Executive shall have been provided an opportunity to be heard in person by the Board (with the assistance of the Executive’s counsel if the Executive so desires). No act, nor failure to act, on
 
 

  the Executive’s part, shall be considered “intentional” unless the Executive has acted or failed to act, with a lack of good faith and with a
lack of reasonable belief that the Executive’s action or failure to act was in the best interest of the Company.
 2.5.      Change in Control. For purposes of this Agreement, a “Change in Control” shall have occurred if:
 (a)       a majority of the directors of the Company shall be persons other than persons: (A) for whose
election proxies shall have been solicited by the Board, or (B) who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly-created
directorships;
 (b)      a majority of the outstanding voting power
of the Company shall have been acquired or beneficially owned (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, or any successor rule thereto) by any person (other than the Company, a subsidiary of the Company or the
Executive) or Group (as defined below), which Group does not include the Executive; or
 (c)       there shall have occurred:
 (A)      a merger or consolidation of the Company with or into another corporation (other than (1) a merger or consolidation with a subsidiary of the Company or (2) a merger or consolidation in
which (aa) the holders of voting stock of the Company immediately prior to the merger as a class continue to hold immediately after the merger at least a majority of all outstanding voting power of the surviving or resulting corporation or its
parent and (bb) all holders of each outstanding class or series of voting stock of the Company immediately prior to the merger or consolidation have the right to receive substantially the same cash, securities or other property in exchange for their
voting stock of the Company as all other holders of such class or series);
 (B)      a statutory exchange of shares of one or more classes or series of outstanding voting stock of the Company for cash, securities or other property;
 (C)      the sale or other disposition of all or substantially all of the assets of the
Company (in one transaction or a series of transactions); or
 (D)      the liquidation or dissolution of the Company;
 unless more than twenty-five percent (25%) of the voting stock (or the voting equity interest) of the
surviving corporation or the corporation or
 
 

  other entity acquiring all or substantially all of the assets of the Company (in the case of a merger, consolidation or disposition of
assets) or of the Company or its resulting parent corporation (in the case of a statutory share exchange) is beneficially owned by the Executive or a Group that includes the Executive.
 2.6.      Group. For purposes of this Agreement, “Group” shall mean any two or more persons acting
as a partnership, limited partnership, syndicate, or other group acting in concert for the purpose of acquiring, holding or disposing of voting stock of the Company.
 2.7.      Company. For purposes of this Agreement, “Company” shall mean ABC Bancorp and shall
include each of its subsidiaries and its “Successors and Assigns” (as hereinafter defined).
 2.8.      Disability. For purposes of this Agreement, “Disability” shall mean a physical or mental infirmity which impairs the Executive’s ability
to substantially perform his duties with the Company for a period of one hundred eighty (180) consecutive days and the Executive has not returned to his full time employment prior to the Termination Date as stated in the “Notice of
Termination” (as hereinafter defined).
 2.9.      Good
Reason.
 2.9.1.   For purposes of this Agreement,
“Good Reason” shall mean a good faith determination by the Executive, in the Executive’s sole and absolute judgment, that any one or more of the following events has occurred, without the Executive’s express written consent,
after a Change in Control:
 (a)       a change in the
Executive’s reporting responsibilities, titles or offices as in effect immediately prior to the Change of Control, or any removal of the Executive from, or any failure to re-elect the Executive to, any of such positions which has the effect of
diminishing the Executive’s responsibility or authority;
 (b)       a reduction by the Company in the Executive’s base salary as in effect immediately prior to the Change of Control or as the same may be increased from time to time or a change
in the eligibility requirements or performance criteria under any bonus, incentive or compensation plan, program or arrangement under which the Executive is covered immediately prior to the Change of Control which adversely affects the
Executive;
 (c)       the Company requires the Executive to be
based anywhere other than within fifty (50) miles of the Executive’s job location at the time of the Change of Control, provided that if the Executive’s job location at such time is not within fifty (50) miles of the
Company’s
 
 

  principal executive offices, then the Company may thereafter require the Executive to be based within such fifty (50) mile radius without
such event constituting Good Reason hereunder; 
 (d)       without replacement by a plan providing benefits to the Executive equal to or greater than those discontinued, the failure by the Company to continue in effect, within its maximum stated term, any pension, bonus, incentive, stock ownership,
purchase, option, life insurance, health, accident disability, or any other employee benefit plan, program or arrangement, in which the Executive is participating at the time of the Change of Control, or the taking of any action by the Company that
would adversely affect the Executive’s participation or materially reduce the Executive’s benefits under any of such plans;
 (e)       the taking of any action by the Company that would materially adversely affect the physical conditions existing at the time of the Change of Control in or
under which the Executive performs his employment duties, provided that the Company may take action with respect to such conditions after a Change in Control so long as such conditions are at least commensurate with the conditions in or under which
an officer of the Executive’s status would customarily perform his employment duties; or
 (f)       a material change in the fundamental business philosophy, direction, and precepts of the Company and its subsidiaries, considered as a whole, as the same existed prior to the
Change of Control.
 2.9.2.   Any event described in subsection 2.9.1 (a)
through (f) which occurs prior to a Change in Control but which the Executive reasonably demonstrates (A) was at the request of a third party who has indicated an intention, or taken steps reasonably calculated, to effect a Change in Control or (B)
otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes hereof, notwithstanding that it occurred prior to a Change in Control.
 2.9.3.   The Executive’s right to terminate his employment pursuant to this Section 2.9 shall
not be affected by his incapacity due to physical or mental illness.
 2.10.    Notice
of Termination. For purposes of this Agreement, “Notice of Termination” shall mean a written notice of termination from the Company, following a Change in Control, of the Executive’s employment which
indicates the specific termination provision in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so
indicated.
 
 

  2.11.    Pro Rata Bonus. For
purposes of this Agreement, “Pro Rata Bonus” shall mean an amount equal to the Bonus Amount multiplied by a fraction the numerator of which is the number of days in the fiscal year through the Termination Date and the denominator of which
is 365.
 2.12.    Successors and Assigns. For purposes of
this Agreement, “Successors and Assigns” shall mean a corporation or other entity acquiring all of substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise.
 2.13.    Termination Date. For purposes of this Agreement,
“Termination Date” shall mean in the case of the Executive’s death, his date of death, in the case of Good Reason, the last day of employment, and in all other cases, the date specified in the Notice of Termination; provided, however, that if the Executive’s employment is terminated by the Company for Cause or due to Disability, the date specified in the Notice of Termination
shall be at least thirty (30) days from the date the Notice of Termination is given to the Executive, provided that in the case of Disability the Executive shall not have returned to the full-time performance of his duties during such period of at
least thirty (30) days.
 3.         Termination of
Employment.
 3.1.      Severance
Benefits. If, during the term of this Agreement, the Executive’s employment with the Company shall be terminated within twelve (12) months following a Change in Control, the Executive shall be entitled to the
following compensation and benefits:
 (a)       If the
Executive’s employment with the Company shall be terminated (i) by the Company for Cause or Disability, (ii) by reason of the Executive’s death, or (iii) by the Executive other than for Good Reason, the Company shall pay to the Executive
the Accrued Compensation and, if such termination is by the Company other than for Cause, a Pro Rata Bonus.
 (b)      If the Executive’s employment with the Company shall be terminated for any reason other than as specified in Section 3.1(a), the Executive shall be entitled to the
following:
 (i)        the Company shall pay the Executive
all Accrued Compensation and a Pro-Rata Bonus;
 (ii)      the Company
shall pay the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date an amount in cash equal to one times the sum of (A) the Base Amount and (B) the Bonus Amount; 
 (iii)     for a number of months equal to twelve (12) (the “Continuation Period”),
the Company shall at its expense continue on behalf of the Executive and his dependents and beneficiaries the life
 
 

  insurance, disability, medical, dental and hospitalization benefits generally provided to the Company’s non-executive salaried
employees at any time during the 90-day period prior to the Change in Control or at any time thereafter. The Company’s obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the Executive obtains any
such benefits pursuant to a subsequent employer’s benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined
benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This subsection (iii) shall not be interpreted so as to limit any benefits to which the Executive or his dependents or
beneficiaries may be entitled under any of the Company’s employee benefit plans, programs or practices following the Executive’s termination of employment, including, without limitation, retiree medical and life insurance
benefits;
 (iv)      the Company shall pay an amount in cash equal to
the excess, if any, of (A) the Supplemental Retirement Benefit (as defined below) had (w) the Executive remained employed by the Company for an additional one (1) complete year of credited service, (x) his annual compensation during such period been
equal to his Base Salary and the Bonus Amount, (y) the Company made employer contributions to each defined contribution plan, if any, in which the Executive was a participant at the Termination Date (in an amount equal to the amount of such
contribution for the plan year immediately preceding the Termination Date) and (z) he been fully (100%) vested in his benefit under each retirement plan, if any, in which the Executive was a participant, over (B) the lump sum actuarial equivalent of
the aggregate retirement benefit, if any, the Executive is actually entitled to receive under such retirement plans. For purposes of this subsection (iv), the “Supplemental Retirement Benefit” shall mean the lump sum actuarial equivalent
of the aggregate retirement benefit the Executive would have been entitled to receive under the Company’s supplemental and other retirement plans, if any; and
 (v)       the restrictions on any outstanding incentive awards (including restricted stock and granted performance shares or units) under any
incentive plan or arrangement shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested, and all
performance units granted to the Executive shall become 100% vested, provided that to the extent that all or any part of any such incentive award or stock option or stock appreciation right or performance unit is not exercisable or does not vest
within four (4) years from the Termination Date, then to that extent (but only to that extent)
 
 

  there shall be no acceleration of vesting or lapse of restrictions under this Section 3.1(b)(v).
 (c)       The amounts provided for in Sections 3.1(a) and 3.1(b)(i), (ii) and (iv) shall be paid in
twelve (12) equal monthly payments (without interest) on the first day of each month commencing on the first day of the month immediately following Executive’s Termination Date. 
 (d)      The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 3.1(b)(iii).
 3.2.      Payments in Lieu of Other Severance Benefits. The severance pay and benefits provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Executive may be entitled under any Company severance or
termination plan, program, practice or arrangement.
 3.3.      Other
Compensation and Benefits. The Executive’s entitlement to any other compensation or benefits shall be determined in accordance with the Company’s employee benefit
plans and other applicable programs, policies and practices then in effect.
 4.         Notice of Termination. Following a Change in Control, any purported termination of the Executive’s employment by the Company
shall be communicated by Notice of Termination to the Executive. For purposes of this Agreement, no such purported termination shall be effective without such Notice of Termination.
 
 

  5.         Excess Parachute
Payments.
 5.1.      Excise
Tax. Notwithstanding anything contained herein to the contrary, if any portion of the payments and benefits provided hereunder and benefits provided to, or for the benefit of, the Executive under any other plan or
agreement of the Company (such payments or benefits are collectively referred to as the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”) or would be nondeductible by the Company pursuant to Section 280G of the Code, the Payments shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment to be made or benefit to be
provided to the Executive shall be subject to the Excise Tax or shall be nondeductible by the Company pursuant to Section 280G of the Code (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). Unless the
Executive shall have given prior written notice specifying a different order to the Company to effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits
which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice
given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive’s rights and entitlements to any benefits or compensation.
 5.2.      Excise Tax Determination. An initial determination
as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Plan and the amount of such Limited Payment Amount shall be made by an accounting firm at the Company’s expense selected by the Company which is
designated as one of the six largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and
documentation to the Company and the Executive within thirty (30) days of the Termination Date, if applicable, and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall
furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Executive, the Executive
shall have the right to dispute the Determination (the “Dispute”). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Section 5.3
below.
 5.3.      Excess Payment. As a result of
the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, the Executive either have been made or will not be made by the Company which, in either case,
will be inconsistent with the limitations provided in Section 5.1 (hereinafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established pursuant to a final determination of a court or an Internal
Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to the Executive made on the date the
Executive received the Excess Payment and the Executive shall repay the Excess Payment to the
 
 

  Company on demand (but not less than ten (10) days after written notice is received by the Executive), together with interest on the Excess Payment at the
“Applicable Federal Rate” (as defined in Section 1274(d) of the Code) from the date of the Executive’s receipt of such Excess Payment until the date of such repayment. In the event that it is determined by (i) the Accounting Firm, the
Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to the Executive’s
satisfaction of the Dispute, that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Executive within ten (10) days of such determination or resolution, together with interest on such amount at the
Applicable Federal Rate from the date such amount would have been paid to the Executive until the date of payment.
 6.         One Million Dollar Deduction Limit.
 6.1.      Section 162(m). Notwithstanding anything contained herein to the contrary, if any portion of the Payments would be
nondeductible by the Company pursuant to Section 162(m) of the Code, the Payments to be made to the Executive in any taxable year of the Company shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment
to be made or benefit to be provided to the Executive in such taxable year of the Company shall be nondeductible by the Company pursuant to Section 162(m) of the Code. The amount by which any Payment is reduced pursuant to the immediately preceding
sentence, together with interest thereon at the Applicable Federal Rate, shall be paid by the Company to the Executive on or before the fifth business day of the immediately succeeding taxable year of the Company, subject to the application of the
limitations of the immediately preceding sentence and Section 5 hereof. Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate this Section 6, the Company shall reduce or eliminate the
Payments in any one taxable year of the Company by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or
benefits which are to be paid the farthest in time from the Section 162(m) Determination (as hereinafter defined). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Executive’s rights and entitlements to any benefits or compensation.
 6.2.      Section 162(m) Determination. The determination as to whether the Payments shall be reduced pursuant to Section 6.1 hereof and the amount of the
Payments to be made in each taxable year after the application of Sections 6.1 hereof shall be made by the Accounting Firm at the Company’s expense. The Accounting Firm shall provide its determination (the “Section 162(m)
Determination”), together with detailed supporting calculations and documentation to the Company and the Executive within thirty (30) days of the Termination Date. The Section 162(m) Determination shall be binding, final and conclusive upon the
Company and the Executive.
 
 

  7.         Restrictive
Covenants.
 7.1.      Additional
Consideration. The Executive acknowledges that (i) the Company separately bargained and paid additional consideration for the restrictive covenants herein; and (ii) the Company has provided certain benefits to the
Executive hereunder in reliance on such covenants in view of the unique and essential nature of the services the Executive performs or will perform on behalf of the Company and the irreparable injury that would befall the Company should the
Executive breach such covenants.
 7.2.      Uniqueness of
Services. The Executive further acknowledges that his services are of a special, unique and extraordinary character and that his position with the Company places or will place him in a position of confidence and trust
with employees of the Company and with the Company’s other constituencies and allows him or will allow him access to Confidential Information (as hereinafter defined).
 7.3.      Reasonableness of Restrictions. The Executive further acknowledges that the type and periods of
restrictions imposed by the covenants in this Section 7 are fair and reasonable and that such restrictions will not prevent the Executive from earning a livelihood.
 7.4.      Business of Company. The Executive further acknowledges that (a) the Company, together with its
subsidiaries, is engaged in the commercial banking business; (b) the Company conducts its business activity in and throughout the Area (as hereinafter defined); and (c) Competing Businesses (as hereinafter defined) are engaged in businesses like and
similar to the business of the Company.
 7.5.      Covenants. Having acknowledged the foregoing, the Executive covenants and agrees with the Company that he will not, directly or indirectly: 
 (a)       while he is in the Company’s employ and through the period ending one (1) year after the termination of his
employment for any reason whatsoever (whether voluntarily or involuntarily), disclose or use or otherwise exploit for his own benefit, or the benefit of any other person, except as may be necessary in the performance of his duties hereunder, any
Confidential Information disclosed to the Executive or of which the Executive became aware by reason of his employment with or ownership in the Company; 
 (b)      while he is in the Company’s employ and through the period ending one (1) year after the termination of his employment for Cause or
Disability, solicit or divert or appropriate to any Competing Business, directly or indirectly, on his own behalf or in the service of or on behalf of any Competing Business, or attempt to solicit or divert or appropriate to any such Competing
Business, within the Area, any person or entity who or which was a customer of the Company at any time during the last twelve (12) months of the Executive’s employment hereunder and with whom the Executive had contact during the term of his
employment;
 
 

  (c)       while he is in the
Company’s employ and through the period ending one (1) year after the termination of his employment for Cause or Disability, employ or attempt to employ or assist anyone else in employing in any Competing Business in the Area any officer,
managerial or executive employee of the Company (whether or not such employment is full time or is pursuant to a written contract with the Company); and
 (d)      while he is in the Company’s employ and through the period ending one (1) year after the termination of his employment for Cause or
Disability, engage in or render any services to, or be employed by, any Competing Business in the Area in the capacity of officer, managerial or executive employee, director, consultant or shareholder (other than as the owner of less than one (1%)
percent of the shares of a publicly-owned corporation whose shares are traded on a national securities exchange or in the over-the-counter market); provided, however, that this subsection (iv) shall not prohibit or otherwise restrict the Executive
from accepting employment with a bank holding company that has a banking subsidiary within the Area so long as the principal offices of such holding company are outside the Area and the Executive’s place of employment is also outside the
Area.
 7.6.      Return of Documents. The
Executive agrees that upon the termination of his employment for any reason whatsoever (whether voluntarily or involuntarily) he will not take with him or retain without written authorization, and he will promptly deliver to the Company, originals
and all copies of all papers, files or other documents containing any Confidential Information and all other property belonging to the Company and in his possession or under his control.
 7.7.      Area. For purposes of this Section 7, the term (a) “Area” means a fifty (50) mile radius
of the Company’s main office or the main office of any of its subsidiaries; (b) “Competing Business” means the commercial banking business; and (c) “Confidential Information” means any and all data and information relating
to the business of the Company (whether or not constituting a trade secret) that is, has been or will be disclosed to the Executive or of which the Executive became or becomes aware as a consequence of or through his relationship with the Company
and that has value to the Company and is not generally known by its competitors; provided, however, that no information will be deemed confidential unless
it has been reduced to writing and marked clearly and conspicuously as confidential information, or it is otherwise treated by the Company as confidential. Confidential Information shall not include any data or information that has been voluntarily
disclosed to the public by the Company (except where such public disclosure has been made without authorization by the Company), or that has been independently developed and disclosed by others, or that otherwise enters the public domain through
lawful means. Confidential Information includes, but is not limited to, information relating to the Company’s financial affairs, processes, services, customers, employees or employees’ compensation, accounting or marketing.

 

  7.8.      Injunctive Relief. The Executive acknowledges that irreparable loss and injury would result to the Company upon the breach of any of the covenants contained in this Section 7 and that damages arising out of such breach would be difficult to ascertain. The
Executive hereby agrees that, in addition to all other remedies provided at law or at equity, the Company may petition and obtain from a court of law or equity both temporary and permanent injunctive relief to prevent a breach by the Executive of
any covenant contained in this Section 7. 
 8.         Successors; Assignability.
 8.1.      Binding Agreement. This Agreement shall be binding upon and shall inure to the benefit of the Company, its Successors and Assigns, and the Company shall require any Successors and Assigns to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal personal representative.
 8.2.      No
Assignment. Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, his beneficiaries or legal representatives, except by will or by the laws of descent and
distribution.
 9.         Fees and
Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the Executive’s termination
of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement (including, without
limitation, any such fees and expenses incurred in connection with the Dispute) or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, and (c) the Executive’s hearing
before the Board as contemplated in Section 2.4 of this Agreement; provided, however, that the circumstances set forth in clauses (a) and (b) of this
Section 9 (other than as a result of the Executive’s termination of employment under circumstances described in Section 2.9.2) occurred on or after a Change in Control.
 10.       Notice. For the purposes of this Agreement, notices and all other communications provided for
in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.
 11.       Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or
 
 

  program provided by the Company (except for any severance or termination policies, plans, programs or practices) and for which the Executive may qualify, nor
shall anything herein limit or reduce such rights as the executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement.
 12.       Settlement of Claims. The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or
others.
 13.       Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.
 14.       Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Georgia without giving effect to the conflict of laws principles thereof. 
 15.       Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of the provisions hereof.
 16.       Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
 
 

  [SIGNATURES NEXT PAGE]
 
 

  IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and delivered by its duly authorized
officers and has caused its proper corporate seal to be affixed hereto, and the Executive has executed, sealed and delivered this Agreement, all as of the day and year first above written.
   

	  
 	  
 	        ABC BANCORP
 
	 [CORPORATE SEAL]
 	  
 	  
 
	 
 
 
 	  
 	 By: 
 	 
 /s/ KENNETH J. HUNNICUTT
 
	  
 	  
 	  
 	 
 
	 ATTEST:
 
 
 	  
 	  
 	 KENNETH J. HUNNICUTT
 PRESIDENT & CEO
 
	 /s/ CINDI H. LEWIS

	  
 	  
 	  
 
	 
 	  
 	  
 	  
 
	 Assistant Secretary
 	  
 	  
 	  
 
	  
 	  
 	  
 	 /s/ JON S. EDWARDS

	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	 JON S. EDWARDSAsset Purchase Agreement dated December 19, 2002

  Exhibit 10.16
  ASSET  PURCHASE  AGREEMENT
  between
  SOUTHLAND BANK
  and
  MBNA AMERICA BANK, N.A.
  DECEMBER 19, 2002

   ASSET  PURCHASE  AGREEMENT
            THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is entered into as of this 19th day of December, 2002, by and between MBNA AMERICA BANK, N.A., a
national banking association located at 1100 N. King Street, Wilmington, Delaware 19884 (“Purchaser”) and SOUTHLAND BANK, an Alabama state bank located at 3299 Ross Clark Circle, NW, Dothan, Alabama 36303 (“Seller”).

 WITNESSETH:
            WHEREAS, Seller presently owns certain open-end, unsecured credit
card accounts, contract rights and receivables, together with certain related personal property; and
            WHEREAS, Seller desires to sell to
Purchaser, and Purchaser desires to purchase from Seller, all of Seller’s right, title and interest in and to certain of those credit card accounts, contract rights, receivables and related personal property, and agrees to assume certain
liabilities of Seller, upon the terms and conditions set forth herein; and
            WHEREAS, Seller has agreed to service these credit card
accounts on behalf of Purchaser during the Interim Servicing Period (as hereinafter defined);
           NOW, THEREFORE, in consideration of the
mutual agreements, representations and warranties hereinafter set forth and for other good and valuable consideration, both the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
  ARTICLE I.  DEFINITIONS
            In addition to the other capitalized terms specifically defined
herein, for the purposes of this Agreement, the following capitalized terms shall mean the following:
            “Account” means
all of Seller’s MasterCard and VISA (whether standard, classic, gold or platinum) credit card accounts which were present on the tapes used for Purchaser’s change in terms notices, the settlement tape, the embossing tape and the conversion
tapes and transmissions provided by Seller to Purchaser, except for any account, whether or not the Seller has knowledge, which (or upon which) as of the Cut-off Time: (a) an Obligor has filed or has had filed against such Obligor within the past 5
years prior to the Cut-off Time, proceedings in bankruptcy, trusteeship, or receivership (whether or not the Seller has received notice of such filing); (b) Seller has received notice that the Obligor intends to file for bankruptcy; (c) an Obligor
is participating in any consumer credit counseling program; (d) an Obligor is 3 or more cycles delinquent as such cycles are set forth on Exhibit 1A or should have been in said delinquency cycles in accordance with Seller’s Policies and
Procedures; (e) fraud or unauthorized use has occurred; (f) the primary address of the Obligor is not in the United States or the Obligor is under the age of eighteen (18); (g) has a lost or stolen Card; (h) is secured by any collateral whatsoever;
(i) is charged-off; (j) is a Guaranteed Account; (k) is a Business Account (1) that has any authorized users and/or permits a person (other than the Obligor) to have credit access to the Business Account, or (2) in which the Obligor is a business
entity and
  1

  said business entity has not executed Purchaser’s Bearer Card Agreement; (l) is not in the name of a living individual and no other individual is contractually obligated
for the payment thereof; (m) is closed or terminated with a balance equal to or less than $0.00; (n) is the subject of a legal proceeding; (o) whose repayment schedule has been altered to a payment amount that is less than the one required by the
Card Agreement or is subject to a reduced interest rate (excluding promotional or introductory rates) as a result of collection efforts or a workout; (p) is not governed by the terms of a Card Agreement included in Exhibit 3.1E; (q) has a credit
line of less than $500.00 and was generated from a preapproved marketing campaign; (r) has been securitized; (s) is a Cost Center Card; (t) has an annual percentage rate on any balance that can not be changed by Purchaser because of any Requirements
of Law, the Card Agreements or any marketing material; (u) has an open date that is after the Cut-off Time; or (v) is a test credit card account opened and maintained by Seller with respect to the MasterCard or VISA system for verification or other
internal purposes.
            “Agreement” means this Asset Purchase Agreement, together with all schedules, exhibits, supplements
and documents that are attached hereto or incorporated herein by reference.
            “Assets” means the assets of the Business
to be acquired by Purchaser as set forth in Section 2.2(A) hereof.
            “Audited Closing Payment” means the payment set
forth on the last line of the Audited Closing Statement reflecting the difference between the Preliminary Purchase Price and the Closing Purchase Price.
            “Benefits Agreements” means all agreements with third parties or affiliates of Seller who provide benefits and services in connection with the
Accounts, including, without limitation, VISA, MasterCard, any provider of credit insurance, travel accident insurance or credit card registration services.  It shall not include services offered by a third party or an affiliate of Seller
through a separate agreement with a Cardholder.
           “Best of ... knowledge”, as used with respect to a Person or its
employees and representatives, means the actual knowledge and awareness of such Person as of the date of this Agreement. 
            “Books
and Records” means all books, records, manuals, documents, materials and other information related to the conduct of the Business and necessary for the ongoing operations of the Business, in paper, electronic or other form in which they are
maintained by Seller, and with respect to each Account, the Card Application, the Card Agreement, monthly billing statements, any correspondence from or to the Cardholder(s), and any and all other documents or other materials specifically relating
to such Account.
            “Business” means the following: (a) with respect to Seller, the business conducted by Seller of
issuing, servicing, maintaining, promoting and owning credit card accounts; and (b) with respect to Purchaser, the business to be conducted with the use of the Assets by Purchaser of issuing, servicing, maintaining, promoting and owning the
Accounts.
  2

             “Business Account” means a credit card account for which the Obligor is a sole proprietorship or a
business entity other than Seller, an Account that is established on Seller’s Card Processor’s system as a business credit card account or an Account that is used predominantly for business purposes by the Obligor and such use is known, or
should be known, by Seller.  
            “Card” means an open-end, unsecured credit card issued by Seller to a Cardholder
pursuant to a Card Agreement.
            “Card Agreement” means the written agreement between Seller and Cardholder, as amended,
which sets forth the terms and conditions for a credit card account and pursuant to which a Card is issued.
           “Card
Application” means the signed original or conformed copy (e.g.,microfilm/microfiche) application, or in the case where any application was made by telephone, the telesales representative’s documentation, whereby a Person applied
for a Card.
            “Card Marks” means the trade names, service marks, trademarks, logos, designs, images, visual
representations, and tradedress used by Seller in connection with the Assets.
            “Cardholder” means any Obligor who has
been issued a Card.
            “Cardholder List” means the names, addresses and, if available, phone numbers of all
Cardholders.
            “Closing” means the execution (as necessary) and delivery of all documents, certificates, resolutions,
opinions, assignments, property and funds as contemplated by this Agreement.
            “Closing Audit” means the audit of the
Closing Statement, conducted pursuant to Section 2.3(D) hereof.
            “Closing Date” means December 20, 2002,  or such
other date as the parties may mutually agree.
            “Closing Payment” means the payment set forth on the last line of the
Closing Statement reflecting the difference between the Preliminary Purchase Price and the Closing Purchase Price.
            “Closing
Purchase Price” means the total purchase price to be paid for the Assets as adjusted and as set forth in the Closing Statement or Audited Closing Statement, as defined in Section 2.3(D)(iii) of this Agreement. 
           “Closing Statement” means a statement, in the form set forth in Exhibit 2.3C, attached hereto, which sets forth the calculation of the Closing
Payment.
            “Conversion Date” means the date on which the processing of the Accounts is transferred from Seller’s
Card Processor to Purchaser’s Card Processor.
  3

             “Cost Center Card” means an Account for which Seller or any affiliate of the Seller is the
Obligor.
            “Cut-off Time” means 11:59:59 p.m., EST, on December 13, 2002, by which time all file maintenance and Account
servicing shall have been performed by Seller in accordance with past custom and practice. 
            “Employee Accounts” means a
consumer credit card account that was generated from Seller’s employee credit card applications. 
            “Enhancements”
has the meaning set forth in Section 4.1.
            “File” means, with respect to each Account, all information, comments,
documents and any correspondence from or to such Account’s Cardholder(s), including, without limitation, the Card Application, Card Agreement, statement fiche and billing dispute documents.
            “Guaranteed Account” means a credit card account that has any Person contractually liable as a guarantor on such account.
            “Interchange Fees” means the fees paid in connection with the exchange of Card transactions between VISA and MasterCard members pursuant to
VISA’s and MasterCard’s operating rules and regulations.
           “Interim Closing Payment” means the payment
representing any undisputed amounts comprising the difference between the Preliminary Purchase Price shown on the Preliminary Closing Statement and the Closing Purchase Price shown on the Closing Statement.
            “Interim Servicing Agreement” means the interim servicing agreement entered into as of the Closing Date by and between Seller and Purchaser and
providing for the servicing of the Accounts by Seller during the Interim Servicing Period, attached hereto as Exhibit 1.
            “Interim Servicing Period” means the period beginning as of the Closing Date and continuing until the Conversion Date.
            “Joint Marketing Agreement” means that agreement entered into as of the Closing Date by and between Seller and Purchaser pursuant to which Purchaser
markets and issues credit cards for Seller to Seller’scustomers.
            “Liens” means any and all debts, liens, options,
security interests, rights of first refusal, claims, encumbrances or any other liabilities, interests, restrictions of every nature, kind and description whatsoever.
            “MasterCard”  means MasterCard International, Inc.
            “Obligor”  means, and shall only include with respect to any Account, any Person obligated to make payments with respect to such Account,
including any guarantor thereof.
            “Par Account” means an Account that is closed with a balance greater than
$0.00.
  4

            “Payments”  means the Preliminary Purchase Price, the Closing Payment, any Interim Closing
Payment, and any Audited Closing Payment.
            “Person”  means any legal person, including, without limitation, any
natural person, corporation, partnership, joint venture, association, limited liability company, joint-stock company, business trust, unincorporated organization, governmental entity or any other entity of every nature, kind and description
whatsoever.
            “Preliminary Purchase Price” means the payment initially paid for the sale of all of the Assets based on
the Preliminary Closing Statement, as set forth on the last line of the Preliminary Closing Statement.
            “Preliminary Closing
Statement” means a statement, in a form substantially similar in all material respects to the form set forth in Exhibit 2.3B attached hereto, setting forth the calculation of the Preliminary Purchase Price.
            “Purchaser’s Card Processor”  means MBNA Technology, Inc. 
            “Receivable” means any amount owing by an Obligor under any Account, including, without limitation, any amounts owing for the payment of goods and
services, cash advances, cash advance fees, access check fees, annual membership fees, billed interest, billed finance charges, billed late charges and any other billed fee, expense or charge of every nature, kind and description whatsoever, less
any amount owed by Seller to the Obligor as a credit balance.
            “Reject Account #1” means any Account that timely rejects
Purchaser’s first change in terms notice described in Section 4.2 which contains the notice changing the state law that governs the Cardholder’s applicable Card Agreement to Delaware as well as the amendment portion of the Card
Agreement.
           “Reject Account #2” means any Account that timely rejects Purchaser’s second change in terms notice
described in Section 4.2 which contains the notice changing the Cardholder’s entire Card Agreement to Purchaser’s credit card agreement. 
            “Requirements of Law” with respect to any Person, means any certificate of incorporation, articles of association, by-laws or other organizational or
governing documents of such Person, and any law, ordinance, statute, treaty, rule, judgment, regulation or other determination or finding of any arbitrator or governmental authority applicable to or binding upon such Person or to which such Person
is subject, whether federal, state, county, local or otherwise (including, without limitation, usury laws, the Federal Truth-In-Lending Act, the Fair Debt Collection Practices Act, the Federal Equal Credit Opportunity Act, the Fair Credit Reporting
Act, the FFIEC Uniform Retail Credit Classification and Account Management Policy, the USA Patriot Act, the National Bank Act and Regulations B, E, and Z of the Board of Governors of the Federal Reserve System).
            “Restricted Period” means the five (5) year period immediately following the Cut-off Time.
            “Seller’s Card Processor” means TYSY.
  5

             “Seller’s Policies and Procedures” means Seller’s policies and normal, day-to-day
operating procedures and practice in compliance with such policies and Seller’s normal financial accounting guidelines for the conduct of the Business, all as existing as of the execution of this Agreement.
            “Tax” means any federal, state or local tax of the United States or of any state, including without limitation any income tax, franchise tax, real or
personal property tax, employment tax, sales and use tax, vault tax and any interest and penalties thereon (including, without limitation, those levied on any failure to make appropriate withholdings), but not including any tax that is levied on
this transaction or chargeable on this Agreement or any documents or instruments required to be executed hereunder or pursuant hereto.
           “Valuation Date” means a date mutually agreed upon by the parties which is no more than three (3) business days prior to the Closing Date.

           “VISA” means Visa U.S.A., Inc.
  ARTICLE II.  Purchase of Assets;
Assumption of Liabilities
  2.1          Schedule of Accounts.     By December 30, 2002, Seller shall deliver to
the Purchaser an Exhibit 2.1 reflecting all Accounts.  Exhibit 2.1 shall, with respect to each Account, contain the information set forth in Section 3.1(C).  Exhibit 2.1 shall be provided to Purchaser in an electronic or magnetic format,
whichever is specified by Purchaser in writing.  When a complete Exhibit 2.1 is provided to Purchaser, such Exhibit 2.1 shall be deemed automatically attached hereto.
  2.2          Purchase of Assets.
                  (A)        On the Closing Date and subject to all of the terms and conditions set forth
herein, Seller shall sell, assign, transfer and convey to Purchaser, and Purchaser shall purchase and receive from Seller, all of Seller’s right, title and interest in and to the following: (i) all Accounts; (ii) all Receivables; (iii) any and
all rights to receive payment for accrued but not yet billed interest on the Accounts; (iv) any and all periodic statements, plastics, applications, and other supplies held in inventory by Seller which relate to the Accounts; (v) the pro-rata
portion of any annual fee associated with the Accounts relating to any period following the Cut-off Time; (vi) all Cards; (vii) the Cardholder List; (viii) all Interchange Fees earned after the Cut-off Time; (ix) all of the Books and Records; and
(x)any other rights or assets solely and directly relating to the foregoing (collectively, the “Assets”).
                  (B)        All assets of Seller not specifically listed or included in Section 2.2(A)
hereof shall remain the property of Seller.  Without limitation, Seller shall retain all right, title and interest in and to all of those MasterCard Card and VISA accounts which do not qualify as an Account.
 2.3          Purchase Price.
                  (A)        Computation. The total Preliminary Purchase Price shall consist of the sum of
the following:
  6

	  
 	  (i)
 	  1.00 multiplied by the total amount of Receivables (other than Receivables from Par Accounts) as of the Valuation Date; plus
 
	  
 	  
 	  
 
	  
 	  (ii)
 	  a premium of eighteen percent (18%) of the amount calculated pursuant to Section 2.3(A)(i) above; plus
 
	  
 	  
 	  
 
	  
 	  (iii)
 	  1.00 multiplied by the total amount of Receivables from Par Accounts as of the Valuation Date; less
 
	  
 	  
 	  
 
	  
 	  (iv)
 	  the pro rata portion of any annual fee relating to any period following the Cut-off Time.
 

                 (B)        Preliminary Closing Statement.  On the Closing Date, Seller shall prepare
a Preliminary Closing Statement setting forth the calculation of the Preliminary Purchase Price.  The form of Preliminary Closing Statement is attached hereto as Exhibit 2.3B.  After being agreed to by the parties, the Preliminary
Purchase Price shall be paid by Purchaser on the Closing Date by a wire transfer to an account that has been designated in writing by Seller at least three (3) business days prior to the Closing Date.
                   (C)        Closing Statement.  Approximately sixty (60) days after the Closing Date,
Purchaser shall conduct and complete a post-Closing audit of the Accounts and Receivables (the “Post-Closing Audit”) and prepare a Closing Statement, the form of which is attached as Exhibit 2.3C.  The Closing Statement shall
set forth the Closing Purchase Price and shall describe any adjustments to the Preliminary Purchase Price which reflect the difference between (i) the actual aggregate face value of the Receivables and Purchaser’s pro rata portion of any annual
fee, all as determined by the Purchaser in the Post-Closing Audit, as of the Cut-off Time and (ii) the actual aggregate face value of the Receivables and Purchaser’s pro rata portion of any annual fee as of the Valuation Date, as reflected on
the Books and Records of Seller’s Card Processor, and upon which the calculation of the Preliminary Purchase Price was based pursuant to Section 2.3(A) hereof.
                   (D)        Closing Audit.
                                 (i)     
    Closing Payment.  If within fifteen (15) days after Seller’s receipt of the Closing Statement, Purchaser and Seller mutually agree on each line item in the Closing Statement, then: (a) if the Preliminary Purchase
Price shown on the Preliminary Closing Statement is less than the Closing Purchase Price shown on the Closing Statement, Purchaser shall pay to Seller the Closing Payment, plus interest calculated at the federal funds rate from the Closing Date to
the date the Closing Payment is made; or (b) if the Preliminary Purchase Price shown on the Preliminary Closing Statement is greater than the Closing Purchase Price shown on the Closing Statement, Seller shall pay to Purchaser the Closing Payment,
plus interest calculated at the federal funds rate from the Closing Date to the date the Closing Payment is made.  The payment required under this paragraph shall be made no later than thirty (30) business days after Seller’s receipt of
the Closing Statement.
                                
(ii)        Interim Closing Payment.  If within fifteen (15) days after Seller’s receipt of the Closing Statement, Purchaser and Seller do not mutually agree upon the correct amounts 
  7

   for all line items in the Closing Statement, then Seller shall, within said 15 day period, notify Purchaser in writing of all line items still in dispute.  Upon such
notification to Purchaser that certain items remain in dispute, Seller shall pay to Purchaser, or Purchaser shall pay to Seller, (whichever the case may be) the Interim Closing Payment, plus interest calculated at the federal funds rate from the
Closing Date to the date the Interim Closing Payment is made.
                                 
(iii)          Audited Closing Statement.  Within fifteen (15) days after Seller’s notice to Purchaser that some line items remain in dispute, Purchaser and Seller shall select a nationally
recognized independent accounting firm which is one of the four largest such firms as of such date to audit the line items in dispute on the Closing Statement and any other items that must be reviewed to resolve the dispute, provided that such
accounting firm may not be the accounting firm then employed by Seller or Purchaser.  The cost of such audit and the preparation of the Audited Closing Statement shall be shared equally between the Purchaser and the Seller.  Except as
otherwise provided in this Agreement, the “Audited Closing Statement” prepared by such accounting firm shall be final, conclusive and binding on the parties for matters covered thereby and a judgment may be entered thereon.  The
Audited Closing Statement shall be in a form substantially similar to the Closing Statement, except that it will reflect the payment of any Interim Closing Payment.
                                
(iv)          Audited Closing Payment.  If an Audited Closing Statement is prepared, then: (a) if the Preliminary Purchase Price, adjusted if applicable by any Interim Closing Payment made, is
less than the Closing Purchase Price shown on the Audited Closing Statement, Purchaser shall pay to Seller the Audited Closing Payment, plus interest calculated at the federal funds rate from the Closing Date to the date the Audited Closing Payment
is made; or (b) if the Preliminary Purchase Price, adjusted if applicable by any Interim Closing Payment made, is greater than the Closing Purchase Price shown on the Audited Closing Statement, Seller shall pay to Purchaser the Audited Closing
Payment, plus interest calculated at the federal funds rate from the Closing Date to the date the Audited Closing Payment is made.
                   (E)          Fee Prorations.  Any fees payable to MasterCard or VISA with
respect to the Assets shall be prorated between the parties as follows: for Seller’s account through the Cut-off Time and for Purchaser’s account after the Cut-off Time.  To the extent possible, such prorations shall be made as soon
as possible after the Closing Date in accordance with adjustment procedures set forth in Section 2.6(C).
  2.4           Assumption of
Liabilities.  
                  (A)        Except as otherwise
expressly set forth herein or in the Interim Servicing Agreement, on the Closing Date, Purchaser shall assume and, thereafter, discharge fully only the following liabilities of Seller to be performed after the Cut-off Time: (i) all of the
obligations of Seller to the Cardholders under the Card Agreements (excluding obligations for Enhancements); (ii) any expenses related to the Accounts and the activity thereon after the Cut-off Time (excluding expenses for Enhancements); and (iii)
subject to the prorations of fees set forth in Section 2.3 (E) hereof, all fees, normal operating assessments and other charges of VISA or MasterCard arising after the Cut-off Time, except for those charges: (a) arising from Seller’s
violation on or before the Cut-off Time of any operating regulation of VISA or MasterCard; or (b) arising from or relating to any special assessments with respect to periods up to and including the Cut-off Time. Except as provided above, Purchaser
shall not assume any liability, 
 8

   commitment, or any other obligation of Seller, whether absolute, contingent, or otherwise known or unknown of any nature, kind or description whatsoever, arising from or
related to the operation of the Seller’s Business prior to or after the Cut-off Time. For the avoidance of doubt, Seller expressly retains all liability arising out of or from the Enhancements.
                   (B)        Seller agrees that: (i) it shall be solely responsible for any draft
retrievals, chargebacks, representments or incorrectly posted transactions that occur through the Cut-off Time and that relate to an Account that bears Seller’s BIN or ICA  (as defined in Section 5.2(D)) number; (ii) it shall be
responsible for processing any draft retrievals, chargebacks, representments or incorrectly posted transactions through the Conversion Date and that relate to an Account that bears Seller’s BIN or ICA, all in accordance with the requirements of
the Interim Servicing Agreement; and (iii) it will be responsible for all expenses related to the Accounts and activity thereon prior to the Cut-off Time.  Seller will be responsible for all expenses charged by Seller’s Card Processor for
the Closing and for the conversion of the Accounts from Seller’s Card Processor to the Purchaser’s Card Processor, including, but not limited to, the cost of all electronic transmissions, back-up tapes and other Seller’s Card
Processor pass through costs and expenses.  Seller will also be responsible for any fees or expenses assessed to Seller or Seller’s Card Processor in relation to this transaction by MasterCard or VISA.  Purchaser shall have no
responsibility for any such Closing or conversion expenses or for any penalties, termination fees, or similar expenses payable because of the termination of Seller’s agreement with Seller’s Card Processor.
                  (C)        Seller shall be liable for any Tax that relates to its operation of the
Business on or prior to the Cut-off Time.  Purchaser shall be liable for any Tax that relates to its operation of the Business after the Cut-off Time.
 2.5          Seller’s Repurchase of Certain Credit Card Accounts.  If within the earlier of September 30, 2003 or one hundred and eighty (180) days after the
Conversion Date Purchaser and Seller determine that: (i) any Account or Receivable purchased should not have been deemed an “Account” or a “Receivable”, respectively, as of the Cut-off Time, (ii) any Account or Receivable
purchased is not as represented by Seller to Purchaser as expressly set forth in this Agreement as of the Cut-off Time for reasons that existed on or before the Cut-off Time; or (iii) an Account becomes a Reject Account #1, then under any of these
scenarios, Seller shall repurchase the applicable Account and/or the applicable Receivable from time to time as necessary.  In such event, Seller shall pay Purchaser, on demand, the amount of the Receivable as of the date of such repurchase by
Seller, plus any applicable premium paid for such Receivable.  The parties each agree that they shall cooperate in producing a transfer document and any other related documents as the other may reasonably request under the circumstances. 
The obligations of the parties under this Section 2.5 are not subject to the limitations contained in Article IX.
  2.6           Post-Closing Adjustments.  Following the Closing, the parties shall, with each other’s reasonable cooperation and assistance, promptly make
any adjustments to the Payments based on the following:
                  (A)        Unposted Items.  Any items or transactions that affect any of the
Payments, but that were unposted or unaccounted for on or before the Cut-off Time, including, without 
  9

   limitation, cash letters for cash advance checks in process, payments in process, unidentified or unlocated items, or errors.
                   (B)        Changes in Receivable Calculation or Misclassification of an Account. 
Misclassification of a credit card account as an “Account” or changes to the Receivables calculation based on the receipt or discovery of information by Purchaser or Seller prior to or after the Cut-off Time and any adjustments relating
to: (i) a data error which occurred on or prior to the Cut-off Time; or (ii) an event, act or omission which resulted in the miscalculation of the Receivables as contemplated in this Agreement.
                  (C)        VISA/MasterCard Fee Prorations.  All fees, normal operating assessments
and other charges imposed by VISA, or MasterCard, or any portion thereof, which are attributable to Seller’s activities on or prior to the Cut-off Time.
                   (D)        Payments Received before and after the Cut-off Time.  Seller shall be
entitled to retain payments on Accounts from Cardholders received and posted to the Accounts by Seller prior to the Cut-off Time.  All payments received by Seller after the Cut-off Time related to the Accounts or received prior to the Cut-off
Time but not posted to the Account as of the Cut-off Time shall belong to Purchaser and shall be handled in accordance with the requirements of this Agreement or the Interim Servicing Agreement, whichever is applicable.
  The obligations of the parties under this Section 2.6 are not subject to the limitations contained in Article IX
  ARTICLE III.  Representations and
Warranties
                 3.1          Seller’s
Representations and Warranties.  Seller hereby represents and warrants to Purchaser on the date hereof and through the Closing Date, as follows:
                  (A)          Organization, Power and Regulatory Status.  Seller is a state
bank duly organized, validly existing and in good standing under the laws of the State of Alabama.  Seller has all necessary power and authority to (i) own and use its property and to conduct its business related to the Accounts as now being
conducted and possesses all licenses and permits, the failure of which to possess would have a material and adverse effect on the Assets or Seller’s Business (hereinafter referred to as a “Material Adverse Effect”), and (ii) enter
into and carry out the terms of this Agreement and the series of transactions contemplated hereby.
                 
(B)          Authorization, Validity and Enforceability.  The execution, delivery and performance of this Agreement by Seller have all been duly authorized by all necessary corporate action and
do not and will not conflict with or result in a breach or violation of Seller’s charter or by-laws, any agreement to which Seller is a party or by which it or its assets are bound or any Requirements of Law. This Agreement is the legal, valid
and binding obligation of Seller, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws or regulations that affect the enforcement of creditors’ rights
generally.
  10

                    (C)          Accounts. 
Exhibit 2.1 is a report containing a true and complete list of all Accounts as of the Cut-off Time.  With respect to each Account, Exhibit 2.1 completely and accurately describes: (a) the Account or control number; (b) the Account
balance; (c) the date of last payment; (d) the amount of the last payment; (e) the status code; (f) the annual percentage rates applicable to each balance within the Account; (g) the current delinquency of the Receivables, based on the applicable
periods set forth in Exhibit 1A; and (h) such other information about the Accounts and any activity related thereto that is in a typical credit card processor “masterfile tape” or that is reasonably requested of Seller by Purchaser in
writing prior to the date hereof.  No Account has a promotional or introductory annual percentage rate applicable to any balance within that Account, as of the Cut-off Time, that is lower than 10.00%.  No Account has a non-promotional or
non-introductory annual percentage rate applicable to any balance within that Account, as of the Cut-off Time, that is lower than 10.00%.  Each Account has fulfilled any conditions set forth in the Card Agreement required to make such Account
subject to the Card Agreement.  Each Account relates to the extension of credit and the advancement of monies on a revolving basis and would be considered a credit card account under Regulation Z of the Board of Governors of the Federal Reserve
System.  Each Account is not secured by any collateral whatsoever.  No Account has been securitized and any Account for which a UCC-1 filing was made by any Person has been released by a UCC-3 filing prior to the Cut-off Time.  Each
Account is payable in United States dollars.  A copy of Seller’s Policies and Procedures, to the extent written, are attached hereto as Exhibit 3.1C-1.  At Closing, no credit card account purchased by Purchaser is improperly
classified as an “Account”.  Each of the Accounts has been originated solely by Seller pursuant to its underwriting, creditworthiness and other similar practices, consistent with Seller’s Policies and Procedures.  Seller, at
the time it originated each Account, was a federally insured financial institution.  All of the interest rates, fees, costs, expenses, penalties and all other charges of every nature, kind and description whatsoever charged to or levied by
Seller against the Accounts in effect as of the Cut-off Time are set forth in Exhibit 3.1-E.
                 
(D)          Receivables.  With respect to each and every Receivable: (a) such Receivable has arisen under an Account; (b) such Receivable has been originated in compliance with all Requirements
of Law applicable to the Seller and pursuant to a Card Agreement; (c) such Receivable is not subject to offset, recoupment, adjustment or any other valid and cognizable claim or defense of an Obligor; and (d) each Receivable represents the legal,
valid and binding payment obligation of the Obligors and is enforceable against such Obligors in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws or regulations that affect
the enforcement of creditors’ rights generally.
                  
(E)          Card Applications and Agreement.  Exhibit 3.1E attached hereto is a form of all of the Card Applications and all of the Card Agreements pursuant to which all Cardholders are
issued a Card and are governed.  The terms of such Card Applications and Card Agreements have not been impaired, waived, altered or modified in any respect except by written instruments contained in the Books and Records.  Any amendments
or changes in terms to the Card Agreements are included in Exhibit 3.1E.  All such Card Agreements and Accounts, including the Receivables, are freely assignable by Seller, do not require the approval or consent of any Cardholder or any other
Person to effectuate the valid assignment of the same in favor of the Purchaser and are governed by federal law and the laws of the state of Georgia.  The terms and provisions of each Account and each Card Agreement can be changed by Purchaser
if it follows the requirements of federal law and the laws of the state of Georgia regarding changing the terms
  11

   of a credit card account.  Each of the Card Agreements is legal, valid, binding and enforceable in accordance with its terms, except as may be limited by bankruptcy,
insolvency, moratorium or other laws or regulations, in effect now or in the future, that affect the enforcement of creditors’ rights generally.  Seller is in full compliance with all the terms and conditions in the Card Agreement and has
performed all of its duties thereunder; and, to the best of Seller’s knowledge, there exists or is threatened thereunder no default, breach or other event, which with the passage of time or the giving of notice, or both, would constitute a
default or breach thereunder.
                  (F)        Benefits Agreements
and Enhancements.  Exhibit 3.1F, attached hereto, sets forth all of the Benefits Agreements (and benefits and enhancements supplied thereunder) and Enhancements maintained by Seller on the Accounts.  The terms of each Benefits
Agreement have not been impaired, waived, altered or modified in any material respect except by written instruments contained in the Books and Records.  Each of the Benefits Agreements is legal, valid and binding and in full force and is
enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, moratorium or other laws or regulations, in effect now or in the future, that affect the enforcement of creditors’ rights
generally.  Seller is in full compliance with all the material terms and conditions thereof; and, to the best of Seller’s knowledge, there exists or is threatened thereunder no default, breach or other event which with the passage of time
or the giving of notice, or both, would constitute a default or breach thereunder.
                  (G)        Servicing of Accounts.  Seller has received or given any and all consents,
licenses, approvals or authorizations of or registrations or declarations with any governmental authority of the United States or any state required to be obtained, effected or given by the Seller to originate, own and operate the Accounts. 
All Accounts have been properly accounted for and all payments or monies received by Seller with respect to the payment of any Receivable have been properly applied.  Each Account has been properly originated, maintained and serviced in all
respects solely by Seller or Seller’s Card Processor in accordance with the applicable Card Agreement, Seller’s Policies and Procedures, all Requirements of Law and in a manner consistent with, and not in violation of, any standard and
customary practices utilized by prudent lenders engaged in the business of lending money through credit card accounts. 
                  (H)        Books and Records Complete.  The relevant Books and Records are true and
complete in all material respects and all information relating to the credit, charges, fees, payment history, customer inquiries, regulatory correspondence and other relevant information which is known and available to Seller relating to the
Accounts is contained in the relevant Books and Records.
                 (I)        No Consent.  No consent of any Person and no license, permit or approval
or authorization from, or exemption by notice or report, or registration, filing or declaration with, any governmental authority having jurisdiction over Seller is required (other than those previously obtained and delivered to Purchaser or those
the failure of which to obtain or deliver would not have a Material Adverse Effect) in connection with the execution or delivery by Seller and the validity or enforceability of this Agreement, the consummation of the series of transactions
contemplated hereby, or the performance by Seller of its duties and obligations hereunder.
  12

                   (J)        Intellectual Property
Rights.  In connection with the Assets, Seller utilizes no trade names, trademarks, service marks, logos and other intellectual property rights other than the Card Marks.  Other than the Card Marks that are owned by third parties, Seller
is the sole and exclusive owner of all Card Marks and such Card Marks do not violate or infringe upon the intellectual or proprietary rights of any Person.  With respect to those Card Marks not owned by Seller, Seller represents and warrants
that it has all necessary power and authority to use the same under a valid written license and that Seller is in full compliance with any such license.
                  (K)        Claims, Litigation and Audits.  There are no administrative or court
actions, suits or proceedings of any kind now pending, and, to the best of Seller’s knowledge, no such actions, suits or proceedings are threatened against Seller or its affiliates, that if adversely decided would have a Material Adverse
Effect, impose liability on a subsequent owner of the Assets or would have an adverse effect on Seller’s ability to carry out the terms of this Agreement.  To the best of Seller’s knowledge, there are no outstanding judgments, orders,
rules, regulations, official interpretations and guidelines of any arbitrator or governmental authority with jurisdiction over Seller or any of Seller’s affiliates which could have a Material Adverse Effect.  No audit, investigation,
inspection or any other review or inquiry whatsoever of any governmental authority, and no accountant report, opinion, or other financial reporting and accounting material, concerning the Assets and conducted during, or covering, the two (2)
calendar years immediately preceding the date of this Agreement has reported Seller’s violation of any Requirements of Law or any other issue or matter that would have a Material Adverse Effect or that would impose any liability on a subsequent
owner of the Assets.
                 (L)        Tax Returns and
Liabilities.  Seller has properly and timely filed all federal, state, county, local and other tax information returns required by law to be filed on or prior to the Closing Date with respect to the Assets and its participation in the Accounts
and has withheld, paid or accrued all amounts shown thereon to be due which are due prior to the Closing Date or accrue through such date.
                  (M)        Operation In Accordance With Law.  Seller is, and on the Closing Date,
will be in compliance with all Requirements of Law relating to the conduct of the Business.
                  (N)        Absence of Change.  Between November 30, 2002 (the “Site Visit
Date”) and the date hereof, Seller has not altered, modified or failed to comply with Seller’s Policies and Procedures applicable to any of the Accounts or related Receivables, including, without limitation, origination, underwriting,
charge-off, delinquency grading, reaging, and collection procedures.
                  (O)        Credit Insurance.  As of the Cut-off Time no Account is being solicited
for credit life insurance. 
                  (P)        other
Agreements.  There are no agreements, contracts, or other business arrangements or understandings affecting any of the Assets, and there are no products, enhancements, programs, benefits or services offered in connection with any of the
Accounts, other than such products, enhancements, programs, benefits or services, agreements, contracts, or other business arrangements or understandings that Seller has expressly disclosed to Purchaser in this Agreement.
 13

                   (Q)        Undisclosed Liability. 
Neither Seller nor any Seller affiliate has any material obligations, commitments or any other liabilities, absolute or contingent, known or unknown, relating to the Assets, except as expressly disclosed herein and except as would not, individually
or in the aggregate, have a Material Adverse Effect.
                  (R)        Disclosure.  To the best of Seller’s knowledge, no statement or
description contained in any document provided or delivered by Seller to Purchaser in connection with the series of transactions contemplated hereby, as of the date of such statement or description, contains any untrue statement of a material fact.
Seller has informed Purchaser, in writing, of any and all features, reward programs, benefits, enhancements, promotional rate programs, balance transfer programs, introductory rate strategies, and usage or activation strategies utilized by the
Seller in the past with respect to the Accounts that remain in effect, or which continue to affect any Account, as of the Cut-off Time.
                  (S)        Effect of Law on Closing.  There is no Requirement of Law applicable to
Seller which would prevent Seller from selling the Assets to Purchaser as contemplated by this Agreement, and the Assets are being sold in compliance with all Requirements of Law.
                  (T)          Title and Liens.  Seller has, and will convey to Purchaser on
the Closing Date, good and marketable title to the Assets, free and clear of any Lien of any Person.
                  (U)          Seller’s Card Processor.  Seller’s Card Processor
has been informed of all Seller’s responsibilities and obligations that will require the assistance of Seller’s Card Processor and: (i) are necessary for the Closing to occur; (ii) will arise during the Interim Servicing Period pursuant to
the terms of the Interim Servicing Agreement; (iii) are necessary for the Conversion Date to occur in accordance with the Conversion Schedule discussed in the Interim Servicing Agreement; and (iv) will arise after the Conversion Date pursuant to the
terms of this Agreement.
 3.2           Purchaser’s Representations and Warranties
  Purchaser represents and warrants to Seller both on the date hereof and on Closing Date as follows:
                  (A)        Due Organization.  Purchaser is a national banking association, duly
organized, validly existing and in good standing under the laws of its jurisdiction of organization. Purchaser has full power and authority to (i) own and use its property and to conduct its business related to post Closing ownership of the Accounts
as now being conducted and possesses all necessary licenses and permits, and (ii) enter into and carry out the terms of this Agreement and the series of transactions contemplated hereby.
                  (B)        Authorization and Binding Effect.   The execution, delivery and
performance of this Agreement by Purchaser have all been duly authorized by all necessary corporate action and do not and will not conflict with or result in a breach or violation of Purchaser’s charter or by-laws, any agreement to which
Purchaser is a party or by which it or its assets are bound or any Requirements of Law. This Agreement is the legal, valid and binding obligation of Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws or regulations that affect the enforcement of creditors’ rights generally.
  14

                    (C)        No Breach of Other
Agreements.  None of the execution, delivery, or performance of this Agreement will constitute a violation of or be in conflict with, or constitute a default under (a) Purchaser’s Articles of Association, By-Laws, and other organic
documents of corporate self-governance (b) any agreement, instrument or other obligation to which Purchaser is a party or by which is bound; or (c) any Requirement of Law.
                  (D)        No Consents.  No consent of any Person and no license, permit, approval,
or authorization from, or exemption by notice, or report, or registration, filing, or declaration with, any governmental authority having jurisdiction over Purchaser is required (other than those previously obtained and delivered to Seller or those
the failure of which to obtain or deliver would not have a Material Adverse Effect) in connection with the execution or delivery by Purchaser and the validity or enforceability of this Agreement, the consummation of the series of transactions
contemplated hereby, or the performance by the Purchaser of its duties and obligations hereunder.
                  
(E)        Claims, Litigation and Audits.  There are no administrative or court actions, suits, or proceedings of any kind now pending, and, to the best of Purchaser’s knowledge, no such actions,
suits or proceedings are threatened against Purchaser, that if adversely decided would have an effect on Purchaser’s ability to carry out the terms of this Agreement. 
  IV.          ARTICLE IV.  Certain Transitional Matters
  4.1          Enhancements.  At all times through the Conversion Date or such earlier date the Seller and Purchaser may agree upon, Seller shall continue to provide
or otherwise make available all of the benefits, programs, features, offers, point programs, rebate programs, enhancements and other services provided to Cardholders as of the Closing Date (whether provided pursuant to a Benefit Agreement or not)
(collectively, “Enhancements”) on the same terms and in the same manner as such Enhancements were provided immediately prior to the Closing Date, all as previously disclosed to Purchaser.  Seller agrees that it has not received any
notice of the termination or amendment of any Benefits Agreements and knows of no plans for such termination or amendment which may take effect on or before the Conversion Date.  Notwithstanding the above, as of the Conversion Date, Seller
(i) shall either have terminated the Benefits Agreements or excluded all Accounts from the Benefits Agreements, so that on the Conversion Date the Accounts are not subject to any Benefits Agreements; and (ii) shall have, in accordance with
any Requirements of Law and any applicable rules, terms and conditions or agreements with the Cardholders, terminated all Enhancements provided by Seller, any Seller affiliate or any third party (whether provided pursuant to a Benefit Agreement or
not), so that all obligations whatsoever of said parties to the Cardholders have ended prior to the Conversion Date and the Purchaser is not liable or obligated to continue any Enhancements or to honor any Enhancements.  Any notice sent to
Cardholders related to the requirements in this Section 4.1 shall be subject to Purchaser’s prior written approval, which shall not be unreasonably withheld or delayed.
 4.2          Changes in Terms.  
                  (A)        Seller shall reasonably assist Purchaser in the timely mailing, at
Purchaser’s sole cost and expense, of such change in terms notice(s) as is reasonably required by Purchaser.
  15

   When the change in terms notice(s) are mailed shall be determined by Purchaser.  Purchaser shall bear the cost of producing and mailing these notices.  These notices
will inform the Cardholders of the changes Purchaser will make to their Card Agreement and will be accompanied by letters prepared by Purchaser with the prior approval of Seller (which approval shall not be unreasonably withheld or delayed, however
such approval but shall not include approval over new benefits and the changes to the Card Agreements) notifying each Cardholder of the sale of the Accounts, changes in Benefits Agreements and any new benefits, all in a manner which serves to
preserve and promote the goodwill and business reputation of both Seller and Purchaser.  Seller agrees to provide Purchaser with a tape of the Accounts for Purchaser to use in preparing and mailing each change in terms notice (“Change in
Terms Tape”).  The format and contents of the Change in Terms Tape will be the same as described in Schedule I to the Interim Servicing Agreement’s Exhibit A.  Each Change in Terms Tape will be provided to Purchaser no later than
ten (10) business days (“Tape Date”) prior to Purchaser mailing the applicable change in terms notice.  Each Change in Terms Tape shall have been produced no earlier than five (5) days prior to the Tape Date and shall be current as of
said date and contain all of the Accounts.  In the event that an Account is not contained on a Change in Terms Tape, Seller agrees to repurchase such Account from Purchaser pursuant to Section 2.5 above.
                   (B)          On the Conversion Date, the Purchaser shall establish on its card
processing system, those Accounts that have been designated as Employee Accounts with an annual percentage rate of 10.00%.
 ARTICLE V.  Covenants
  5.1          Negative Covenants of Seller.  With respect to the Business, Seller covenants and agrees that between the date hereof and the Closing Date, Seller
shall not engage in any transaction or incur any obligation or liability with respect to the Business except in the ordinary course of its business as presently conducted; and shall use its commercially reasonable best efforts to preserve its
business organization to keep such Business intact, to keep available a work force of a quality and quantity capable of rendering services comparable to the services of its present employees and to preserve the goodwill of its suppliers, customers
and others having business relations with Seller relating to said programs.  Without limiting the generality of the foregoing, Seller, with regard to its Business, shall not, without the prior written consent of Purchaser, do any of the
following:

	  
 	  (A)
 	  from the date hereof and through the Closing Date, materially amend, terminate or otherwise materially modify any of its contracts or commitments in a manner that would
materially and adversely affect the Accounts, except as required by Requirements of Law;
 
	  
 	  
 	  
 
	  
 	  (B)
 	  from the date hereof and through the Closing Date, re-age any of the Accounts and/or Receivables, except as required by Requirements of Law;
 
	  
 	  
 	  
 
	  
 	 (C)
 	  (and shall not allow any affiliate to), except as otherwise permitted in Section 13(f) of that certain Joint Marketing Agreement dated of even date herewith between
Seller’s parent corporation and Purchaser (the “Joint Marketing Agreement”), at any time within the Restricted Period, specifically target (other than the assistance provided by Seller’s parent corporation to Purchaser in

 

  16

	  
 	  
 	  accordance with the terms of the Joint Marketing Agreement) any offer of a credit card or charge card to Persons who were Cardholders with an Account; provided, however, that
Seller may offer Persons who were Cardholders the opportunity to participate in another credit card or charge card program endorsed by Seller provided the opportunity is not only made available to such Persons, but rather is offered as a part of a
general solicitation to all customers of Seller, and provided further that no such Persons are directly or indirectly identified as a customer of Purchaser or offered any terms or incentives different from that offered to all other customers of
Seller;
 
	  
 	  
 	  
 
	  
 	  (D)
 	  from the date hereof and through the Closing Date, sell, assign, lease or otherwise transfer or dispose of any of the Assets;
 
	  
 	  
 	  
 
	  
 	 (E)
 	  from the date hereof and through the Closing Date, communicate with any Cardholder or other users of the Accounts, except in the ordinary course of business in accordance with
past practice and custom and in a manner which does not identify Purchaser or any of Purchaser’s affiliates or as required by Requirements of Law; provided, however, that Seller shall first notify Purchaser of such communications;
and
 
	  
 	  
 	  
 
	  
 	  (F)
 	  from the date hereof and through the Closing Date and notwithstanding the immediately above section (E) or any other sections of this Agreement, market or solicit, via
telemarketing, direct mail, direct promotions or the internet, the Cardholders any reduced rate offer without Purchaser’s prior written consent.
 

  5.2          Affirmative Covenants of Seller.
                  (A)          Seller shall give Purchaser and its representatives full access
during Seller’s normal business hours, upon reasonable advance notice, to all of the Assets, including, without limitation; accounting, financial, statistical, and corporate records relating to the Business; and for purposes of examining the
same in connection with the series of transactions contemplated hereby.
                  (B)          Purchaser and Seller shall meet and work together regarding the
management of the Assets prior to the Conversion Date to effect a smooth transition.  In the event of a significant attrition of Seller’s employees which affects the management of Assets, the parties shall confer and consult in order to
institute the steps necessary to ensure no interruption of the quality and quantity of services rendered to the Cardholders in accordance with past custom and practice.  Seller shall employ underwriting and collection criteria which are no less
stringent than those employed by Seller in the ordinary course of its Business as currently conducted and as set forth in Seller’s Policies and Procedures and in a manner which complies with all Requirements of Law.
                 (C)          If Seller is unable to transfer the prefixes for its VISA Bank
Identification Number(s) (“BIN”) and MasterCard Interbank Card Account number(s) (“ICA”) to Purchaser on the Conversion Date pursuant to Section 5.2(D) below or if the BIN and ICA numbers are not to be transferred to Purchaser,
Seller shall at its expense, after the Conversion Date, and until such date as the prefix numbers are transferred to Purchaser (if ever):
  17

	  
 	                 (i)        Provide reasonable assistance to
Purchaser (which shall include, without limitation, obtaining the full 23 digit reference number for a particular transaction, the production of documents (the production of documents shall include, but not be limited to, production of statement,
payment, and access check copies) and the interpretation of any relevant comments, all within either seven (7) business days or, if due to an emergency, twenty four (24) hours after Purchaser’s request) to help resolve any dispute or claim of
any Cardholder relating to any transactions or balances that posted to an Account bearing the Seller’s ICA numbers or BIN, as those terms are defined in Section 5.2(D) below, or Seller shall be responsible for any and all losses incurred by
Purchaser as a result of Seller’s failure to comply with the above.
 
	  
 	  
 
	  
 	                 (ii)        Process draft retrievals and
chargeback requests within twenty four (24) hours after receipt of the request from Purchaser and shall promptly forward the draft retrievals to Purchaser upon receipt.
 
	  
 	  
 
	  
 	                (iii)        Notify Purchaser, within forty
eight (48) hours of receipt by Seller, of any representment, pre-arbitration, pre-compliance, compliance or arbitration case it receives involving the Accounts(“Cases”).  After receiving Purchaser’s response to a Case, Seller
shall process the response within twenty four (24) hours after such receipt. Seller shall not make a decision on any Case or any chargeback involving the Accounts unless approved in writing by Purchaser.
 
	  
 	  
 
	  
 	                 (iv)        Settle with Purchaser on any
chargeback involving the Accounts and its BIN and ICA numbers via ACH within five (5) days of Purchaser’s request, which settlement shall be initiated by Purchaser.  If Seller fails to settle on any such chargeback within thirty (30) days
of Purchaser’s request, Seller agrees that Purchaser may reverse the entry and Seller shall be responsible for such entry.
 

                   (D)        Seller agrees to transfer its VISA Bank Identification Number(s)
(“BIN”) and MasterCard InterBank Card Account (“ICA”)number(s) used for the Accounts after the BINs and/or ICA numbers contain only the Accounts and there has been no merchant activity for at least ninety (90) days.  Seller
agrees that the transfer of the BINs and/or ICA numbers (with only the Accounts contained therein) to Purchaser will occur no later than ten (10) days after the Conversion Date.  Until Purchaser is transferred the BINs and/or ICA numbers Seller
shall, from time to time following the Conversion Date and at its expense, as reasonably requested by Purchaser:

	  
 	                (i)        Take all such steps and perform such
acts as are necessary to confirm to Purchaser the smooth and orderly post-Conversion Date ownership and operation of the Accounts.  Information on Account transactions or payments that occur or are received between the Seller’s last file
maintenance day for the Accounts prior to the Conversion Date, (which last file maintenance day is the Thursday prior to the Conversion Date) and through the end of the Conversion Date shall be forwarded to Purchaser on the day following the
Conversion Date in an electronic format designated by Purchaser.
 
	  
 	  
 
	  
 	                 (ii)        Provide information on
post-Conversion Date Account transactions and payments on a daily basis to Purchaser by electronic communication, in a format 
 

  18

	  
 	  designated by Purchaser, which shall include the full 23 digit reference number for a particular transaction and a description of each transaction, including the city and state.
All such post-Conversion Date transactions and payments shall be settled via ACH, which net settlement shall be initiated by Purchaser and include those transactions and payments that are posted to an Account. All above-mentioned electronic
transmissions shall include for each payment, the amount of the payment, the date the payment was received by Seller and the Account’s credit card number.
 
	  
 	  
 
	  
 	                (iii)        Provide to Purchaser, daily, with
returned payment checks and access checks for the Accounts via overnight courier and that settlement of such checks will be handled on a case by case basis and will be settled via wire transfer.
 
	  
 	  
 
	  
 	                  (iv)        Upon the request of Purchaser,
take all steps necessary to report immediately any invalid Account(s) through the periodic warning bulletin system maintained by MasterCard and VISA utilizing the BIN and/or ICA.
 
	  
 	  
 
	  
 	                  (v)        Notwithstanding the above, Seller
agrees that it shall not process or accept any trailing transaction or payment on any Account sixty (60) days after the Conversion Date and acknowledges and agrees that Purchaser will not accept or settle on any trailing transaction or payment that
occurs or is received sixty (60) days after the Conversion Date unless otherwise agreed to by Purchaser on a case by case basis.
 
	  
 	  
 
	  
 	  A trailing transaction is defined as, but is not limited to, the following types of transactions: (i) all cardholder retail activity, (i.e., sales, refunds and cash advances);
(ii) any automatic debit on an Account; and (iii) any transaction on an Account below the floor limit established by MasterCard or VISA.
 

                  (E)          Seller shall supply Purchaser with Seller’s routing and
transit number and direct deposit number thirty (30) days prior to the Conversion Date.  Seller agrees to cooperate with Purchaser in testing the trailing transaction processes as outlined in this Section 5.2 to ensure that the processes will
work to the Purchaser’s reasonable satisfaction.  Seller and Purchaser also agree that a testing transaction report will be supplied to the Seller, detailing the number of trailing transactions, the type of transaction, and the dollar
value of each automated clearing house settlement.  
                  
(F)        From the Closing Date and through the ninetieth (90th) day following the Conversion Date, Seller hereby authorizes Purchaser to use the Card Marks: (i) to identify Purchaser as Seller’s
successor in interest to the Accounts; (ii) on Cards; (iii) on periodic statements, Card Agreements and other communications to Cardholders with respect to the Accounts for which Cards bear Seller’s name; and (iv) for
identification purposes in any collection efforts related to an Account for the period in which the related Cards bear Seller’s name so long as such collection efforts comply with the terms of the Card Agreement and all Requirements of
Law.  During the period of use authorized herein, Purchaser shall use the Card Marks solely: (i) in the forms and formats and on forms currently used by the Seller for Cards, periodic statements, Card Agreements and communications, or
(ii) in the forms and formats on such forms as Seller shall approve in writing prior to any such use, which approval shall not be unreasonably withheld or delayed.  It is expressly agreed that other than the limited license granted above,
Purchaser is not purchasing or acquiring any right, title or interest in the name of 
  19

   Seller or any trade names, trademarks, logos or service marks of Seller.  Purchaser shall make no use of any of the Card Marks which will damage or diminish Seller’s
goodwill.  Throughout the term of the license granted hereby, Seller represents and warrants that it has the right to license the Card Marks to Purchaser and that the Card Marks do not and will not violate or otherwise infringe upon the
intellectual, proprietary or any other rights of any Person.
                 
(G)          On the Conversion Date, Seller shall deliver to the Purchaser all of the Files necessary for Conversion, or such other Files as may be reasonably requested by Purchaser.All Files
necessary for the Business Accounts that are Accounts shall be delivered to Purchaser ten (10) business days prior to the Conversion Date.  Seller shall continue to hold and retain post-Conversion for the sole benefit of Purchaser, any other
Files, including those Files which cannot be extracted from information about Seller’s other member accounts without undue effort or expense (the “Retained Files”).

	  
 	            (i)        From time to time following Closing and the Conversion Date, the
Seller shall deliver such Retained Files as reasonably requested by Purchaser within five (5) business days after a request.  The cost of retrieving and delivering the Retained Files to Purchaser shall be borne by the Seller.  Time frames
for extraordinary requests for information will be mutually negotiated at the time of the request. Extraordinary requests are defined as:  any information retrieval request the size of which cannot be reasonably filled in the ordinary course of
business in the five business day time frame referred to above on this Section 5.2(G)(i), utilizing existing staff, without effect to normal operations.
 
	  
 	  
 
	  
 	            (ii)        In discharging its obligations hereunder, Seller agrees to
utilize such document storage, safekeeping and security methods as are customary in the industry. Without limiting any of its obligations under this Agreement, Seller agrees to maintain the Retained Files for a period following the Closing Date in
compliance with  federal and/or state law or with Seller’s current record retention policy for the applicable document whichever is longer.
 
	  
 	  
 
	  
 	           (iii)        The operation of this Section 5.2(G) shall survive the Closing
and Conversion Date.
 

                   (H)         As of
the Conversion Date, Seller agrees that: (i) no Account will have a credit balance that a Cardholder has requested in writing to be refunded prior to the Cut-off Time; (ii) no Account will have a credit balance that has not been requested in writing
to be refunded that has been in existence for more than ninety (90) days; (iii) no Account will have an initial billing dispute or any other initial dispute that has been in existence for more than forty (40) days that has not been decisioned and
processed by Seller accordingly, with the exception of international transactions; (iv) no Account will have an outstanding representment that has been in existence more than thirty (30) days that has not been decisioned and processed by Seller
accordingly; and (v) no Account will have an outstanding compliance or arbitration case that has not been decisioned and processed by Seller accordingly. 
                   (I)        Seller agrees that: (i) any pre-compliance case, pre-arbitration case,
incoming compliance case, or incoming arbitration case that is received by Seller within the ten (10) day period prior to the Conversion Date for which the date the Seller must respond is after the
  20

   Conversion Date will be promptly forwarded to Purchaser for decisioning and processing; and (ii) without Purchaser’s consent, it shall not accept any resolution (i.e.,
that Seller or Cardholder will be liable) of any pre-compliance case, pre-arbitration case, incoming compliance case, or incoming arbitration case for which the date the Seller must respond is within the ten (10) day period prior to the Conversion
Date.
                  (J)          Prior to the Conversion Date,
Seller agrees to use commercially reasonable efforts to clear any suspense account entries relating to payments or any chargebacks for the Accounts. 
                   (K)        Seller agrees to flag each Reject Account #1, Reject Account #2, Guaranteed
Account, credit card accounts that are secured, Employee Accounts, Business Accounts and (all collectively referred to as “Flagged Accounts”) so that, on each tape provided by Seller or Seller’s Card Processor, each such type of
credit card account is readily identifiable on Purchaser’s Card Processor’s system.  If Seller fails to identify any Flagged Accounts in such manner, other than the employee credit card accounts that are Accounts, Purchaser shall not
have any obligation, if any, to purchase such Flagged Accounts or, if Closing has already occurred, Seller agrees to repurchase such Flagged Accounts from Purchaser pursuant to Section 2.5 above.  With respect to any employee credit card
accounts that are not properly flagged, Purchaser will convert those accounts to Purchaser’s standard credit card terms for the Accounts.  A list of the types of Flagged Accounts and their corresponding identifying codes are hereto
attached as Exhibit 5.2K
                   (L)        If requested by
Purchaser, Seller shall provide Purchaser with historical statistical information with respect to the Accounts, as set forth on Exhibit 5.2L, attached hereto, certified true and correct by a duly authorized Senior Vice President of
Seller.  Purchaser shall be entitled to receive, at Purchaser’s expense, an opinion of a nationally-recognized certified public accounting firm respecting the accuracy of such information based upon such accounting firm’s review of
the Accounts pursuant to procedures agreed upon by Purchaser and such accounting firm.  Seller shall reasonably cooperate, at Purchaser’s sole cost and expense, with such accounting firm in the performance of its review.

                 (M)         In accordance with the operating procedures of Visa and
MasterCard, any fees, normal operating assessments and other charges imposed by Visa, or MasterCard, or any portion thereof, with respect to the Assets owned by Purchaser after the Cut-off Time, but serviced by Seller during the Interim Servicing
Period will be paid by Purchaser.  Seller shall provide Purchaser by the 7th business day subsequent to the end of each calendar quarter that occurred during the Interim Servicing Period with all such reports necessary for Purchaser to
determine the fees, normal operating assessments and other charges imposed on the Assets for such calendar quarter.
                   (N)        In order to comply with the requirements of the Fair Credit Reporting Act,
Seller agrees to provide Purchaser (prior to the Conversion Date and on a tape formatted the same way the conversion tapes are formatted) with the date on which each Account, that is reported to a credit reporting agency as being delinquent as of
the Conversion Date, first went delinquent. 
                  
(O)        Upon the reasonable request of Purchaser, at Purchaser’s expense, Seller shall provide Purchaser with copies of all reports, summaries, and/or conclusions issued by Seller, any
  21

   third party and/or any regulator relating to the servicing of the Account by Seller’s Card Processor.
  5.3          Mutual Covenants.
                  (A)        Subject to the terms and conditions herein provided, each party shall cooperate
fully with the other and shall use its commercially reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things commercially reasonably necessary or appropriate hereunder and under any Requirements
of Law to consummate the series of transactions contemplated by this Agreement.  Each party further agrees to use its commercially reasonable best efforts to obtain consents of all third parties and governmental agencies necessary for the
consummation of the series of transactions contemplated by this Agreement.
                 (B)        Between the date hereof and the Closing, each party shall promptly advise the
other in writing of any fact which, if existing or known at the date hereof, would have been required to be set forth or disclosed in or pursuant to this Agreement or of any fact which, if existing or known at the date hereof, would have made any of
the representations contained herein materially untrue or misleading.
  ARTICLE VI. Closing
  6.1        Closing. The Closing shall take place on the Closing Date at the offices of Purchaser in Wilmington, Delaware or such other place and date as the parties hereto may
mutually agree.  The parties will endeavor to consummate the Closing in Wilmington, Delaware in a remote fashion through the use of facsimile transmission and overnight couriers.  If the Closing has not occurred on or before January 31,
2003, then either party has the option to terminate this Agreement without any further obligation or liability to the other party effective upon giving notice of such termination to such other party except for any obligation contained herein that
specifically survives any termination hereof.  Such option to terminate the Agreement described above must be exercised by 5:00 PM EST of the next business day after such above stated date, or the option to terminate for such failure to close
shall be void and of no further force or effect.  In the event that neither party has the option to terminate this Agreement in accordance with the above described option or the option is not exercised or not timely exercised, the parties shall
mutually agree upon a later Closing Date.  Notwithstanding the above, if all of the conditions precedent to a party’s obligations hereunder set forth in Sections 6.2 or 6.3 hereof (whichever the case may be) have been fulfilled on or prior
to the Closing Date, that party shall have no right to terminate this Agreement.
  6.2          Closing: Conditions Precedent to Purchaser’s
Obligations.  The obligation of Purchaser to close under this Agreement is subject to the fulfillment on or prior to the Closing Date of each of the following conditions (unless waived by Purchaser):
                 (A)          The representations and warranties made by Seller herein shall be
true and correct in all material respects as of the Closing Date, as though such representations and warranties were restated and made at and as of the Closing Date;
                  (B)          All the necessary consents, regulatory and other approvals,
licenses and other authorizations shall have been obtained (or the relevant waiting period shall have expired)
  22

   permitting the post-Closing ownership and operation by Purchaser of the Assets on terms substantially comparable to those existing at the present;
                  (C)        As of the Closing Date, there shall not have been any material adverse
change in the Assets since the Site Visit Date;
                  (D)        All of the deliveries which Seller is obligated to make or cause to be made
under Article VII of this Agreement shall have been made;
                  (E)        No claim, action, suit, proceeding or governmental investigation shall have
been threatened or instituted challenging the validity of this Agreement or the series of transactions contemplated hereby;
                  (F)        All pre-Closing covenants, obligations and other matters to be performed on the
part of Seller shall have been fulfilled;
                 (G)        ABC
Bancorp, Seller’s sole shareholder, shall have executed and delivered to Purchaser a Joint Marketing Agreement that is reasonably acceptable to Purchaser; and
                  (H)        Seller shall deliver or cause to be delivered to Purchaser minutes of the
meeting of Seller’s board of directors with respect to the approval of this Agreement and the transactions contemplated hereunder and the authorization of officers of Seller to sign this Agreement and related documents.
  6.3        Closing: Conditions Precedent to Seller’s Obligations.  The obligation of Seller to close under this Agreement is subject to the fulfillment on or
prior to the Closing Date of each of the following conditions (unless waived by Seller):
                  (A)        The representations and warranties made by Purchaser herein shall be true and
correct in all material respects as of the Closing Date, as though such representations and warranties were restated and made at and as of the Closing Date;
                  (B)        All the necessary consents, regulatory and other approvals, licenses and other
authorizations shall have been obtained (or the relevant waiting period shall have expired) permitting the post-Closing ownership and operation by Purchaser of the Assets on terms substantially comparable to those existing at the present;

                 (C)        All of the deliveries which Purchaser is obligated to make
or cause to be made under Article VII hereof shall have been made;
                 (D)          No claim, action, suit, proceeding or governmental investigation
shall have been threatened or instituted challenging the validity of this Agreement or the series of transactions contemplated hereby; 
                  (E)          All pre-Closing covenants, obligations and other matters to be
performed on the part of Purchaser shall have been fulfilled;
  23

                    (F)        Purchaser shall deliver or
cause to be delivered to Seller the authorization of officers of Purchaser to sign this Agreement and related documents.
  ARTICLE VII.  Deliveries At Closing 
  7.1           Seller.  At the Closing, Seller shall deliver or cause to be delivered to Purchaser the following:
                  (A)        Written evidence of transfer to convey to Purchaser all of Seller’s
rights, title and interest in and good and marketable title to the Assets, free and clear of any and all Liens in the form attached hereto as Exhibit 7.1A;
                  (B)        A Certificate of Good Standing or Existence of Seller, attached hereto as
Exhibit 7.1B;
                  (C)        A certificate, dated the
Closing Date, signed by the President or a Senior Vice President of Seller, certifying that the conditions specified in Section 6.2 have been fulfilled, the form of which is attached hereto as Exhibit 7.1C;
                 (D)        A certificate, dated as of the Closing Date, signed by the Secretary or an
Assistant Secretary of Seller, certifying the incumbency of the officers or other representatives of Seller signing this Agreement on behalf of Seller and the related documents and instruments to be delivered in connection herewith, the form of
which is  attached hereto as Exhibit 7.1D; and 
                  (E)        Such additional instruments, documents or certificates as may be reasonably
requested by Purchaser and necessary for the consummation of the Closing and the series of transactions contemplated hereby.
  7.2        Purchaser.  At the Closing, Purchaser shall deliver or cause to be delivered to Seller the following:
                  (A)        the Preliminary Purchase Price as provided in Section 2.3;
                  (B)        A certificate, dated the Closing Date, signed by a President or a
Senior Vice President of Purchaser, certifying that the conditions specified in Section 6.3 have been fulfilled, the form of which is attached hereto as Exhibit 7.2B;
                  (C)          certificate, dated as of the Closing Date, signed by the Secretary
or an Assistant Secretary of Purchaser, certifying the incumbency of the officers or other representatives of Purchaser signing this Agreement on behalf of Purchaser and the related documents and instruments to be delivered in connection herewith,
the form of which is attached hereto as Exhibit 7.2C; and
                 (D)        Such additional instruments, documents or certificates as may be reasonably
requested by Seller and necessary for the consummation of the Closing and the series of transactions contemplated hereby.
  24

   ARTICLE VIII.  Risk of Loss  
  The risk of loss, damage or destruction from any cause to the Books and
Records and Files shall be borne by Seller at all times between the date hereof and the date the Books and Records are in Purchaser’s possession.  The risk of loss, damage or destruction from any cause to any other Assets shall be borne by
Seller at all times between the date hereof and the Closing Date.
  ARTICLE IX.  Indemnification
  9.1        Seller’s Indemnification of Purchaser.  Subject to the terms of this Article IX, Seller agrees to indemnify, defend and hold Purchaser, its successors and
permitted assigns, harmless of and from any claim, damage, liability, loss, cost or expense (including, without limitation, reasonable attorneys’ fees and expenses) or any other liability of every nature, kind and description whatsoever
including, without limitation, acts or liabilities to third parties incurred or suffered by Purchaser, by reason of or resulting from or arising out of:
                  (A)        the operation of the Business by the Seller prior to the Cut-off Time (whether
known or unknown, contingent or matured), including, without limitation, indemnification for violations of Requirements of Law by Seller prior to the Cut-off Time; 
                  (B)        any misrepresentation or breach of any of Seller’s representations,
warranties or covenant contained herein or in any document or instrument delivered by Seller hereunder;
                 (C)        the termination of any agreements or relationships;
                 (D)        the exclusion of the Accounts from all Benefits Agreements; or

                (E)          the termination of the Enhancements for any
Account.
  9.2         Purchaser’s Indemnification of Seller.  Subject to the terms of this Article IX , Purchaser agrees to indemnify,
defend and hold Seller, its successors and permitted assigns, harmless of and from any claim, damage, liability, loss, cost or expense (including, without limitation, reasonable attorneys’ fees and expenses) or any other liability of every
nature, kind and description whatsoever including, without limitation, acts or liabilities to third parties incurred or suffered by Seller, by reason of or resulting from or arising out of:
                 (A)          the operation of the Business by the Purchaser subsequent to the Cut-off
Time (whether known or unknown, contingent or matured), including, without limitation, indemnification for violations of Requirements of Law by Purchaser after the Cut-off Time); or
                 (B)          any misrepresentation or breach of any representation, warranty or
covenant of Purchaser contained herein or in any document or instrument delivered by Purchaser hereunder.
  9.3          Manner of Handling
Claims.  If either party obtains knowledge of: (a) facts that would give rise to a right of indemnification for that party; or (b) commencement of an action that may require indemnification, such party shall give written notice to the other
party as promptly as practicable after its receipt of that knowledge.  Following receipt of such notice, the indemnifying party shall be entitled to participate in the defense of such claim and, upon notice
 25

   delivered promptly to the indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to the indemnified party.  Within a reasonable period
following the assumption of such defense by the indemnifying party, the indemnified party shall be permitted to participate in the defense of such claim and may retain additional counsel of its choice at its own expense.  If however, the
defendants in such action include both parties, and the indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the indemnifying party, the
indemnified party shall be entitled to separate counsel, reasonably acceptable to the indemnified party, which shall be paid for by the indemnifying party.  In the event that the indemnifying party reimburses the indemnified party for a third
party claim, the indemnified party shall remit to the indemnifying party any reimbursement that the indemnified party subsequently receives for such third party claim.
  9.4        Other Limitations.      The indemnifying party hereunder shall have no liability under this Article IX and Article XI of the Interim
Servicing Agreement unless and until such indemnifying party (as the case may be) receives notice asserting a claim for indemnification with respect thereto on or before the second anniversary of the Conversion Date.  Notwithstanding anything
to the contrary contained in this Article IX or Article XI of the Interim Servicing Agreement, no indemnification shall be required to be made hereunder until the aggregate amount of all claims, damages, liabilities, losses, costs or expenses
actually incurred by the indemnified party hereunder exceeds $50,000, at which point the indemnified party hereunder shall be entitled to indemnification only when, and only with respect to amounts by which, the aggregate of all such claims,
damages, liabilities, losses, costs or expenses actually incurred exceeds such amount.  In no event shall the aggregate liability of the indemnifying party hereunder exceed an amount that equals three times the Closing Purchase Price. This
Section 9.4 shall (i) have no effect on Seller’s obligations pursuant to Section 2.5 or 2.6. 
 9.5        Subrogation.     The indemnifying party shall be subrogated to any claims or rights of the indemnified party as against any other persons with
respect to any amounts paid by the indemnifying party under this Section.  The indemnified party shall cooperate with the indemnifying party, at the indemnifying party’s expense, in the indemnifying party’s assertion of any such
claim.
  9.6          Mitigation of Losses.     .Each of Seller and Purchaser shall use reasonable efforts to
minimize (and Purchaser shall cause any assignee or transferee of its rights or obligations hereunder to use its reasonable efforts to minimize)any losses for which any other party hereto may be liable pursuant to this Agreement.
 
9.7        Survival of Representations, Warranties and Covenants.     Except as expressly provided otherwise herein, all representations,
warranties and covenants contained in this Agreement shall survive the Closing for a period of two years after the Conversion Date.  This Section 9.7 shall not apply to an indemnifying party’s obligation with respect to claims for
indemnification that were received by such party on or before the second anniversary of the Conversion Date.
  ARTICLE X.  
  26

   10.1        Confidentiality     From and after the execution of this Agreement, the parties hereto
shall keep confidential and shall cause their respective affiliates, officers, directors, employees, agents and advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) (collectively,
“Representatives”), to keep confidential and not disclose to any third party any and all information concerning the series of transactions contemplated herein, the terms of this Agreement, the Interim Servicing Agreement and any other
agreement or document executed in connection herewith and any and all information obtained from the other party concerning the assets, properties and business of the other party, and shall not use such information for any purpose other than
consummating the transaction contemplated by this Agreement; provided, however, that neither party shall be subject to the above obligations with respect to any such information provided to it by the other party which: (a) was in the receiving
party’s possession or in the public domain at the time of the disclosing party’s disclosure, or subsequently enters the public domain through no act or failure to act on the part of the receiving party; or (b) is lawfully obtained by the
receiving party from a third party that is not subject to a confidentiality agreement or given to the receiving party on a confidential basis.  Notwithstanding the above, either party may disclose the information described in the first sentence
to (i) a governmental authority if, and only to the extent, required by law or regulation; or (ii) to its Representatives for purposes of consummating the transaction contemplated by this Agreement. Neither party, nor any of their Representatives,
shall make any announcements or press releases regarding this Agreement or the series of transactions contemplated herein without the prior written consent of the parties hereto unless required by applicable law.  This section shall survive the
Closing or any termination of this Agreement.
 10.2        “No-Shop” Provisions.  Seller agrees that it shall neither, directly or
indirectly, through brokers, agents, affiliates or otherwise, sell, transfer or otherwise encumber or offer to sell, transfer or otherwise encumber, or solicit, discuss, accept or take any other action with respect to an offer from any other
potential purchaser to acquire any of the Assets, whether by asset purchase, stock purchase or otherwise; provided, however, that, if in the opinion of Seller’s Board of Directors, after consultation with counsel, the failure to respond to an
unsolicited offer to acquire the Assets would be inconsistent with its fiduciary duties to shareholders under applicable law, Seller may, in response to an unsolicited offer to acquire the Assets, and subject to compliance with the last sentence of
this Section 10.2, (i) furnish information with respect to Seller and the Assets to any Person pursuant to a confidentiality agreement and (ii) participate in negotiations regarding such acquisition proposal.  Seller shall immediately advise
Purchaser orally and in writing of any request for information or of any acquisition proposal, or any inquiry with respect to or which could lead to any acquisition proposal, the material terms and conditions of such request, acquisition proposal or
inquiry, and the identity of the Person making any acquisition proposal or inquiry, and Seller shall keep Purchaser fully informed of the status and details (including amendments or proposed amendments) of any such request, acquisition proposal or
inquiry.
  10.3        Expenses.  Seller shall bear any and all levies, or other charges of any nature, kind or description imposed by any
governmental authority on Seller in connection with the series of transactions contemplated hereby.  Any other costs, expenses, or charges incurred by either of the parties hereto shall be borne by the party incurring such cost, expense or
charge whether or not the series of transactions contemplated hereby shall be consummated.
  27

   10.4       Notices.  Except as otherwise expressly set forth herein, any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly given and shall be effective (i) when delivered personally, (ii) when successfully sent by telecopy to the telecopy number below, (iii) the next business day following the
date on which the same has been delivered prepaid to a national air courier service or (iv) when received if sent by the mails, certified or registered, postage prepaid, in each case addressed to the respective parties as set forth below or to such
other addresses as may from time to time be designated in advance by written notice given as herein required:

	 If to Seller:
 	  If to Purchaser:
 
	  
 	  
 
	  Southland Bank
 	  MBNA America Bank, N.A.
 
	  3299 Ross Clark Circle
 	  1100 North King Street
 
	  Dothan, Alabama36303
 	  Wilmington, Delaware 19884-0123
 
	  
 	  
 
	  Attn:  Mike McDonald
 	  Attn:  Jeffrey Fincher
 
	  
 	  
 
	  Facsimile # (229) 873-4456
 	  Facsimile # (302) 432-2957
 
	  With copies to:
 	  
 
	  
 	  Diana Clift Cebrick
 
	  
 	  Counsel
 

 or, as to each party at such other address as may be designated from time to time by such party
or parties by like notice to the other parties, complying with this Section.  All such notices, payments, demands or other communications shall be deemed validly given and legally effective when received.
  10.5       Severability.     If any term or condition of this Agreement should be held invalid by a court, arbitrator or tribunal of competent jurisdiction in
any respect, such invalidity shall not affect the validity of any other term or condition hereof.  If any term or condition of this Agreement should be held to be unreasonable as to time, scope or otherwise by such a court, arbitrator or
tribunal, it shall be construed by limiting or reducing it to a minimum extent so as to be enforceable under then applicable law.  The parties acknowledge that they would have executed this Agreement with any such invalid term or condition
excluded or with any such unreasonable term or condition so limited or reduced.
  10.6       Specific Performance and Other Equitable Relief.  The
parties hereby expressly recognize and acknowledge that immediate, extensive and irreparable damage would result in the event that this Agreement is not specifically enforced.  Therefore, in addition to, and not in limitation of, any other
remedy available to Purchaser or Seller, the respective rights and obligations of an aggrieved party hereunder shall be enforceable in a court of equity by a decree of specific performance and appropriate injunctive relief may be applied for and
granted in connection therewith.  Such remedies and any and all other remedies provided for in this Agreement shall, however, be cumulative in nature and not exclusive and shall be in addition to any other remedies whatsoever which any party
may otherwise have. 
  10.7       Entire Agreement; Amendments.     This Agreement, together with the Interim Servicing Agreement
and the Joint Marketing Agreement, constitutes the entire agreement of the parties
  28

  with regard to the specific subject matter hereof and supersedes all prior written and/or oral understandings between the parties.  This Agreement may not be amended
except pursuant to a writing signed by both parties.
  10.8       Waiver.     Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement.  Any waiver must be in writing and signed by the party to be
charged therewith. Notwithstanding any investigation conducted before or after the transfer of the Assets and notwithstanding any actual or implied knowledge or notice of any facts or circumstances which Purchaser may have as a result of such
investigation or otherwise, Purchaser shall be entitled to rely upon the warranties, representations and covenants of Seller in this Agreement.
  10.9       Binding Effect.     Neither party shall assign this Agreement without the written consent of the other and any attempted assignment without said
consent shall be null, void and without any effect whatsoever; provided, however, that Purchaser may assign any or all of its rights hereunder to any affiliate or subsidiary of MBNA Corporation, a Maryland corporation.  Any such assignment
shall not relieve Purchaser of its obligations hereunder.
  10.10       Exhibits and Schedules.     The Exhibits attached hereto
and each certificate, schedule, list, summary or other document provided or delivered pursuant to this Agreement or in connection with the transactions contemplated hereby are incorporated herein by this reference and made a part hereof.

 10.11       Construction.     The parties acknowledge that this Agreement shall be governed, enforced, performed and construed in accordance
with the laws of the State of Delaware (excepting only those conflicts of laws provisions which would serve to defeat the operation of Delaware substantive law).  No presumption or any other means of construction shall exist against the party
drafting this Agreement.
 10.12       Arbitration.     All claims, demands, disputes, controversies, differences or
misunderstandings arising out of or relating to this Agreement, or the failure or refusal to perform the whole or any part hereof, shall be settled by arbitration conducted by the American Arbitration Association (“AAA”) in accordance with
the commercial arbitration rules thereof then pertaining.  The parties hereby agree that judgment upon such award may be entered in any court having appropriate jurisdiction over the parties hereto.  The fees of the AAA shall be borne by
the parties equally.
  10.13        No Third Party Beneficiaries.     This Agreement is for the sole and exclusive benefit of
the parties hereto; nothing in this Agreement shall be construed to grant to any person other than the parties hereto, and their respective successors and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any
provision hereof.
  10.14         Further Assurances.     The parties hereto hereby agree to do such further acts and
things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as either may at any time reasonably request in order to better assure and confirm unto each party their respective rights, powers and remedies
conferred hereunder.
  29

   10.15       Drafting.     Each party acknowledges that its legal counsel participated in the drafting of
this Agreement.  The parties agree that the rule of construction that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor one party or another.
  10.16       Counterparts.     Provided that all parties hereto execute a copy of this Agreement, this Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute one and the same instrument.  The parties acknowledge that delivery of executed copies of this Agreement may be effected by facsimile or other comparable
means.
 10.17       Headings.     The headings contained herein are included solely for ease of reference and in no way shall
limit, expand or otherwise affect either the substance or construction of the terms and conditions of this Agreement or the intent of the parties hereto. 
  10.18       Brokers.     Seller has not had or is not having any dealings with, or has not received any services from any finder, broker, agent or other
similar party, who is or will be entitled to a commission, fee or other payment of any nature in connection with this Agreement or any transactions contemplated hereby.  Purchaser has not had or is not having any dealings with, or has not
received any services from any finder, broker, agent or other similar party, who is or will be entitled to a commission, fee or other payment of any nature in connection with this Agreement or any transactions contemplated hereby, except for Kessler
Financial Services, L.P. (“Kessler”).  Purchaser will be responsible for compensating Kessler for its services and will indemnify and hold Seller harmless from any loss or liability it incurs as a result of Purchaser’s engagement
of Kessler.
  10.20       No Joint Venture and Independent Contractor.     Nothing in this Agreement shall be deemed to create a
partnership or joint venture among the parties.  Except as expressly set forth herein, no party shall have any authority to bind or commit the other party.  In the performance of its duties or obligations under this Agreement or any other
contract, commitment, undertaking or agreement made pursuant to this Agreement, Seller shall not be deemed to be, or permit itself to be, understood as an agent of the Purchaser and shall at all times take whatever measures are necessary to ensure
that its status shall be that of an independent contractor operating a separate entity.
  30

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

	 SELLER:
 	  
 	  PURCHASER:
 
	  
 	  
 	  
 
	  SOUTHLAND BANK
 	  
 	  MBNA AMERICA BANK, N.A.
 
	  
 	  
 	  
 	  
 	  
 
	  By:
 	  /s/ KENNETH J. HUNNICUTT
 	  
 	  By:
 	  /s/ WILLIAM P. MORRISON, SR.
 	  
 
	  
 	 
 	  
 	  
 	 
 	  
 
	 Name:
 	  Kenneth J. Hunnicutt
 	  
 	  Name
 	  William P. Morrison, Sr.
 	   
 
	  Title:
 	  Authorized Representative
 	  
 	  Title:
 	  Senior Executive Vice President
 	   
 

  31

   TExhibit 10.16 (cont’d.)
  ADDENDUM TO THE ASSET PURCHASE AGREEMENT

           THIS ADDENDUM (the “Addendum”) is entered into as of the 3rd day of February, 2003 (the “Effective Date”), by and
between ABC Bancorp (“Seller”) and MBNA America Bank, N.A. (“Purchaser”). 
            WHEREAS, Seller and Purchaser executed an
Asset Purchase Agreement dated December 19, 2002 as the same may have been amended (the “Agreement”); and
            WHEREAS, the parties
have agreed to modify various provisions found in said Agreement.
           NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Seller and Purchaser agree as follows:
  1.        The above recitals are incorporated herein and deemed a part of this Addendum. All capitalized
terms used herein and not otherwise specifically defined herein shall have the meanings ascribed to such terms in the Agreement.   
  2.       The
subpart (d) of the definition of Account in Article 1 of the Agreement is hereby amended in its entirety to read as follows:

	  
 	  (d)     an Obligor is 5 (five) or more cycles delinquent as such cycles are set forth on Exhibit 1A or should have been in said delinquency cycles in
accordance with Seller’s Policies and Procedures;
 

  3.         Except as amended by this Addendum, all of the terms, conditions
and covenants of the Agreement are valid, shall remain in full force and effect, and are hereby ratified and confirmed.  Any inconsistencies between this Addendum and the Agreement shall be governed by this Addendum.  Notwithstanding
anything to the contrary in the Agreement, the Agreement, as amended by this Addendum, shall be governed by and subject to the laws of the State of Delaware (excepting only those conflicts of laws provisions which would serve to defeat the operation
of Delaware substantive law) and shall be deemed for all purposes to be made and fully performed in Delaware.
  4.       This Addendum may be executed in any
number of counterparts, each of which shall be considered an original, and all of which shall be deemed one and the same instrument.  The Agreement, as amended by this Addendum, contains the entire agreement of the parties with respect to the
matters covered and no other or prior promises, negotiations or discussions, oral or written, made by any party or its employees, officers or agents shall be valid and binding.
 IN WITNESS WHEREOF,
each party hereto, by its representative, has executed this Addendum as of the date first above written, and such party and its representative warrant that such representative is duly authorized to execute and deliver this Addendum for and on behalf
of such party.

	  SELLER:
 	  
 	  PURCHASER:
 
	  
 	  
 	  
 	  
 
	  ABC BANCORP
 	  
 	  MBNA AMERICA BANK, N.A.
 
	  
 	  
 	  
 
	  By:
 	  /s/ KENNETH J. HUNNICUTT
 	  
 	  By:
 	  /s/ WILLIAM P. MORRISON, Sr.
 
	  
 	 
 	  
 	  
 	 
 
	 Name:
 	  
 	 Kenneth J. Hunnicutt
 	  
 	 Name:
 	 William P. Morrison, Sr.
 
	 Title:
 	 Chief Executive Officer
 	  
 	 Title:
 	 Vice Chairman
 
							

  
  32

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