Document:

<PAGE>

[LOGO] TEACHERS INSURANCE AND ANNUITY ASSOCIATION     JOAN H. FALLON
       COLLEGE RETIREMENT EQUITIES FUND               MANAGING DIRECTOR
       730 Third Avenue                               Telephone:  (212) 916-4412
       New York, NY  10017                            Fax:  (212) 916-4527

UPS AIR

                                                 February 16, 2000

The Townsend Group
1500 West Third Street
Suite 410
Cleveland, Ohio   44113

Attention: MR. TERRANCE R. AHERN

                             Re:     Teachers Insurance and Annuity
                                     Association of America
                                     Real Estate Separate Account;
                                     ERISA INDEPENDENT FIDUCIARY

Dear Mr. Ahern:

     This letter sets forth the terms and conditions under which Teachers
Insurance and Annuity Association of America (the "Company") offers to
appoint The Townsend Group ("Townsend") to serve as the Independent
Fiduciary, as defined below, under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") for its real estate pooled separate account
(the "Account"). The Account is designed primarily for investment by
participants in retirement plans qualified under Section 401(a) and Section
403(a) of the Internal Revenue Code of 1986, as amended, ("Code"), Code
Section 403(b) plans, and certain individual retirement annuities under
Section 408 of the Code.

1.   BACKGROUND

          On October 17, 1996 the Company was granted a prohibited transaction
     exemption ("PTE") from the Department of Labor ("DOL"), PTE 96-76,
     Exemption Application No. D-09915, 61 Fed. Reg. 54229 (1996). PTE 96-76
     provides an exemption from certain potential prohibited transactions under
     Section 406 of ERISA and Section 4975 of the Code with respect to certain
     transactions or classes of transactions involving the Account. Among other
     features, the Account offers a stand-by liquidity mechanism under which
     units of interest in the Account ("Units") may be purchased or sold by the
     Company. PTE 96-76 contemplates that various aspects of the Account's
     operation will be subject to the oversight of an independent fiduciary
     ("Independent Fiduciary") which will be a business organization

<PAGE>

     with substantial real estate investment experience and which will be
     familiar with the responsibilities of a fiduciary with respect to benefit
     plans under ERISA. The Independent

     Fiduciary will act for the exclusive benefit of the plans and plan
     participants who elect to participate in the Account.

          Included in PTE 96-76, Section III(e), 61 Fed. Reg. 54230-54231, are
     descriptions of the responsibilities of the Independent Fiduciary. The
     valuation procedures and rules for the Account are described in Exhibit A
     to this Agreement and in the proposed PTE, 61 Fed. Reg. 15128, pgs.
     15134-15136 (1996).

2.   COMPENSATION

          Compensation for services rendered by Townsend pursuant to this
     Agreement shall be paid from the Account in the amounts and in accordance
     with the terms and conditions set forth in Schedule 1 attached hereto.

3.   DUTIES AND RESPONSIBILITIES OF THE COMPANY

          The Company is an investment manager, as defined in Section 3(38) of
     ERISA, with respect to the Account, and shall be primarily responsible, as
     a fiduciary under ERISA, for all aspects of the establishment and
     administration of the Account. The Company alone shall be responsible for
     making determinations with respect to the acquisition and disposition of
     properties by the Account and for all other aspects of the investment of
     Account assets, subject to the duties and responsibilities of Townsend
     specifically set forth in PTE 96-76 and paragraph 4 hereof.

4.   DUTIES AND RESPONSIBILITIES OF TOWNSEND

     A.   Townsend's duties and responsibilities under this Agreement shall be
          those set forth in PTE 96-76 and as described below:

          (1)  Townsend will review and approve the valuation of the Account and
               of the properties held in the Account as outlined in the proposed
               PTE, 61 Fed. Reg. 15128, pgs. 15134-15136 and as more
               specifically described in Valuation Procedures and Rules which
               have been adopted for the Account by the Company and which shall
               be subject to the approval of

                                       2

<PAGE>

               Townsend. (A copy of the current draft of the valuation
               procedures and rules for the Account is attached as Exhibit A.)

          (2)  Townsend will approve the appointment of all independent
               appraisers retained by the Company to perform periodic valuations
               of Account properties. For this purpose, the Company will forward
               to Townsend information provided to the Company with respect to
               the background, education and experience of each such independent
               appraiser.

          (3)  Townsend may require an appraisal in addition to those conducted
               by an independent appraiser appointed as provided in clause (2)
               above, when it believes that the characteristics of a particular
               property have changed materially or with respect to any property
               where it deems an additional appraisal to be necessary or
               appropriate in order to assure a correct Account valuation.
               Townsend will perform such reviews of Account properties as it
               may determine to be necessary or desirable in establishing the
               necessity of such additional appraisals. Townsend shall have the
               authority to designate independent appraisers to be hired by the
               Company to perform any such additional appraisals, but the
               Company hereby reserves the right to disapprove any such
               selection. Accordingly, Townsend shall notify the Company at
               least fourteen (14) days prior to the anticipated hiring of any
               appraiser not previously approved by the Company. Any such
               appraiser will be deemed approved by the Company if the Company
               fails to object within fourteen (14) days of receipt of the
               aforesaid notice and the Company will, thereupon, hire such
               appraiser. The Company may in its sole discretion withdraw its
               approval of an appraiser at any time prior to hiring such
               appraiser for future appraisals by giving a notice of withdrawal
               of its approval.

          (4)  Townsend shall review purchases and sales of Units, as defined in
               PTE 96-76, Section IV(p), 61 Fed. Reg. 54233, by Account
               participants and the Company to assure that correct Account
               values are applied. With respect to the foregoing, Townsend may
               rely upon the truth, completeness and correctness of information
               provided to it by the Company or by the independent auditor
               designated by the Company with respect to the Account.

          (5)  If required under PTE 96-76, Townsend will determine with the
               Company the appropriate "Trigger Point" as defined in PTE 96-76,
               Section IV(o), 61 Fed. Reg. 54233, relating to the level of the
               Company's ongoing ownership of Liquidity Units in the Account, as
               defined in PTE 96-76, Section IV(g), 61 Fed. Reg. 54232, and the
               manner in which any reduction of the Company's participation in
               excess of such Trigger Point

                                       3
<PAGE>

               is to be effected as contemplated under the PTE. If Townsend
               believes that asset sales are desirable in order to reduce the
               Company's ownership of Units in the Account, Townsend will
               participate in the planning of any such program of sales,
               including the selection of the properties to be sold and the
               guidelines to be followed in making such sales.

          (6)  In the event of the termination of the Account as described in
               PTE 96-76, Section III(e)(10) and (11), 61 Fed. Reg. 54231,
               Townsend will approve the sale of Account properties and
               supervise Account operation during the "Wind Down" period (as
               defined in PTE 96-76, Section IV(q), 61 Fed. Reg. 54233). Such
               period will commence with the Company's notice to Account
               participants of its termination of the Account and will end on
               the date that no Units are held by any Participant (and, if
               applicable, Participating Plans), as defined in PTE 96-76 (SEE
               Section III(c), 61 Fed. Reg. 54229 and IV(h), 61 fed. Reg. 54232,
               respectively).

          (7)  Townsend will review and approve the investment guidelines
               established by the Company for the Account and will monitor the
               conformity of all property acquisitions and sales with the
               requirements of such guidelines.

          (8)  With respect to any other transaction or matter involving the
               Account that is submitted to Townsend by the Company, Townsend
               will review said transaction or matter in order to determine
               whether it is fair to the Account and in the Account's best
               interests.

     B.   In the event that the Company or the DOL or any other governmental
          agency requires or requests Townsend to perform additional functions
          reasonably related to the type of review described herein, or to
          undertake duties with respect to the Account beyond those specifically
          enumerated herein, these additional duties and functions shall be
          deemed to be included among the duties of Townsend under this
          Agreement, provided that:

          (1)  The Company requests Townsend to perform such activity in
               writing; and

          (2)  Townsend and the Company determine the nature and amount of any
               additional compensation that may be appropriate with respect to
               such additional duties. If Townsend and the Company are not able
               to agree upon the nature and amount of any additional
               compensation, Townsend and the Company hereby agree to submit any
               disputed issues to arbitration and to be bound by the results
               thereof; provided, however, that Townsend shall nevertheless
               perform the additional duties described above during the time
               required for a final determination to be made with respect to the
               nature and/or amount of any additional compensation that it may
               receive.

                                       4
<PAGE>

     C.   Townsend will meet with the Company on a quarterly basis to review the
          activities of the Account and the actions that Townsend has taken
          under this Agreement. Townsend will submit to the Company a summary
          report from time to time as it may deem necessary or appropriate, but
          no less frequently than annually. Such report shall be a written
          report that summarizes and explains all actions and activities that
          Townsend has undertaken since the submission of the last such report
          or the commencement of its terms, except those actions and activities
          that Townsend in its judgment deems to be not material. All or any
          part of any such report may, after consultation with Townsend, be
          provided by the Company to any Account participant or to the DOL or
          any other governmental agency. Townsend shall maintain appropriate
          records of its actions and activities under this Agreement and will
          allow the Company to review such records during normal business hours
          upon reasonable prior request by the Company, and the Company, after
          consultation with Townsend, may provide the results of any such review
          to the DOL or to any other governmental agency.

     D.   Townsend may make all reasonable inquiries, consult with whomever it
          reasonably deems necessary, do all acts that are reasonably necessary
          to the performance of its duties, and review such Company documents as
          are reasonably appropriate for carrying out its responsibilities under
          this Agreement. All work to be performed, pursuant to this paragraph
          4, may be performed during normal business hours at the Company's Home
          Office, 730 Third Avenue, New York, New York 10017 or such other place
          as may be reasonably designated by Townsend, including Townsend's
          offices.

5.   REPRESENTATIONS

     Townsend represents and agrees that:

     A.   Townsend has at least five years of experience with respect to
          commercial real estate investments.

     B.   The gross income which is received by Townsend (or any partnership or
          corporation of which Townsend is a 10 percent or more partner or
          shareholder) from the Company and its affiliates (as defined in PTE
          96-76, Section IV(b), 61 Fed. Reg. 54231-54232) for any fiscal year
          ending during the term of this Agreement shall not exceed 5 percent of
          its annual gross income from all sources for the preceding fiscal
          year. Such income limitation will include services rendered to the
          Account as the Independent Fiduciary under any prohibited transaction
          exemption granted by the DOL. Townsend will provide, on or before
          February 15, of each year, a written report to the Company of the
          gross income

                                       5
<PAGE>

          it received from the Company in the prior fiscal year as a percentage
          of the gross income received during the preceding fiscal year.

     C.   Townsend shall not (i) acquire any property from, sell any property to
          or borrow any funds from, the Company or any of its affiliates during
          the period for which it serves as an Independent Fiduciary under this
          Agreement and for a period of six months thereafter, or (ii) negotiate
          any such transaction described in (i) during the period that Townsend
          serves as the Independent Fiduciary.

     D.   In the event that the DOL requires additional representations by
          Townsend, it is agreed that Townsend will make any such reasonably
          required representations that are true in fact.

6.   INDEPENDENT STATUS

          As the Independent Fiduciary, Townsend shall not be an agent of the
     Company. In keeping with this status, Townsend shall be free to control its
     method of fulfilling its responsibilities within the framework of its
     obligations to the Participants and their beneficiaries (and, if
     applicable, Participating Plans), as defined in PTE 96-76, Section III(c),
     61 Fed. Reg. 54229 and IV(h), 61 Fed. Reg. 54232, respectively, and to the
     Company.

7.   FIDUCIARY STANDARDS/CONFIDENTIALITY

          Notwithstanding any other provision of this Agreement, it is
     understood that Townsend will act as a fiduciary, as defined in ERISA, with
     respect to the Participants and their beneficiaries (and, if applicable,
     Participating Plans) that invest in the Account, and that Townsend will
     perform its duties under this Agreement for the exclusive benefit of such
     Participants, their beneficiaries and Participating Plans and in conformity
     with the legal requirements imposed upon it by ERISA.

          It is understood that Townsend will not unnecessarily engage in any
     activity in connection with this appointment that is adverse to the
     interest of the Company. Townsend may provide similar independent fiduciary
     services with respect to other benefit plans subject to ERISA; provided
     that Townsend does not use or disclose in such relationships confidential
     information obtained by it in the course of providing services under this
     Agreement.

          Upon termination of this Agreement, Townsend will disclose to the
     Company all material in its possession that has been released to it by the
     Company or produced pursuant to this Agreement. Such material may be
     retained by Townsend if it deems such

                                       6
<PAGE>

     retention to be necessary to protect its interests or the interests of the
     Participants and their beneficiaries (and, if applicable, Participating
     Plans) that have invested in the Account. If Townsend retains any such
     material, it shall promptly notify the Company in writing of such action.
     The aforesaid notice shall include an itemized list of all retained
     documents and other materials. Upon receipt of the aforesaid notice, or at
     any time thereafter, the Company may at its option, require that Townsend
     deliver all such retained material to the person who succeeds to its
     position as Independent Fiduciary. However, Townsend may retain any
     materials that it deems necessary to protect its interests, provided that
     copies of said materials are furnished to either the Company or Townsend's
     successor as Independent Fiduciary, upon request. Townsend will not at any
     time during the term of this Agreement or thereafter disclose any of the
     Company's trade secrets, confidential business methods, or any other
     confidential information which it may have acquired during its service as
     Independent fiduciary under this Agreement.

8.   PERSONNEL

          Townsend agrees that, without limiting its responsibilities under this
     Agreement or under ERISA, primary responsibility for the performance of the
     services contemplated under this Agreement shall be assigned to Mr.
     Terrence R. Ahern and that it will use its best efforts to assure that Mr.
     Terrence R. Ahern continues to act in such capacity during the term of this
     Agreement. In the event that Mr. Terrence R. Ahern does not, for any
     reason, continue to serve in such capacity, Townsend agrees that it will
     assign primary responsibility for the duties contemplated under this
     Agreement to a senior employee of similar experience and ability.

9.   EFFECTIVE DATE/TERMINATION/NOTICE

     A.   This Agreement shall become effective on March 1, 2000, or if later,
          the date of receipt by the Company of a copy of this Agreement that
          has been executed by Townsend and by an authorized officer of the
          Company.

     B.   Townsend's appointment shall commence on the date this Agreement
          becomes effective for a three (3) year term, and shall be renewable by
          the Company, from time to time, and without limitation on the number
          of renewals, for additional three (3) year terms. The Company shall
          delegate to a special subcommittee of the Company's Investment
          Committee (the "Subcommittee") the sole power to renew any such
          appointment and the Subcommittee shall not renew the appointment if
          forty percent (40%) of the Subcommittee members disapprove of such
          renewal. Upon expiration of Townsend's appointment without renewal
          this Agreement shall terminate. Townsend may terminate this Agreement
          at any time but must give at

                                       7
<PAGE>

          least 180 days prior written notice to the Company. The Company must
          terminate this Agreement and Townsend's appointment prior to the
          expiration of the term of its appointment if a majority of the Special
          Subcommittee members determines that: (1) Townsend has breached any
          representation set forth in paragraph 5; (2) that Townsend has failed
          to carry out its responsibilities under this Agreement in an effective
          manner, or is unable to do so; or (3) that a merger or restructuring
          of Townsend with or into another entity may cause a conflict of
          interest that shall impair Townsend's ability to carry out its
          responsibilities under this Agreement in an effective manner. In the
          event that Townsend's term shall terminate as described in this
          paragraph 9B., Townsend shall be compensated only for services
          performed by it prior to the date of such termination.

     C.   Unless otherwise expressly provided herein, any notice, demand or
          request under this Agreement shall be deemed to have been properly
          given and served by depositing the same in the United States mail,
          addressed as provided herein, postpaid and registered or certified
          with return receipt requested. Any such notice, demand or request
          shall be effective upon being deposited in the United States mail.
          However, the time period in which a response or action to any such
          notice, demand or request must be given or taken shall commence to run
          from the date of receipt on the return receipt of the notice, demand
          or request by the addressee thereof. Rejection or other refusal to
          accept or the inability to deliver because of changed address of which
          no notice was given shall be deemed to be receipt of the notice,
          demand or request. Notice to the Company shall be addressed to Ms.
          Joan H. Fallon, Managing Director, Teachers Insurance and Annuity
          Association of America, 730 Third Avenue, New York, New York
          10017-3206, with a copy to Ms. Monica Dodd Calhoun, Vice President and
          Chief Counsel, Teachers Insurance and Annuity Association of America,
          730 Third Avenue, New York, New York 10017-3206, (or such other person
          or persons as the Company may designate). Notice to Townsend shall be
          addressed to Mr. Terrance R. Ahern, Principal, The Townsend Group,
          1500 West Third Street, Suite 410, Cleveland, Ohio 44113.

10.  INDEMNIFICATION AND INSURANCE

     A.   Subject to the limitations in clause C of this paragraph 10, Townsend
          shall be indemnified and saved harmless by the Account from and
          against any and all claims of liability arising in connection with the
          exercise of its duties and responsibilities to the Account by reason
          of any act or omission, including all expenses reasonably incurred in
          the defense of such act or omission, unless (1) it shall be
          established by final judgement of a court of competent jurisdiction
          that such act or omission involved a violation of the duties imposed
          by Part 4 of Title I of ERISA on the part of Townsend, or (2) in the
          event of a settlement or other

                                       8
<PAGE>

          disposition of such claim involving the Account, it is determined by
          written opinion of independent counsel acceptable to both parties,
          that such act or omission involved a violation of the duties imposed
          by Part 4 of Title I of ERISA on the part of Townsend.

     B.   Subject to the limitation in clause C of this paragraph 10, the
          Account shall pay expenses (including reasonable attorneys' fees and
          disbursements), judgments, fines and amounts paid in settlement
          incurred by Townsend in connection with any of the proceedings
          described above, in advance of the final disposition of such
          proceedings, provided that (1) Townsend shall repay such advances to
          the Account, plus reasonable interest, if it is established by a final
          judgment of a court of competent jurisdiction, or by written opinion
          of independent counsel under the circumstances described in section A
          above, that Townsend violated its duties under Part 4 of Title I of
          ERISA, and (2) Townsend shall, in the discretion and upon the request
          of the Company, provide a bond or make other appropriate arrangements
          for repayment of advances. Notwithstanding the foregoing, no such
          advances shall be made in connection with any claim against Townsend
          that is made by the Account or the Company, provided that upon the
          final disposition of such claim, the expenses (including reasonable
          attorneys' fees and disbursements), judgments, fines and amounts paid
          in settlement incurred by Townsend shall be reimbursed by the Account
          to the extent provided above.

     C.   The indemnification provided under clauses A and B of this paragraph
          10 shall apply only to claims and expenses not actually covered by
          insurance. Townsend agrees to maintain professional liability coverage
          that includes coverage for its responsibilities under this Agreement,
          with limits of at least $5 million for errors and omissions, $2
          million for general business liability, and a $1 million fidelity
          bond, throughout the term of this Agreement.

11.  ENTIRE AGREEMENT

          This letter contains the entire agreement between the parties.
     However, where the text of this Agreement contains express reference to PTE
     96-76, or specific paragraphs of of PTE 96-76 and the proposed PTE, 61 Fed.
     Reg. 15128 (1996), and the representations made therein, it is the
     intention of the parties that PTE 96-76 and the proposed exemption be
     incorporated in this Agreement for the purpose of construing the meaning of
     such express references. This Agreement may not be changed orally or by
     conduct but only by agreement in writing signed by both parties.

12.  NO WAIVER

          Failure to insist upon strict compliance with any of the terms,
     covenants, or

                                       9
<PAGE>

     conditions of this Agreement shall not be deemed a waiver of such term,
     covenant, or condition, nor shall any waiver or relinquishment of any right
     or power hereunder at any one or more times be deemed a waiver or
     relinquishment of such right or power at any other time or times.

13.  SEVERABILITY

          The invalidity or unenforceability any provision of this Agreement
     shall in no way affect the validity or enforceability of any other
     provision.

14.  CHOICE OF LAW

          This Agreement and performance hereunder is subject to ERISA. However,
     to the extent that this Agreement and performance hereunder is not governed
     by ERISA or other applicable federal law, the laws of the State of New York
     shall apply. The choice of law embodied in this paragraph 14 shall be
     effective irrespective of the jurisdiction in which any suit, action or
     proceeding may be instituted.

          Please signify your acceptance by signing below and returning a copy
     of this letter to the Company.

                                 Sincerely,

                                 TEACHERS INSURANCE AND ANNUITY
                                    ASSOCIATION OF AMERICA

                                  By:________________________
                                          Joan H. Fallon

Accepted:

THE TOWNSEND GROUP

By:______________________            Date:   _______________
     Terrance R. Ahern

                                       10

<PAGE>

                                    EXHIBIT A

              TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

                         VALUATION PROCEDURES AND RULES
                             FOR REAL ESTATE ACCOUNT

       This outline summarizes the basic elements of the valuation procedures
and rules for the Account.

BASIC PRINCIPLES

1.     The valuation of equity real estate holdings is not an exact science; it
       requires appraisals which are independent estimates of market value.

       A.     Sales are the best measure of the value of equity real estate
              holdings, but since they don't occur frequently, appraisals are
              generally believed to be the best estimate of value at a given
              point in time.

       B.     Independent appraisals are expensive, and a balance is required
              between the accuracy of the estimate of value and the cost to the
              Account of additional appraisals.

2.     The Account's valuation procedures and rules are under the direct
       supervision of an Independent Fiduciary and operate within guidelines and
       limits established by the Independent Fiduciary.

VALUATION PROCEDURES FOR THE ACCOUNT

1.     INDEPENDENT FIDUCIARY. The valuation of Account properties is conducted
       under the supervision of the Independent Fiduciary.

                                       1
<PAGE>

       A.     The valuation procedures and rules will be approved by the
              Independent Fiduciary. They cannot be changed without the consent
              of the Independent Fiduciary.

       B.     The rules will limit the extent to which a property's value can
              change without the prior approval of the Independent Fiduciary.

       C.     The Independent Fiduciary may require a new independent appraisal
              of any property at any time.

2.     INITIAL VALUATION. The initial value of each property will be the price
       at which it is acquired (including all expenses relating to purchase,
       such as acquisition fees, legal fees and expenses, and other closing
       costs).

3.     SCHEDULED VALUATIONS.

       A.     INDEPENDENT APPRAISALS. Each property will be valued by an
              independent appraiser at least once per year.

              (i)    The appraisal cycle will be set up so that properties will
                     be independently appraised in as even a pattern as
                     practical over the course of a calendar year. This will be
                     done by assigning to each property, at the time it is
                     purchased, the month in which its independent appraisal
                     will occur each year.

              (ii)   The independent appraisers selected by TIAA must be
                     approved by the Independent Fiduciary.

              (iii)  The following would be among the factors generally
                     considered in the annual appraisal:

                     -      description and condition of the property

                     -      regional and local market conditions

                     -      current and projected occupancy levels

                     -      highest and best use of the property

                     -      cost approach

                     -      sales comparison approach

                                       2
<PAGE>

                     -      income approach including discounted cash flow
                            analysis

       B.     QUARTERLY UPDATES. TIAA's staff will update the independent
              appraisals on a quarterly basis.

                     (i)    Appraisal assumption (e.g. discount rates and rates
                            of inflation) will be reviewed and revised as
                            necessary.

                     (ii)   Occupancy levels, cash flow, etc. will be reviewed
                            as well as regional and local market conditions.

       C.     ACCRUALS. The Accumulation and Liquidity Unit Values of the
              Account may change by a daily accrual of projected income and
              expenses during a given month. The Annuity Unit values of the
              Account may change on the last calendar day of each month by the
              accrual of projected income and expenses for that month.

4.     SPECIAL ADJUSTMENTS. The value of a given property could be adjusted at
       any time to reflect any immediate or significant changes in value.

5.     LIMITS AND SUPERVISION

       A.     The Independent Fiduciary receives quarterly valuation reports
              from TIAA which, in addition to their involvement, detail Account
              activity. The format of these reports will be developed with the
              Independent Fiduciary. The Fiduciary will, therefore, be familiar
              with Account properties.

       B.     Daily accruals of income and expenses, as well as incremental
              adjustments in property value (from quarterly updates), will be
              reported to the Independent Fiduciary as they are included in the
              Unit value calculation.

       C.     Material changes in value (as described in D. below) will be
              approved by the Independent Fiduciary prior to inclusion in a Unit
              Value calculation.

       D.     TIAA cannot, without the prior approval of the Independent
              Fiduciary, change the values of one or more properties if such
              changes would exceed the following limits:

               (i)  The adjustment would result in a 6 percent increase or
                    decrease in the value of a given property since the last
                    independent appraisal of that property;

               (ii) The adjustments would result in a greater than 2 percent
                    change in the value of the Account since the prior monthly
                    valuation date; or

                                       3
<PAGE>

              (iii)  The adjustments would result in a greater than 4 percent
                     change in the value of the Account within any calendar
                     quarter.

       In addition, the Independent Fiduciary will approve any adjustments made
within the first three months after the receipt of the annual appraisal
performed by an independent qualified appraiser.

                                       4<PAGE>

                              ADOPTION AGREEMENT
                                      FOR
                         NEWBERRY FEDERAL SAVINGS BANK
              EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST

Name of Employer:    Newberry Federal Savings Bank
                   ------------------------------------------------------

Address:             1735 Wilson Road, Newberry, SC 29108
                   ------------------------------------------------------

Telephone Number:    (803) 321-3200         (803) 321-3225 FAX
                   ------------------------------------------------------

Contact Person:      Mr. Stephen Sligh, President
                   ------------------------------------------------------

Name of Plan:        Newberry Federal Savings Bank Employees'
                   ------------------------------------------------------
                     Savings & Profit Sharing Plan and Trust
                   ------------------------------------------------------

THIS ADOPTION AGREEMENT, upon execution by the Employer and the Trustee, and
subsequent approval by a duly authorized representative of Pentegra Services,
Inc. (the "Sponsor"), together with the Sponsor's Employees' Savings & Profit
Sharing Plan and Trust Agreement (the "Agreement"), shall constitute the
Newberry Federal Savings Bank Employees' Savings & Profit Sharing Plan and Trust
(the "Plan").  The terms and provisions of the Agreement are hereby incorporated
herein by this reference; provided, however, that if there is any conflict
between the Adoption Agreement and the Agreement, this Adoption Agreement shall
control.

The elections hereinafter made by the Employer in this Adoption Agreement may be
changed by the Employer from time to time by written instrument executed by a
duly authorized representative thereof; but if any other provision hereof or any
provision of the Agreement is changed by the Employer other than to satisfy the
requirements of Section 415 or 416 of the Internal Revenue Code of 1986, as
amended (the "Code"), because of the required aggregation of multiple plans, or
if as a result of any change by the Employer the Plan fails to obtain or retain
its tax-qualified status under Section 401(a) of the Code, the Employer shall be
deemed to have amended the Plan evidenced hereby and by the Agreement into an
individually designed plan, in which event the Sponsor shall thereafter have no
further responsibility for the tax-qualified status of the Plan.  However, the
Sponsor may amend any term, provision or definition of this Adoption Agreement
or the Agreement in such manner as the Sponsor may deem necessary or advisable
from time to time and the Employer and the Trustee, by execution hereof,
acknowledge and consent thereto.  Notwithstanding the foregoing, no amendment of
this Adoption Agreement or of the Agreement shall increase the duties or
responsibilities of the Trustee without the written consent thereof.

                                       1
<PAGE>

  I.  Effect of Execution of Adoption Agreement

      The Employer, upon execution of this Adoption Agreement by a duly
      authorized representative thereof, (choose 1 or 2):

      1. _____  Establishes as a new plan the Newberry Federal Savings Bank
                Employees' Savings & Profit Sharing Plan and Trust, effective
                _____________________, 200______ (the "Effective Date").

      2.   X    Amends its existing defined contribution plan and trust
         -----

                ( Newberry Federal Savings Bank 401(k) Profit Sharing
                 ----------------------------------------------------
                 Plan) dated October 1, 1985, in its entirety into the Newberry
                 ----        ---------
                 Federal Savings Bank Employees' Savings & Profit Sharing Plan
                 and Trust, effective May 1, 2000, except as otherwise provided
                                      -----------
                 herein or in the Agreement (the "Effective Date").

  II.  Definitions

       A.  Employer

           1. "Employer," for purposes of the Plan, shall mean:

                             Newberry Federal Savings Bank
              -------------------------------------------------------

           2. The Employer is (choose whichever may apply):

         (a) _____  A member of a controlled group of corporations under Section
                    414(b) of the Code.

         (b) _____  A member of a group of entities under common control under
                    Section 414(c) of the Code.

         (c) _____  A member of an affiliated service group under Section 414(m)
                    of the Code.

         (d)  X     A corporation.
             -----

         (e) _____  A sole proprietorship or partnership.

         (f) _____  A Subchapter S corporation.

      3. Employer's Taxable Year Ends on    9/30  .
                                          --------

      4. Employer's Federal Taxpayer Identification Number is   57-0216290 .
                                                               ------------

      5. Employer's Plan Number is (enter 3-digit number) 002 .
                                                         -----

    B. "Entry Date" means the first day of the (choose 1 or 2):

      1.   X   Calendar month coinciding with or next following the date the
         ----
               Employee satisfies the Eligibility requirements described in
               Section III.

                                       2
<PAGE>

      2. ____  Calendar quarter (January 1, April 1, July 1, October 1)
               coinciding with or next following the date the Employee satisfies
               the Eligibility requirements described in Section III.

    C. "Member" means an Employee enrolled in the membership of the Plan.

    D. "Normal Retirement Age" means (choose 1 or 2):

      1.   X   Attainment of age   65   (select an age not less than 55 and not
         ----                    ------
               greater than 65).

      2. _____  Later of: (i) attainment of age 65 or (ii) the fifth anniversary
                of the date the Member commenced participation in the Plan.

    E. "Normal Retirement Date" means the first day of the first calendar month
       coincident with or next following the date upon which a Member attains
       his or her Normal Retirement Age.

    F. "Plan Year" means the twelve (12) consecutive month period ending on
       9/30  (month/day).
      -----

    G. "Salary" for benefit purposes under the Plan means (choose 1, 2 or 3):

       1.   X   Total taxable compensation as reported on Form W-2 (exclusive of
          ----
                any compensation deferred from a prior year).

       2. ____  Basic Salary only.

       3. ____  Basic Salary plus one or more of the following (if 3 is chosen,
                then choose (a), (b),  (c) or (d), whichever shall apply):

         (a)  _____  Commissions not in excess of $______________________

         (b)  _____  Commissions to the extent that Basic Salary plus
                     Commissions do not exceed $ _____________________

         (c)  _____  Overtime

         (d)  _____  Overtime and bonuses

       Note:  Member pre-tax contributions to a Section 401(k) plan are always
              included in Plan Salary.

              Member pre-tax contributions to a Section 125 cafeteria plan are
              also to be included in Plan Salary, unless the Employer elects to
              exclude such amounts by checking this line. ___________

III.  Eligibility Requirements

      A. All Employees shall be eligible to participate in the Plan in
         accordance with the provisions of Article II of the Plan, except the
         following Employees shall be excluded (choose whichever shall apply):

         1.   X   Employees who have not attained age 21.
            ----

         2.   X   Employees who have not, during the 12    consecutive month
            ----                                    ------
                  period (1-11, 12 or 24) beginning with an Employee's Date of
                  Employment, Date of Reemployment or any anniversary thereof,
                  completed 1,000 Hours of Service (determined by multiplying
                           -------
                  the number of months above by 83 1/3.

                  Note: Employers which permit Members to make pre-tax elective
                  deferrals to the Plan (see V.A.3.) may not elect a 24 month
                  eligibility period.

                                       3
<PAGE>

         3.   X   Employees included in a unit of Employees covered by a
            ----
                  collective bargaining agreement, if retirement benefits were
                  the subject of good faith bargaining between the Employer and
                  Employee representatives.

         4.   X   Employees who are nonresident aliens and who receive no earned
            ----
                  income from the Employer which constitutes income from sources
                  within the United States.

         5. ____  Employees included in the following job classifications:

                  (a)  _____   Hourly Employees

                  (b)  _____   Salaried Employees

         6. ____  Employees of the following employers which are aggregated
                  under Section 414(b), 414(c) or 414(m) of the Code:

                  ----------------------------------------------------------
                  ____________________________________________
                  ____________________________________________

         Note:  If no entries are made above, all Employees shall be eligible to
                participate in the Plan on the later of: (i) the Effective Date
                or (ii) the first day of the calendar month or calendar quarter
                (as designated by the Employer in Section II.D.) coinciding with
                or immediately following the Employee's Date of Employment or,
                as applicable, Date of Reemployment.

    B.   Such Eligibility Computation Period established above shall be
         applicable to (choose 1 or 2):

         1.  X   Both present and future Employees.
            ---

         2. ___  Future Employees only.

    C.   Such Eligibility requirements established above shall be (choose 1 or
         2):

         1.   X   Applied to the designated Employee group on and after the
            ----
                  Effective Date of the Plan.

         2. ____  Waived for the _____ consecutive monthly period (may not
                  exceed 12) beginning on the Effective Date of the Plan.

                                       4
<PAGE>

  IV.  Hours of Employment and Prior Employment Credit

       A. The number of Hours of Employment with which an Employee or Member is
          credited shall be (choose 1 or 2):

          1.   X   The actual number of Hours of Employment. (Hour of Service
             ----
                   Method)

          2. ____  190 Hours of Employment for every month of Employment.
                   (Equivalency Method)

          Note:  This election is relevant if you selected an eligibility
                 requirement under III.A.2. or a vesting schedule under VIII.A.
                 other than immediate vesting.

       B. Prior Employment Credit:      N/A

          _____  Employment with the following entity or entities shall be
                 included for eligibility and vesting purposes:

       Note:     If this Plan is a continuation of a Predecessor Plan, service
                 under the Predecessor Plan shall be counted as Employment under
                 this Plan.

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

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

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

  V.  Contributions

      Note:  Annual Member pre-tax elective deferrals, Employer matching
             contributions, Employer basic contributions, Employer supplemental
             contributions, Employer profit sharing contributions and Employer
             Qualified Non-Elective contributions, in the aggregate, may not
             exceed 15% of all Members' Salary (excluding from Salary Member
             pre-tax elective deferrals).

      A.  Employee Contributions (fill in 1 and/or 6 if applicable; choose 2 or
          3; 4 or 5):

          1.   X   The maximum amount of monthly contributions a Member may make
             ----
                   to the Plan is 10 % (1-20) of the Member's monthly Salary.
                                 ----
          2.   X    A Member may make pre-tax elective deferrals to the Plan,
             ----
                    based on multiples of 1% of monthly Salary.

          3. ____   A Member may not make pre-tax elective deferrals to the
                    Plan.

          4. ____   A Member may make after-tax contributions to the Plan, based
                    on multiples of 1% of monthly Salary.

          5.   X   A Member may not make after-tax contributions to the Plan.
             ----

                                       5
<PAGE>

          6.   X   An Employee may allocate a rollover contribution to the Plan
             ----
                   prior to satisfying the Eligibility requirements described
                   above.

    B.    A Member may change his or her contribution rate (choose 1, 2 or 3):

          1. _____  1 time per pay period.

          2. _____  1 time per calendar month.

          3.   X    1 time per calendar quarter.
             -----

    C.    Employer Matching Contributions (fill in 1 if applicable; and choose
          2, 3, 4 or 5):

          1. The Employer matching contributions under 2, 3 or 4 below shall be
             based on the Member's contributions not in excess of 5 % (1-20 but
                                                                 ---
             not in excess of the percentage specified in A.1. above) of the
             Member's Salary.

          2.  X   The Employer shall allocate to each contributing Member's
             ----
                  Account an amount equal to 100 % (based on 1% increments not
                  to exceed 200%) of the Member's contributions for that month.

          3. ____ The Employer shall allocate to each contributing Member's
                  Account an amount determined in accordance with the following
                  schedule:

                       Years of Employment     Matching %
                       -------------------     -------------
                     Less than 3                        50%
                     At least 3, but less than 5        75%
                     5 or more                          100%

          4. ____ The Employer shall allocate to each contributing Member's
                  Account an amount determined in accordance with the following
                  schedule:

                       Years of Employment     Matching %
                       -------------------     -------------
                     Less than 3                        100%
                     At least 3, but less than 5        150%
                     5 or more                          200%

          5. ____ No Employer matching contributions will be made to the Plan.

    D.    Employer Basic Contributions (choose 1 or 2):    N/A

          1. _____  The Employer shall allocate an amount equal to _______%
                    (based on 1% increments not to exceed 15%) of Member's
                    Salary for the month to (choose (a) or (b)):

                    (a)  _____   The Accounts of all Members

                    (b)  _____   The Accounts of all Members who were employed
                                 with the Employer on the last day of such
                                 month.

          2. _____  No Employer basic contributions will be made to the Plan.

    E.    Employer Supplemental Contributions:

          The Employer may make supplemental contributions for any Plan Year in
          accordance with Section

                                       6
<PAGE>

          3.7 of the Plan.

    F.    Employer Profit Sharing Contributions (Choose 1, 2, 3, 4, or 5):

          1. _____  No Employer Profit Sharing Contributions will be made to the
                    Plan.

          Non-Integrated Formula
          ----------------------

          2. _____  Profit sharing contributions shall be allocated to each
                    Member in the same ratio as each Member's Salary during such
                    Contribution Determination Period bears to the total of such
                    Salary of all Members.

          3. _____  Profit sharing contributions shall be allocated to each
                    Member in the same ratio as each Member's Salary for the
                    portion of the Contribution Determination Period during
                    which the Member satisfied the Employer's eligibility
                    requirement(s) bears to the total of such Salary of all
                    Members.

          Integrated Formula
          ------------------

          4. _____  Profit sharing contributions shall be allocated to each
                    Member's Account in a uniform percentage (specified by the
                    Employer as _______%) of each Member's Salary during the
                    Contribution Determination Period up to the Social Security
                    Taxable Wage Base as defined in Section _____ of the Plan
                    ("Base Salary") for the Plan Year that includes such
                    Contribution Determination Period , plus a uniform
                    percentage(specified by the Employer as _______%) of each
                    Member's Salary for the Contribution Determination Period in
                    excess of the Social Security Taxable Wage Base ("Excess
                    Salary") for the Plan Year that includes such Contribution
                    Determination Period, in accordance with Article III of the
                    Plan.

          5. _____  Profit sharing contributions shall be allocated to each
                    Member's Account in a uniform percentage (specified by the
                    Employer as _______%) of each Member's Salary for the
                    portion of the Contribution Determination Period during
                    which the Member satisfied the Employer's eligibility
                    requirement(s), if any, up to the Base Salary for the Plan
                    Year that includes such Contribution Determination Period,
                    plus a uniform percentage (specified by the Employer as
                    _______%) of each Member's Excess Salary for the portion of
                    the Contribution Determination Period during which the
                    Member satisfied the Employer's eligibility requirement(s)
                    in accordance with Article III of the Plan.

    G.    Allocation of Employer Profit Sharing Contributions:

          In accordance with Section V, G above, a Member shall be eligible to
          share in Employer Profit Sharing Contributions, if any, as follows
          (choose 1 or 2):

          1. _____  A Member shall be eligible for an allocation of Employer
                    Profit Sharing Contributions for a Contribution
                    Determination Period in all events.

                                       7
<PAGE>

          2. _____  A Member shall be eligible for an allocation of Employer
                    Profit Sharing Contributions for a Contribution
                    Determination Period only if he or she (choose (a), (b) or
                    (c) whichever shall apply):

                    (a) _____  is employed on the last day of the Contribution
                               Determination Period or retired, died or became
                               totally and permanently disabled prior to the
                               last day of the Contribution Determination
                               Period.

                    (b) _____  completed 1,000 Hours of Employment if the
                               Contribution Determination Period is a period of
                               12 months (250 Hours of Employment if the
                               Contribution Determination Period is a period of
                               3 months) or retired, died or became totally and
                               permanently disabled prior to the last day of the
                               Contribution Determination Period.

                    (c) _____  is employed on the last day of the Contribution
                               Determination Period and, if such period is 12
                               months, completed 1,000 Hours of Employment (250
                               Hours of Employment if the Contribution
                               Determination Period is a period of 3 months) or
                               retired, died or became totally and permanently
                               disabled prior to the last day of the
                               Contribution Determination Period.

    H. "Contribution Determination Period" for purposes of determining and
       allocating Employer profit sharing contributions means (choose 1,2, 3 or
       4):

       1. _____ The Plan Year.

       2. _____ The Employer's Fiscal Year (defined as the Plan's "limitation
                year") being the twelve (12) consecutive month period commencing
                ___________________(month/day) and ending _________________
                (month/day).

       3. _____ The three (3) consecutive monthly periods that comprise each of
                the Plan Year quarters.

       4. _____ The three (3) consecutive monthly periods that comprise each of
                the Employer's Fiscal Year quarters. (Employer's Fiscal Year is
                the twelve (12) consecutive month period commencing __________
                (month/day) and ending ____________________________(month/day).)

    I. Employer Qualified Nonelective Contributions:

       The Employer may make qualified nonelective contributions for any Plan
       Year in accordance with Section 3.9 of the Plan.

VI. Investment Funds

    The Employer hereby appoints Barclays Global Investors, N.A. to serve as
    Investment Manager under the Plan.

                                       8
<PAGE>

    The Employer hereby selects the following Investment Funds to be made
    available under the Plan (choose whichever shall apply) and consent to the
    lending of securities by such funds to brokers and other borrowers. The
    Employer agrees and acknowledges that the selection of Investment Funds made
    in this Section VI is solely its responsibility, and no other person,
    including the Sponsor or Investment Manager, has any discretionary authority
    or control with respect to such selection process. The Employer hereby holds
    Investment Manager harmless from, and indemnifies it against, any liability
    Investment Manager may incur with respect to such Investment Funds so long
    as Investment Manager is not negligent and has not breached its fiduciary
    duties.

     1.   X    Money Market Fund
         ---
     2.   X    Stable Value Fund
         ---
     3.   X    Government Bond Fund
         ---
     4.   X    S&P 500 Stock Fund
         ---
     5.   X    S&P 500/Value Stock Fund
         ---
     6.   X    S&P 500/Growth Stock Fund
         ---
     7.   X    S&P MidCap Stock Fund
         ---
     8.   X    Russell 2000 Stock Fund
         ---
     9.   X    International Stock Fund
         ---
     10.  X    Asset Allocation Funds (3)
         ---
               .    Income Plus
               .    Growth & Income
               .    Growth

     11. ___   Employer Stock Fund
     12.  X    Newberry Federal Savings Bank Certificate of Deposit Fund
         ---

VII. Employer Securities  N/A

     A. If the Employer makes available an Employer Stock Fund pursuant to
        Section VI of this Adoption Agreement, then voting and tender offer
        rights with respect to Employer Stock shall be delegated and exercised
        as follows (choose 1 or 2):

        1. _____  Each Member shall be entitled to direct the Plan Administrator
                  as to the voting and tender offer rights involving Employer
                  Stock held in such Member's Account, and the Plan
                  Administrator shall follow or cause the Trustee to follow such
                  directions. If a Member fails to provide the Plan
                  Administrator with directions as to voting or tender offer
                  rights, the Plan Administrator shall exercise those rights as
                  it determines in its discretion and shall direct the Trustee
                  accordingly.

                                       9
<PAGE>

           2. _____  The Plan Administrator shall direct the Trustee as to the
                     voting of all Employer Stock and as to all rights in the
                     event of a tender offer involving such Employer Stock.

VIII.  Investment Direction

N/A    A.  Members shall be entitled to designate what percentage of employee
           contributions and employer contributions made on their behalf will be
           invested in the various Investment Funds offered by the Employer as
           specified in Section VI of this Adoption Agreement; provided,
           however, that the following portions of a Member's Account must be
           invested in the Employer Stock Fund or, if applicable, the Employer
           Certificate of Deposit Fund (choose whichever shall apply):

           1. _____  Employer Profit Sharing Contributions

           2. _____  Employer Matching Contributions

           3. _____  Employer Basic Contributions

           4. _____  Employer Supplemental Contributions

           5. _____  Employer Qualified Nonelective Contributions

N/A

       B.  ___  Amounts invested in the Employer Stock Fund or, if applicable,
                the Employer Certificate of Deposit Fund may not be transferred
                to any other Investment Fund.

N/A    1.  ___  Notwithstanding this election in B, a Member may transfer such
                amounts upon (choose whichever may apply):

                (a) _____  the attainment of age ___ (insert 45 or greater)

                (b) _____  the completion of ___ (insert 10 or greater) years of
                           employment

                (c) _____  the attainment of age plus years of employment equal
                           to ___ (insert 55 or greater)

       C.  A Member may change his or her investment direction (choose 1,2, or
           3):

           1.  X   1 time per business day.
              ---

           2. ___  1 time per calendar month.

           3. ___  1 time per calendar quarter.

       D.  If a Member fails to make an effective investment direction, the
           Member's contributions and employer contributions made on the
           Member's behalf shall be invested in Newberry Savings Bank CD Fund
                                                -----------------------------
           (insert one of the Investment Funds selected in Section VI of this
           Adoption Agreement).

                                       10
<PAGE>

  IX.  Vesting Schedules; Years of Employment for Vesting Purposes

       A. (Choose 1, 2, 3, 4, 5, 6 or 7)

                    Schedule           Years of Employment        Vested %
                    --------           -------------------        --------

          1. ___    Immediate           Upon Enrollment             100%

          2. ___    2-6 Year Graded     Less than 2                   0%
                                        2 but less than 3            20%
                                        3 but less than 4            40%
                                        4 but less than 5            60%
                                        5 but less than 6            80%
                                        6 or more                   100%

          3. ___    5-Year Cliff        Less than 5                   0%
                                        5 or more                   100%

          4. ___    3-Year Cliff        Less than 3                   0%
                                        3 or more                   100%

          5. ___    4-Year Graded       Less than 1                   0%
                                        1 but less than 2            25%
                                        2 but less than 3            50%
                                        3 but less than 4            75%
                                        4 or more                   100%

          6. ___    3-7 Year Graded     Less than 3                   0%
                                        3 but less than 4            20%
                                        4 but less than 5            40%
                                        5 but less than 6            60%
                                        6 but less than 7            80%
                                        7 or more                   100%

          7.  X     Other               Less than    1                0%
             ---                                   -----
                                         1  but less than  2         10%
                                        ----              ---        --
                                         2  but less than  3         20%
                                        ----              ---        --
                                         3  but less than  4         30%
                                        ----              ---        --
                                         4  but less than  5         40 %
                                        ----              ---        --
                                         5  but less than  6         60%
                                        ----              ---        --
                                         6  but less than  7         80%
                                        ----              ---        --
                                              7 or more             100%
                                                                    ---

    B. With respect to the schedules listed above, the Employer elects one of
       the following (choose 1, 2, 3 and 4; or 5):

                                       11
<PAGE>

       1. Schedule  7      solely with respect to Employer matching
                   ----
          contributions.

       2. Schedule ____    solely with respect to Employer basic contributions.

       3. Schedule ____    solely with respect to Employer supplemental
          contributions.

       4. Schedule  _____   solely with respect to Employer profit sharing
          contributions.

       5. Schedule  _____   with respect to all Employer contributions.

       NOTE:   Notwithstanding any election by the Employer to the contrary,
       each Member shall acquire a 100% vested interest in his Account
       attributable to all Employer contributions made to the Plan upon the
       earlier of (i) attainment of Normal Retirement Age, (ii) approval for
       disability or (iii) death. In addition, a Member shall at all times have
       a 100% vested interest in the Employer Qualified Non-Elective
       Contributions, if any, and in the pre-tax elective deferrals and
       nondeductible after-tax Member Contributions.

    C.  Years of Employment Excluded for Vesting Purposes

        The following Years of Employment shall be disregarded for vesting
        purposes (choose whichever shall apply):

        1. _____  Years of Employment during any period in which neither the
                  Plan nor any predecessor plan was maintained by the Employer.

        2. _____  Years of Employment of a Member prior to attaining age 18.

X.  Withdrawal Provisions

    A. The following portions of a Member's Account will be eligible for in-
       service withdrawals, subject to the provisions of Article VII of the Plan
       (choose whichever shall apply):

       1. _____ Employee after-tax contributions and the earnings thereon.

                In-service withdrawals permitted only in the event of (choose
                whichever shall apply):

                (a) _____   Hardship.

                (b) _____   Attainment of age 59 1/2.

       2.   X       Employee pre-tax elective deferrals and the earnings
          -----     thereon.

                Note:  In-service withdrawals of all employee pre-tax elective
                       deferrals and earnings thereon as of December 31, 1988
                       are permitted only in the event of hardship or attainment
                       of age 59 1/2. In-service withdrawals of earnings after
                       December 31, 1988 are permitted only in the event of
                       attainment of age 59 1/2.

                                       12
<PAGE>

      3.    X  Employee rollover contributions and the earnings thereon.
          ----
               In-service withdrawals permitted only in the event of (choose
               whichever shall apply):

               (a) _____   Hardship.

               (b) _____   Attainment of age 59 1/2.

      4.    X  Employer matching contributions and the earnings thereon.
          ----
               In-service withdrawals permitted only in the event of (choose
               whichever shall apply):

               (a) _____   Hardship.

               (b) _____   Attainment of age 59 1/2.

      5. _____ Employer basic contributions and the earnings thereon.

               In-service withdrawals permitted only in the event of (choose
               whichever shall apply):

               (a) _____   Hardship.

               (b) _____   Attainment of age 59 1/2.

      6. _____ Employer supplemental contributions and the earnings thereon.

               In-service withdrawals permitted only in the event of (choose
               whichever shall apply):

               (a) _____   Hardship.

               (b) _____   Attainment of age 59 1/2.

      7. _____ Employer profit sharing contributions and the earnings thereon.

               In-service withdrawals permitted only in the event of (choose
               whichever shall apply):

               (a) _____   Hardship.

               (b) _____   Attainment of age 59 1/2.

      8. _____ Employer qualified nonelective contributions and earnings
               thereon.

               Note:  In-service withdrawals of all employer qualified
                      nonelective contributions and earnings thereon are
                      permitted only in the event of attainment of age 59 1/2.

      9. _____ No in-service withdrawals shall be allowed.

                                       13
<PAGE>

N/A   B.  Notwithstanding any elections made in Subsection A of this Section X
          above, the following portions of a Member's Account shall be excluded
          from eligibility for in-service withdrawals (choose whichever shall
          apply):

          1. _____  Employer contributions, and the earnings thereon, credited
                    to the Employer Stock Fund or, if applicable, the Employer
                    Certificate of Deposit Fund.

          2. _____  All contributions and/or deferrals, and the earnings
                    thereon, credited to the Employer Stock Fund or, if
                    applicable, the Employer Certificate of Deposit Fund.

          3. _____  Other: _____________________________________________

XI.   Distribution Option (choose whichever shall apply)

      1.  X    Lump Sum and partial lump sum payments only.
         ----

      2. ____  Lump Sum and partial lump sum payments plus one or more of the
               following (choose (a) and /or (b)):

               (a) _____  Installment payments.

               (b) _____  Annuity payments.

      3. ____  Distributions in kind of Employer Stock.

  XII.  Loan Program (choose 1, 2 or 3)

        1.  _____  No loans will be permitted from the Plan.

        2.    X    Loans will be permitted from the Member's Account.
            -----

        3.  _____  Loans will be permitted from the Member's Account, excluding
                   (choose whichever shall apply):

                   (a) _____  Employer Profit sharing contributions and the
                              earnings thereon.

                   (b) _____  Employer matching contributions and the earnings
                              thereon.

                   (c) _____  Employer basic contributions and the earnings
                              thereon.

                   (d) _____  Employer supplemental contributions and the
                              earnings thereon.

                   (e) _____  Employee after-tax contributions and the earnings
                              thereon.

                   (f) _____  Employee pre-tax elective deferrals and the
                              earnings thereon.

                   (g) _____  Employee rollover contributions and the earnings
                              thereon.

                                       14
<PAGE>

                   (h) _____  Employer qualified nonelective contributions and
                              the earnings thereon.

                   (i) _____  Any amounts to the extent invested in the Employer
                              stock fund.

  XIII.  Additional Information

         If additional space is needed to select or describe an elective feature
         of the Plan, the Employer should attach additional pages and use the
         following format:

         The following is hereby made a part of Section --- of the Adoption
         Agreement and is thus incorporated into and made a part of the [Plan
         Name]

         Signature of Employer's Authorized Representative ____________________

         Signature of Trustee _________________________________________________

         Supplementary Page _____ of [total number of pages].

  XIV.   Plan Administrator

         The Named Plan Administrator under the Plan shall be the (choose 1, 2,
         3 or 4):

         Note:  Pentegra Services, Inc. may not be appointed Plan Administrator.

         1.    X   Employer
             ----

         2.  ____  Employer's Board of Directors

         3.  ____  Plan's Administrative Committee

         4.  ____  Other (if chosen, then provide the following information)

                   Name: ____________________________________________________

                   Address: _________________________________________________

                   Tel No: __________________________________________________

                   Contact: _________________________________________________

         Note:   If no Named Plan Administrator is designated above, the
                 Employer shall be deemed the Named Plan Administrator.

                                       15
<PAGE>

  XV.  Trustee

       The Employer hereby appoints The Bank of New York to serve as Trustee for
       all Investment Funds under the Plan except the Employer Stock Fund.

       The Employer hereby appoints the following person or entity to serve as
       Trustee under the Plan for the Employer Stock Fund.*

       Name: _________________________________________________________________

       Address: ______________________________________________________________

       Telephone No: ______________________  Contact: ________________________

                                           ___________________________________
                                                   Signature of Trustee
                                          (Required only if the Employer is
                                           serving as its own Trustee)

    * Subject to approval by The Bank of New York, if The Bank of New York is
      appointed as Trustee for the Employer Stock Fund.

    The Employer hereby appoints The Bank of New York to serve as Custodian
    under the Plan for the Employer Stock Fund in the event The Bank of New York
    does not serve as Trustee for such Fund.

                                       16
<PAGE>

                        EXECUTION OF ADOPTION AGREEMENT

By execution of this Adoption Agreement by a duly authorized representative of
the Employer, th Employer acknowledges that it has established or, as the case
may be, amended a tax-qualified retirement plan into the Newberry Federal
Savings Bank Employee's Savings & Profit Sharing Plan and Trust (the "Plan").
The Employer hereby represents and agrees that it will assume full fiduciary
responsibility for the operation of the Plan and for complying with all duties
and requirements imposed under applicable law, including, but not limited to,
the Employee Retirement Income Security Act of 1974, as amended, and the
Internal Revenue Code of 1986, as amended. In addition, the Employer represents
and agrees that it will accept full responsibility of complying with any
applicable requirements of federal or state securities law as such laws may
apply to the Plan and to any investments thereunder.  The Employer further
acknowledges that any opinion letter issued with respect to the Adoption
Agreement and the Agreement, by the Internal Revenue Service ("IRS") to Pentegra
Services, Inc., as sponsor of the Employees' Savings & Profit Sharing Plan, does
not constitute a ruling or a determination with respect to the tax-qualified
status of the Plan and that the appropriate application must be submitted to the
IRS in order to obtain such a ruling or determination with respect to the Plan.

The failure to properly complete the Adoption Agreement may result in
disqualification of the Plan and Trust evidenced thereby.

The Sponsor will inform the Employer of any amendments to the Plan or Trust
Agreement or of the discontinuance or abandonment of the Plan or Trust.

Any inquiries regarding the adoption of the Plan should be directed to the
Sponsor as follows:

                        Pentegra Services, Inc.
                        108 Corporate Park Drive
                        White Plains, New York 10604
                        (914) 694-1300

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed by its duly authorized officer this 31st day of March    , 2000.
                                             ----       ----------     -

                                        Newberry Federal Savings Bank

                                        By: /s/ J. Thomas Johnson
                                            _____________________________

                                        Name: J. Thomas Johnson
                                              ___________________________

                                        Title: Chairman and CEO
                                               __________________________

                                       17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}]]