Document:

ex10-1.htm

    
      Exhibit 10.1

        

      

    

    

    PURCHASE
AND ASSUMPTION AGREEMENT

    

    

    dated as
of

    

    

    September
24, 2008

    

    

    between

    

    

    CAPITAL
BANK

    

    and

    

    OMNI
NATIONAL BANK

    

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    TABLE OF
CONTENTS

     

    
      	
              ARTICLE
      I – CERTAIN DEFINITIONS

            	
              1

            
	 
      	
              SECTION
      1.01

            	
              Certain
      Definitions

            	
              1

            
	 
      	
              SECTION
      1.02

            	
              Accounting
      Terms

            	
              10

            
	 
      	
              SECTION
      1.03

            	
              Construction
      of Terms

            	
              10

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      II – PURCHASE AND SALE

            	
              11

            
	 
      	
              SECTION
      2.01

            	
              Purchase
      and Sale of Assets; Assumption of Liabilities

            	
              11

            
	 
      	
              SECTION
      2.02

            	
              Purchase
      Price

            	
              11

            
	 
      	
              SECTION
      2.03

            	
              Adjustments
      to Purchase Price

            	
              12

            
	 
      	
              SECTION
      2.04

            	
              Allocation
      of Consideration

            	
              13

            
	 
      	
              SECTION
      2.05

            	
              Sale
      and Transfer of Servicing and Escrows

            	
              13

            
	 
      	
              SECTION
      2.06

            	
              Assumption
      of IRA Deposits

            	
              14

            
	 
      	
              SECTION
      2.07

            	
              Loan
      Accounts Secured by Deposit Accounts

            	
              14

            
	 
      	
              SECTION
      2.08

            	
              Loans
      Reviewed Prior to Signing; Review of Post-Signing Loans; Purchaser’s Right
      to Reject Loans

            	
              14

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      III – REPRESENTATON AND WARRANTIES OR SELLER

            	
              17

            
	 
      	
              SECTION
      3.01

            	
              Corporate
      Organization and Authority

            	
              17

            
	 
      	
              SECTION
      3.02

            	
              No
      Conflict; Licenses and Permits; Compliances with Laws and
      Regulations

            	
              17

            
	 
      	
              SECTION
      3.03

            	
              Approvals
      and Consents

            	
              17

            
	 
      	
              SECTION
      3.04

            	
              Title
      to Assets

            	
              18

            
	 
      	
              SECTION
      3.05

            	
              Condition
      of Assets

            	
              18

            
	 
      	
              SECTION
      3.06

            	
              Deposits

            	
              18

            
	 
      	
              SECTION
      3.07

            	
              Contracts

            	
              18

            
	 
      	
              SECTION
      3.08

            	
              Litigation
      and Liabilities

            	
              18

            
	 
      	
              SECTION
      3.09

            	
              Compliance
      with Laws

            	
              19

            
	 
      	
              SECTION
      3.10

            	
              Regulatory
      Matters

            	
              19

            
	 
      	
              SECTION
      3.11

            	
              Absence
      of Certain Changes, Etc.

            	
              19

            
	 
      	
              SECTION
      3.12

            	
              Employment
      Matters; Employee Relations

            	
              19

            
	 
      	
              SECTION
      3.13

            	
              Employee
      Benefit Plans

            	
              20

            
	 
      	
              SECTION
      3.14

            	
              Books
      and Records

            	
              20

            
	 
      	
              SECTION
      3.15

            	
              Fiduciary
      Obligations

            	
              20

            
	 
      	
              SECTION
      3.16

            	
              Loans

            	
              20

            
	 
      	
              SECTION
      3.17

            	
              Taxes

            	
              21

            
	 
      	
              SECTION
      3.18

            	
              Utilities
      Complete

            	
              21

            
	 
      	
              SECTION
      3.19

            	
              Insurance

            	
              21

            
	 
      	
              SECTION
      3.20

            	
              Brokers

            	
              21

            
	 
      	
              SECTION
      3.21

            	
              Disclosure

            	
              21

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      IV – REPRESENTATIONS AND WARRANTIES OF PURCHASER

            	
              22

            
	 
      	
              SECTION
      4.01

            	
              Corporate
      Organization and Authority

            	
              22

            
	 
      	
              SECTION
      4.02

            	
              No
      Conflict; Licenses and Permits; Compliance with Laws and
      Regulations

            	
              22

            
	 
      	
              SECTION
      4.03

            	
              Approvals
      and Consents

            	
              22

            

    

     

    
      
        
           

        

        
          - i
-

          
            

          

        

        
           

        

      

    

    
      	 
      	
              SECTION
      4.04

            	
              Regulatory
      Matters

            	
              22

            
	 
      	
              SECTION
      4.05

            	
              Financing
      Available

            	
              23

            
	 
      	
              SECTION
      4.06

            	
              Litagation
      and Undisclosed Liabilities

            	
              23

            
	 
      	
              SECTION
      4.07

            	
              Brokers

            	
              23

            
	 
      	
              SECTION
      4.08

            	
              Disclosure

            	
              23

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      V – COVENANTS OF THE PARTIES

            	
              23

            
	 
      	
              SECTION
      5.01

            	
              Access
      and Confidentiality

            	
              23

            
	 
      	
              SECTION
      5.02

            	
              Activity
      in the Ordinary Course

            	
              24

            
	 
      	
              SECTION
      5.03

            	
              Maintenance
      of Records

            	
              26

            
	 
      	
              SECTION
      5.04

            	
              Insurance;
      Risk of Loss

            	
              26

            
	 
      	
              SECTION
      5.05

            	
              Negotiable
      Instruments

            	
              26

            
	 
      	
              SECTION
      5.06

            	
              Customeres

            	
              26

            
	 
      	
              SECTION
      5.07

            	
              Conversion

            	
              27

            
	 
      	
              SECTION
      5.08

            	
              Real
      Property Matters; Real Property Leases

            	
              27

            
	 
      	
              SECTION
      5.09

            	
              Regulatory
      Approvals

            	
              29

            
	 
      	
              SECTION
      5.10

            	
              Delivery
      of the Loan Documents

            	
              29

            
	 
      	
              SECTION
      5.11

            	
               Collateral
      Assignments and Filing

            	
              30

            
	 
      	
              SECTION
      5.12

            	
              Interest
      Reporting and Withholding

            	
              30

            
	 
      	
              SECTION
      5.13

            	
              Change
      of Name

            	
              30

            
	 
      	
              SECTION
      5.14

            	
              Credit
      Insurance

            	
              31

            
	 
      	
              SECTION
      5.15

            	
              Overdrafts

            	
              31

            
	 
      	
              SECTION
      5.16

            	
              Taxes
      and Fees; Proration of Certain Expenses

            	
              31

            
	 
      	
              SECTION
      5.17

            	
              Employees
      and Employee Benefits

            	
              32

            
	 
      	
              SECTION
      5.18

            	
              Non-Solicitation

            	
              33

            
	 
      	
              SECTION
      5.19

            	
              Further
      Assurances

            	
              34

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      VI – CLOSING

            	
              34

            
	 
      	
              SECTION
      6.01

            	
              Closign
      Date and Place

            	
              34

            
	 
      	
              SECTION
      6.02

            	
              Conditions
      to Obligations of Purchaser

            	
              34

            
	 
      	
              SECTION
      6.03

            	
              Conditions
      to Obligations of Seller

            	
              37

            
	 
      	
              SECTION
      6.04

            	
              Other
      Documents

            	
              38

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      VII – TERMINATION

            	
              39

            
	 
      	
              SECTION
      7.01

            	
              Termination

            	
              39

            
	 
      	
              SECTION
      7.02

            	
              Liability
      for Termination

            	
              39

            
	 
      	
              SECTION
      7.03

            	
              Procedure
      Upon Termination

            	
              40

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      VIII – INDEMNIFICATION

            	
              40

            
	 
      	
              SECTION
      8.01

            	
              Indemnification

            	
              40

            
	 
      	
              SECTION
      8.02

            	
              Calculation
      of Losses

            	
              41

            
	 
      	
              SECTION
      8.03

            	
              Threshhold

            	
              41

            
	 
      	
              SECTION
      8.04

            	
              Survival
      of Indemnification Obligations

            	
              41

            
	 
      	
              SECTION
      8.05

            	
              Terms
      and Conditions of Indemnification; Resolution of Conflicts

            	
              42

            
	 
      	 
      	 
      	 
      
	
              ARTICLE
      IX – MISCELLANEOUS

            	
              43

            
	 
      	
              SECTION
      9.01

            	
              Assignment

            	
              43

            

    

    

    
      
        
           

        

        
          - ii
-

          
            

          

        

        
           

        

      

    

    
      	 
      	
              SECTION
      9.02

            	
              Binding
      Affect

            	
              43

            
	 
      	
              SECTION
      9.03

            	
              Public
      Notice

            	
              43

            
	 
      	
              SECTION
      9.04

            	
              Notices

            	
              43

            
	 
      	
              SECTION
      9.05

            	
              Governing
      Law

            	
              44

            
	 
      	
              SECTION
      9.06

            	
              Entire
      Agreement

            	
              44

            
	 
      	
              SECTION
      9.07

            	
              Counterparts

            	
              44

            
	 
      	
              SECTION
      9.08

            	
              Headings

            	
              45

            
	 
      	
              SECTION
      9.09

            	
              Waiver
      and Amendment

            	
              45

            
	 
      	
              SECTION
      9.10

            	
              Expenses

            	
              45

            
	 
      	
              SECTION
      9.11

            	
              Severability

            	
              45

            
	 
      	 
      	 
      	 
      
	
              Exhibit
      A – Loans Reviewed Prior to Signing

            	 
      

    

    

      
        
           

        

        
          - iii
-

          
            

          

        

        
           

        

      

    

    
      THIS PURCHASE AND ASSUMPTION AGREEMENT
is dated as of September 24, 2008, between CAPITAL BANK, a North Carolina
state-chartered bank (“Purchaser”),
and OMNI NATIONAL BANK, a bank chartered under the laws of the United States
(“Seller”).

      

      RECITALS

      

      WHEREAS, Seller maintains branches at
the following North Carolina locations:  (i) 225 Green Street,
Suite 101, Fayetteville, North Carolina; (ii) 929 South McPherson Church
Road, Fayetteville, North Carolina; (iii) 4841 Ramsey Street, Fayetteville,
North Carolina; and (iv) 88 North Fayetteville Street, Parkton, North
Carolina (the “Branches”); and

      

      WHEREAS, Purchaser desires to assume
and purchase from Seller, and Seller desires to assign and sell to Purchaser,
certain of Seller’s liabilities and assets, respectively, allocated by Seller to
the Branches.

      

      NOW, THEREFORE, in consideration of
their mutual promises and obligations and intending to be legally bound hereby,
the parties agree as follows:

      

      

      ARTICLE
I

      

      CERTAIN
DEFINITIONS

      

      SECTION 1.01  Certain
Definitions.  As used in this Agreement, the terms below shall
have the meanings set forth.

      

      “Accounting
Records” means Seller’s general ledger with respect to the Branches and
the subsidiary ledgers and supporting schedules that support the general ledger
balances.

      

      “Accrued
Expenses” means the accrued and unpaid expenses appearing as a Liability
on a Closing Statement or a Final Closing Statement.

      

      “Accrued
Interest” means, as of the referenced date and (i) with respect to
Deposits, interest which is accrued on such Deposits and not yet posted to the
related Deposit accounts or paid to the depositor as of such date and
(ii) with respect to Loans, interest which is accrued on such Loan and not
yet paid as of such date.

      

      “Affiliate”
of a person means any person directly or indirectly controlling or controlled by
or under direct or indirect common control with such person.

      

      “Agreement”
means this Purchase and Assumption Agreement, including all schedules, exhibits,
and addenda as modified, amended, or extended from time to time.

      

      “Allocation”
has the meaning specified in Section 2.04.

      

      “Applicable
Employees” has the meaning specified in Section 5.17(a).

      
        
           

        

        
          - 1
-

          
            

          

        

        
           

        

      

      “Assets”
means the (i) Furniture, Fixtures, and Equipment, (ii) Improvements,
(iii) Cash on Hand, (iv) Prepaid Expenses, (v) Real Property,
(vi) Records, (vii) Loans, the servicing rights thereto, any
guarantees thereof and Seller’s interest in any collateral for the Loans,
(viii) Seller’s benefits and rights under Safe Deposit Agreements, and
(ix) Seller’s benefits and rights under Assumed Contracts, and all of
Seller’s right, title and interest under the Real Property Leases; provided,
however, Assets do not include any deferred Tax assets, refunds for Taxes
relating to the period prior to the Closing Date, and prepaid Taxes; provided,
further, Assets do not include any credit card receivables or accounts, any
goodwill, or any right to the use of any trade name, trademark, or service mark,
if any, of Seller or any of its Affiliates.  The allocation provisions
of Section 5.16(c) shall apply for the purposes of determining to what extent
any Taxes, deferred Tax assets, and Tax refunds relate to the period prior to
the Closing Date.

      

      “Assumed
Contracts” means all service or similar contracts, including personal
property leases (but excluding the Real Property Leases), that are in effect as
of the Closing Date, are related to the Branches and the Assets, and are validly
assigned to Purchaser.

      

      “Assumed
Deposits” means all Deposits existing on the Closing Date, together with
all Accrued Interest thereon as of the Closing Date.

      

      “ATM”
means each automated teller machine owned or leased by Seller and located at the
Branches and the three (3) automated teller machines owned or leased by Seller
elsewhere in Cumberland County, North Carolina.

      

      “Bank
Merger Act” means Section 18(c) of the Federal Deposit Insurance
Act, as amended.

      

      “Benefit
Plan” means “employee benefit plan,” as defined in Section 3(3) of
ERISA, and any other employee benefit arrangement or payroll practice,
including, without limitation, any bonus plan, equity or equity-based
compensation, or deferred compensation arrangement, stock purchase, severance
pay, sick leave, vacation pay, paid time off, salary continuation for
disability, hospitalization, medical insurance, life insurance, scholarship
program, and any “employee pension plan”, as defined in Section 3(2) of
ERISA.

      

      “Bill of
Sale” has the meaning specified in Section 6.02(f).

      

      “Branches”
has the meaning specified in the recitals hereto.

      

      “Business
Day” means a day on which Seller and Purchaser are open for business in
the State of North Carolina which is not a Saturday or a Sunday.

      

      “Cash on
Hand” means, as of the referenced date, all petty cash, vault cash,
teller cash, and prepaid postage maintained at the Branches, including at
ATMs.

      

        
          
             

          

          
            - 2
-

            
              

            

          

          
             

          

        

      

      “Close of
Business” means 2:00 p.m. Eastern Time (or such other time as the parties
may agree to) on the Closing Date.

      

      “Closing”
has the meaning specified in Section 6.01.

      

      “Closing
Date” means the date on which the Closing occurs.

      

      “Closing
Statement” has the meaning specified in Section 2.02(b).

      

      “Code”
means the Internal Revenue Code of 1986, as amended.

      

      “Commissioner”
refers collectively to the North Carolina State Banking Commission and the North
Carolina Commissioner of Banks.

      

      “Conversion”
has the meaning specified in Section 5.07.

      

      “Conversion
Brochure” has the meaning specified in Section 5.07.

      

      “Delivery
Records” means all Records other than transaction tickets and records for
closed accounts, but may be copies of original Records.

      

      “Deposit
Premium” means six percent (6%).

      

      “Deposits” means,
as of any date, all deposit liabilities of Seller booked, maintained, or
primarily serviced at the Branches, which constitute “deposits” for purposes of
the Federal Deposit Insurance Act, 12 U.S.C. § 1813, including all
uncollected items included in depositors’ balances (including Overdrafts as
provided in Section 5.15), merchant accounts, any Accrued Interest, and any
Deposits in IRAs not excluded under Section 2.06(b), together with Seller’s
rights and responsibilities under any customer agreement evidencing or relating
thereto, but excluding (i) deposits in accounts that have been in an overdrawn
status for more than thirty (30) days at the Closing, (ii) deposits held in the
name of Seller or any of its Affiliates, (iii) Outpost Deposits, (iv) deposits
excluded under Section 2.06(b), and (v) deposits excluded under Section
2.07.  Seller and Purchaser shall use commercially reasonable efforts
to identify deposits excluded from Deposits hereunder prior to the Closing
Date.

      

      “Employees”
means any employee employed by Seller on the Closing Date at the
Branches.

      

      “Encumbrances”
means all mortgages, deeds of trust, claims, options, rights of first refusal,
charges, liens, encumbrances, easements, limitations, restrictions, commitments,
security interests, pledges, or other similar charges, liabilities, or rights,
whether accrued, absolute, contingent, or otherwise.

      

      “Environmental
Laws” means: (i) all federal, state, and local statutes, regulations,
ordinances, orders, decrees, and similar provisions having the force or effect
of law relating to or imposing liability, responsibility, or standards of
conduct applicable to environmental, health, or

      
        
           

        

        
          - 3
-

          
            

          

        

        
           

        

      

      safety
conditions and/or Hazardous Materials affecting the Real Property and the Leased
Real Property (including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Superfund Amendment and
Reauthorization Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act,
the Oil Pollution Act, the Coastal Zone Management Act, any “Superfund” or
“Superlien” law, the North Carolina Oil Pollution and Hazardous Substances
Control Act, the North Carolina Solid Waste Management Act, and the North
Carolina Water and Air Resources Act, including any amendments thereto from time
to time); and (ii) all common law concerning public health and safety, worker
health and safety, noise, odor, wetlands, indoor air, contamination,
pollution or protection of the environment, including without limitation all
standards of conduct and bases of obligations relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, discharge, release,
threatened release, control, or clean-up of any Hazardous
Substances.

      

      “Environmental
Survey” has the meaning specified in Section 5.08(b).

      

      “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.

      

      “Extension
of Credit” has the meaning specified in Section 2.08(b).

      

      “Extensions
of Credit To Be Repurchased” has the meaning specified in Section
2.08(i).

      

      “Federal
Funds Rate” on any day means the per annum rate of interest (rounded
upward to the nearest 1/100 of 1%) which is the weighted average of the rates on
overnight federal funds transactions arranged on such day or, if such day is not
a banking day, the previous banking day, by federal funds brokers computed and
released by the Federal Reserve Bank of Richmond (or any successor) in
substantially the same manner as such Federal Reserve Bank currently computes
and releases the weighted average it refers to as the “Federal Funds Effective
Rate” at the date of this Agreement.

      

      “FDIC”
means the Federal Deposit Insurance Corporation.

      

      “Final
Closing Statement” has the meaning specified in Section
2.03.

      

      “Final
Settlement Payment” has the meaning specified in
Section 2.03.

      

      
        “Furniture,
Fixtures, and Equipment” means all furniture, appliances, fixtures, and
equipment, including ATMs, trade fixtures, telephone systems, safe deposit boxes
(exclusive of contents), vaults, and supplies (excluding any items consumed or
disposed of, but including new items acquired or obtained in the ordinary course
of business, through the Closing Date) that are located at the Branches, but
excluding signage or other advertising or blank paper stock, forms, or supplies
bearing Seller’s corporate logos, trade names, or trademarks,
security

        
          
             

          

          
            - 4
-

            
              

            

          

          
             

          

        

        equipment,
computers and computer software, branch automation equipment, and branch
communications equipment.

         

      

      “GAAP”
means United States generally accepted accounting principles, as in effect from
time to time.

      

      “Green
Street Branch” means Seller’s Branch at 225 Green Street, Suite 101,
Fayetteville, North Carolina.

      

      “Hazardous
Substance” means any materials, substances, wastes, chemical substances,
or mixtures presently listed, defined, designated, or classified as hazardous,
toxic, or dangerous, or otherwise regulated, under any Environmental Law,
whether by type or quantity.

      

      “Identified
Loan” means any loan listed for review, other than a Jointly Underwritten
Extension of Credit, that is subject to any of the following
defects:

      

      (i)           loan
documents material to the enforceability of the loan are missing;

      

      (ii)           the
loan was not originated or has not been administered in compliance in all
material respects with applicable laws;

      

      (iii)           loan
documents relating to the loan are not legal, valid, and binding;

      

      (iv)           Seller’s
rights in any collateral securing a loan are not perfected or enforceable, or
the priority of such rights are not as reflected in the books and records of
Seller, and the absence of any such right of Seller in the collateral securing
the loan would have a material impact on Purchaser’s ability, in the event of
default, to realize upon such collateral the value ascribed
thereto;

      

      (v)           the
loan is in non-accrual status on Seller’s books, the collateral securing the
loan has been repossessed, or collection efforts have been instituted or claim
and delivery, or foreclosure proceedings have been filed, or insurance on the
loan collateral has been force-placed; or

      

      (vi)           Purchaser,
in its reasonable discretion, reasonably considers the loan to be inconsistent
with its credit policies or procedures.

      

      “Improvements”
means all improvements to the Real Property associated with the Branches and
with the Leased Real Property which shall have been purchased, installed, or
constructed, and used in connection with the ownership, operation, or
maintenance of the Branches or such real property.

      

      “Indemnified
Parties” has the meaning specified in Section 8.01(b).

      

        
          
             

          

          
            - 5
-

            
              

            

          

          
             

          

        

      

      “Indemnifying
Party” has the meaning specified in Section 8.05(a).

      

      “Initial
Review Period” has the meaning specified in
Section 2.08(b).

      

      “Intrusive
Testing” has the meaning specified in Section 5.08(b).

      

      “IRA”
means an “individual retirement account” or similar Deposit account established
in accordance with the provisions of Section 408 of the Code for which
Seller acts as custodian or trustee, but as to which (i) Seller may not exercise
investment discretion and (ii) Seller’s customer for whom the IRA is established
may not direct securities investment while Seller acts as custodian or
trustee.

      

      “IRS”
means the Internal Revenue Service.

      

      “Information”
has the meaning specified in Section 5.01(b).

      

      “Jointly
Underwritten Extension of Credit” has the meaning specified in Section
2.08(h).

      

      “Knowledge”
means, with respect to any particular fact or other matter and (i) with
respect to any individual, (a) that such individual is actually aware of
such fact or matter or (b) that a prudent individual could be expected to
discover or otherwise become aware of such fact or matter in the course of
conducting a reasonable investigation regarding the accuracy of any
representation or warranty contained in this Agreement, and (ii) with
respect to any entity, that any individual who is serving as a director or
officer of such entity (or in any similar executive capacity) has Knowledge of
such fact or other matter (as set forth in (i) above).

      

      “Leased
Real Property” means (i) the real property at the Parkton Branch and (ii)
the real property at the Green Street Branch.

      

      “Liabilities”
means, except as otherwise specifically provided herein, (i) the Assumed
Deposits and all terms and agreements relating to the Assumed Deposits,
(ii) Seller’s obligations with respect to the Loans, the servicing of the
Loans, and the collateral for the Loans, (iii) Seller’s obligations under
the Assumed Contracts and the Property Leases (to the extent assumed by
Purchaser), (iv) Seller’s obligations under the Safe Deposit Agreements,
(v) Seller’s obligations to provide customer services from and after the
Closing Date in connection with the Assets and the Assumed Deposits, (vi) any
fee or expense adjustment required to be shown as a Liability in accordance with
Section 5.16(b), and all liabilities from the Purchaser’s operations of the
Branches after the Closing Date; provided, however, that Liabilities shall not
include (a) any liability in respect of letters of credit, travelers’ checks,
money orders, cashier’s checks, official checks, or consignment of U.S.
government bonds or (b) any liability for Taxes for any period prior to the
Closing Date.  The allocation provisions of Section 5.16(c) shall
apply for purposes of determining to what extent a liability for Taxes exists
with respect to a period prior to the Closing Date.

      

      “Litigation
Conditions” has the meaning specified in Section
8.05(b).

      
        
           

        

        
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      “Loan
Documents” means all Records with respect to a Loan, including, without
limitation, applications, notes, security agreements, deeds of trust, mortgages,
loan agreements, including building and loan agreements, guarantees, sureties
and insurance policies (including title insurance policies), flood hazard
certifications, and all modifications, waivers, and consents relating to any of
the foregoing.

      

      “Loans”
means, subject to Sections 2.08(f) and (g), all loans (including Overdraft Loans
and loan commitments, but excluding the interest of any participants in such
Loans) which are listed as “Loans that Purchaser Intends to Purchase (subject to
the terms and conditions of the Agreement)” in Exhibit A to this Agreement, as
updated to reflect loans to be acquired by Purchaser as of the Closing Date as
provided in Section 2.08.

      

      “Loan
Value” means, as of the referenced date, (i) with respect to any Loan
other than a Jointly Underwritten Extension of Credit, (a) the outstanding
principal balance of such Loan as of such date, net of any participant’s
interest therein, less (b) two percent (2%) of the greater of (x) the amount
described in clause (a) and (y) the aggregate loan commitment with respect to
such Loan as of such date (whether or not drawn), net of any participant’s
interest therein, and (ii) with respect to any Jointly Underwritten Extension of
Credit, the outstanding principal balance of such Extension of Credit as of such
date, net of any participant’s interest therein.  For the avoidance of
doubt, late charges and fees shall not constitute principal, interest, or
commitment for the purposes of this definition.

      

      “Losses”
means losses, liabilities, damages, expenses, costs, and reasonable legal fees
and disbursements, collectively.

      

      “Material
Adverse Effect” means a material adverse effect on the condition,
financial or otherwise, or results of operation of the Branches, the validity of
this Agreement or the transactions contemplated in it, or on the ability of
Seller or Purchaser to consummate timely the transactions contemplated
hereby.

       

      
        “Material
Defect” means (i) the existence of any Encumbrance (other than a
Permitted Lien), title imperfection, or title irregularity with respect to the
Real Property, its access, or any appurtenances, easements of rights, or the
existence of any fact or condition that constitutes a breach of Seller’s
representations and warranties contained in Section 3.04, in any such case
that will materially affect Purchaser’s use of the Real Property for the purpose
of the operation of a branch bank or materially affects the value or
marketability of the Real Property, (ii) the encroachment by an improvement on
the Real Property onto other property or onto any easement, a violation of any
setback requirement, the encroachment of an improvement on any other property
onto the Real Property, or the existence of a zoning or other land use
restriction that in each such case does not permit use of the Real Property as a
branch banking facility as a permitted use without grandfathering or variance
and without site plan review or the construction of any additional improvements,
(iii) the existence of any structural defect or state of disrepair in the
improvements on the Real Property of the Branches and the Leased Real Property
(including any equipment, fixtures, or other components related thereto) that
Purchaser reasonably believes would cost greater than Twenty-Five Thousand
Dollars ($25,000) to repair or correct, or (iv) the

        
          
             

          

          
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        existence
of facts or circumstances relating to the Branches reflecting that (a) there
likely has been a discharge, disposal, release, threatened release, or emission
by any person of any Hazardous Substance on, from, under, at, or relating to the
Real Property and the Leased Real Property, or (b) that any action has been
taken or not taken, or a condition or event likely has occurred or exists, with
respect to the Real Property and the Leased Real Property, which constitutes or
would constitute a material violation of any Environmental Law, as to which
Purchaser reasonably believes, in either case (a) or (b), based on the advice of
legal counsel or other consultants expert in the area on which they are
expressing an opinion, that Purchaser could potentially become responsible or
liable for assessment, removal, remediation, monetary damages, or civil,
criminal, or administrative penalties or other corrective action and in
connection with which the amount of expense or liability which it would likely
incur or for which it would likely become responsible or liable at any time
following consummation of the transactions contemplated by this Agreement would
be likely to exceed Twenty-Five Thousand Dollars ($25,000).

         

      

      “New
Employee” has the meaning specified in Section 5.17(a).

      

      “Outpost
Deposit” means, as of any date, each deposit liability of Seller booked,
maintained, or primarily serviced at the Branches, which constitutes a “deposit”
for purposes of the Federal Deposit Insurance Act, 12 U.S.C. § 1813,
including the items enumerated in the definition of “Deposits”, to a customer
(i) that maintains a deposit account booked, maintained, or primarily serviced
at a branch of Seller other than the Branches, and (ii) whose chief executive
office or primary place of business is not located in a market served by one of
the Branches.

      

      “Overdraft”
means the amount by which any Deposit account at the Branches is overdrawn as of
the Closing Date on account of checks, drafts, or other items that have been
presented against such account for payment against insufficient funds and that,
under applicable rules of the Federal Reserve Bank or other check collection
rules or procedures, cannot be returned and charged back to the presenting or
collecting bank as a matter of right.

      

      “Overdraft
Loans” means unsecured overdraft Loans, including negotiable order of
withdrawal line of credit accounts, relating to the Assumed Deposits, as of the
Close of Business, plus Accrued Interest, which do not exceed the applicable
credit limit and are linked to an open account.

      

      “Parkton
Branch” means Seller’s Branch at 88 North Fayetteville Street, Parkton,
North Carolina.

      

      “Permitted
Liens” means Encumbrances (i) securing any Liability, (ii) properly
recorded in any title reports, opinions, or insurance binders delivered or made
available to Purchaser prior to the execution of this Agreement, (iii) for Taxes
or assessments, special or otherwise, either not due and payable or being
contested in good faith and subject to escrow or reserves, or (iv) consisting of
easements, rights of way, restrictions, covenants of record, matters that would
be shown on an accurate survey, claims and covenants not shown on record, and
any other defect or exception to title or Encumbrance which do not individually
or in the aggregate impair or interfere with the present and continued use and
operation of the affected property.

      

        
          
             

          

          
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      “Policies”
has the meaning specified in Section 3.19.

      

      “Post-Closing
Review Period” has the meaning specified in
Section 2.08(i).

      

      “Prepaid
Expenses” means the prepaid expenses appearing as an Asset in respect of
the Branches on a Closing Statement or a Final Closing Statement, as the case
may be, that (i) have been recorded in accordance with GAAP, (ii) are
not intercompany or interoffice accounts, and (iii) provide future benefit
to the business conducted at the Branches by the Purchaser.

      

      “Property
Examination” has the meaning specified in Section 5.08(b).

      

      “Purchase
Price” has the meaning specified in Section 2.02(a).

      

      “Purchaser”
has the meaning specified in the first paragraph of this Agreement.

      

      “Purchaser
Indemnified Parties” has the meaning specified in Section
8.01(a).

      

      “Real
Property” means the real property at the Branches, including any
Improvements thereon, but excluding the Leased Real Property.

      

      “Real
Property Lease Examination” has the meaning specified in Section
5.08(e).

      

      “Real
Property Leases” means (i) that certain lease agreement for the Parkton
Branch, dated January 1, 2003, among Berline Bodenheimer, Dorothy Bodenheimer
and Seller, as amended through the date hereof, and (ii) that certain commercial
lease agreement for the Green Street Branch, dated as of March 3, 2008, between
Allison Holdings, LLC, and Seller, as amended through the date
hereof.

      

      “Records”
means all records and original documents in Seller’s possession (including
records maintained electronically) which pertain to and are utilized by Seller
to administer, reflect, monitor, evidence, or record information respecting the
business or conduct of the Branches (including transaction tickets through the
Closing Date and all records of closed accounts located in the Branches) and all
such records and original documents respecting (i) the Assumed Contracts,
(ii) the Assets, (iii) the Assumed Deposits, (iv) the Liabilities, and
(v) the Loans, the servicing rights to the Loans, and the collateral for
the Loans (including the Loan Documents).

      

        “Regulatory
Approvals” means all approvals, permits, authorizations, waivers, or
consents of governmental or regulatory agencies or authorities necessary or
appropriate to permit consummation of the transactions contemplated herein and
includes, without limitation, the following: (i) approval of regulatory
agencies required under the Bank Merger Act; (ii) approvals of the
Commissioner under applicable law; and (iii) expiration of the waiting
period provided for in the Bank Merger Act without commencement of any action
challenging Purchaser’s

        
          
             

          

          
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        acquisition
of the Branches hereunder by the United States Department of Justice or any
other person.

      

       

      “Retained
Liabilities” has the meaning specified in Section 2.01(b).

      

      “Safe
Deposit Agreements” means any agreements, including rental agreements,
related to the safe deposit boxes, if any, located in the Branches.

      

      “Seller”
has the meaning specified in the first paragraph of this Agreement.

      

      “Seller
Indemnified Parties” has the meaning specified in Section
8.01(b).

      

      “Settlement
Payment” has the meaning specified in Section 2.02(c).

      

      “Study
Period” has the meaning specified in Section 5.08(b).

      

      “Supplemental
Review Period” has the meaning specified in Section 2.08(c).

      

      “Tax”
or “Taxes”
refers to all federal, state, local, or foreign taxes including, without
limitation, income, gross receipts, windfall profits, severance, property,
production, sales, use, excise, transfer, license, franchise, employment,
withholding, or similar taxes or amounts required to be withheld and paid over
to any government in respect of any tax or governmental fee or charge, including
any interest, penalties, or additions to tax on the foregoing.

      

      “Threshold”
has the meaning specified in Section 8.03.

       

    

    
      SECTION
1.02  Accounting
Terms.  To the extent that any accounting terms used in this
Agreement are not defined in Section 1.01 or elsewhere herein, they shall
be defined under GAAP.

       

      
        SECTION
1.03  Construction of
Terms.  In using and applying the various terms, provisions and
conditions in this Agreement, the following rules of construction shall apply
except where the context clearly indicates that a different meaning is intended:
(a) the terms “hereby”, “hereof”, “herein”, “hereunder”, and any similar words,
refer to this Agreement; (b) as the context requires, words in the masculine
gender mean and include correlative words of the feminine and neuter genders,
and words importing the singular number include the plural number, and vice
versa; (c) words importing persons include firms, companies, associations,
general partnerships, limited partnerships, limited liability partnerships,
limited liability limited partnerships, limited liability companies, trusts,
business trusts, corporations, and other legal organizations, including public
and quasi-public bodies, as well as individuals; (d) the use of the terms
“including” or “included in”, or the use of examples generally, are not intended
to be limiting, but shall mean, without limitation, the examples provided and
other terms included within the description for which examples are given that
are not listed, whether similar or dissimilar; (e) the phrase “costs and
expenses”, or variations thereof, shall include, without limitation, reasonable
attorneys’ fees and fees of legal assistants, and reasonable fees
of

        
          
             

          

          
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        accountants,
engineers, surveyors, appraisers, and other professionals or experts, and all
references to attorneys’ fees or fees of legal assistants, or fees of
accountants, engineers, surveyors, appraisers, or other professionals or experts
shall mean reasonable fees; (f) as the context requires, the word “and” may have
a joint meaning or a several meaning and the word “or” may have an inclusive
meaning or an exclusive meaning; (g) any reference contained in this Agreement
to specific statutes or laws shall include any successor statutes or laws, as
the case may be; and (h) this Agreement shall not be applied, interpreted, and
construed more strictly against a person because that person or that person’s
attorney drafted this Agreement in whole or in part.

         

         

      

      ARTICLE
II

      

      PURCHASE
AND SALE

      

      SECTION
2.01  Purchase and Sale of Assets;
Assumption of Liabilities.  (a) Subject to the terms and
conditions set forth in this Agreement, at the Closing, Purchaser shall
(i) purchase the Assets and (ii) assume the Liabilities, and Seller
shall sell, assign, transfer, convey, and deliver to Purchaser, free and clear
of all Encumbrances, except for Permitted Liens, all of Seller’s right, title,
and interest in and to, and obligations with respect to, the Assets and the
Liabilities.

      

      (b)           Notwithstanding
anything in this Agreement to the contrary, except as  expressly
provided in (a) above, Purchaser shall not assume or have any liability for, and
Purchaser does not undertake to assume or discharge, any liability or obligation
of Seller of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued in the financial statements of
Seller (the “Retained
Liabilities”), and Seller shall retain all such Retained
Liabilities.

      

      (c)           The
sales, purchases, transfers, assumptions, leases, and other acts made or taken
at the Closing will be made or taken to be effective as of the Close of
Business, notwithstanding the time of the Settlement Payment.  Seller
shall be responsible for the Branches and the operation thereof until the Close
of Business.  The Close of Business shall be the relevant cutoff time
for purposes of the proration described in Section 5.16(b), and any amounts
to be paid in accordance with Section 5.16(b) shall be paid
contemporaneously with the Final Settlement Payment.

      

      SECTION
2.02  Purchase
Price.  (a) The purchase price for the Assets shall be an
amount (the “Purchase
Price”) computed
as follows:

      

      (i)           an
amount equal to the Deposit Premium multiplied by the average daily balance of
the Deposits for the period of ten (10) consecutive Business Days ending on the
third (3rd) Business Day prior to the Closing Date; plus

      

        
          
             

          

          
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      (ii)           the
aggregate amount of Cash on Hand as of the Closing Date; plus

      

      (iii)           the
Accrued Interest on the Loans as of the Closing Date; plus

      

      (iv)           the
net book value of the Real Property as of the Closing Date; plus

      

      (v)           the
aggregate Loan Value of the Loans as of the Closing Date; plus

      

      (vi)           the
aggregate net book value of the Assets, excluding those items listed in (ii)
through (v), as reflected on the books of Seller as of the Closing
Date.

      

      (b)           On
the Closing Date, Seller shall deliver to Purchaser a closing statement prepared
by Seller in accordance with its customary accounting principles, policies and
methods and estimating the computation of the Purchase Price for the Branches as
of the Closing based on the Assets and Liabilities as of a time no earlier than
the end of the third (3rd) Business Day prior to the Closing Date (the “Closing
Statement”).

      

      (c)           On
the first (1st) Business Day following the Closing Date and based on the
preliminary computations set forth in the Closing Statement, Seller shall
transfer to Purchaser cash in an amount (each, a “Settlement
Payment”) equal
to the amount of (i) the sum of the Assumed Deposits plus Accrued Expenses minus
(ii) the Purchase Price.

      

      SECTION
2.03  Adjustments to Purchase
Price.  Within sixty (60) days after the Closing, Seller
shall examine its books and records and determine the accuracy of the
information set forth in the Closing Statement and deliver to Purchaser an
updated closing statement setting forth the actual computation of the Purchase
Price for the Branches (the “Final
Closing Statement”).  Without
limiting the generality of the foregoing, the Final Closing Statement shall
include an update to address any Extensions of Credit To Be
Repurchased.  The Final Closing Statement shall become final and
binding on Purchaser and Seller unless Purchaser gives written notice to Seller
of its actual or potential disagreement with respect to any item included in
such Final Closing Statement before 5:00 p.m. on the tenth (10th) Business
Day after its delivery to Purchaser.  Seller and Purchaser shall use
their reasonable best efforts to resolve the disagreement or concern during the
ten (10) Business Day period following receipt by Seller of such
notice.  If the disagreement or concern is not resolved during such
ten (10) Business Day period, then the dispute shall be referred to an
independent accounting firm of nationally recognized standing proposed by Seller
(and approved by Purchaser unless good cause exists for disapproval) that has
not represented any of the parties hereto within the preceding two (2) years,
and such Final Closing Statement shall be modified, if required, by the
independent accounting firm, and thereupon, such Final Closing Statement shall
become final and binding.  The cost of the independent accounting firm
shall be shared and paid by Purchaser and/or Seller, each of whom will pay an
amount equal to the aggregate amount of such accounting firm’s fees and expenses
multiplied by a fraction, the numerator of which is the portion of all contested
amounts not awarded to such party and the denominator of which is the aggregate
of all contested amounts, each as determined by such accounting
firm.  Once the Final Closing Statement has become final and binding,
and in the event that such Final Closing Statement differs from
the

      
        
           

        

        
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      Closing
Statement, the consideration hereunder shall be adjusted in accordance with such
Final Closing Statement as follows: (a) if the sum of the Purchase Price and the
Settlement Payment for the Branches exceeds the Assumed Deposits set forth in
the Final Closing Statement for the Branches, Purchaser shall pay Seller an
amount equal to such difference; or (b) if the Assumed Deposits set forth in the
Final Closing Statement for the Branches exceed the sum of the Purchase Price
and the Settlement Payment for the Branches, Seller shall pay Purchaser an
amount equal to such difference (a “Final
Settlement Payment”).  In either
case, interest at the Federal Funds Rate from the Closing Date to, but excluding
the date of the Final Settlement Payment, shall be included in the Final
Settlement Payment.  Any Final Settlement Payment shall be paid within
ten (10) Business Days after the Final Closing Statement has become final and
binding.  The Final Settlement Payment shall be made in cash by wire
transfer of immediately available funds on or before 4:00 p.m. local time on the
date of payment to an account specified by the receiving party.  The
Final Settlement Payment shall, for all purposes, be considered an adjustment to
the Purchase Price.

      

      SECTION
2.04  Allocation of
Consideration.  Purchaser and Seller agree that the
consideration payable hereunder at the Closing shall be allocated among the
Assets, tangible and intangible, on the basis of an allocation to be mutually
agreed by Purchaser and Seller (the “Allocation”).  Purchaser and
Seller agree (a) to timely file a mutually acceptable IRS Form 8594 or
other appropriate IRS form in accordance with the Allocation (and an amended IRS
Form 8594 or other appropriate IRS form, to the extent required to reflect the
Final Closing Statement) and (b) that the Allocation shall be binding on
Purchaser and Seller for all Tax reporting purposes, except that either party
may change any such report in the event of a dispute with any taxing authority
or take any other step to settle or resolve such a dispute; provided, however,
that a party shall not make any such change without first obtaining the consent
of the other party, which consent shall not be delayed or withheld
unreasonably.

      

      SECTION
2.05  Sale
and Transfer of Servicing and Escrows.  (a) The Loans
shall be sold on a servicing released basis:  (i) as of the Closing
Date, all rights, obligations, liabilities, and responsibilities with respect to
the servicing of the Loans will be assumed by Purchaser; and (ii) Seller shall
be discharged and indemnified by Purchaser from all liability with respect to
servicing of the Loans on and after the Closing Date.

      

      (b)           As
of the Closing Date, Purchaser will assume, and agrees to undertake and
discharge, any and all obligations of the holder and servicer of any Loans that
are mortgage Loans as such obligations may relate to the escrow, maintenance of
escrow, and payments from escrow of moneys paid by or on account of the
applicable mortgagor.  As soon as reasonably practicable after the
Closing Date, and in any event on or before the tenth (10th) Business Day
after the Closing Date, Seller shall remit by wire transfer of immediately
available funds to Purchaser any and all funds held in escrow that were
collected and received pursuant to a mortgage Loan for the payment of taxes,
assessments, hazard insurance premiums, primary mortgage insurance policy
premiums, if applicable, or comparable items prior to the Closing Date plus any
Accrued Interest.  Seller makes no warranties or representations of
any kind or nature as to the sufficiency of such sum to discharge any
obligations with respect to mortgage Loans.

      

        
          
             

          

          
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      SECTION
2.06  Assumption of IRA
Deposits.  (a) With respect to Assumed Deposits in IRAs,
Seller will use commercially reasonable efforts, and will cooperate with
Purchaser in taking any action reasonably necessary or appropriate, to
accomplish or accompany the appointment of Purchaser as successor custodian or
trustee or the delegation to Purchaser of Seller’s authority and responsibility
as custodian of all such Assumed Deposits in IRAs, including, but not limited
to, sending to the depositors thereof appropriate notices, cooperating with
Purchaser in soliciting consents from such depositors, executing assignments
reasonably satisfactory to Purchaser, and filing any appropriate applications
with applicable regulatory authorities.  If any such delegation is
made to Purchaser, Purchaser will perform all of the duties so delegated and
comply with the terms of Seller’s agreement with the depositor of the Assumed
Deposits affected thereby.

      

      (b)           If,
notwithstanding the foregoing, as of the Closing Date, Purchaser shall be unable
to retain deposit liabilities in respect of an IRA or the account holder has
notified Seller or Purchaser of the account holder’s objection to Purchaser
acting as custodian or trustee of such IRA, such deposit liabilities will not be
Deposits for purposes of this Agreement.

      

      SECTION
2.07  Loan
Accounts Secured by Deposit Accounts.  In the event that a loan
account at one of the Branches is secured by a deposit account that is allocated
by Seller to another of Seller’s branches that is not a Branch, or where a
Deposit account at a Branch secures a loan account assigned by Seller to another
of Seller’s branches that is not a Branch, Seller either will cause both
accounts to be assigned to the Branch or will assign the account at the Branch
to another of Seller’s branches that is not a Branch.  If an account
is reassigned from a Branch under this Section, it will not be a Deposit or a
Loan for purposes of this Agreement.  Reassignment of an account to or
from a Branch will be done only upon the approval of Purchaser, which shall not
be unreasonably withheld.  Seller shall make the adjustments described
in this Section no later than thirty (30) days prior to the Closing
Date.  In the event that Seller fails to make a reassignment called
for in this Section prior to the Closing Date, Seller and Purchaser will enter
into appropriate agreements under which the holder of any such deposit or
Deposit securing such a loan owned by the other will undertake appropriate
measures to protect the security interest of the other.

      

      SECTION
2.08  Loans
Reviewed Prior to Signing; Review of Post-Signing Loans; Purchaser’s Right to
Reject Loans.  (a) Exhibit A hereto
(i) lists all loans made by Seller (and guarantees related thereto) on or
prior to June 30, 2008 that have been reviewed by Purchaser and
(ii) categorizes such loans in one (1) of the following three (3)
classes:  (A) loans that Purchaser intends to purchase (subject
to the terms and conditions of this Agreement); (B) Identified Loans; and
(C) loans that Purchaser will not purchase.

      

      (b)           On
or prior to October 15, 2008, Seller shall deliver to Purchaser a listing of (i)
loans (and any guarantees related thereto) and (ii) any renewals of or
modifications to any loans previously reviewed by Purchaser (each such loan,
renewal or modification, an “Extension
of Credit”), in each case that were made or entered into after June 30,
2008 and on or prior to September 30, 2008.  During the period
beginning on the date Purchaser receives such listing and ending on the tenth
(10th) Business Day after such date (the “Initial
Review Period”),
Seller shall afford to the officers and authorized representatives of Purchaser,
subject to Seller’s normal 

      
        
           

        

        
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      security
requirements, access to all documents relating to such Extensions of Credit
necessary for Purchaser to make a reasonable investigation of such Extensions of
Credit and any collateral therefor.  Purchaser shall notify Seller in
writing of the existence of any additional Identified Loans no later than ten
(10) Business Days following the expiration of the Initial Review
Period.  Promptly following such notification, Purchaser will update
(and deliver to Seller a copy of) Exhibit A to reflect
the appropriate categorization of the loans reviewed by Purchaser during the
Initial Review Period.

      

      (c)           On
or prior to November 5, 2008, Seller shall deliver to Purchaser a listing of all
Extensions of Credit that were made or entered into after September 30, 2008 and
on or prior to October 31, 2008.  During the ten (10) Business Day
period beginning on the date Purchaser receives the listing of Extensions of
Credit pursuant to the immediately preceding sentence (the “Supplemental
Review Period”),
Seller shall afford to the officers and authorized representatives of Purchaser,
subject to Seller’s normal security requirements, access to all documents
relating to such Extensions of Credit necessary for Purchaser to make a
reasonable investigation of such Extensions of Credit and any collateral
therefor.  Purchaser shall notify Seller in writing of the existence
of any additional Identified Loans no later than ten (10) Business Days
following the expiration of the Supplemental Review Period.  Promptly
following such notification, Purchaser will update (and deliver to Seller a copy
of) Exhibit A
to reflect the appropriate categorization of the loans reviewed by Purchaser
during the Supplemental Review Period.

      

      (d)           Each
listing of Extensions of Credit delivered by Seller to Purchaser pursuant to
subsections (b) and (c) above shall specify, with respect to each Extension of
Credit listed, whether such Extension of Credit is (i) a renewal of or
modification to a loan previously reviewed by Purchaser, (ii) a new loan made to
a Person with whom one of the Branches has an existing lending relationship,
i.e. the borrower under another loan previously reviewed by Purchaser, or (iii)
a new loan made to a Person with whom none of the Branches has an existing
lending relationship, i.e. a borrower not previously reviewed by
Purchaser.

      

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

      

      (f)           At
any time prior to the date for notification to customers of the assignment of
the Loans pursuant to applicable law, Seller may, in its sole discretion,
attempt to cure to Purchaser’s reasonable satisfaction any defect identified by
Purchaser with respect to an Identified Loan.  If Seller cures to
Purchaser’s reasonable satisfaction each defect so identified by Purchaser with
respect to any Identified Loan, such Identified Loan shall subsequently be
listed on Exhibit
A as a Loan to be purchased by Purchaser and shall be purchased by
Purchaser.  If Seller does not cure to Purchaser’s reasonable
satisfaction each defect so identified by Purchaser with respect to any
Identified Loan, such Identified Loan shall not subsequently be listed on Exhibit A as other
than an Identified Loan, shall not be purchased by Purchaser, and shall not
constitute a Loan for purposes of this Agreement.

      

        
          
             

          

          
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      (g)           Notwithstanding
anything to the contrary in this Agreement, the Purchaser shall not purchase any
loan (other than a Jointly Underwritten Extension of Credit) (i) ninety
(90) days or more past due as to principal or interest as of the Closing Date,
(ii) in connection with which the obligor has filed a petition for relief under
the United States Bankruptcy Code, or otherwise has indicated an inability or
refusal to pay the loan as it becomes due, prior to the Closing, (iii) to a
borrower that to Seller’s Knowledge is deceased, as reflected in Records
relating to such loan, (iv) in which Seller participates with another lender as
of the Closing Date, except as specifically offered by Seller and accepted by
Purchaser, or (v) excluded pursuant to Section 2.07.  No loan
described in the immediately preceding sentence shall constitute a Loan for
purposes of this Agreement.

      

      (h)           During
the period beginning on November 1, 2008, and ending on the Closing Date or the
earlier termination of this Agreement, Seller shall promptly notify Purchaser of
each Extension of Credit proposed to be made or entered into after such date and
booked at a Branch.  If Purchaser notifies Seller that Purchaser has
approved such proposed Extension of Credit, the parties shall cooperate in order
to jointly underwrite such proposed Extension of Credit, and Seller shall use
commercially reasonable efforts to make or enter into such proposed Extension of
Credit prior to the Closing Date on the terms approved by
Purchaser.  Each such proposed Extension of Credit made or entered
into prior to the Closing Date on the terms approved by Purchaser shall be a
“Jointly
Underwritten Extension of Credit”.

      

      (i)           On
the Closing Date, Seller shall update (and deliver to Purchaser a copy of) Exhibit A to list and
categorize each Jointly Underwritten Extension of Credit as a loan that
Purchaser intends to purchase (it being understood that such categorization
shall be subject to subsequent change to the extent provided in clause (C)(x)
below).  During the ten (10) Business Days following the Closing Date
(the “Post-Closing
Review Period”), Seller shall afford to the officers and authorized
representatives of Purchaser, subject to Seller’s normal security requirements,
access to all documents relating to the Jointly Underwritten Extensions of
Credit necessary for Purchaser to make a reasonable investigation thereof and
any collateral therefor.  No later than ten (10) Business Days
following the expiration of the Post-Closing Review Period, Purchaser shall (A)
notify Seller of any Jointly Underwritten Extension of Credit with respect to
which Purchaser has identified a defect described in clause (i), (ii), (iii) or
(iv) of the definition of “Identified Loan”, (B) notify Seller of any loan
(other than a Jointly Underwritten Extension of Credit) described in subsection
(g) above (the Jointly Underwritten Extensions of Credit and the loans referred
to in preceding clauses (A) and (B), collectively, the “Extensions of Credit To Be
Repurchased”) and (C) update (and deliver to Seller a copy of) Exhibit A reflecting
the categorization of (x) each Jointly Underwritten Extension of Credit reviewed
by Purchaser during the Post-Closing Review Period as either (1) a Jointly
Underwritten Extension of Credit that Purchaser will purchase or (2) a Jointly
Underwritten Extension of Credit that Purchaser will not purchase (based solely
on its status as an Extension of Credit To Be Repurchased) and (y) each other
loan previously categorized as a loan that Purchaser intends to purchase as
either (1) the same or (2) a loan that Purchaser will not purchase (based solely
on its status as an Extension of Credit To Be Repurchased).

      
        
           

        

        
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      (j)           Promptly
following its receipt from Purchaser of the notices and updated copy of Exhibit A required
pursuant to subsection (i) above, Seller shall repurchase each Extension of
Credit To Be Repurchased for an amount equal to the Loan Value thereof plus
Accrued Interest thereon as of the date of repurchase.

       

       

    

    
      ARTICLE
III

      

      REPRESENTATIONS
AND WARRANTIES OF SELLER

      

      Seller
represents and warrants as follows:

      

      SECTION
3.01  Corporate Organization and
Authority.  Seller is a bank duly organized, validly existing,
and in good standing under the laws of the United States and has the requisite
power and authority to conduct the business now being conducted at the Branches,
to accept and maintain the Assumed Deposits, and to own the
Assets.  Seller has the requisite corporate power and authority and
has taken all corporate action necessary in order to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby.  This Agreement is a valid and binding agreement of Seller
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and similar laws of general
applicability relating to or affecting creditors’ rights, and to general equity
principles.

      

      SECTION
3.02  No
Conflict; Licenses and Permits; Compliance with Laws and
Regulations.  The execution, delivery, and performance of this
Agreement by Seller does not, and will not, violate any provision of its charter
or by-laws or, subject to the receipt of the Regulatory Approvals, violate or
constitute a breach of, or default under, any law, rule, regulation, judgment,
decree, ruling, or order of any court, government, or governmental agency to
which Seller is subject.  The execution, delivery, and performance of
this Agreement by Seller does not, and will not, violate or constitute a breach
of, or default under, any agreement or instrument of Seller, or to which Seller
is subject or is a party or by which Seller is otherwise bound, or to which the
Branch is subject or to which the Assets, Assumed Deposits, or Assumed Contracts
(except for any required consents under Assumed Contracts in respect of the
transactions herein contemplated) are subject, which violation, breach, or
default, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.  Seller has all material
licenses, franchises, permits, certificates of public convenience, orders, and
other authorizations of all foreign, federal, state, and local governments and
governmental authorities necessary for the lawful conduct of its business at the
Branches as now conducted, and all such authorizations are valid and in good
standing and are not subject to any proceedings for suspension, modification, or
revocation.

      

      SECTION
3.03  Approvals and
Consents.  Except as required to obtain the Regulatory
Approvals, no notices, reports, or other filings are required to be made by
Seller with, nor are any consents, registrations, approvals, permits, or
authorizations required to be obtained by Seller from, any governmental or
regulatory authorities in connection with the execution and delivery of this
Agreement by Seller and the consummation of the transactions contemplated hereby
by Seller.

      

        
          
             

          

          
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      SECTION
3.04  Title
to Assets.  As of the Closing, Seller will have good, valid and
marketable title to, or the legal right to use, each of the Assets, except for
Assets that are leases under which Seller is the lessee, in each case subject to
no Encumbrance or restriction on transfer, except for Permitted
Liens.  With respect to Assets that are leases under which Seller is
the lessee, including the Real Property Leases, as of the Closing, Seller will
have a valid and assignable leasehold interest in the property covered by the
leases and, with respect to the Real Property Leases, insurable leasehold title
to the Parkton Branch and the Green Street Branch.

      

      SECTION
3.05  Condition of
Assets.  All of the Furniture, Fixtures, and Equipment,
including, without limitation, the Branches’ ATMs, included in the Assets are in
good operating or working condition and good repair (normal wear and tear
excepted) and free from any material defect.  All of the Branches’
buildings, structures, fixtures and improvements are structurally sound, in good
repair (normal wear and tear excepted), and usable and adequate for their
intended purpose and to conduct the business of the Branches as it is now being
conducted.

      

      SECTION
3.06  Deposits.  Seller
is an “insured institution” as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder.  The Deposits of each depositor at
the Branches are insured by the FDIC to the maximum amount provided by law, all
deposit insurance premiums due from Seller to the FDIC have been paid in full in
a timely fashion, and, to the Knowledge of Seller, no proceedings have been
commenced or are contemplated by the FDIC or otherwise to terminate such
insurance.  The Deposits (a) are genuine and enforceable obligations
of Seller and have been acquired and maintained in compliance with all
applicable laws, including, without limitation, the Truth in Savings Act and
regulations promulgated thereunder; (b) were acquired in the ordinary course of
Seller’s business; and (c) are not subject to any Encumbrances that are superior
to the rights of persons shown on the records delivered to Purchaser indicating
the owners of such Deposits, other than claims against such Deposit owners, such
as state and federal tax liens, garnishments, and other judgment claims, which
have matured or may mature into claims against the respective
Deposits.  Seller has provided Purchaser with a list setting forth the
name, address, telephone number (if available), account number, and account
balance of each Deposit account holder at the Branches as of the date
hereof.

      

      SECTION
3.07  Contracts.  Each
Assumed Contract constitutes a valid and binding obligation of Seller (subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws of general applicability relating to or affecting creditors’
rights, and to general equity principles), and there does not exist, with
respect to Seller’s obligations thereunder, any default, or event or condition
which constitutes, or after notice or passage of time or both would constitute,
a default on the part of Seller under any Assumed Contract.  Each
lease relating to Furniture, Fixtures, and Equipment used in the Branches is
current, and all rents, expenses, and charges payable by Seller have been paid
or accrued in accordance with the terms thereof.  No consent is
required from any party to an Assumed Contract for Seller’s assumption thereof,
except as listed in Schedule 3.07.

      

      SECTION
3.08  Litigation and
Liabilities.  There are no actions, suits, or proceedings
pending or, to Seller’s Knowledge, threatened, against Seller, or obligations or
liabilities

      
        
           

        

        
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      (whether
accrued, contingent, or otherwise), or facts or circumstances that could
reasonably be expected to result in any claims against or obligations or
liabilities of Seller that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

      

      SECTION
3.09  Compliance With
Laws.  To Seller’s Knowledge, Seller’s business at the Branches
has been conducted in material compliance with all federal, state, and local
laws, regulations and ordinances applicable thereto, including, without
limitation, informational reporting, truth in lending, truth in savings,
consumer credit laws and regulations, currency transaction reporting, and
Environmental Laws.

      

      SECTION
3.10  Regulatory
Matters.  There are no pending, or, to the Knowledge of Seller,
threatened, disputes or controversies between Seller and any federal, state, or
local governmental authority, except for such disputes and controversies as
could not reasonably be expected to result in a Material Adverse
Effect.  To Seller’s Knowledge, there is nothing related to Seller,
its Affiliates or their respective operations that would prevent the obtainment
of the Regulatory Approvals and any other approvals or authorizations necessary
to consummate the transaction described herein.

      

      SECTION
3.11  Absence of Certain Changes,
Etc.  Except in connection with the transactions contemplated
hereby, since December 31, 2006, Seller’s business at the Branches has been
conducted only in the ordinary and usual course, and there has not been any
material adverse change in the condition (financial or otherwise), properties,
business, or results of operations of the Branches, or any development or
combination of developments which, individually or in the aggregate, could
reasonably be expected to result in any such change.

      

      SECTION
3.12  Employment Matters; Employee
Relations.  (a) Seller has delivered to Purchaser a true,
complete and accurate list of all persons employed by Seller at each Branch as
of the date of this Agreement, including those on leave of absence (medical,
family, military, personal or other), disability, layoff and vacation, together
with title, date of hire, compensation of each and, for purposes of Benefit Plan
accrual calculations, date of birth.

      

      (b)           Seller
(i) has paid in full to or accrued on behalf of all of its employees at the
Branches all wages, salaries, commissions, bonuses, fees and other direct
compensation for all labor or services rendered, including all wages, salaries,
commissions, bonuses, fees and other direct compensation for all labor or
services performed by them and all vacation pay, sick pay, severance pay and
other amounts promised to the extent required by law or its existing policies or
practices, and (ii) is in compliance in all material respects with all
applicable federal, state and local laws, statutes, rules and regulations with
regard to employment and employment practices, terms and conditions, and wages
and hours and other compensation matters; and no person has, to the Knowledge of
Seller, asserted that Seller is liable in any amount for any arrearages in wages
or employment taxes or for any penalties for failure to comply with any of the
foregoing.

      

      (c)           There
is no action, suit or proceeding by any person pending or, to the Knowledge of
Seller, threatened against Seller (or its employees), involving employment
discrimination, harassment, wrongful discharge or similar claims relating in any
way to the Branches or any of Seller’s employees at the
Branches.  Seller is not a party to or bound by any

      
        
           

        

        
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      collective
bargaining agreement with any of the employees of the Branches, any labor union
or any other collective bargaining unit or organization.  There is no
pending or, to Seller’s Knowledge,  threatened labor dispute, work
stoppage or strike involving a Branch or any of Seller’s employees at a Branch,
or any pending or, to Seller’s Knowledge, threatened proceeding in which it is
asserted that Seller has committed an unfair labor practice, and, to Seller’s
Knowledge, there is no activity involving it or any of the employees of the
Branches seeking to certify a collective bargaining unit or engaging in any
other labor organization activity.

      

      SECTION
3.13  Employee Benefit
Plans.  There is no Encumbrance outstanding upon any of the
Assets pursuant to Section 412(n) of the Code in favor of any Benefit
Plan.  There is no Encumbrance outstanding upon any of the Assets
pursuant to Section 4068 of ERISA in favor of the Pension Benefit Guaranty
Corporation.  None of the Assets has been provided as security for any
Benefit Plan maintained or contributed to by Seller or its Affiliates pursuant
to Section 401(a)(29) of the Code.  Seller and its Affiliates have
never had any past, present or future obligation or liability to contribute to
any “multiemployer plan,” as defined in Section 3(37) of ERISA.

      

      SECTION
3.14  Books
and Records.  The books and records of Seller relating to the
Branches, the Assets and the Liabilities, including the Accounting Records
related to the Branches, are complete and correct in all respects and have been
maintained in accordance in all respects with good business
practices.  The Accounting Records have been prepared in accordance
with all applicable laws and GAAP consistently applied throughout the periods
involved.  The Accounting Records fairly present in all material
respects the financial position of Seller related to the Branches, the Assets
and the Liabilities as of the date thereof, and the results of operations
related to the Branches, the Assets and the Liabilities for the periods referred
to therein.  Seller does not have any material liabilities, whether
absolute or contingent, direct or indirect, that relate to the Branches, the
Assets or the Liabilities and are not reflected or provided for in the
Accounting Records.

      

      SECTION
3.15  Fiduciary
Obligations.  Other than with respect to IRAs, Seller has no
trust or fiduciary relationship or obligations in respect of any of the Assumed
Deposits or in respect of any other Assets or Liabilities.

      

      SECTION
3.16  Loans.  With
respect to each Loan:  (a) such Loan was solicited and originated in
compliance with all applicable requirements of federal, state, and local laws
and regulations in effect at the time of such solicitation and origination, and
there was no fraud on the part of Seller with respect to the origination of any
Loan; (b) each note evidencing a Loan and any related security instrument
(including, without limitation, any guaranty or similar instrument) constitutes
a valid and legally binding obligation of the obligor or guarantor thereunder,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfers, reorganization, moratorium, and similar laws of general
applicability relating to or affecting creditors’ rights, and to general equity
principles; and (c) no claims, counterclaims, set-off rights, or other rights
exist, nor do the grounds for any such claim, counterclaim, set-off rights, or
other rights exist, with respect to such Loan which could impair the
collectibility thereof.

      

        
          
             

          

          
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      SECTION
3.17  Taxes.  With
respect to the Assumed Deposits, Seller is in compliance with the law and IRS
regulations relative to (a) obtaining from depositors of the Assumed
Deposits, executed IRS Forms W-8 and W-9 and (b) reporting of
interest.  There are no liens for Taxes allocated to or imposed on
Seller on any of the Assets, and, to the Knowledge of Seller, there is no basis
for the assertion of any such liens.  Seller has paid when due all
Taxes in respect of the Assets.

      

      SECTION
3.18  Utilities
Complete.  Reasonable and adequate utility services, including
sewer, water, gas, electric power, and telephone service, as applicable, are
available to the Branches.

      

      SECTION
3.19  Insurance.  Seller
has in effect with respect to each Branch a “financial institutions bond” and
policies of general liability, casualty, employee fidelity, errors and omissions
and other property and liability insurance (the “Policies”).  Seller
has delivered to Buyer true, correct and complete copies of the
Policies.  The Policies provide coverage in such amounts and against
such liabilities, casualties, losses or risks as is required by applicable law
or regulation; and, in the judgment of management of Seller, the insurance
coverage provided under the Policies is reasonable and adequate in all respects
for the Branches.  Each of the Policies is in full force and effect
and is valid and enforceable in accordance with its terms, and is underwritten
by an insurer of recognized financial responsibility that is qualified to
transact business in North Carolina; and Seller has taken all requisite actions
(including the giving of required notices) under each such Policy to preserve
all rights thereunder with respect to all matters.  Seller is not in
default under the provisions of, has not received notice of cancellation or
nonrenewal of or any premium increase on, and has no Knowledge of any failure to
pay any premium on or any inaccuracy in any application for, any
Policy.  There are no pending claims with respect to the Branches or
any Assets under any Policy, and Seller has no Knowledge of any facts or of the
occurrence of any event that is reasonably likely to result in any such
claim.  Seller has not made any claims on its employee fidelity bonds
with respect to the Branches during the three (3) years preceding the date of
this Agreement.

      

      SECTION
3.20  Brokers.  Seller
has not employed any broker or agent in connection with the transactions
contemplated by this Agreement, except Sandler O’Neill & Partners,
L.P.

      

      SECTION
3.21  Disclosure  (a) No
representation or warranty or other statement made by Seller in connection with
the transactions contemplated hereby contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.

      

      (b)           Seller
does not have Knowledge of any fact that has specific application to the Assets,
the Assumed Deposits or Seller (other than general economic or industry
conditions) and that may cause a Material Adverse Effect on the Branches, the
Assets or the Assumed Deposits that has not been set forth in this Agreement or
any schedule hereto.

      

        
          
             

          

          
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      ARTICLE
IV

      

      REPRESENTATIONS
AND WARRANTIES OF PURCHASER

      

      Purchaser
represents and warrants as follows:

      

      SECTION
4.01  Corporate Organization and
Authority.  Purchaser is a bank duly organized, validly
existing, and in good standing under the laws of North
Carolina.  Purchaser has the requisite corporate power and authority
and has taken all corporate action necessary in order to execute and deliver
this Agreement, to consummate the transactions contemplated hereby, to accept
and maintain the Assumed Deposits, to own the Assets, and to operate the
Branches.  This Agreement is a valid and binding agreement of
Purchaser enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, and similar laws of
general applicability relating to or affecting creditors’ rights, and to general
equity principles.

      

      SECTION
4.02  No
Conflict; Licenses and Permits; Compliance with Laws and
Regulations.  The execution, delivery, and performance of this
Agreement by Purchaser does not, and will not, violate any provision of its
charter or by-laws or, subject to the receipt of the Regulatory Approvals,
violate or constitute a breach or contravention of, or default under, any law,
rule, regulation, order, judgment, decree, or filing of any government,
governmental authority, or court to which Purchaser is subject.  The
execution, delivery, and performance of this Agreement by Purchaser does not,
and will not, violate or constitute a breach of, or default under, any agreement
or instrument of Purchaser, or by which Purchaser is otherwise bound, which
violation, breach, or default, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.  On the
Closing Date, Purchaser shall have all material licenses, franchises, permits,
certificates of public convenience, orders, and other authorizations of all
foreign, federal, state, and local governments and governmental authorities
necessary for the lawful conduct of its business at the Branches purchased by
Purchaser hereunder.

      

      SECTION
4.03  Approvals and
Consents.  Except as required to obtain the Regulatory
Approvals, no notices, reports, or other filings are required to be made by
Purchaser with, nor are any consents, registrations, approvals, permits, or
authorizations required to be obtained by Purchaser from, any governmental or
regulatory authorities in connection with the execution and delivery of this
Agreement by Purchaser and the consummation of the transactions contemplated
hereby by Purchaser.

      

      SECTION
4.04  Regulatory
Matters.  (a) There are no pending or, to the Knowledge of
Purchaser, threatened, disputes or controversies between Purchaser or any of its
Affiliates and any federal, state, or local governmental
authority.  To Purchaser’s Knowledge, there is no reason, other than
market concentration in the relevant markets of the Branches, why the Regulatory
Approvals and, to the extent necessary to consummate the transaction described
herein, any other approvals, authorizations, filings, registrations, and notices
might be delayed or might not be obtained.

      

        
          
             

          

          
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      (b)           Purchaser
has at least a “satisfactory” rating under the Community Reinvestment Act of
1977, and is (and on a pro forma basis giving effect to the transaction
contemplated by this Agreement will be) at least “adequately capitalized,” as
these quoted terms are defined for purposes of the Federal Deposit Insurance
Act.

      

      (c)           Purchaser
is not a party to any written order, decree, agreement, or memorandum of
understanding with, or commitment letter or similar submission to, any federal
or state governmental agency or authority charged with the supervision or
regulation of depository institutions or engaged in the insurance of deposits,
nor has Purchaser been advised by any such regulatory authority that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter, or submission, in each case
which order, decree, agreement, memorandum of understanding, commitment letter,
or submission could reasonably be expected to result in a Material Adverse
Effect.

      

      SECTION
4.05  Financing
Available.  Not later than the Closing Date, Purchaser will
have available sufficient cash or other liquid assets or financing pursuant to
binding agreements or commitments which may be used to fund the transactions
contemplated by this Agreement, and Purchaser’s ability to consummate the
transactions contemplated by this Agreement is not contingent on raising any
equity capital, obtaining specific financing, consent of any lender, or any
other matter.

      

      SECTION
4.06  Litigation and Undisclosed
Liabilities.  There are no actions, suits, or proceedings
pending or, to Purchaser’s Knowledge, threatened, against Purchaser, or
obligations or liabilities (whether accrued, contingent, or otherwise), or facts
or circumstances that could reasonably be expected to result in any claims
against or obligations or liabilities of Purchaser that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.

      

      SECTION
4.07  Brokers.  Purchaser
has not employed any broker or agent in connection with the transactions
contemplated by this Agreement, except McColl Partners.

      

      SECTION
4.08  Disclosure.  No
representation or warranty or other statement made by Purchaser in connection
with the transactions contemplated hereby contains any untrue statement or omits
to state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.

      

      

      ARTICLE
V

      

      COVENANTS
OF THE PARTIES

       

      
        SECTION
5.01  Access
and Confidentiality.  (a) Between the date of this
Agreement and the Closing Date, Seller shall afford to Purchaser and its
respective officers, employees, agents, and representatives full access to the
properties, books, records, contracts, documents, files (including Loan files),
and other information of or relating to the Branches, the Assets,
the

        
          
             

          

          
            - 23
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        Liabilities,
the Assumed Contracts, and the Assumed Deposits upon reasonable advance notice
to the President of Seller during normal business hours; provided, however, that
any inspection shall be conducted in a manner that does not unreasonably
interfere with Seller’s normal business operations or its relations with its
customers.  Seller shall cause its personnel at the Branches and its
personnel having managerial responsibility for the Branches to be reasonably
available during normal business hours, to an extent not disruptive of ongoing
operations, to provide information and assistance in connection with Purchaser’s
investigation of matters relating to the Branches, the Assets, the Liabilities,
the Assumed Contracts, and the Assumed Deposits and to familiarize Purchaser
with basic policies and operational procedures of Seller relating to the
Branches.  Seller shall furnish Purchaser with such additional
financial and operating data and other information about its business operations
at the Branches as may be reasonably necessary for the orderly transfer of the
business operations of the Branches.

      

       

      (b)           Subject
to Section 9.03 hereof, each party to this Agreement shall hold, and shall
cause its respective directors, officers, employees, agents, consultants, and
advisors to hold, in strict confidence (unless disclosure to a bank regulatory
authority is necessary in connection with any Regulatory Approval or unless
compelled to disclose by judicial or administrative process or, in the written
opinion of its counsel, by other requirements of law or the applicable
requirements of any regulatory agency or relevant stock exchange) all
discussions and information related to the Branches (or, if required under a
contract with a third party, concerning such third party) and all non-public
records, books, contracts, instruments, computer data, system documentation, and
other data and information (collectively, “Information”) furnished pursuant to this
Agreement (except to the extent that such Information can be shown to have been
(i) previously known by such party on a non-confidential basis,
(ii) in the public domain through no fault of such party, or
(iii) later lawfully acquired from other sources by the party to which it
was furnished, and such other source is not subject to a confidentiality
restriction with regard to such Information), and neither party shall release or
disclose such Information to any other person, except, upon the same conditions
of confidentiality, to its auditors, attorneys, financial advisors, bankers,
other consultants and advisors, and as otherwise permitted under this
Agreement.

      

      (c)           This
Section shall not prohibit disclosure of Information required by applicable law
to be disclosed, but such additional disclosure shall be limited to that
actually required by law, and the party making disclosure shall give the other
party as much notice as is practicable of such obligation (except where
prohibited by applicable law) so that the other party may seek a protective
order or other similar or appropriate relief, and also shall undertake in good
faith to have the Information disclosed treated confidentially by the party to
whom the disclosure is made.

      

      SECTION
5.02  Activity in the Ordinary
Course.  (a) From the date hereof, and until the Closing
Date, Seller shall conduct the business of the Branches in the ordinary and
usual course consistent in all material respects with past practices and
standards, and Seller shall not, without the prior written consent of
Purchaser:

      

        
          
             

          

          
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      (i)           permit
any Branch to engage or participate in any material transaction or incur or
sustain any material obligation except in the ordinary course of such Branch’s
business;

      

      (ii)           offer
interest rates or terms on any category of deposits or loans at any Branch that
are not determined in a manner consistent with past practice and procedure and
that are not reasonable within the current financial environment in the market
area of the Branches;

      

      (iii)           except
as expressly provided in this Agreement, transfer to or from any Branch to or
from any of Seller’s other operations or branches, any Assets or Deposits,
except upon the unsolicited request of a depositor or customer in the ordinary
course of business or if any Deposit is pledged as security for a loan or
similar obligation that is not an Asset;

      

      (iv)           except
in the ordinary course of business, sell, transfer, assign, encumber, or
otherwise dispose of or enter into any contract, agreement, or understanding to
sell, transfer, assign, encumber, or dispose of any Asset;

      

      (v)           make
or agree to make any material improvements to the Branches or the Real Property,
except with respect to commitments for such made on or before the date of this
Agreement or normal maintenance purchased or made in the ordinary course of
business;

      

      (vi)           terminate,
renew, amend, extend or otherwise modify the Real Property Leases;

      

      (vii)           terminate
the operations of any Branch or file any application to relocate or close any
Branch;

      

      (viii)           enter
into any commitment, agreement, understanding, or other arrangements to
transfer, assign, encumber, or otherwise dispose of any Branch, except in a
manner consistent with Seller’s obligations under this Agreement;
or

      

      (ix)           solicit
any current employee of Seller at any Branch to transfer to or post for
positions at any other branch of Seller or grant any increase in the salary or
wages of any of the Employees other than normal increases at times and amounts
consistent with Seller’s past practices.

      

      (b)           Between
the date of this Agreement and the Closing Date, neither Seller nor Purchaser
shall, and each shall cause its respective officers, directors, agents, and
employees not to, take any action that is intended to induce, or is reasonably
likely to induce, the transfer of banking business from any Branch; provided,
however, that nothing in this paragraph shall limit the right of either party to
advertise or market its products in the ordinary course of
business.

      

        
          
             

          

          
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      SECTION
5.03  Maintenance of
Records.  Through the Closing Date, Seller will maintain the
Records in accordance with safe and sound banking practices and in a manner
consistent in all material respects with past practice, which is understood by
Seller to be generally in accordance with GAAP.  All Records, whether
held by Purchaser or Seller, shall be maintained by the applicable party for
such periods following the Closing as are required by law, unless the parties
shall, applicable law permitting, agree in writing to a different
period.  From and after the Closing Date (a) each of the parties
shall permit the other reasonable access to any applicable Records in its
possession relating to matters arising on or before the Closing Date, and
(b) Purchaser shall permit Seller reasonable access to any applicable
Records in its possession relating to matters arising after the Closing Date, in
either case, reasonably necessary in connection with any request for
information, claim, action, litigation, or other proceeding involving the party
requesting access to such Records or in connection with any legal obligation
owed by such party to any present or former depositor or other
customer.  The reasonable access permitted under this Section 5.03
shall include a party’s ability, upon reasonable notice, at its own expense and
during normal business hours, to make copies of and excerpts from the Records as
it may deem desirable.

      

      SECTION
5.04  Insurance; Risk of
Loss.  Seller shall maintain the Assets in customary repair,
order, and condition, reasonable wear and tear and damage by fire or other
casualty excepted.  Until the Close of Business, Seller shall maintain
insurance on the Assets in an amount sufficient to cover the replacement cost of
the Assets, and all risk of loss shall be on Seller.  Seller shall
remain in substantial compliance with any obligations it has under the Assumed
Contracts or otherwise relating to maintenance of and insurance upon the Assets
until the Close of Business.  From and after the Close of Business,
risk of loss of the Assets shall be on Purchaser.

      

      SECTION
5.05  Negotiable
Instruments.  Seller will destroy or remove any supply of
Seller’s money orders, official checks, gift checks, or any other negotiable
instruments, including travelers’ checks, located at the Branches on the Closing
Date.

      

      SECTION
5.06  Customers.  (a) Prior
to Closing, (i) Seller and Purchaser will join in notifying the customers
of each Branch of
the transactions contemplated hereby, and (ii)  Seller and Purchaser shall
join in providing all notices to such customers and other persons that Seller or
Purchaser is required to give by any regulatory authority having jurisdiction or
under applicable law, including ERISA and the Real Estate Settlement Procedures
Act of 1974, or the terms of any other agreement between Seller and any customer
in connection with the transactions contemplated hereby.  All costs
and expenses of any notice or communication sent or published under this
Agreement by Purchaser or Seller shall be shared equally by Seller and
Purchaser.  Seller and Purchaser will cooperate reasonably to effect
the notices described in this Section 5.06.

      

      (b)           Anything
herein to the contrary notwithstanding, neither Purchaser nor Seller shall
object to the use by depositors of the Assumed Deposits of checks and similar
instruments bearing Seller’s name or any proprietary mark of
Seller.

      

        
          
             

          

          
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      SECTION
5.07  Conversion.  Seller
and Purchaser shall cooperate with each other and use reasonable efforts to
agree, reasonably in advance of the Closing Date, on procedures and their
respective responsibilities (both prior to and after the Closing Date) with
respect to (a) the conversion of information maintained on Seller’s data
processing systems to Purchaser’s data processing systems and (b) the timely
transfer of information, funds, records and documents, in each case relating to
the Assumed Deposits, Loans, and Cash on Hand, pursuant to a conversion plan to
be developed and mutually agreed upon by Purchaser and Seller (the “Conversion”)
and outlined in a conversion brochure to be prepared by Purchaser and reasonably
agreed to by Seller (the “Conversion
Brochure”).  The Conversion Brochure shall address the
following matters, without limitation:

      

      (i)           use
of checks and similar instruments bearing Seller’s name or any proprietary mark
of Seller by the depositors of Assumed Deposits;

      

      (ii)           inactivation
by Seller and issuance by Purchaser of ATM cards and debit cards with respect to
Assumed Deposit accounts;

      

      (iii)           direct
deposit arrangements, direct debit arrangements, Overdrafts, and stop payment
orders relating to Assumed Deposit accounts and Loan accounts, as
applicable;

      

      (iv)           deposits
received after the Closing Date for credit to Assumed Deposit
accounts;

      

      (v)           returned
items received after the Closing Date with respect to Assumed Deposit
accounts;

       

      (vi)           charge-back
items received after the Closing Date with respect to merchant Assumed Deposit
accounts;

      

      (vii)           Automated
Clearing House items mistakenly routed or presented to Seller after the Closing
Date; and

      

      (viii)           notification
of Automated Clearing House originators.

      

      Seller
and Purchaser shall each pay for their own expenses incurred in the Conversion
and comply in all material respects with the Conversion procedures and
responsibilities outlined in the Conversion Brochure.  Notwithstanding
the foregoing, in the event of any conflict between the provisions of this
Agreement and the provisions of the Conversion Brochure, the provisions of this
Agreement shall govern.  On or prior to the Closing Date, Seller shall
make available to Purchaser all Delivery Records as well as all of the data
which is reasonably necessary for the Conversion.  Purchaser and
Seller agree that all amounts required to be remitted by either party to the
other party from and after the Closing Date, including in connection with the
Conversion, shall be settled on a daily basis.

       

      
        SECTION
5.08  Real
Property Matters; Real Property Leases.  (a) Seller agrees
to deliver to Purchaser, as soon as reasonably possible after the execution of
this Agreement, not to exceed thirty (30) days from the date of this Agreement,
copies of all (i) title information in possession

        
          
             

          

          
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        of
Seller, including, but not limited to, title insurance policies, attorneys’
opinions on title, surveys, covenants, deeds, notes and mortgages, and easements
relating to the Real Property, and (ii) copies of reports, surveys,
assessments, analyses, remediation plans, notices, correspondence, or other
information that to Seller’s Knowledge relate to the environmental condition of
the Real Property, the presence of Hazardous Substances on the Real Property,
violations of Environmental Laws, or the structural and mechanical condition of
the Improvements.  Such delivery shall constitute no warranty by
Seller as to the accuracy or completeness thereof or that Purchaser is entitled
to rely thereon.

      

       

      (b)           At
its option and expense, Purchaser may, at its sole risk and expense, cause to be
conducted within sixty (60) calendar days after the date hereof (the “Study
Period”) (i) a title examination, physical survey, zoning compliance
review, and structural inspection of the Real Property and improvements thereon
(the “Property
Examination”)
and (ii) site inspections, historic reviews, regulatory analyses, and Phase
I environmental assessments of the Real Property, together with such other
studies, testing, and analyses as Purchaser shall deem necessary or desirable
(collectively, the “Environmental
Survey”);
provided, however, that, without prior written consent of Seller, Purchaser will
not conduct any ground water monitoring or install any test well or undertake
any investigation that requires a permit or license from, or the reporting of
the investigation or the results thereof to, a local or state environmental
regulatory authority or the U.S. Environmental Protection Agency (“Intrusive
Testing”).

      

      (c)           If
in the course of the initial Property Examination or Environmental Survey
Purchaser discovers a Material Defect with respect to the Real Property,
Purchaser will give prompt written notice thereof to Seller (but in any event
prior to 5:00 p.m. on the last day of the Study Period or, in the case of
an update, within five (5) Business Days following Purchaser’s discovery
thereof, and in any event prior to the Closing) describing the facts or
conditions constituting the Material Defect and the measures which Purchaser
reasonably believes are necessary to correct such Material
Defect.  Seller and Purchaser shall discuss and agree upon what
measures are necessary to remedy such defect, and, thereafter, Seller shall
respond to Purchaser’s notice within thirty (30) days after its receipt
advising Purchaser whether Seller elects to cure the Material
Defect.  Absent such a response, Seller shall be deemed to have
declined to cure such Material Defect.  If Seller elects to cure, then
Seller shall proceed with such cure and shall complete such cure within sixty
(60) days thereafter or within such additional period as shall be agreed upon by
Seller and Purchaser, provided that completion of the cure of such defect shall
be a condition to Purchaser’s obligation to close.  Subject to Section
7.01(c), the Closing shall be delayed for such period as shall be necessary to
accommodate Seller’s thirty (30)-day period within which to respond to
Purchaser’s notice and, in the event Seller elects to cure the Material Defect,
to accommodate the above sixty (60)-day (or longer, if agreed upon by Purchaser
and Seller) cure period (or such shorter period as is required for Seller to
cure the Material Defect).

      

      (d)           If
Seller elects not to cure or is not able to cure, or if Purchaser and Seller are
not able to agree on the steps necessary to cure, a Material Defect with respect
to the Real Property at the Branches (whether discovered during the initial or
updated Property Examination or Environmental Survey), or if Seller does not
consent to reasonable Intrusive Testing proposed to be conducted by Purchaser at
the applicable Branch, then Purchaser shall have the option

      
        
           

        

        
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      exercisable
upon written notice to Seller to (i) waive the Material Defect,
(ii) purchase the Assets (other than such Real Property) and assume the
Deposits associated with the applicable Branch, but lease such Real Property
with respect to such Branch from Seller for a period of up to twelve (12)
months, on a month-to-month basis, at a reasonable cost and with reasonable
terms to be agreed upon by Seller and Purchaser, in order to allow for the
relocation of the business at such Branch to another facility, or
(iii) terminate this Agreement in accordance with Section
7.01(f).  If Purchaser does not deliver such a notice on or prior to
the fifth (5th) Business Day following (x) if Seller has elected to cure, the
expiry of Seller’s sixty (60)-day cure period, or (y) otherwise, the expiry of
Seller’s thirty (30)-day response period, Purchaser shall be deemed to have
waived the Material Defect.

      

      (e)           Seller
agrees to deliver to Purchaser, as soon as reasonably possible after the
execution of this Agreement, a copy of the Real Property Leases and copies of
all reports, surveys, notices, correspondence, or other information known to
Seller and relating to the environmental condition of the Parkton Branch and the
Green Street Branch, and all other legal documents related
thereto.  At its option and expense, Purchaser may cause to be
conducted a due diligence examination of the Real Property Leases and the other
legal documents related thereto and the Parkton Branch and the Green Street
Branch (the “Real
Property Lease Examination”).  If in the
course of the Real Property Lease Examination Purchaser reasonably determines
not to accept an assignment of either or both Real Property Leases from Seller,
Purchaser will give prompt written notice thereof to Seller (but in any event
prior to 5:00 p.m. on the sixtieth (60th) calendar day following the date
of delivery of the Real Property Leases and other legal documents related
thereto), describing the reasons for declining to accept an assignment of such
Real Property Lease.  Thereafter, Purchaser shall have the option
exercisable upon written notice to Seller to purchase the Assets and assume the
Deposits associated with the Parkton Branch and/or the Green Street Branch, as
the case may be, but sublease from Seller the applicable Leased Real Property
for a period of up to twelve (12) months, on a month-by-month basis, subject to
landlord consent, as applicable, at a reasonable cost and with reasonable terms
to be agreed upon by Seller and Purchaser, in order to allow for relocation of
the business of each applicable Branch to another facility.

      

      SECTION
5.09  Regulatory
Approvals.  As soon as practicable and no later than fifteen
(15) days after the date of this Agreement, Purchaser shall prepare and file any
applications to federal or state regulatory authorities for approvals necessary,
including all Regulatory Approvals, to consummate the transactions contemplated
by this Agreement.  Seller shall cooperate fully and promptly with
Purchaser in connection with Purchaser’s applications, including joining in such
applications, and will prepare and file any such applications required by
regulators to be filed by Seller.  Purchaser shall use best efforts to
obtain each such approval as promptly as practicable, and to provide Seller with
copies of any applications relating thereto prior to filing and to keep Seller
informed of responses from the various regulatory agencies during the
application process.  Seller shall hold in strict confidence all
materials filed by Purchaser under a claim of confidentiality.

      

      SECTION
5.10  Delivery of the Loan
Documents.  (a) In connection with the sale hereunder, as
soon as reasonably practicable after the Closing Date, Seller shall deliver to
Purchaser or its designee the Loan Documents actually in the possession of
Seller, including

      
        
           

        

        
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      electronic
Records.  Seller shall have no responsibility or liability for the
Loan Documents from and after the time such files are delivered by Seller to its
designee for shipment to Purchaser.

      

      (b)           Promptly
upon the execution of this Agreement, Purchaser shall provide Seller the exact
name to which the Loans are to be endorsed, or whether any Loans should be
endorsed in blank.  Seller will use reasonable efforts to complete
such endorsements and deliver the Loan Documents within ninety (90) days after
Closing.

      

      SECTION
5.11  Collateral Assignments and
Filing.  As reasonably requested by Purchaser, Seller shall
assist Purchaser in obtaining the perfection of the same priority security
interest as is held by Seller in the collateral, if any, securing each Loan sold
on the Closing Date in favor of Purchaser or its designated assignee as secured
party.  This Section shall not impose on Seller any obligation to cure
defects identified with respect to Identified Loans pursuant to Section 2.08(f),
the decision to cure such defects being within the sole discretion of
Seller.

      

      SECTION
5.12  Interest Reporting and
Withholding.  (a) Seller will report to applicable taxing
authorities and holders of Assumed Deposits, with respect to the period from
January 1 of the year in which the Closing occurs through the Closing Date, all
interest credited to, withheld from, and any early withdrawal penalties imposed
upon the Assumed Deposits.  Purchaser will report to the applicable
taxing authorities and holders of Assumed Deposits, with respect to all periods
from the day after the Closing Date, all such interest credited to, withheld
from, and early withdrawal penalties imposed upon such Assumed
Deposits.  Any amounts required by any governmental agencies to be
withheld from any of the Assumed Deposits through the Closing Date will be
withheld by Seller in accordance with applicable law or appropriate notice from
any governmental agency and will be remitted by Seller to the appropriate agency
on or prior to the applicable due date.  Any such withholding required
to be made subsequent to the Closing Date shall be withheld by Purchaser in
accordance with applicable law or appropriate notice from any governmental
agency and will be remitted by Purchaser to the appropriate agency on or prior
to the applicable due date.

      

      (b)           Seller
will be responsible for delivering to payees all IRS notices with respect to
information reporting and tax identification numbers required to be delivered
for the period through the Closing Date which occurs with respect to the Assumed
Deposits.  Purchaser will be responsible for delivering to payees all
such IRS notices required to be delivered for the period from the day after the
Closing Date.

      

      (c)           Seller
will make all required reports to applicable Tax authorities and to obligors on
Loans purchased on the Closing Date, with respect to the period from January 1
of the year in which the Closing occurs through the Closing Date, concerning all
interest and points received by Seller.  Purchaser will make all
required reports to applicable Tax authorities and to obligors on Loans
purchased on the Closing Date, with respect to all periods from the day after
the Closing Date, concerning all such interest and points received.

      

      SECTION
5.13  Change
of Name.  Seller shall remove from each Branch all items that
are not being transferred to Purchaser under this Agreement, including, but not
limited to, signage that bears Seller’s logos, trade names, or trademarks, on or
prior to the Closing, at

      
        
           

        

        
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      Seller’s
own expense.  Seller shall have the option to remove and retain, or
provide to Purchaser, signage apparatus at each Branch that does not bear
Seller’s logos, trade names, or trademarks.

      

      SECTION
5.14  Credit
Insurance.  Seller will either remit all claim payments or
other proceeds it receives on account of credit insurance on the Loans to
Purchaser or, if received prior to the Closing Date, apply such payments or
proceeds to the outstanding principal balance of such Loans.  Seller
will use reasonable efforts to assign policies of credit insurance associated
with the Loans to Purchaser.  Purchaser will remit any insurance
premiums paid to it in connection with the Loans to the appropriate credit
insurance company.

      

      SECTION
5.15  Overdrafts.  All
overdrawn Deposit accounts will be assigned to Purchaser at Closing, and the
Overdrafts represented thereby will be included in the Assets purchased by
Purchaser at Closing.  Purchaser will use good faith efforts
consistent with its normal collection practices to collect the
Overdrafts.

      

      SECTION
5.16  Taxes
and Fees; Proration of Certain
Expenses.  (a) Notwithstanding anything herein to the
contrary, all sales Taxes that are payable or that arise as a result of the
consummation of the transactions contemplated by this Agreement will be borne by
Seller, and any recording or filing fees or transfer, documentary, stamp, or
similar Taxes with respect thereto will be borne by
Purchaser.  Purchaser shall not be responsible for any Tax liability
related to the business or operations of the Branches or the Assets and
Liabilities arising before the Close of Business, and Seller shall not be
responsible for any Tax liabilities related to the business or operations of the
Branches or the Assets and Liabilities arising after the Close of
Business.  After the Closing Date, each of Seller and Purchaser
shall:  (i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in connection with this
Agreement; (ii) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax returns or reports relating to the Assets,
the Liabilities, or the operation of the Branches; (iii) make available to the
other, and to any taxing authority as reasonably requested, all relevant
information, records, and documents relating to Taxes with respect to the
Assets, the Liabilities, or the operation of the Branches; and (iv) provide
timely notice to the other in writing of any pending or proposed Tax audits
(with copies of all relevant correspondence received from any taxing authority
in connection with any Tax audit or information request) or assessments with
respect to the Assets, the Liabilities, or the operation of any Branch for
taxable periods for which the other may have a liability under this
Agreement.  The party requesting assistance or cooperation shall bear
the other party’s out-of-pocket expenses in complying with such request to the
extent that those expenses are attributable to fees and other costs of
unaffiliated third-party service providers; provided that such other party shall
obtain a quotation from any such third-party service providers prior to
engagement and obtain approval thereof from the party requesting
assistance.

      

      (b)           Utility
payments, telephone charges, rent, salaries, FDIC assessments and deposit
insurance premiums, other ordinary operating expenses of the Branches, and other
expenses related to the Assets and Liabilities shall, except as provided in
subsection (c) below for Taxes, be prorated between the parties as of the Close
of Business.  To the extent any such item has been prepaid by Seller
for a period extending beyond the Close of Business, such expenses shall appear
as an Asset on the Closing Statement and the Final Closing Statement.  To

      
        
           

        

        
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      the
extent that expenses have been accrued and not paid by Seller prior to the
Closing Date, they shall appear as a Liability on the Closing Statement and the
Final Closing Statement.

      

      (c)           Whenever
it is necessary under this Agreement to allocate Taxes (including a liability
for Taxes, a Tax refund, or a prepaid Tax) between periods prior to and after
the Closing Date (or determine the amount of prepaid Taxes), such Taxes shall be
apportioned by assuming that the Branches had a taxable year or period which
ended at the Close of Business, except that any property Taxes or exemptions,
allowances, or deductions that are calculated on an annual basis shall be
apportioned based on time.  Appropriate payments shall be made between
Purchaser and Seller whenever necessary to effectuate the proper allocation of
any Tax liability, Tax refund, or prepaid Tax under this Agreement.

      

      SECTION
5.17  Employees and Employee
Benefits.  (a) Purchaser shall offer employment at will
(with no reduction in base salary or weekly or hourly rate of pay) to the
employee set forth on Schedule 5.17(a) and all other employees of Seller at each
Branch identified in the list provided by Purchaser pursuant to the provisions
of subsection (c) below (the “Applicable
Employees”).  Such offers shall be effective on the Closing
Date.  Each Applicable Employee who accepts Purchaser’s offer of
employment shall be a “New
Employee” for purposes of this Agreement effective upon the Closing
Date.  Each New Employee’s employment with Purchaser shall be on an
at-will basis, and nothing in this Agreement shall be deemed to constitute an
employment agreement with any such person or to obligate Purchaser to employ any
such person for any specific period of time or in any specific position or to
restrict Purchaser’s right to terminate the employment of any such person at any
time and for any reason.  Purchaser shall not assume any obligation or
liability of Seller under any employment or similar agreement with Seller’s
employees, all of which obligations and liabilities shall be retained by
Seller.

      

      (b)           Purchaser
shall not assume or be liable for any severance costs associated with
terminating the employment of, or any accrued vacation costs for, any employee
of Seller who is not an Applicable Employee or any Applicable Employee who
declines Purchaser’s offer of employment.  For a period of one (1)
year following the Closing Date, Purchaser will provide to any New Employee that
it terminates without cause severance pay in an amount equal to the product of
(i) an amount equal to the salary at termination of such terminated New Employee
for two (2) weeks and (ii) the terminated New Employee’s cumulative years of
service with Seller and Purchaser; provided that the minimum severance payment
shall not be less than four (4) weeks’ base salary.  Purchaser’s
determination of the presence or absence of cause under this Section shall be
conclusive absent bad faith, and its calculations of severance pay shall be
conclusive absent manifest error.

      

      (c)           At
least sixty (60) days prior to Closing, Seller shall deliver to Purchaser a
report listing each employee employed at each Branch as of the date the report
is prepared to include name, position, exempt or nonexempt status, date of hire,
total years of service, and present salary.  At least thirty (30) days
prior to Closing, Purchaser shall deliver to Seller a list of employees employed
at each Branch who will be offered employment with Purchaser in accordance with
subsection (a) above, stating the name, prospective position and salary of
each.  Seller and Purchaser agree that the employee set forth on
Schedule 5.17(c) will be retained as an

      
        
           

        

        
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      employee
of Seller following the Closing and will therefore not be included in the list
provided by Purchaser as described above.

      

      (d)           On
and after the Closing Date and for purposes of eligibility, vesting, and
vacation entitlement under any Benefit Plan, each New Employee shall receive
full credit from Purchaser for all prior service properly credited under a
comparable plan or arrangement of Seller.  Purchaser shall not be
required to credit any New Employee with prior service for purposes of benefit
accrual under any pension plan, profit sharing plan, savings plan, or other
deferred compensation plan.  The report referred to in subsection (c)
above shall list such service of each New Employee and may be conclusively
relied upon by Purchaser in crediting service in accordance with this
Section.

      

      (e)           Seller
shall retain responsibility for all claims incurred by Applicable Employees
under Seller’s Benefit Plans.  Purchaser shall assume responsibility
for payment of all claims incurred by New Employees under Purchaser’s Benefit
Plans.  Seller shall retain any obligation for payment of long or
short-term disability claims arising from disabilities of Applicable Employees
that occurred prior to the Closing Date.  Purchaser shall be
responsible for payment of long- and short-term disability claims that arise
from disabilities of Applicable Employees that occur on or after the date they
become New Employees.  For purposes of this paragraph, a claim shall
be deemed to have been incurred when the medical or other service giving rise to
the claim is performed, except that disability claims shall be deemed to have
been incurred on the date the employee becomes disabled.

      

      (f)           Purchaser
agrees to (i) provide coverage for active New Employees and their
beneficiaries under its medical, dental, and health and welfare plans as of the
later of the Closing Date or the date an Applicable Employee becomes a New
Employee, (ii) waive any waiting periods and preexisting condition
limitations or exclusions (other than those excluded under Seller’s health
insurance plan) under such plans, (iii) use its best efforts to cause such
plans to honor any expenses incurred by the New Employees and their
beneficiaries under similar plans of Seller during the portion of the calendar
year in which the Closing Date occurs for purposes of satisfying applicable
deductible, co-insurance, and maximum out-of-pocket expenses, and
(iv) permit New Employees to participate in Purchaser’s retirement or
401(k) plans immediately following the Closing Date.

      

      (g)           Purchaser
shall provide New Employees with credit under Purchaser’s vacation pay plan for
all vacation pay benefits earned under Seller’s vacation pay policy and not yet
used as of the Closing Date. 

      

      (h)           For
a period of one (1) year from the Closing Date, Seller shall not directly or
indirectly solicit for employment any New Employee then employed by Purchaser;
provided that the foregoing shall not prohibit general solicitations to the
public or general advertising that is not targeted at New
Employees.

       

      
        SECTION
5.18  Non-Solicitation.  Seller
hereby agrees that for a period of one (1) year from the Closing Date, Seller
shall not specifically target and solicit customers of any Branch; provided,
however, that nothing in this Section shall (a) restrict general mass
mailings,

        
          
             

          

          
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        telemarketing
calls, statement stuffers, advertisements, or other similar communications
whether in print, on radio, television, or the internet, or by other means that
are directed to the general public or to a group of customers who may include
customers of any Branch, provided that such group is defined by criteria other
than primarily as customers of any Branch or (b) otherwise prevent Seller
from taking such actions as may be required to comply with applicable federal or
state laws, rules, or regulations or from servicing or communicating with the
then-current customers of Seller, including customers of Seller with whom Seller
maintains account relationships either centrally or at other
branches.

         

      

      SECTION
5.19  Further
Assurances.  Purchaser and Seller agree to use all reasonable
efforts to satisfy or cause to be satisfied as soon as practicable their
respective obligations hereunder and the conditions precedent to the
Closing.  Each of Seller and Purchaser will execute, acknowledge, and
deliver such instruments and take such other actions as the other party may
reasonably require in order to carry out the intent of this
Agreement.  Seller will duly execute and deliver such assignments,
bills of sale, deeds, acknowledgments, and other instruments of conveyance and
transfer as shall at any time be necessary or appropriate to vest in Purchaser
the full legal and equitable title to the Assets.  For a reasonable
period of time after the Closing Date, each party will promptly deliver to the
other all mail and other communications which are properly addressed or
delivered to the other as a consequence of the transactions pursuant to this
Agreement; and, without limitation of the foregoing, on and after the Closing
Date, Seller shall promptly forward any mail, communications, or other material
relating to the Assumed Deposits or the Assets, to such employees of Purchaser
at such addresses as may from time to time be specified by Purchaser in
writing.

      
 

      ARTICLE
VI

      

      CLOSING

      

      SECTION
6.01  Closing Date and
Place.  Unless earlier terminated pursuant to Section 7.01, the
closing of the transactions provided for herein (the “Closing”)
will be held at the offices of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P., or at another place agreed to by the parties, on such date and
time as are agreed to by the parties.  The Closing shall be effective
as of the Close of Business.

       

      
        SECTION
6.02  Conditions to Obligations of
Purchaser.  Unless waived in writing by Purchaser, the
obligation of Purchaser to consummate the transactions contemplated by this
Agreement to be consummated at the Closing is conditioned upon fulfillment, at
or before the Closing, of each of the following conditions:

        

        (a)           All
consents, approvals, and authorizations required to be obtained prior to the
Closing from governmental and regulatory authorities in connection with the
performance and consummation of the transactions contemplated hereby, including
the Regulatory Approvals, shall have been made or obtained, and shall remain in
full force and effect, all waiting periods applicable to the consummation of the
transactions contemplated hereby shall have expired or been terminated, and all
required regulatory filings shall have been made.  Such
consents,

        
          
             

          

          
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        approvals,
permits, and authorizations, including Regulatory Approvals, shall not have
imposed any condition which is materially disadvantageous or burdensome to
Purchaser.

        

        (b)           No
court or governmental or regulatory authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced, or entered any statute, rule,
regulation, judgment, decree, injunction, or other order (whether temporary,
preliminary, or permanent) which is in effect and which would result in a
Material Adverse Effect, and no proceeding seeking the enactment of such a
judgment, decree, injunction, or other order shall have been announced or
commenced.

        

        (c)           Each
of the representations and warranties of Seller contained in this Agreement or
in any schedule attached hereto that are qualified by reference to materiality
shall be true and correct, and the representations and warranties that are not
so qualified shall be true and correct in all material respects, on and as of
the date of this Agreement and on and as of the Closing Date as if made on the
Closing Date.

        

        (d)           Seller
shall have performed and complied in all material respects with all agreements,
undertakings and obligations that are required to be performed or complied with
by it at or prior to the Closing.

        

        (e)           No
Material Adverse Effect shall have occurred after the date of this
Agreement.

        

        (f)           Purchaser
shall have received each of the following documents, which shall be delivered in
a manner agreed to between Purchaser and Seller and shall be in form and
substance reasonably satisfactory to Purchaser:

        

        (i)           resolutions
of Seller’s Board of Directors, certified by its Secretary or Assistant
Secretary, authorizing the signing and delivery of this Agreement and all
related documents, and the consummation of the transactions contemplated hereby
and thereby;

        

        (ii)           a
certificate from the Secretary or Assistant Secretary of Seller as to the
incumbency and signatures of officers;

        

        (iii)           a
certificate signed by a duly authorized officer of Seller stating that the
conditions set forth in Sections 6.02(a), (b), (c), (d) and (e) have been
satisfied;

        

        (iv)           a
Bill of Sale and Instrument of Assignment and Assumption pursuant to which the
Assets shall be transferred to Purchaser “AS IS, WHERE IS” and with all faults,
except as provided in this Agreement (the “Bill of
Sale”), signed by Seller;

        

        (v)           (A)
special warranty deeds with documentary stamps affixed conveying the Real
Property to Purchaser, free and clear of all Encumbrances

        
          
             

          

          
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        other
than Permitted Liens, together with such other instruments and documents as may
be required for the issuance of appropriate title insurance covering the Real
Property, all in form and substance reasonably acceptable to Purchaser, and
Seller shall have filed or recorded any and all documents necessary to vest
legal and equitable title in the Real Property in Purchaser, all in form and
substance reasonably acceptable to Purchaser; and (B) with respect to each
Leased Real Property, (x) if Purchaser has notified Seller that it will exercise
its option to sublease such Leased Real Property pursuant to Section 5.08(e),
a sublease
of such Leased Real Property and a landlord’s consent to the sublease, each in
form and substance reasonably acceptable to Purchaser, or (y) if
Purchaser has not so notified Seller, an assignment and assumption of the
related Real Property Lease in form and substance reasonably acceptable to
Purchaser, transferring the leasehold interest in such Leased Real Property to
Purchaser, together with such instruments and documents as may be reasonably
required for the issuance of appropriate leasehold title insurance with respect
to such Real Property Lease, and Seller shall have filed or recorded any and all
documents reasonably deemed necessary by Purchaser to vest the leasehold
interest in Purchaser, including a landlord’s consent to the assignment and a
landlord’s estoppel certificate, each in form and substance reasonably
acceptable to Purchaser;

        

        (vi)           the
Delivery Records;

        

        (vii)           an
original, fully executed counterpart of each written Assumed Contract in effect
on the Closing Date and such consents as shall be required pursuant to the terms
of any Assumed Contracts in connection with the assignments of such Assumed
Contracts to Purchaser;

        

        (viii)           a
complete set of keys for each Branch, including, but not limited to, keys for
all vaults and ATMs, appropriately tagged for identification, and manuals and/or
specifications with respect to vaults and ATMs;

        

        (ix)           the
Closing Statement in a form reasonably acceptable to Purchaser and signed by
Seller;

        

        (x)           Seller’s
resignation as trustee or custodian, as applicable, with respect to each IRA
included in the Assumed Deposits, and appointment of Purchaser as successor
trustee or custodian with respect thereto, subject to Section 2.06(a), in
form and substance reasonably acceptable to Purchaser;

        

        (xi)           all
documentation required to exempt Seller from the withholding requirement of
Section 1445 of the Code, including an affidavit from Seller to Purchaser
that Seller is not a foreign person and providing Seller’s U.S. taxpayer
identification number;

        

        (xii)           an
assignment in recordable form reflecting the transfer and assignment to
Purchaser of each deed of trust, mortgage, assignment of rents
and

        
          
             

          

          
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        profits,
and other real property related Loan Documents recorded in the real property
records in applicable public registries (e.g., real property records in the
offices of Registers of Deeds in North Carolina), in a form reasonably
acceptable to Purchaser;

        

        (xiii)           an
affidavit from Seller as to the absence of any mechanics’ or materialmen’s liens
and such other matters as may be reasonably requested by Purchaser or
Purchaser’s title insurance company, in form and substance reasonably acceptable
to Purchaser or Purchaser’s title insurance company; and

        

        (xiv)           such
other bills of sale, assignments of management, maintenance, service or
servicing contracts, security deposits under leases, guaranties, warranties,
utility security deposits, and such other instruments and documents as Purchaser
may reasonably require as necessary for transferring, assigning, and conveying
to Purchaser good, marketable, and insurable title to the Assets, free and clear
of all Encumbrances other than Permitted Liens, and permitting assumption of
Liabilities by Purchaser.

      

       

      SECTION
6.03  Conditions to Obligations of
Seller.  Unless waived in writing by Seller, the obligation of
Seller to consummate the transactions contemplated by this Agreement to be
consummated at the Closing is conditioned upon fulfillment, at or before the
Closing, of each of the following conditions:

      

      (a)           All
consents, approvals, permits, and authorizations required to be obtained prior
to the Closing from governmental and regulatory authorities in connection with
the performance and consummation of the transactions contemplated hereby,
including the Regulatory Approvals, shall have been made or obtained and shall
remain in full force and effect; and all waiting periods applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated and all required regulatory filings shall have been
made.  Such consents, approvals, permits, and authorizations,
including Regulatory Approvals, shall not have imposed any condition which is
materially disadvantageous or burdensome to Seller.

      

      (b)           No
court or governmental or regulatory authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced, or entered any statute, rule,
regulation, judgment, decree, injunction, or other order (whether temporary,
preliminary, or permanent) which is in effect and would result in a Material
Adverse Effect, and no proceeding seeking the enactment of such a judgment,
decree, injunction, or other order that would have a Material Adverse Effect
shall have been announced or commenced.

      

      (c)           Each
of the representations and warranties of Purchaser contained in this Agreement
or in any schedule attached hereto that are qualified by reference to
materiality shall be true and correct, and the representations and warranties
that are not so qualified shall be true and correct in all material respects, on
and as of the date of this Agreement and on and as of the Closing Date as if
made on the Closing Date.

      

        
          
             

          

          
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      (d)           Purchaser
shall have performed and complied in all material respects with all agreements,
undertakings and obligations that are required to be performed or complied with
by it at or prior to the Closing Date.

      

      (e)           Seller
shall have received each of the following documents, which shall be delivered in
a manner agreed to between Purchaser and Seller and shall be in form and
substance reasonably satisfactory to Seller:

      

      (i)           resolutions
of Purchaser’s Board of Directors or an authorized committee thereof, certified
by its Secretary or Assistant Secretary, authorizing the signing and delivery of
this Agreement and all related documents, and the consummation of the
transactions contemplated hereby and thereby;

      

      (ii)           a
certificate of the Secretary or Assistant Secretary of Purchaser as to the
incumbency and signatures of officers;

      

      (iii)           a
certificate signed by a duly authorized officer of Purchaser stating that the
conditions set forth in Sections 6.03(a), (b), (c) and (d) have been
fulfilled;

      

      (iv)           the
Bill of Sale signed by Purchaser;

      

      (v)           the
Closing Statement in a form reasonably acceptable to Seller and signed by
Purchaser;

      

      (vi)           Purchaser’s
acceptance of its appointment as successor trustee or custodian, as applicable,
of each IRA included in the Assumed Deposits and assumption of the fiduciary
obligations of the trustee or custodian with respect thereto, subject to
Section 2.06; and

      

      (vii)           such
other bills of sale, assignments of management, maintenance, service or
servicing contracts, security deposits under leases, guaranties, warranties,
utility security deposits, and such other instruments and documents as Seller
may reasonably require as necessary for transferring, assigning, and conveying
to Purchaser good, marketable, and insurable title to the Assets and permitting
assumption of Liabilities by Purchaser.

      

      SECTION
6.04  Other
Documents.  The parties agree to execute and deliver such other
documents as the parties determine are reasonably necessary to consummate the
transactions contemplated by this Agreement.

      

        
          
             

          

          
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      ARTICLE
VII

      

      TERMINATION

      

      SECTION
7.01  Termination.  This
Agreement may be terminated at any time prior to the Closing Date:

      

      (a)           by
the mutual written consent of Purchaser and Seller;

      

      (b)           by
Seller or Purchaser, in the event of a material breach by the other of any
representation, warranty, or agreement contained herein which is not cured or
cannot be cured within thirty (30) days after written notice of such breach has
been delivered to the breaching party; provided, however, that (subject to
Section 7.02) termination pursuant to this Section shall not relieve the
breaching party of liability for such breach or otherwise;

      

      (c)           by
Seller or Purchaser, notwithstanding any other provision of this Agreement, in
the event that the Closing has not occurred within one hundred eighty (180) days
of the date of this Agreement unless the failure to so consummate by such time
is due to a breach of this Agreement by the party seeking to terminate, or the
failure to fulfill any condition to Closing set forth in Section 6.02 or Section
6.03 by the party seeking to terminate;

      

      (d)           by
Seller or Purchaser, notwithstanding any other provision of this Agreement, in
the event that the Regulatory Approvals have not been received within one
hundred eighty (180) days of the date of this Agreement, unless such non-receipt
was caused by the failure of the party seeking to terminate to act in a timely
manner with respect to such Regulatory Approvals or such party’s negligence or
willful misconduct or other breach of this Agreement with respect to the
Regulatory Approvals;

      

      (e)           by
Seller or Purchaser at any time after the final, nonappealable denial or
revocation of any Regulatory Approval, unless such denial or revocation was
caused by the failure of the party seeking to terminate to act in a timely
manner with respect to such Regulatory Approvals or such party’s negligence or
willful misconduct or other breach of this Agreement with respect to the
Regulatory Approvals; or

      

      (f)           by
Purchaser within the relevant period set forth in Section 5.08, if Seller fails
or declines to cure a Material Defect with respect to the Real
Property.

       

      
        SECTION
7.02  Liability for
Termination.  If this Agreement is terminated as permitted by
Section 7.01, except as provided in Section 7.01(b), such termination shall
be without liability of either party (or any shareholder, director, officer,
employee, agent, consultant or representative of such party) to the other party
to this Agreement, except as described below in this Section 7.02 and in Section
7.03.  If this Agreement is terminated as provided in Section 7.01(b)
or other than as permitted by Section 7.01, or if such termination pursuant
to Section 7.01 results from the willful failure of a party to fulfill a
condition to the performance of the obligations of the other party or to perform
a covenant of this Agreement, such party shall

        
          
             

          

          
            - 39
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        pay to
the other party, concurrently with such termination, a termination fee of One
Hundred Fifty Thousand Dollars ($150,000) as the sole remedy for such
breach.

         

      

      SECTION
7.03  Procedure Upon
Termination.  In the event of termination pursuant to Section
7.01 hereof, written notice thereof shall be given promptly to the other party,
and this Agreement shall terminate and be null and void, except for any payment
obligations provided herein, upon receipt of such notice immediately unless an
extension is consented to by the party having the right to
terminate.  Without limiting the terms of Section 5.01, if this
Agreement is terminated as provided herein, each party will return to the party
furnishing the same all documents, work papers and other materials of the other
party relating to this transaction, whether obtained before or after the
execution hereof.  The provisions of Sections 5.01(b) and (c)
and this Section 7.03 shall be deemed to survive the termination of this
Agreement.

       

    

    
       

      ARTICLE
VIII

      

      INDEMNIFICATION

      

      SECTION
8.01  Indemnification.  (a) From
and after the Closing and subject to the limitations contained in this ARTICLE
VIII, Seller will indemnify Purchaser and its respective officers, directors and
Affiliates and their respective successors and assigns (collectively, the “Purchaser
Indemnified Parties”) and hold the Purchaser Indemnified Parties harmless
against any and all Losses that Purchaser Indemnified Parties have incurred on
or after the Closing Date by reason of:

      

      (i)           the
inaccuracy or breach of any representation or warranty of Seller contained in
this Agreement;

      

      (ii)           the
breach by Seller of any covenant of Seller contained in this
Agreement;

      

      (iii)           Seller’s
conduct of the business of each Branch or Seller’s ownership, operation or use
of the Assets on or prior to the Closing Date; or

      

      (iv)           Seller’s
failure to pay when due or to otherwise perform any of the Retained
Liabilities.

      

      (b)           From
and after the Closing and subject to the limitations contained in this ARTICLE
VIII, Purchaser will indemnify Seller and its respective officers, directors and
Affiliates and their respective successors and assigns (collectively, the “Seller
Indemnified Parties” and, together with the Purchaser Indemnified
Parties, collectively, the “Indemnified
Parties”) and hold the Seller Indemnified Parties harmless against Losses
that the Seller Indemnified Parties have incurred on or after the Closing Date
by reason of:

      

      (i)           the
inaccuracy or breach of any representation or warranty of Purchaser contained in
this Agreement;

      

        
          
             

          

          
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      (ii)           the
breach by Purchaser of any covenant of Purchaser contained in this
Agreement;

      

      (iii)           Purchaser’s
conduct of the business of each Branch or Purchaser’s ownership, operation or
use of the Assets after the Closing Date; or

      

      (iv)           Purchaser’s
failure to pay when due or to otherwise perform any of its liabilities and
obligations, including the Liabilities following Purchaser’s assumption
thereof.

      

      SECTION
8.02  Calculation of
Losses.  For the purpose of calculating Losses arising from any
breach or default of any of the representations, warranties, covenants and
agreements contained in this Agreement, the applicable provisions thereof shall
be read and interpreted as if any qualification therein with respect to
materiality or Material Adverse Effect was not contained therein.  All
calculations of Losses under this Agreement shall take into account and be
reduced by (a) any proceeds actually recovered under insurance policies (after
giving effect to any deductible, retention or equivalent loss rated premium
adjustment and any costs or expenses incurred in making such recovery) in
connection with the matter out of which such Losses shall arise, and (b) any Tax
benefits that the Indemnified Party may receive in connection
therewith.  In no event shall Seller or Purchaser be liable for any
punitive, special, consequential, exemplary or incidental Losses, except to the
extent an Indemnified Party is found by a court of competent jurisdiction, the
decision of which is final and binding and not subject to appeal, to be liable
to a third party (in no event an Affiliate of Seller or Purchaser, respectively)
for special, consequential, exemplary or incidental (but not punitive)
Losses.

      

      SECTION
8.03  Threshold.  Notwithstanding
anything contained herein to the contrary, neither party shall have any
liability under this Agreement (including under Section 8.01) in respect of
breaches of, or inaccuracies in, representations and warranties unless and until
the aggregate Losses for which indemnity by such party would otherwise be due
under this Agreement exceeds one-half percent (1/2%) of the Purchase Price (the
“Threshold”),
in which case such indemnifying party shall be responsible for the aggregate
amount of all Losses regardless of the Threshold.  Each of the parties
hereto acknowledges and agrees that the foregoing limitations contained in this
Section 8.03 do not apply to Losses (a) in respect of breaches of, or
inaccuracies in, the representations in Sections 3.01, 3.04, 3.12, 3.13, 3.17
and 4.01, and (b) for fraud.

      

      SECTION
8.04  Survival of Indemnification
Obligations.  The indemnification obligations of each party
under Section 8.01 in respect of breaches of, or inaccuracies in,
representations and warranties shall remain in full force and effect for
eighteen (18) months following the Closing Date; provided, however, that the
indemnification obligations with respect to the representations and warranties
contained in Sections 3.01, 3.04 and 4.01 and the indemnification obligations
with respect to fraud shall remain in full force and effect
indefinitely.  Notwithstanding the preceding sentence, indemnification
obligations under Section 8.01 shall survive the time at which they would
otherwise terminate pursuant to this Section with respect to Losses set forth in
a written notice, given to the party against whom indemnification is sought
prior to such time of termination, which notice shall state (a) the inaccuracy
or breach giving rise to such indemnification obligations, and (b) the aggregate
amount of Losses or an estimate

      
        
           

        

        
          - 41
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      thereof,
in each case to the extent known or reasonably determinable at such time,
resulting from such inaccuracy or breach.

      

      SECTION
8.05  Terms
and Conditions of Indemnification; Resolution of
Conflicts.  (a) Any party seeking indemnification must
give the other party (the “Indemnifying
Party”) prompt written notice of the claim for Losses stating the
aggregate amount of the Losses or an estimate thereof, in each case to the
extent known or determinable at such time; provided that the failure to provide
such notice shall not relieve the Indemnifying Party of its indemnification
obligations hereunder except to the extent that the Indemnifying Party is
actually prejudiced by the failure to give such notice.

      

      (b)           The
respective obligations and liabilities of the parties to indemnify pursuant to
Section 8.01 in respect of any Losses arising from a claim by a third party
shall be subject to the following additional terms and conditions:

      

      (i)           The
Indemnifying Party shall have the right to undertake, by counsel or other
representatives of its own choosing reasonably satisfactory to the Indemnified
Party, the defense, compromise, and settlement of such claim if (A) the claim
involves (and continues to involve) solely monetary damages and the Indemnifying
Party’s assumption of the defense or settlement of such claim will not have a
material adverse effect on the Indemnified Party’s business, and (B) the
Indemnifying Party expressly agrees in writing to the Indemnified Party that, as
between the two, the Indemnifying Party is solely obligated to satisfy and
discharge the claim subject to the limitations on liability contained in this
ARTICLE VIII (the foregoing, collectively, the “Litigation
Conditions”).

      

      (ii)           In
the event that the Indemnifying Party shall elect not to undertake such defense,
or within thirty (30) days after written notice of any such claim from the
Indemnified Party shall fail to defend, or the Indemnifying Party is unable to
satisfy the Litigation Conditions, the Indemnified Party (upon further written
notice to the Indemnifying Party) shall have the right to undertake the defense,
compromise or settlement of such claim, by counsel or other representatives of
its own choosing, on behalf of, at the expense of and for the account and risk
of the Indemnifying Party.

      

      (c)           Notwithstanding
anything in this Section to the contrary, (i) the Indemnifying Party shall not,
without the Indemnified Party’s written consent, settle or compromise any claim
or consent to entry of any judgment which does not include as an unconditional
term thereof the giving by the claiming party or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim, and
(ii) in the event that the Indemnifying Party undertakes defense of any claim,
the Indemnified Party, by counsel or other representative of its own choosing
and at its sole cost and expense, shall have the right to consult with the
Indemnifying Party and its counsel or other representatives concerning such
claim, and the Indemnifying Party and the Indemnified Party and their respective
counsel or other representatives shall cooperate with respect to such claim,
subject to the execution and delivery of a mutually satisfactory joint defense
agreement.

      
        
           

        

        
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      ARTICLE
IX

      

      MISCELLANEOUS

      

      SECTION
9.01  Assignment.  Neither
this Agreement nor any of the rights, interests, or obligations of either party
hereunder may be assigned by either of the parties hereto without the prior
written consent of the other party.

      

      SECTION
9.02  Binding
Effect.  This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.  Except as expressly
provided in ARTICLE VIII, the parties hereto intend that nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person, including, without limitation, any employee or former employee of
Seller, any legal or equitable right, benefit, or remedy of any nature
whatsoever, including, without limitation, any rights of employment or benefits
for any specified period, under or by reason of this Agreement.

      

      SECTION
9.03  Public
Notice.  From and after the date hereof until the Closing Date,
neither Purchaser nor Seller shall, directly or indirectly, make, or cause to be
made, any press release for general circulation, public announcement, or
disclosure or issue any notice or communication generally to employees with
respect to any of the transactions contemplated hereby without the prior consent
of the other party, which consent shall not be unreasonably
withheld.  Consent shall be deemed granted by the party from which it
is sought unless such party objects within two (2) Business Days after receipt
of the proposed press release or other announcement from the party requesting
consent.  Seller and Purchaser shall cooperate reasonably to produce
public announcements to be released simultaneously within five (5) days after
the date of this Agreement.  Nothing herein shall limit the right of
Seller’s or Purchaser’s parent, after the initial press release regarding the
transaction, to refer to this transaction or to file a copy of this Agreement in
any document required to be filed with the Securities and Exchange Commission or
in its annual report to shareholders.  Nothing in this Agreement shall
limit the right of either party to make any disclosure required by law, subject
to the provisions of Section 5.01.

      

      SECTION
9.04  Notices.  All
notices, requests, demands, consents, and other communications given or required
to be given under this Agreement and under the related documents shall be in
writing and delivered to the applicable party at the address indicated
below:

       

    

    
      	
               
      If
      to Purchaser:

            	
               

            	
              Capital
      Bank

              Capital
      Bank Plaza

              333
      Fayetteville Street, Suite 700

              Raleigh,
      North Carolina 27601

              Attention:
      Michael Moore, Chief Financial Officer

              Facsimile
      No.: (919) 645-6353

               

            

    

     

    
      
        
           

        

        
          - 43
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      With
      copies to:	
               

            	
              Smith,
      Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.

              2500
      Wachovia Capitol Center

              Raleigh,
      North Carolina 27601

              Attention:
      Geoffrey Adams

              Facsimile
      No.: (919) 821-6800

               

            
	 If
      to Seller:	
               

            	
              Omni
      National Bank

              Six
      Concourse Parkway, Suite 2300

              Atlanta,
      Georgia 30328

              Attention:
      Stephen M. Klein, Chief Executive Officer

              Facsimile
      No.: (678) 244-6400

               

            
	 
      With
      copies to:	
               

            	
              Powell
      Goldstein LLP

              One
      Atlantic Center

              1201
      West Peachtree Street, 14th Floor

              Atlanta, Georgia 30309

              Attention:
      Katherine M. Koops

              Facsmile
      No.: (404) 572-6999

            

    

    

    
      or, as to
each party at such other address as shall be designated by such party in a
written notice to the other party complying as to delivery with the terms of
this Section.  Any notices shall be in writing, including telegraphic
or facsimile communication, and may be sent by registered or certified mail,
return receipt requested, postage prepaid, or by fax, or by overnight delivery
service.  Notice shall be effective upon actual receipt
thereof.

      

      SECTION
9.05  Governing
Law.  This Agreement and the legal relations between the
parties shall be governed by and interpreted in accordance with the laws of the
State of North Carolina applicable to contracts made and to be performed
entirely within the State of North Carolina.

      

      SECTION
9.06  Entire
Agreement.  This Agreement, including any exhibits or schedules
hereto, contains the entire understanding of and all agreements between the
parties hereto with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understanding, oral or written, pertaining
to any such matters, which agreement or understanding shall be of no force or
effect for any purpose.  The provisions of this Agreement shall
prevail if there is any inconsistency between this Agreement and any operating
agreement, conversion plan, or similar document relating to the methods of
consummating the transactions contemplated by this Agreement, even if such
document may be characterized as an agreement and dated after the date of this
Agreement.

      

      SECTION
9.07  Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

      

        
          
             

          

          
            - 44
-

            
              

            

          

          
             

          

        

      

      SECTION
9.08  Headings.  The
headings used in this Agreement are inserted for purposes of convenience of
reference only and shall not limit or define the meaning of any provisions of
this Agreement.

      

      SECTION
9.09  Waiver
and Amendment.  The waiver of any breach of any provision under
this Agreement by any party shall not be deemed to be a waiver of any preceding
or subsequent breach under this Agreement.  No such waiver shall be
effective unless it is in writing.  This Agreement may not be amended
or supplemented in any manner except by mutual agreement of the parties and as
set forth in a writing signed by the parties hereto or their respective
successors in interest.

      

      SECTION
9.10  Expenses.  Except
as specifically provided otherwise in this Agreement, each party shall bear and
pay all costs and expenses, including, without limitation, legal fees, which it
incurs, or which may be incurred on its behalf, in connection with the
preparation of this Agreement and consummation of the transactions described
herein, and the expenses, fees, and costs necessary for any approvals of the
appropriate regulatory authorities.

      

      SECTION
9.11  Severability.  If
any provision of this Agreement or the application of any such provision to any
person or circumstance shall be held invalid, illegal, or unenforceable in any
respect by a court of competent jurisdiction, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof.

      
 

    

    [The
remainder of this page intentionally left blank.]

    

      
        
           

        

        
          - 45
-

          
            

          

        

        
           

        

      

    

    [Signature
Page to Purchase and Assumption Agreement]

    

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

    

    
      	 
      	
              CAPITAL
BANK

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:  /s/  Grant
      Yarber

            	 
      
	 
      	
              Name:         Grant
Yarber

            	 
      
	 
      	
              Title:           President

            	 
      

    

    

    

    
      	 
      	
              OMNI NATIONAL
      BANK

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:  /s/  Constance E.
      Perrine

            	 
      
	 
      	
              Name:         Constance E.
      Perrine

            	 
      
	 
      	
              Title:           President

            	 
      

    

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    Exhibit
A

    

    LOANS
REVIEWED PRIOR TO SIGNING

    

    [attached]WWW.EXFILE.COM, INC. -- 888-775-4789 -- BOSTON SCIENTIFIC CORPORATION -- EXHIBIT 10.1 TO FORM 10Q

    EXHIBIT
10.1

     

    

     

    

     

    
 

     

    

     

    

     

    BOSTON
SCIENTIFIC CORPORATION

     

    NON-EMPLOYEE
DIRECTOR

     

    DEFERRED
COMPENSATION PLAN

     

    

     

    (As
Amended and Restated Effective January 1, 2009)

     

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Table of
Contents

     

     

    
      
        	 	 	
                Page

              
	 	 	 
	
                ARTICLE
      I

              	
                Definitions

              	
                1

              
	 	 	 
	 	 	 
	
                ARTICLE
      II

              	
                Eligibility
      and Enrollment

              	
                5

              
	 	 	 
	
                2.1

              	
                Participation

              	
                5

              
	 	 	 
	
                2.2

              	
                Enrollment
      Requirements

              	
                5

              
	 	 	 
	
                2.3

              	
                Commencement
      of Participation

              	
                5

              
	 	 	 
	 	 	 
	
                ARTICLE
      III

              	
                Deferral
      Commitments/Interest Crediting/Taxes

              	      
                5

              
	 	 	 
	
                3.1

              	
                Maximum
      Deferral

              	
                5

              
	 	 	 
	
                3.2

              	
                Election
      to Defer: Effect of Election Form.

              	
                5

              
	 	 	 
	
                3.3

              	
                Withholding
      of Deferral Amounts

              	
                6

              
	 	 	 
	
                3.4

              	
                Initial
      Credits and Interest Crediting

              	
                6

              
	 	 	 
	
                3.5

              	
                Interest
      Crediting for Installment Distributions

              	
                8

              
	 	 	 
	
                3.6

              	
                Taxes

              	
                8

              
	 	 	 
	
                3.7

              	
                Quarterly
      Statements

              	
                9

              
	 	 	 
	 	 	 
	
                ARTICLE
      IV

              	
                Fixed
      Date Payout; Withdrawals; Change in Control

              	      
                9

              
	 	 	 
	
                4.1

              	
                Fixed
      Date Payout

              	
                9

              
	 	 	 
	
                4.2

              	
                Other
      Benefits Take Precedence Over Fixed Date Payout

              	
                9

              
	 	 	 
	
                4.3

              	
                Unforeseeable
      Financial Emergencies.

              	
                9

              
	 	 	 
	
                4.4

              	
                Change
      in Control

              	
                10

              
	 	 	 
	 	 	 
	
                ARTICLE
      V

              	Termination
      Benefit	      
                10

              
	 	 	 
	
                5.1

              	
                Termination
      Benefit

              	
                10

              
	 	 	 
	
                5.2

              	
                Payment
      of Termination Benefit.

              	
                10

              
	 	 	 
	
                5.3

              	
                Failure
      to Elect

              	
                11

              
	 	 	 
	
                5.4

              	
                Death
      Prior to Completion of Termination Benefit

              	
                11

              
	 	 	 
	 	 	 
	
                ARTICLE
      VI

              	
                Pre-Termination
      Survivor Benefit

              	
                      
                  11

                

              
	 	 	 
	
                6.1

              	
                Pre-Termination
      Survivor Benefit

              	
                11

              
	 	 	 
	
                6.2

              	
                Payment
      of Pre-Termination Survivor Benefit.

              	
                12

              
	 	 	 
	
                6.3

              	
                Failure
      to Elect

              	
                12

              
	 	 	 

      

       

       

      
        
           

        

        
          - i
-

          
            

          

        

        
           

        

      

       

      
        	 	 	 
	
                ARTICLE
      VII

              	
                Beneficiary
      Designation

              	      
                13

              
	 	 	 
	
                7.1

              	
                Beneficiary

              	
                13

              
	 	 	 
	
                7.2

              	
                Beneficiary
      Designation: Change

              	
                13

              
	 	 	 
	
                7.3

              	
                Acknowledgment

              	
                13

              
	 	 	 
	
                7.4

              	
                No
      Beneficiary Designation

              	
                13

              
	 	 	 
	
                7.5

              	
                Doubt
      as to Beneficiary

              	
                13

              
	 	 	 
	
                7.6

              	
                Discharge
      of Obligations

              	
                13

              
	 	 	 
	 	 	 
	
                ARTICLE
      VIII

              	
                Termination,
      Amendment or Modification

              	
                      
                  13

                

              
	 	 	 
	
                8.1

              	
                Termination

              	
                13

              
	 	 	 
	
                8.2

              	
                Amendment

              	
                14

              
	 	 	 
	
                8.3

              	
                Plan
      Agreement

              	
                14

              
	 	 	 
	
                8.4

              	
                Effect
      of Payment

              	
                14

              
	 	 	 
	 	 	 
	
                ARTICLE
      IX 

              	
                Administration

              	      
                14

              
	 	 	 
	
                9.1

              	
                Committee
      Duties

              	
                14

              
	 	 	 
	
                9.2

              	
                Agents

              	
                14

              
	 	 	 
	
                9.3

              	
                Binding
      Effect of Decisions

              	
                15

              
	 	 	 
	
                9.4

              	
                Indemnity
      of Committee

              	
                15

              
	 	 	 
	
                9.5

              	
                Company
      Information

              	
                15

              
	 	 	 
	 	 	 
	
                ARTICLE
      X 

              	
                Other
      Benefits and Agreements

              	
                      
                  15

                

              
	 	 	 
	
                10.1

              	
                Coordination
      with Other Benefits

              	
                15

              
	 	 	 
	 	 	 
	
                ARTICLE
      XI 

              	
                Claims
      Procedures

              	
                      
                  15

                

              
	 	 	 
	
                11.1

              	
                Presentation
      of Claim

              	
                15

              
	 	 	 
	
                11.2

              	
                Notification
      of Decision

              	
                15

              
	 	 	 
	
                11.3

              	
                Review
      of a Denied Claim

              	
                16

              
	 	 	 
	
                11.4

              	
                Decision
      on Review

              	
                16

              
	 	 	 
	
                11.5

              	
                Legal
      Action

              	
                16

              
	 	 	 
	 	 	 
	
                ARTICLE
      XII 

              	
                Funding

              	
                      
                  17

                

              
	 	 	 
	
                12.1

              	
                No
      Funding

              	
                17

              
	 	 	 
	
                12.2

              	
                Grantor
      Trust

              	
                17

              
	 	 	 
	 	 	 
	
                ARTICLE
      XIII 

              	Miscellaneous	
                      
                  17

                

              
	 	 	 
	
                13.1

              	
                Limitation
      on Benefit Payment

              	
                17

              

      

       

      
        
           

        

        
          - ii
-

          
            

          

        

        
           

        

      

      
        	 	 	 
	
                13.2

              	
                Status
      of Plan

              	
                18

              
	 	 	 
	
                13.3

              	
                Unsecured
      General Creditor

              	
                18

              
	 	 	 
	
                13.4

              	
                Company’s
      Liability

              	
                18

              
	 	 	 
	
                13.5

              	
                Nonassignability

              	
                18

              
	 	 	 
	
                13.6

              	
                Not
      a Contract of Employment

              	
                18

              
	 	 	 
	
                13.7

              	
                Furnishing
      Information

              	
                18

              
	 	 	 
	
                13.8

              	
                Terms

              	
                18

              
	 	 	 
	
                13.9

              	
                Captions

              	
                18

              
	 	 	 
	
                13.10

              	
                Governing
      Law

              	
                19

              
	 	 	 
	
                13.11

              	
                Notice

              	
                19

              
	 	 	 
	
                13.12

              	
                Successors

              	
                19

              
	 	 	 
	
                13.13

              	
                Spouse’s
      Interest

              	
                19

              
	 	 	 
	
                13.14

              	
                Validity

              	
                19

              
	 	 	 
	
                13.15

              	
                Incompetent

              	
                19

              
	 	 	 
	
                13.16

              	
                Court
      Order

              	
                19

              
	 	 	 
	
                13.17

              	
                Distribution
      in the Event of Taxation.

              	
                20

              
	 	 	 
	
                13.18

              	
                Code
      Section 409A

              	
                20

              
	 	 	 

      

    

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        - iii
-

        
          

        

      

      
         

      

    

    BOSTON
SCIENTIFIC CORPORATION

    

    NON-EMPLOYEE
DIRECTOR

    

    DEFERRED
COMPENSATION PLAN

    

    As
Amended and Restated

     

    Effective
January 1, 2009

     

    Purpose

     

    The
purpose of this Plan is to provide specified benefits to Directors of Boston
Scientific Corporation, a Delaware corporation, the sponsor of this Plan. This
Plan shall be unfunded for tax purposes.  The Plan, as restated
herein, is intended to comply with Code section 409A and shall be interpreted
and construed in accordance with Code section 409A and the Treasury regulations
and other interpretative guidance issued thereunder.  No amounts
credited or vested under the Plan prior to January 1, 2005, pursuant to the
terms of the Plan as then in effect, shall be grandfathered within the meaning
of Code section 409A.

     

    ARTICLE
I

     

    Definitions

     

    For
purposes hereof, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated
meanings:

     

    
      	
              1.1  

            	
              “Account
      Balance” shall mean (i) the Deferral Amount, plus (ii) interest credited
      in accordance with all the applicable interest crediting provisions of
      this Plan, less (iii) all distributions or other debits credited pursuant
      to the provisions of this Plan. This Account Balance shall be a
      bookkeeping entry only and shall be utilized solely as a device for the
      measurement and determination of the amounts to be paid or issued to a
      Participant pursuant to this Plan.

            

    

     

    
      	
              1.2  

            	
              “Annual
      Deferral Amount” shall mean that portion of a Participant’s Directors Fees
      that a Participant elects to have deferred in accordance with Article 3
      for any one Plan Year. In the event of a Participant’s Separation from
      Service or death prior to the end of a Plan Year, such year’s Annual
      Deferral Amount shall be the actual amount deferred prior to such event.
      

            

    

     

    
      	
              1.3  

            	
              “Beneficiary”
      shall mean one or more persons, trusts, estates or other entities,
      designated in accordance with Article 7, that are entitled to receive
      benefits under this Plan upon the death of a
  Participant.

            

    

     

    
      	
              1.4  

            	
              “Beneficiary
      Designation Form” shall mean the form established from time to time by the
      Committee that a Participant completes, signs and returns to the Committee
      to designate one or more
Beneficiaries.

            

    

     

    
      	
              1.5  

            	
              “Board”
      shall mean the board of directors of the
  Company.

            

    

     

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

    

    
      	
              1.6  

            	
              “Cash
      Common Stock Account Balance” shall mean the portion of a Participant’s
      Account Balance attributable to Directors Fees that, absent deferral under
      the Plan, would have been paid to the Director in cash and which is
      converted and credited under the Common Stock Option pursuant to the
      Director’s election under Section
3.4(a).

            

    

     

    
      	
              1.7  

            	
              “Change
      in Control” shall mean the first to occur of any of the following change
      in control events, as determined by the Committee in accordance with the
      provisions of Treas. Reg.
§1.409A-3(i)(5):

            

    

     

    (a) Change in
Ownership.  The acquisition by any one person, or more than one person
acting as a group (as defined in Treas. Reg. §1.409A-3(i)(5)(v)(B)) of stock of
the Company that, together with stock held by such person or group, constitutes
more than 50% of the total fair market value or total voting power of the stock
of the Company.

     

    (b) Change in
Effective Control.

     

    
      	
              (i)  

            	
              The
      acquisition by any one person, or more than one person acting as a group
      (as defined in Treas. Reg. §1.409A-3(i)(5)(v)(B)) on one date (or during
      the 12-month period ending on the date of the most recent acquisition by
      such person or persons) ownership of stock of the Company possessing 30%
      or more of the total voting power of the stock of the Company; provided,
      however, that any acquisition by (x) any noncorporate shareholder of the
      Company as of the effective date of the initial registration of an
      offering of Common Stock under the Securities Act of 1933, (y) the Company
      or any of its subsidiaries, or any employee benefit plan (or related
      trust) sponsored or maintained by the Company or any of its subsidiaries
      or (z) any corporation with respect to which, following such acquisition,
      more than 60% of, respectively, the then outstanding shares of common
      stock of such corporation and combined voting power of the then
      outstanding voting securities of such corporation entitled to vote
      generally in the election of directors is then beneficially owned,
      directly or indirectly, by all or substantially all of the individuals and
      entities who were the beneficial owners, respectively, of the outstanding
      Common Stock and Company voting securities immediately prior to such
      acquisition in substantially the same proportion as their ownership,
      immediately prior to such acquisition, of the outstanding Common Stock and
      Company voting securities, as the case may be, shall not constitute a
      Change in Control.

            

    

     

    
      	
              (ii)  

            	
              The
      replacement of a majority of members of the Board during any 12-month
      period by Directors whose appointment or election is not endorsed by a
      majority of the members of the Board before the date of the appointment or
      election.

            

    

     

    (c) Change in
the Ownership of a Substantial Portion of the Company’s Assets.  The
acquisition by any one person, or more than one person acting as a group (as
defined in Treas. Reg. §1.409A-3(i)(5)(v)(B)) on one date (or during the
12-month period 

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    ending on
the date of the most recent acquisition by such person or persons) assets from
the Company that have a total gross fair market value (determined without regard
to any liabilities associated with such assets) equal to or more than 40% of the
total gross fair market value of all of the assets of the Company (determined
without regard to any liabilities associated with such assets) immediately
before such acquisition or acquisitions.  

     

    
      	
              1.8  

            	
              “Claimant”
      shall have the meaning set forth in Section
  11.1.

            

    

     

    
      	
              1.9  

            	
              “Code”
      shall mean the Internal Revenue Code of 1986, as may be amended from time
      to time.

            

    

     

    
      	
              1.10  

            	
              “Committee”
      shall mean the committee described in Article
9.

            

    

     

    
      	
              1.11  

            	
              “Common
      Stock” shall mean the common stock, $.01 par value, of the
      Company.

            

    

     

    
      	
              1.12  

            	
              “Common
      Stock Option” shall mean the conversion and crediting option described in
      Section 3.4(a)(ii).

            

    

     

    
      	
              1.13  

            	
              “Common
      Stock Account Balance” shall mean the Cash Common Stock Account Balance
      and the Equity Common Stock Account
Balance.

            

    

     

    
      	
              1.14  

            	
              “Company”
      shall mean Boston Scientific Corporation, a Delaware corporation, and any
      successor to all or substantially all of the Company’s assets or business
      which assumes the obligations of the Company to the maximum extent
      permitted by Code section 409A.

            

    

     

    
      	
              1.15  

            	
              “Deferral
      Amount” shall mean the sum of all of a Participant’s Annual Deferral
      Amounts.

            

    

     

    
      	
              1.16  

            	
              “Deduction
      Limitation” shall mean the limitation described in Section 13.1 on a
      benefit that may otherwise be distributable pursuant to the provisions of
      this Plan.

            

    

     

    
      	
              1.17  

            	
              “Director”
      shall mean any non-employee member of the board of directors of the
      Company.

            

    

     

    
      	
              1.18  

            	
              “Directors
      Fees” shall mean the annual fees paid by the Company, including retainer
      fees and committee chair fees and any equity-based awards granted to the
      Director by the Company, in each case for serving on its board of
      directors.

            

    

     

    
      	
              1.19  

            	
              “Election
      Form” shall mean the form established from time to time by the Committee
      that a Participant completes, signs and returns to the Committee to make
      an election under the Plan.

            

    

     

    
      	
              1.20  

            	
               “Equity
      Common Stock Account Balance” shall mean the portion of a Participant’s
      Account Balance attributable to Directors Fees that, absent deferral under
      the Plan, would have been issued to the Director in the form of one or
      more equity-based awards.

            

    

     

    
      	
              1.21  

            	
              “Fixed
      Date Payout” shall mean the payout described in Section
    4.1.

            

    

     

     

     

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    
      	
              1.22  

            	
              “Market
      Price” shall mean, as of any trading date, the closing price of Common
      Stock on such date (or, if no trading shall have occurred on such date, on
      the immediately preceding date on which trading shall have
      occurred).

            

    

     

    
      	
              1.23  

            	
              “Moody’s
      Rate Option” shall mean the interest crediting option described in Section
      3.4(a)(i).

            

    

     

    
      	
              1.24  

            	
              “Moody’s
      Rate Option Account Balance” shall mean the portion of a Participant’s
      Account Balance attributable to Directors Fees that, absent deferral under
      the Plan, would have been paid to the Director in cash and as to which
      interest is being credited under the Moody’s Rate Option pursuant to the
      Director’s election under Section
3.4(a).

            

    

     

    
      	
              1.25  

            	
              “Participant”
      shall mean a Director (i) who elects to participate in the Plan (in
      accordance with the provisions of the Plan), (ii) who signs a Plan
      Agreement, an Election Form and a Beneficiary Designation Form, (iii)
      whose signed Plan Agreement, Election Form and Beneficiary Designation
      Form are accepted by the Committee, (iv) who commences participation in
      the Plan, and (v) whose Plan Agreement has not terminated. A spouse or
      former spouse of a Participant shall not be treated as a Participant in
      the Plan, even if he or she has an interest in the Participant’s benefits
      under the Plan as a result of applicable law or property settlements
      resulting from legal separation or
divorce.

            

    

     

    
      	
              1.26  

            	
              “Plan”
      shall mean the Boston Scientific Corporation Non-Employee Director
      Deferred Compensation Plan, as amended and restated effective January 1,
      2009, and as may be further amended from time to time, which shall be
      evidenced by this instrument, including any amendment hereto, and by each
      Plan Agreement.

            

    

     

    
      	
              1.27  

            	
              “Plan
      Agreement” shall mean a written agreement which is entered into by and
      between the Company and a Participant. Each Plan Agreement executed by a
      Participant and the Company shall provide for the entire benefit to which
      such Participant is entitled to under the Plan, and the Plan Agreement
      bearing the latest date of acceptance by the Committee shall govern such
      entitlement. The terms of any Plan Agreement may vary by Participant, and
      any Plan Agreement may provide additional benefits not set forth in the
      Plan or limit the benefits otherwise provided under the Plan; provided,
      however, that any such additional benefits or benefit limitations must be
      agreed to by both the Company and the
  Participant.

            

    

     

    
      	
              1.28  

            	
              “Plan
      Year” shall mean the twelve (12) month period beginning on January 1 and
      continuing through December 31.

            

    

     

    
      	
              1.29  

            	
              “Pre-Termination
      Survivor Benefit” shall mean the benefit described in Article
      6.

            

    

     

    
      	
              1.30  

            	
              “Separation
      from Service” and correlative terms mean the ceasing of all services as a
      Director constituting a “separation from service” (as that term is defined
      at Treas. Reg. § 1.409A-1(h)) from the Company and any corporation or
      other trade or business that together with the Company would be treated as
      a single “employer” for purposes of Treas. Reg. §
      1.409A-1(h)(3).

            

    

     

    
      	
              1.31  

            	
              “Termination
      Benefit” shall mean the benefit described in Article
  5.

            

    

     

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    
      	
              1.32  

            	
              “Unforeseeable
      Financial Emergency” shall mean an unanticipated emergency that is caused
      by an event beyond the control of the Participant that would result in
      severe financial hardship to the Participant resulting from (i) a sudden
      and unexpected illness or accident of the Participant or a dependent of
      the Participant, (ii) a loss of the Participant’s property due to
      casualty, or (iii) other extraordinary and unforeseeable circumstances
      arising as a result of events beyond the control of the Participant and
      constituting an “unforeseeable emergency” as defined in Treas. Reg.
      § 1.409A-3(i)(3), all as determined in the sole discretion of the
      Committee.

            

    

     

    ARTICLE
II

     

    Eligibility and
Enrollment

     

    
      	
              2.1  

            	
              Participation.  Participation
      in the Plan shall be limited to
Directors.

            

    

     

    
      	
              2.2  

            	
              Enrollment
      Requirements.  As a condition to participation, each
      Director shall complete, execute and return to the Committee a Plan
      Agreement, an Election Form and a Beneficiary Designation Form not later
      than the applicable election deadline specified in Section
      3.2.  In addition, the Committee shall establish from time to
      time such other enrollment requirements as it determines, in its sole
      discretion, are necessary.

            

    

     

    
      	
              2.3  

            	
              Commencement of
      Participation.  Each Director shall commence
      participation in the Plan upon satisfaction of all enrollment requirements
      set forth in this Plan and required by the Committee, including returning
      all required documents to the Committee within the required time frame. If
      a Director fails to meet all such requirements within the required time
      frame, he or she shall not be eligible to participate in the Plan until
      the first day of the Plan Year commencing after the delivery to and
      acceptance by the Committee of the required
  documents.

            

    

     

    ARTICLE
III

     

    Deferral
Commitments/Interest Crediting/Taxes

     

    
      	
              3.1  

            	
              Maximum
      Deferral.  For each Plan Year, a Participant may elect to
      defer up to 100% of his or her Directors Fees. Notwithstanding the
      foregoing, if a Participant first becomes a Participant after the first
      day of a Plan Year, the maximum Annual Deferral Amount shall be limited to
      the amount of Directors Fees not yet earned by the Participant as of the
      date the Participant submits a Plan Agreement and Election Form that are
      accepted by the Committee.

            

    

     

    
      	
              3.2  

            	
              Election to Defer:
      Effect of Election Form.

            

    

     

    (a) First Plan
Year.  In connection with a Participant’s commencement of
participation in the Plan during the course of a Plan Year, the Participant may
make an irrevocable deferral election for Directors Fees in respect of services
to be performed for the remainder of the Plan Year in which the Participant
commences participation in the Plan not later than thirty (30) days after first
becoming eligible, along with, to the extent consistent with section 409A of the
Code, such other form or forms as the Committee deems necessary or desirable
under the Plan. For such election to be valid, the Election Form must be
completed and signed by the Participant, timely delivered to the 

     

     

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

    Committee
(in accordance with the foregoing sentence) and accepted by the
Committee.  A Director who already participates or is eligible to
participate in (including, except to the extent otherwise provided in Treas.
Reg. § 1.409A-2(a)(7), a Director who has any entitlement, vested or unvested,
to payments under) any other nonqualified deferred compensation plan that would
be required to be aggregated with the Plan for purposes of Treas. Reg.
§ 1.409A-1(c)(2) shall not be treated as eligible for the mid-year election
rules of this Section 3.2 with respect to the Plan, even if he or she had never
previously been eligible to participate in the Plan itself.

     

    (b) Subsequent Plan
Years.  For each succeeding Plan Year, an irrevocable deferral
election for that Plan Year, and such other elections as the Committee deems
necessary or desirable under the Plan, shall be made by timely delivering to the
Committee a new Election Form, in accordance with its rules and procedures;
provided that such Election Form must be delivered not later than the last day
of the Plan Year preceding the Plan Year in which the services to which the
Directors Fees relate are to be performed. If no Election Form is timely
delivered for a Plan Year, there shall be no Annual Deferral Amount for that
Plan Year.

     

    
      	
              3.3  

            	
              Withholding of
      Deferral Amounts.  For each Plan Year, Directors Fees
      with respect to which a deferral election has been made under Section 3.2
      shall be withheld at the time such Directors Fees are or otherwise would
      be paid, transferred, or delivered to the
  Participant.

            

    

     

    
      	
              3.4  

            	
              Initial Credits and
      Interest Crediting.  Amounts withheld under Section 3.3
      shall be credited to each Participant’s Account Balance as set forth in
      this Section 3.4.

            

    

     

    (a) Directors Fees Attributable
to Cash.  At the time that a Participant makes a deferral
election under Section 3.2 for any Plan Year with respect to Directors Fees
that, absent such election, would have been payable to the Director in cash, the
Participant shall also elect whether interest shall be credited on the Annual
Deferral Amount for such Plan Year on the basis of the Moody’s Rate Option or
the Common Stock Option, or whether a designated portion of the Annual Deferral
Amount shall be subject to each such option.

     

    
      	
              (i)  

            	
              Moody’s Rate
      Option.  If the Moody’s Rate Option is elected for all or
      a designated portion of an Annual Deferral Amount, that amount shall be
      credited to the Participant’s Moody’s Rate Option Account Balance, and
      interest shall be credited for each Plan Year to the Annual Deferral
      Amount (or the designated portion thereof) at the applicable Moody’s rate.
      The applicable Moody’s rate for a Plan Year shall be the interest rate,
      stated as an annual rate, that (i) is published in Moody’s Bond Record
      under the heading of “Moody’s Composite Yield on Seasoned Corporate Bonds”
      and (ii) is equal to the average corporate bond yield calculated for the
      month of September preceding the Plan Year for which the rate is to be
      used.  Interest shall be credited under this option as though
      the Annual Deferral Amount for each Plan Year were withheld at the
      beginning of the Plan Year or, in the case of the first year of Plan
      participation, were withheld on the date that the Participant commenced
      participation in the Plan, and shall be compounded annually.  In
      the event distribution of the Annual Deferral Amount is made or commences
      prior to the end of a Plan Year, the basis for that year’s interest
      crediting on such distribution will be a fraction of the full year’s
      interest, based on the number of full months prior to such distribution or
      commencement.  For purposes of crediting interest up to the time
      of a distribution, each distribution shall be treated as made on the first
      day of the month in which the distribution is actually
    made.

            

    

     

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

    

    
      	
              (ii)  

            	
              Common Stock
      Option:  If the Common Stock Option is elected for all or
      a designated portion of an Annual Deferral Amount, that amount will be
      converted (in the manner prescribed in this Section 3.4(a)(ii)) into
      hypothetical Common Stock equivalent units and credited to the
      Participant’s Cash Common Stock Account Balance.  The number of
      such units shall be determined by dividing that part of the Annual
      Deferral Amount (or designated portion thereof) that is attributable to
      each calendar quarter by the average of the Market Prices of Common Stock
      during the last five (5) trading days of the preceding calendar
      quarter.  Common Stock equivalent units will be calculated to
      the nearest thousandth.  On each dividend payment date for the
      Common Stock, dividend equivalents in the form of additional units
      representing Common Stock will be credited to the Participant’s Cash
      Common Stock Account Balance equal to (i) the per-share cash dividend
      divided by the average of the Market Prices of Common Stock on the five
      (5) trading days preceding the payment date, multiplied by (ii) the number
      of such units reflected in such Account Balance on the day before the
      dividend payment date.  Upon the Participant’s Separation from
      Service or death, or in the event of a Fixed Date Payout, the Common Stock
      equivalent units credited to the Cash Common Stock Account Balance will be
      valued for payment by multiplying the applicable number of units by the
      average of the Market Prices of Common Stock during the last five (5)
      trading days of the month preceding the date on which the Annual Deferral
      Amount is to be paid (or on which payments of such Amount are to
      commence).  If the outstanding shares of Common Stock are
      increased, decreased or exchanged for a different number or kind of shares
      or other securities, or if additional shares or new or different shares or
      other securities are distributed with respect to such shares of Common
      Stock or other securities through merger, consolidation, sale of all or
      substantially all the property of the Company, reorganization,
      recapitalization, reclassification, stock dividend, stock split, reverse
      stock split or other distribution with respect to such shares of Common
      Stock or other securities, appropriate adjustments will be made by the
      Company in the number of Common Stock equivalent units credited to a
      Participant’s Cash Common Stock Account
Balance.

            

    

     

    (b) Directors Fees Attributable
to Equity.  A deferral election under Section 3.2 for any Plan
Year with respect to Directors Fees that, absent such election, would have been
issued to the Director in the form of one or more equity-based awards shall
constitute an election to have such equity-based award(s) converted (in the
manner prescribed in Section 3.4(b)(i) below) into hypothetical Common Stock
equivalent units and credited to the Participant’s Equity Common Stock Account
Balance pursuant to this Section 3.4(b).  As of any date thereafter,
the Participant shall be vested in any Common Stock equivalent unit credited to
his or her Equity Common Stock Account Balance solely to the extent that he or
she would have been vested as of such date in the specific equity-based award
from which such Common Stock equivalent unit was converted, absent the
conversion of such equity-based award into Common Stock equivalent units under
this Section 3.4(b).

     

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

    

    
      	
              (i)  

            	
              The
      number of such units shall be equal to the number of shares of Common
      Stock subject to the equity-based award which has been
      deferred.  If the outstanding shares of Common Stock are
      increased, decreased or exchanged for a different number or kind of shares
      or other securities, or if additional shares or new or different shares or
      other securities are distributed with respect to such shares of Common
      Stock or other securities through merger, consolidation, sale of all or
      substantially all the property of the Company, reorganization,
      recapitalization, reclassification, stock dividend, stock split, reverse
      stock split or other distribution with respect to such shares of Common
      Stock or other securities, appropriate adjustments will be made by the
      Company in the number of Common Stock equivalent units credited to a
      Participant’s Equity Common Stock Account
  Balance.

            

    

     

    
      	
              (ii)  

            	
              No
      additional amounts or units shall be credited in respect of any units
      credited under the Equity Common Stock Account Balance in respect of any
      dividend payment date for the Common Stock.  Each Director shall
      be entitled to a lump sum cash payment payable each calendar year, no
      later than December 31st of such year, in an amount equal to the sum of
      the following calculated for each dividend payment date that occurred
      during such calendar year: (i) the per-share cash dividend declared for
      such dividend payment date, multiplied by (ii) the number of units
      reflected in the Participant’s Equity Common Stock Account Balance on the
      day before such dividend payment
date.

            

    

     

    
      	
              3.5  

            	
              Interest Crediting for
      Installment Distributions.  If a Participant’s benefits
      under this Plan are to be paid from the Moody’s Rate Option Account
      Balance in substantially equal monthly installments, such payments shall
      be determined by amortizing the Participant’s specified benefit over the
      number of months elected, using the interest rate determined under the
      Moody’s Rate Option for each year and treating the first installment
      payment as all principal and each subsequent installment payment, first as
      interest accrued for the applicable installment period on the unpaid
      Moody’s Rate Option Account Balance and second as a reduction in the
      Moody’s Rate Option Account Balance.

            

    

     

    
      	
              3.6  

            	
              Taxes.  The
      Company, or the trustee of any trust established under Section 12.2, shall
      withhold from any payments made to a Participant under this Plan any
      applicable federal, state and local income, employment and other taxes
      that are required to be withheld by the Company, or the trustee of the
      trust, in connection with such payments, in amounts and in a manner to be
      determined in the sole discretion of the Company or the
      trustee.

            

    

     

     

    
      
         

      

      
        - 8
-

        
          

        

      

      
         

      

    

    
      	
              3.7  

            	
              Quarterly
      Statements.  As soon as practicable after the end of each
      calendar quarter, the Committee shall provide a statement to each
      Participant showing the Participant’s Account Balance as of the end of the
      quarter.  In determining the Account Balance as of the end of a
      quarter, the Committee shall credit interest under the Moody’s Rate Option
      through the last day of the quarter, and shall provide the aggregate
      number of Common Stock equivalent units credited to the Participant’s Cash
      Common Stock Account Balance and to the Participant’s Equity Common Stock
      Account Balance as of the last day of the
  quarter.

            

    

     

     

    ARTICLE
IV

     

    Fixed Date Payout;
Withdrawals; Change in Control

     

    
      	
              4.1  

            	
              Fixed Date
      Payout.  In connection with each election to defer an
      Annual Deferral Amount, a Participant may elect irrevocably to receive a
      future “Fixed Date Payout” from the Plan.  Subject to the
      Deduction Limitation, the Fixed Date Payout shall be a lump sum payment,
      payable in cash except with respect to amounts credited under the Equity
      Common Stock Account which shall, to the extent vested, be issuable in
      stock, in an amount that is equal to such Annual Deferral Amount plus
      interest, if any, credited in the manner provided in Section 3.4 above on
      that amount.  Subject to the Deduction Limitation and the other
      terms and conditions of this Plan, each Fixed Date Payout elected shall be
      paid within 60 days of the first day of any Plan Year designated by the
      Participant that is at least three (3) years after the first day of the
      Plan Year in which the Annual Deferral Amount is actually
      deferred.  Any portion of the Participant’s Equity Common Stock
      Account Balance which is not vested in accordance with Section 3.4(b) as
      of the date of the Fixed Date Payout shall be forfeited as of such
      date.  At any time prior to the first day of the Plan Year
      preceding the Plan Year in which a Fixed Date Payout is otherwise
      scheduled to be made under this Section 4.1, the Participant may change
      this election by submitting a new Election Form to the Committee that is
      accepted by the Committee in its sole discretion; provided that
      he or she must irrevocably elect to postpone such Fixed Date Payout by a
      period of not fewer than five (5) years, in which case payment shall be
      made on or within thirty (30) days following the last day of such
      subsequent Plan Year.  No such additional deferral election
      shall take effect until one year has elapsed from the date the new
      Election Form is accepted by the
Committee.

            

    

     

    
      	
              4.2  

            	
              Other Benefits Take
      Precedence Over Fixed Date Payout.  Should an event occur
      that triggers a benefit under Article 5 or 6, any Annual Deferral Amount,
      plus interest thereon, if any, that is subject to a Fixed Date Payout
      election or additional deferral election under Section 4.1 shall not be
      paid in accordance with Section 4.1, but shall be paid or issued in
      accordance with the other applicable
Article.

            

    

     

    
      	
              4.3  

            	
              Unforeseeable
      Financial Emergencies.

            

    

     

    (a) Withdrawal for Unforeseeable
Financial Emergency.  If a Participant experiences an
Unforeseeable Financial Emergency, the Participant may, with the consent of a
majority of the disinterested members of the Committee, receive a distribution
from his or her Moody’s Rate Option Account Balance, in an amount reasonably
needed to satisfy the Unforeseeable Financial Emergency, plus amounts necessary
to pay taxes reasonably anticipated as a result of the distribution; provided that, no
distribution shall be made under this Section 4.3 to the extent that such
Unforeseeable Financial Emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship), or by cessation of deferrals under the Plan. The
determination of the existence of a Participant’s Unforeseeable Financial
Emergency and the amount required to be distributed to meet the need created by
the Unforeseeable Financial Emergency shall be made by the Committee, all in
accordance with the rules of Treas. Reg. §1.409A-3(i)(3).  The payment
of any amount under this Section 4.3 shall not be subject to the Deduction
Limitation.  No portion of the Participant’s Common Stock Account
Balance shall be available for withdrawal under this Section 4.3.

     

    
      
         

      

      
        - 9
-

        
          

        

      

      
         

      

    

    (b) Cessation of
Deferrals. To the extent that a Participant receives a distribution under
the Plan due to an Unforeseeable Financial Emergency under this Section 4.3,
such Participant’s deferral election for the remainder of the then-current Plan
Year shall be cancelled and have no further effect.

     

    
      	
              4.4  

            	
              Change in
      Control.  If a Change in Control occurs, all deferral
      elections under the Plan shall automatically cease, and each Participant
      (or Beneficiary of a deceased Participant) shall receive a distribution of
      the aggregate value of his or her Moody’s Rate Option Account Balance and
      his or her Cash Common Stock Account Balance in a single lump sum cash
      payment as soon as practicable, and no later than 60 days, after such
      Change in Control.  The Participant’s Equity Common Stock
      Account Balance shall not be paid under this Section 4.4 but shall,
      instead, be paid out in accordance with the other provisions of the
      Plan.

            

    

     

     

    ARTICLE
V

     

    Termination
Benefit

     

    
      	
              5.1  

            	
              Termination
      Benefit.  Subject to the Deduction Limitation, a
      Participant who experiences a Separation from Service prior to his or her
      death shall receive, as a Termination Benefit, his or her Account Balance
      in accordance with this Article 5.

            

    

     

    
      	
              5.2  

            	
              Payment of Termination
      Benefit.

            

    

     

    (a) Equity Common Stock Account
Balance.  A Participant who experiences a Separation from
Service prior to his or her death shall receive his or her Equity Common Stock
Account Balance as a Termination Benefit in the form of stock no later than 60
days after the date the Participant Separates from Service.  Any
portion of the Participant’s Equity Common Stock Account Balance which is not
vested in accordance with Section 3.4(b) as of the date of the Participant’s
Separation from Service shall be forfeited as of such date.

     

     

     

    
      
         

      

      
        - 10
-

        
          

        

      

      
         

      

    

    (b) Moody’s Rate Option Account
Balance.  In connection with each election to defer an Annual
Deferral Amount, the Participant shall elect to receive the portion of such
Annual Deferral Amount allocated to the Moody’s Rate Option as a Termination
Benefit in the form of a lump sum or in substantially equal monthly payments
(the latter determined in accordance with Section 3.5 above) over a period of 60
or 120 months with such payment to be made or to commence no later than 60 days
after the date the Participant Separates from Service.  The
Participant may change this election by submitting a new Election Form to the
Committee that is accepted by the Committee in its sole discretion; provided that he or
she must irrevocably elect to postpone by a period of not fewer than five (5)
years the year in which payment of his or her Moody’s Rate Option Account
Balance is to be made or to commence, in which case (unless there is an
accelerated payment by reason of the Participant’s death under Section 5.4 or
Article 6) payment shall be made or shall commence no later than 60 days
following the last day of such subsequent year.  No such additional
deferral election shall take effect until one year has elapsed from the date the
new Election Form is accepted by the Committee.

     

    (c) Cash Common Stock Account
Balance.  The Participant shall receive his or her Cash Common
Stock Account Balance as a Termination Benefit payable in two (2) installments,
with one-half of the value of the Cash Common Stock Account Balance (determined
in accordance with Section 3.4(a)(ii) as of the date of the Participant’s
Separation from Service) paid within 60 days of the Separation from Service and
the remainder of the value of the Cash Common Stock Account Balance paid on or
after January 1 of the year following the year of the Separation from
Service.

     

    
      	
              5.3  

            	
              Failure to
      Elect.  With respect to each Plan Year in which a
      Participant makes a deferral election, if a Participant does not make any
      election with respect to the form of payment of the Annual Deferral Amount
      allocated to the Moody’s Rate Option, then the Termination Benefit
      attributable to such Annual Deferral Amount shall be payable in a lump sum
      no later than 60 days after the date the Participant Separates from
      Service. 

            

    

     

    
      	
              5.4  

            	
              Death Prior to
      Completion of Termination Benefit.  If a Participant dies
      after Separation from Service but before the Termination Benefit is paid
      or paid in full, the Participant’s unpaid Termination Benefit shall be
      paid, or payments shall commence or continue to be made, to the
      Participant’s Beneficiary (a) at the same time or times as, or over the
      remaining number of months and in the same amounts as, that unpaid
      Termination Benefit would have been paid to the Participant had the
      Participant survived, or (b) in a lump sum, if requested by the
      Beneficiary and allowed in the sole discretion of the Committee (but only
      to the extent permissible under Code section 409A), that is equal to the
      Participant’s unpaid remaining Account
Balance.

            

    

     

     

    ARTICLE
VI

     

    Pre-Termination Survivor
Benefit

     

    
      	
              6.1  

            	
              Pre-Termination
      Survivor Benefit.  Subject to the Deduction Limitation,
      the Participant’s Beneficiary shall receive a Pre-Termination Survivor
      Benefit equal to the Participant’s Account Balance, if the Participant
      dies before he or she experiences a Separation from
    Service.

            

    

     

    
      
         

      

      
        - 11
-

        
          

        

      

      
         

      

    

    
      	
              6.2  

            	
              Payment of
      Pre-Termination Survivor
Benefit.

            

    

     

    (a) Equity Common Stock Account
Balance.  A Participant’s Beneficiary who is entitled to a
Pre-Termination Survivor Benefit under Section 6.1 shall receive the
Participant’s Equity Common Stock Account Balance in stock no later than 90 days
after the date of the Participant’s death.  Any portion of the
Participant’s Equity Common Stock Account Balance which is not vested in
accordance with Section 3.4(b) as of the date of the Participant’s death shall
be forfeited as of such date.

     

    (b) Moody’s Rate Option Account
Balance.  A Participant, in connection with his or her
commencement of participation in the Plan, shall elect on an Election Form
whether his or her Beneficiary shall receive his or her Moody’s Rate Option
Account Balance as a Pre-Termination Survivor Benefit in the form of a lump sum
or in equal monthly payments (the latter determined in accordance with Section
3.5 above) over a period of 60 or 120 months.  The Participant may
change this election by submitting a new Election Form to the Committee that is
accepted by the Committee in its sole discretion; provided that no such
change shall take effect until one year has elapsed from the date the new
Election Form is accepted by the Committee. Despite the foregoing, if the
Participant’s Account Balance at the time of his or her death is less than the
applicable dollar amount in effect under Code section 402(g)(1)(B) at such time,
payment of the Pre-Termination Survivor Benefit may be made, in the sole
discretion of the Committee, in a lump sum; provided that such payment results
in the termination and liquidation of the entirety of the Participant’s interest
under the Plan, including all agreements, methods, programs, or other
arrangements with respect to which deferrals of compensation are treated as
having been deferred under a single nonqualified deferred compensation plan
under Treas. Reg. §1.409A-1(c)(2).  Any Pre-Termination Survivor
Benefit payable under this Section 6.2(b) shall be made, in the case of a lump
sum payment, or shall commence, in the case of an installment payment, no later
than 90 days after the date of the Participant’s death.  

     

    (c) Cash Common Stock Account
Balance.  Unless the entirety of the Participant’s interest
under the Plan is distributed in a lump sum pursuant to the third sentence of
Section 6.2(b), a Participant’s Beneficiary who is entitled to a Pre-Termination
Survivor Benefit under Section 6.1 shall receive the Participant’s Cash Common
Stock Account Balance in two (2) installments, with one-half of the value of the
Cash Common Stock Account Balance (determined in accordance with Section
3.4(a)(ii) as of the date of the Participant’s death) paid within 90 days of the
date of the Participant’s death and the remainder of the value of the Cash
Common Stock Account Balance paid on or after January 1 of the year following
the year of the Participant’s death.

     

    
      	
              6.3  

            	
              Failure to
      Elect.  If a Participant does not make any election with
      respect to the form of payment of his or her Moody’s Rate Option Account
      Balance as a Pre-Termination Survivor Benefit, then such benefit shall be
      paid in a lump sum no later than 90 days after the date of the
      Participant’s death.

            

    

     

     

    
      
         

      

      
        - 12
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    ARTICLE
VII

     

    Beneficiary
Designation

     

    
      	
              7.1  

            	
              Beneficiary.  Each
      Participant shall have the right, at any time, to designate his or her
      Beneficiary(ies) (both primary as well as contingent) to receive any
      benefits payable under the Plan to a beneficiary upon the death of a
      Participant. The Beneficiary designated under this Plan may be the same as
      or different from the Beneficiary designation under any other plan of the
      Company in which the Participant
participates.

            

    

     

    
      	
              7.2  

            	
              Beneficiary
      Designation: Change.  A Participant shall designate his
      or her Beneficiary by completing and signing the Beneficiary Designation
      Form, and returning it to the Committee or its designated
      agent.  A Participant shall have the right to change a
      Beneficiary by completing, signing and otherwise complying with the terms
      of the Beneficiary Designation Form and the Committee’s rules and
      procedures, as in effect from time to time.  Upon the acceptance
      by the Committee of a new Beneficiary Designation Form, all Beneficiary
      designations previously filed shall be canceled.  The Committee
      shall be entitled to rely on the last Beneficiary Designation Form filed
      by the Participant and accepted by the Committee prior to his or her
      death.

            

    

     

    
      	
              7.3  

            	
              Acknowledgment.  No
      designation or change in designation of a Beneficiary shall be effective
      until received, accepted and acknowledged in writing by the Committee or
      its designated agent.

            

    

     

    
      	
              7.4  

            	
              No Beneficiary
      Designation.  If a Participant fails to designate a
      Beneficiary as provided in Sections 7.1, 7.2 and 7.3 above, or if all
      designated Beneficiaries predecease the Participant or die prior to
      complete distribution of the Participant’s benefits, then the
      Participant’s designated Beneficiary shall be deemed to be his or her
      surviving spouse.  If the Participant has no surviving spouse,
      the benefits remaining under the Plan to be paid to a Beneficiary shall be
      payable to the executor or personal representative of the Participant’s
      estate.

            

    

     

    
      	
              7.5  

            	
              Doubt as to
      Beneficiary.  If the Committee has any doubt as to the
      proper Beneficiary to receive payments pursuant to this Plan, the
      Committee shall have the right, exercisable in its discretion, to cause
      the Company to withhold such payments until this matter is resolved to the
      Committee’s satisfaction.

            

    

     

    
      	
              7.6  

            	
              Discharge of
      Obligations.  The payment of benefits under the Plan to a
      Beneficiary shall fully and completely discharge the Company and the
      Committee from all further obligations under this Plan with respect to the
      Participant, and that Participant’s Plan Agreement shall terminate upon
      such full payment of benefits.

            

    

     

     

    ARTICLE
VIII

     

    Termination, Amendment or
Modification

     

    
      	
              8.1  

            	
              Termination.  Although
      the Company anticipates that it will continue the Plan for an indefinite
      period of time, there is no guarantee that the Company will continue the
      Plan or will not terminate the Plan at any time in the future. The
      Company, by action of the Board, may, at any time and from time to time,
      terminate the Plan as a whole or with respect to any Participant or group
      of Participants. The termination of the Plan shall not adversely affect
      any Participant or Beneficiary who has become entitled to the payment of
      any benefits under the Plan as of the date of termination; provided,
      however, that, upon the full termination of the Plan, payments hereunder
      shall be accelerated only to the extent permitted by Treas. Reg.
      §1.409A-3(j)(4)(ix).

            

    

     

    
      
         

      

      
        - 13
-

        
          

        

      

      
         

      

    

    
      	
              8.2  

            	
              Amendment.  The
      Company may, at any time, amend or modify the Plan in whole or in part by
      action of the Board; provided, however, that no change shall be made to
      the Plan that would be inconsistent with the applicable provisions of Code
      section 409A and, except for any amendment or modification the Company
      determines in its sole discretion is necessary to comply with law or
      regulation, no amendment or modification shall be effective to (i)
      decrease or restrict the value of a Participant’s Account Balance in
      existence at the time the amendment or modification is made, calculated as
      if the Participant had experienced a Separation from Service as of the
      effective date of the amendment or modification, or, if the Participant
      had Separated from Service as of the effective date of the amendment or
      modification or (ii) affect any Participant or Beneficiary who has become
      entitled to the payment of benefits under the Plan as of the date of the
      amendment or modification.

            

    

     

    
      	
              8.3  

            	
              Plan
      Agreement.  Despite the provisions of Sections 8.1 and
      8.2 above, if a Participant’s Plan Agreement contains benefits or
      limitations that are not in this Plan document, the Company may only amend
      or terminate such provisions with the consent of the
      Participant.

            

    

     

    
      	
              8.4  

            	
              Effect of
      Payment.  The full payment of the applicable benefit
      under Articles 5 or 6 of the Plan shall completely discharge all
      obligations to a Participant and his or her designated Beneficiaries under
      this Plan and the Participant’s Plan Agreement shall
      terminate.

            

    

     

     

    ARTICLE
IX

     

    Administration

     

    
      	
              9.1  

            	
              Committee
      Duties.  This Plan shall be administered by a Committee
      which shall consist of the Board, or such committee as the Board shall
      appoint. Members of the Committee may be Participants under this
      Plan.  The Committee shall also have the discretion and
      authority to (i) make, amend, interpret, and enforce all appropriate rules
      and regulations for the administration of this Plan (ii) decide or resolve
      any and all questions as may arise in connection with the Plan, including
      without limitation any interpretations of this Plan and any entitlement to
      benefits under the Plan, and (iii) delegate the performance of ministerial
      tasks relating to Plan administration to such persons as the Committee may
      designate.  Any individual serving on the Committee who is a
      Participant will not vote or act on any matter relating solely to himself
      or herself.  When making a determination or calculation, the
      Committee shall be entitled to rely on information furnished by a
      Participant or the Company.

            

    

     

    
      	
              9.2  

            	
              Agents.  In
      the administration of this Plan, the Committee may, from time to time,
      employ agents and delegate to them such duties as it sees fit (including
      acting through a duly appointed representative) and may from time to time
      consult with counsel who may be counsel to the
  Company.

            

    

     

    
      
         

      

      
        - 14
-

        
          

        

      

      
         

      

    

    
      	
              9.3  

            	
              Binding Effect of
      Decisions.  The decision or action of the Committee with
      respect to any question arising out of or in connection with the
      administration, interpretation and application of the Plan and the rules
      and regulations promulgated hereunder shall be final and conclusive and
      binding upon all persons having any interest in the Plan, in the absence
      of clear and convincing evidence that the Committee acted arbitrarily and
      capriciously.

            

    

     

    
      	
              9.4  

            	
              Indemnity of
      Committee.  The Company shall indemnify and hold harmless
      the members of the Committee, and any individual or individuals to whom
      duties of the Committee may be delegated, against any and all claims,
      losses, damages, expenses or liabilities arising from any action or
      failure to act with respect to this Plan, except in the case of willful
      misconduct by the Committee, any of its members or any such individual or
      individuals.

            

    

     

    
      	
              9.5  

            	
              Company
      Information.  To enable the Committee to perform its
      functions, the Company shall supply full and timely information to the
      Committee on all matters relating to the compensation of its Participants,
      the date and circumstances of the Separation from Service or death of its
      Participants, and such other pertinent information as the Committee may
      reasonably require.

            

    

     

     

    ARTICLE
X

     

    Other Benefits and
Agreements

     

    
      	
              10.1  

            	
              Coordination with
      Other Benefits.  The benefits provided for a Participant
      and Participant’s Beneficiary under the Plan are in addition to any other
      benefits available to such Participant under any other plan or program
      sponsored or maintained by the Company.  The Plan shall
      supplement and shall not supersede, modify or amend any other such plan or
      program except as may otherwise be expressly
  provided.

            

    

     

     

    ARTICLE
XI

     

    Claims
Procedures

     

    
      	
              11.1  

            	
              Presentation of
      Claim.  Any Participant or Beneficiary of a deceased
      Participant (such Participant or Beneficiary being referred to below as a
      “Claimant”) may deliver to the Committee a written claim for a
      determination with respect to the amounts distributable to such Claimant
      from the Plan.  If such a claim relates to the contents of a
      notice received by the Claimant, the claim must be made within 60 days
      after such notice was received by the Claimant.  All other
      claims must be made within 180 days of the date on which the event that
      caused the claim to arise occurred.  The claim must state with
      particularity the determination desired by the
  Claimant.

            

    

     

    
      	
              11.2  

            	
              Notification of
      Decision.  The Committee shall consider a Claimant’s
      claim within a reasonable time, and shall notify the Claimant in
      writing:

            

    

     

    (a) that the
Claimant’s requested determination has been made, and that the claim has been
allowed in full; or

     

    (b) that the
Committee has reached a conclusion contrary, in whole or in part, to the
Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:

     

    
      
         

      

      
        - 15
-

        
          

        

      

      
         

      

    

    
      	
              (i)  

            	
              the
      specific reason(s) for the denial of the claim, or any part of
      it;

            

    

     

    
      	
              (ii)  

            	
              specific
      reference(s) to pertinent provisions of the Plan upon which such denial
      was based;

            

    

     

    
      	
              (iii)  

            	
              a
      description of any additional material or information necessary for the
      Claimant to perfect the claim, and an explanation of why such material or
      information is necessary; and

            

    

     

    
      	
              (iv)  

            	
              an
      explanation of the claim review procedure set forth in Section 11.3
      below.

            

    

     

    
      	
              11.3  

            	
              Review of a Denied
      Claim.  Within 60 days after receiving a notice from the
      Committee that a claim has been denied, in whole or in part, a Claimant
      (or the Claimant’s duly authorized representative) may file with the
      Committee a written request for a review of the denial of the
      claim.  Thereafter, but not later than 30 days after the review
      procedure began, the Claimant (or the Claimant’s duly authorized
      representative):

            

    

     

    (a) may
review pertinent documents;

     

    (b) may
submit written comments or other documents; and/or

     

    (c) may
request a hearing, which the Committee, in its sole discretion, may
grant.

     

    
      	
              11.4  

            	
              Decision on
      Review.  The Committee shall render its decision on
      review promptly, and not later than 60 days after the filing of a written
      request for review of the denial, unless a hearing is held or other
      special circumstances require additional time, in which case the
      Committee’s decision must be rendered within 120 days after such date.
      Such decision must be written in a manner calculated to be understood by
      the Claimant, and it must contain:

            

    

     

    (a) specific
reasons for the decision;

     

    (b) specific
reference(s) to the pertinent Plan provisions upon which the decision was based;
and

     

    (c) such
other matters as the Committee deems relevant.

     

    
      	
              11.5  

            	
              Legal
      Action.  A Claimant’s compliance with the foregoing
      provisions of this Article 11 is a mandatory prerequisite to a Claimant’s
      right to commence any legal action with respect to any claim for benefits
      under this Plan.

            

    

     

     

    
      
         

      

      
        - 16
-

        
          

        

      

      
         

      

    

    ARTICLE
XII

     

    Funding

     

    
      	
              12.1  

            	
              No
      Funding.  Nothing in the Plan will be construed to create
      a trust or to obligate the Company or any other person to segregate a
      fund, purchase an insurance contract, or in any other way currently to
      fund the future payment of any benefits hereunder, nor will anything
      herein be construed to give any Participant or any other person rights to
      any specific assets of the Company or of any other person.  The
      Plan constitutes a mere promise by the Company to make benefit payments in
      the future, and is intended to be unfunded for tax
      purposes.  Any benefits which become payable hereunder shall be
      paid from the general assets of the Company, and the rights of any
      Participant or of his or her estate or Beneficiary shall be those of an
      unsecured general creditor.

            

    

     

    
      	
              12.2  

            	
              Grantor
      Trust.  The Company, in its sole discretion, may
      establish, in a manner not inconsistent with the requirements of Code
      section 409A(b), a trust (a “grantor trust”) of which it is treated as the
      owner under Subpart E of Subchapter J, Chapter 1 of the Code to provide
      for the payment of benefits hereunder, subject to the claims of the
      Company’s general creditors in the event of insolvency, and subject to
      such other terms and conditions as the Company may deem necessary or
      advisable to ensure that benefits are not includable, by reason of the
      trust, in the income of trust beneficiaries prior to their actual
      distribution.

            

    

     

     

    ARTICLE
XIII

     

    Miscellaneous

     

    
      	
              13.1  

            	
              Limitation on Benefit
      Payment.  To the extent applicable and except as
      otherwise provided, this limitation shall be applied to all distributions
      that are “subject to the Deduction Limitation” under this
      Plan.  If the Company determines in good faith prior to a Change
      in Control that there is a reasonable likelihood that any compensation
      paid to a Participant for a taxable year of the Company would not be
      deductible by the Company solely by reason of the limitation under Code
      section 162(m), then to the extent deemed necessary by the Company to
      ensure that the entire amount of any distribution to the Participant
      pursuant to this Plan prior to the Change in Control is deductible, the
      Company may defer all or any portion of a distribution under this Plan;
      provided, that the payment is made either during the Participant’s first
      taxable year in which the Company reasonably anticipates, or should
      reasonably anticipate, that if the payment is made during such year, the
      deduction of such payment will not be barred by application of Code
      section 162(m) or during the period beginning with the date of the
      Participant’s Separation from Service and ending on the later of the last
      day of the taxable year of the Company which the Participant Separates
      from Service or the 15th
      day of the third month following the Participant’s Separation from
      Service, or if earlier upon a Change in Control, and provided further that
      where any scheduled payment to a Participant in the Company’s taxable year
      is delayed in accordance with this paragraph, the delay in payment will be
      treated as a subsequent deferral election under Code section 409A unless
      all scheduled payments to that Participant that could be delayed in
      accordance with this paragraph are also delayed.  Any amounts
      deferred pursuant to this limitation shall continue to be credited with
      interest in accordance with Section 3.5.  Notwithstanding
      anything to the contrary in this Plan, the Deduction Limitation shall not
      apply to any distributions made after a Change in
  Control.

            

    

     

     

    
      
         

      

      
        - 17
-

        
          

        

      

      
         

      

    

    
      	
              13.2  

            	
              Status of
      Plan.  The Plan is intended to be a plan that is not
      qualified within the meaning of Code section 401(a) and that is unfunded
      for tax purposes.  The Plan shall be administered and
      interpreted to the extent possible in a manner consistent with that
      intent.

            

    

     

    
      	
              13.3  

            	
              Unsecured General
      Creditor.  Participants and their Beneficiaries, heirs,
      successors and assigns shall have no legal or equitable rights, interests
      or claims in any property or assets of the Company.  For
      purposes of the payment of benefits under this Plan, any and all of the
      Company’s assets shall be, and remain, the general, unpledged unrestricted
      assets of the Company.  The Company’s obligation under the Plan
      shall be merely that of an unfunded and unsecured promise to pay money in
      the future.

            

    

     

    
      	
              13.4  

            	
              Company’s’s
      Liability.  The Company’s liability for the payment of
      benefits shall be defined only by the Plan and the Plan Agreement, as
      entered into between the Company and a Participant.  The Company
      shall have no obligation to a Participant under the Plan except as
      expressly provided in the Plan and his or her Plan
    Agreement.

            

    

     

    
      	
              13.5  

            	
              Nonassignability.  Neither
      a Participant nor any other person shall have any right to commute, sell,
      assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
      transfer, hypothecate, alienate or convey in advance of actual receipt,
      the amounts, if any, payable hereunder, or any part thereof, which are,
      and all rights to which are expressly declared to be, unassignable and
      non-transferable, except that the foregoing shall not apply to any court
      order specified in Section 13.16 below.  No part of the amounts
      payable shall, prior to actual payment, be subject to seizure, attachment,
      garnishment or sequestration for the payment of any debts, judgments,
      alimony or separate maintenance owed by a Participant or any other person,
      nor be transferable by operation of law in the event of a Participant’s or
      any other person’s bankruptcy or
insolvency.

            

    

     

    
      	
              13.6  

            	
              Not a Contract of
      Employment.  The terms and conditions of this Plan shall
      not be deemed to constitute a contract of employment between the Company
      and the Participant.  Nothing in this Plan shall be deemed to
      give a Participant the right to be retained in the service of the Company
      as a Director, or to interfere with the right of the Company to discipline
      or discharge the Participant at any
time.

            

    

     

    
      	
              13.7  

            	
              Furnishing
      Information.  A Participant or his or her Beneficiary
      will cooperate with the Committee by furnishing any and all information
      requested by the Committee and take such other actions as may be requested
      in order to facilitate the administration of the Plan and the payments of
      benefits hereunder.

            

    

     

    
      	
              13.8  

            	
              Terms.  Whenever
      any words are used herein in the masculine, they shall be construed as
      though they were in the feminine in all cases where they would so apply;
      and whenever any words are used herein in the singular or in the plural,
      they shall be construed as though they were used in the plural or the
      singular, as the case may be, in all cases where they would so
      apply.

            

    

     

    
      	
              13.9  

            	
              Captions.  The
      captions of the articles, sections and paragraphs of this Plan are for
      convenience only and shall not control or affect the meaning or
      construction of any of its
provisions.

            

    

     

    
      
         

      

      
        - 18
-

        
          

        

      

      
         

      

    

    
      	
              13.10  

            	
              Governing
      Law.  The provisions of this Plan shall be construed and
      interpreted according to the laws of the Commonwealth of Massachusetts
      without regard to its conflict of laws
  principles.

            

    

     

    
      	
              13.11  

            	
              Notice.  Any
      notice or filing required or permitted to be given to the Committee under
      this Plan shall be sufficient if in writing and hand-delivered, or sent by
      overnight, registered or certified mail, to the address
    below:

            

    

     

    Non-Employee Director Deferred
Compensation Plan Committee

    c/o General Counsel

    Boston Scientific
Corporation

    One Boston Scientific
Place

    Natick, MA 01760-1537

     

    Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification. Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the
Participant.

     

    
      	
              13.12  

            	
              Successors.  The
      provisions of this Plan shall bind and inure to the benefit of the Company
      and its successors and assigns and the Participant and the Participant’s
      designated Beneficiaries.

            

    

     

    
      	
              13.13  

            	
              Spouse’s
      Interest.  The interest in the benefits hereunder of a
      spouse of a Participant who has predeceased the Participant shall
      automatically pass to the Participant and shall not be transferable by
      such spouse in any manner, including but not limited to such spouse’s
      will, nor shall such interest pass under the laws of intestate
      succession.

            

    

     

    
      	
              13.14  

            	
              Validity.  In
      case any provision of this Plan shall be illegal or invalid for any
      reason, said illegality or invalidly shall not affect the remaining parts
      hereof, but this Plan shall be construed and enforced as if such illegal
      or invalid provision had never been inserted
  herein.

            

    

     

    
      	
              13.15  

            	
              Incompetent.  If
      the Committee determines in its discretion that a benefit under this Plan
      is to be paid to a minor, a person declared incompetent or a person
      incapable of handling the disposition of that person’s property, the
      Committee may direct payment of such benefit to the guardian, legal
      representative or person having the care and custody of such minor,
      incompetent or incapable person.  The Committee may require
      proof of minority, incompetency, incapacity or guardianship, as it may
      deem appropriate prior to distribution of the benefit.  Any
      payment of a benefit shall be a payment for the account of the Participant
      and the Participant’s Beneficiary, as the case may be, and shall be a
      complete discharge of any liability under the Plan for such payment
      amount.

            

    

     

    
      	
              13.16  

            	
              Court
      Order.  The Committee is authorized to make any payments
      directed by court order in any action in which the Plan or the Committee
      has been named as a party.  In addition, if a court determines
      that a spouse or former spouse of a Participant has an interest in the
      Plan as the result of a property settlement or otherwise, the Committee,
      in its sole discretion, shall have the right, notwithstanding any election
      made by a Participant, to distribute immediately the spouse’s or former
      spouse’s interest in the Plan to that spouse or former
    spouse.

            

    

     

    
      
         

      

      
        - 19
-

        
          

        

      

      
         

      

    

    
      	
              13.17  

            	
              Distribution in the
      Event of Taxation.

            

    

     

    (a) In
General.  If, for any reason, all or any portion of a
Participant’s benefit under this Plan becomes taxable to the Participant prior
to receipt, a Participant may petition the Committee for a distribution of that
portion of his or her benefit that has become taxable.  Upon the grant
of such a petition, which grant shall not be unreasonably withheld, the Company
shall distribute to the Participant immediately available funds in an amount
equal to the taxable portion of his or her benefit (which amount shall not
exceed a Participant’s unpaid Account Balance under the Plan).  If the
petition is granted, the tax liability distribution shall be made within 90 days
of the date when the Participant’s petition is granted.  Such a
distribution shall affect and reduce the benefits to be paid under this
Plan.

     

    (b) Code Section
409A.  Acceleration of the payment of benefits under the Plan
shall also be allowed at any time the Plan fails to meet the requirements of
Code section 409A and the regulations issued thereunder, to the extent such
acceleration is permitted under Treas. Reg. §1.409A-3(j)(4)(vii).  Any
payment made based upon the acceleration for the failure to meet the
requirements of Code section 409A and the regulations issued thereunder may not
exceed the amount required to be included in income as a result of the failure
to comply with the requirements of section 409A of the Code and the regulations
issued thereunder.

     

    
      	
              13.18  

            	
              Code Section
      409A.  The Plan shall be interpreted and construed in
      accordance with Code section 409A and the Treasury regulations and other
      interpretative guidance issued thereunder, including, to the extent
      required under Treas. Reg. §1.409A-3(i)(2), enforcement of the six (6)
      month delay on any distribution upon the Separation from Service of a
      “specified employee” within the meaning of Code section
      409A(a)(2)(B)(i).

            

    

     

    

     

    IN
WITNESS WHEREOF, the Company has signed this Plan document this ______ day of
__________________, 2008.

     

    Boston Scientific
Corporation

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        - 20
-

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