PURCHASE AND ASSUMPTION AGREEMENT

Exhibit A – Loans Reviewed Prior to Signing

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 ” ).

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:

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).

“ 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.

“ 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. Sec. 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 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 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).

“ 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).

“ 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 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. Sec. 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.

“ 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 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 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.

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 (3 ^rd ) Business Day prior to the Closing Date; plus

(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 (3 ^rd ) Business Day prior to the Closing Date (the “ Closing Statement ” ).

(c) On the first (1 ^st ) 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 (10 ^th ) 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 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 (10 ^th ) 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.

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 (10 ^th ) 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 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.

(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).

(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.

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.

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 respe