<PAGE>

                            STOCK PURCHASE AGREEMENT


     THIS  STOCK  PURCHASE  AGREEMENT,  entered  into  as of May 1,  1998  (this
"Agreement")   between  Affiliated  Community  Bancorp,   Inc.   ("Seller"),   a
 ---------
Massachusetts  corporation  with  its  principal  offices  at 716  Main  Street,
Waltham, Massachusetts, and William R. Berkley ("Buyer"), an individual residing
in the State of Connecticut.

                               W I T N E S S E T H
                               -------------------

     Whereas,  Seller desires to sell and Buyer desires to buy all of the issued
and outstanding shares of the capital stock of Middlesex Bank & Trust Company, a
Massachusetts  trust  company  that is presently a wholly  owned  subsidiary  of
Seller ("Middlesex"); and

     Whereas,  the Board of Directors of Seller  believes that the  transactions
set forth herein will be in the best  interests of Seller and its  stockholders,
customers,  employees and other  constituencies,  as applicable,  as well as the
communities served by Middlesex; and

     Whereas,  Seller and Buyer  desire to  provide  for  certain  undertakings,
conditions,  representations,  warranties  and covenants in connection  with the
transactions contemplated hereby;

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants and agreements contained herein, and other valuable  consideration the
receipt and  adequacy  of which is hereby  acknowledged,  the parties  hereto do
hereby agree as follows:


                                    ARTICLE 1

                                   DEFINITIONS

     As used in this Agreement,  the following  capitalized terms shall have the
meanings set forth below.

          "BHCA" shall mean the Bank Holding Company Act of 1956, as amended.

          "Business  Day" shall mean a day other than a Saturday,  a Sunday or a
          Federal or Massachusetts legal holiday.

          "Buyer" shall mean William R. Berkley, individually.

          "Closing Date" shall have the meaning  ascribed thereto Section 2.3(a)
          hereof.

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                                       -2-

          "Code" shall mean the Internal Revenue Code of 1986, as amended.

          "Commissioner"   shall   mean  the   Commissioner   of  Banks  of  the
          Commonwealth of Massachusetts.

          "Confidentiality  Agreement"  shall mean that certain letter agreement
          by and among Interlaken Capital,  Inc., an entity controlled by Buyer,
          Seller and Middlesex dated as of March 28, 1998.

          "Cutoff Date" shall have the meaning  ascribed  thereto in Section 3.7
          hereof.

          "Damages"   shall   mean  all   actions,   costs,   losses,   damages,
          disbursements,  obligations, penalties, liabilities or expenses of any
          kind or nature  (including,  but not limited to interest and penalties
          and all reasonable legal,  accounting and other  professional fees and
          expenses  incurred  in the  defense  of  claims  and  amounts  paid in
          settlement  and any  defense,  set-off,  or  counter-claim)  that  are
          actually imposed or otherwise incurred or suffered by a Person.

          "Executive  Agreements"  shall have the  meaning  ascribed  thereto in
          Section 5.20(b) hereof.

          "FDIA" shall mean the Federal Deposit Insurance Act, as amended.

          "FDIC" shall mean the Federal Deposit Insurance Corporation.

          "Lien"  shall mean any lien,  pledge,  charge,  encumbrance,  security
          interest,  mortgage, lease, or other adverse claim of any nature, kind
          or description, contingent or otherwise.

          "Middlesex" shall mean Middlesex Bank & Trust Company, a Massachusetts
          trust company.

          "Middlesex  Common Stock" shall have the meaning  ascribed  thereto in
          Section 3.2 hereof.

          "Middlesex  Plan" shall have the meaning  ascribed  thereto in Section
          3.12(a) hereof.

          "Middlesex Preferred Stock" shall have the meaning ascribed thereto in
          Section 3.2 hereof.

          "Material  Adverse  Effect" shall mean,  when used with respect to any
          Person,  (i) a  material  adverse  change in or effect on the  assets,
          liabilities,   business,  operations  or  prospects  of  such  Person,
          provided  that,  with respect to Middlesex,  any such change or effect
          resulting  directly or indirectly from changes in law,  regulations or
          generally accepted  accounting  principles (or  interpretations of any
          thereof),  changes in the general level of market  interest  rates, or
          changes in the economic,  financial or market conditions affecting the
          banking industry generally in the region in which Middlesex  operates,
          shall not constitute a Material Adverse Effect,  or (ii) such Person's
          ability to satisfy its obligations under this Agreement.

          "NASDAQ" shall mean the Nasdaq Stock Market,  Nasdaq Regulation,  Inc.
          and/or NASD, Inc. as and to the extent applicable.

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                                       -3-

          "Ownership  Claim" shall have the meaning  ascribed thereto in Section
          5.19(b) hereof.

          "Person" shall mean any natural person,  corporation,  business trust,
          joint venture, association, company, partnership or any other entity.

          "Purchase  Price" shall have the meaning  ascribed  thereto in Section
          2.2 hereof.

          "Requisite  Regulatory  Approvals"  shall  have the  meaning  ascribed
          thereto in Section 6.1(b) hereof.

          "Seller"   shall  mean   Affiliated   Community   Bancorp,   Inc.,   a
          Massachusetts corporation.

          "Shares"  shall have the  meaning  ascribed  thereto  in  Section  2.1
          hereof.

          "Stock  Purchase" shall have the meaning  ascribed  thereto in Section
          2.1 hereof.

          "subsidiary"  shall mean,  when used with reference to any party,  any
          corporation of which the majority of the securities or other interests
          having by their terms ordinary voting power to elect a majority of the
          board of directors is directly or  indirectly  owned or  controlled by
          such party or by any one or more of its subsidiaries, or by such party
          and one or more of its subsidiaries.

          "Tax Claim" shall have the meaning ascribed thereto in Section 5.19(a)
          hereof.

          "Taxes"  shall  mean all  foreign,  federal,  state  and  local  taxes
          (including  deficiencies,  interest and penalties relating thereto) of
          any kind, including without limitation all income, gross income, gross
          receipts,  sales, use, ad valorem,  franchise,  profits,  withholding,
          payroll,  employment,  excise, stamp, occupancy,  premium, property or
          windfall  profits tax,  customs,  duty or other taxes or  governmental
          fees,  assessments  or charges,  together  with any  interest  and any
          penalties,  additions  to tax or  additional  amounts,  imposed by any
          taxing authority (domestic or foreign).

          "Tax  Returns"  shall  mean all  returns,  declarations,  reports  and
          information  returns and statements required to be filed in respect of
          any Taxes.

          "Transfer  Taxes" shall have the meaning  ascribed  thereto in Section
          5.16 hereof.

          "UST Agreement" shall mean that certain Affiliation Agreement and Plan
          of  Reorganization  dated as of  December  15,  1997 by and  among UST
          Corp.,  Mosaic  Corp.,  a wholly owned  subsidiary  of UST Corp.,  and
          Seller.

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                                      -4-

                                    ARTICLE 2

                               THE STOCK PURCHASE

     2.1  Shares  Sold and  Acquired.  Subject  to the  terms  set forth in this
Agreement,  on the Closing Date, and upon payment of the Purchase Price,  Seller
shall  sell,  convey,  transfer,  assign and  deliver to Buyer an  aggregate  of
800,000 shares of the common stock of Middlesex,  par value $1.00 per share (the
"Shares"), which constitute 100% of the issued and outstanding shares of capital
stock of  Middlesex.  Such  sale and  purchase  of the  Shares  is  referred  to
hereinafter as the "Stock Purchase."

     2.2 Price for Shares.  Buyer shall deliver to Seller as  consideration  for
the sale, conveyance,  transfer, assignment and delivery to Buyer of the Shares,
in accordance with the terms and conditions of this Agreement,  the sum of Eight
Million Two Hundred Forty Thousand and 00/100 Dollars ($8,240,000.00) in cash
(the "Purchase Price").

     2.3 Closing.

          (a) The purchase and sale of the Shares  hereunder  shall occur at the
     offices of  Sullivan &  Worcester  LLP,  One Post  Office  Square,  Boston,
     Massachusetts, or at such other place as shall be mutually agreeable to the
     parties, at a time and on a date (the "Closing Date") to be mutually agreed
     upon by Buyer and Seller, which date shall be within five (5) Business Days
     after the last of the  conditions  precedent  set forth in Article 6 hereof
     has been satisfied or properly waived.

          (b) On the Closing Date, the following actions shall be taken:

               (i) Buyer shall pay the Purchase Price to Seller by wire transfer
          of  immediately  available  federal  funds in an  amount  equal to the
          Purchase Price to such bank account in the United States of America as
          Seller shall have  designated  at least two (2) Business Days prior to
          the Closing Date;

               (ii) Seller shall  deliver or cause to be  delivered  one or more
          certificates  for the Shares to Buyer,  duly endorsed in blank or with
          stock  powers  duly  endorsed  in  blank,  together  with  such  other
          documents as Buyer may reasonably  request to evidence the transfer to
          Buyer of good and valid title in and to the Shares,  free and clear of
          any Lien,  together  with such minute  books,  stock  record books and
          other corporate  documents and records relating to Middlesex which are
          in the possession of Seller and not otherwise located in the Middlesex
          offices or otherwise held in the custody of Middlesex; and

               (iii) Each party shall take such other actions, and shall execute
          and deliver such other instruments or documents,  as shall be required
          under Article 6 hereof.


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                                       -5-


                                    ARTICLE 3

                    REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents and warrants to Buyer as follows:



     3.1  Corporate   Organization.   Seller  is  a  business  corporation  duly
organized, validly existing and in corporate good standing under the laws of the
Commonwealth of Massachusetts.  Seller is a bank holding company registered with
the Board of Governors of the Federal  Reserve System under the BHCA.  Middlesex
is a trust  company duly  organized and validly  existing  under the laws of the
Commonwealth  of  Massachusetts.  Middlesex is an "insured bank" as such term is
defined in  Section  3(h) of the FDIA.  Middlesex  has the  corporate  power and
authority to own, lease or operate all of its properties and assets and to carry
on its business as it is now being conducted.  All of the issued and outstanding
shares of the capital stock of Middlesex are owned beneficially and of record by
Seller,  free and clear of any Lien.  Middlesex has no subsidiaries  and owns no
equity interest beneficially or of record in any other Person.

     3.2 Capitalization of Middlesex.

          (a) The  authorized  capital stock of Middlesex  consists of 3,000,000
     shares of common stock, par value of $1.00 per share (the "Middlesex Common
     Stock"),  and 100,000  shares of  preferred  stock,  par value of $1.00 per
     share (the "Middlesex  Preferred Stock"). As of the date hereof,  there are
     800,000 shares of Middlesex Common Stock issued and outstanding,  no shares
     of  Middlesex  Preferred  Stock  issued  or  outstanding  and no  shares of
     Middlesex capital stock of any kind held in Middlesex's treasury.

          (b)  Neither  Seller  nor  Middlesex  is  bound  by  any   outstanding
     subscriptions,  options,  warrants, calls, commitments or agreements of any
     character  calling for the  transfer,  sale,  purchase  or issuance  of, or
     representing the right to purchase, subscribe for or otherwise receive, any
     shares of the capital stock of Middlesex or any securities convertible into
     or  representing  the right to receive,  purchase or subscribe for any such
     shares of Middlesex.

     3.3 Authority. Seller has full corporate power and authority to execute and
deliver this  Agreement and to  consummate  the Stock  Purchase as  contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
Stock Purchase as contemplated  hereby have been duly and validly authorized and
approved by the Board of  Directors  of Seller.  No other  corporate  actions or
proceedings  on the part of Seller or Middlesex are necessary to consummate  the
Stock Purchase.  This Agreement has been duly and validly executed and delivered
by Seller,  and  (assuming due  authorization,  execution and delivery by Buyer)
constitutes  the valid and binding  obligation  of Seller,  enforceable  against
Seller in  accordance  with its terms,  except that  enforcement  thereof may be
limited by the  receivership,  conservatorship  and  supervisory  powers of bank
regulatory agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium  or other similar laws  affecting  enforcement  of creditors'  rights
generally  and  except  that  enforcement  thereof  may be  subject  to  general
principles  of equity  (regardless  of whether  enforcement  is  considered in a
proceeding in equity or at law) and the availability of equitable remedies.

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                                      -6-

     3.4 No Violation. Neither the execution and delivery of this Agreement, nor
the  consummation  of the Stock  Purchase by Seller does or will (i) violate any
provision of the articles of  organization  or by-laws of Seller or Middlesex or
(ii) assuming that the consents and approvals  referred to in Section 3.5 hereof
are  duly  obtained,   (a)  violate  any  statute,   code,  ordinance,   permit,
authorization,  registration, rule, regulation, judgment, order, writ, decree or
injunction  applicable  to Seller or Middlesex or (b)  violate,  conflict  with,
result in a breach  of any  provisions  of,  constitute  a default  (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of, accelerate the performance  required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of Seller or Middlesex,  under any of the terms,
conditions or provisions of any note, bond, capital note,  debenture,  mortgage,
indenture,  deed of trust,  license,  lease,  agreement or other  instrument  or
obligation  to which  Seller  or  Middlesex  is a party,  or by which  Seller or
Middlesex  or any of  their  respective  properties  or  assets  may be bound or
affected,  except for any such breach or default  referred to in this clause (b)
which  individually or in the aggregate would not have a Material Adverse Effect
on Middlesex following the consummation of the Stock Purchase.

     3.5 Consents and Approvals.  Except for notice of the  consummation  of the
Stock  Purchase  that is  required  to be  filed  with  the  Commissioner  or as
otherwise disclosed in Schedule 3.5 hereto, no consents or approvals of, filings
or registrations with or notices to any governmental  agency or authority or any
nongovernmental  third party are  necessary  to be obtained or made by Seller or
Middlesex  in  connection  with the  execution  and  delivery  by Seller of this
Agreement and the  consummation  by Seller of the Stock Purchase as contemplated
hereby.

     3.6  Legal  Proceedings.  There is no  suit,  action,  proceeding  or claim
pending  or, to the  knowledge  of Seller,  threatened,  (i)  against  Seller or
Middlesex or (ii)  challenging  the  validity or  propriety of the  transactions
contemplated  by this  Agreement,  as to  which,  in  either  case,  there  is a
reasonable  probability  of an adverse  determination  and which,  if  adversely
determined,  would have or could be reasonably expected to have, individually or
in the  aggregate,  a  Material  Adverse  Effect  on  Seller  or  Middlesex,  as
applicable, nor is there any judgment, decree, injunction,  rule or order of any
legal  or  administrative  body or  arbitrator  outstanding  against  Seller  or
Middlesex having any such effect.

     3.7 Tax Matters.

          (a) Seller or Middlesex  have timely filed or will timely file all Tax
     Returns  that are or will be  required  to be filed by or with  respect  to
     activities  of Middlesex on or prior to the day  immediately  preceding the
     Closing  Date  (the  "Cutoff  Date")  and have paid or will pay on a timely
     basis all  material  Taxes due or have  provided  or will  provide for such
     Taxes in accordance with generally accepted accounting principles. All such
     Tax Returns  that have been filed were correct and complete in all material
     respects.

          (b) Seller or Middlesex  has  withheld and paid all Taxes  required to
     have been withheld and paid in connection with amounts paid to any employee
     or  independent  contractor  of  Middlesex  or other third party  providing
     services to Middlesex.

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                                      -7-


          (c) No consent or agreement has been filed relating to Middlesex under
     Section 341(f) of the Code.

          (d) No  extension  of time with  respect  to any date on which any Tax
     Return was or is to be filed by or with  respect to Middlesex is in effect,
     and no waiver or agreement  is in effect for the  extension of time for the
     assessment or payment of any Tax for which Middlesex may be liable.

          (e) No Tax Return of Middlesex  is, as of the date of this  Agreement,
     currently the subject of an audit or, to Seller's knowledge,  investigation
     by any  taxing  authority.  No  returns  of Taxes of  Middlesex  have  been
     examined by any taxing authority.  There is no claim or assessment  pending
     or, to Seller's knowledge,  threatened against Middlesex for any deficiency
     in Taxes.

          (f) All tax sharing  agreements and other similar  procedures  between
     Middlesex and Seller or any of Seller's  affiliates will terminate,  having
     been fully satisfied, by the Closing Date.

          (g)  Middlesex  is a member of Seller's  affiliated  group and will be
     included in Seller's  consolidated  federal income tax return that includes
     the period from January 1, 1998 through the Cutoff Date. As such, Seller is
     and will be eligible to file an election  under  Section  338(h)(10) of the
     Code with respect to a "qualified  stock purchase" (as such term is defined
     in Section 338 of the Code) of the capital stock of Middlesex.

     3.8 Broker's Fees.  Neither Seller nor any of its officers or directors has
employed any broker or finder or incurred any liability  for any broker's  fees,
commissions  or  finder's  fees  in  connection  with  any of  the  transactions
contemplated by this Agreement.

     3.9 Absence of Undisclosed Liabilities. To the best knowledge of Seller, as
of  March  31,  1998,  Middlesex  does  not have  any  obligation  or  liability
(contingent  or  otherwise)  that is material,  or that when  combined  with all
similar  obligations  or liabilities  would be material,  except as disclosed or
reflected in Middlesex's Call Report (Form FFIEC 034) for the period ended March
31, 1998.

     3.10  Subsequent  Events.  To the best  knowledge of Seller,  except as set
forth on Schedule  3.10  hereto,  since March 31,  1998,  Middlesex  has not (i)
conducted  its business  other than in the  ordinary  course,  (ii)  incurred or
discharged any liability  other than in the ordinary  course of business,  (iii)
made any sale or disposition of any assets,  including  loans,  other than sales
and  dispositions in the ordinary  course of business,  (iv) made,  amended,  or
entered into any employment contract or bonus,  incentive,  stock option, profit
sharing, pension,  retirement, or other similar plan or arrangement,  other than
any increases in compensation or bonus payments to officers or employees paid in
the ordinary course of business,  (v) entered into or engaged in any transaction
with, or made any payment to, any officer,  director,  stockholder or affiliate,
other  than in the  ordinary  course  of  business,  (vi)  made  any  change  in
accounting practices,  methods or principles except in accordance with generally
accepted  accounting  principles,  (vii) made any  commitment to borrow money or
make

<PAGE>
                                      -8-

a capital  expenditure  other than in the ordinary  course of  business,  (viii)
amended its bylaws or articles of  organization,  (ix)  terminated or waived any
material  rights of value to its business or (x) entered  into any  agreement or
commitment to do any of the foregoing.

     3.11  Material  Agreements.  To the best  knowledge  of  Seller,  except as
disclosed  in  Schedule  3.11  hereto  and except  for this  Agreement,  the UST
Agreement and any other agreements  specifically referred to herein, (i) neither
Seller  nor any of its  subsidiaries,  other than  Middlesex,  is a party to any
written  agreement,   arrangement  or  commitment   relating  to  the  business,
operations,  properties,  assets, liabilities or personnel of Middlesex and (ii)
Middlesex is not a party to or bound by (a) any written  agreement,  arrangement
or commitment  relating to the employment  (including  severance) of any person,
(b) any written contract, agreement or understanding with any labor union or (c)
any other  written  contract,  agreement or  commitment  that is material to the
business, operations or financial condition of Middlesex.

     3.12 Employee Benefit Plans.

          (a) To the best knowledge of Seller, Schedule 3.12 lists each employee
     benefit plan that Middlesex  maintains or to which it  contributes  (each a
     "Middlesex  Plan").  To the best  knowledge  of Seller,  all  contributions
     (including  all  employer   contributions  and  employee  salary  reduction
     contributions)  which  are  required  to  have  been  paid  to date to each
     Middlesex Plan have been so paid.

          (b) To the best  knowledge of Seller,  Middlesex  has no obligation to
     provide retiree health or welfare  benefits to any of its current or former
     employees.  To the best knowledge of Seller, there are no actions, suits or
     claims  (other than  routine  claims for  benefits)  pending or  threatened
     against  Middlesex  or Seller  with  respect to any  Middlesex  Plan or the
     assets of any such  plan,  and  Seller is not aware of any facts that exist
     that could give rise to any  actions,  suits or claims  (other than routine
     claims for benefits ) against any Middlesex  Plan or the assets of any such
     plan.

     3.13 Affiliate  Transactions.  To the best  knowledge of Seller,  except as
disclosed in Schedule 3.13 hereto,  Middlesex is not a party to any agreement or
arrangement  pursuant to which  assets  and/or  liabilities  may be  transferred
between  Middlesex and Seller or any of Seller's other  subsidiaries or services
may be provided to or for the benefit of  Middlesex by Seller or any of Seller's
other  subsidiaries  or by  Middlesex  to or for the benefit of Seller or any of
Seller's other  subsidiaries,  other than agreements or arrangements  containing
terms and  conditions  that are  substantially  the same as those  that would be
entered into with unaffiliated third parties or that are immaterial with respect
to the assets or liabilities transferred or services provided.

     For purposes of this Agreement,  including without  limitation this Article
3,  when a  representation  or  warranty  of  Seller is given to the best of its
knowledge or to its  knowledge  or with  reference to matters of which Seller is
aware or which are known to Seller, or with any other similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness,
without  any  special  or  additional   investigation  or  inquiry  having  been
undertaken for the purpose of this Agreement or any specific  representation  or
warranty contained herein, of the following officers

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                                       -9-

of Seller: Timothy J. Hansberry,  President and Chief Executive Officer; John G.
Fallon,  Executive Vice President and Chief  Financial  Officer;  and Quentin J.
Greeley, Executive Vice President and General Counsel.

                                   ARTICLE 4

                     REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby represents and warrants to Seller as follows:

     4.1  Authority.  Buyer is legally  competent  and  otherwise  authorized to
execute and deliver  this  Agreement  and to  consummate  the Stock  Purchase as
contemplated  by this  Agreement.  This  Agreement  has been  duly  and  validly
executed and delivered by Buyer, and (assuming due authorization,  execution and
delivery  by Seller)  constitutes  the valid and  binding  obligation  of Buyer,
enforceable  against Buyer in accordance with its terms, except that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,  moratorium or
other similar laws  affecting  enforcement  of creditors'  rights  generally and
except that enforcement  thereof may be subject to general  principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) and the availability of equitable remedies.

     4.2 No  Violations.  Neither the execution and delivery of this  Agreement,
nor the consummation of the Stock Purchase by Buyer does or will,  assuming that
the consents and approvals  referred to in Section 4.3 hereof are duly obtained,
(i) violate any statute, code, ordinance, permit,  authorization,  registration,
rule,  regulation,  judgment,  order,  writ, decree or injunction  applicable to
Buyer or (ii) violate,  conflict with,  result in a breach of any provisions of,
constitute a default (or an event which,  with notice or lapse of time, or both,
would constitute a default) under,  result in the termination of, accelerate the
performance  required  by,  or  result in the  creation  of any  lien,  security
interest,  charge or other  encumbrance  upon any of the properties or assets of
Buyer,  under any of the terms,  conditions  or  provisions  of any note,  bond,
capital note, debenture,  mortgage,  indenture,  deed of trust, license,  lease,
agreement or other  instrument or  obligation  to which Buyer is a party,  or by
which he or any of his properties or assets may be bound or affected, except for
any such breach or default referred to in this clause (ii) which individually or
in the aggregate would not have a Material Adverse Effect on Buyer.

     4.3 Consents and Approvals. Except for consents and approvals of or filings
or registrations with the FDIC and the Massachusetts  Commissioner,  no consents
or approvals of, filings or  registrations  with or notices to any  governmental
agency or  authority  or any  nongovernmental  third party are  necessary  to be
obtained or made by Buyer in connection with the execution and delivery by Buyer
of this  Agreement  and the  consummation  by Buyer  of the  Stock  Purchase  as
contemplated hereby.

     4.4 Legal Proceeding. There is no suit, action, proceeding or claim pending
or, to the knowledge of Buyer, threatened, (i) against Buyer or (ii) challenging
the validity or propriety of the transactions contemplated by this Agreement, as
to which, in either case, there is a reasonable

<PAGE>

                                      -10-

probability  of an adverse  determination  and which,  if adversely  determined,
would  have or could be  reasonably  expected  to have,  individually  or in the
aggregate,  a  Material  Adverse  Effect  on Buyer,  nor is there any  judgment,
decree,  injunction,  rule or  order  of any  legal  or  administrative  body or
arbitrator outstanding against Buyer having any such effect.

     4.5 Regulatory Approvals.  Buyer is not aware of any reason why he would be
unable to obtain all of the consents  and  approvals  referenced  in Section 4.3
above in a timely manner.

     4.6  Financing.  Buyer has  presently  available  to him  capital  and cash
sufficient to fulfill his  obligations  hereunder  and to  consummate  the Stock
Purchase.

     4.7 Broker's Fees. Neither Buyer nor any other Person affiliated with Buyer
has  employed any broker or finder or incurred  any  liability  for any broker's
fees,  commissions or finder's fees in connection  with any of the  transactions
contemplated by this Agreement.


                                    ARTICLE 5

                          COVENANTS OF BUYER AND SELLER

     5.1 Conduct of Business.

          (a) During the period from the date of this  Agreement  to the Closing
     Date,  unless  otherwise  permitted by the prior written  consent of Buyer,
     Seller shall cause Middlesex to:

               (i) maintain its legal existence and good standing;

               (ii)  conduct  business  and engage in  transactions  only in the
          ordinary course of business and consistent with past practice;

               (iii) use all commercially reasonable efforts to (x) preserve its
          business organization intact, (y) keep available to itself the present
          or future  services of its employees,  and (z) preserve for itself the
          good will of  customers  and others with whom  business  relationships
          exist;

               (iv) use all commercially reasonable efforts to maintain and keep
          its  properties  in as  good  repair  and  condition  in all  material
          respects as existing on the date hereof,  except for  depreciation due
          to ordinary wear and tear and damage due to casualty;

               (v) use all commercially  reasonable  efforts to maintain in full
          force and effect insurance generally comparable in amount and in scope
          of coverage to that maintained by it as of the date hereof; and

<PAGE>

                                      -11-

               (vi) comply with and perform in all material  respects all of its
          obligations  and duties  (x) under  contracts,  leases  and  documents
          relating  to  or  affecting  its  assets,  properties,   business  and
          operations  and (y) imposed  upon it by all federal and state laws and
          all  rules,  regulations  and  orders  imposed  by  federal  or  state
          governmental authorities.

          (b) Seller agrees that from the date of this  Agreement to the Closing
     Date, except as otherwise  specifically permitted or required, or otherwise
     contemplated,  by this  Agreement or  consented to in writing by Buyer,  it
     shall cause Middlesex not to:

               (i) change any provision of Middlesex's  articles of organization
          or by- laws;

               (ii)  change  the  number  of shares  of  Middlesex's  authorized
          capital;

               (iii) issue any shares of  Middlesex's  capital stock or issue or
          grant any option,  warrant, call, commitment,  subscription,  right to
          purchase or agreement of any character relating to such capital stock;

               (iv)  hypothecate,  pledge or  otherwise  encumber  any shares of
          Middlesex's capital stock;

               (v) grant any severance or termination  pay to, or enter into any
          employment,   severance  or  termination  agreement  (other  than  the
          Executive   Agreements),    noncompetition,   bonus,   stock   option,
          profit-sharing, retirement or incentive plan or any other similar plan
          or agreement  with,  any of Middlesex's  directors,  officers or other
          employees or grant any increase in the compensation or benefits of, or
          pay any bonus to, any Middlesex  officer or employee other than in the
          ordinary course of business consistent with past practices;

               (vi)  merge  into,   consolidate  with,  affiliate  with,  or  be
          purchased or acquired by, any other Person, or permit any other Person
          to  be  merged,  consolidated  or  affiliated  with  Middlesex  or  be
          purchased or acquired by Middlesex, or acquire any significant portion
          of the  assets  or  securities  of  any  other  Person,  or  sell  any
          significant  portion of Middlesex's assets or issue any of Middlesex's
          securities to any other Person;

               (vii)  make any  change  in  Middlesex's  accounting  methods  or
          practices,  other than changes  required in accordance with applicable
          law and/or generally accepted accounting principles;

               (viii) engage or participate in any material transaction or incur
          or sustain any material obligation or liability except in the ordinary
          course of its businesses consistent with past practices;

<PAGE>

                                      -12-

               (ix) except in the ordinary  course of business  consistent  with
          past practices,  sell, lease, transfer,  assign, encumber or otherwise
          dispose of, or enter into any contract,  agreement or understanding to
          sell, lease, transfer,  assign,  encumber or otherwise dispose of, any
          of its assets;

               (x)  declare  or  pay  any   dividends   on  or  make  any  other
          distributions in respect of the Middlesex Common Stock;


<PAGE>


                                      -12-


               (xi) incur any additional debt obligation or other obligation for
          borrowed  money,  or guaranty any additional  debt obligation or other
          obligation  for  borrowed  money,  except  in the  ordinary  course of
          business  consistent with past practices,  which shall include but not
          necessarily be limited to creation of deposit  liabilities,  purchases
          of federal funds and entry into repurchase agreements or other similar
          arrangements commonly employed by banks;

               (xii)  incur  or  commit  to  any  capital  expenditures  or  any
          obligations or liabilities in connection therewith, other than capital
          expenditures and such related  obligations or liabilities  incurred or
          committed to in the ordinary  course of business  consistent with past
          practices,  which, in all cases, do not individually exceed $25,000 or
          cumulatively exceed $75,000;

               (xiii) engage in any  transaction  with Seller or any of Seller's
          other subsidiaries  involving any transfer of assets or liabilities to
          or from or for the benefit of Middlesex or providing of services to or
          by or for the benefit of Middlesex,  other than transactions of a type
          engaged in by and  between  or among  Middlesex,  Seller and  Seller's
          other  subsidiaries  as of or prior to the date of this  Agreement  or
          which are otherwise  immaterial to Middlesex  individually  and in the
          aggregate; and

               (xiv) agree to do or publicly  announce an  intention to do or to
          agree to do any of the  foregoing  or any other action that would make
          any of  Seller's  representations  or  warranties  contained  in  this
          Agreement  untrue  or  incorrect  or would  otherwise  violate  any of
          Seller's agreements or commitments contained in this Agreement.

     5.2 No  Solicitation.  Neither Seller nor any of its  directors,  officers,
employees, representatives or agents shall, and Seller shall cause Middlesex not
to,  solicit any Person or group (other than Buyer or any  affiliate  thereof or
advisor  thereto or any  regulatory  authority,  in each such case in connection
with the Stock  Purchase  as  contemplated  by this  Agreement)  concerning  any
affiliation, merger, disposition of substantial assets, sale of capital stock or
any similar transaction  involving Middlesex.  Seller shall promptly (and in any
event  within 24 hours)  advise  Buyer  following  the  receipt by Seller of any
inquiry  or  proposal  concerning  any  affiliation,   merger,   disposition  of
substantial assets,  sale of capital stock or any similar transaction  involving
Middlesex and the substance thereof (including the identity of the Person making
such  inquiry or  proposal),  and shall advise  Buyer of any  developments  with
respect thereto promptly following the occurrence thereof.

<PAGE>

                                      -13-

     5.3 Current Information.  During the period from the date of this Agreement
to the Closing Date,  Seller shall cause Middlesex to make available one or more
designated  representatives  to confer  on a regular  and  frequent  basis  with
representatives of Buyer to report the general status of its ongoing operations.
Seller  shall  promptly  notify  Buyer of any  material  change  in  Middlesex's
business, operations,  properties, assets or liabilities and of any governmental
complaints,  investigations or hearings (or  communications  indicating that the
same may be  contemplated)  relating to  Middlesex,  or the  institution  or the
threat of any litigation or similar proceeding involving  Middlesex,  as soon as
Seller  becomes  aware of any of the  foregoing,  and  Seller  will  keep  Buyer
informed of any such events as known to Seller.  Each of Buyer and Seller  shall
report to the other any material breach of any representation or warranty of the
reporting party contained in this Agreement  promptly after such reporting party
has become aware of such breach.

     5.4 Buyer Access to Properties and Records. Seller shall cause Middlesex to
permit Buyer access during normal business hours, during the period prior to the
Closing Date, to  Middlesex's  properties  and to disclose and make available to
Buyer and its  advisors  all  material  books,  papers and  records  relating to
Middlesex's assets,  stock ownership,  properties,  operations,  obligations and
liabilities,  including, but not limited to, all books of account (including the
general ledger), tax records, minute books,  organizational documents,  by-laws,
material  contracts  and  agreements,   filings  with  regulatory   authorities,
litigation files and plans affecting  employees,  including the Middlesex Plans.
The rights of access  granted  pursuant to this section shall not diminish or in
any manner  affect the express  representations,  warranties  or  agreements  of
Seller  contained  in this  Agreement  or in any manner  constitute  a waiver or
relinquishment  on the  part of  Buyer  of the  right  to  rely  upon  any  such
representations,  warranties and  agreements of Seller in accordance  with their
terms hereunder.

     5.5 Financial and Other Statements.

          (a) As soon as prepared,  and in any case prior to submission,  Seller
     shall cause  Middlesex to deliver to Buyer all reports or other  statements
     filed after the date hereof with the FDIC, the  Commissioner  and any other
     federal or state  governmental  agency or  authority,  except to the extent
     that any such disclosure of any such reports or statements is prohibited by
     law.

          (b) Promptly  upon receipt  thereof,  Seller shall cause  Middlesex to
     furnish to Buyer copies of all internal control reports  submitted to it by
     independent  accountants in connection with each annual, interim or special
     audit of its books made by such accountants.

          (c) With  reasonable  promptness,  Seller  shall  cause  Middlesex  to
     furnish to Buyer such additional  financial data pertaining to Middlesex as
     Buyer  may  reasonably   request,   including  without  limitation  monthly
     financial statements.

     5.6 Confidentiality.  Seller,  Interlaken Capital, Inc. and Middlesex shall
continue  to be  bound  by the  terms  and  conditions  of  the  Confidentiality
Agreement. In addition,  Buyer hereby covenants and agrees to comply with all of
the restrictions and fulfill all applicable obligations applicable to Interlaken
Capital, Inc. under the terms of the Confidentiality Agreement.

<PAGE>

                                      -14-

     5.7 Regulatory Matters;  Consents.  Each of Buyer and Seller will cooperate
with the  other and use all  commercially  reasonable  efforts  to  prepare  all
necessary documentation,  to effect all necessary filings and registrations with
and to obtain all necessary permits,  consents,  approvals and authorizations of
all  federal  and  state   governmental   agencies  and   authorities   and  all
nongovernmental   third  parties   necessary  to  consummate  the   transactions
contemplated by this Agreement. Each party hereto shall have the right to review
and approve in advance all  descriptions  of it, its  subsidiaries or affiliates
and/or the  business and  operations  thereof  which appear in any  application,
registration  or  other  filing  made  in  connection   with  the   transactions
contemplated  by this Agreement with any  governmental  agency or authority.  In
exercising the foregoing  right,  the parties hereto shall act reasonably and as
promptly as practicable.

     5.8 Public Announcements.  Except as otherwise required by law or the rules
of the  Securities and Exchange  Commission or NASDAQ,  neither Buyer nor Seller
will distribute any news releases or other public  information  disclosures with
respect to this Agreement or the Stock Purchase as contemplated  hereby,  unless
approved by the other party (which approval will not be unreasonably withheld).

     5.9  Further  Assurances.  Subject  to  the  terms  and  conditions  herein
provided,  each of the parties hereto agrees to use all commercially  reasonable
efforts to, as promptly as practicable,  take, or cause to be taken,  all action
and to do, or cause to be done, all things necessary,  proper or advisable under
applicable  laws and  regulations  to  consummate  and make  effective the Stock
Purchase as contemplated by this Agreement.  In case at any time on or after the
Closing  Date any further  action is  necessary  or  desirable  to carry out the
purpose of this  Agreement,  the proper  officers and  directors,  to the extent
applicable, of each party to this Agreement shall take all such necessary steps.

     5.10 Buyer Reliance on Due Diligence. Buyer acknowledges and agrees that he
has  undertaken  or caused to be undertaken a full  investigation  of Middlesex,
including  its  management,   business,   operations,   properties,  assets  and
liabilities,  that he has only a  contractual  relationship  with Seller,  based
solely  on the  terms  of this  Agreement,  and  that  other  than  the  express
representations and warranties of Seller contained in Article 3 hereof,  neither
Seller nor Middlesex nor any of their respective officers, directors, employees,
representatives  or  agents  has  made,  nor has Buyer  relied  upon,  any other
representations  or  warranties of any kind as an inducement to or in connection
with Buyer's entering into this Agreement.

     5.11 Prohibition on Middlesex Change of Control.  Unless otherwise required
by law, for a period of not less than three years  following  the Closing  Date,
Buyer shall not cause any Person, other than an immediate family member of Buyer
or a Person controlled directly or indirectly by Buyer, to acquire, or otherwise
take any action that would result in any Person,  other than an immediate family
member  of  Buyer  or a Person  controlled  directly  or  indirectly  by  Buyer,
acquiring five percent or more of the outstanding  shares of any class or series
of voting securities of Middlesex;  provided, however, that nothing contained in
this  Section  5.11  shall   prevent  or   otherwise   prohibit  the   following
transactions:  (i) any  transfer  of up to ten percent in the  aggregate  of the
outstanding  shares of any class or series of voting  securities of Middlesex to
the senior  management  of  Middlesex  and/or any other  employees of any Person
controlled directly or indirectly by Buyer; and (ii) the

<PAGE>

                                      -15-

authorization  and  issuance by  Middlesex  of  additional  shares of  Middlesex
capital stock, so long as (a) no shareholder other than Buyer (including Buyer's
immediate family and other Persons  controlled  directly or indirectly by Buyer)
shall  control more than ten percent of the  outstanding  shares of any class or
series of voting  securities  of  Middlesex  and (b)  Buyer,  together  with his
immediate family members and other Persons controlled  directly or indirectly by
Buyer,  shall continue to own beneficially  and of record,  not less than thirty
percent of the outstanding  shares of each class and series of voting securities
of Middlesex.


     5.12 Directors' and Officers' Indemnification and Insurance.

          (a) Buyer agrees that all rights to indemnification existing in favor,
     and all limitations on the personal liability, of any director,  officer or
     other  employee  of  Middlesex  provided  for in  Middlesex's  articles  of
     organization  or by-laws as in effect as of the date hereof with respect to
     matters  occurring  prior to the Closing Date shall survive and continue in
     effect following the consummation of the Stock Purchase.  In the event that
     (i) any of the Buyer's  successors or assigns  consolidates  with or merges
     into  any  other  Person  and  shall  not be the  continuing  or  surviving
     corporation or entity of such consolidation or merger, or (ii) the Buyer or
     any of his  successors  or assigns  transfers  or conveys the Shares or any
     other controlling  interest in Middlesex or otherwise  transfers or conveys
     all or  substantially  all of  Middlesex's  properties  and  assets  to any
     Person,  then,  and in each such  case,  to the  extent  necessary,  proper
     provision  shall be made so that the successors and assigns of Buyer assume
     the obligations set forth in this Section 5.12(a).

          (b) Buyer shall cause the persons serving as officers and directors of
     Middlesex immediately prior to the consummation of the Stock Purchase to be
     covered for a period of six (6) years from the Closing Date by a directors'
     and officers'  liability  insurance policy containing terms and conditions,
     including  terms of coverage  and coverage  amounts,  which are at least as
     advantageous  as the terms and  conditions of the  directors' and officers'
     liability  insurance policy maintained as of the date hereof by Seller with
     respect to acts or  omissions  occurring  at or prior to the Closing  Date,
     which were  committed  by any such  officers or  directors  of Middlesex in
     their capacity as such. Buyers' obligation under this Section 5.12(b) shall
     be deemed to be  satisfied  without any further  action or  expenditure  by
     Buyer if and to the extent that Seller  notifies  Buyer in writing that the
     continuing  directors'  and officers'  liability  insurance  coverage to be
     provided  for the benefit of the  directors  and officers of Seller and its
     subsidiaries   pursuant  to  the  terms  of  the  UST  Agreement   provides
     satisfactory  coverage to those  persons who would  otherwise be covered by
     the directors' and officers'  liability  insurance  policy  contemplated by
     this Section 5.12(b).

     5.13 Mutual Access to Records.  Following  the Closing Date,  each of Buyer
and  Seller  shall  afford  to  the  other  and  their   respective   attorneys,
accountants, officers and other representatives reasonable access, during normal
business  hours,  to the books and records of Middlesex or Seller (as such books
and records of Seller relate to its prior  ownership of Middlesex),  as the case
may be, to the extent  they relate to a period  prior to the  Closing  Date (and
shall  permit  such  persons to examine  and copy such books and  records to the
extent reasonably  requested by the requesting party at such requesting  party's
sole cost and expense) in connection with financial reporting and tax matters

<PAGE>

                                      -15-

(including financial and tax audits and tax contests) and other similar business
purposes.  Each of Buyer and Seller shall cause to be maintained  all such books
and records for a period of not less than seven years after the Closing Date and
thereafter  shall not  cause  any such  books and  records  to be  destroyed  or
disposed  of unless  sixty  (60)  days'  prior  written  notice of such  party's
intention  to so destroy or dispose of such books and  records has been given to
the other party.  During such sixty (60) day period,  the party  receiving  such
notice may request that some or all of such documents be delivered to such party
at such party's expense,  in which case the party that has delivered such notice
shall promptly do so.

     5.14  Financial  Reporting,  Tax  and  Audit  Cooperation.  To  the  extent
applicable  following  the Closing Date,  Buyer shall cause his and  Middlesex's
employees  and agents (a) to prepare the normal  monthly,  quarterly  and annual
financial reports of Middlesex for the year-to-date period ending on the Closing
Date  consistent  with past practices and (b) to cooperate fully with and assist
Seller in connection with any other financial  reporting or tax matters relating
to  Middlesex  (including  financial  and tax audits and tax  contests) or other
similar business purposes.

     5.15  Litigation  Cooperation.  If either  party  shall  become  engaged or
participate in any action,  claim or proceeding  with any third party in respect
of the  business  or  operations  of  Middlesex  or Seller,  as  applicable,  as
conducted on or prior to the Closing Date,  then the other party shall cooperate
in all  reasonable  respects  with such  first  party in  connection  therewith,
including,  without  limitation,  making  available to such first party, at such
first party's  expense,  relevant records and employees of Buyer or Middlesex or
Seller,  as the case may be,  which or who may be helpful  with  respect to such
action, claim or proceeding.

     5.16  Transfer  Taxes.  All  stamp,  transfer,   documentary,  sales,  use,
registration  and  other  such  Taxes  and fees  (including  any  penalties  and
interest)  incurred in connection  with this Agreement and the Stock Purchase as
contemplated  hereby  (other than those  imposed on or measured by the income of
Seller)  (collectively,  the "Transfer Taxes") shall be paid by Buyer, and Buyer
shall,  at his own expense,  procure any stock transfer  stamps required by, and
properly   file  on  a  timely  basis  all   necessary  Tax  Returns  and  other
documentation with respect to, any such Transfer Tax.

     5.17  Federal and State Tax  Returns.  Seller shall (a) prepare and file on
timely basis the federal and all state income Tax Returns to be filed by or with
respect to the  activities  of  Middlesex  for the period  from  January 1, 1998
through the Cutoff Date,  and (b) pay any Taxes  relating to such period.  Buyer
shall (and shall cause Middlesex to) fully cooperate with Seller so as to enable
Seller to include Middlesex in all requisite Tax Returns.

     5.18  Section  338(h)(10)  Election.  If Buyer so elects,  as  evidenced by
written notice given to Seller not later than the Closing Date, Buyer and Seller
will join in making an election under Section 338(h)(10) of the Code. Buyer will
be responsible for preparing and filing all documents and materials necessary in
connection  with electing  treatment  under Section  338(h)(10) of the Code with
respect to the  purchase  of the Shares.  In  connection  with any such  Section
338(h)(10)  election,  the fair market value of the assets of Middlesex shall be
determined on the basis of the parties' mutual agreement with respect thereto.

<PAGE>

                                      -17-

     5.19 Seller Indemnification.

          (a) Except as  provided  in  Section  5.16  above,  from and after the
     Closing Date, Seller shall indemnify and save Buyer and Middlesex  harmless
     from,  and shall be  entitled to any refund  (whether by direct  payment or
     offset) of, any and all  liabilities for any Taxes imposed on Middlesex for
     all taxable  periods that end on or before the Closing  Date.  If any claim
     for Taxes is asserted by any taxing  authority  against  Buyer or Middlesex
     that, if successful,  would result in an indemnification  payment by Seller
     pursuant to this Section  5.19(a),  then Buyer or Middlesex  shall promptly
     notify  Seller in writing of such claim (a "Tax  Claim"),  and such  notice
     shall  include in  reasonable  detail the  circumstances  surrounding  such
     claim.  Seller shall control the handling and disposition of all Tax Claims
     including, without limitation, (i) whether or not to contest or settle such
     Tax Claim at the outset or at any stage,  (ii)  whether to pursue or forego
     any  administrative  appeals and  proceedings,  (iii) if Seller  chooses to
     undertake  judicial action with respect to a Tax Claim,  the court or other
     judicial  body before  which the action  shall be  commenced,  and (iv) the
     manner in which any such contest is to be conducted.

          (b) Seller shall  indemnify  and save Buyer  harmless from any and all
     Damages  suffered by Buyer or Middlesex as a result of a breach of Seller's
     representation set forth in the penultimate sentence of Section 3.1 hereof.
     Promptly after receipt by Buyer of notice of any claim or the  commencement
     of any action by any third party against Buyer  resulting  from a breach of
     Seller's  representation  set forth in the penultimate  sentence of Section
     3.1  hereof,  Buyer  shall  notify  Seller  in  writing  of such  claim  or
     commencement of such action (in either case, an "Ownership Claim"), stating
     in  reasonable  detail the nature and basis of such claim and Buyer's  good
     faith estimate of the amount thereof.

          (c) The failure by Buyer to notify  Seller  promptly in writing of any
     Tax Claim or Ownership  Claim shall not relieve  Seller from any  liability
     which it may have to Buyer  hereunder  unless and only to the  extent  that
     such failure  materially and adversely  prejudices the ability of Seller to
     defend against or mitigate  damages arising out of any such claim.  Subject
     to the specific  applicable  provisions  contained in Section  5.19(a) with
     respect  to a Tax  Claim,  if any Tax  Claim or  Ownership  Claim  shall be
     brought  against Buyer,  it shall notify Seller thereof and Seller shall be
     entitled to participate  therein, and to assume the defense thereof, and to
     settle and compromise  any such claim or action;  provided,  however,  that
     Seller shall not agree or consent to any of the following  without  Buyer's
     written consent,  which consent shall not be unreasonably withheld: (i) the
     application  of any  equitable  relief upon Buyer or  Middlesex or (ii) any
     other  settlement or compromise that affects Buyer directly other than with
     respect to  Buyer's  ownership  interest  in  Middlesex  or (iii) any other
     settlement or compromise that affects Middlesex directly. After notice from
     Seller to Buyer of its  election to assume the defense of any such claim or
     action, Seller shall not be liable for other expenses subsequently incurred
     by Buyer in connection with the defense thereof; provided, however, that if
     Seller  elects not to assume such  defense,  then Buyer may retain  counsel
     satisfactory to it and defend, compromise or settle such claim on behalf of
     and for the account and risk of Seller, and Seller shall pay all reasonable
     fees and expenses of such counsel for Buyer promptly as statements therefor
     are received; and, provided, further, that

<PAGE>

                                      -18-

     Buyer  shall  not  consent  to entry  of any  judgment  or  enter  into any
     settlement  or  compromise  without  the written  consent of Seller,  which
     consent shall not be unreasonably withheld. Buyer shall also have the right
     to select its own counsel,  at its own expense,  to represent  Buyer and to
     participate  in the defense of any such Tax Claim or  Ownership  Claim,  as
     applicable.

          5.20 Corporate Governance Matters.

               (a) Board of  Directors.  John G.  Fallon  shall  resign from the
          Middlesex  Board of Directors  effective as of the Closing Date. It is
          the parties'  present  intention  that following the Closing Date, the
          Board of Directors of Middlesex shall consist, at least initially,  of
          seven persons, at least the majority of which shall consist of current
          members of the Middlesex Board, including C. Bernard Fulp.

               (b)  Management.  It  is  the  parties'  present  intention  that
          following the Closing Date, C. Bernard Fulp shall continue to serve as
          President and Chief  Executive  Officer of  Middlesex,  Edward L. Lowe
          shall  continue to serve as Senior Vice  President and Senior  Lending
          Officer of Middlesex  and Richard P. White shall  continue to serve as
          Vice President of Operations and Finance of Middlesex.  On the Closing
          Date, Buyer and/or Middlesex shall enter into an  employment/severance
          agreement with each such officer,  such agreements to be substantially
          in the forms included as Exhibit A hereto, subject to any modification
          or  revision  thereof  as may be  required  by the  FDIC or any  other
          regulatory   agency  or  authority   (collectively,   the   "Executive
          Agreements").


                                    ARTICLE 6

                               CLOSING CONDITIONS

     6.1 Conditions to Each Party's Obligations under this Agreement.

     The  respective  obligations of each party to consummate the Stock Purchase
and the  transactions  contemplated  by this  Agreement  shall be subject to the
fulfillment on or prior to the Closing Date of the following conditions, none of
which may be waived:

          (a)  Injunctions.  None of the parties  hereto shall be subject to any
     order, decree or injunction of a court or agency of competent  jurisdiction
     which  enjoins  or  prohibits   the   consummation   of  the   transactions
     contemplated by this Agreement.

          (b) Regulatory Approvals. All necessary approvals,  authorizations and
     consents  of  all  governmental   agencies  and  authorities   required  to
     consummate the  transactions  contemplated  herein shall have been obtained
     and shall remain in full force and effect and all waiting periods  relating
     to any such approvals,  authorizations  or consents shall have expired (all
     such  approvals,  authorizations  and  consents  and the  lapse of all such
     waiting periods being referred to as the "Requisite Regulatory Approvals").

<PAGE>

                                      -19-


     6.2  Conditions  to the  Obligations  of Buyer  under this  Agreement.  The
obligations  of Buyer to  consummate  the Stock  Purchase  and the  transactions
contemplated by this Agreement shall be further subject to the satisfaction,  on
or prior to the Closing Date, of the following conditions:

          (a) Covenants;  Representations. The obligations of Seller required to
     be performed by it on or prior to the Closing Date pursuant to the terms of
     this  Agreement  shall have been duly  performed and complied with, and the
     representations  and warranties of Seller contained in this Agreement shall
     be  true  and  correct  in all  material  respects  as of the  date of this
     Agreement  and as of the  Closing  Date,  as  though  made at and as of the
     Closing  Date  (except  as  otherwise  specifically  contemplated  by  this
     Agreement  and  except  as  to  any   representation   or  warranty   which
     specifically  relates to an earlier date),  and Buyer shall have received a
     certificate to such effect signed by the president and the chief  financial
     officer of Seller or such other  appropriate  executive  officer(s)  of any
     permitted successor in interest to Seller.

          (b)  Absence of Any  Material  Adverse  Effect.  There  shall have not
     occurred any events or  circumstances  that have caused a Material  Adverse
     Effect on Middlesex.

          (c) Third-Party Consents. All permits, consents, waivers,  clearances,
     approvals and authorizations of all nongovernmental and nonregulatory third
     parties  required  to be obtained  by Seller or  Middlesex  under the terms
     hereof to consummate the transactions  contemplated by this Agreement shall
     have been  obtained and shall  remain in full force and effect,  other than
     any   such   permits,   consents,   waivers,   clearances,   approvals   or
     authorizations  the  failure  of  which to  obtain  would  neither  make it
     impossible to consummate  such  transactions  nor,  individually  or in the
     aggregate, result in a Material Adverse Effect on Middlesex.

          (d) Burdensome  Condition.  None of the Requisite Regulatory Approvals
     shall impose a condition that Buyer provide additional capital to Middlesex
     on the  Closing  Date or  within a  specified  period  of time  thereafter;
     provided,  however, that no condition contained in any Requisite Regulatory
     Approval that Buyer cause  Middlesex to maintain any minimum capital ratios
     from and after the Closing Date shall be considered to be a requirement  of
     additional  capital as  contemplated  hereunder  unless  Buyer must provide
     additional capital to Middlesex  immediately in order to cause Middlesex to
     satisfy any such capital ratios as of the Closing Date.

     In addition to the  foregoing,  Seller and/or  Middlesex will furnish Buyer
with such additional certificates, instruments or other documents in the name or
on behalf of Seller or Middlesex,  executed by  appropriate  officers or others,
including  without  limitation  certificates or  correspondence  of governmental
agencies  or  authorities  or   nongovernmental   third  parties,   to  evidence
fulfillment  of the  conditions  set  forth in this  Section  6.2 as  Buyer  may
reasonably request.

<PAGE>

                                      -20-

     6.3  Conditions  to the  Obligations  of Seller under this  Agreement.  The
obligations  of Seller to  consummate  the Stock  Purchase and the  transactions
contemplated by this Agreement shall be further subject to the satisfaction,  at
or prior to the Closing Date, of the following conditions:

          (a) Covenants;  Representations.  The obligations of Buyer required to
     be performed by it on or prior to the Closing Date pursuant to the terms of
     this  Agreement  shall have been duly  performed and complied with, and the
     representations  and warranties of Buyer  contained in this Agreement shall
     be true and correct as of the date of this  Agreement and as of the Closing
     Date in all material respects, as though made at and as of the Closing Date
     (except as otherwise specifically contemplated by this Agreement and except
     as to any  representation  or  warranty  which  specifically  relates to an
     earlier date),  and Seller shall have received a certificate to such effect
     signed by Buyer.

          (b)  Absence of Any  Material  Adverse  Effect.  There  shall have not
     occurred any events or  circumstances  that have caused a Material  Adverse
     Effect on Buyer.

          (c) Third-Party Consents. All permits, consents, waivers,  clearances,
     approvals and authorizations of all nongovernmental and nonregulatory third
     parties  required  to be  obtained  by Buyer  under  the  terms  hereof  to
     consummate the transactions  contemplated by this Agreement shall have been
     obtained  and shall  remain in full force and  effect,  other than any such
     permits,  consents,  waivers,  clearances,  approvals or authorizations the
     failure of which to obtain would  neither make it  impossible to consummate
     such  transactions  nor,  individually  or in the  aggregate,  result  in a
     Material Adverse Effect on Buyer.

          (d) Termination of Seller Contract Obligations.  All of the contracts,
     agreements or other commitments that impose any commitment or obligation on
     Seller  and  relate  to  the  business,  operations,   properties,  assets,
     liabilities  or personnel of Middlesex,  including  without  limitation any
     such agreements with third-party vendors or other service providers and all
     employment,  severance and special termination agreements, all of which are
     intended to be  referenced  in  Schedule  3.11(i)  hereto,  shall have been
     terminated or otherwise  assigned to, with all such  attendant  commitments
     and obligations of Seller assumed by, Buyer and/or Middlesex.

          (e) Executive  Agreements.  All of the Executive Agreements shall have
     been executed and delivered by the intended parties thereto.

          (f) Consummation of UST Acquisition.  The acquisition of Seller by UST
     Corp. pursuant to the UST Agreement shall have been consummated.

     In  addition  to  the  foregoing,  Buyer  will  furnish  Seller  with  such
additional certificates, instruments or other documents in the name or on behalf
of  Buyer,  executed  by  appropriate  officers  or  others,  including  without
limitation   certificates  or   correspondence   of  governmental   agencies  or
authorities or  nongovernmental  third parties,  to evidence  fulfillment of the
conditions set forth in this Section 6.3 as Seller may reasonably request

<PAGE>

                                      -21-

                                    ARTICLE 7

                        TERMINATION, AMENDMENT AND WAIVER

     7.1 Termination.  This Agreement may be terminated at any time prior to the
Closing Date, if one or more of the following events shall occur:

          (a) by mutual written consent of Buyer and Seller  authorized by their
     respective Boards of Directors;

          (b) by Buyer or Seller if the Closing Date shall not have  occurred on
     or prior to  September  30,  1998,  or such  later  date as shall have been
     agreed to in  writing  by Buyer and  Seller,  unless  the  failure  of such
     occurrence  shall be due to the failure of the party  seeking to  terminate
     this Agreement to perform or observe his or its agreements  herein required
     to be performed or observed at or prior to the Closing Date;

          (c) by Buyer or Seller:  (i)  thirty  days after the date on which any
     request or application for a Requisite  Regulatory Approval shall have been
     denied,  unless  within  the  thirty-day  period  following  such  denial a
     petition for rehearing or an amended  application  has been filed with such
     governmental  regulatory  authority  or agency,  except that no party shall
     have the right to terminate this  Agreement  pursuant to this clause (i) if
     such denial  shall be due to the failure of the party  seeking to terminate
     this Agreement to perform or observe in any material respects the covenants
     and agreements of such party set forth herein;  or (ii) if any governmental
     or  regulatory  authority or agency,  or court of  competent  jurisdiction,
     shall  have  issued a final  permanent  order or  injunction  enjoining  or
     otherwise prohibiting the consummation of the transactions  contemplated by
     this Agreement and the time for appeal or petition for  reconsideration  of
     such order or injunction shall have expired without such appeal or petition
     being granted or such order or injunction shall otherwise have become final
     and non-appealable; or

          (d) by Buyer or Seller  (provided  that the  terminating  party is not
     then in material breach of any representation,  warranty, covenant or other
     agreement contained herein), in the event of a material breach by the other
     party  of any  representation  ,  warranty,  covenant  or  other  agreement
     contained herein,  which breach is not cured after thirty (30) days written
     notice thereof is given to the party committing such breach.

     7.2 Effect of Termination. In the event of termination of this Agreement by
either Buyer or Seller as provided above,  this Agreement shall forthwith become
null and void (other than Sections  5.6, 7.2 and 8.1 hereof,  which shall remain
in full force and effect) and there shall be no further liability on the part of
Buyer or Seller or their respective  officers or directors to the other,  except
in the event of a willful breach of any  representation,  warranty,  covenant or
agreement contained in this Agreement,  in which case, the breaching party shall
remain  liable  for any and all  damages,  costs  and  expenses,  including  all
reasonable  attorneys' fees, sustained or incurred by the nonbreaching party (i)
as a result  thereof or in connection  therewith,  (ii) in  connection  with the
enforcement of its rights

<PAGE>

                                      -22-

hereunder and (iii) in  connection  with the  negotiation  and execution of this
Agreement and the transactions contemplated hereby.

     7.3 Amendment,  Extension and Waiver.  Subject to applicable law and as may
be  authorized  by  Seller's  Board  of  Directors,  at any  time  prior  to the
consummation of the  transactions  contemplated by this Agreement or termination
of this Agreement in accordance  with the provisions of Section 7.1 hereof,  the
parties may (a) amend this Agreement, (b) extend the time for the performance of
any of the  obligations  or other  acts of either  party  hereto,  (c) waive any
inaccuracies in the  representations  and warranties  contained herein or in any
document  delivered  pursuant  hereto,  or (d) waive  compliance with any of the
agreements or conditions  contained in Articles 5 and 6 (other than Section 6.1)
hereof.  This  Agreement  may not be amended  except by an instrument in writing
signed on behalf of each of the parties  hereto.  Any agreement on the part of a
party  hereto to any  extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or failure
to insist on strict  compliance  with such  obligation,  covenant,  agreement or
condition  shall not  operate as a waiver of, or estoppel  with  respect to, any
subsequent or other failure.


                                    ARTICLE 8

                                  MISCELLANEOUS

     8.1  Expenses.  Except as may  otherwise  be agreed  to  hereunder  or in a
writing by the parties of subsequent date hereto,  all legal and other costs and
expenses  incurred  in  connection  with  this  Agreement  and the  transactions
contemplated  hereby  shall  be paid  by the  party  incurring  such  costs  and
expenses.

     8.2  Survival.  None  of the  representations,  warranties,  covenants  and
agreements of any party shall  survive  after the Closing  Date,  except for the
representations,  agreements  and  covenants  contained  or  referred  to in the
penultimate  sentence of Section 3.1,  Section 5.6, the last sentence of Section
5.9 and Sections 5.10 through  5.19,  inclusive,  all of which  representations,
agreements  and  covenants  shall  survive  and remain in effect  following  the
Closing Date in accordance with their terms.

     8.3  Notices.  All notices or other  communications  hereunder  shall be in
writing  and shall be  delivered  by hand,  by  overnight  courier  service,  by
registered or certified mail (return receipt requested) or by telecopy (in which
case a copy  thereof  shall,  simultaneously  therewith,  be  sent by  hand,  by
overnight  courier  service or by  registered or certified  mail),  addressed as
follows:

<PAGE>

                                      -23-

          (a) If to Seller, to:

                                    Affiliated Community Bancorp, Inc.
                                    716 Main Street
                                    Waltham, Massachusetts 02154
                                    Attention:  Timothy J. Hansberry, President
                                                 and Chief Executive Officer

                           Copy to:

                                    Sullivan & Worcester LLP
                                    One Post Office Square
                                    Boston, Massachusetts 02109
                                    Attention:  Stephen J. Coukos, Esq.

          (b) If to Buyer, to:

                                    William R. Berkley
                                    165 Mason Street
                                    Greenwich, Connecticut 06830

                           Copies to:

                                    Edwards & Angell
                                    2700 Hospital Trust Tower
                                    Providence, Rhode Island 02903
                                    Attention:  V. Duncan Johnson, Esq.

                                    and

                                    William L. Mahone, Esq.
                                    Vice President and General Counsel
                                    Interlaken Capital, Inc.
                                    475 Steamboat Road
                                    Greenwich, Connecticut 06830

or such other address or telecopy number as shall be furnished in writing by any
party in conformity  with the  foregoing,  and any such notice or  communication
shall be deemed to have been given as of the date received.

     8.4 Parties in  Interest.  This  Agreement  shall be binding upon and shall
inure to the benefit of the parties hereto and their  respective  successors and
assigns;  provided,  however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the  prior  written  consent  of the other  parties,  and that  nothing  in this
Agreement  is intended to confer,  expressly or by  implication,  upon any other
person any rights or remedies under

<PAGE>

                                      -24-

or by reason of this  Agreement;  and provided  further,  however,  that nothing
contained in this Section 8.4 shall prevent UST Corp.'s wholly owned subsidiary,
Mosaic Corp.,  or such other UST subsidiary as may merge with Seller pursuant to
the UST Agreement, from assuming all of the rights, interests and obligations of
Seller  as  Seller's  successor  in  interest  by  merger  pursuant  to the  UST
Agreement.  Upon the  consummation  of the merger of Seller with and into Mosaic
Corp. or such other UST  subsidiary,  all of Seller's  rights and remedies under
this Agreement shall be exercisable by Mosaic Corp. or such other UST subsidiary
and its permitted successors and assigns.

     8.5 Complete Agreement. This Agreement, including the schedules referred to
herein,  contain the entire  agreement  and  understanding  of the parties  with
respect to its subject matter. There are no restrictions,  agreements, promises,
warranties,  covenants  or  undertakings  between the  parties  other than those
expressly set forth  herein.  This  Agreement  supersedes  all prior  agreements
(except  for the  Confidentiality  Agreement)  and  understandings  between  the
parties, both written and oral, with respect to its subject matter.

     8.6  Counterparts.  This Agreement may be executed in counterparts,  all of
which shall be considered  one and the same agreement and each of which shall be
deemed to be an original and shall become  effective when a counterpart has been
signed by each of the parties and delivered to each of the other parties.

     8.7  Governing  Law.  This  Agreement  shall be governed by the laws of the
Commonwealth of Massachusetts.

     8.8 Captions.  The Article and Section headings contained in this Agreement
are for  reference  purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

     8.9 Effect of  Investigations.  No investigation by the parties hereto made
heretofore or hereafter,  whether pursuant to this Agreement or otherwise, shall
affect the express  representations  and  warranties  of the  parties  which are
contained  herein and each such  representation  and warranty shall survive such
investigation  in accordance with its terms,  subject,  however,  to Section 8.2
hereof.

     8.10  Severability.  In the event that any one or more  provisions  of this
Agreement shall for any reason be held invalid,  illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity,  illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties  shall use all  reasonable  efforts  to  substitute  a valid,  legal and
enforceable provision which, insofar as practicable, implements the purposes and
intents of this Agreement.

     8.11 Specific Enforceability.  The parties recognize and hereby acknowledge
that it is  impossible  to measure in money the damages  that would  result to a
party  by  reason  of the  failure  of the  other  party to  perform  any of the
obligations imposed on it by this Agreement. Accordingly, if either party should
institute an action or proceeding seeking specific enforcement of the provisions
hereof,  the party against  which such action or  proceeding  is brought  hereby
waives the claim or defense that the party instituting such action or proceeding
has an adequate remedy at law and hereby

<PAGE>

                                      -25-

agrees not to assert in any such action or proceeding  the claim or defense that
such a remedy at law exists.

     8.12 WAIVER OF JURY TRIAL.  ALL OF THE PARTIES  HERETO  HEREBY  IRREVOCABLY
WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


<PAGE>

                                      -26-

     IN WITNESS WHEREOF, Buyer has executed this Agreement and Seller has caused
this Agreement to be executed by its duly authorized  officer, in each case as a
sealed instrument, as of the day and year first above written.

                                       AFFILIATED COMMUNITY BANCORP, INC.

                                       By:  /s/ Timothy J. Hansberry
                                           -------------------------
                                           Timothy J. Hansberry
                                           President and Chief Executive Officer


                                            /s/ William R. Berkley
                                           -------------------------
                                           William R. Berkley, individually