<PAGE>
 
EXECUTION DRAFT                                                   Exhibit 10.15




                   BRANCH PURCHASE AND ASSUMPTION AGREEMENT
                   ----------------------------------------
<PAGE>
 
                               TABLE OF CONTENTS

                   BRANCH PURCHASE AND ASSUMPTION AGREEMENT
                   ----------------------------------------   


1.      PURCHASE AND ASSUMPTION OF ASSETS AND ASSUMPTION OF 
        ----------------------------------------------------
        LIABILITIES;PAYMENT..................................................3
        -------------------

1.01    Purchase of Assets and Assumption of Liabilities, Payment............3
        ---------------------------------------------------------             

1.02    Transfer of Assets...................................................3
        ------------------                                                    

1.03    Acceptance and Assumption............................................4
        -------------------------                                             

1.04    Payment of Funds.....................................................6
        ----------------                                                      

1.05    Acquisition..........................................................8
        -----------                                                           

1.06    Title to Real Estate.................................................8
        --------------------                                                  

1.07    Transfer of Loans Without Recourse...................................8
        ----------------------------------                                      

1.08    Document Quality Review and Limited Indemnity........................8
        ---------------------------------------------                           

1.09    Transfer of Personal Property.......................................10
        -----------------------------

2.      OBLIGATIONS OF THE PARTIES PRIOR TO EFFECTIVE TIME..................10
        --------------------------------------------------

2.01    Covenants of Seller.................................................10
        -------------------                                                   

2.02    Covenants of Purchaser..............................................11
        ----------------------

2.03    Covenants of All Parties............................................11
        ------------------------                                              

3.      REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER..............11
        ------------------------------------------------------

3.01    Representations and Warranties of Seller............................11
        ----------------------------------------                              


                                       2
<PAGE>
 
3.02    Representations and Warranties of Purchaser.........................13
        -------------------------------------------                           

3.03    Survival of Covenants, Representations and Warranties...............14
        -----------------------------------------------------                 

4.      WARRANTIES, REPRESENTATIONS AND ACTIONS RESPECTING EMPLOYEES 
        ------------------------------------------------------------
        AND PENSION AND EMPLOYEE BENEFIT PLANS..............................14
        --------------------------------------

4.01    List of Branch Employees............................................14
        ------------------------                                              

4.02    Actions to be Taken by Purchaser....................................14
        --------------------------------                                      

4.03    Actions to be Taken by Seller.......................................15
        -----------------------------                                         

4.04    Cooperation by Seller and Purchaser.................................15
        -----------------------------------                                   

5.      CONDITIONS PRECEDENT TO CLOSING.....................................16
        -------------------------------

5.01    Conditions to Seller's Obligations..................................16
        ----------------------------------                                    

5.02    Conditions to Purchaser's Obligations...............................16
        -------------------------------------                                 

5.03    Non-Satisfaction of Conditions Precedent............................18
        ----------------------------------------                              

6.      CLOSING.............................................................18
        -------

6.01    Closing and Closing Date............................................18
        ------------------------                                              

6.02    Seller's Actions at Closing.........................................18
        ---------------------------                                           

6.03    Purchaser's Actions at Closing......................................20
        ------------------------------                                        

6.04    Methods of Payment..................................................20
        ------------------                                                    

6.05    Availability of Closing Documents...................................21
        ---------------------------------                                     

6.06    Effectiveness of Closing............................................21
        ------------------------                                              

7.      CERTAIN TRANSITIONAL MATTERS........................................21
        ----------------------------


                                       3
<PAGE>
 
7.01    Transitional Action by Purchaser....................................21
        --------------------------------                                      

7.02    Transitional Action by Seller.......................................24
        -----------------------------                                         

7.03    Transitional Action by All Parties..................................26
        ----------------------------------                                    

7.04    Effect of Transitional Action.......................................27
        -----------------------------                                         

8.      GENERAL COVENANTS AND INDEMNIFICATION...............................27
        -------------------------------------

8.01    Information.........................................................28
        -----------                                                           

8.02    Confidentiality Obligations of Purchaser............................28
        ----------------------------------------                              

8.03    Confidentiality Obligations of Seller...............................28
        -------------------------------------                                 

8.04    Indemnification by Seller...........................................28
        -------------------------                                             

8.05    Indemnification by Purchaser........................................29
        ----------------------------                                          

8.06    Solicitation of Customers...........................................29
        -------------------------                                             

8.07    Further Assurances..................................................30
        ------------------                                                    

8.08    Purchaser's Operation of Branch.....................................30
        -------------------------------                                       

9.      [RESERVED]..........................................................30
      
10.     TERMINATION.........................................................30
        -----------

10.01   Methods of Termination..............................................30
        ----------------------                                              

10.02   Procedure Upon Termination..........................................31
        --------------------------                                          

10.03   Effect of Termination...............................................31
        ---------------------                                               

11.     MISCELLANEOUS PROVISIONS............................................32
        ------------------------

11.01   Expenses............................................................32
        --------                                                            


                                       4
<PAGE>
 
11.02     Certificates......................................................32
          ------------                                                        

11.03     Amendment and Modifications.......................................32
          ---------------------------                                         

11.04     Waivers...........................................................32
          -------                                                             

11.05     Notices...........................................................33
          -------                                                             

11.06     Parties in Interest: Assignment; Amendment........................33
          ------------------------------------------                          

11.07     Headings..........................................................34
          --------                                                            

11.08     Terminology.......................................................34
          -----------                                                         

11.09     Flexible Structure................................................34
          ------------------                                                  

11.10     Press Releases....................................................34
          --------------                                                      

11.11     Personal Liability................................................34
          ------------------                                                  

11.12     Entire Agreement..................................................34
          ----------------                                                    

11.13     Governing Law.....................................................35
          -------------                                                       

11.14     Counterparts......................................................35
          ------------                                                        

11.15     Severability......................................................35
          ------------                                                        


                                       5
<PAGE>
 
                    BRANCH PURCHASE AND ASSUMPTION AGREEMENT
                    ---------------------------------------- 

         This Agreement ("Agreement"), dated as of February 2, 1999, is made by
                          ---------
and between COASTAL BANK, a Maine banking corporation ("Seller"), and KENNEBUNK
                                                        ------    
SAVINGS BANK, a Maine mutual savings bank ("Purchaser").
                                            ---------

                             W I T N E S S E T H:

         WHEREAS, Purchaser wishes to acquire and Seller to sell certain assets
and deposit liabilities associated with Seller's Shoppers Village Branch located
on Route 1 in Kennebunk, Maine, upon the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained and other good and valuable consideration, Seller and Purchaser hereby
agree as follows:

A.       DEFINITIONS.
         -----------

         ACH shall mean Automated Clearing House.

         ALTA shall mean American Land Title Association.

         Acquisition shall have the meaning specified in Section 1.05.

         Acquisition Consideration shall have the meaning set forth in Section
         1.04(a).

         Assets shall mean the Owned Personal Property, the Safety Deposit
         Business, the Loans, Cash on Hand, Prepaid Expenses and Leased Real
         Estate.

         Branch shall mean the Branch of Seller located at Shopper's Village,
         Kennebunk, Maine.

         Branch Employees shall have the meaning specified in Section 4.01.

         Business Day shall mean any day other than a Saturday, Sunday or a day
         in which Seller is closed for business in compliance with the laws of
         the State of Maine or the United States of America. Any action, notice,
         or right which is to be taken or given or which is to be exercised or
         lapse on or by a given date which is not a business day may be taken,
         given, or exercised, and shall not lapse, until the next business day
         following.

         Cash on Hand shall have the meaning specified in Section 1.02(d).

         Closing shall have the meaning specified in Section 6.01.

         Closing Date shall have the meaning specified in Section 6.01.

         Code shall mean the Internal Revenue Code of 1986, as amended, and the
         Regulations 


                                       1
<PAGE>
 
         promulgated thereunder.

         Defect shall have the meaning specified in Section 1.08(a).

         Deferred Expenses shall have the meaning specified in Section 1.03(d).

         Deposit Accounts shall have the meaning specified in Section 1.03(b).

         Deposit Liabilities shall have the meaning specified in Section
         1.03(b).

         Deposit Premium shall have the meaning specified in Section
         1.04(a)(ii)(A).

         Effective Time shall have the meaning specified in Section 6.01.

         ERISA shall mean the Employee Retirement Income Security Act of 1974,
         as amended.

         Excluded Assets shall have the meaning specified in Section 7.01(l).

         Excluded Bundled Products shall have the meaning specified in Section
         7.02(j).

         Excluded Deposit Accounts shall have the meaning specified in Section
         1.03(b).

         FDIA shall mean the Federal Deposit Insurance Act.

         FDIC shall mean the Federal Deposit Insurance Corporation.

         Indemnified Account shall have the meaning specified in Section
         1.08(b).

         Leased Real Estate shall have the meaning specified in Section 1.02(f).

         Leasehold Improvements shall mean personal property affixed to the
         Leased Real Estate by Seller.

         Loan Files shall have the meaning specified in Section 1.08(a).

         Loans shall mean overdraft protection lines of credit associated with
         Deposit Accounts (i.e., lines of credit on which advances are made to
         fund overdrafts in Deposit Accounts). "Loans" shall not include any
         other type of loan.

         Loss shall have the meaning specified in Section 1.08(c).

         Permitted Exceptions shall mean, with respect to the Leased Real
         Estate, (i) those standard printed exceptions appearing as Schedule B
         items in a Standard ALTA leasehold owner's title insurance policy, (ii)
         those exceptions, restrictions, easements, rights of way, and
         encumbrances referenced in Exhibit A to this Agreement; (iii) statutory
         liens for current real estate taxes or assessments, both general and
         special, not yet due, or if due 


                                       2
<PAGE>
 
         not yet delinquent, or the validity of which is being contested in good
         faith by appropriate proceedings; (iv) all zoning laws and rulings; (v)
         such other liens, imperfections in title, charges, easements,
         restrictions, and encumbrances which, individually and in the aggregate
         are not material in character, amount, or extent, or do not materially
         detract from the value of, or materially interfere with, the present
         use of, any property subject thereto or affected thereby; and (vi) any
         Additional Exceptions approved by Purchaser in writing; (vii) any
         exceptions to title arising from the action, inaction or status of
         Purchaser.

         Person shall mean any individual, corporation, partnership,
         association, trust or other entity, whether business, personal or
         otherwise.

         Premium Rate High Rise Savings Accounts shall mean the accounts of the
         type described in Schedule B attached hereto and listed in detail in
         the List of Premium Rate High Rise Savings Accounts provided separately
         as part of Seller's Disclosure Materials.

         Prepaid Expenses shall have the meaning specified in Section 1.02(e).

         Referred New Accounts shall have the meaning specified in Section
         7.01(m).

         Safety Deposit Business shall have the meaning specified in Section
         1.02(b).

         Seller's Disclosure Materials shall mean the identical copies, one
         delivered by Seller to Purchaser as a document separate from this
         Agreement, and one retained by Seller, containing confidential
         information disclosed in negotiation of this Agreement, including,
         without limitation, List of Premium Rate High Rise Savings Accounts,
         the ODL List and the Preliminary List of Accounts To Be Transferred.

1.       PURCHASE AND ASSUMPTION OF ASSETS AND ASSUMPTION OF LIABILITIES; 
         ---------------------------------------------------------------
         PAYMENT.
         -------

         1.01 Purchase of Assets and Assumption of Liabilities, Payment. As of
              ---------------------------------------------------------
the Effective Time (as defined in Section 6.01 hereof), Purchaser shall purchase
and Seller shall sell, assign, transfer, convey and deliver certain of the
assets and Purchaser shall purchase and assume from Seller certain of the
liabilities used in or relating to the banking business conducted by the Seller
at the Branch pursuant to the terms and conditions set forth herein.

         1.02 Transfer of Assets. Subject to the terms and conditions of this
              ------------------
Agreement, Seller shall assign, transfer, convey, and deliver to Purchaser, as
of the Effective Time (as defined in Section 6.01 hereof), the following assets
(the "Assets"):
      ------

         (a)  Owned Personal Property. All right, title, and interest in and
              -----------------------
              to the furniture, fixtures, and equipment, including Leasehold
              Improvements, that are located and used at the Branch and are
              owned by Seller, other than the excluded personal property
              listed in attached Schedule C (the "Owned Personal Property");
                                                  -----------------------


                                       3
<PAGE>
 
         (b)      Safety Deposit Business. All right, title, and interest of
                  -----------------------
                  Seller in and to the safety deposit business (subject to the
                  allocation of safety deposit rental payments as provided in
                  Section 1.03(c)(i) hereof), if any, located at the Branch as
                  of the Effective Time (the "Safety Deposit Business");
                                              -----------------------

         (c)      Loans. All Loans (exclusive of any reserve for possible loan
                  -----
                  losses), including, without limitation, Loans that are
                  summarized in attached Schedule D as more specifically set
                  forth in the ODL List provided separately in Seller's
                  Disclosure Materials. The parties agree that, in the operation
                  of the Branch in the ordinary course of business between the
                  date of this Agreement and the Effective Time as contemplated
                  in Section 2.01(a), (A) there will be changes in the amount
                  and type of the Loans, and (B) there may be additional Loans
                  associated with the Branch, which will become part of the
                  Loans and some Loans may be paid off and closed;

         (d)      Cash on Hand. All cash on hand (i.e., U.S. currency and coin)
                  ------------
                  at the Branch as of the Effective Time (the "Cash on Hand");
                                                               ------------

         (e)      Prepaid Expenses. All prepaid expenses of Seller relating
                  ----------------
                  specifically to the Branch as of the Effective Time described
                  in attached Schedule E (the "Prepaid Expenses"); and
                                               ----------------

         (f)      Leased Real Estate. All right, title and interest in and to
                  ------------------
                  the real property leased by Seller from lessors in which any
                  of the Branch is situated (the "Leased Real Estate"), which
                                                  ------------------
                  leasehold is evidenced by a lease agreement a copy of which is
                  attached hereto as Schedule F (the "Real Estate Lease").
                                                      -----------------

         No rights in the names "Coastal", "Coastal Bank", "Coastal Savings
Bank", or derivatives thereof or modifications thereto are being transferred to
Purchaser hereunder.

         1.03     Acceptance and Assumption. Subject to the terms and conditions
                  -------------------------
of this Agreement, as of the Effective Time Purchaser shall:

         (a)      Assets. Receive and accept all of the Assets assigned,
                  ------
                  transferred, conveyed, and delivered to Purchaser by Seller
                  pursuant to this Agreement;

         (b)      Deposit Liabilities. Assume and thereafter faithfully honor
                  ------------------- 
                  and fully and timely pay, perform, and discharge all of the
                  "Deposit Liabilities" (as hereinafter defined). The term
                  "Deposit Liabilities" means all of Seller's indebtedness,
                   -------------------
                  obligations, duties, and liabilities of every type and
                  character relating to all deposit accounts (including, without
                  limitation, all passbook accounts, all checking, Money Market
                  and NOW accounts, individual retirement accounts ("IRAs") ,
                                                                     ---
                  and certificates of deposit) (collectively "Deposit Accounts")
                                                              ----------------
                  which are reflected on the books of Seller as of the Effective
                  Time as being assigned to or attributable to the Branch
                  consistent with the methodology employed in preparing the
                  Preliminary List of Accounts summarized in Schedule G attached
                  hereto and more specifically set forth in Seller's Disclosure
                  Materials ("Preliminary List") and generally described
                              ----------------

                                       4
<PAGE>
 
               in Schedule G attached hereto, other than (1) commercial deposit
               accounts that are subject to a sweeps agreement pursuant to which
               balances in such deposit accounts are invested in repurchase
               agreements on an overnight basis, (2) any account pledged to
               collateralize loans the Purchaser is not purchasing under this
               Agreement and (3) the excluded deposit accounts described in
               Schedule G-1 ("Excluded Deposit Accounts"). The parties
                              -------------------------
               understand and agree that, in the operation of the Branch in the
               ordinary course of business between the date of this Agreement
               and the Effective Time as contemplated in Section 2.01(a), there
               will be changes in the amount and type of the Deposit Liabilities
               to be assumed by the Purchaser pursuant to this Agreement.
               Deposit Liabilities include, without limitation, the obligation
               to pay and otherwise process all such Deposit Accounts in
               accordance with applicable law and customary banking practices,
               and applicable Deposit Account contractual terms and the duty to
               supply all applicable reporting forms required to be filed after
               the Effective Time, providing however, that Seller shall send and
               file Forms 1099 relating to all Deposit Accounts for all periods
               preceding the Closing Date and Purchaser shall send and file
               Forms 1099 relating to all Deposit Accounts for all periods on
               and after the Closing Date. In connection with Deposit Accounts
               consisting of IRAs, Purchaser shall assume, in addition to the
               deposit liability, the plans pertaining thereto and the custodial
               arrangements in connection therewith;

         (c)   Safety Deposit Business. Assume and thereafter faithfully honor
               -----------------------
               and fully and timely perform and discharge all of the
               obligations, duties, and liabilities of Seller arising from and
               after the Effective Time with respect to:

               (i)      The Safety Deposit Business, if any, including
                        delinquent boxes, and including, but not limited to,
                        the maintenance of all necessary facilities for the
                        use of safety deposit boxes by the renters thereof
                        during the periods for which such persons have paid
                        rent therefor in advance to Seller (subject to
                        Seller's retention of all safety deposit box rental
                        payments made before the Effective Time and
                        Purchaser's right to retain all such payments made
                        thereafter), subject to the provisions of the
                        applicable leases or other agreements relating to
                        such boxes; and

               (ii)     All safety deposit box lease agreements and documents
                        pertaining to the safety deposit business of the
                        Branch as of the Effective Time; and

               (iii)    All safekeeping agreements, receipts, and other
                        documents pertaining to all safekeeping items held by
                        the Branch for its customers as of the Effective Time
                        (not including any liabilities with respect to trust
                        department services or obligations or services not
                        typically included in a bank safety deposit
                        business);

         (d)   Deferred Expenses. Assume and thereafter faithfully honor and
               ----------------- 
               fully and timely pay, perform and discharge all deferred
               expenses described in attached Schedule H (the "Deferred
                                                               --------
               Expenses");
               --------  


                                       5
<PAGE>
 
         (e)      Liabilities under Leases. Assume and thereafter faithfully
                  ------------------------
                  honor and fully and timely pay, perform and discharge, all of
                  the obligations, duties and liabilities of Seller arising from
                  and after the Effective Time under all of the Leases sold,
                  assigned, or transferred to Purchaser by Seller pursuant to
                  this Agreement; provided, however, that Purchaser shall not be
                  required to assume liability under the Real Property Lease if
                  the lessor shall fail and refuse to consent to the assignment
                  of such lease to Purchaser;

         (f)      Liabilities under Loan Commitments, etc. Assume and thereafter
                  ---------------------------------------
                  faithfully honor and fully and timely perform and discharge
                  all of the obligations, duties and liabilities of Seller
                  arising from and after the Effective Time under all Loans
                  sold, assigned, or transferred to Purchaser by Seller pursuant
                  to this Agreement, including additional extensions of credit
                  to customers in connection with said Loans;

         (g)      Employee Benefits Liabilities. Assume all liabilities 
                  -----------------------------
                  specifically allocated to Purchaser pursuant to Section 4; and

         (h)      No Other Liabilities. Except to the extent expressly set forth
                  --------------------
                  above, Purchaser shall not assume any other liabilities with
                  respect to the Branch or the operation of Seller's business at
                  the Branch, whether arising prior to the date hereof or
                  between the date hereof and the Effective Time. Liabilities
                  not assumed hereunder, include, without limitation, all
                  claims, debts or liabilities arising out of alleged wrongful,
                  negligent or unlawful acts or out of breach of any contract or
                  duty that occurs prior to the Effective Time, whether such
                  liabilities are to customers, vendors, employees or any other
                  person.

         1.04     Payment of Funds. Subject to the terms and conditions hereof,
                  ----------------
                  at the Closing:

          (a)     Acquisition Consideration. Seller shall make available and
                  ------------------------- 
                  transfer to Purchaser, in the manner specified in Section 6.04
                  hereof, the "Acquisition Consideration" consisting of funds in
                  an amount equal to

                  (i)      the sum of the following:

                           (A)      the amount of the aggregate balance of all
                                    Deposit Liabilities (including interest
                                    posted or accrued to such accounts as of
                                    midnight on the day preceding the Closing
                                    Date) plus
                                          ----

                           (B)      the amount of the Deferred Expenses prorated
                                    as of the Effective Time;

                  (ii) less an amount equal to the sum of the following:
                       ----

                                       6
<PAGE>
 
          (A)  Nine percent (9%) of the "Average Branch Deposits" (as
               hereinafter defined) for the thirty (30) calendar day period
               immediately preceding the Closing Date. The term "Average Branch
                                                                 --------------
               Deposits" shall mean the average of the daily aggregate balance
               --------
               of all Deposit Liabilities (which aggregate balances shall
               include (i) the balances of Referred New Accounts, as that term
               is defined in Section 7.01(m), and (ii) interest posted to such
               accounts as of midnight of each of such thirty (30) days
               preceding the Closing Date but shall exclude interest accrued but
               not posted to such accounts as of midnight of each of such 30
               days) other than (a) those balances represented by certificates
               of deposit or statement savings accounts of $100,000 or more that
               (x) are established after the date hereof, and (y) earn interest
               at a rate otherwise not generally offered or available for
               comparable deposits through Seller's branch system, and (b) the
               average balance of Premium Rate High Rise Savings Accounts to the
               extent such average exceeds Four Million One Hundred Eighty
               Thousand Dollars ($4,180,000). The dollar figure which is the
               product of nine percent (9%) multiplied by the Average Branch
               Deposits in effect for the thirty (30) day period immediately
               preceding the Closing Date is hereinafter called the "Deposit
                                                                     -------
               Premium";
               -------

          (B)  the amount of Cash on Hand transferred to Purchaser as of the
               Effective Time;

          (C)  the sum of $1.00, representing the aggregate amount of the agreed
               values of the Leased Real Estate as set forth on attached
               Schedule F;

          (D)  the aggregate amount of the depreciated book values as of the
               Effective Time of the Owned Personal Property transferred to
               Purchaser;

          (E)  the depreciated book value of all Leasehold Improvements not
               already included in Owned Personal Property;

          (F)  the amount of all Prepaid Expenses, prorated as of the Effective
               Time; and

          (G)  the book value of all Loans, plus accrued and unpaid interest
               thereon computed as of the Effective Time.

In the event that the amount equal to subclause (ii) above exceeds the amount
equal to subclause (i), the full amount of such excess shall constitute an
amount due from Purchaser to Seller and shall be paid to Seller at the Closing
in the manner specified in Section 6.04 hereof.


                                       7
<PAGE>
 
         (b)   Proration of Certain Expenses. All rent and other charges under
               -----------------------------
               the Leases, all Prepaid Expenses (including, without limitation,
               any prepaid FDIC premium with respect to Deposit Accounts), and
               all Deferred Expenses shall be prorated between Purchaser and
               Seller as of the Effective Time; provided, however, that all
               utility payments shall be prorated on the basis of the best
               information available at Closing. All security deposits under the
               Leases shall be credited to Seller. All prorations shall be paid
               on the Closing Date to the party entitled to the benefit of the
               proration; provided, however, that in the event that any
               prorations cannot be reasonably calculated as of the Closing, a
               post-closing adjustment shall be made in the manner specified in
               Section 6.04 hereof.

         1.05  Acquisition. The purchase and acceptance by Purchaser from Seller
               -----------
of such assets and the assumption by Purchaser of such liabilities of Seller
pursuant to the terms and conditions set forth herein is sometimes referred to
herein as the "Acquisition".
               -----------

         1.06  Title to Real Estate.
               --------------------

         (a)   Seller will execute, acknowledge and deliver to Purchaser at the
               Closing an Assignment of its leasehold interests in the Leased
               Real Estate, conveying to Purchaser all of Seller's leasehold
               estate in the Leased Real Estate, free and clear of all liens and
               encumbrances except Permitted Exceptions and except as otherwise
               provided in subsection (b), insurable for the benefit of
               Purchaser at customary rates and on the standard ALTA leasehold
               owner's title insurance policy, in amounts reasonably
               satisfactory to Purchaser. The cost of obtaining any title
               insurance shall be Purchaser's sole responsibility. Seller shall
               also deliver to Purchaser a landlord's consent to the assignment
               of the Real Estate Lease, in form and substance reasonably
               satisfactory to Purchaser and its counsel. Any expense charged by
               landlord for such consent shall be paid by Seller.

          (b)  Seller will deliver to Purchaser copies of any existing title
               commitments or specimen title policies for the leasehold estate
               in the Leased Real Estate.

         1.07  Transfer of Loans Without Recourse. Except as expressly provided
               ----------------------------------
in Section 1.08, all Loans transferred to Purchaser pursuant to this Agreement
shall be transferred without recourse.

         1.08  Document Quality Review and Limited Indemnity.
               ---------------------------------------------  

         Purchaser has conducted due diligence prior to executing this
Agreement. That due diligence was sufficient to satisfy Purchaser that any
Defects described below are not so pervasive as to justify or require
termination of this Agreement. The purpose of this Section 1.08 is to permit
subsequent additional diligence and to provide a procedure to protect the
Purchaser from actual loss arising out of Defects after consummation of the
Acquisition.

         (a)   Quality Review. Within 60 days from the date of this Agreement,
               --------------  
               Purchaser shall

                                       8
<PAGE>
 
               have the right, at reasonable times and upon reasonable notice,
               to review any and all Loan Files and Deposit Account Files, to
               the extent allowed by applicable law, with respect to Defects. If
               applicable law would prohibit the surrender of any document (or a
               portion thereof) that Purchaser might reasonably request for
               purposes of the review described in this section, Seller will
               make the most minimal redactions, copying, or other minimal
               modifications to permit disclosure to Purchaser to the fullest
               extent allowed by applicable law. Seller expressly reserves the
               right to participate with Purchaser in any such review. As used
               herein:

               "Loan Files" means any file or files containing the Note, Loan
               Agreement, disclosures, and any other documents evidencing a Loan
               sold under this Agreement.

               "Deposit Account Files" means all files and records relating to
               Deposit Accounts, including, without limitation, signature cards,
               deposit agreements, IRS custodial or trust agreements, safe
               deposit agreements and other records.

               "Defect" shall mean and refer to one or more of the following
               conditions:

               (i)      Missing Documents. The Loan File or Deposit Account File
                        -----------------
                        contains no original Note, signature card or other
                        document evidencing the debt or account or contains no
                        copy of a loan agreement required by the debt instrument
                        or commitment letter.

               (ii)     Material Documentation Error. The documents contained in
                        ---------------------------- 
                        the Loan File or Deposit Account File demonstrate an
                        error in content that would have a material adverse
                        effect upon the enforceability of debt instruments,
                        guarantees or security instruments or the ability of the
                        Purchaser to determine or enforce its rights and
                        obligations with respect to a Deposit Account (a
                        "material documentation error"). For example, an
                        unsigned note or loan agreement is a material
                        documentation error.

        (b)    Procedure for Cure. Upon discovery of any Defect pursuant to a
               ------------------
               review of one or more Loan Files or Deposit Account Files,
               Purchaser shall give written Notice of Defect to Seller,
               specifying the nature of the Defect and the requested cure. Any
               such Notice of Defect must be delivered within the 60-day period
               specified in the preceding subsection 1.08(a). Seller shall then
               have a period of 60 days after receipt of the Notice of Defect in
               which to cure any such Defect. If Seller fails so to cure, then
               the Loan or Deposit Account in question shall be identified as an
               Indemnified Account ("Indemnified Account") until such time as
                                     -------------------
               the Defect is cured and all Losses (as defined below) have been
               paid.

        (c)    Limited Indemnity. Seller shall indemnify Purchaser and shall
               -----------------
               hold Purchaser harmless from and against any loss including,
               without limitation, loss of loan principal and interest and
               reasonable external collection expense, including


                                       9
<PAGE>
 
               reasonable fees and costs of outside counsel (collectively, a
               "Loss"), to the extent the same is attributable to a Defect in an
                ----
               Indemnified Account.

        1.09   Transfer of Personal Property. Seller shall convey Owned Personal
               -----------------------------
Property to Purchaser by executing and delivering the Bill of Sale and Receipt
set forth in Schedule O attached hereto. Seller shall also use commercially
reasonable efforts to deliver a consent to assignment by any lessor of personal
property deemed material by Purchaser.

2.      OBLIGATIONS OF THE PARTIES PRIOR TO EFFECTIVE TIME
        --------------------------------------------------

        2.01   Covenants of Seller. Seller hereby covenants to Purchaser that,
               -------------------
from the date hereof until the Effective Time, it will do or cause the following
to occur:

        (a)    Operation of Branch. (i) Continue to operate the Branch in a
               ------------------- 
               manner equivalent to that manner and system of operation,
               consistent with its customary practices, (ii) not knowingly
               permit any act or conduct by any of its employees that would
               cause material harm or damage to the reputation of the Branch or
               a material reduction in the existing deposit liabilities of the
               Branch, (iii) not transfer any Branch Employees without the prior
               written consent of Purchaser, and (iv) maintain the Owned
               Personal Property in a condition substantially the same as that
               as of the date of this Agreement, ordinary wear and tear and
               casualty excepted.

        (b)    Information Concerning Branch. Furnish or otherwise provide
               -----------------------------
               Purchaser, its agents or representatives reasonable access to,
               and permit Purchaser to make or cause to be made such reasonable
               investigation of, information and materials relating to the
               financial and physical condition of, and legal questions
               concerning, the Branch as Purchaser reasonably deems necessary or
               advisable; provided, however, that such access and investigation
               shall not interfere unnecessarily with the normal operations of
               the Branch or Seller; provided, further, that nothing in this
               Section 2.01(b) shall be deemed to require Seller to breach any
               statutory obligation of confidentiality.

        (c)    Required Authorizations. Obtain and procure all necessary
               ----------------------- 
               corporate approvals and authorizations required on its part to
               enable it to fully perform all obligations imposed on it
               hereunder which must be performed by it at or prior to the
               Closing.

        (d)    Creation of Liens and Encumbrances. Not voluntarily create any
               ----------------------------------
               liens, imperfections in title, charges, easements, restrictions,
               or encumbrances affecting the Leased Real Estate.

        (e)    Damage, Destruction, or Condemnation of Real Property. In the
               -----------------------------------------------------
               event Seller is notified of any pending or threatened
               condemnation proceeding relating to the Leased Real Estate,
               notify Purchaser thereof and Seller and Purchaser shall cooperate
               in responding to any such proceeding so as not to prejudice the
               rights of Purchaser and Seller to recover in such proceedings.


                                      10
<PAGE>
 
        (f)    Preservation of Lease. Preserve in good standing and in full
               ---------------------
               force and effect the Real Property Lease.

        2.02   Covenants of Purchaser. Purchaser hereby covenants to Seller
               ----------------------
that, from the date hereof until the Effective Time, it will do or cause the
following to occur:

        (a)    Certain Applications. As soon as reasonably possible, but not
               -------------------- 
               later than thirty (30) business days after the date of this
               Agreement, Purchaser shall prepare and submit for filing the
               appropriate applications (including draft applications) to all
               appropriate regulatory agencies required on the part of Purchaser
               for the Acquisition to be consummated at the Closing as
               contemplated in Section 6.01 herein. Thereafter, Purchaser shall
               use its best efforts to pursue such applications diligently and
               on a priority basis, and shall promptly file such supplements,
               amendments, and additional information in connection therewith as
               may be necessary for the Acquisition to be consummated at such
               Closing. Purchaser shall deliver to Seller a copy of such
               applications, and any supplement, amendment, or item of
               additional information in connection therewith, not later than
               three (3) days after the date it is filed with the appropriate
               regulatory agencies. Seller shall execute and join in any
               application which requires Seller's participation unless Seller
               believes that the information provided therein is false or
               misleading.

        (b)    Required Authorizations. Purchaser shall obtain and procure all
               -----------------------
               necessary corporate approvals and authorizations required on its
               part to enable it to fully perform all obligations imposed on it
               hereunder which must be performed by it at or prior to the
               Closing.

        2.03   Covenants of All Parties. Seller hereby covenants to Purchaser,
               ------------------------
and Purchaser hereby covenants to Seller, that, from the date hereof until the
Closing, such party shall cooperate fully with the other party in obtaining any
consents, approvals, permits, or authorizations which are required to be
obtained pursuant to any federal or state law, or any federal or state
regulation thereunder, for or in connection with the transactions described in
and contemplated by this Agreement.

3.      REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
        ------------------------------------------------------

        3.01   Representations and Warranties of Seller. Seller represents and
               ----------------------------------------
warrants to Purchaser as follows:

        (a)    Good Standing and Power of Seller. Seller is, and shall remain
               ---------------------------------
               through the Effective Time, a bank duly organized, and validly
               existing under the laws of the State of Maine with corporate
               power to own its properties and assets and to carry on its
               business as presently conducted. Seller is, and shall remain
               through the Effective Time, an insured bank, as defined in the
               FDIA and applicable regulations thereunder.


                                      11
<PAGE>
 
        (b)    Authorization of Agreement. The execution and delivery of this
               --------------------------
               Agreement, and the transactions contemplated hereby, have been
               duly authorized by all necessary corporate action on the part of
               Seller, and this Agreement is the valid and binding obligation of
               Seller.

        (c)    Effective Agreement. Subject to the receipt of any and all
               -------------------
               necessary regulatory approvals and required consents, neither the
               execution, delivery, and performance of this Agreement by Seller
               nor the consummation of the transactions contemplated hereby,
               shall (i) conflict with, result in the breach of, constitute a
               violation or default, result in the acceleration of payment or
               other obligations of Seller, or (ii) create a lien, charge, or
               encumbrance, under any of the provisions of the Articles of
               Incorporation or By-Laws of Seller, under any judgment, decree,
               or order, under any law, rule, or regulation of any government or
               agency thereof, or under any material contract, material
               agreement, or material instrument to which Seller is subject,
               where such conflict, breach, violation, default, acceleration, or
               lien would have a material adverse effect on the Assets or
               Seller's ability to perform its obligations hereunder.

        (d)    Title to Assets. Except for Leased Real Estate, Seller is the
               ---------------
               sole owner of each of the Assets free and clear of any mortgage,
               lien, encumbrance, or restriction of any kind or nature.

        (e)    Zoning Violations. As of the date of this Agreement, Seller has
               -----------------
               not received any notice of violation of any applicable zoning or
               environmental regulation, ordinance, or other law, order,
               regulation or requirement relating to the Leased Real Estate.

        (f)    Condemnation Proceedings. Seller has received no written notice
               ------------------------
               of any pending or threatened condemnation proceedings affecting
               or relating to the Branch.

        (g)    No Broker. No broker or finder, or other party or agent
               ---------
               performing similar functions, has been retained by Seller or is
               entitled to be paid based upon any agreements, arrangements, or
               understandings made by Seller in connection with the transactions
               contemplated hereby, and no brokerage fee or other commission has
               been agreed to be paid by Seller on account of the transactions
               contemplated hereby.

        (h)    Loans. To Seller's knowledge: (i) the Loans are evidenced by a
               -----
               note or loan agreement that is the valid and binding obligation
               of all borrowers named therein; (ii) all loans were made in
               compliance with, and have been serviced in compliance with, all
               applicable laws; and (iii) there are no acts, omissions or
               conditions that would give rise to any claim or right to
               rescission, set-off, counterclaim or defense with respect to any
               Loan. There are no oral modifications or amendments or additional
               agreements related to the Loans that are not reflected in the
               records of the Branch.


                                      12
<PAGE>
 
        (i)    Deposit Accounts. The Deposit Accounts are each evidenced by a
               ----------------
               deposit account agreement or IRA agreement that to Seller's
               knowledge is valid, binding and enforceable in accordance with
               its terms. Each Deposit Account was established, maintained and
               serviced in conformity with all applicable laws and regulations.

        (j)    Real Estate Lease. The Real Estate Lease is in full force and
               -----------------
               effect; Seller is not in default thereunder, nor does any
               condition exist which, with the passage of time or the giving of
               notice (or both) would constitute a default by Seller thereunder.
               Schedule F contains a true and correct copy of the Real Estate
               Lease and all amendments and waivers thereto.

        (k)    Claims. There are no claims, suits, proceedings or other
               ------
               litigation ("Claims") pending or, to Seller's knowledge,
               threatened against Seller or any of the Assets, except those
               Claims which, if adversely determined, would not have a material
               adverse effect upon the ability of Seller or Purchaser to conduct
               banking business at the Branch.

        (l)    Labor Matters. Except as set forth on Schedule Q, there are no
               -------------
               pending or threatened claims or complaints by any Branch
               Employees relating to labor, employment or discrimination matters
               (including, without limitation, wage/hour complaints, complaints
               to the Maine Human Rights Commission, and complaints to the
               National Labor Relations Board).

        3.02   Representations and Warranties of Purchaser. Purchaser represents
               ------------------------------------------- 
and warrants to Seller as follows:

        (a)    Good Standing and Power of Purchaser. Purchaser is, and shall
               ------------------------------------
               remain through the Effective Time, a mutual savings bank duly
               organized, validly existing, and in good standing under the laws
               of the State of Maine with corporate power to own its properties
               and to carry on its business as presently conducted. Purchaser
               is, and shall remain through the Effective Time, an insured bank,
               as defined in the FDIA and applicable regulations thereunder.

        (b)    Authorization of Agreement. The execution and delivery of this
               --------------------------
               Agreement, and the transactions contemplated hereby, have been
               duly authorized by all necessary corporate action on the part of
               Purchaser, and this Agreement is a valid and binding obligation
               of Purchaser.

        (c)    Effective Agreement. Subject to the receipt of any and all
               -------------------
               necessary regulatory approvals and required consents, from all
               appropriate regulatory agencies, and such approvals becoming
               final and effective, the execution, delivery, and performance of
               this Agreement by Purchaser, and the consummation of the
               transactions contemplated hereby, will not conflict with, result
               in the breach of, constitute a violation or default, result in
               the acceleration of payment or other obligations, or create a
               lien, charge, or encumbrance, under any of the provisions of the
               Articles of Incorporation and Bylaws of Purchaser.


                                      13
<PAGE>
 
        (d)    Capital. Purchaser will have on the Closing Date capital and cash
               -------
               sufficient to fulfill its obligations hereunder.

        (e)    No Broker. No broker or finder, or other party or agent
               ---------
               performing similar functions, has been retained by Purchaser or
               is entitled to be paid based upon any agreements, arrangements,
               or understandings made by Purchaser in connection with the
               transactions contemplated hereby, and no brokerage fee or other
               commission has been agreed to be paid by Purchaser on account of
               the transactions contemplated hereby.

        3.03   Survival of Covenants, Representations and Warranties. The
               -----------------------------------------------------
respective covenants, representations, and warranties of Seller and Purchaser
contained or referred to in this Agreement or in any certificate, schedule, or
other instrument delivered or to be delivered pursuant to this Agreement shall
survive the Closing. Except as otherwise specifically provided in this
Agreement, any claim for breach of these covenants, representations and
warranties must be brought within 18 months after the Closing Date.

4.      WARRANTIES, REPRESENTATIONS AND ACTIONS RESPECTING EMPLOYEES AND PENSION
        ------------------------------------------------------------------------
        AND EMPLOYEE BENEFIT PLANS.
        --------------------------

        4.01   List of Branch Employees. Seller has provided Purchaser with a
               ------------------------
list of the names of certain officers and employees (including full and
part-time employees) assigned to, and actively employed at, the Branch as of the
date hereof ("Branch Employees"). The description of the positions held by
              ----------------
Branch Employees is attached as Schedule A. An updated list of Branch Employees
as of the Effective Time will be provided to Purchaser not later than the
Closing Date.

        4.02   Actions to be Taken by Purchaser. Purchaser covenants to Seller 
               --------------------------------
that it will do or cause the following to occur:

        (a)    Branch Employees. Purchaser shall offer to hire, as of the
               ----------------
               Effective Time, all Branch Employees. Purchaser shall offer to
               hire such Branch Employees in positions and responsibilities, and
               at salaries and with benefits, comparable to those held by such
               Employees as of the Effective Time. Purchaser shall cause all
               Branch Employees who accept employment with Purchaser as of the
               Effective Time to be eligible to participate in the "employee
               welfare benefit plans" and "employee pension plans" (within the
               meaning of Section 3(1) and Section 3(2) of ERISA, respectively)
               of Purchaser in which similarly situated employees of Purchaser
               are generally eligible to participate, provided that (1) nothing
               herein shall prevent Purchaser from modifying or terminating such
               plans from time to time, and (2) all Branch Employees who accept
               employment with Purchaser and their dependents shall be covered
               as of the Effective Time (and shall not be excluded from coverage
               on account of any pre-existing condition) under any such plan
               that is a group health plan of Purchaser subject to Part 6 of
               Title I of ERISA. For purposes of any length of service
               requirements, waiting periods, vesting periods or differential
               benefits based on length of service in any such plan for which a
               Branch Employee 


                                      14
<PAGE>
 
               may be eligible after the Effective Time, Purchaser shall ensure
               that service by such Branch Employee with Seller shall be deemed
               to have been service with Purchaser; provided however, that any
                                                    ----------------
               Branch Employee hired by Purchaser shall not receive credit for
               such employee's years of service with Seller for purposes of
               determining the employee's accrued benefit under Purchaser's
               defined benefit pension plan.

        4.03   Actions to be Taken by Seller. Seller shall do or cause the
               -----------------------------
               following to occur:

        (a)    Branch Employees. Without Purchaser's prior written consent
               ----------------
               (which consent shall not unreasonably be withheld) Seller shall
               not (i) terminate any Branch Employee as of the date hereof,
               unless such person is dismissed "for cause" and written notice of
               such dismissal is provided to Purchaser, (ii) transfer or assign
               Branch Employees as of the date hereof to another branch of the
               Seller or assign a part-time Branch Employee to a position of
               permanent employment, or (iii) increase the compensation of
               Branch Employees as of the date hereof, other than to reflect
               normal compensation increases in amount and frequency consistent
               with the past practice of the Seller. From the date of this
               Agreement until twelve (12) months following the Effective Time,
               Seller will not solicit for hire any Branch Employees, provided,
               however, that this provision shall not preclude Seller from
               hiring any Branch Employees who, without direct inducement from
               Seller, elect not to become or remain employed by Purchaser.

        (b)    Coverage Under Seller's Benefit Plans Before and After the
               ----------------------------------------------------------
               Effective Time. While employed by Seller prior to the Effective
               --------------
               Time, Seller shall continue to provide the Branch Employees with
               those employee benefits that Seller generally makes available to
               its employees. Each Branch Employee who becomes employed by
               Purchaser as of the Effective Time shall cease to be employed by
               Seller at that time and shall be entitled to receive only those
               post-employment benefits, if any, which Seller's benefit plans
               generally make available to terminated employees.

        (c)    Seller's Pension Plan. Seller states that it formerly sponsored a
               ---------------------
               defined benefit pension plan which has been terminated and that
               all accrued benefits have been distributed to participants of the
               pension plan. Seller warrants that Purchaser shall have no
               funding or successor liability with respect to the terminated
               pension plan.

        4.04   Cooperation by Seller and Purchaser. After the Closing, Seller
               -----------------------------------
and Purchaser each will cooperate with the other in providing reasonable access
to all information required for the operation of, or the preparation and
submission of reports or notices required in connection with the operation of
the retirement plans and any other employee benefit programs maintained by
Seller or Purchaser which cover any of the Branch Employees, including without
limitation the preparation and submission of reports or notices to the Pension
Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue
Service, or any other governmental entity.


                                      15
<PAGE>
 
5.      CONDITIONS PRECEDENT TO CLOSING.
        ------------------------------- 

        5.01   Conditions to Seller's Obligations. The obligations of Seller to
               ----------------------------------
consummate the Acquisition are subject to the satisfaction, or the waiver by
Seller to the extent permitted by applicable law, of each of the following
conditions at or prior to the Closing:

        (a)    Prior Regulatory Approval of the Acquisition. All filings and
               --------------------------------------------
               registrations with, and notifications to, all federal and state
               authorities required for consummation of the Acquisition and
               Purchaser's operation of the Branch shall have been made, all
               approvals and authorizations of all federal and state authorities
               required for consummation of the Acquisition and Purchaser's
               operation of the Branch shall have been received and shall be in
               full force and effect, and all applicable waiting periods shall
               have passed. The United States Department of Justice shall not
               have objected to the consummation of the Acquisition, unless such
               objection shall have been withdrawn or a United States District
               Court shall have approved consummation of the Acquisition
               notwithstanding the objection of the Department of Justice.

        (b)    Corporate Action. The Board of Directors of Purchaser shall have
               ----------------
               taken all corporate action necessary by it to effectuate this
               Agreement and the Acquisition, and Purchaser shall have furnished
               Seller with a certified copy of each such resolution adopted by
               the Board of Directors of Purchaser evidencing the same.

        (c)    Representations and Warranties. The representations and
               ------------------------------
               warranties of Purchaser set forth in this Agreement shall be true
               and correct in all material respects at and as of the Effective
               Time with the same effect as though all such representations and
               warranties had been made on and as of such time (unless a
               different date is specifically indicated in such representations
               and warranties), and Purchaser shall have delivered to Seller a
               certificate in the form of attached Schedule I to that effect,
               dated as of the Closing Date.

        (d)    Covenants. Each and all of the covenants and agreements of
               ---------
               Purchaser to be performed or complied with at or prior to Closing
               pursuant to this Agreement shall have been duly performed or
               complied with in all material respects by Purchaser, or waived by
               Seller, and Purchaser shall have delivered to Seller a
               certificate in the form of attached Schedule I to that effect,
               dated as of the Closing Date.

        (e)    Opinion of Counsel. Purchaser shall have delivered to Seller an
               ------------------
               opinion of counsel substantially in the form of attached Schedule
               J, dated as of the Closing Date.

        5.02   Conditions to Purchaser's Obligations. The obligation of
               ------------------------------------- 
Purchaser to consummate the Acquisition are subject to the satisfaction, or the
waiver by Purchaser to the extent permitted by applicable law, of each of the
following conditions at or prior to the Closing:


                                      16
<PAGE>
 
        (a)    Prior Regulatory Approval. All filings and registrations with,
               -------------------------
               and notifications to, all federal and state authorities required
               for consummation of the Acquisition and Purchaser's operation of
               the Branch shall have been made, all approvals and authorizations
               of all federal and state authorities required for consummation of
               the Acquisition and Purchaser's operation of the Branch shall
               have been received and shall be in full force and effect, and all
               applicable waiting periods shall have passed. The United States
               Department of Justice shall not have objected to the consummation
               of the Acquisition, unless such objection shall have been
               withdrawn or a United States District Court shall have approved
               consummation of the Acquisition notwithstanding the objection of
               the Department of Justice.

        (b)    Corporate Action. The Board of Directors of Seller shall have
               ----------------
               taken all corporate action necessary by it to approve and
               effectuate this Agreement and the Acquisition and Seller shall
               have delivered to Purchaser a certificate in the form of attached
               Schedule K to that effect, dated as of the Closing Date. Upon
               approval by Seller's board of directors, this Agreement shall
               constitute an official record of the Seller and shall be
               maintained as such as a permanent record of the Seller.

        (c)    Representations and Warranties. The representations and
               ------------------------------
               warranties of Seller set forth in this Agreement shall be true
               and correct in all material respects as of the Effective Time
               with the same effect as though all such representations and
               warranties had been made on and as of such date (unless a
               different date is specifically indicated in such representations
               and warranties), and Seller shall have delivered to Purchaser a
               certificate in the form of attached Schedule K to that effect,
               dated as of the Closing Date.

        (d)    Covenants. Each and all of the covenants and agreements of Seller
               ---------
               to be performed or complied with pursuant to this Agreement shall
               have been duly performed or complied with in all material
               respects by Seller, or waived by Purchaser, and Seller shall have
               delivered to Purchaser a certificate in the form of attached
               Schedule K to that effect, dated as of the Closing Date.

        (e)    Opinion of Counsel. Seller shall have delivered to Purchaser an
               ------------------
               opinion of Bernstein, Shur, Sawyer & Nelson, P.A., substantially
               in the form of attached Schedule L, dated as of the Closing Date.

        (f)    Lessor Consent. The lessor of the Leased Real Estate shall have
               --------------
               given such lessor's written consent to the assignment to and
               assumption by Purchaser of the Real Estate Lease, without charge
               or cost to Purchaser, and, if such is not already of record as of
               the date hereof, shall have executed a recordable memorandum of
               the Real Estate Lease.

        (g)    Mortgage Arrangements. Any mortgagee of the Leased Real Estate
               ---------------------
               shall have entered an agreement with Purchaser of the type
               described in Section 21 of the Real Estate Lease.


                                      17
<PAGE>
 
        (h)    The Lessor of the Leased Real Estate shall have amended the Real
               Estate Lease to add a description of the Leased Real Estate that
               is reasonably acceptable to Purchaser and substantially in the
               form of Schedule R, Description of Leased Property, as Exhibit A
               to the Real Estate Lease.

        5.03   Non-Satisfaction of Conditions Precedent. The non-occurrence or
               ----------------------------------------
delay of the Closing of the Acquisition by reason of the failure of timely
satisfaction of all conditions precedent to the obligations of any party hereto
to consummate the Acquisition shall in no way relieve such party of any
liability to the other party hereto, nor be deemed a release or waiver of any
claims the other party hereto may have against such party, if and to the extent
the failure of timely satisfaction of such conditions precedent is attributable
to the actions or inaction of such party. In the event all conditions precedent
to Closing have not been either satisfied or waived by July 1, 1999, either
party may terminate this Agreement by written notice to the other, as more fully
set forth in Section 10.

6.      CLOSING.
        -------

        6.01   Closing and Closing Date. Subject to receipt of regulatory
               ------------------------ 
approvals and satisfaction of closing conditions, the Acquisition contemplated
by this Agreement shall occur at a Closing to be held at 9:00 A.M. on May 14,
1999 in the offices of counsel to Purchaser, located at One Monument Square,
Portland, Maine. If either a necessary regulatory approval has not been obtained
or there is a failure of any condition precedent to this Agreement, Closing
shall occur at such other location at 9:00 A.M. on such Friday subsequent to May
14, 1999 as Purchaser may select (as soon as possible after said date), and to
which Seller shall agree (unless it is not reasonably possible for Seller to
close at such time or place). If the Closing occurs other than on May 14, 1999,
because of a failure to obtain necessary regulatory approval or failure of a
condition precedent, Purchaser shall give Seller reasonable prior written notice
of the date it proposes for the Closing to occur. Notwithstanding any provision
to the contrary in this Agreement, in the event that the Closing does not occur
on May 14, 1999 because of the fault of Purchaser, the Purchase Price shall be
equal to the greater of (i) the Purchase Price calculated as of May 14, 1999,
and (ii) the Purchase Price calculated as of the actual Closing Date. The date
on which the Closing occurs is referred to in this Agreement as the "Closing
                                                                     ------- 
Date". The "Effective Time" of this Agreement for purposes of making
----        --------------
calculations and other purposes specifically referred to in this Agreement shall
be as of the close of business at the Branch on the Closing Date, provided that
if the actions referred to in Sections 6.02 and 6.03 have not been completed by
12:00 midnight on the Closing Date, the Effective Time shall be deemed not to
have occurred and the parties will establish a Closing Date for a Friday that
Purchaser shall select and to which Seller shall agree (unless it is not
reasonably possible for Seller to close at such time). The Closing shall be
deemed to have been consummated and final as of the Effective Time. Except as
otherwise provided in this Agreement, all risks of loss shall pass from Seller
to Purchaser as of the Effective Time. All actions taken and documents delivered
at the Closing will be deemed to have been taken and executed simultaneously,
and no action will be deemed taken nor any document deemed delivered until all
have been taken and delivered.

        6.02   Seller's Actions at Closing. At the Closing (unless another time
               ---------------------------
is specifically stated), Seller shall:


                                      18
<PAGE>
 
               (a)  execute, acknowledge (if required pursuant to applicable
                    law), and deliver to Purchaser, dated the Closing Date:

                    (i)   The Certificate of Seller in the form of attached
                          Schedule K;

                    (ii)  The Opinion of Counsel for Seller in the form of
                          attached Schedule L;

                    (iii) An Instrument of Assumption of IRA's in the form of
                          attached Schedule N;

                    (iv)  The Bill of Sale and Receipt in the form of attached
                          Schedule O;

                    (v)   A Lease Assignment and Assumption Agreement in the
                          form of attached Schedule P with respect to the Real
                          Property Lease;

                    (vi)  All other documents required to be delivered to
                          Purchaser by Seller at the Closing pursuant to the
                          terms of this Agreement, and any other documents which
                          Purchaser has furnished to Seller not later than ten
                          (10) business days prior to the Closing that are
                          necessary or reasonably advisable to consummate the
                          transactions contemplated by this Agreement.

               (b)  make available to Purchaser at the Branch the following:

                    (i)   Such of the Assets as shall be capable of physical
                          delivery;

                    (ii)  The originals or best available copies of files,
                          records, and documents (in whatever form or medium
                          then maintained by Seller) pertaining to the Assets
                          and the Deposit Liabilities, Loans and Safety Deposit
                          Business;

                    (iii) The contents of all safety deposit boxes maintained at
                          the Branch as of the Effective Time;

                    (iv)  All safety deposit box lease agreements and other
                          documents pertaining to the safety deposit business of
                          the Branch as of the Effective Time;

                    (v)   All safekeeping agreements, receipts, and other
                          documents pertaining to all safekeeping items held by
                          the Branch for its customers as of the Effective Time;
                          and

                    (vi)  All safekeeping items held by the Branch for its
                          customers as of the Effective Time, subject to the
                          provisions of the applicable agreements, receipts, and
                          other documents pertaining thereto;

               (c)  deliver to Purchaser any funds required to be paid by Seller
                    to Purchaser at the Closing pursuant to the terms of this
                    Agreement.


                                      19
<PAGE>
 
        6.03   Purchaser's Actions at Closing. 
               ------------------------------

        (a)    At the Closing (unless another time is specifically stated),
               Purchaser shall execute, acknowledge (if required pursuant to
               applicable law) and deliver to Seller:

               (i)   Certificate of Purchaser in the form of attached 
                     Schedule I;

               (ii)  The Opinion of Counsel for Purchaser in the form of
                     attached Schedule J;

               (iii) The Instrument of Assumption in the form of attached
                     Schedule M;

               (iv)  The Instrument of Assumption of IRAs in the form of
                     attached Schedule N;

               (v)   The Bill of Sale and Receipt in the form of attached
                     Schedule O;

               (vi)  Lease Assignment and Assumption Agreement in the form of
                     attached Schedule P with respect to the Real Property
                     Lease; and

               (vii) All other documents required to be delivered to Seller by
                     Purchaser at the Closing pursuant to the terms of this
                     Agreement and any other documents which Seller has
                     furnished to Purchaser not later than ten (10) business
                     days prior to the Closing that are necessary or reasonably
                     advisable to consummate the transactions contemplated by
                     this Agreement.

        (b)    deliver to Seller any funds required to be paid by Purchaser to
               Seller at the Closing pursuant to the terms of this Agreement.


        6.04   Methods of Payment. Subject to the adjustment procedures set
               ------------------
forth in this Section 6.04, the transfer of the funds, if any, due to Purchaser
or to Seller, as the case may be, as set forth pursuant to the terms of Section
1.04 hereof, shall be made on the Closing Date in immediately available United
States Federal Funds. At least two (2) business days prior to the Closing,
Seller and Purchaser shall provide written notice to one another indicating the
account and bank to which such funds shall be wire transferred. In order to
facilitate the Closing, the parties agree: (i) that the amount of funds
transferred on the Closing Date pursuant to Section 1.04 hereof shall be
computed based upon (a) the Acquisition Consideration amount calculated as
specified in Section 1.04(a), (b) the book value plus accrued interest of the
Loans as of midnight on the day immediately preceding the Closing Date, (c) Cash
on Hand at the Branch as of midnight on the day immediately preceding the
Closing Date, and (d) the aggregate balance of all Deposit Liabilities
(including interest posted or accrued to such accounts) as of midnight on the
day immediately preceding the Closing Date; and (ii) that within ten (10)
business days after the Closing Date the parties shall make appropriate post-
closing adjustments, consistent with the provisions of Section 1.04 hereof,
based upon the actual Deposit Premium and the actual Deposit Liabilities, Loans
and Cash on Hand based on all transactions which took place up to the Effective
Time but which were not reflected as of midnight on the day immediately
preceding the Closing Date. In addition, prorations of Prepaid Expenses and
Deferred Expenses that cannot be

                                      20
<PAGE>
 
reasonably calculated at the Closing shall be settled and paid based on actual
figures as soon as possible after the Closing.

    6.05 Availability of Closing Documents. The documents proposed to be used
         ---------------------------------
and delivered at the Closing shall be made available for examination by the
respective parties not later than 12:00 noon, Portland, Maine time, on the third
business day prior to the Closing Date.

    6.06 Effectiveness of Closing. Upon the satisfactory completion of such
         ------------------------ 
Closing, the Acquisition shall be deemed to be effective, and the Closing shall
be deemed to have occurred as of the Effective Time.

7.  CERTAIN TRANSITIONAL MATTERS.
    ----------------------------     

    7.01 Transitional Action by Purchaser. Prior to and after the Effective Time
         --------------------------------
    unless otherwise indicated:

    (a)  Payment of Deposit Liabilities.  After the Effective Time, Purchaser
         ------------------------------                                      
         will: (1) pay in accordance with the law and customary banking
         practices and contractual terms all properly drawn and presented
         checks, negotiable orders of withdrawal, drafts, debits, and other
         withdrawal orders presented to Purchaser by mail, over the counter,
         through electronic media, or through the check clearing system of the
         banking industry, by Deposit Accounts customers, whether drawn on
         checks, negotiable orders of withdrawal, drafts, or other withdrawal
         order forms provided by Seller or by Purchaser; (ii) in all other
         respects discharge, in the usual course of the banking business, the
         duties and obligations of Seller with respect to the balances due and
         owing to the Deposit Accounts customers; provided, however, that
         Purchaser's obligations pursuant to this Section 7.01 to honor checks,
         negotiable orders of withdrawal drafts, and other withdrawal orders on
         forms provided by Seller and carrying its imprint (including its name
         and transit routing number) shall not apply to any such check,
         negotiable order of withdrawal, draft, or other withdrawal order
         presented to Purchaser more than ninety (90) days following the
         Closing Date.

    (b)  Demand for Termination of Deposit Liabilities.  Purchaser hereby
         ----------------------------------------------                  
         acknowledges that if, after the Effective Time, any Deposit Accounts
         customers, instead of accepting the obligation of Purchaser to pay the
         Deposit Liabilities (including accrued interest thereon) assumed
         hereunder, shall demand payment from Seller for all or any part of any
         such Deposit Liabilities (including accrued interest thereon), Seller
         shall not be liable or responsible for making such payment.

    (c)  Checks, etc. Presented to Purchaser.   If any Deposit Accounts
         -----------------------------------                           
         customer draws a check, draft, or withdrawal order against the Deposit
         Liabilities which is presented or delivered to Seller not later than
         ninety (90) days after the Closing, Seller shall promptly batch all
         such checks, drafts or withdrawal orders and to deliver the same to
         Purchaser daily.  In the event Seller should pay any properly payable
         check, draft, or withdrawal order, Purchaser shall immediately, upon
         demand by Seller, 



                                      21
<PAGE>
 
         reimburse Seller for such payment or charge. Seller shall be chargeable
         with the warranties and representations implied by law with respect to
         any such check, draft, or withdrawal order which may be paid by Seller
         over the counter.

         During the first sixty (60) days after the Effective Time, there shall
         be a daily settlement by wire transfer of amounts of checks, drafts,
         withdrawal orders or return items that Seller has paid on that day in
         accordance with Schedule S. Seller shall send to Purchaser an
         electronic summary of all such items it has paid and shall deliver such
         checks, drafts, or withdrawal orders as soon as possible on the day
         received by Seller, as more fully set forth in Schedule S.

    (d)  Delivery of Purchaser's Check Forms.  In order to reduce the
         ------------------------------------                        
         continuing charges to Seller through the check clearing system of the
         banking industry which would result from check forms of Seller being
         used after the Effective Time by the Deposit Accounts customers,
         Purchaser shall, on or before the Effective Time, at its cost and
         expense, and without charge to Seller or such customers, notify all
         such customers by letter, in a form reasonably acceptable to Seller,
         of Purchaser's assumption of Deposit Liabilities (which shall include
         a notification to those Deposit Accounts customers whose accounts are
         then covered by any type of overdraft protection offered by Seller)
         that from and after the Effective Time all such overdraft protection
         from Seller shall terminate and shall be assumed by Purchaser and
         furnish each Deposit Accounts customer with checks using the forms of
         Purchaser and with instructions to the customer to utilize such checks
         on Purchaser's forms on and after the Effective Time and thereafter to
         destroy any unused checks on Seller's forms; such notice and such
         delivery of checks by Purchaser shall be by first class U.S. mail.

    (e)  Uncollected Checks Returned to Seller. Adjustment of Acquisition
         ---------------------------------------------------------------- 
         Payments 
         --------  
         Purchaser shall promptly pay to Seller an amount equivalent to
         the amount of any checks, negotiable orders of withdrawal, drafts, or
         any other withdrawal orders (net of the applicable Deposit Premium paid
         by Purchaser with respect to the Deposit Liabilities represented by any
         such instrument) credited as of the Effective Time to any Deposit
         Accounts which are returned uncollected to Seller after the Effective
         Time and which shall include an amount equivalent to holds placed upon
         such Deposit Accounts for items cashed by Seller (net of the applicable
         Deposit Premium paid by Purchaser with respect to the Deposit
         Liabilities represented by any such instrument) as of the Effective
         Time which items are subsequently dishonored; provided, however, that
         if Seller shall have failed to make or properly reflect in the
         information provided to Purchaser any provisional credit or hold on any
         such Deposit Accounts in respect of uncollected funds represented by
         any such item, Purchaser's obligations under this subsection (d) in
         respect of such item shall be limited to the amount of collected funds
         in such Deposit Accounts.



                                      22
<PAGE>
 
    (f)  Default in Loan Payments to Seller.  If the balance due on any Loan
         -----------------------------------                                
         has been reduced by Seller as a result of a payment by check or draft
         received prior to the Effective Time, which item is returned to Seller
         after the Effective Time, the asset value represented by the Loan
         shall be correspondingly increased and an amount in cash equal to such
         increase shall be promptly paid by Purchaser to Seller.

    (g)  Notices to Obligors on Loans.  Purchaser shall, as soon as practicable
         ----------------------------                                          
         after the Effective Time, prepare and transmit at Purchaser's expense
         to each obligor on each Loan a notice to the effect that the Loan has
         been transferred and directing that payments be made to Purchaser at
         any address of Purchaser specified by Purchaser, with Purchaser's name
         as payee on any checks or other instruments used to make such
         payments.

    (h)  Data Processing.  All tasks and obligations concerning the provision
         ----------------                                                    
         of data processing services to or for the Branch after the Effective
         Time, are the sole and exclusive responsibility of, and shall be
         performed solely and exclusively by, the Purchaser.  Seller agrees to
         provide reasonable access to its data processing system and its
         information systems personnel to permit Purchaser and its data
         processing contractor to plan for conversion of all Deposit Accounts
         to Purchaser's data processing system by the opening of business on
         the business day following the Effective Time.  Seller shall deliver
         electronic records of all Deposit Accounts and Loans in a medium
         specified by Purchaser on the Closing Date.

    (i)  New ATM Cards.  Purchaser shall, prior to the Thursday before the
         --------------                                                   
         Closing, furnish ATM cards to Deposit Accounts customers to replace
         Seller's ATM cards.  Purchaser shall notify affected customers to
         destroy the old ATM cards and shall notify customers of standard
         withdrawal limits for the weekend that immediately follows the Closing
         Date.

    (j)  Security for Public Deposits.  Purchaser shall, not later than the
         -----------------------------                                     
         Effective Time, supply suitable government-backed securities as
         security for any deposits of governmental units included among the
         Deposit Liabilities for which Seller had provided similar security.

    (k)  Insurance.  Purchaser shall be responsible for all insurance
         ---------                                                   
         protection for the Branch, including but not limited to premises and
         activities conducted thereon from and after the Effective Time.

    (l)  Removal of Excluded Assets.  From and after the Effective Time,
         --------------------------                                     
         Purchaser will cooperate with and permit Seller, at Seller's option
         and expense and at no expense to Purchaser, to remove any assets from
         the Branch not included in the Acquisition ("Excluded Assets");
                                                       ---------------   
         provided, however, that Seller shall arrange for the removal of such
         Excluded Assets as soon as possible at such times and in a manner that
         does not significantly interfere with the normal business activities
         and operations of Purchaser at the Branch. Purchaser shall not be
         liable for any loss or damage to 


                                      23
<PAGE>
 
          any such Excluded Assets prior to their removal from the Branch unless
          such loss or damage results from Purchaser's negligence.

     (m)  Referred New Accounts.  Beginning on the Monday prior to the Closing
          ---------------------                                               
          Date, and ending at the Effective Time, Seller shall allow, and
          Purchaser shall place, a Customer Service Representative at the Branch
          to open all new deposit accounts as accounts of Purchaser ("Referred
                                                                      --------
          New Accounts"). Purchaser shall keep records of Referred New Accounts
          ------------                                                         
          and shall provide a summary of such records to Seller at Closing, and
          the balances of Referred New Accounts will be included in the
          computation of Average Branch Deposits and the Deposit Premium as
          provided in Section 1.04(a).

     7.02 Transitional Action by Seller.  Prior to and after the Closing, unless
          -----------------------------                                       
otherwise indicated:
 
     (a)  Training of Branch Employees by Purchaser.  Prior to the Effective
          ------------------------------------------                        
          Time, Seller shall cooperate with Purchaser, at Purchaser's expense
          and at no expense to Seller, in making Branch Employees available at
          reasonable times for whatever program of training Purchaser deems
          advisable; provided, however, that Purchaser shall conduct such
          training program in a manner that does not materially interfere with
          or prevent the performance of the normal duties and activities of such
          Branch Employees.

     (b)  Installation of Equipment by Purchaser.  During the period following
          ---------------------------------------                             
          receipt of all necessary regulatory approvals for the Acquisition
          until the Closing Date, but at least twenty-five (25) days prior to
          the Closing Date, Seller shall cooperate with and permit Purchaser, at
          Purchaser's option and expense and at no expense to Seller, to make
          provision for the installation of teller equipment in the Branch;
          provided, however, that Purchaser shall arrange for the installation
          of such equipment at such times and in a manner that does not
          materially interfere with the normal business activities and operation
          of Seller or the Branch.

     (c)  IRA Documentation.  Seller shall cooperate with Purchaser in securing
          ------------------                                                   
          proper documentation of change in custodian and/or trustee for any IRA
          account which is included in the Deposit Liabilities of the Branch. In
          addition, the parties shall cooperate in sending appropriate and
          timely notification of such change to affected customers.

     (d)  Statements to Deposit Account Customers.  At Seller's cost, Seller
          ----------------------------------------                          
          shall issue, as of the Effective Time, standard account statements for
          each statement savings, NOW, and checking account included in the
          Deposit Liabilities and a short-cycle statement for each Loan account.
          Passbook transaction information that has not been posted to a
          passbook as of the Effective Time will be passed by Seller to
          Purchaser via paper report listings or magnetic tape.  Purchaser shall
          be responsible for posting on passbooks the transactions reflected on
          such paper report listings or magnetic tape for passbook accounts.


                                      24
<PAGE>
 
     (e)  Notices to Deposit Account and Loan Customers.  Subsequent to the
          ----------------------------------------------                   
          procurement of all appropriate regulatory approvals for the
          Acquisition, and at its sole cost and expense, Seller shall notify its
          Deposit Account customers by letter in a form reasonably acceptable to
          Purchaser of the pending Acquisition.  Seller shall provide Purchaser
          with names, addresses, account data and any other information
          necessary for Purchaser to give advance notice of revised terms
          applicable to Deposit Accounts and Loans after the acquisition.
          Seller shall join in any notice of change of terms reasonably
          requested by Purchaser, to the extent notice from Seller is required
          by applicable law in order to make any account changes effective as of
          the Effective Time. In addition, Purchaser and Seller shall cooperate
          in making reasonable communication with Branch customers designed to
          maximize customer retention.

     (f)  Deactivation of ATMs and ATM Cards.  Seller will deactivate all ATM
          -----------------------------------                                
          cards issued with respect to all Deposit Accounts and will
          electronically block access of those cards to the Deposit Accounts,
          and will deactivate the ATM at the Branch. The parties will determine
          the time for deactivation of Seller's ATM cards and activation of
          cards issued by Purchaser in accordance with the goal of minimizing
          the time between deactivation and activation. To this end, the parties
          will make all reasonable efforts and arrangements with their
          respective third-party processors to provide uninterrupted service,
          such efforts to be described in Schedule T, provided that in no event
          shall the time between deactivation and activation exceed the period
          between the Effective Time and 9:00 A.M. on the day following the
          Closing Date.

     (g)  Seller's Responsibilities After Effective Time. As early as
          -----------------------------------------------            
          practicable on the day following the Closing Date, Seller will deliver
          to Purchaser the production/divestiture file tapes and a trial balance
          of records of account containing the pertinent data and descriptive
          information relating to the Deposit Accounts and Loans and containing
          the ATM customer file via electronic media; provided, further, that
          such data and information shall include detailed transaction history
          for the most recent statement cycle ending on the Closing Date, and
          microfiche for the regular statement cycle immediately preceding
          thereto. If after the Effective Time Seller receives any payment with
          respect to a Loan, Seller shall forward it to Purchaser as promptly as
          practicable, using reasonable efforts to do so by the next business
          day.

     (h)  Disclosure of Certain Accounts.   At the Closing, Seller shall
          ------------------------------                                
          disclose a list of, and provide any and all accompanying documentation
          for, those Deposit Accounts that have any lien, IRS levy, trustee
          process, or other attachment, as well as all dormant accounts and
          accounts of customers who are involved in any pending or threatened
          litigation with Seller, as of midnight on the day before the Closing
          Date.

     (i)  Deposit Accounts That May Exceed FDIC Limits After Closing.  Seller
          -----------------------------------------------------------        
          shall reasonably cooperate with and provide information to Purchaser,
          including but not 


                                      25
<PAGE>
 
          necessarily limited to the customers' account balances, names and
          addresses, to assist Purchaser in identifying those Branch customers
          whose balances may exceed FDIC limits after Closing because such
          customers are already customers of Purchaser.

    (j)   Excluded Bundled Products.
          --------------------------

          (1) Between the time of execution of this Agreement and the Effective
          Time, Seller agrees not to solicit Branch customers for, or establish
          at the Branch, any deposit account that is bundled with another
          banking product or other financial service of a type that Purchaser is
          not purchasing under this Agreement if such product "bundle" is first
          offered by Seller after the date hereof ("Excluded Bundled PRODUCTS").
                                                    -------------------------

          (2) As used in this Section (j), the term "bundled" refers to a
          combination of products or services through advantageous pricing,
          combined marketing, or explicit tying.

          (3) (a) Excluded Bundled Products include, without limitation, a
          Deposit Account bundled with one or more loan products not covered by
          this Agreement.

          (b) Excluded Bundled Products do not include (i) combinations of
                                        ------
          Deposit Accounts and overdraft protection accounts, or (ii) any other
          manner or method of bundling products currently being offered to the
          public by Seller on the date hereof.

          (4) Notwithstanding the foregoing and without limiting Seller's
          obligations under Section 2.01(a), Seller may solicit any customer for
          such bundled products if the deposit account involved is to be
          established at Seller's branches other than the Branch.

    7.03  Transitional Action by All Parties.  Prior to and after the Closing,
          ----------------------------------                                    
unless otherwise indicated:
 
    (a)   Cooperation in Transition.  Purchaser and Seller shall use their best
          -------------------------                                            
          efforts to cooperate with each other in assuring an orderly transition
          of ownership of the Assets and responsibility for the Deposit
          Liabilities for a period of sixty (60) days following the Effective
          Time, or such longer period as may be specified in this Agreement with
          respect to specific actions.

     (b)  Automated Clearing House System.  Prior to the Effective Time,
          -------------------------------                               
          Purchaser will make reasonable efforts to notify all originators of
          ACH entries affecting Deposit Accounts or Loans of the terms and
          effect of the Acquisition.  For a period of ninety (90) days after the
          Effective Time, Seller will deliver to Purchaser each business day an
          ACH NACHA format tape or paper listing of all ACH entries received by
          Seller for debit or credit to a Loan Account or Deposit Account,



                                      26
<PAGE>
 
          accompanied by either a check, or deposit advice to a settlement
          account with the Seller, for the amount by which such credits exceed
          debits or an invoice, or charge advice to a settlement account with
          the Seller, for the amount by which such debits exceed credits, which
          invoice shall be paid by Purchaser on the same business day if
          received before 12:00 noon local time or on the next business day if
          received after 12:00 noon local time.

     (c)  Checks, etc. Presented after Effective Time.  Purchaser and Seller
          -------------------------------------------                       
          shall cooperate with each other at or prior to the Closing to provide
          for settlement by Purchaser or Seller, as the case may be, of checks,
          returns, and other items which are presented to Purchaser or Seller
          after the Effective Time and which are drawn on or chargeable to any
          of the Deposit Accounts.

     (d)  Loss due to Late Posting, etc. on Closed Deposit Accounts.  If,
          ---------------------------------------------------------      
          notwithstanding both parties' compliance with Schedule S, during the
          thirty (30) days after the Closing Date there is a loss due to the
          late posting and late return to the bank of first deposit (as defined
          in Regulation CC) on closed Deposit Accounts, Purchaser and Seller
          agree to share any such loss equally between them.  If a late return
          loss occurs due to a party's failure to comply with Schedule S, such
          party shall bear that loss.

     (e)  Deposit Account Overdrafts.  Deposit Account overdrafts approved with
          --------------------------                                           
          respect to ledger dates on or after the Effective Time will be the
          responsibility and risk of Purchaser.  Deposit Account overdrafts
          approved with respect to ledger dates more than five (5) days prior to
          the Effective Time will be the responsibility and risk of the Seller.
          Deposit Accounts overdrafts approved with respect to ledger dates
          during the period from five (5) days prior to the Effective Time to
          the day prior to the Closing Date, inclusive, will initially be the
          responsibility and risk of Purchaser; provided, however, that
          Purchaser shall have the right to retransfer any such overdrafts
          (other than overdrafts of customers who are specifically identified in
          writing by Purchaser to Seller not less than five (5) days prior to
          the Effective Time) back to Seller for its responsibility and risk
          within five (5) days following the Effective Time, and Seller will
          repurchase all rights in respect of such overdrafts from Purchaser for
          the amount of the overdrafts outstanding at the time they
          retransferred back to Seller (net of any Deposit Premium paid by
          Purchaser to Seller attributable to such overdrafts), and provided
          further, that Purchaser has closed all Deposit Accounts on which such
          overdrafts exist not later than the date of their retransfer.

  7.04    Effect of Transitional Action.  Except as and to the extent expressly
          -----------------------------                                   
set forth in this Section 7, nothing contained in this Section 7 shall be
construed to be an abridgment or nullification of the rights, customs, and
established practices under applicable banking laws and regulations as they
affect any of the matters addressed in this Section 7.

8.  GENERAL COVENANTS AND INDEMNIFICATION.
    -------------------------------------      



                                      27
<PAGE>
 
    8.01  Information.  Except as otherwise set forth in the Agreement, for a
          -----------                                                        
period of six (6) years following the Closing, Seller and Purchaser mutually
agree to provide each other, upon written request and to the extent allowed by
applicable law, with reasonable access to, or copies of, information and records
relating to the Branch, including, without limitation, Branch Employee and
customer files which are in the possession or control of Purchaser or Seller
reasonably necessary to permit Seller or Purchaser or any of their affiliates to
comply with or contest any applicable legal, tax, banking, accounting, or
regulatory policies or requirements, any legal or regulatory proceedings, or
inquiries by customers or Branch Employees. The provisions of this Section 8.01
shall survive the Closing for a period of six (6) years and any claim for the
breach of this Section 8.01 must be brought within such six-year period.

    8.02  Confidentiality Obligations of Purchaser. From and after the date
          ----------------------------------------                             
hereof, Purchaser shall treat all information received from Seller concerning
the business, assets, operations, and financial condition of Seller (including
without limitation the Branch), as confidential, unless and to the extent that
Purchaser can demonstrate that such information was already known to Purchaser
or in the public domain, and Purchaser shall not use any such information (so
required to be treated as confidential) for any purpose except in furtherance of
the transactions contemplated hereby, provided that after the Effective Time
Purchaser can use for any legal purpose any and all information about Deposit
Accounts and Assets acquired in the Acquisition. Upon the termination of this
Agreement, Purchaser shall promptly return all documents and work papers
containing, and all copies of, any such information (so required to be treated
as confidential) received from or on behalf of Seller in connection with the
transactions contemplated hereby.  The covenants of Purchaser contained in this
Section 8.02 are of the essence and shall survive any termination of this
Agreement; provided, however, that Purchaser shall not be deemed to have
violated the covenants set forth in this Section 8.02 if Purchaser shall in good
faith disclose any of such confidential information in compliance with any legal
process, order, or decree issued by any court or agency of government of
competent jurisdiction.

    8.03  Confidentiality Obligations of Seller. From and after the date
          -------------------------------------                               
hereof, Seller shall treat all information received from Purchaser concerning
Purchaser's business, assets, operations, and financial condition as
confidential, unless and to the extent Seller can demonstrate that such
information was already known to Seller or in the public domain, and Seller
shall not use any such information (so required to be treated as confidential)
for any purpose except in furtherance of the transactions contemplated hereby.
Upon the termination of this Agreement, Seller shall promptly return all
documents and work papers containing, and all copies of, any such information
(so required to be treated as confidential) received from or on behalf of
Purchaser in connection with the transactions contemplated hereby.  The
covenants of Seller contained in this Section 8.03 are of the essence and shall
survive any termination of this Agreement; provided, however, that Seller shall
not be deemed to have violated the covenants set forth in this Section 8.03 if
Seller or any of such affiliates shall in good faith disclose any of such
confidential information in compliance with any legal process, order, or decree
issued by any court or agency of government of competent jurisdiction.

    8.04  Indemnification by Seller. Except as specifically disclaimed in
          -------------------------                                           
this Agreement, from and after the Effective Time, Seller shall indemnify, hold
harmless, and defend Purchaser and its affiliates and agents from and against
all claims, losses, liabilities, demands and obligations, 



                                      28
<PAGE>
 
including without limitation, reasonable attorneys' fees and expenses, arising
out of any actions, suits, or proceedings (other than proceedings to prevent or
limit the consummation of the Acquisition) relating to the Assets, the Deposit
Liabilities (including checks negotiated prior to the Effective Time), the other
liabilities assumed by Purchaser hereunder, or the operations at the Branch,
prior to the Effective Time. Seller's indemnity obligation hereunder shall
include, without limitation, claims relating to wrongful or negligent acts of
Seller that occurred prior to the Effective Time, even if the claim is not
asserted until after the Effective Time. The provisions of this Section 8.04
shall apply to actions, suits, or proceedings resulting from breach by Seller of
any of the representations, warranties, or covenants of Seller contained in this
Agreement. Purchaser shall give Seller written notice of any written claim,
demand, process and/or pleading received by Purchaser in connection with any
such actions, suits or proceedings; provided, however, that failure to give such
notice shall not affect Seller's indemnification obligations under this Section
8.04 unless and to the extent that such failure is prejudicial to Seller. Seller
will, upon written request of Purchaser, take over the defense in any such
actions, suits or proceedings through counsel selected by Seller, compromise
and/or settle the same and prosecute any available appeals or reviews of any
adverse judgment or ruling that may be entered therein. The obligations of
Seller pursuant to this Section 8.04 shall survive the Closing. Except as
otherwise specifically provided in this Agreement, any claim for indemnification
under this Section must be brought within 18 months after the Closing Date.

    8.05  Indemnification by Purchaser.  From and after the Effective Time,
          ----------------------------                                         
Purchaser shall indemnify, hold harmless and defend Seller and its affiliates
and agents from and against all claims, losses, liabilities, demands and
obligations, including, without limitation, reasonable attorneys' fees and
expenses, arising out of any actions, suits or proceedings relating to the
Assets, the Deposit Liabilities (including checks negotiated on and after the
Effective Time), the other liabilities assumed by Purchaser hereunder, or the
operations at the Branch, including, without limitation, wrongful or negligent
acts of Purchaser, to the extent such claims, losses or liabilities arise on and
after the Effective Time or relate to the Deposit Liabilities expressly assumed
herein.  The provisions of this Section 8.05 shall apply to any actions, suits
or proceedings resulting from breach by Purchaser of any of the representations,
warranties or covenants of Purchaser contained in this Agreement.   Seller shall
give Purchaser written notice of any written claim, demand, process and/or
pleading received by Seller or it affiliates in connection with any such
actions, suits or proceedings; provided, however, that failure to give such
notice shall not affect Purchaser's indemnification obligations under this
Section 8.05 unless and to the extent that such failure is prejudicial to
Purchaser.  Purchaser will, upon written request of Seller, take over the
defense in any such actions, suits or proceedings through counsel selected by
Purchaser, compromise and/or settle the same and prosecute any available appeals
or review of any adverse judgment or ruling that may be entered therein.  The
obligations of Purchaser pursuant to this Section 8.05 shall survive the
Closing.  Except as otherwise specifically provided in this Agreement, any claim
for indemnification under this Section resulting from breach by Purchaser of the
representations, warranties, and covenants of Purchaser contained in this
Agreement must be brought within 18 months after the Closing Date.

    8.06  Solicitation of Customers.
          -------------------------     

    (a)   For two (2) years following the Effective Time, Seller will not, and
          will not permit 


                                      29
<PAGE>
 
          any of its affiliates to, knowingly solicit customers whose Deposit
          Accounts liabilities are assumed or whose Loans are purchased by
          Purchaser pursuant to this Agreement, except as may occur in
          connection with advertising or solicitations directed to the public in
          York County, Maine, generally. Notwithstanding the foregoing, the
          provisions of this Section 8.06(a) shall not restrict Seller from
          soliciting business entities for its non-deposit products.

     (b)  Seller shall not establish a branch or ATM in Kennebunk or
          Kennebunkport, Maine, for a period of two (2) years after the Closing
          Date.

     8.07 Further Assurances. From and after the date hereof, each party hereto
          ------------------                                                
agrees to execute and deliver such instruments and to take such other
actions as the other party hereto may reasonably request in order to carry out
and implement this Agreement.

     8.08 Purchaser's Operation of Branch.
          -------------------------------     

     (a)  Logos and Sign Faces.  Not later than the Effective Time, Purchaser:
          ---------------------                                               
          (i) shall change the legal name of the Branch to a name that does not
          include the word "Coastal", and (ii) except for any documents or
          materials in possession of the customers of the Branch (including but
          not limited to deposit tickets and checks), shall not use and shall
          cause the Branch to cease using (A) any signage, stationery,
          advertising, documents, or printed or written materials that refer to
          such Branch by any name that includes the word "Coastal@ and (B) any
          logo, trademark or service mark or trade name registered in the name
          of, or otherwise owned by Seller or any of its affiliates, except as
          otherwise provided in this Agreement or permitted pursuant to any
          written agreement(s) between Purchaser and Seller or its affiliates.
          During the seven (7) day period immediately preceding the Effective
          Time, Seller shall cooperate with any reasonable request of Purchaser
          directed to accomplishing the installation of signage of Purchaser's
          choosing at the Branch prior to the Effective Time; provided, however,
          that all such installations shall be at the sole and exclusive expense
          of Purchaser, that such installations shall be performed in such a
          manner that does not materially interfere with the normal business
          activities and operations of the Branch and that all such installed
          signage shall be covered in such a way as to be unreadable at all
          times prior to the Effective Time.  Immediately following the
          Effective Time, Seller shall, at its sole and exclusive expense,
          commence activities directed to accomplishing the removal of all of
          Seller's existing signage at the Branch and will diligently pursue
          such activities in good faith so that such removal may be effected as
          promptly as practicable following the Closing.

9.  [RESERVED]

10. TERMINATION.
    -----------   

    10.01 Methods of Termination. This Agreement may be terminated in any of
          ----------------------                                               
the following ways:



                                      30
<PAGE>
 
     (a)   By either Purchaser or Seller, in writing, delivered to the other
           party at least five days in advance of such termination, if the
           Closing has not occurred by July 1, 1999.

     (b)   At any time prior to the Effective Time by the mutual consent in
           writing of Purchaser and Seller;

     (c)   By Purchaser in writing if and when, at any time prior to the
           Closing, any condition set forth in Section 5.02 of this Agreement
           becomes incapable of being in all material respects fulfilled and
           such condition has not been waived by Purchaser;

     (d)   By Seller in writing if and when, at any time prior to the Closing,
           any condition set forth in Section 5.01 of this Agreement becomes
           incapable of being fulfilled in all material respects and such
           condition has not been waived by Seller;

     (e)   At any time prior to the Effective Time by Purchaser or Seller in
           writing if the other shall have been in breach of any representation
           and warranty, covenant, or agreement, and such breach shall not have
           been cured within 15 days after the giving of notice to the breaching
           party of such breach;

     (f)   By Seller or Purchaser in writing at any time after any applicable
           regulatory authority has denied approval of any application of
           Purchaser for approval of the transactions contemplated hereby and
           such denial has become final and nonappealable.

     10.02 Procedure Upon Termination.  In the event of termination pursuant to
           --------------------------
Section 10.01, and except as otherwise stated therein, written notice shall be
given to the other party, and this Agreement shall terminate immediately upon
receipt of such notice unless an extension is consented to by the party having
the right to terminate.  If this Agreement is terminated as provided in this
Section 10:
 
     (a)   each party will return all documents, work papers, and other
           materials of the other party, including photocopies or other
           duplications thereof, relating to the transactions contemplated
           hereby, whether obtained before or after the execution hereof, to the
           party furnishing the same; and

     (b)   all information received by either party hereto with respect to the
           business of the other party (other than information which is a matter
           of public knowledge or which has heretofore been published in any
           publication for public distribution or filed as public information
           with any governmental authority) shall be held confidential by such
           party and not disclosed by such party to third persons and shall not
           be used for any purpose whatsoever.

     10.03 Effect of Termination.
           ---------------------     


                                      31
<PAGE>
 
     (a)   Each party's right of termination under Section 10.01 is in addition
           to any other rights it may have under this Agreement or otherwise,
           and the exercise of a right of termination will not be an election of
           remedies. If this Agreement is terminated pursuant to Section 10.01,
           all further obligations of the parties under this Agreement will
           terminate, except that the obligations in Sections 8.02, 8.03, 10.02,
           and 11.01 will survive; provided, however, that if this Agreement is
           terminated by a party because of a breach of the Agreement by the
           other party or because one or more of the conditions to the
           terminating party's obligations under this Agreement is not satisfied
           as a result of the other party's failure to comply with its
           obligations under this Agreement, the terminating party's right to
           pursue all legal remedies will survive such termination unimpaired.

     (b)   Except as otherwise specifically provided in this Agreement, in the
           event of termination of this Agreement pursuant to this Section 10,
           neither Purchaser nor Seller nor their respective affiliates,
           officers, directors or agents shall have any liability or obligation
           to the other of any nature whatsoever except liabilities and
           obligations arising from any material breach of any provision of this
           Agreement occurring prior to the termination hereof.

11.  MISCELLANEOUS PROVISIONS.
     ------------------------    

     11.01 Expenses.  Except as and to the extent otherwise specifically
           --------                                                       
allocated herein, each of the parties hereto shall bear its own expenses,
whether or not the transactions contemplated hereby are consummated.  All sales
taxes, if any, shall be paid by Purchaser.  The provisions of this Section 11.01
relating to the payment of such expenses and taxes are of the essence and shall
survive the termination of this Agreement.

     11.02 Certificates.  All statements contained in any certificate delivered
           ------------
by or on behalf of Seller or Purchaser pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties of the party delivering the certificate
hereunder.

     11.03 Amendment and Modifications. The parties hereto, by mutual consent of
           ---------------------------
their duly authorized officers may amend, modify, and supplement this Agreement
in such manner as may be agreed upon by them in writing.

     11.04 Waivers.  Each party hereto, by written instrument signed by an
           -------                                                          
officer of such party, may extend the time for the performance of any of the
obligations or other acts of the other party hereto and may waive, but only as
affects the party signing such instrument: (a) any inaccuracies in the
representations or warranties of the other party contained or referred to in
this Agreement or in any document delivered pursuant hereto; (b) compliance with
any of the covenants or agreements of the other party contained in this
Agreement; (c) the performance (including performance to the satisfaction of a
party or its counsel) by the other party of such of its obligations set out
herein; (d) satisfaction of any condition to the obligations of the waiving
party pursuant to this Agreement.  The execution, acknowledgment, and delivery
of any 


                                      32
<PAGE>
 
instrument or document required pursuant to the provisions of this Agreement
shall not be deemed to be a waiver of any rights or obligations of any party to
this Agreement.

     11.05 Notices.  Any notice or other communication required or permitted
           -------                                                            
pursuant to this Agreement shall be effective only if it is in writing and
delivered personally, by facsimile transmission, or by registered or certified
return receipt mail, postage prepaid or by overnight courier, addressed as
follows:

     If to Purchaser:

     Kendall E. Reed
     Executive Vice President
     Kennebunk Savings Bank
     104 Main Street, P.O. Box 28
     Kennebunk, ME 04043-0028


     with a copy to:

     Richard P. Hackett
     Pierce Atwood
     One Monument Square
     Portland, ME 04101

     If to Seller:

     Edward M. Williams
     Senior Vice President
     Coastal Bank
     36 Thomas Drive
     Westbrook, ME 04092


     With a copy to:

     Wayne E. Tumlin, Esq.
     Bernstein, Shur, Sawyer & Nelson
     One Hundred Middle Street
     P.O. Box 9729
     Portland, ME  04104


or such other person or address as any such party may designate by notice to the
other parties, and shall be deemed to have been given as of the date received.

     11.06 Parties in Interest: Assignment; Amendment. (a)  This Agreement
           ------------------------------------------ 
is binding upon and is for the benefit of the parties hereto and their
respective successors, legal representatives, and assigns.  No person who is not
a party hereto (or a successor or assignee of such party) shall have any rights
or benefits under this Agreement, either as a third party beneficiary or
otherwise.  


                                      33
<PAGE>
 
This Agreement cannot be assigned, and this Agreement cannot be amended or
modified, except by a written agreement executed by the parties hereto or their
respective successors and assigns. Without limiting the foregoing, the
provisions of section 8.06 shall apply to any successor and any affiliate of
Seller existing now or in the future.

     11.07 Headings.  The headings and table of contents used in this Agreement
           --------
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

     11.08 Terminology. The specific terms of art that are defined Section A of
           -----------
this Agreement shall apply throughout this Agreement (including without
limitation each Schedule hereto), unless expressly indicated otherwise.  Unless
expressly indicated otherwise in a particular context, the terms "herein,"
"hereunder," "hereto," "hereof," and similar references refer to this Agreement
in its entirety and not to specific articles, sections, schedules, or
subsections of this Agreement.  Unless expressly indicated otherwise in a
particular context, references in this Agreement to enumerated articles,
sections, and subsections refer to designated portions of this Agreement (but do
not refer to portions of any Schedule unless such Schedule is specifically
referenced) and do not refer to any other document.

     11.09 Flexible Structure.  References in this Agreement to federal or
           ------------------                                                
state laws or regulations, jurisdictions, or chartering or regulatory
authorities shall be interpreted broadly to allow maximum flexibility in
consummating the transactions contemplated hereby in light of changing business,
economic, and regulatory conditions.  Without limiting the foregoing, in the
event Seller and Purchaser agree in writing to alter the legal structure of the
Acquisition contemplated by this Agreement, references in this Agreement to such
laws, regulations, jurisdictions, and authorities shall be deemed to be altered
to reflect the laws, regulations, jurisdictions, and authorities that are
applicable in light of such change.

     11.10  Press Releases. Except to the extent required by law (in
            --------------                                             
conjunction with regulatory approvals or otherwise), without the prior written
consent of the other party, neither Purchaser nor Seller will, and each will
direct its representatives not to make any communication to Branch Employees or
customers or to the general public with respect to the transaction between the
parties or any of the terms, conditions, or other aspects of the transactions
contemplated in this Agreement.  The parties shall collaborate in joint
communications, and review and reasonably grant consent to the other party's
communications, to Branch Employees, the public, and customers.

     11.11 Personal Liability.  Notwithstanding anything to the contrary in this
           ------------------
Agreement, no director, officer, or employee of either Seller or Purchaser shall
have any personal liability arising out of or in connection with this Agreement,
including without limitation, any liability as a result of the untruthfulness or
breach of any representations or warranties made or in connection with this
Agreement.

     11.12 Entire Agreement.  This Agreement supersedes any and all oral or
           ----------------                                                   
written agreements and understandings heretofore made relating to the subject
matter hereof, including, without limitation, the Letter of Intent the parties
executed on November 5, 1998, and contains 


                                      34
<PAGE>
 
the entire agreement of the parties relating to the subject matter hereof. All
schedules, exhibits, and appendices to this Agreement are incorporated into this
Agreement by reference and made a part hereof.

     11.13 Governing Law.  This Agreement shall be governed by, and construed
           -------------                                                        
in accordance with, the laws of the State of Maine.  The Law of conflicts of law
rules of the State of Maine shall not apply.  If any part of this Agreement is
declared illegal by a court of competent jurisdiction, the remaining parts shall
remain in full force and effect.

     11.14 Counterparts.  This Agreement and any Schedule thereto may be
           ------------                                                   
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

     11.15 Severability.  If any provision of this Agreement is invalid or
           ------------                                                     
unenforceable, the balance of this Agreement shall remain in effect.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as an instrument under seal, by their respective officers whose
signatures appear below as of the date first above written.


PURCHASER:                             SELLER:
KENNEBUNK SAVINGS BANK                 COASTAL BANK


By: /s/Kendell E. Reed                 By: /s/Edward M. Williams
    ------------------                     ---------------------
Print Name: Kendell E. Reed            Print Name: Edward M. Williams
Its:Executive Vice President           Its: Senior Vice President


                                      35
<PAGE>
 
                                   SCHEDULES

                                       TO

                    BRANCH PURCHASE AND ASSUMPTION AGREEMENT
                    ----------------------------------------


Schedule A    Description of Positions Held by Branch Employees
Schedule B    Description of Premium Rate High Rise Savings Accounts
Schedule C    List of EXCLUDED Owned Personal Property
Schedule D    Preliminary ODL Summary
Schedule E    Types of Prepaid Expenses
Schedule F    Lease Agreement for Leased Real Estate
Schedule G    Preliminary Summary of Accounts to be Transferred
Schedule G-1  Excluded Deposit Accounts
Schedule H    Deferred Expenses
Schedule I    Form of Certificate of Purchaser
Schedule J    Form of Opinion of Counsel for Purchaser
Schedule K    Form of Certificate of Seller
Schedule L    Form of Opinion of Counsel for Seller
Schedule M    Form of Instrument of Assumption
Schedule N    Form of Instrument of Assumption of Individual Retirement Accounts
Schedule O    Form of Bill of Sale and Receipt
Schedule P    Form of Lease Assignment and Assumption Agreement
Schedule Q    Pending Labor Matters
Schedule R    Description of Leased Property
Schedule S    Procedure for Inclearing Items
Schedule T    Plan for ATM Card Deactivation and Activation



Exhibit A     Real Estate Lease Information


                                      36
<PAGE>
 
                                   Schedule A
                                   ----------
                                        
                        Description of Branch Employees
                        -------------------------------


Position or Job Title           Number of Employees             Status

AVP Branch Manager              1                               Full Time
Teller I                        1                               Part Time
Teller II                       3                               Full Time
Banking Office Assistant        1                               Full Time
                                  
TOTAL EMPLOYEES                 6                              


                                      37
<PAGE>
 
                                 Schedule B
                                 ----------

             Description of Premium Rate High Rise Savings Accounts
             ------------------------------------------------------

As of 11/05/1998
----------------

                         Total Number of Accounts                79

                         Total Dollar Amount                     $3,744,456.01


                                      38
<PAGE>
 
                                  Schedule C
                                  ----------

                   List of Excluded Owned Personal Property
                   ----------------------------------------
                                        

Description
-----------

 .    Endorser (microfilmer)
 .    Baily sign
 .    SDI teller software (All)
 .    Unisys computer hardware (All)
 .    UPS 1200va/1000w 60 Hz
 .    Regulatory signs, CRA, Reg CC, . . . (All)
 .    Vinyl lettering
 .    Sign panels & letters
 .    Adtran-dsu, pcsi-cs8000
 .    Novous (Discover Card) and MasterCard/Visa cash advance terminal and
     printer
 .    Lexmark laser printer
 .    Synopites hub
 .    Hayes 28.8 modem
 .    A/B switch


                                      39
<PAGE>
 
                                   Schedule D
                                   ----------

                            Preliminary ODL Summary
                            -----------------------
 
As of 11/05/1998
 
          Interest Rate         Number          Line Limit      Unpaid Balance
 
          16.00%                6               $12,300.00      $1,004.50
          17.50%                27              $40,100.00      $6,667.95
                                                                
          Total                 33              $52,400.00      $7,672.45


                                      40
<PAGE>
 
                                 Schedule E
                                 ----------

                           Types of Prepaid Expenses
                           -------------------------

 
     (a)  Federal Deposit Insurance Corporation premium with respect to the
          Deposit Accounts; and

     (b)  Prepaid expenses reflected on the books of Seller as being
          attributable to the Branch as of the Effective Time and disclosed to
          Purchaser in writing at or prior to the Closing:


                                      NONE



                                      41
<PAGE>
 
                                  Schedule F
                                  ----------

                    Lease Agreement For Leased Real Estate
                    --------------------------------------


See attached copy of Real Estate Lease.



                                      42

<PAGE>

                                      LEASE


         This is an INDENTURE OF LEASE, made this 1st day of January nineteen
hundred ninety-six, by and between ROLAND P. GOSSELIN and CECILE G. GOSSELIN,
copartners doing business as BATES REALTY, having a usual place of business in
Manchester, Hillsborough County, New Hampshire (LESSOR), and Coastal Savings
Bank, with a principal place of business at Colonel Westbrook Executive Park, 36
Thomas Drive, Westbrook, Maine (LESSEE).


         1. Demised Premises. LESSOR hereby demises and lets to LESSEE, and
            ----------------
LESSEE hereby leases and takes from LESSOR, for the term and upon the terms and
conditions hereinafter set forth, certain premises consisting of 2100 square
feet of space, located in the Shopping Center known as "Shoppers Village",
situated on Route One in Kennebunk, Maine, said premises being shown on Exhibit
"A" attached hereto, reference to which is hereby made for a more particular
description of the demised premises. The area of the demised premises is agreed
by the parties to be 2100 square feet, and for all purposes under this LEASE the
area of the demised premises shall be considered to be 2100 square feet.

                                       1

<PAGE>


         Together with an easement for the exclusive use of LESSEE to be used
for the purposes of ingress and egress to and from the drive-in window portion
of the demised premises. Said easement is more fully delineated on a plan marked
Exhibit "A" attached hereto and made a part hereof.

         2. "Shopping Center" Defined. The term "Shopping Center" shall mean the
             ------------------------   
entire land area owned by or leased to LESSOR, as shown on said Exhibit "A", as
the same may be reduced or enlarged by LESSOR from time to time.

         3. Term. The term of this LEASE shall be five (5) years, commencing
            ----
January 1, 1996, and ending December 31, 2000.

         4. Option To Renew. So long as the LESSEE shall not be in default
            ---------------
beyond the expiration of any applicable grace period in the performance,
fulfillment or observance of the terms or provisions of this LEASE, both at the
date of exercise of any such option and at the commencement of any such extended
term, the LESSEE shall have the privilege of extending or renewing this LEASE
for two (2) additional five (5) year terms, by giving notice to the LESSOR, in
writing, six (6) months prior to the expiration of the original term or of the
option term. The extended term of this LEASE shall be subject to the covenants,
provisions and agreements of this LEASE.

         5. Rent - Original Term. The LESSEE covenants to pay fixed rent during
            --------------------
the original term hereof in lawful currency of the United States Government at
the following rate, payable in equal monthly installments in advance of the
first day of each and every


                                        2
<PAGE>

month of the term hereof without notice thereon and without deduction, set-off
or other charge therefrom or against the same:

         Year One    (1) =      $11.00 per sq. foot
         Year Two    (2) =      $11.00 per sq. foot
         Year Three  (3) =      $10.00 per sq. foot
         Year Four   (4) =      $10.00 per sq. foot
         Year Five   (5) =      $11.00 per sq. foot

         6.   Rent - Option Term   First and Second five (5) year options:
              ------------------
              Annual increases at the lesser of CPI or four (4) percent over the
previous year. For purposes of this LEASE, the term CPI shall refer to the
consumer Price Index/Boston Index.

         7.   Real Estate Taxes
              -----------------  
              (a) LESSEE shall pay to LESSOR, as an additional charge, all real
estate taxes imposed on or levied against the demised premises for each lease
year during the term of this LEASE. For the purposes hereof, the real estate
taxes imposed on or levied against the demised premises in a year shall be the
real estate taxes imposed on the Shopping Center for such year multiplied by a
fraction having as its numerator, the rentable floor area included within the
demised premises and as its denominator, the total rentable floor area included
within all of the buildings within the Shopping Center. The payment shall be
made to the LESSOR each year within ten (10) days after LESSEE shall have
received from LESSOR a copy of LESSOR'S tax bill together with a statement
showing the amount due for LESSEE.

                                        3

<PAGE>
              (b) The expression "real estate taxes" used herein shall mean all
ad valorem taxes and betterment assessments (special or general, ordinary or
extraordinary) imposed or assessed by any public authority having jurisdiction,
which upon assessment or upon failure of payment become a lien upon the demised
premises or the Shopping Center, except only that if any betterment assessment
is payable in installments, the real estate taxes for any year shall include
only such installments of such betterment assessment as are allocable to said
tax year. If LESSOR shall have the right to elect the period over which any
betterment assessment is payable, LESSOR agrees to elect the longest period of
time available. The term "real estate taxes" as used in this lease shall include
all income taxes, excise profits taxes, excise taxes, franchise taxes, and
estate, succession, inheritance and transfer taxes. LESSEE shall pay all taxes
upon its signs, equipment and other personal property in or upon the demised
premises. For the purpose of this Article, such taxes shall not be included
within the real estate taxes upon the land and buildings of the Shopping Center.

              (c) Real Estate taxes imposed or levied against the demised
premises for the tax year which include the commencement date or termination
date of the term of this lease or any extension of original term shall be
apportioned pro-rata between LESSOR and LESSEE on the basis of the portions of
such tax years that are included within the term of this LEASE, or any extension
thereof.

         8. Tax Increase Clause (Caused by LESSEE'S Improvements) LESSEE agrees
            ----------------------------------------------------    
to pay any increase in the real estate taxes caused


                                        4
<PAGE>

by leasehold improvements installed by LESSEE. Said taxes, however, shall not be
based on a valuation greater than the cost of said improvements to LESSEE.

         9. Additional Rent  
            --------------- 
   
            (a) UTILITIES: LESSEE shall pay to the LESSOR as an additional
                ---------
charge, all cost of utilities used by the common area, which additional charges
shall be those costs multiplied by a fraction having as its numerator, the
rentable floor area included within the demised premises and as its denominator,
the total rentable floor area included within all the buildings within the
Shopping Center. The payment shall be made to LESSOR within ten (10) days after
LESSEE shall have received from LESSOR a copy of LESSOR'S utility bill together
with a statement showing the amount due from LESSEE.

            (b) FIRE, HAZARD AND LIABILITY INSURANCE: LESSEE shall pay to
                ------------------------------------ 
LESSOR, an additional charge, the cost of fire, hazard and liability insurance
imposed on the demised premises for each lease year, which additional charges
shall be those costs multiplied by a fraction having as its numerator, the
rentable floor area included within the demised premises and as its denominator,
the total rentable floor area included within all of the buildings within the
Shopping Center. The payment shall be made to LESSOR within ten (10) days after
LESSEE shall have received from LESSOR a copy of LESSOR'S fire and hazard
insurance bill together with a statement showing the amount due from LESSEE.

            (c) OTHER: LESSEE shall pay to LESSOR, or its designee, as an
                -----
additional charge, the cost of maintaining the parking areas and


                                        5

<PAGE>

common facilities, which cost may include, without limitation, LESSOR'S costs
for lighting, hydrant fee, sprinkler fee, traffic control, snow and ice removal,
refuse removal, landscaping, restriping and repairs of said common areas. These
additional charges shall be those costs multiplied by a fraction having as its
numerator the rentable floor area included within the demised premises, and as
its denominator the total rentable floor area included within all of the
buildings within the Shopping Center, which additional charges shall be paid to
LESSOR within ten (10) days after LESSEE shall have received from LESSOR a copy
of LESSOR'S statement showing the amount due from LESSEE.

             (d) The term "common facilities", as used herein, shall be
construed to include those facilities within the commercial center for the
nonexclusive use of the LESSEE in common with other authorized users, and shall
include, but not be limited to the parking area, sidewalks, planted areas, open
means of ingress and egress, and the structure advertising the common name given
to the commercial center.

         10. Utilities. LESSEE agrees to pay all charges for heat, air
             ---------   
conditioning, water, gas, electricity, sewer assessments, and other utilities
used by the demised premises. LESSOR may, at its election, furnish water, gas
and electricity or any other utilities to the demised premises; in such event
LESSEE agrees to purchase from the LESSOR its requirements of such of said
utilities as LESSOR shall elect to furnish, but the charges made by the LESSOR
for any utility so furnished by it shall not exceed the


                                        6

<PAGE>

charges the LESSEE would be required to pay if LESSEE purchased the same utility
directly from the utility company or agency furnishing the same to the SHOPPING
CENTER. LESSEE agrees it will, at all times, keep sufficient heat in the demised
premises to prevent the pipes from freezing.

         11. Common Facilities. LESSEE shall have the right, as appurtenant to
             -----------------   
the demised premises, to use all common facilities within the Shopping Center in
common with LESSOR and all others to whom LESSOR has or may hereafter grant
similar rights, subject to the provisions of this LEASE and such reasonable
regulations as LESSOR shall from time to time establish. LESSOR may from time to
time make reasonable changes in the location and nature of any of the common
facilities in the Shopping Center, and may temporarily close any common facility
to make repairs or changes, or to prevent the acquisition of easements or a
dedication to public use, or to discourage use of the common facilities by
anyone not entitled thereto, provided, however, that no changes or temporary
closures shall have an adverse impact on the aesthetics of, access to and from,
and the regular operation of LESSEE'S business in and upon the Demised Premises.
LESSOR shall designate a portion of the parking area in which LESSEE'S officers,
agents or employees of its sublessees, concessionaires or other occupants of the
demised premises may park their automobiles, and parking for such persons shall
be permitted only in such designated portion. For the purpose of assisting in
the enforcement of the provisions of this Article 11, LESSEE shall, upon
request, furnish to LESSOR the registration


                                        7

<PAGE>
plate numbers of the automobiles operated by the above described persons.

       LESSOR shall manage all common facilities within the Shopping Center, and
shall maintain the landscaping, drainage and lighting facilities provided by
LESSOR, and shall provide for the removal of snow and ice from the parking areas
and roadways. In the event LESSOR conducts any repairs, replacements,
improvements, alterations, additions or other work to or upon any of the common
facilities, LESSOR shall exercise utmost prudence and shall do all that is
reasonable and necessary to ensure that (i) LESSEE'S business in and upon the
Demised Premises is not interrupted and (ii) all such construction is completed
with proper diligence and in a timely manner. So long as LESSOR shall act in the
manner provided in the previous sentence, LESSOR shall not be liable for any
inconvenience or interruption of business or other consequences resulting from
the making of repairs, replacements, improvements, alterations or additions, or
the doing of any other work, by or at the direction of LESSOR, to or upon any of
such common facilities. 

       12. Expansion of Shopping Center. LESSOR has informed LESSEE, and LESSEE
           ----------------------------     
understands, that the Shopping Center as it now exists, as shown on Exhibit "A",
may be expanded, and that, as part of the expansion project, the existing
driveways and parking areas comprising the common area of the Shopping Center
may be altered, relocated or rearranged. LESSEE hereby consents to and approves
said expansion project, subject, however, to the covenants and restrictions of
LESSOR set forth in Article 11 hereof and the

                                        8

<PAGE>

obligation of LESSOR to designate a portion of the parking area for parking by
the persons referred to in Article 11 above. LESSEE shall, if requested, execute
such instrument as may be appropriate to the limitation above set forth.
Notwithstanding anything to the contrary contained herein, LESSOR agrees that
LESSEE shall not be responsible for the costs of any utilities of the common
area incurred as a result of the completion of the expansion project and that
all utilities during the construction phase of such project will be separately
metered.

       13. Covenants, Obligations and Conduct of Lessee. LESSEE shall:
           --------------------------------------------
     
           (a) keep the demised premises and the show window and signs thereof
lighted during such times as LESSOR shall prescribe for such lighting by
reasonable rules and regulations;

           (b) procure all licenses and permits which may be required for any 
use made of the demised premises;

           (c) remove all snow and ice from the sidewalks bounding the demised
premises and keep the same clean and free of dirt and debris;

           (d) abide by all other reasonable rules and regulations made by 
LESSOR for furthering the success of the Shopping Center of which the demised
premises are a part;

           (e) not carry on any manufacturing or assembly work on the demised
premises; 

           (f) not use sidewalks adjacent to the demised premises to display or
sell merchandise, or otherwise obstruct the same,


                                        9

<PAGE>

without the prior written consent of LESSOR, which consent shall not be
unreasonably withheld;

           (g) not conduct any auction, fire, bankruptcy, going out of business,
or similar sale, or conduct a factory outlet, discount, bargain, cut price, or
similar type of operation, without the prior consent of LESSOR, which consent
shall not be unreasonably withheld, except that if any other Tenants in the
Shopping Center are conducting such business, other than auction, fire sale,
bankruptcy or going out of business or similar sale, the Tenant shall have the
right to conduct such business in a similar manner;

           (h) not permit anything to be done about the demised premises which 
shall be unlawful, improper or contrary to any law, ordinance, regulation or
requirement of any public authority or insurance inspection rating bureau or
similar organization, or which may be injurious to or adversely affect the
general character of the demised premises of the Shopping Center;

           (i) not use in or about the demised premises any advertising media 
that may be objectionable to LESSOR or other tenants in the Shopping Center,
such as loud speakers, phonographs or radio broadcasts that may be heard outside
of the demised premises;

           (j) not deliver or remove any freight except over service roadways 
and in accordance with such reasonable rules and regulations as may be made by
LESSOR;

           (k) not burn any trash on or near the demised premises, or permit any
offensive odors to be emitted from the demised premises;

           (l) not overload, damage or deface the demised premises;

                                       10

<PAGE>

           (m) not place or permit the placing of any signs (except paper
window signs advertising goods or services being sold by LESSEE, awnings,
aerials, flagpoles or the like on the demised premises without on each occasion
obtaining the prior written consent of LESSOR, which consent shall not be
unreasonably withheld so long as such sign bears a reasonable relationship to
the size of the store premises occupied by LESSEE and to the size of other signs
of other tenants, and provided such sign shall be comparable in design and color
with other signs in the Shopping Center. LESSOR covenants and agrees that LESSOR
will require any tenant of premises adjacent to or abutting the demised premises
to install its business sign to the Shopping Center building in such a manner so
as (i) to be clearly separate and distinct from LESSEE'S sign and (ii) to
differentiate LESSEE'S business from the business of the tenant.

           (n) keep the demised premises in a neat, clean and sanitary
manner, and at its own cost and expense, keep the same in good repair, excepting
only damage caused by fire or other casualty not the result of the negligence of
LESSEE, or by any taking by eminent domain; and, without limiting the generality
of the foregoing, do the following: repair and maintain the entire interior,
including walls and ceilings, and repair and maintain the store front; do
repairs and maintenance required for plumbing, electrical, sewerage, air
conditioning, ventilating and heating facilities, and all fixtures used in
connection therewith, all doors and windows, floor covering, signs, fixtures and
equipment appurtenant to the


                                       11

<PAGE>

demised premises; replace all glass and restore and replace all floor covering
at reasonable intervals and make all alterations and repairs of whatever nature
required by applicable laws, ordinances, orders or regulations of any public
authority or by any insurer or Board of Fire Underwriters; promptly pay, when
due, all charges for labor or materials in connection with any work done by
LESSEE or anyone claiming under LESSEE, on the demised premises; and save
harmless and indemnify LESSOR against any and all claims for injury, loss or
damage caused by or resulting from the doing of any such work on the demised
premises.

           (o) all signs, counters, shelving, equipment and all other trade
fixtures installed by or at the expense of LESSEE shall remain the property of
LESSEE, and LESSEE may remove the same at any time or times during the term of
this LEASE, unless excused in writing by LESSOR. LESSEE shall, at its own cost
and expense, make any and all repairs to the demised premises and the floors and
walls thereof as may become necessary by reason of such removal, Painting and
patching where necessary. LESSEE shall cap or otherwise suitably secure all
utility lines left exposed or unconnected after such removal. In the event that
LESSEE shall fail to remove its aforesaid property, or to make such repairs, on
or prior to the last day of the term thereof or any extension of the term,
LESSOR shall have the right to effect such removal and make such repairs, and
LESSEE shall forthwith reimburse LESSOR for its cost therefor.

           (p) all goods, wares, merchandise and property of any kind


                                       12

<PAGE>

whatsoever placed or stored on the demised premises shall be at the sole risk
and hazard of LESSEE.

           (q) LESSEE shall save LESSOR harmless and indemnified to the
extent permitted by law from and against any and all claims, actions, loss,
damage, liability and expenses in connection with the loss of life, personal
injury and/or damage to property, arising out of or resulting from any
occurrence in, upon, or at the demised premises, or arising out of or resulting
from the occupancy or use of the demised premises or any part thereof, if
occasioned wholly or in part by any act, neglect, or failure on the part of the
LESSEE to perform the obligations imposed by this lease, or by any negligence or
omission of LESSEE, its officers, agents, employees, and those of its
sublessees, licensees, concessionaires, or others occupying space in the demised
premises. LESSEE agrees that LESSOR shall not be liable to LESSEE or anyone
claiming under LESSEE, for any injury, loss or damage resulting from the act or
negligence of any occupant of adjoining premises, upper stories, or any other
part of the Shopping Center of which the demised premises are a part, provided,
however, that LESSEE shall have, and this Article 13(q) shall not be deemed to
be a waiver of, all of LESSEE'S right and remedies provided by law or in equity.
LESSEE shall maintain with respect to the demised premises and the Shopping
Center of which the demised premises are a part comprehensive public liability
insurance covering all of LESSEE'S obligations under this subsection (q) in an
amount not less than Five Hundred Thousand ($500,000.00) Dollars with respect to


                                       13

<PAGE>

injuries to any persons, and not less than One Hundred Thousand ($100,000.00)
Dollars with respect to damage to property, insuring LESSOR as well as LESSEE
against injury to persons or damage to property as herein provided.

         Each policy of insurance which LESSEE is required to maintain under the
provisions of this subsection (q) shall be with companies qualified to do
business in the state where the Shopping Center is located and reasonably
acceptable to LESSOR. LESSEE shall deposit with LESSOR certificates of such
insurance at or prior to the commencement of the term, and thereafter new
certificates not later than ten (10) days prior to the expiration of expiring
policies. To the extent obtainable, policies shall provide that they may not be
cancelled without at least ten (10) days' prior written notice to LESSOR.

         14. Fire and Other Casualty Damage or Destruction-Insured Loss. If the
             ----------------------------------------------------------   
demised premises become untenantable in whole or in part by reason of damage or
destruction by fire or other casualty covered by fire insurance policies carried
by LESSOR, LESSEE shall immediately give written notice thereof to LESSOR, and
unless this Lease be terminated as hereinafter provided, LESSOR, at its own
expense, shall repair or rebuild the same with reasonable dispatch so as to
restore the demised premises to substantially the same condition they were in
immediately prior to such damage or destruction, provided, however, that LESSOR
is not required to expend for such repairs or rebuilding any amount in excess of
the insurance proceeds received with respect to such damage of


                                       14

<PAGE>

destruction.

         If the demised premises or the buildings comprising the Shopping Center
of which the demised premises are a part shall be damaged or destroyed to the
extent of fifty percent (50%) or more or their insurable value by any cause,
either party may elect by written notice to the other delivered within thirty
(30) days after the damage or destruction has occurred to terminate this lease
immediately. In the absence of such notice or election, LESSOR shall forthwith
proceed to repair and rebuild the demised premises.

         If this lease is not terminated as above provided, and if the fault or
neglect of LESSEE or any person claiming under LESSEE did not contribute to such
damage or destruction, then from and after such damage and until the demised
premises are restored to substantially the same condition they were in prior to
such damage or destruction, the fixed rent and all other charges shall abate in
proportion to the extent that the demised premises have been rendered
untenantable by such damage or destruction.

         LESSOR shall keep the building of which the demised premises are a part
insured against loss or damage by fire to the extent of the full insurance value
thereof, including all improvements, alterations, additions and changes made by
either party hereto. LESSOR shall provide LESSEE with a certificate evidencing
such insurance within thirty (30) days of the date hereof and at the same time
during each year hereafter.

         15. Eminent Domain - 100% Taking. If after the execution hereof
             -----------------------------


                                       15

<PAGE>

and prior to the expiration of the term of this lease or any extension thereof,
the whole of the demised premises shall be taken by eminent domain, then the
term of this lease shall cease as of the time when LESSOR shall be divested of
its title to the demised premises, and the rent shall be pro-rated and adjusted
as of the time of termination.

         If a part of the demised premises or a part of the Shopping Center of
which the premises are a part, or a part of the common areas shall be taken by
eminent domain and as a result thereof either the ground floor area of the
demised premises or the total area of the Shopping Center (including for this
purpose parking space, other common areas and access from the highway to the
Shopping Center and ground floor area of the buildings in the Shopping Center)
shall be reduced by more than fifteen percent (15%), LESSOR or LESSEE, may at
its election, terminate this lease by giving the other written notice of the
exercise of its election to terminate within sixty (60) days after the date of
the filing of the notice of such taking. The termination shall be effective as
of the date that the premises so taken are required to vacated. If this lease is
not terminated as aforesaid, then the term of this lease shall continue in full
force and effect and LESSOR shall, with reasonable dispatch, after LESSEE is
required to vacate any part of the demised premises (if any part shall have been
taken), repair and rebuild what may remain of the demised premises, so as to put
the same into condition for use and occupancy by LESSEE. From and after the date
that the LESSEE is required to vacate any


                                       16

<PAGE>

part of the demised premises taken, the fixed rent and all other charges shall
abate in proportion to the extent of the taking of the demised premises.

         LESSOR reserves to itself, and LESSEE assigns to LESSOR, all rights to
damages accruing on account of any taking by eminent domain or by reason of any
act of any public or quasipublic authority for which damages are payable, except
such damage or award as may be provided for by law, and may be recoverable by
LESSEE, for its loss of business and loss of fixtures and improvements, and
moving expenses. LESSEE agrees to execute such instruments to perfect such
assignment as may be requested by LESSOR and to turn over to LESSOR any damages
assigned as aforesaid.

         16. Lessor's Covenants. LESSOR shall keep in reasonably good order and
             ------------------   
repair the following portions of the demised premises; foundations, roof,
structural columns and beams, the exterior walls, and only such plumbing,
electrical, sewerage, air-conditioning, ventilating and heating facilities as
are contained in the demised premises or pass through the demised premises to
serve other premises in the complex. LESSOR shall not be required to make such
repairs to any of the above-described portions of the demised premises
necessitated by any act, default or negligence of the LESSEE'S officers, agents
and employees, or those of its sublessees, licensees, concessionaires or other
occupants of the demised premises. LESSOR shall not be deemed to have committed
a breach of any obligation to make repairs unless it shall have made


                                       17

<PAGE>

such repairs negligently, or it shall have received notice from LESSEE in
writing designating the particular repairs needed and shall have failed to make
such repairs within a reasonable time after receipt of such notice.
Notwithstanding anything to the contrary contained herein, LESSOR shall be
required to make repairs in a timely and diligent manner.

         LESSEE covenants that it will permit LESSOR and its agents to examine
the demised premises at reasonable times and to show them to prospective
purchasers, lenders and tenants; that it will permit LESSOR to enter the demised
premises without charge or reduction of rent, to make such repairs,
improvements, alterations or additions as may be required in order to comply
with the requirements of this lease, or of any public authority having
jurisdiction, or to facilitate making repairs or improvements to any other part
of the Shopping Center or to make repairs which LESSEE may have failed promptly
to make pursuant to LESSEE'S covenants hereunder, or to construct, install, or
repair in the demised premises or the approaches thereto, any utility or waste
line or pipe or any agency for transmission through the demised premises of
electricity, heat, gas or power of any kind, and for any such purposes to use or
occupy such portion of the demised premises as may be necessary therefor. Unless
there exists an emergency which places the demised premises in jeopardy, LESSOR
shall have access to the demised premises for the purposes set forth in this
Article 16 only upon reasonable notice to LESSEE, which for purposes of this
Lease shall be twenty-four (24) hours,


                                       18

<PAGE>

and provided that there shall be no interference with LESSEE'S business.

         17. Use and Competition. So long as this LEASE is in effect, LESSOR 
             -------------------   
shall have no more than one (1) additional financial, banking or credit union
type-institution as a tenant in the Shoppers Village Shopping Center.

         18. Assignment and Subletting. LESSEE shall not assign or encumber this
             -------------------------   
lease in whole or in part, nor sublet all or any part of the demised premises,
nor grant any license, concession or lease to operate any business or department
in the demised premises, without the prior written consent of LESSOR in each
instance, which consent shall not be unreasonably withheld or delayed. If this
lease shall be assigned or if the demised premises or any part thereof shall be
underlet or occupied by anybody other than LESSEE, LESSOR may collect rent from
the assignee, under-tenant or occupant, and apply the net amount collected to
the rent herein reserved, but no such assignment, underletting, occupancy or
collection shall be deemed a waiver of this covenant, or an acceptance of the
assignee, under-tenant or occupant, as tenant, or a release of LESSEE from
further performance hereunder. Notwithstanding any assignment or sublease,
LESSEE shall remain fully liable on this lease, and shall not be released from
performing any of its terms, covenants and conditions.

         19. Defaults and Remedies. This LEASE is made on condition that (i) if
             ---------------------   
LESSEE shall neglect or fail to perform or observe any of


                                       19

<PAGE>

the terms, provisions, conditions and covenants herein contained on LESSEE'S
part to be performed or observed for a period of thirty (30) days after receipt
by LESSEE of notice of such neglect or failure (except for the payment of rent
and other charges in which case the period of notice shall be ten (10) days, or
if more than thirty (30) days shall reasonably be required because of the nature
of the default to cure the default and LESSEE shall fail within said thirty (30)
day period to commence and thereafter diligently to proceed to cure such
default; or (ii) if the estate hereby created shall be taken on execution or by
other process of law; or (iii) if LESSEE shall commit an act of bankruptcy or be
declared bankrupt or insolvent according to law, or if any assignment shall be
made of its property for the benefit of creditors; or if any proceedings,
including, without limitation, proceedings for reorganization or for an
"arrangement" shall be commenced by or against LESSEE under any bankruptcy or
insolvency law now or hereafter enacted and the same shall not be dismissed
within ninety (90) days from the time of their commencement; or (iv) if a
receiver, guardian, conservator, trustee or assignee or any other or similar
officer or person shall be appointed to take charge of all or any part of
LESSEE'S property, or (v) if any court shall enter an alteration of the rights
of creditors; or (vi) if LESSEE shall fail to take possession of the demised
premises and open for the conduct of business within thirty (30) days following
the commencement date hereunder, then, and in any of said cases (notwithstanding
any license or any former breach of covenant or


                                       20

<PAGE>

waiver of benefit thereof, or consent in a former instance), LESSOR shall have
the right, at its election, then or at any time thereafter, either 

              (a) to give LESSEE written notice of LESSOR'S intention to
terminate this lease on the date of such notice, or on any later date specified
therein, and on the date specified in such notice LESSEE'S right to possession
of the demised premises shall cease and this lease shall thereupon be
terminated; or

              (b) without terminating this lease to re-let the premises or any
part thereof for such term or terms, which may be for a period extending beyond
the term of this lease, and at such rental or rentals, or upon such other terms
or conditions, as LESSOR may deem advisable, with the right to make alterations
and repairs to the premises. No such re-letting by LESSOR shall be construed as
an election on LESSOR'S part to terminate this lease, unless a written notice of
such intention be given to LESSEE, or unless the termination thereof be decreed
by a court of competent jurisdiction.

         LESSEE agrees to indemnify and save harmless LESSOR from any loss,
damage or injury whatsoever, including reasonable attorney's fees, in the event
of a breach by LESSEE of covenants or of any obligations under this lease, and
against any loss or rental for the balance of the term of this lease after
breach, and notwithstanding LESSOR'S rights to terminate the same for breach by
the LESSEE.

         LESSOR shall not be deemed to be in default hereunder unless its
default shall continue for thirty (30) days, or for such


                                       21

<PAGE>

additional time as is reasonably required to correct its default after written
notice thereof has been given by LESSEE to LESSOR specifying the nature of the
alleged default.

         In the event of a happening that requires repairs or maintenance of an
emergency nature by LESSOR, including removal of snow and ice, LESSEE shall have
the right, but not the obligation, to proceed at once to make such repairs or
carry out such maintenance, and LESSEE shall promptly notify LESSOR of the
condition requiring such repairs or maintenance and shall afford LESSOR the
opportunity to take over and complete the same if LESSOR so elects after receipt
of such notice. LESSOR shall reimburse LESSEE for the reasonable cost or expense
to LESSEE for the making of such repairs or the carrying out of such
maintenance.

         20. Covenant of Quiet Enjoyment. LESSOR agrees that upon the LESSEE'S
             ---------------------------   
paying the rent and performing and observing the terms, provisions, conditions
and covenants on its part to be performed and observed, LESSEE shall and may
peaceably and quietly have, hold and enjoy the demised premises and the LESSEE'S
right to use the common facilities of the Shopping Center, as herein provided,
without any manner of hindrance or molestation from LESSOR or anyone claiming
under LESSOR, subject, however, to the terms of this lease.

         21. Arrangements with Mortgagees. LESSEE agrees that upon the request
             ----------------------------   
of LESSOR it will subordinate this lease and the lien hereof to the lien of any
present or future mortgage or mortgages upon the demised premises or upon any
property of which the demised


                                       22

<PAGE>

premises are a part, irrespective of the time of execution or time of recording
of any such mortgage or mortgages. LESSEE agrees that it will, upon request of
LESSOR, execute, acknowledge and deliver any and all instruments deemed by
LESSOR necessary or desirable to give effect to or notice of such subordination.
LESSEE or LESSOR agree to execute and deliver any appropriate instruments
necessary to carry out the agreements in this section contained. Any such
mortgage to which this lease shall be subordinated may contain such other terms,
provisions and conditions as the mortgagee deems usual or customary.

         LESSEE'S obligations under the foregoing paragraph shall be conditioned
upon said mortgagee's entering into an agreement with LESSEE by the terms of
which the mortgagee under said mortgage will agree not to disturb the possession
and other rights of LESSEE under this lease so long as LESSEE performs its
obligations hereunder, and to accept LESSEE as LESSEE of the leased premises
under the terms and conditions of this lease in the event of acquisition of
title by such mortgagee through foreclosure proceedings or otherwise, and LESSEE
covenants and agrees to recognize the holder of such mortgage as LESSOR in such
event, which agreement is made expressly binding upon the successors and assigns
of LESSEE and of the mortgagee and upon anyone purchasing said leased premises
at any foreclosure sale. LESSEE and LESSOR agree to execute and deliver any
appropriate instruments necessary to carry out the agreement in this paragraph
contained. LESSOR covenants that it will obtain and deliver to LESSEE an
appropriate


                                       23

<PAGE>

"non-disturbance" agreement, as aforesaid, from any existing mortgages.

         22. Off-set Statements. Within thirty (30) days after request therefor
             ------------------   
by LESSOR, LESSEE shall deliver to LESSOR, or to any prospective mortgagee or
purchaser, a certificate, in recordable form, stating (if such be the case) that
this lease is in full force and effect and that there are no defenses or
off-sets thereto, or stating such defenses or off-sets as may be claimed by
LESSEE. The delivery of such statement shall constitute an irrevocable waiver of
all claims of whatever nature by LESSEE against LESSOR arising out of or in any
way connected with this lease, other than claims specified by LESSEE in said
statement and other than claims not then accrued.

         23. Rules and Regulations. LESSEE will observe and comply with, and
             ---------------------   
will cause its sublessees, concessionaires, or others occupying space in the
demised premises, and its and their employees and agents, to observe and comply
with reasonable Shopping Center rules and regulations from time to time
promulgated by LESSOR for the benefit and prosperity of the Shopping Center.
However, neither LESSEE nor anyone claiming under LESSEE shall be bound by any
such rules and regulations until such time as LESSEE receives a copy thereof.

         24. Acceptance of Demised Premises. The opening of the demised premises
             ------------------------------   
by LESSEE for its business shall constitute an acknowledgment by LESSEE that the
demised premises are in the condition required to be in by this lease, and that
LESSOR has


                                       24

<PAGE>

performed all LESSOR'S work with respect thereto, unless LESSEE has otherwise
notified LESSOR in writing.

         Any other provisions in this lease to the contrary notwithstanding, no
indemnifications, release or limitation of liability of the LESSOR, with respect
to any personal injury or property damage, shall be applicable to any personal
injury or property damage, or claims arising therefrom, when occasioned by the
negligence or willful misconduct of the LESSOR or its agents, employees and
contractors.

         25. Force Majeure. In the event that either party hereto shall be
             -------------   
delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, labor troubles, inability to produce
materials, failure of power, restrictive governmental laws or regulations,
riots, insurrections, war or other reason of a like nature, not the fault of any
party delayed in performing work or doing acts required under the terms of this
lease, then performance of such act shall be excused for the period of the delay
and the period for the performance of any such act shall be extended for a
period equivalent to the period of such delay. The provisions of this article
shall not operate to excuse the LESSEE from the prompt payment of fixed rent,
additional rent or any other payments required by the terms of this lease.

         26. Waivers. Failure of LESSOR to complain of any act or omission on
             -------   
the part of LESSEE, no matter how long the same may continue, shall not be
deemed to be a waiver by LESSOR of any of its rights hereunder. No waiver by
LESSOR or any time, express or


                                       25

<PAGE>

implied, of any breach of any provision of this lease shall be deemed a waiver
of a breach of any other provision of this lease, or a consent to any subsequent
breach of the same or any other provision. If any action by LESSEE shall require
LESSOR'S consent or approval, LESSOR'S consent to or approval of such action on
any one occasion shall not be deemed a consent to or approval of said action on
any subsequent occasion, or a consent to or approval of any other action or on
any subsequent occasion. Payment by LESSEE or acceptance by LESSOR of a lesser
amount than shall be due from LESSEE to LESSOR shall not be deemed to be
anything but payment on account, and the acceptance by LESSOR of a check for a
lesser amount with an endorsement or statement thereon or upon a letter
accompanying said check that said lesser amount is payment in full, shall not be
deemed an accord and satisfaction, and LESSOR may accept said check without
prejudice to recover the balance due or pursue any other remedy. Any and all
rights and remedies which LESSOR may have under this lease, or by operation of
law, either at law or in equity, upon any breach, shall be distinct, separate
and cumulative and shall not be deemed inconsistent with each other; and no one
of them, whether exercised by LESSOR or not, shall be deemed to be in exclusion
of any other; and any two (2) or more of all of such rights and remedies may be
exercised at the same time.

         27. Costs and Expenses. Wherever in this lease provision is made for
             ------------------   
the doing of any act by LESSOR or LESSEE, it is understood and agreed that said
act shall be done by the party designated at


                                       26

<PAGE>

its own cost and expense, unless a contrary intent is expressed.

         28. Holding Over. If the LESSEE or anyone claiming under the LESSEE
             ------------   
shall remain in possession of the demised premises or any part thereof after the
expiration of the term of this lease without any agreement in writing between
LESSOR and LESSEE with respect thereto prior to acceptance of rent by LESSOR,
the party remaining in possession shall be deemed a tenant-at-sufferance, and
after acceptance of rent by LESSOR the party remaining in possession shall be
deemed a tenant-at-will; provided, however, that the rent during the period such
party shall continue to hold the demised premises or any part thereof shall be
payable at the highest rate payable during the term hereof.

         29. Showing the Demised Premises. LESSOR shall have reasonable access
             ----------------------------   
to the demised premises during the last six (6) months of the term of this lease
or any extension thereof for the purpose of exhibiting said premises to
prospective tenants and purchasers and the putting up of "for sale" or "for
rent" signs.

         30. Broker's Commission. LESSOR and LESSEE warrant and represent that
             -------------------   
they have had no dealings or negotiations with any broker or agent, except as
listed below, in connection with this lease, and each shall pay and hold the
other harmless and indemnified from and against any and all costs, expenses
(including counsel fees) or liability for any compensation, commissions, and
charges claimed by any broker or agent with respect to this lease or the
negotiation thereof.

         31. Notices. Any notice or other communication relating to
             ------- 

                                       27

<PAGE>

this lease shall be deemed to be duly given if in writing and sent by registered
or certified mail, postage prepaid, addressed to the party for whom it is
intended, at such place as shall have been last designated by such party, either
in this paragraph or in a notice given as herein provided, as its address for
receiving notices hereunder. Until further notice, LESSOR designates BATES
REALTY, 270 Amory Street, Manchester, New Hampshire, 03102, as its address for
such purpose; and LESSEE designates Coastal Savings Bank, 36 Thomas Drive,
Westbrook, Maine 04092, as its address for such purpose. Any notice given under
this Article 31 shall be deemed to have been given when actually received by the
party to which it is addressed.

         Miscellaneous. The word "LESSOR" and "LESSEE" and the pronouns
         -------------
referring thereto, as used in this lease, shall mean, where the context requires
or admits, the persons or entities named herein as LESSOR and LESSEE
respectively, and their respective heirs, legal representatives, successors and
assigns, irrespective of whether singular or plural, masculine, feminine or
neuter. Except as otherwise provided herein, the agreements and conditions in
this lease contained on the part of LESSOR to be performed and observed shall be
binding upon LESSOR and its successors and assigns and shall inure to the
benefit of LESSEE and its successors and assigns; and the agreements and
conditions on the part of LESSEE to be performed and observed shall be binding
upon LESSEE and its successors and assigns, and shall inure to the benefit of
LESSOR and its successors and assigns.


                                       28

<PAGE>

         If LESSEE shall consist of more than one person or entity, or if there
shall be a guarantee of LESSEE'S obligations, the liability of all such persons
or entities, including the guarantor, if any, shall be joint and several.

         It is agreed that if any provisions of this lease shall be determined
to be void by any court of competent jurisdiction, than such determination shall
not affect any other provisions of this lease, all of which other provisions
shall remain in full force and effect; and it is the intention of the parties
hereto that if any provision of this lease is capable of two (2) constructions,
one of which would render the provisions void and the other which would render
the provision valid, then such provision shall have the meaning which renders it
valid.

         LESSEE shall not record this lease, and LESSOR shall execute a notice
thereof to be recorded in the York County Registry of Deeds in Maine.

         Any rider attached hereto duly executed by LESSOR and LESSEE shall be
deemed incorporated herein and made a part hereof. In the event that any
provision in such rider is inconsistent with any printed provision of this
lease, the provision in said rider shall supersede said printed provision.

         This lease shall constitute the only agreement between the parties
relative to the demised premises, and no oral statements and no prior written
matter not specifically incorporated herein shall be of any force or effect. In
entering into this lease, the parties rely solely upon the representations and
agreements


                                       29

<PAGE>

contained herein. This agreement shall not be modified except by writing
executed by both parties.

         This lease may be executed in any number of counterparts and each fully
executed counterpart shall be deemed an original.

         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year first above written.

WITNESSES:                                BATES REALTY     (LESSOR)

/s/ Ronald E. Girard                      By:      /s/ Roland P. Gosselin     
-----------------------------             ------------------------------------
                                                   ROLAND P. GOSSELIN, PARTNER

/s/ Ronald E. Girard                      By:      /s/ Cecile G. Gosselin     
-----------------------------             ------------------------------------
                                                   CECILE G. GOSSELIN, PARTNER

                                          Coastal Savings Bank     (LESSEE)

/s/ Daina J. Nathanson                    By:      Roger H. Hunter, SVP       
-----------------------------             ------------------------------------


                                       30

<PAGE>
                    BATES REALTY - COASTAL SAVINGS BANK LEASE
                       SHOPPER'S VILLAGE, KENNEBUNK, MAINE
                                      RIDER

1.      LESSOR shall contribute $1.50/s.f. ($3,150) to LESSEE to be used for
improvements to the LESSEE'S branch. LESSEE agrees to match the amount paid by
the LESSOR and will therefore complete at least $6,300.00 in improvements.
Payment by LESSOR will be made to the LESSEE after verification of improvements
and invoices totalling $6,300.00 or more.

2.      The lease shall allow LESSEE to cancel its lease obligation at any time
during the first two (2) years of the lease so long as LESSEE provides the
LESSOR with at least nine (9) months notice of its intent. Should LESSEE have to
exercise this option clause, the LESSEE will reimburse the LESSOR its
contribution of $3,150.00 it made towards improvements.

3.      If Shopper's Village becomes 50% (or more) vacant at any time during
LESSEE'S tenancy and remains so for more than six months, LESSEE shall have the
right to terminate the remaining balance of the lease with no penalty, and
neither party shall have any further rights or liabilities herein.


                                       31





<PAGE>
 
                                   Schedule G
                                   ----------

               Preliminary Summary of Accounts to be Transferred
               -------------------------------------------------
                          Dated as of November 5, 1998
                          ----------------------      
 
Type of Account             Number of Accounts              Aggregate Balance
---------------             ------------------              ----------------- 
 
Savings                     591                             $ 6,712,033.12
DDA and MMDA                787                               2,177,582.72
CDs/IRAs                    362                               4,952,757.00
X-Mass                       56                                   1,770.00
IOLTAs                        3                                  60,939.00
Savings Sweeps                1                                  50,421.00
                                   
Total                       1,800                           $13,955,502.84




                                      43
<PAGE>
 
                                  Schedule G-1
                                  ------------
                           Excluded Deposit Accounts
                           -------------------------
                                        

As of November 5, 1998 or as otherwise specified
------------------------------------------------

     Type                  Number of Accounts       Aggregate Balance
     ----                  ------------------       -----------------
 
     Savings                           1            $50,421.44 (Loan Collateral)
     DDA and MMDA                      0      
     CDs**                             8            $ 88,890.68
     IRAs                              0      
     IOLTAs                            0      
     Savings Sweeps                    0      
                                              
     Total                             9            $139,312.12

** One CD for $1,100.00 as of 12/7/1998



                                      44
<PAGE>
 
                                  Schedule H
                                  ----------

                               Deferred Expenses
                               -----------------


     (a)  Utility payments;
 
     (b)  Taxes and assessments upon the Owned Real Estate;

     (c)  Deferred expenses reflected on the books of Seller as being
          attributable to the Branch as of the Effective Time and disclosed to
          Purchaser in writing at or prior to the Closing:

                                      NONE



                                      45
<PAGE>
 
                                   Schedule I
                                   ----------

                        Form of Certificate of Purchaser
                        --------------------------------


  We hereby certify that:

  (1) The undersigned, ___________________ is the of Purchaser as defined below.

  (2) All representations and warranties of Purchaser as set forth in the Branch
Purchase and Assumption Agreement (the "Purchase and Assumption Agreement"),
                                        ---------------------------------
dated as of January__, 1999, by and between Purchaser and Coastal Bank
("Seller") are true and correct in all material respects as of this date and
with the same effect as though all such representations and warranties had been
made on and as of this date (unless a different date is specifically indicated
in such representations and warranties);

  (3) Each and all of the covenants and agreements of Purchaser to be performed
or complied with at or prior to Closing pursuant to the Purchase and Assumption
Agreement have been either duly performed and complied with in all material
respects by Purchaser, or waived in writing by Seller;

  (4) The Board of Directors of Purchaser has taken all corporate action
necessary by it to effectuate the Purchase and Assumption Agreement and the
Acquisition (as defined in the Purchase and Assumption Agreement) contemplated
thereby, and attached hereto is a correct and complete copy of a Clerk's
Certificate certifying the adoption of resolutions of the Board of Directors of
Purchaser authorizing the Purchase and Assumption Agreement and the Acquisition
contemplated thereby; and

  (5) To the best of the undersigned's knowledge, as of the date hereof, there
is no litigation or proceeding pending in or by any court or agency of any
government or by any third party which in the judgment of the executive officers
of Purchaser, with the advice of counsel, restrains, enjoins or prohibits
consummation of the transactions contemplated by the Purchase and Assumption
Agreement or which is likely to result in rescission in connection with such
transactions.

Dated: May 14, 1999


                    PURCHASER:        KENNEBUNK SAVINGS BANK


                                      By: 
                                         -------------------------------
                                      Name:
                                      Title:



                                      46
<PAGE>
 
                                  Schedule J
                                  ----------

                   Form of Opinion of Counsel for Purchaser
                   ----------------------------------------



Coastal Bank
36 Thomas Drive
Westbrook, ME 04092


Gentlemen:

  We have acted as counsel for Kennebunk Savings Bank, a financial institution
organized under the laws of Maine ("Purchaser"), in connection with Purchaser's
purchase of certain assets and assumption of certain liabilities from Coastal
Bank ("Seller").  Such purchase and assumption is to be consummated pursuant to
the terms of a Branch Purchase and Assumption Agreement, dated as of January __,
1999 (the "Agreement"), by and between Purchaser and Seller.  This opinion is
furnished to you pursuant to Section 5.01(e) of the Agreement.

  We have examined such documents, records and matters of law as we have deemed
necessary for purposes of this opinion.  In making such examination for the
purpose of this opinion, we have assumed the authenticity of all original
documents and records, the conformity of all documents and records submitted to
us as conformed copies or photocopies of original documents, the genuineness of
all signatures and, except insofar as Purchaser is concerned, the due
authorization, execution, and delivery of such documents and the due authority
of all persons executing each such document.  [We have also examined and relied
upon: [list any specific reliance documents].]  Based thereupon, and subject to
the qualifications herein, are of the opinion that:

        1.  Purchaser is a validly existing financial institution in good
standing under the laws of Maine.

        2.  Purchaser has all requisite corporate power and authority to enter
into the Agreement and the Agreement has been duly approved by all requisite
corporate action of Purchaser, has been duly executed and delivered by
Purchaser, and is valid and binding upon Purchaser.

        3.  Purchaser has obtained all necessary licenses, approvals, consents
and other governmental actions required under any state or federal law or
regulation in connection with the execution and performance of the Agreement and
the consummation of the transactions contemplated thereby. Neither the execution
and delivery of the Agreement nor the consummation by Purchaser of the
transactions contemplated thereby will result in the violation of any statute or
regulation or any order or decree of any court or governmental authority of
which we have knowledge binding upon Purchaser, or its properties.




                                      47
<PAGE>
 
        4.  We are not aware of any litigation or proceeding pending in or by
any court or agency of any government or by any third party which, in our
judgment, enjoins or prohibits consummation of the transactions contemplated by
the Agreement or which is likely to result in rescission thereof.

        Our opinions herein contained are subject to the following
qualifications:

        (i)   The enforceability of obligations under any agreement or document
is subject to insolvency, reorganization, moratorium, and other laws affecting
the rights and remedies of creditors generally or the application of principles
of equity, whether in an action at law or a proceeding in equity. In addition,
we express no opinion regarding the availability of the remedy of specific
performance, or of any other equitable remedy or relief, to enforce any right
under any agreement or document.

        (ii)  Our opinions are limited to the laws of the United States and the
State of Maine, and we express no opinions as to the laws of any other states or
jurisdictions.

        The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes which may thereafter be brought to our
attention. Our opinions are based on statutory laws and judicial decisions that
are in effect on the date hereof, and we do not opine with respect to any law,
regulation, rule, or governmental policy which may be enacted or adopted after
the date hereof, nor do we assume any responsibility to advise you of future
changes in our opinions.

        This opinion is solely for your information in connection with the
transactions contemplated by the Agreement. This letter may not be relied upon
by any other person or for any other purposes whatsoever.

                                        Very truly yours,



                                      48
<PAGE>
 
                                   Schedule K
                                   ----------

                         Form of Certificate of Seller
                         -----------------------------

 
      We hereby certify that:
 
      (1)  The undersigned, _______________________, is the _______________ of 
Seller, as defined below.
 
      (2)  All representations and warranties of Seller as set forth in the
Branch Purchase and Assumption Agreement (the "Purchase and Assumption
Agreement"), dated as of January __, 1999, by and between Seller and Kennebunk
Savings Bank ("Purchaser"), are true and correct in all material respects as of
this date and with the same effect as though all such representations and
warranties had been made on and as of this date (unless a different date is
specifically indicated in such representations and warranties);
 
      (3)  Each and all of the covenants and agreements of Seller to be
performed or complied with at or prior to Closing pursuant to the Purchase and
Assumption Agreement have been either duly performed and complied with in all
material respects by Seller, or waived in writing by Purchaser;

      (4)  The Board of Directors of Seller has taken all corporate action
necessary by it to effectuate the Purchase and Assumption Agreement and the
Acquisition (as defined in the Purchase and Assumption Agreement) contemplated
thereby, and attached hereto is a correct and complete copy of the resolutions
of the Board of Directors of Seller authorizing the Purchase and Assumption
Agreement and the Acquisition contemplated thereby; and
 
      (5)  To the best of the undersigned's knowledge, as of the date hereof,
there is no litigation or proceeding pending in or by any court or agency of any
government or by any third party which in the judgment of the executive officers
of Seller, with the advice of counsel, restrains, enjoins or prohibits
consummation of the transactions contemplated by the Purchase and Assumption
Agreement or which is likely to result in rescission in connection with such
transactions.

Dated: May 14, 1999


                           SELLER:         COASTAL BANK

                                           By: 
                                              --------------------------------
                                           Name:
                                                ------------------------------
                                           Title: 
                                                 -----------------------------



                                      49
<PAGE>
 
                                  Schedule L
                                  ----------

                     Form of Opinion of Counsel for Seller
                     -------------------------------------



Kennebunk Savings Bank
104 Main St., P.O. Box 28
Kennebunk, ME 04043-0028

Gentlemen:

  We have acted as counsel for Coastal Bank, a financial institution organized
under the laws of Maine ("Seller"), in connection with Seller's sale of certain
assets and transfer of certain liabilities to Kennebunk Savings Bank
("Purchaser").  Such purchase and assumption is to be consummated pursuant to
the terms of a Branch Purchase and Assumption Agreement, dated as of January __,
1999 (the "Agreement"), by and between Purchaser and Seller.  This opinion is
furnished to you pursuant to Section 5.02(e) of the Agreement.

  We have examined such documents, records and matters of law as we have deemed
necessary for purposes of this opinion, and have examined the Agreement,
Seller's Articles of Association and By-Laws and relevant corporation records.
In making such examination for the purpose of this opinion, we have assumed the
authenticity of all original documents and records, the conformity of all
documents and records submitted to us as conformed copies or photocopies of
original documents, the genuineness of all signatures and, except insofar as
Seller is concerned, the due authorization, execution, and delivery of such
documents and the due authority of all persons executing each such document. We
have also examined and relied upon: [list any specific reliance documents].
Based thereupon, and subject to the qualifications herein, we are of the opinion
that:

  1.  Seller is a validly existing financial institution in good standing under
the laws of Maine.

  2.  Seller has all requisite corporate power and authority to enter into the
Agreement, and the Agreement has been duly approved by all requisite corporate
action of Seller, has been duly executed and delivered by Seller, and is valid
and binding upon Seller.

  3. Seller has obtained all necessary licenses, approvals, consents and other
governmental actions required under any state or federal law or regulation in
connection with the execution and performance of the Agreement and the
consummation of the transactions contemplated thereby. Neither the execution and
delivery of the Agreement nor the consummation by Seller of the transactions
contemplated thereby will result in the violation of any statute or regulation
or any order or decree of any court or governmental authority of which we have
knowledge binding upon Seller, or its properties.

  4.  We are not aware of any litigation or proceeding pending in or by any
court or agency 



                                      50
<PAGE>
 
of any government or by any third party which, in our judgment, enjoins or
prohibits consummation of the transactions contemplated by the Agreement or
which is likely to result in rescission thereof.

  The opinions herein contained are subject to the following qualifications:

  (i)  The enforceability of obligations under any agreement or document is
subject to insolvency, reorganization, moratorium, and other laws affecting the
rights and remedies of creditors generally or the application of principles of
equity, whether in an action at law or a proceeding in equity.  In addition, we
express no opinion regarding the availability of the remedy of specific
performance, or of any other equitable remedy or relief, to enforce any right
under any agreement or document.

  (ii) Our opinions are limited to the laws of the United States and the State
of Maine, and we express no opinions as to the laws of any other states or
jurisdictions.

  The information set forth herein is as of the date hereof.  We assume no
obligation to advise you of changes which may thereafter be brought to our
attention. This opinion is based on statutory laws and judicial decisions that
are in effect on the date hereof, and we do not opine with respect to any law,
regulation, rule, or governmental policy which may be enacted or adopted after
the date hereof, nor do we assume any responsibility to advise you of future
changes in law.

  This opinion is solely for your information in connection with the
transactions contemplated by the Agreement.  This letter may not be relied upon
by any other person or for any other purposes whatsoever.


                                                 Very truly yours,

                                       51
<PAGE>
 
                                   Schedule M
                                   ----------

                        Form of Instrument of Assumption
                        --------------------------------


     Pursuant to the provisions of Section 1.03 of the Branch Purchase and
Assumption Agreement dated as of January __, 1999 (the "Agreement"), by and
between Coastal Bank  ("Seller") and Kennebunk Savings Bank ("Purchaser"),
Purchaser:
 
     (a)  hereby assumes and hereby agrees to hereafter faithfully honor and
          fully and timely pay, perform, and discharge all of the Deposit
          Liabilities associated with the Branch on the books of Seller as of
          the Effective Time, together with all accrued interest attributed
          thereto; and
 
     (b)  hereby assumes and hereby agrees to hereafter faithfully honor and
          fully and timely perform, and discharge all of the obligations,
          duties, and liabilities of Seller with respect to (1) the safety
          deposit box business of the Branch including, but not limited to, the
          maintenance of all necessary facilities for the use of safety deposit
          boxes by the renters thereof during the periods for which such persons
          have paid rent therefor in advance to Seller (subject to allocations
          of rents between Seller and Purchaser as provided in Section
          1.03(c)(i) of the Agreement), subject to the provisions of the
          applicable leases or other agreements relating to such boxes and the
          performance of all other necessary activities relating to such boxes,
          and (2) all safety deposit box lease agreements and documents
          pertaining to the safety deposit business of the Branch as of the
          Effective Time; and
 
     (c)  hereby assumes and hereby agrees to hereafter faithfully honor and
          fully and timely pay, perform and discharge all Deferred Expenses;
 
     (d)  hereby assumes and hereby agrees to hereafter faithfully honor and
          fully and timely pay, perform and discharge all of the obligations,
          duties, and liabilities of Seller arising from and after the Closing
          Date under the Real Estate Lease assigned to Purchaser by Seller.
 
 
     All capitalized terms that are defined in the Agreement and are not
otherwise defined herein shall have the meaning given to them in the Agreement.
 
     IN WITNESS WHEREOF, Purchaser has caused this instrument to be duly
executed and delivered as of May 14, 1999.
 

                    PURCHASER:        KENNEBUNK SAVINGS BANK


                                      By: 
                                         ----------------------------------

                                       52
<PAGE>
 
                                      Name: 
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                       53
<PAGE>
 
                                  Schedule N
                                  ----------

      Form of Instrument of Assumption of Individual Retirement Accounts
      ------------------------------------------------------------------

  Pursuant to the provisions of Section 1.03 of the Branch Purchase and
Assumption Agreement dated as of January __, 1999 ("Agreement"), by and between
Seller and Purchaser, as defined below, Purchaser hereby assumes and agrees to
hereafter faithfully, fully, and timely honor, pay, perform, and discharge all
Deposit Liabilities consisting of individual retirement accounts ("IRAs"),
together with all accrued interest attributable thereto and the custodial
arrangement in connection therewith.
 
  Purchaser further hereby assumes and agrees to hereafter faithfully honor and
fully and timely pay, perform, and discharge all of Seller's obligations,
duties, and liabilities evidenced by or related to each Individual Retirement
Custodial Account Agreement (i.e., Internal Revenue Service Model Form 5305-A
with certain supplementary provisions and related IRA Disclosure Statement)
pertaining to the Deposit Liabilities consisting of IRAs, including, without
limitation, the obligation to file reports with the Internal Revenue Service
with respect to such Deposit Liabilities, to the extent such reports are
required and become due after the Effective Time, except that Seller shall send
and file Forms 5498 for all periods ending prior to the date hereof.
 
Seller hereby appoints Purchaser as the successor trustee to Seller under the
Deposit Liabilities consisting of IRAs.  Purchaser hereby accepts from Seller
such appointment to serve in such capacity.
 
  Purchaser and Seller further hereby agree that Purchaser shall distribute, on
or before the date such distribution is required to be made to avoid the
imposition upon the IRA depositor of any excise or other penalty tax, and in
accordance with Section 4974 and other applicable provisions of the Internal
Revenue Code and proposed, temporary, and final regulations of the Internal
Revenue Service, the minimum distribution amount ("MDA") required to be made for
calendar year 1999 by any IRA depositor who has reached age 70-1/2 during or
prior to calendar year 1999, and Purchaser shall be deemed to hold such MDA as
the escrow agent of Seller under instructions to so distribute such MDA.
Notwithstanding the foregoing, to the extent any MDA is required to be
distributed on or before the first day of the first calendar month after the
Closing Date. Purchaser is not responsible for making such MDA.
 
  All capitalized terms that are defined in the Agreement and are not otherwise
defined herein have the meaning given to them in the Agreement.
 
 
  IN WITNESS WHEREOF, the Purchaser and Seller have caused this instrument to be
duly executed and delivered as of May 14, 1999.

                    PURCHASER:        KENNEBUNK SAVINGS BANK


                                      By: 
                                         ---------------------------------

                                       54
<PAGE>
 
                                      Name:
                                           -------------------------------  
                                      Title:
                                            ------------------------------


                    SELLER:           COASTAL BANK


                                      By: 
                                         ---------------------------------
                                      Name:
                                           -------------------------------
                                      Title:
                                            ------------------------------

                                       55
<PAGE>
 
                                 Schedule O
                                 ----------
                        Form of Bill of Sale and Receipt
                        --------------------------------

  FOR VALUE RECEIVED, Seller, as defined below, hereby absolutely and
unconditionally transfers, conveys, sells, sets over, assigns, endorses, and
negotiates to Purchaser, as defined below, all of Seller's right, title, and
interest in, to, and under all Assets, but without recourse and without
representation or warranty of any kind, whether express or implied, except as
otherwise specifically set forth in the Branch Purchase and Assumption Agreement
dated January __, 1999, between Purchaser and Seller ("Agreement").

  Seller hereby delivers and/or promises to deliver at the times and in the
manner set forth in the Agreement  (a) all of the Assets as are capable of
physical delivery, (b) all files, records, and documents (in the form or medium
presently maintained by Seller) pertaining to the Assets and the Deposit
Liabilities, (c) the contents of all safety deposit boxes maintained at the
Branch as of the Effective Time, and (d) all safety deposit box lease agreements
and other documents pertaining to the safety deposit business of the Branch as
of the Effective Time, subject to the provisions of the applicable agreements,
receipts, and other documents pertaining thereto.

  All capitalized terms that are defined in the Agreement and are not otherwise
defined herein shall have the meaning given to them in the Agreement.
 
  IN WITNESS WHEREOF, Seller and Purchaser have caused this instrument to be
duly executed and delivered as of May ____, 1999.
 

                    SELLER:           COASTAL BANK

                                      By: 
                                         ---------------------------------
                                      Name:
                                           -------------------------------  
                                      Title:
                                            ------------------------------

                    PURCHASER         KENNEBUNK SAVINGS BANK


                                      By: 
                                         ---------------------------------
                                      Name:
                                           -------------------------------
                                      Title:
                                            ------------------------------

                                       56
<PAGE>
 
                                  Schedule P
                                  ----------

                           Form of Lease Assignment
                           ------------------------


  THIS LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement"), made this
14th day of May, 1999, by and between Coastal Bank, having an address at 36
Thomas Drive, Westbrook, Maine ("Assignor"), and Kennebunk Savings Bank, having
an address at 104 Main St., P.O. Box 28, Kennebunk, Maine ("Assignee");
 
                             W I T N E S S E T H:
                             --------------------

  WHEREAS, Assignor is the owner of the leasehold estates created by the lease
attached hereto as Exhibit A and made a part hereof (the "Lease"), with respect
to the premises described in the attached Exhibit A (the "Leased Premises");

  WHEREAS, Assignor desires to assign all of its right, title and interest in
and to the Lease and the Leased Premises to Assignee, and Assignee desires to
assume Assignor's right, title and interest in and to the Lease and the Leased
Premises in accordance with the terms hereinafter set forth;

  NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by each of the parties hereto, Assignor
and Assignee do hereby agree as follows:

     1.   Assignment and Covenants.
          ------------------------ 

          a.   Assignor hereby gives, grants, bargains, sells, conveys,
               transfers and set over unto Assignee, its successors and assigns,
               all of Assignor's right, title and interest in and to the Lease
               and the Leased Premises.

          b.   Assignor, for itself, its successors and assigns, covenants with
               Assignee, its successors and assigns, as follows:  that Assignor
               is the true and lawful owner of the leasehold estate created by
               the Lease; that the Lease is now in full force and effect; that
               no default exists under the Lease, nor any condition that, with
               the passage of time or the giving of notice, or both, would
               constitute a default; that Assignor has good right to sell and
               convey the leasehold estate created by the Lease; that all rent
               now due under the Lease has been paid in full; that no claims
               exist against the leasehold estate arising by, through or under
               Assignor; and that Assignor will defend the rights of Assignee in
               the leasehold estate against all claims of title arising by,
               through or under Assignor.

          c.   Assignor warrants that Exhibit A attached hereto correctly sets
               forth: (i) Landlord's calculation of Seller's percentage of
               common expenses (additional rent), (ii) a description of the
               Leased Real Estate, and (iii) the 

                                       57
<PAGE>
 
               last date through which additional rent (as defined in Section 9
               of the Real Estate Lease) has been paid.

          d.   Except as otherwise set forth above and in the Agreement, the
               foregoing assignment and transfer is made without representation
               or warranty, express or implied, of any nature whatsoever.

     2.   Assumption.  Assignee hereby accepts the foregoing assignment and, in
          ----------                                                           
          consideration thereof, Assignee hereby covenants and agrees that, on
          and after the Effective Date, Assignee will assume, observe, perform,
          fulfill and be bound by all terms, covenants, conditions and
          obligations of the Lease that arise on and after the Effective Date
          and are to be observed, performed and fulfilled by the tenant named
          therein on and after the Effective Date in the same manner and to the
          same extent as if Assignee were the tenant named therein.

     3.   Indemnification.
          --------------- 

          a.   Assignor hereby indemnifies and agrees to defend and hold
               harmless Assignee from and against any and all liability, loss,
               damage and expense, including, without limitation, reasonable
               attorneys' fees, that Assignee may or shall incur under the Lease
               by reason of any failure or alleged failure of Assignor to have
               complied with or to have performed, before the Effective Date,
               all of the obligations of the tenant under the Lease that were to
               be performed before the Effective Date.

          b.   Assignee hereby indemnifies and agrees to defend and hold
               harmless Assignor from and against any and all liability, loss,
               damage and expense, including, without limitation, reasonable
               attorneys' fees, that Assignor may or shall incur under the Lease
               by reason of any failure or alleged failure of Assignee to comply
               with or to perform, on or after the Effective Date, all of the
               obligations of the tenant under the Lease that arise on and after
               the Effective Date and are to be performed on or after the
               Effective Date.

     4.   Effective Date.  The "Effective Date" as used herein, shall mean the
          --------------                                                      
          earlier of the following:  (i) the Closing Date, as that term is
          defined in that certain Purchase and Assumption Agreement, dated
          January __, 1999, by and between Assignor and Assignee; or (ii) the
          date upon which this Agreement is filed for record with the Recorder
          of York County, Maine.

     5.   Successors and Assigns.  The terms and conditions of this Agreement
          ----------------------                                             
          shall be binding upon and shall inure to the benefit of the parties
          hereto and their respective successors and assigns.

     6.   Counterparts.  This Agreement may be executed in several counterparts,
          ------------                                                          
          each of which shall constitute one and the same instrument.

                                       58
<PAGE>
 
  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first set forth above.



Signed in the presence of:       COASTAL BANK ("Assignor")


                                 By: 
-----------------------------       -----------------------------
Name:                            Name:
     ------------------------         ---------------------------
                                 Title:
                                       --------------------------

                                 And:
-----------------------------        ----------------------------
Name:                            Name:
     ------------------------         ---------------------------
                                 Title:
                                       --------------------------

                                 KENNEBUNK SAVINGS BANK ("Assignee")



                                 By: 
-----------------------------       -----------------------------
Name:                            Name:
                                      ---------------------------
                                 Title:
                                       --------------------------

                                 And:
-----------------------------        ----------------------------
Name:                            Name:
     ------------------------         ---------------------------

                                       59
<PAGE>
 
                                    CONSENT
                                    -------


  The undersigned, being the landlord under that certain lease dated
_____________, in Exhibit A, by _________________________ to, hereby confirms
its consent to the assignment of such lease to Kennebunk Savings Bank and
releases Coastal Bank from any further obligation thereunder.



Signed in the presence of:        LANDLORD:
                                           ----------------------

                                 By: 
-----------------------------       -----------------------------
                                 Name:
                                      ---------------------------
                                 Title:
                                       --------------------------

-----------------------------        

                                       --------------------------
                                              (Individual)

                                       60
<PAGE>
 
               (INSERT APPROPRIATE ACKNOWLEDGMENT FOR CORPORATE,
                      PARTNERSHIP OR INDIVIDUAL LANDLORD)

                                       61
<PAGE>
 
STATE OF            )
         ------     )  SS:
COUNTY OF           )
         ----------


Before me, a Notary Public in and for said County and State, personally
appeared_____________________, and __________________, the _____________________
and ____________________, respectively, of Coastal Bank, who acknowledged that
they executed the foregoing instrument on behalf of said bank and that the same
was the free act and deed of said bank and their free act and deed individually
and as such officers.

  IN WITNESS WHEREOF, I have hereunto set my hand and official seal, at
________, ______ this ____ day of _________, 19__.


                                    -----------------------------
                                    Notary Public



  STATE OF                  )
           -------          )  SS:
  COUNTY OF                 )
            ------------

  BEFORE ME, a Notary Public in and for said County and State, personally
appeared ____________________and ____________________, the ________________ and
_____________________, respectively, of Kennebunk Savings Bank who acknowledged
that they did sign the foregoing instrument on behalf of said bank and that the
same was the free act and deed of said bank, and their free act and deed
individually and as such officers.

  IN WITNESS WHEREOF, I have hereunto set my hand and official seal, at
____________, ______, this _____ day of ___________, 19__.



                                    -----------------------------
                                    Notary Public

  This instrument prepared by:

     ----------------------------
     ----------------------------
     ----------------------------
     ----------------------------

                                       62
<PAGE>
 
                                   Exhibit A
                                   ---------

                              Description of Lease
                              --------------------


The leasehold estate created by that certain lease dated _____________, by and
between _______________________, as landlord, and Coastal Bank of  36 Thomas
Drive, Westbrook, Maine ("Seller"), as tenant, a memorandum of which was
recorded in Volume ______, at Page _____ of the ____________ County, _____
Records, and together with all right, title and interest of Seller in and to the
following described premises:

                    (Insert description of Leased Premises)
                                        

                                       63
<PAGE>
 
                                   Schedule Q
                             Pending Labor Matters
                             ---------------------


NONE

                                       64
<PAGE>
 
                                   Schedule R
                                   ----------
                                        
                         Description of Leased Property
                         ------------------------------
                                        

                                        

                                       65
<PAGE>
 
                                   Schedule S
                                   ----------
                         Procedure for Inclearing Items
                         ------------------------------
                                        
       Following the consummation of the Acquisition, Seller will notify
Purchaser no later than 1:00 P.M. each business day of the monies due Seller for
inclearing items received for payment on purchased deposits. Purchaser will be
responsible for reimbursing Seller for monies due via wire transfer no later
than 5:00 P.M of the same business day. Seller will cause its inclearing
servicer (Financial Institution Service Corporation a/k/a FISC) to deliver by
courier the physical items to Purchaser located at 5 Fletcher Street (Libby
House), Kennebunk, Maine no later than 5:00 P.M. of the same business day.

                                        

                                       66
<PAGE>
 
                                   Schedule T
                                   ----------
                 Plan for ATM Card Deactivation and Activation
                 ---------------------------------------------

  Coastal Bank and Kennebunk Savings Bank will develop, within any technical
limitations imposed by internal processing systems or their respective ATM and
Debit Card processors, EDS and Mellon Network Services, an ATM and Debit Card
deactivation and activation plan designed to minimize customer loss of ATM and
Debit Card functionality.

  Coastal Bank will close the ATM located at 45 Portland Road, Kennebunk at the
close of business on the closing date.  The ATM will be reactivated by Kennebunk
Savings Bank subsequent to the opening of the branch as a Kennebunk Savings Bank
location.

                                       67