EXHIBIT 10-1


                        SOUTHCOAST FINANCIAL CORPORATION

                            4,000 Capital Securities


                        Floating Rate Capital Securities
               (Liquidation Amount $1,000.00 per Capital Security)


                               PURCHASE AGREEMENT


                                                                     May 3, 2002



Bayview Financial Trading Group, L.P.
2665 South Bayshore Drive
Third Floor
Miami, Florida  33133


Ladies and Gentlemen:

          Southcoast Financial  Corporation,  Inc., a South Carolina corporation
(the "Company"),  and its financing  subsidiary,  Southcoast  Capital Trust I, a
Delaware Business Trust (the "Trust," and hereinafter together with the Company,
the  "Offerors"),  hereby confirm their  agreement with you, a Delaware  limited
partnership, as the purchaser (the "Purchaser"), as follows:

Section 1. Issuance and Sale of Securities.

          1.1.  Introduction.  The  Offerors  propose  to issue  and sell at the
Closing (as defined in Section 2.4.1 hereof) 4,000 of the Trust's  Floating Rate
Capital Securities,  with a liquidation amount of $1,000.00 per capital security
(the  "Capital  Securities"),  to you  pursuant  to the  terms of this  Purchase
Agreement (the "Agreement"). The Capital Securities shall be offered and sold by
the Trust directly to the Purchaser  without  registration of any of the Capital
Securities, the Debentures or the Guarantee under the Securities Act of 1933, as
amended (the  "Securities  Act"),  or any other  applicable  securities  laws in
reliance upon  exemptions from the  registration  requirements of the Securities
Act and other  applicable  securities  laws. The Offerors and the Purchaser have
entered  into  this  Agreement  to set  forth  their  understanding  as to their
relationship and their respective rights, duties and obligations.

         1.2.  Operative  Agreements.  The Capital Securities shall be fully and
unconditionally  guaranteed on a subordinated  basis by the Company with respect
to distributions and amounts payable upon  liquidation,  redemption or repayment
(the  "Guarantee")   pursuant  and  subject  to  the  Guarantee  Agreement  (the


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"Guarantee  Agreement"),  to be dated as of the  Closing  Date  (as  defined  in
Section  2.4.1 hereof) and executed and delivered by the Company and Wells Fargo
Bank,   National   Association  ("Wells  Fargo"),  as  trustee  (the  "Guarantee
Trustee"),  for the  benefit  from time to time of the  holders  of the  Capital
Securities. The entire proceeds from the sale by the Trust to the holders of the
Capital  Securities  shall be combined with the entire proceeds from the sale by
the Trust to the Company of its common securities (the "Common Securities"), and
shall be used by the Trust to purchase  $4,125,000  in  principal  amount of the
Floating  Rate  Junior   Subordinated   Deferrable   Interest   Debentures  (the
"Debentures") of the Company.  The Capital  Securities and the Common Securities
for the Trust shall be issued pursuant to an Amended and Restated Declaration of
Trust among Wells Fargo, as institutional trustee (the "Institutional Trustee"),
Wells  Fargo  Delaware  Trust  Company,   as  Delaware  trustee  (the  "Delaware
Trustee"),  the Administrative  Trustees named therein,  and the Company,  to be
dated as of the Closing Date and in substantially the form heretofore  delivered
to the  Purchaser  (the  "Trust  Agreement").  The  Debentures  shall be  issued
pursuant to an Indenture (the "Indenture"),  to be dated as of the Closing Date,
between  the Company and Wells  Fargo,  as  indenture  trustee  (the  "Indenture
Trustee").  The documents  identified in this Section 1.2 are referred to herein
as the "Operative Documents."

          1.3. Legends.  Upon original issuance thereof,  and until such time as
the  same  is no  longer  required  under  the  applicable  requirements  of the
Securities Act, the Capital  Securities and Debentures  certificates  shall each
contain a legend as required pursuant to any of the Operative Documents.

Section 2. Purchase of Capital Securities and Fees and Expenses.

         2.1. Purchase Price. From the date hereof until the Closing Date (which
date may be extended by mutual agreement of the Offerors and the Purchaser), the
Offerors  hereby  grant to the  Purchaser  the  exclusive  right to purchase the
Capital Securities at a purchase price of $970 per Capital Security.

         2.2. Costs and Expenses. Whether or not this Agreement is terminated or
the sale of the Capital Securities is consummated,  the Company hereby covenants
and agrees that it shall directly pay or cause to be paid all  reasonable  costs
and expenses  incident to the  performance  of the  obligations  of the Offerors
under this Agreement,  including all fees, expenses and disbursements of counsel
and  accountants  for the  Offerors;  the  reasonable  costs and  charges of any
trustee,  transfer agent or registrar and the fees and  disbursements of counsel
to any trustee,  transfer agent or registrar  attributable to the Debentures and
the  Capital  Securities;  all  reasonable  expenses  incurred  by the  Offerors
incident to the preparation,  execution and delivery of the Trust Agreement, the
Indenture,  and the  Guarantee;  and all other  reasonable  costs  and  expenses
incident to the  performance  of the  obligations  of the Company  hereunder and
under the Trust Agreement and the Indenture.

         2.3.  Failure  to  Close.  If  any  of the  conditions  to the  Closing
specified in this Agreement shall not have been fulfilled to the satisfaction of
the  Purchaser or if the Closing shall not have occurred on or before 10:00 a.m.
(Virginia  time)  on May 31,  2002,  then  each  party  hereto,  notwithstanding
anything  to the  contrary in this  Agreement,  shall be relieved of all further
obligations  under this Agreement without thereby waiving any rights it may have
by  reason  of such  nonfulfillment  or  failure;  provided,  however,  that the


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obligations of the parties under Sections 2.2 and 9 shall not be so relieved and
shall continue in full force and effect.

         2.4. Closing and Delivery of Payment.

                  2.4.1.  Closing;  Closing  Date.  The sale and purchase of the
         Capital Securities by the Offerors to the Purchaser shall take place at
         a closing (the  "Closing")  at the offices of Kelley Drye & Warren LLP,
         at 10:00 a.m.  (Virginia  time) on May 3, 2002, or such other  business
         day as may be  agreed  upon  by the  Offerors  and the  Purchaser  (the
         "Closing  Date").   Payment  by  the  Purchaser  shall  be  payable  in
         immediately  available  funds  and  shall  be made  prior  to or on the
         Closing Date.

                  2.4.2.  Delivery.  The certificate for the Capital  Securities
         shall be in definitive form, registered in the name of the Purchaser or
         its  nominee  and in the  aggregate  amount of the  Capital  Securities
         purchased by the Purchaser.

                  2.4.3.   Transfer  Agent.   The  Offerors  shall  deposit  the
         certificate  representing the Capital Securities with the Institutional
         Trustee or other appropriate party prior to the Closing Date.

Section 3. Closing  Conditions.  The  obligations  of the parties  hereto on the
Closing Date shall be subject to the accuracy, at and as of the Closing Date, of
the representations and warranties contained in this Agreement, to the accuracy,
at and as of the Closing  Date,  of the  statements  of the Offerors made in any
certificates  pursuant to this Agreement,  to the performance by the Offerors of
their respective obligations under this Agreement,  to compliance,  at and as of
the Closing  Date,  by the  Offerors  with their  respective  agreements  herein
contained, and to the following further conditions:

         3.1. Opinions of Counsel. On the Closing Date, the Purchaser shall have
received the following  favorable  opinions,  each dated as of the Closing Date:
(a) from Haynsworth  Sinkler Boyd, P.A.,  counsel for the Offerors and addressed
to the  Purchaser  in  substantially  the form set forth on Exhibit A-l attached
hereto and incorporated  herein by this reference,  (b) from Richards,  Layton &
Finger,  special Delaware counsel to the Offerors and addressed to the Purchaser
and the Offerors,  in  substantially  the form set forth on Exhibit A-2 attached
hereto and  incorporated  herein by this  reference  and (c) from  Kelley Drye &
Warren LLP, special tax counsel to the Offerors,  and addressed to the Purchaser
and the Offerors,  in  substantially  the form set forth on Exhibit A-3 attached
hereto and  incorporated  herein by this  reference,  subject to the  receipt by
Kelley Drye & Warren LLP of a representation letter from the Company in the form
set forth in Exhibit A-3 completed in a manner reasonably satisfactory to Kelley
Drye & Warren LLP (collectively, the "Offerors' Counsel Opinions"). In rendering
the Offerors' Counsel  Opinions,  counsel to the Offerors may rely as to factual
matters upon  certificates or other documents  furnished by officers,  directors
and  trustees  of the  Offerors  (copies  of  which  shall be  delivered  to the
Purchaser) and by government officials, and upon such other documents as counsel
to the Offerors may, in their  reasonable  opinion,  deem appropriate as a basis
for the  Offerors'  Counsel  Opinions.  Counsel to the  Offerors may specify the
jurisdictions  in which  they are  admitted  to  practice  and that they are not
admitted to practice in any other jurisdiction and are not experts in the law of
any other jurisdiction. Such Offerors' Counsel Opinion shall not state that they
are to be governed or qualified by, or that they are  otherwise  subject to, any
treatise,   written  policy  or  other  document  relating  to  legal  opinions,


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including,  without  limitation,  the Legal Opinion Accord of the ABA Section of
Business Law (1991).

          3.2. Officer's  Certificate.  At the Closing Date, the Purchaser shall
have  received  certificates  from the Chief  Executive  Officer of the Company,
dated  as of  the  Closing  Date,  stating  that  (i)  the  representations  and
warranties of the Offerors set forth in Section 5 hereof are true and correct as
of the Closing Date and that the Offerors have complied with all  agreements and
satisfied all  conditions on their part to be performed or satisfied at or prior
to the Closing Date,  (ii) since the date of this  Agreement,  the Offerors have
not incurred any liability or obligation,  direct or contingent, or entered into
any material transactions,  other than in the ordinary course of business, which
is  material  to the  Offerors,  and (iii)  covering  such other  matters as the
Purchaser may reasonably request.

          3.3.  Administrative  Trustee's Certificate.  At the Closing Date, the
Purchaser  shall  have  received  a  certificate  of one or more  Administrative
Trustees  of  the  Trust,  dated  as of  the  Closing  Date,  stating  that  the
representations  and  warranties  of the Trust set forth in Section 5 hereof are
true and correct as of the Closing Date and that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date.

          3.4.  Purchase  Permitted by Applicable  Laws; Legal  Investment.  The
purchase of and payment for the Capital  Securities  shall (a) not be prohibited
by any applicable law or governmental regulation,  (b) not subject the Purchaser
to any penalty or, in the reasonable  judgment of the  Purchaser,  other onerous
conditions  under or pursuant to any applicable law or governmental  regulation,
and (c) be permitted by the laws and regulations of the  jurisdictions  to which
the Purchaser is subject.

          3.5.  Consents  and  Permits.  The  Company  and the Trust  shall have
received  all  consents,  permits  and other  authorizations,  and made all such
filings and declarations,  as may be required from any person or entity pursuant
to any law, statute,  regulation or rule (federal, state, local and foreign), or
pursuant to any agreement,  order or decree to which the Company or the Trust is
a party or to which  either is  subject,  in  connection  with the  transactions
contemplated by this Agreement.

         3.6.  Information.  Prior to or on the Closing Date, the Offerors shall
have furnished to the Purchaser such further information, certificates, opinions
and documents  addressed to the  Purchaser,  which the Purchaser may  reasonably
request,  including,  without  limitation,  a  complete  set  of  the  Operative
Documents or any other documents or certificates required by this Section 3; and
all proceedings taken by the Offerors in connection with the issuance, offer and
sale of the  Capital  Securities  as  herein  contemplated  shall be  reasonably
satisfactory in form and substance to the Purchaser.

          If any  condition  specified  in this  Section  3 shall  not have been
fulfilled when and as required in this  Agreement,  or if any of the opinions or
certificates  referenced  above or  elsewhere  in this  Agreement  shall  not be
reasonably  satisfactory in form and substance to the Purchaser,  this Agreement
may be  terminated  by the  Purchaser by notice to the Offeror at any time at or


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prior to the  Closing  Date.  Notice of such  termination  shall be given to the
Offerors in writing or by telephone or facsimile confirmed in writing.

Section 4.  Conditions  to the Offerors'  Obligations.  The  obligations  of the
Offerors to sell the Capital  Securities  to the Purchaser  and  consummate  the
transactions contemplated by this Agreement shall be subject to the accuracy, at
and  as of the  Closing  Date,  of the  representations  and  warranties  of the
Purchaser  contained in Section 6 of this Agreement and to the following further
conditions:

         4.1.  Executed  Agreement.  The Offerors  shall have  received from the
Purchaser an executed copy of this Agreement.

         4.2.  Fulfillment  of  Other  Obligations.  The  Purchaser  shall  have
fulfilled all of its other obligations and duties required to be fulfilled under
this Agreement prior to or at the Closing.

Section 5. Representations and Warranties of the Offerors.  The Offerors jointly
and  severally  represent and warrant to the Purchaser as of the date hereof and
as of the Closing Date as follows:

         5.1.     Securities Law Matters.

                  (a)  Neither  the  Company  nor the  Trust,  nor any of  their
         "Affiliates"  (as  defined  in Rule  501(b) of  Regulation  D under the
         Securities Act ("Regulation D")), nor any person acting on any of their
         behalf  has,  directly  or  indirectly,  made  offers  or  sales of any
         security, or solicited offers to buy any security,  under circumstances
         that would require the  registration of any of the Capital  Securities,
         the Guarantee and the  Debentures or any other  securities to be issued
         or  which   may  be  issued  by  the   Purchaser   (collectively,   the
         "Securities") under the Securities Act.

                  (b) Except as contemplated herein, neither the Company nor the
         Trust,  nor any of their  Affiliates,  nor any person  acting on its or
         their behalf has (i) offered for sale or  solicited  offers to purchase
         the  Securities  or  (ii)  engaged  in any  form of  offering,  general
         solicitation or general  advertising  (within the meaning of Regulation
         D) in connection with any offer or sale of any of the Securities.

                  (c) The Securities  satisfy the  eligibility  requirements  of
         Rule 144A(d)(3) under the Securities Act.

                  (d)  Neither the  Company  nor the Trust is or,  after  giving
         effect  to the  offering  and sale of the  Capital  Securities  and the
         consummation of the transactions  described in this Agreement,  neither
         the Company nor the Trust will be, an "investment company" or an entity
         "controlled"  by an  "investment  company,"  in each  case  within  the
         meaning of  Section  3(a) of the  Investment  Company  Act of 1940,  as
         amended (the  "Investment  Company Act") without regard to Section 3(c)
         of the Investment Company Act.



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                  (e)  Neither  the  Company nor the Trust has paid or agreed to
         pay to any person or entity any compensation for soliciting  another to
         purchase any of the Securities.

         5.2.  Organization,  Standing and Qualification of the Trust. The Trust
has been duly  created and is validly  existing  in good  standing as a Business
Trust under  Chapter 38 of Title 12 of the Delaware  Code (the  "Business  Trust
Act") with the power and  authority  to own property and to conduct the business
it  transacts  and  proposes  to  transact  and to enter  into and  perform  its
obligations  under  the  Operative  Documents.  The Trust is duly  qualified  to
transact  business  as a  foreign  entity  and  is  in  good  standing  in  each
jurisdiction in which such qualification is necessary,  except where the failure
to so qualify or be in good standing would not have a material adverse effect on
the Trust. The Trust is not a party to or otherwise bound by any agreement other
than the  Operative  Documents.  The Trust is and will,  under  current  law, be
classified  for federal  income tax  purposes  as a grantor  trust and not as an
association taxable as a corporation.

         5.3. Trust  Agreement.  The Trust Agreement has been duly authorized by
the Company and, on the Closing Date, will have been duly executed and delivered
by the Company and the Administrative Trustees, and, assuming due authorization,
execution and delivery by the  Institutional  Trustee and the Delaware  Trustee,
will be a valid and binding  obligation  of the Company and such  Administrative
Trustees,  enforceable against them in accordance with its terms, subject to (a)
applicable bankruptcy,  insolvency,  moratorium,  receivership,  reorganization,
liquidation and other laws relating to or affecting creditors' rights generally,
and (b) general  principles  of equity  (regardless  of whether  considered  and
applied in a proceeding in equity or at law) ("Bankruptcy and Equity").  Each of
the Administrative  Trustees is an employee or a director of the Company or of a
financial institution  subsidiary of the Company and has been duly authorized by
the Company to execute and deliver the Trust Agreement.

         5.4. Guarantee  Agreement and the Indenture.  Each of the Guarantee and
the Indenture has been duly  authorized by the Company and, on the Closing Date,
will have been duly  executed and  delivered by the Company,  and,  assuming due
authorization,  execution and delivery by the Guarantee Trustee,  in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture,  will
be a valid and  binding  obligation  of the  Company  enforceable  against it in
accordance with its terms, subject to Bankruptcy and Equity.

         5.5. Capital Securities and Common  Securities.  The Capital Securities
and the Common  Securities have been duly authorized by the Trust Agreement and,
when issued and delivered  against  payment  therefor on the Closing Date to the
Purchaser,  in the case of the Capital  Securities,  and to the Company,  in the
case of the Common  Securities,  will be validly issued and represent  undivided
beneficial  interests in the assets of the Trust. None of the Capital Securities
or the Common  Securities is subject to preemptive or other similar  rights.  On
the Closing Date, all of the issued and  outstanding  Common  Securities will be
directly owned by the Company free and clear of any pledge,  security  interest,
claim, lien or other encumbrance.

         5.6.  Debentures.  The  Debentures  have  been duly  authorized  by the
Company and, at the Closing Date,  will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture,  and,
when  authenticated  in the manner  provided for in the  Indenture and delivered
against  payment  therefor  by the  Trust,  will  constitute  valid and  binding


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obligations of the Company entitled to the benefits of the Indenture enforceable
against the Company in accordance  with their terms,  subject to Bankruptcy  and
Equity.

         5.7.  Power and  Authority.  This  Agreement has been duly  authorized,
executed and  delivered by the Company and the Trust and  constitutes  the valid
and binding  obligation  of the Company and the Trust,  enforceable  against the
Company and the Trust in accordance  with its terms,  subject to Bankruptcy  and
Equity.

          5.8. No Defaults. The Trust is not in violation of the Trust Agreement
 or, to the  knowledge  of the  Administrative  Trustees,  any  provision of the
 Business Trust Act. The execution,  delivery and  performance by the Company or
 the  Trust  of  the  Operative  Documents  to  which  it is a  party,  and  the
 consummation of the transactions  contemplated herein or therein and the use of
 the proceeds therefrom,  will not conflict with or constitute a breach of, or a
 default under,  or result in the creation or imposition of any lien,  charge or
 other  encumbrance upon any property or assets of the Trust, the Company or any
 of the Company's  subsidiaries pursuant to any contract,  indenture,  mortgage,
 loan agreement, note, lease or other instrument to which the Trust, the Company
 or any of its  subsidiaries  is a party  or by  which  it or any of them may be
 bound,  or to which any of the  property  or assets of any of them is  subject,
 except for a conflict, breach, default, lien, charge or encumbrance which could
 not  reasonably  be  expected to have a Material  Adverse  Effect nor will such
 action result in any violation of the Trust Agreement or the Business Trust Act
 or  require  the  consent,  approval,  authorization  or order of any  court or
 governmental agency or body. As used herein, the term "Material Adverse Effect"
 means any effect  that is  material  and  adverse to the  Offerors'  ability to
 consummate the transactions  contemplated  herein or in the Operative Documents
 or any effect  that is  material  and adverse to the  condition  (financial  or
 otherwise),  earnings, affairs, business, prospects or results of operations of
 the Company and its  subsidiaries  taken as whole,  whether or not occurring in
 the ordinary course of business.

          5.9.  Organization,  Standing and  Qualification  of the Company.  The
 Company has been duly  incorporated and is validly existing as a corporation in
 good standing under the laws of South  Carolina,  with all requisite  corporate
 power and authority to own its properties and conduct the business it transacts
 and proposes to transact,  and is duly qualified to transact business and is in
 good standing as a foreign corporation in each jurisdiction where the nature of
 its  activities  requires such  qualification,  except where the failure of the
 Company  to be so  qualified  would  not,  singly or in the  aggregate,  have a
 Material Adverse Effect.

          5.10.  Subsidiaries of the Company.  Each of the Company's significant
 subsidiaries  (as defined in Section l-02 of Regulation  S-X to the  Securities
 Act (the  "Significant  Subsidiaries"))  is listed in Exhibit B attached hereto
 and incorporated herein by this reference. Each Significant Subsidiary has been
 duly  organized and is validly  existing and in good standing under the laws of
 the  jurisdiction  in which it is chartered or  organized,  with all  requisite
 power and authority to own its properties and conduct the business it transacts
 and proposes to transact,  and is duly qualified to transact business and is in
 good standing as a foreign entity in each jurisdiction  where the nature of its
 activities  requires such  qualification,  except where the failure of any such
 Significant  Subsidiaries  to be so  qualified  would  not,  singly  or in  the
 aggregate, have a Material Adverse Effect.



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          5.11.  Permits.  The Company and each of its Significant  Subsidiaries
 have all  requisite  power and  authority,  and all  necessary  authorizations,
 approvals, orders, licenses, certificates and permits of and from regulatory or
 governmental officials,  bodies and tribunals, to own or lease their respective
 properties and to conduct their  respective  businesses as now being conducted,
 except such  authorizations,  approvals,  orders,  licenses,  certificates  and
 permits  which,  if not  obtained  and  maintained,  would not have a  Material
 Adverse Effect, and neither the Company nor any of the Significant Subsidiaries
 has  received  any  notice  of  proceedings   relating  to  the  revocation  or
 modification  of  any  such  authorizations,   approvals,   orders,   licenses,
 certificates or permits which, singly or in the aggregate, if the failure to be
 so licensed or approved is the subject of an  unfavorable  decision,  ruling or
 finding,  would  have a  Material  Adverse  Effect;  and  the  Company  and its
 Significant  Subsidiaries  are in compliance with all applicable  laws,  rules,
 regulations  and orders  and  consents,  the  violation  of which  would have a
 Material Adverse Effect.

         5.12.  Conflicts,  Authorizations  and Approvals.  Except as previously
 disclosed  to the  Purchaser  in  writing,  neither  the Company nor any of the
 Significant  Subsidiaries is in violation of its respective  charter or by-laws
 or  similar  organizational  documents  or in  default  in the  performance  or
 observance of any obligation, agreement, covenant or condition contained in any
 contract,  indenture,  mortgage, loan agreement, note, lease or other agreement
 or  instrument  to  which  either  the  Company  or  any  of  the   Significant
 Subsidiaries is a party, or by which it or any of them may be bound or to which
 any  of  the  property  or  assets  of the  Company  or any of the  Significant
 Subsidiaries  is  subject,   the  effect  of  which  violation  or  default  in
 performance or observance would have a Material Adverse Effect.

          5.13. Holding Company Registration and Deposit Insurance.  The Company
is duly  registered (i) as a bank holding  company or financial  holding company
under the Bank Holding  Company Act of 1956, as amended,  and the regulations of
the Board of  Governors of the Federal  Reserve  System or (ii) as a savings and
loan holding  company under the Home Owners' Loan Act of 1933,  as amended,  and
the regulations of the Office of Thrift Supervision, and the deposit accounts of
the  Company's  subsidiary  depository  institutions  are insured by the Federal
Deposit  Insurance  Corporation  ("FDIC") to the fullest extent permitted by law
and  the  rules  and  regulations  of the  FDIC,  and  no  proceedings  for  the
termination of such insurance are pending or threatened.

          5.14.   Financial Statements.

                  (a) The audited consolidated balance sheets of the Company and
all of its  subsidiaries  as of  December  31,  2000 and  December  31, 2001 and
related   consolidated   income   statements   and   statements  of  changes  in
shareholders'  equity for the three years ended  December 31, 2001 together with
the notes  thereto,  copies of each of which have been provided to the Purchaser
(together,  the "Financial  Statements"),  have been prepared in accordance with
generally accepted  accounting  principles applied on a consistent basis (except
as may be  disclosed  therein) and fairly  present in all material  respects the
financial  position and the results of operations  and changes in  shareholders'
equity of the  Company and all of its  subsidiaries  as of the dates and for the
periods  indicated  (subject,  in the case of interim financial  statements,  to
normal recurring  year-end  adjustments,  none of which shall be material).  The
books and records of the Company and all of its subsidiaries  have been, and are


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being,  maintained in all material respect in accordance with generally accepted
accounting principles and any other applicable legal and accounting requirements
and reflect only actual transactions.

                  (b) The  Company's  report on FRY-9C  dated  December 31, 2002
(the "FRY-9C") previously provided to the Purchaser is the most recent available
such report and the information therein fairly presents in all material respects
the financial position of the Company and all of its subsidiaries.

                  (c) Since the respective dates of the Financial Statements and
the  FRY-9C,  there has been no  material  adverse  change or  development  with
respect to the  financial  condition  or  earnings of the Company and all of its
subsidiaries, taken as a whole.

                  (d) The accountants of the Company who certified the Financial
Statements  are   independent   public   accountants  of  the  Company  and  its
subsidiaries  within  the  meaning  of the  Securities  Act  and the  rules  and
regulations thereunder.

          5.15. Regulatory  Enforcement Matters.  Except as previously disclosed
 to the Purchaser in writing, neither the Company nor any of its subsidiaries is
 subject or is party to, or has  received  any notice or advice that any of them
 may  become  subject  or party to,  any  investigation  with  respect  to,  any
 cease-and-desist   order,   agreement,   consent   agreement,   memorandum   of
 understanding or other regulatory enforcement action,  proceeding or order with
 or by, or is a party to any commitment letter or similar  undertaking to, or is
 subject to any  directive by, or has been since January 1, 1999, a recipient of
 any  supervisory  letter from, or since January 1, 1999,  has adopted any board
 resolutions  at the request of, any  Regulatory  Agency (as defined below) that
 currently  restricts in any material  respect the conduct of their  business or
 that in any material  manner  relates to their capital  adequacy,  their credit
 policies,  their management or their business (each, a "Regulatory Agreement"),
 nor has the Company or any of its  subsidiaries  been advised  since January 1,
 1999 by any Regulatory Agency that it is considering  issuing or requesting any
 such Regulatory Agreement. There is no material unresolved violation, criticism
 or exception by any  Regulatory  Agency with respect to any report or statement
 relating to any examinations of the Company or any of its subsidiaries. As used
 herein, the term "`Regulatory Agency" means any federal or state agency charged
 with the supervision or regulation of depository institutions,  bank, financial
 or  savings  and  loan  holding  companies,  or  engaged  in the  insurance  of
 depository  institution  deposits,  or  any  court,  administrative  agency  or
 commission or other governmental  agency,  authority or instrumentality  having
 supervisory  or regulatory  authority with respect to the Company or any of its
 Significant Subsidiaries.

         5.16.  No  Material  Change.  Except  as  previously  disclosed  to the
 Purchaser  in writing,  since  December  31,  2001,  there has been no material
 adverse  change or  development  with respect to the  condition  (financial  or
 otherwise),  earnings, affairs, business, prospects or results of operations of
 the Offerors on a consolidated basis.

          5.17. No Undisclosed  Liabilities.  Neither the Company nor any of its
 subsidiaries  has any material  liability,  whether  known or unknown,  whether
 asserted or  unasserted,  whether  absolute or contingent,  whether  accrued or
 unaccrued,  whether  liquidated or  unliquidated,  and whether due or to become


                                       9
<Page>

 due,  including  any liability for taxes (and there is no past or present fact,
 situation,  circumstance,  condition  or other  basis for any present or future
 action, suit, proceeding,  hearing, charge, complaint,  claim or demand against
 the Company or its subsidiaries giving rise to any such liability),  except (i)
 for liabilities set forth in the Financial Statements,  (ii) normal fluctuation
 in the amount of the  liabilities  referred to in clause (i) above occurring in
 the  ordinary  course of business  of the  Company and all of its  subsidiaries
 since the date of the most  recent  balance  sheet  included  in the  Financial
 Statements,  and  (iii) as may be  specifically  disclosed  in  writing  to the
 Purchaser.

          5.18.  Litigation.  Except as previously disclosed to the Purchaser in
 writing, no charge, investigation, action, suit or proceeding is pending or, to
 the knowledge of the Offerors, threatened, against or affecting the Offerors or
 any of their respective  properties  before or by any courts or any regulatory,
 administrative or governmental  official,  commission,  board,  agency or other
 authority or body, or any arbitrator,  wherein an unfavorable decision,  ruling
 or finding could have a Material Adverse Effect.

          5.19. Deferral of Interest Payments on Debentures.  The Company has no
 present  intention to exercise its option to defer  payments of interest on the
 Debentures  as  provided  in the  Indenture.  The  Company  believes  that  the
 likelihood  that it would  exercise its right to defer  payments of interest on
 the  Debentures  as provided  in the  Indenture  at any time  during  which the
 Debentures are outstanding is remote because of the restrictions  that would be
 imposed on the Company's  ability to declare or pay dividends or  distributions
 on, or to redeem, purchase,  acquire or make a liquidation payment with respect
 to, any of the Company's capital stock and on the Company's ability to make any
 payments of principal,  interest or premium on, or repay, repurchase or redeem,
 any of its debt securities that rank pari passu in all respects with, or junior
 in interest to, the Debentures.

Section 6.  Representations  and  Warranties  of the  Purchaser.  The  Purchaser
represents  and  warrants  to the  Offerors  as of the date hereof and as of the
Closing Date as follows:

          6.1.  Organization,  Standing and  Qualification.  The  Purchaser is a
Delaware  limited  partnership,  duly  organized,  validly  existing and in good
standing  under the laws of the State of Florida,  with full power and authority
to own,  lease and operate its  properties and conduct its business as currently
being  conducted.  The  Purchaser is duly  qualified  to transact  business as a
foreign  corporation and is in good standing in each other jurisdiction in which
it owns or leases  property  or  conducts  its  business  so as to require  such
qualification  and in which the failure to so qualify would,  individually or in
the aggregate,  have a material  adverse  effect on the condition  (financial or
otherwise),  earnings,  business,  prospects  or  results of  operations  of the
Purchaser.

         6.2.  Power and  Authority.  The Purchaser has all requisite  power and
authority to enter into this  Agreement,  and this  Agreement  has been duly and
validly authorized,  executed and delivered by the Purchaser and constitutes the
legal,  valid and binding  agreement of the Purchaser,  enforceable  against the
Purchaser in accordance  with its terms,  subject to Bankruptcy and Equity,  and
except as any indemnification or contribution  provisions thereof may be limited
under applicable securities laws.

         6.3   Certain Additional Representations.



                                       10
<Page>

                  6.3.1.  Private  Issuance.   The  Purchaser   understands  and
         acknowledges  that neither the Capital  Securities,  the Debentures nor
         the Guarantee  have been  registered  under the  Securities  Act or any
         other  applicable  securities  law,  are being  offered for sale by the
         Trust in transactions not requiring  registration  under the Securities
         Act, and may not be offered,  sold, pledged or otherwise transferred by
         the Purchaser except in compliance with the  registration  requirements
         of the Securities Act or any other applicable securities laws, pursuant
         to an exemption therefrom or in a transaction not subject thereto.

                  6.3.2.  Investment  Intention.  The Purchaser  represents  and
         warrants  that it is  purchasing  the  Capital  Securities  for its own
         account,  for investment,  and not with a view to, or for offer or sale
         in  connection  with,  any  distribution  thereof in  violation  of the
         Securities  Act or other  applicable  securities  laws,  subject to any
         requirement of law that the disposition of its property be at all times
         within its control  and  subject to its ability to resell such  Capital
         Securities  pursuant to an effective  registration  statement under the
         Securities  Act  or  under  Rule  144A  or  any  other  exemption  from
         registration available under the Securities Act or any other applicable
         securities law.

                  6.3.3.  Financial  Experience.  The Purchaser,  whose business
         includes acquiring the Capital Securities and other similar securities,
         represents  and warrants that it has such  knowledge and  experience in
         financial  and business  matters that it is capable of  evaluating  the
         merits and risks of purchasing the Capital Securities and is aware that
         it may be required to bear the economic  risk of an  investment  in the
         Capital  Securities.  The  Purchaser  also  represents  that  it  is an
         "accredited  investor"  within  the  meaning of Rule  501(a)  under the
         Securities Act.

                  6.3.4.  No  Further  Actions.  The  Purchaser  represents  and
         warrants  that no filing with,  or  authorization,  approval,  consent,
         license,   order,   registration,   qualification  or  decree  of,  any
         governmental  body,  agency  or  court  having  jurisdiction  over  the
         Purchaser,  other  than  those  that  have been  made or  obtained,  is
         necessary  or required  for the  performance  by the  Purchaser  of its
         obligations  under this  Agreement or to  consummate  the  transactions
         contemplated herein.

                  6.3.5.  No Violations.  The Purchaser  represents and warrants
         that (i) the  Purchaser  is not in  violation or default of any term of
         its Agreement of Limited Partnership, of any provision of any mortgage,
         indenture, contract, agreement, instrument or contract to which it is a
         party or by which it is bound or of any judgment,  decree,  order, writ
         or, to its knowledge, any statute, rule or regulation applicable to the
         Purchaser  which  would  prevent  the  Purchaser  from  performing  any
         material  obligation  set  forth  in  this  Agreement,   and  (ii)  the
         execution,  delivery  and  performance  of  and  compliance  with  this
         Agreement,  and  the  consummation  of  the  transactions  contemplated
         herein,  will not,  with or  without  the  passage of time or giving of
         notice,  result in any such material violation,  or be in conflict with
         or  constitute  a  default  under  any such  term,  or the  suspension,
         revocation,  impairment,  forfeiture  or  non-renewal  of  any  permit,
         license,  authorization  or approval  applicable to the Purchaser,  its
         business or operations  or any of its assets or properties  which would
         prevent the Purchaser  from  performing  any material  obligations  set
         forth in this Agreement.

                  6.3.6.  Reliance.  The Purchaser  understands and acknowledges
         that the Company will rely upon the truth and accuracy of the foregoing
         acknowledgments,  representations, warranties and agreements and agrees
         that,  if any of the  acknowledgments,  representations,  warranties or
         agreements deemed to


                                       11
<Page>

         have been made by it by its purchase of the Capital  Securities  are no
         longer accurate, it shall promptly notify the Company.

                  6.3.7.  No Public Market.  The Purchaser  understands  that no
         public market exists for any of the Capital Securities,  and that it is
         unlikely  that  a  public  market  will  ever  exist  for  the  Capital
         Securities

Section 7. Covenants of the Offerors.  The Offerors  covenant and agree with the
Purchaser as follows:

         7.1. Compliance with Representations and Warranties.  During the period
from the date of this  Agreement to the Closing  Date,  the  Offerors  shall use
their best efforts and take all action  necessary or  appropriate to cause their
representations  and  warranties  contained in Section 5 hereof to be true as of
the Closing Date, after giving effect to the  transactions  contemplated by this
Agreement, as if made on and as of the Closing Date.

         7.2.  Sale and  Registration  of  Securities.  The  Offerors  and their
Affiliates  shall not nor shall any of them  permit any  person  acting on their
behalf,  to directly or indirectly (i) sell, offer for sale or solicit offers to
buy or  otherwise  negotiate  in  respect  of any  security  (as  defined in the
Securities  Act) that would or could be integrated  with the sale of the Capital
Securities in a manner that would require the registration  under the Securities
Act of the Capital  Securities,  the  Debentures  or the  Guarantee or (ii) make
offers  or  sales  of any  such  security,  or  solicit  offers  to buy any such
security, under circumstances that would require the registration of any of such
securities under the Securities Act.

         7.3. Use of Proceeds. The Trust shall use the proceeds from the sale of
the Capital Securities to purchase the Debentures from the Company.

         7.4. Investment  Company.  The Offerors shall not engage, or permit any
subsidiary to engage,  in any activity which would cause it or any subsidiary to
be an "investment company" under the provisions of the Investment Company Act.

         7.5.  Reimbursement of Expenses.  If the sale of the Capital Securities
provided  for herein is either  consummated  or is not  consummated  because any
condition  set forth in  Section 3 hereof is not  satisfied,  or  because of any
refusal, inability or failure on the part of the Company or the Trust to perform
any agreement herein or comply with any provision hereof other than by reason of
a breach by the Purchaser, the Company shall reimburse the Purchaser upon demand
for  all  of  its  out-of  pocket  expenses   (including   reasonable  fees  and
disbursements  of  counsel) in an amount not to exceed  $15,000  that shall have
been  incurred by it in  connection  with the  proposed  purchase of the Capital
Securities.  Notwithstanding the foregoing, the Company shall have no obligation
to reimburse  the Purchaser  for its  out-of-pocket  expenses if the sale of the
Capital  Securities  fails to occur  because  the  Purchaser  fails to fulfill a
condition set forth in Section 4.

         7.6.  Directed  Selling  Efforts,   Solicitation  and  Advertising.  In
connection with any offer or sale of any of the  Securities,  the Offerors shall
not,  nor shall  either of them  permit  any of their  Affiliates  or any person
acting on their behalf to, (i) engage in any "directed  selling  efforts" within


                                       12
<Page>

the meaning of Regulation S, or (ii) engage in any form of general  solicitation
or general advertising (as defined in Regulation D).

         7.7.  Compliance with Rule 144A(d)(4) under the Securities Act. So long
as any of the Capital Securities are outstanding and are "restricted securities"
within the meaning of Rule  144(a)(3)  under the  Securities  Act,  the Offerors
will,  during any period in which they are not subject to and in compliance with
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange Act"), or the Offerors are not exempt from such reporting requirements
pursuant  to and in  compliance  with Rule  12g3-2(b)  under the  Exchange  Act,
provide to each holder of such  restricted  securities  and to each  prospective
purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective  purchaser in connection with any proposed
transfer,  any information  required to be provided by Rule 144A(d)(4) under the
Securities  Act, if applicable.  This covenant is intended to be for the benefit
of the holders, and the prospective  purchasers designated by such holders, from
time to time of such  restricted  securities.  The  information  provided by the
Offerors pursuant to this Section 7.7 will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.

         7.8. Quarterly Reports. Within 50 days of the end of each calendar year
quarter and within 100 days of the end of each  calendar  year during  which the
Debentures  are  issued  and  outstanding,  the  Offerors  shall  submit  to the
Purchaser and any third party that may be designated in writing by the Purchaser
a completed quarterly report in the form attached hereto as Exhibit C.

Section 8. Covenants of the Purchaser.  The Purchaser  covenants and agrees with
the  Offerors  that,  during the period from the date of this  Agreement  to the
Closing  Date,  the  Purchaser  shall use its best  efforts  and take all action
necessary or appropriate to cause its representations  and warranties  contained
in  Section  6 to be  true  as of  Closing  Date,  after  giving  effect  to the
transactions contemplated by this Agreement, as if made on and as of the Closing
Date.



                                       13
<Page>

Section  9. Indemnification.

         9.1.  Indemnification   Obligation.  The  Offerors  shall  jointly  and
  severally indemnify and hold harmless the Purchaser and its agents, employees,
  officers and directors and each person that controls the Purchaser  within the
  meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
  and agents,  employees,  officers and directors or any such controlling person
  of the Purchaser (each such person or entity, an "Indemnified Party") from and
  against  any  and all  losses,  claims,  damages,  judgments,  liabilities  or
  expenses, joint or several, to which such Indemnified Party may become subject
  under the Securities Act, the Exchange Act or other federal or state statutory
  law or regulation,  or at common law or otherwise  (including in settlement of
  any litigation, if such settlement is effected with the written consent of the
  Offerors), insofar as such losses, claims, damages, judgments,  liabilities or
  expenses (or actions in respect  thereof)  arise out of, or are based upon, or
  relate to, in whole or in part,  (a) any untrue  statement  or alleged  untrue
  statement of a material fact contained in any information  (whether written or
  oral) or documents  executed in favor of,  furnished or made  available to the
  Purchaser by the Offerors, or (b) any omission or alleged omission to state in
  any information  (whether written or oral) or documents  executed in favor of,
  furnished or made available to the Purchaser by the Offerors,  a material fact
  required to be stated therein or necessary to make the statements  therein not
  misleading, and shall reimburse each Indemnified Party for any legal and other
  expenses as such expenses are reasonably incurred by such Indemnified Party in
  connection with investigating, defending, settling, compromising or paying any
  such loss, claim, damage, judgments, liability, expense or action described in
  this Section 9.1. In addition to their other obligations under this Section 9,
  the Offerors  hereby agree that, as an interim  measure during the pendency of
  any claim, action, investigation,  inquiry or other proceeding arising out of,
  or based upon, or related to the matters  described above in this Section 9.1,
  they shall  reimburse  each  Indemnified  Party on a  quarterly  basis for all
  reasonable legal or other expenses  incurred in connection with  investigating
  or  defending  any  such  claim,  action,  investigation,   inquiry  or  other
  proceeding,  notwithstanding the absence of a judicial determination as to the
  propriety and enforceability of the possibility that such payments might later
  be held to have been  improper by a court of  competent  jurisdiction.  To the
  extent  that any such  interim  reimbursement  payment is so held to have been
  improper,  each  Indemnified  Party shall promptly  return such amounts to the
  Offerors together with interest, determined on the basis of the prime rate (or
  other  commercial  lending rate for borrowers of the highest credit  standing)
  announced  from  time to time by Wells  Fargo  (the  "Prime  Rate").  Any such
  interim  reimbursement  payments  which are not made to an  Indemnified  Party
  within 30 days of a request for reimbursement shall bear interest at the Prime
  Rate from the date of such request.

          9.2. Conduct of Indemnification Proceedings. Promptly after receipt by
 an Indemnified  Party under this Section 9 of notice of the commencement of any
 action,  such  Indemnified  Party shall, if a claim in respect thereof is to be
 made against the Offerors  under this Section 9, notify the Offerors in writing
 of the  commencement  thereof;  but, subject to Section 9.4, the omission to so
 notify the  Offerors  shall not  relieve  them from any  liability  pursuant to
 Section 9.1 which the Offerors may have to any Indemnified  Party unless and to
 the extent that the  Offerors did not  otherwise  learn of such action and such
 failure by the  Indemnified  Party results in the forfeiture by the Offerors of
 substantial rights and defenses. In case any such action is brought against any
 Indemnified Party and such Indemnified Party seeks or intends to seek indemnity
 from the Offerors,  the Offerors shall be entitled to  participate  in, and, to
 the extent  that they may wish,  to assume the  defense  thereof  with  counsel
 reasonably  satisfactory to such Indemnified Party;  provided,  however, if the
 defendants  in any such  action  include  both the  Indemnified  Party  and the
 Offerors and the Indemnified  Party shall have reasonably  concluded that there


                                       14
<Page>

 may be a conflict  between the  positions of the  Offerors and the  Indemnified
 Party in  conducting  the defense of any such action or that there may be legal
 defenses  available to it and/or other Indemnified  Parties which are different
 from or additional to those available to the Offerors,  the  Indemnified  Party
 shall have the right to select  separate  counsel to assume such legal defenses
 and to  otherwise  participate  in the defense of such action on behalf of such
 Indemnified Party. Upon receipt of notice from the Offerors to such Indemnified
 Party of their election to so assume the defense of such action and approval by
 the  Indemnified  Party of counsel,  the  Offerors  shall not be liable to such
 Indemnified  Party  under  this  Section  9 for any  legal  or  other  expenses
 subsequently  incurred by such Indemnified Party in connection with the defense
 thereof  unless (i) the  Indemnified  Party shall have employed such counsel in
 connection with the assumption of legal defenses in accordance with the proviso
 in the  preceding  sentence (it being  understood,  however,  that the Offerors
 shall  not be  liable  for the  expenses  of more  than  one  separate  counsel
 representing the Indemnified  Parties who are parties to such action),  or (ii)
 the Offerors shall not have employed  counsel  reasonably  satisfactory  to the
 Indemnified  Party to represent the Indemnified  Party within a reasonable time
 after notice of commencement of the action, in each of which cases the fees and
 expenses  of counsel of such  Indemnified  Party shall be at the expense of the
 Offerors.

         9.3.  Additional  Remedies.  The indemnity  agreement contained in this
Section 9 is in addition to any liability  that the Offerors may otherwise  have
to any Indemnified Party.

         9.4. Additional  Indemnification.  The Company shall indemnify and hold
harmless  the Trust  against  all loss,  liability,  claim,  damage and  expense
whatsoever, as due from the Trust under Sections 9.1 through 9.3 hereof.

Section 10.  Miscellaneous.

         10.1.  Notices.  Prior to the Closing,  and thereafter  with respect to
matters pertaining to this Agreement only, all notices and other  communications
provided for or permitted  hereunder shall be made in writing by  hand-delivery,
first-class mail, telex,  telecopier or overnight air courier  guaranteeing next
day delivery:

         if to the Purchaser, to:

                                   Bayview Financial Trading Group, L.P.
                                   2665 South Bayshore Drive
                                   Third Floor
                                   Miami, Florida  33133
                                    Telecopier: (305) 854-9939
                                    Telephone: (305) 341-3668
                                    Attention:   Robert Barfield



                                       15
<Page>


         with a copy to:

                                   Kelley Drye & Warren LLP
                                   8000 Towers Crescent Drive
                                   Suite 1200
                                   Vienna, VA   22182
                                   Telecopier:  (703) 918-2450
                                   Telephone:  (703) 918-2300
                                   Attention:  Norman B. Antin, Esq
                                                 Jeffrey D. Haas, Esq.

         if to the Offerors, to:

                                    Southcoast Financial Corporation
                                    530 Johnnie Dodds Boulevard
                                    Mt. Pleasant, SC 29464
                                    Telecopier:  (843) 884-2886
                                    Telephone:  (843) 884-0504
                                    Attention:  L. Wayne Pearson

         with a copy to:

                                    Hansworth Sinkler Boyd P.A.
                                    1426 Main Street, Suite 1200
                                    Columbia, S.C. 29201-2834
                                    Telecopier:  (803) 765-1243
                                    Telephone:  (803) 779-3080
                                    Attention: George S. King, Jr., Esq.

         All such notices and  communications  shall be deemed to have been duly
given (i) at the time  delivered by hand,  if  personally  delivered,  (ii) five
business days after being  deposited in the mail,  postage  prepaid,  if mailed,
(iii) when  answered  back,  if telexed,  (iv) the next business day after being
telecopied,  or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after the
Closing,  the  foregoing  notice  provisions  shall be  superseded by any notice
provisions  of  the  Operative  Documents  under  which  notice  is  given.  The
Purchaser,   the  Company,  and  their  respective  counsel,  may  change  their
respective  notice  addresses  from time to time by written notice to all of the
foregoing persons.

         10.2. Parties in Interest,  Successors and Assigns. Except as expressly
set forth herein, this Agreement is made solely for the benefit of the Purchaser
and the  Offerors and any person  controlling  the  Purchaser,  the Offerors and
their  respective  successors and assigns;  and no other person shall acquire or
have any right under or by virtue of this Agreement.  This Agreement shall inure
to the benefit of and be binding upon the  successors and assigns of each of the
parties.



                                       16
<Page>

         10.3.  Counterparts.  This  Agreement  may be  executed  by the parties
hereto in separate counterparts,  each of which when so executed shall be deemed
to be an original and all of which taken together  shall  constitute one and the
same agreement.

         10.4.  Headings.  The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

         10.5.  Governing Law. This Agreement shall be governed by and construed
in accordance  with the internal laws (and not the laws  pertaining to conflicts
of laws) of the State of Florida. In the event of the institution of any action,
suit or proceeding,  each of the parties hereto hereby consents to the exclusive
jurisdiction  and venue of the courts of the State of  Florida  located in Miami
Dade  County,  Florida  and the  United  States  District  Court  in and for the
Southern  District  of  Florida  with  respect to any  matter  relating  to this
Agreement and the performance of the parties' obligations  hereunder and each of
the parties hereto hereby further consents to the personal  jurisdiction of such
courts.  Any action,  suit or  proceeding  brought by or on behalf of any of the
parties hereto  relating to such matters shall be commenced,  pursued,  defended
and  resolved  only in such courts and any  appropriate  appellate  court having
jurisdiction  to hear an appeal from any judgment  entered in such  courts.  The
parties hereby agree that service of process may be made in any manner permitted
by the rules of such courts and the laws of the State of Florida.

         10.6.  Entire  Agreement.  This  Agreement,  together  with  the  other
Operative  Documents and the other  documents  delivered in connection  with the
transactions  contemplated  by this  Agreement,  is intended by the parties as a
final  expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject  matter  contained  herein and therein.  There are no  restrictions,
promises, warranties or undertakings,  other than those set forth or referred to
herein and therein. This Agreement, together with the other Operative Documents,
supersedes  all prior  agreements  and  understandings  between the parties with
respect to such subject matter.

         10.7. Severability. In the event that any one or more of the provisions
contained  herein,  or the  application  thereof in any  circumstances,  is held
invalid,  illegal or unenforceable in any respect for any reason,  the validity,
legality and  enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected, it
being  intended  that all of the  Purchaser's  rights  and  privileges  shall be
enforceable to the fullest extent permitted by law.

         10.8.  Survival.  The Purchaser and the Offerors,  respectively,  agree
that the representations, warranties and agreements made by each of them in this
Agreement and in any certificate or other instrument  delivered  pursuant hereto
shall  remain in full force and effect and shall  survive the  delivery  of, and
payment for, the Capital Securities.

                       [Signatures and Attachments Omitted]



                                       17