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EXHIBIT 10.7

STATE OF NORTH CAROLINA
                                               SUPPLEMENTAL DEFINED
     COUNTY OF MECKLENBURG                          CONTRIBUTION PLAN



         THIS PLAN is made and entered into effective as of the 31st day of
December, 1999, by and between PARK MERIDIAN BANK, a state banking association
organized under the laws of North Carolina with its principal offices and place
of business in the State of North Carolina (hereinafter referred to as the
"Corporation"), and KEVIN KENNELLY, an individual residing in the State of North
Carolina (hereinafter referred to as "the Employee").

                          W I T N E S S E T H  T H A T:

         WHEREAS, the Employee is employed by the Corporation;

         WHEREAS, the Employee has provided valuable services to the
Corporation;

         WHEREAS, the Corporation recognizes the valuable services performed by
the Employee and the benefits that have inured to the Corporation as a result of
such service and wishes to encourage the Employee's continued employment and
service to the Corporation;

         WHEREAS, the Employee wishes to be allowed to defer a certain amount of
compensation during the Employee's years of employment to provide additional
means of savings for the Employee and the Employee's family upon the Employee's
retirement from active service with the Corporation, or other termination of
such employment whether by reason of disability, death or otherwise; and

         WHEREAS, the parties hereto wish to document the terms and conditions
upon which the Corporation agrees to pay such deferred compensation to the
Employee or the Employee's designated beneficiary after the Employee's
retirement, disability, death or such other termination of employment.

         NOW, THEREFORE, in consideration of the Employee's past services and in
consideration of the Employee remaining in its employ until the Employee's
retirement from active service with the Corporation, or other termination of
such employment whether by reason of disability, death or otherwise, and other
good and valuable consideration, the adequacy and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

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1.       DEFINITIONS

1.1      "Beneficiary" means with respect to the Employee, the person or persons
         who are designated to receive payments under the Plan as provided
         herein. Such Beneficiary shall be initially designated by the Employee
         on the Beneficiary Designation form attached hereto as "Attachment A"
         and incorporated herein by reference.

1.2      "Compensation" means all compensation (before required withholdings)
         paid or payable by the Corporation to the Employee for services
         rendered to the Corporation.

1.3      "Corporation" means PARK MERIDIAN BANK, a state banking association
         organized under the laws of North Carolina, or any successor thereto
         and its subsidiaries.

1.4      "Death Benefit" means an amount determined as follows:

         (a)      Ascertain the amount of the Employee's Deferred Benefit
                  Account as of the date of the Employee's death;

         (b)      Divide the amount determined in (a), above, by the number of
                  years remaining in the period for which benefits are to be
                  paid to the Beneficiary;

         (c)      Divide the quotient determined in (b), above, by twelve (12).

         The result obtained above shall be the Employee's Death Benefit for the
         first year for which such Death Benefit is payable. As of each
         anniversary of the date on which such benefit is first payable to the
         Beneficiary, the Death Benefit shall be recalculated as provided above
         in this Section, and shall constitute the Death Benefit for the
         following one year period.

1.5      "Deferred Benefit Account" means the account being administered for the
         benefit of the Employee under Section 2 of the Plan. Such account shall
         consist of deferrals of the Employee's Compensation made pursuant to
         the Plan, plus interest on such deferrals, less distributions made to
         the Employee or his Beneficiary under the Plan. Such account shall not
         actually be funded but shall be a bookkeeping account established on
         the Corporation's records.

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1.6      "Deferred Compensation" means the full amount of the Employee's annual
         bonus or such other amount of the Employee's Compensation which he
         elects to defer under the Plan with the consent of the Corporation. All
         deferrals of Compensation under this Plan must be made by December 31st
         of the year prior to the year in which services are rendered which
         entitle the Employee to such Compensation, or such other time before
         the Employee is entitled to receive such Compensation from the
         Corporation, and in all events such election must be made by the
         Employee before he has performed the services for which such
         Compensation is payable. All deferrals of compensation under this Plan
         must be made in writing in the form and manner agreed to by the
         Employee and the Corporation.

1.7      "Entry Date" means the effective date of the Plan.

1.8      "Employee" means KEVIN KENNELLY.

1.9      "Fiscal Year" shall mean the 12 month period beginning on January 1 of
         each year.

1.10     "Normal Retirement Benefit" means an amount determined as follows:

         (a)      Ascertain the amount of the Employee's Deferred Benefit
                  Account as of the date of such determination;

         (b)      Divide the amount determined in (a), above, by the number of
                  years remaining in the period for which benefits are to be
                  paid to the Employee or his Beneficiary;

         (c)      Divide the quotient determined in (b), above, by twelve (12).

         The result obtained above shall be the Employee's Normal Retirement
         Benefit for the first year for which such benefit is payable. As of
         each anniversary of the date on which such benefit is first payable to
         the Employee or the Beneficiary, the Employee's Normal Retirement
         Benefit shall be recalculated as provided above in this Section, and
         shall constitute the Employee's Normal Retirement Benefit for the
         following one year period.

1.11     "Plan" means the Supplemental Defined Contribution Plan of the
         Corporation and its successors as described herein as the same may
         hereafter from time to time be amended.

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2.       ADMINISTRATION OF ACCOUNT

2.1      Deferrals of Compensation by the Employee pursuant to the Plan shall be
         credited to the Employee's Deferred Benefit Account as of the date on
         which such Compensation would have been paid to the Employee if the
         Employee had not elected to defer the receipt of such Compensation. Any
         distribution made to the Employee or the Beneficiary pursuant to the
         Plan shall be deducted from the Employee's Deferred Benefit Account as
         of the date on which such distribution is made.

2.2      During each Fiscal Year, the Employee's Deferred Benefit Account shall
         be credited with interest, compounded daily, as of the last day of such
         Fiscal Year.

2.3      The interest rate per annum which shall be credited to the Employee's
         Deferred Benefit Account for each Fiscal Year shall be that rate of
         return earned for such Fiscal Year by one of the following mutual funds
         which shall be selected by the Employee on or before December 31st of
         the year prior to the beginning of such Fiscal Year:

         (1) Eaton Vance Tax-Managed Growth (U.S. Large-Cap Growth);
         (2) Eaton Vance Tax-Managed Emerging Growth (U.S. Small-Cap Growth);
         (3) State Street Research Legacy (U.S. Large-Cap Growth); and
         (4) MFS Emerging Growth (U.S. Mid and Large Cap Growth).

         The Employee shall make his selection by completing the mutual fund
selection form attached hereto as "Attachment B" and incorporated herein by
reference. If the mutual fund selected by the Employee shall experience a loss
for a relevant Fiscal year, the Employee's Deferred Benefit Account for such
Fiscal Year shall be reduced by the amount of the loss.

 3.      PAYMENT OF BENEFITS

 3.1     Following the termination of the Employee's employment with the
         Corporation for any reason other than death, the Corporation will make
         a series of payments to the Employee, each such payment to be equal to
         the Employee's Normal Retirement Benefit. The first such payment shall
         be made on the first day of the month following the termination of the
         Employee's employment and the remaining payments shall be made on the
         first day of each succeeding month until Sixty (60) payments have been
         made. If the Employee dies before all of the payments due to the
         Employee have been made, then any remaining payments shall be made to
         the Employee's Beneficiary. If the Employee's Beneficiary dies before
         all of the

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         payments due to the Beneficiary have been made, then any remaining
         payments shall be made to the personal representative of the
         Beneficiary's estate.

3.2      Following the termination of the Employee's employment with the
         Corporation on account of his death, the Corporation will make a series
         of payments to such Employee's Beneficiary, each such payment to be
         equal to the Employee's Death Benefit. The first such payment shall be
         made on the first day of the month following the Employee's death and
         the remaining payments shall be made on the first day of each
         succeeding month until Sixty (60) payments have been made. If the
         Employee's Beneficiary dies before all of the payments due to the
         Beneficiary have been made, then any remaining payments shall be made
         to the personal representative of the Beneficiary's estate.

3.3      If, at the death of the Employee, there is no properly designated
         living Beneficiary, then any payment(s) due under Section 3.1 or 3.2
         shall be made to the personal representative of the Employee's estate.

3.4      After the Employee's death, if the Employee's Beneficiary becomes
         entitled to receive any payments hereunder she shall have the right,
         upon providing Thirty (30) days written notice to the Corporation, to
         elect to receive a lump sum payment of the then remaining balance in
         the Deferred Benefit Account.

4.       RIGHTS AND DUTIES OF EMPLOYEES

4.1      The Employee or any other person shall not have any interest in any
         fund or in any specific asset or assets of the Corporation by reason of
         this Plan, or for any other reason, or have any right to receive any
         distributions under the Plan except as and to the extent expressly
         provided under the Plan. The Employee is a general creditor of the
         Corporation.

4.2      The Employee shall receive an updated copy of the Plan and shall
         receive copies of any amendments to the Plan within ten (10) days after
         their adoption.

4.3      No right of the Employee or any Beneficiary to receive payment
         hereunder shall be subject to alienation, transfer, sale, assignment,
         pledge, attachment, garnishment or encumbrance of any kind. Any attempt
         to alienate, sell, transfer, assign, pledge or otherwise encumber any
         such payments whether presently or hereafter payable shall be void. No
         payment under this Plan shall be subject to debts or liabilities of any
         Employee or Beneficiary.

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4.4      Every person receiving or claiming payments under the Plan shall be
         presumed to be mentally competent until the date on which the
         Corporation receives a written notice in a form and manner acceptable
         to the Corporation that such person is incompetent and that a guardian,
         conservator or other person legally vested with the interest of his or
         her estate has been appointed. If a guardian or conservator of the
         estate of any person receiving or claiming payments under the Plan is
         appointed, payments under this Plan may be made to such guardian or
         conservator provided that the proper proof of appointment and
         continuing qualification is furnished in a form and manner acceptable
         to the Corporation. Any payments so made shall be a discharge of any
         liability of the Corporation for such payments.

4.5      Each person entitled to receive a payment under this Plan, whether the
         Employee, Beneficiary, a guardian or otherwise, shall provide the
         Corporation with such information it may from time to time deem
         necessary or in its best interest in administering the Plan. Any such
         person shall also furnish the Corporation with such documents,
         evidence, data or other information as the Corporation may from time to
         time deem necessary or advisable.

5.       DUTIES OF THE PLAN ADMINISTRATOR

5.1      The Plan shall be administered by the Plan Administrator.

5.2      The Plan Administrator may from time to time establish rules and
         regulations for the administration of the Plan and adopt standard forms
         for such matters as elections, beneficiary designations and
         applications for benefits, provided such rules and forms are not
         inconsistent with the provisions of the Plan.

5.3      All determinations of the Plan Administrator shall be binding on all
         parties. In construing or applying the provisions of the Plan, the
         Corporation shall have the right to rely upon a written opinion of
         legal counsel, which may be independent legal counsel or legal counsel
         regularly employed by the Corporation, whether or not any question or
         dispute has arisen as to any distribution from the Plan.

5.4      The Plan Administrator shall be responsible for maintaining books and
         records for the Plan.

6.       AMENDMENT OR TERMINATION

6.1      The Corporation reserves the right to amend, modify, terminate or
         discontinue the Plan at any time. However, no such amendment,
         modification, termination or discontinuance shall have the effect of:

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         (a)      Reducing the then value of the Employee's Deferred Benefit
                  Account; or
         (b)      Deferring the time at which benefits shall be paid to the
                  Employee or the
         (c)      Employee's Beneficiary pursuant to the Plan.

7.       NOT A CONTRACT OF EMPLOYMENT

7.1      This Plan is not a contract of employment between the Employee and the
         Corporation. No provision of this Plan restricts the right of the
         Corporation to discharge the Employee, or restricts the right of the
         Employee to terminate his employment.

8.       CLAIMS PROCEDURE

8.1      If a benefit under this Plan is not paid to the Employee or Beneficiary
         and such person believes that he or she is entitled to receive it, a
         claim shall be made in writing to the Plan Administrator within sixty
         (60) days from the date payment was to be made. Such claim shall be
         reviewed by the Plan Administrator and the Corporation. If the claim is
         denied, in full or in part, the Plan Administrator shall provide
         written notice within ninety (90) days setting forth the specific
         reasons for denial. The notice shall include specific reference to the
         provisions of this Plan upon which the denial is based and any
         additional material or information necessary to perfect the claim, if
         any. Such written notice shall also indicate the steps to be taken if a
         review of the denial is desired.

         If the claim is denied and a review is desired, the claimant shall
         notify the Plan Administrator in writing within sixty (60) days. A
         claim shall be treated as denied if the Plan Administrator does not
         take action in the aforesaid ninety (90) day period. In requesting
         review, the claimant may review this Plan or any documents relating to
         it and submit any written issues and comments he or she may feel
         appropriate. In his or her sole discretion the Plan Administrator shall
         then review the claim and provide a written decision within sixty (60)
         days. This decision likewise shall state the specific provisions of
         this Plan on which the decision is based.

         The Secretary of the Corporation is hereby designated as the named
         fiduciary and Plan Administrator of this Plan.

9.       CONSTRUCTION AND EXPENSE

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9.1      Whenever the context so requires, words in the masculine include the
         feminine and words in the feminine include the masculine and the
         definition of any terms in the singular may include the plural.

9.2      All expenses of administering the Plan shall be paid by the Corporation
         unless the Plan provides to the contrary.

9.3      The Plan shall be construed, administered and governed in all respects
         under the laws of the State of North Carolina.


                         [Signatures on Following Page]

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         IN WITNESS WHEREOF, the parties hereto have executed this Plan
effective as of the day and year first above written.

                                       "Corporation"

                                       PARK MERIDIAN BANK,
                                       a North Carolina banking association


Attest:                                By: /s/ Henry A. Harkey  (SEAL)
                                           ---------------------------
                                           Henry A. Harkey, Chairman of the
                                           Board of Directors
/s/ Bryan Kennedy, III
-----------------------------
Assistant Secretary

[CORPORATE SEAL]


By executing this Plan I hereby accept the invitation to participate in the
Plan. I acknowledge that I have read the Plan, understand its terms, understand
that benefits will be paid pursuant to the Plan only under the specific
circumstances described herein, understand that I am a general creditor of the
Corporation and that I have no interest in specific assets owned by the
Corporation.

                                        "the Employee"


                                        /s/  Kevin Kennelly   (SEAL)
                                        ----------------------------
                                        Kevin Kennelly

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                                  ATTACHMENT A

                             BENEFICIARY DESIGNATION


         For purposes of the Plan, I hereby designate the following Beneficiary:



                  Aleanne F. Kennelly



                                        /s/  Kevin Kennelly   (SEAL)
                                        ----------------------------
                                        Kevin Kennelly, Employee

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                                  ATTACHMENT B

                              MUTUAL FUND SELECTION

         For purposes of the Plan, I hereby designate the following mutual fund
to be used to calculate the interest rate per annum which shall be credited to
my Deferred Benefit Account for each Fiscal Year after the date below.












Date:                                       /s/ Kevin Kennelly   (SEAL)
     ------------------------------         ---------------------------
                                            Kevin Kennelly, Employee

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