Document:

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                                                                   EXHIBIT 10.18

                          FRANKFORT FIRST BANCORP, INC.

                               Guaranty Agreement

         THIS AGREEMENT is entered into this 30TH DAY OF JUNE, 2004 (the
"Effective Date"), by and between Frankfort First Bancorp, Inc. (the "Company")
and TERESA KUHL (the "Employee"),

         WHEREAS, the Employee has heretofore been employed by First Federal
Savings Bank of Frankfort (the "Bank") as its VICE PRESIDENT, and has entered
into an agreement (the "Bank Agreement") dated JUNE 30, 2004, with the Employee;
and

         WHEREAS, the Board of Directors (the "Board") of the Company believes
it is in the best interests of the Company to enter into this Agreement with the
Employee in order to assure continuity of management of the Bank and to
reinforce and encourage the long-term retention of the Employee; and

         WHEREAS, the parties desire by this writing to set forth the Company's
commitment to guarantee the Bank's obligations under the Bank Agreement with the
Employee.

         NOW, THEREFORE, it is AGREED as follows:

         1. Consideration from Company; Joint and Several Liability. The Company
hereby agrees that to the extent permitted by law, it shall be jointly and
severally liable with the Bank for the payment of all amounts due under the Bank
Agreement, provided that the paragraphs of the Bank Agreement that appear under
the heading "Termination or Suspension under Federal Law" shall be inapplicable
to this Agreement. The Board may in its discretion at any time during the term
of this Agreement agree to pay the Employee a base salary for the remaining term
of this Agreement. If the Board agrees to pay such salary, the Board shall
thereafter review, not less often than annually, the rate of the Employee's
salary, and in its sole discretion may decide to increase his salary.

         2. Discretionary Bonuses: Participation in Retirement, Medical and
Other Plans. The Employee shall participate in an equitable manner with all
other senior management employees of the Company in discretionary bonuses that
the Board may award from time to time to the Company's senior management
employees, as well as in (i) any of the following plans or programs that the
Company may now or in the future maintain: group hospitalization, disability,
health, dental, sick leave, life insurance, travel and/or accident insurance,
auto allowance/auto lease, retirement, pension, and/or other present or future
qualified plans provided by the Company, generally which benefits, taken as a
whole, must be at least as favorable as those in effect on the Effective Date;
and (ii) any fringe benefits which are or may become available to the Company's
senior management employees, including for example: any stock option or
incentive compensation plans, and. any other benefits which are commensurate
with the responsibilities and functions to be performed by the Employee under
this Agreement.

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         3. Indemnification. The Company agrees that its Bylaws shall continue
to provide for indemnification of directors, officers, employees and agents of
the Company, including the Employee, during the full term of this Agreement, and
to at all times provide adequate insurance for such purposes.

         4. Successors and Assigns.

                  (a) Company. This Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Company.

                  (b) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.

         5. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.

         6. Applicable Law. Except to the extent preempted by Federal law, the
laws of the Commonwealth of Kentucky shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.

         7. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

         8. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.

                                       2

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         IN WITNESS HEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.

ATTEST:                                     FRANKFORT FIRST BANCORP, INC.

/s/ Danny A. Garland                        By: /s/ William C. Jennings
----------------------------                    --------------------------------
Secretary                                       Its Chairman of the Board

WITNESS:

/s/ R. Clay Hulette                         /s/ Teresa Kuhl
----------------------------                ------------------------------------
                                            Teresa Kuhl

                                       3<PAGE>

                                                                   EXHIBIT 10.19

            FRANKFORT FIRST BANCORP, INC./FIRST FEDERAL SAVINGS BANK
                         JUNIOR OFFICER RECOGNITION PLAN

PURPOSE: In order to attract and retain responsible, competent, and experienced
individuals at key positions at First Federal Savings Bank, the Company has
devised the following plan to augment other compensation arrangements in place.
This plan also will serve to more closely align the interests of these key
employees with the interests of the Company through an award of the Company's
common stock.

ADMINISTRATION: This plan will be administered by the Board of Frankfort First
Bancorp, Inc.

PARTICIPANTS: The plan is designated for those employees designated by the Board
as "Junior Executive Officers." Generally, these employees will be at Vice
President level. This plan is not intended to reward Senior Executive Officers
such as Company President Don Jennings or Bank President Danny Garland. At the
plan's inception, plan participants will be Vice Presidents Clay Hulette and
Teresa Kuhl. In the future, the Board, at its sole discretion, may authorize
awards to other employees who are either hired or promoted to this level.

PLAN ASSETS: The Company will transfer 8,000 shares to the plan, to be
recognized on the balance sheets as a contra-capital account. These shares will
be transferred from Treasury Shares.

AWARD: Participants will receive a total award of 2,000 shares to be vested over
five years (400 shares per year) beginning in calendar year 2003, to be
disbursed on a schedule designated by the Board. The Board may determine that
past service may be counted toward the first year of vesting thus an employee
with one or more years experience may be immediately eligible for disbursement.
In such cases, subsequent vesting will occur annually on the anniversary of the
initial award.

DIVIDENDS: Dividends will be paid on all shares in the plan. Dividends on shares
awarded but not yet disbursed will stay in the plan until the corresponding
share is disbursed, at which time the dividend will be disbursed.

ELIGIBILITY: Participants will relinquish all rights to undisbursed shares and
corresponding dividends held in this plan if they voluntarily resign, retire, or
are terminated for cause. Upon the death or disability of a participant, the
remaining shares and corresponding dividends that have been awarded and vested
will be granted within 30 days of their last day of service. This plan does not
guarantee vesting in case of change in control of the Company.

EXPIRATION: This plan will remain in effect for the later of 10 years (ending in
calendar 2013), until all grants that have been awarded have been vested, or
until all shares have been disbursed from the plan.

VOTING: Shares in the plan that have not been disbursed to participants will be
voted as directed by the Board.

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TERMINATION: The Board may terminate this plan at any time prior to its
expiration, subject to future disbursement of shares and the accompanying
dividends already awarded but not yet disbursed. Shares and cash held in the
plan but not awarded will be returned to the Company.

TRANSFER: The plan administrator may transfer shares to the Bank for purposes of
disbursement to employees in order to avail the Company of the Bank's payroll
apparatus.<PAGE>

                                  EXHIBIT 10.4

                        PURCHASE AND ASSUMPTION AGREEMENT

                                 BY AND BETWEEN

                           PROVIDENT BANK OF MARYLAND
                                   ("SELLER")

                                       AND

                            GATEWAY BANK & TRUST CO.
                                  ("PURCHASER")

<PAGE>

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

ARTICLE I - TRANSFER OF ASSETS AND LIABILITIES

         Section 1.1.      Transferred Assets................................. 1
         Section 1.2.      Purchase Price..................................... 2
         Section 1.3.      Deposit Liabilities................................ 3
         Section 1.4.      Loans Transferred.................................. 6
         Section 1.5.      Safe Deposit Business.............................. 7
         Section 1.6.      Employee Matters................................... 8
         Section 1.7.      Records and Data Processing........................ 9
         Section 1.8.      Security........................................... 9
         Section 1.9.      Taxes and Fees;  Proration of Certain Expenses..... 9
         Section 1.10.     Real Property .....................................10

ARTICLE II - CLOSING AND EFFECTIVE TIME

         Section 2.1.      Effective Time.....................................13
         Section 2.2.      Closing............................................13
         Section 2.3.      Closing Payment....................................15

ARTICLE III - INDEMNIFICATION

         Section 3.1.      Seller's Indemnification of Purchaser..............17
         Section 3.2.      Purchaser's Indemnification of Seller..............17
         Section 3.3.      Claims for Indemnity...............................17
         Section 3.4.      Limitations on Indemnification.....................18

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER

         Section 4.1.      Corporate Organization.............................19
         Section 4.2.      No Violation.......................................19
         Section 4.3.      Corporate Authority................................19
         Section 4.4.      Enforceable Agreement..............................19
         Section 4.5.      No Brokers ........................................19
         Section 4.6.      Personal Property..................................20
         Section 4.7.      Real Property......................................20
         Section 4.8.      Condition of Property..............................20
         Section 4.9.      Loans..............................................21
         Section 4.10      Compliance with Certain Laws.......................21
         Section 4.11.     Community Reinvestment Act Representation..........21
         Section 4.12.     Leases.............................................21
         Section 4.13.     Limitation of Representations and Warranties.......21
         Section 4.14      Litigation.........................................22

                                       i

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ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER

         Section 5.1.      Corporate Organization.............................22
         Section 5.2.      No Violation.......................................22
         Section 5.3.      Corporate Authority................................22
         Section 5.4.      Enforceable Agreement..............................22
         Section 5.5.      Brokers, Finders and Advisors......................23
         Section 5.6       Regulatory Capital and Condition...................23
         Section 5.7       Government Proceedings.............................23
         Section 5.8       Community Reinvestment Act.........................23
         Section 5.9       Litigation.........................................23

ARTICLE VI - OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME

         Section 6.1.      Full Access........................................23
         Section 6.2       Delivery of Magnetic Media Records.................24
         Section 6.3.      Application for Approval to Effect Purchase of
                           Assets and Assumption of Liabilities...............24
         Section 6.4.      Conduct of Business; Maintenance of Properties.....24
         Section 6.5.      No Solicitation by Seller..........................25
         Section 6.6.      Further Actions....................................26
         Section 6.7.      Fees and Expenses..................................26
         Section 6.8.      Breaches with Third Parties........................26
         Section 6.9.      Insurance..........................................26
         Section 6.10.     Public Announcements...............................26
         Section 6.11.     Tax Reporting......................................27

ARTICLE VII - CONDITIONS TO PURCHASER'S OBLIGATIONS

         Section 7.1.      Representations and Warranties True................27
         Section 7.2.      Obligations Performed..............................27
         Section 7.3.      No Adverse Litigation..............................27
         Section 7.4.      Regulatory Approval................................27

ARTICLE VIII - CONDITIONS TO SELLER'S OBLIGATIONS

         Section 8.1.      Representations and Warranties True................28
         Section 8.2.      Obligations Performed..............................28
         Section 8.3.      No Adverse Litigation..............................28
         Section 8.4.      Regulatory Approval................................28

                                       ii

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ARTICLE IX - TERMINATION

         Section 9.1.      Methods of Termination.............................28
         Section 9.2.      Procedure Upon Termination.........................29
         Section 9.3.      Payment of Expenses................................30

ARTICLE X - MISCELLANEOUS PROVISIONS

         Section 10.1.     Amendment and Modification.........................30
         Section 10.2.     Waiver or Extension................................30
         Section 10.3.     Assignment.........................................30
         Section 10.4.     Confidentiality....................................30
         Section 10.5.     Addresses for Notices, Etc.........................31
         Section 10.6.     Counterparts.......................................31
         Section 10.7.     Headings...........................................31
         Section 10.8.     Governing Law......................................31
         Section 10.9.     Sole Agreement.....................................32
         Section 10.10.    Severability.......................................32
         Section 10.11.    Parties in Interest................................32

                                      iii

<PAGE>

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

         THIS PURCHASE AND ASSUMPTION AGREEMENT (this "Agreement") is entered
into as of May 13, 2004 among Provident Bank of Maryland, a Maryland chartered
bank having its principal office at Baltimore, Maryland ("Seller"), and Gateway
Bank & Trust Co., a North Carolina chartered bank having its principal offices
in Elizabeth City, North Carolina ("Purchaser"):

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

         WHEREAS, Seller wishes to divest, upon the terms and conditions set
forth herein, certain assets and certain deposit and other liabilities of its
offices at the locations set forth in Schedule 1 (individually the "Elizabeth
City Center," the "Emporia Center," and the "Suffolk Center," and collectively
the "Banking Centers"); and

         WHEREAS, Purchaser wishes to buy such assets and assume such
liabilities upon the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, Seller and Purchaser agree as follows:

                                    ARTICLE I
                                    ---------
                       TRANSFER OF ASSETS AND LIABILITIES
                       ----------------------------------

Section 1.1. Transferred Assets.
-----------  ------------------

         (a)      As of the Effective Time (as defined in Section 2.1) and upon
                  the terms and conditions set forth herein, Seller will sell,
                  assign, transfer, convey and deliver to Purchaser, and
                  Purchaser will purchase from Seller, all of the transferable
                  rights, title and interest of Seller in the following assets
                  associated with the Banking Centers and identified in this
                  Agreement and the Exhibits hereto, and not otherwise excluded
                  from sale pursuant to the provisions of Subsection 1.1(b):

                  (1)      subject to Section 1.10, all real estate and
                           improvements thereon owned by Seller at the Banking
                           Centers (the "Real Property"), together with all
                           rights and appurtenances pertaining thereto;

                  (2)      except as provided in Section 1.1(b), the furniture,
                           fixtures, leasehold improvements, equipment and other
                           tangible personal property owned by Seller and
                           located at each Banking Center and used in conducting
                           Seller's business at the Banking Center (the
                           "Personal Property");

                  (3)      all leases affecting the Banking Centers, and all
                           equipment leases for equipment located at the Banking
                           Centers (the "Equipment Leases"); and all assignable
                           operating contracts of the Banking Centers excluding
                           any

<PAGE>

                           master contracts (the "Assignable Contracts") all of
                           which Equipment Leases and Assignable Contracts are
                           listed on Exhibit 1.1(a)(3);

                  (4)      all safe deposit contracts and leases for the safe
                           deposit boxes located at the Banking Centers as of
                           the Effective Time (the "Safe Deposit Contracts");

                  (5)      all Loans (as defined in Section 1.4(a)) transferred
                           pursuant to Section 1.4;

                  (6)      all coins and currency located at the Banking Centers
                           as of the Effective Time (the "Coins and Currency");

                  (7)      all merchant services accounts associated with
                           Deposit Liabilities (as defined in Section 1.3(a))
                           located at the Banking Centers;

                  (8)      all overdrafts associated with the Deposit
                           Liabilities assumed by Purchaser; and

                  (9)      Seller's rights in and to the use of the current
                           telephone numbers of the Banking Centers.

         (b)      All assets, properties and rights of Seller not expressly
                  included in Section 1.1(a) are excluded from the transactions
                  contemplated by this Agreement, including, without limitation,
                  the following items (the "Excluded Assets"):

                  (1)      the assets listed on Exhibit 1.1(b) hereto;

                  (2)      Seller's rights in and to the name "Provident Bank of
                           Maryland" and any derivation thereof and any of
                           Seller's corporate logos, trademarks, trade names,
                           signs, paper stock, forms and other supplies
                           containing any such logos, trademarks or trade names,
                           and trade names and logos of third parties with whom
                           Seller has contracted to provide services to its
                           customers; and

                  (3)      all loans attributed to the Banking Centers as of the
                           close of business on the Closing Date except for the
                           Loans.

         (c)      Seller shall coordinate with Purchaser to remove the Excluded
                  Assets from the Banking Centers on or prior to the Effective
                  Time. Seller shall remove the Excluded Assets at its own cost
                  and, apart from making any reasonable repairs necessitated by
                  removing the Excluded Assets, Seller shall be under no
                  obligation to restore the Banking Centers' premises to their
                  original condition, which shall be the responsibility of
                  Purchaser.

                                       2

<PAGE>

Section 1.2. Purchase Price.
-----------  --------------

         (a)      As consideration for the purchase of the Banking Centers,
                  Purchaser shall pay Seller a purchase price (the "Purchase
                  Price") equal to the sum of the following:

                  (1)      With respect to the Real Property, $362,500 for the
                           Elizabeth City Center, $849,000 for the Emporia
                           Center, and $669,771 for the Suffolk Center (the
                           "Property Value").

                  (2)      A premium for the Deposit Liabilities and franchise
                           value related to the Banking Centers equal to 4.5% of
                           the Deposit Liabilities at the Elizabeth Center and
                           Emporia Centers and 7.5% at the Suffolk Center;

                  (3)      The Net Book Value, including accrued but unpaid
                           interest and fees, for the Loans as set forth in
                           Section 1.4;

                  (4)      The Net Book Value (as defined in Section 1.2(d)) of
                           the Personal Property; and

                  (5)      The face amount of the Coins and Currency.

         (b)      In addition, Purchaser shall assume, as of the Effective Time,
                  all of the duties, obligations and liabilities of Seller
                  arising on or after the Effective Time relating to the Real
                  Property, the Equipment Leases, the Assignable Contracts, the
                  Safe Deposit Contracts, and the Deposit Liabilities (including
                  all accrued interest relating thereto); provided, that any
                  cash items paid by Seller and not cleared prior to the
                  Effective Time shall be the responsibility of Seller, subject
                  to the terms of Section 1.3.

         (c)      For purposes of this Agreement, "Net Book Value" means the
                  value determined from the Post-Closing Balance Sheet;
                  provided, however, that such value shall not include the loan
                  loss reserve attributable to any Loan (as defined in Section
                  1.4 ) or any general reserve.

Section 1.3. Deposit Liabilities.
-----------  -------------------

         (a)      "Deposit Liabilities" shall mean all of Seller's duties,
                  obligations and liabilities relating to the deposit accounts
                  (except as set forth in Section 1.3(b)) located at the Banking
                  Centers as of the Effective Time (including accrued but unpaid
                  or uncredited interest thereon). A list of the Deposit
                  Liabilities as they existed on April 30, 2004 is attached
                  hereto as Exhibit 1.3(a).

         (b)      Except for those liabilities and obligations specifically
                  assumed by Purchaser under Section 1.2(b), Purchaser is not
                  assuming any other liabilities or obligations of Seller or
                  otherwise. Subject to the limitations on indemnification set
                  forth in Section 3.4, liabilities not assumed include, but are
                  not limited to, the following:

                                       3

<PAGE>

                  (1)      Seller's official checks, cashier checks, letters of
                           credit, money orders, interest checks and expense
                           checks issued prior to closing, consignments of U.S.
                           Government "E" and "EE" bonds and any and all
                           traveler's checks.

                  (2)      Liabilities or obligations of Seller with respect to
                           any litigation, suits, claims, demands or
                           governmental proceedings arising, commenced or made
                           known to Seller prior to Closing or arising from
                           events occurring prior to Closing.

                  (3)      Deposit accounts associated with lines of credit
                           where the line of credit is excluded in accordance
                           with Section 1.4 (b).

                  (4)      Deposit accounts associated with qualified retirement
                           plans where Seller is the trustee of such plan or the
                           sponsor of a prototype plan used by such plan.

                  (5)      Deposit accounts associated with Seller's national or
                           regional account relationships, if any.

                  (6)      Self-directed individual retirement accounts, if any,
                           it being understood that all other types of IRA
                           Deposit Liabilities are intended to be transferred.

         (c)      Seller does not represent or warrant that any deposit
                  customers whose accounts are assumed by Purchaser will become
                  or continue to be customers of Purchaser after the Effective
                  Time.

         (d)      Purchaser agrees to pay in accordance with law and customary
                  banking practices all properly drawn and presented checks,
                  drafts and withdrawal orders presented to Purchaser by mail,
                  over the counter or through the check clearing system of the
                  banking industry, by depositors of the accounts assumed,
                  whether drawn on the checks, withdrawal or draft forms
                  provided by Seller or by Purchaser, and in all other respects
                  to discharge, in the usual course of the banking business, the
                  duties and obligations of Seller with respect to the balances
                  due and owing to the depositors whose accounts are assumed by
                  Purchaser.

         (e)      If, after the Effective Time, any depositor, instead of
                  accepting the obligation of Purchaser to pay the Deposit
                  Liabilities assumed, shall demand payment from Seller for all
                  or any part of any such assumed Deposit Liabilities, Seller
                  shall not be liable or responsible for making any such
                  payment; provided, that if Seller shall pay the same,
                  Purchaser agrees to reimburse Seller for any payments, and
                  Seller shall not be deemed to have made any representations or
                  warranties to Purchaser with respect to any checks, drafts or
                  withdrawal orders processed after the Effective Time drawn on
                  such Deposit Liabilities, and any such representations or
                  warranties implied by law are hereby expressly disclaimed.
                  Seller and Purchaser shall make arrangements to provide for
                  the daily settlement

                                       4

<PAGE>

                  with immediately available funds by Purchaser of checks,
                  drafts, withdrawal orders, returns and other items presented
                  to and paid by Seller within 30 calendar days after the
                  Effective Time and drawn on or chargeable to accounts that
                  have been assumed by Purchaser; provided, however, that Seller
                  shall be held harmless and indemnified by Purchaser for acting
                  in accordance with such arrangements.

         (f)      Purchaser agrees, at its cost and expense, (1) to assign new
                  account numbers to depositors of assumed accounts, (2) to
                  notify such depositors, on or before the Effective Time, in a
                  form and on a date mutually acceptable to Seller and
                  Purchaser, of Purchaser's assumption of Deposit Liabilities
                  and that checks or drafts written after sixty (60) calendar
                  days after the Closing Date on Seller's check or draft forms
                  will not be honored, and (3) within five (5) business days
                  after the Closing Date to furnish such depositors with checks
                  on the forms of Purchaser and with instructions to utilize
                  Purchaser's checks and to destroy unused check, draft and
                  withdrawal order forms of Seller. (If Purchaser so elects,
                  Purchaser may offer to buy from such depositors their unused
                  Seller check, draft and withdrawal order forms.) In addition,
                  Seller will notify its affected customers by letter of the
                  pending assignment of the Deposit Liabilities to Purchaser,
                  which notice shall be at Seller's cost and expense and shall
                  be in a form and mailed at a time mutually agreeable to Seller
                  and Purchaser.

         (g)      Purchaser agrees to pay promptly to Seller an amount
                  equivalent to the amount of any checks, drafts or withdrawal
                  orders credited to an assumed account as of the Effective Time
                  that are properly returned to Seller after the Effective Time.

         (h)      As of the Effective Time, Purchaser will assume and discharge
                  Seller's duties and obligations in accordance with the terms
                  and conditions and laws, rules and regulations that apply to
                  the certificates, accounts and other Deposit Liabilities
                  assumed under this Agreement.

         (i)      As of the Effective Time, Purchaser will maintain and
                  safeguard in accordance with applicable law and sound banking
                  practices all account documents, deposit contracts, signature
                  cards, deposit slips, canceled items and other records related
                  to the Deposit Liabilities assumed under this Agreement,
                  subject to Seller's right of access to such records as
                  provided in this Agreement.

         (j)      Seller will render a final statement to each depositor of an
                  account assumed under this Agreement as to transactions
                  occurring through the Effective Time; provided, however, that
                  Seller shall not be obligated to render a final statement on
                  any account not ordinarily receiving periodic statements in
                  the ordinary course of Seller's business. Seller will be
                  entitled to impose normal fees and service charges on a
                  per-item basis at Closing, but Seller will not impose periodic
                  fees or blanket charges in connection with such final
                  statements.

                                       5

<PAGE>

         (k)      Seller will timely provide to Purchaser 1099 data for
                  Purchaser to comply with all laws, rules and regulations
                  regarding 2004 tax reporting of transactions of such accounts
                  through the Effective Time.

         (l)      As of the Effective Time, Purchaser, at its expense, will
                  notify all Automated Clearing House ("ACH") originators of the
                  transfers and assumptions made pursuant to the Agreement;
                  provided, however, that Seller may, at its option, notify all
                  such originators itself (on behalf of Purchaser) also at the
                  expense of Purchaser. For a period of 60 calendar days
                  beginning on the Effective Time, Seller will honor all ACH
                  items related to accounts assumed under this Agreement which
                  are routed or presented to Seller. Seller will make no charge
                  to Purchaser for honoring such items, and will electronically
                  transmit such ACH data to Purchaser. If Purchaser cannot
                  receive an electronic transmission, Seller will make available
                  to Purchaser at Seller's operations center receiving items
                  from the Automated Clearing House tapes containing such ACH
                  data. Items routed or presented after the 60-day period shall
                  be returned to the presenting party. Seller and Purchaser
                  shall make arrangements to provide for the daily settlement
                  with immediately available funds by Purchaser of any ACH items
                  honored by Seller, and Seller shall be held harmless and
                  indemnified by Purchaser for acting in accordance with this
                  arrangement to accept ACH items.

         (m)      As of the Effective Time, Purchaser agrees to use its best
                  efforts to collect from Purchaser's customers amounts equal to
                  any Visa or MasterCard charge backs under the MasterCard and
                  Visa Merchant Agreements between Seller and its customer, or
                  amounts equal to any deposit items returned to Seller after
                  the Effective Time which were honored by Seller prior to the
                  Effective Time, and remit such amounts so collected to Seller.
                  Purchaser agrees to immediately freeze and remit to Seller any
                  funds, up to the amount of the charged back or returned item
                  that had been previously credited by Seller, if such funds are
                  available at the time of notification by Seller to Purchaser
                  of the charged back or returned item and such charge back is
                  permitted. Notwithstanding the foregoing, Purchaser shall have
                  no duty to remit funds for any item or charge that has been
                  improperly returned or charged to Seller. Solely for the
                  purposes of this Section 1.3(m), all references to Seller
                  shall be deemed to include Seller and its assignees.

Section 1.4. Loans Transferred.
-----------  -----------------

         (a)      Seller will transfer to Purchaser as of the Effective Time,
                  subject to the terms and conditions of this Agreement, all of
                  Seller's right, title and interest in (including collateral
                  relating thereto) loans maintained, serviced and listed in
                  Seller's records as loans of the Banking Centers that are
                  secured by Deposit Liabilities transferred to Purchaser
                  pursuant to this Agreement (collectively, the "Loans"). Such
                  Loans (as well as any security interest related thereto) shall
                  be transferred by means of a blanket (collective) assignment
                  and not individually (except as may be otherwise required by
                  law). A list of the Loans as they existed on May 8, 2004 is
                  attached hereto as Exhibit 1.4(a).

                                       6

<PAGE>

         (b)      In connection with the transfer of any loans requiring notice
                  to the borrower, Purchaser shall comply with all notice and
                  reporting requirements of the loan documents or of any law or
                  regulation.

         (c)      All Loans transferred to Purchaser shall be valued at their
                  Net Book Value, such value to include accrued interest.

         (d)      All Loans will be transferred without recourse to Seller and
                  without any warranties or representations as to their
                  collectibility or the creditworthiness of any of the obligors
                  of such Loans.

         (e)      For a period of 60 calendar days after the Effective Time,
                  Seller will forward to Purchaser loan payments received by
                  Seller. Purchaser shall reimburse Seller upon demand for
                  checks returned on payments forwarded to Purchaser; however,
                  to the extent possible, Seller will deduct the amount of such
                  returned checks from any amounts owed by Seller to Purchaser.

         (f)      As of the Effective Time, Seller shall transfer and assign all
                  files, documents and records related to the Loans (the
                  "Records") to Purchaser, and Purchaser will be responsible for
                  maintaining and safeguarding all the Records in accordance
                  with applicable law and sound banking practices.

         (g)      If the balance due on any Loan purchased pursuant to this
                  Section 1.4 has been reduced by Seller as a result of a
                  payment by check received prior to the Effective Time, which
                  item is returned after the Effective Time, the asset value
                  represented by the Loan transferred shall be correspondingly
                  increased and an amount in cash equal to such increase shall
                  be paid by Purchaser to Seller promptly upon demand.

         (h)      Seller shall grant to Purchaser as of the Effective Time a
                  limited power of attorney, in substantially the form attached
                  hereto as Exhibit 1.4(h) (the "Power of Attorney").

Section 1.5. Safe Deposit Business.
-----------  ---------------------

         (a)      As of the Effective Time, Purchaser will assume and discharge
                  Seller's obligations with respect to the safe deposit box
                  business at the Banking Centers arising on or after the
                  Effective Time in accordance with the terms and conditions of
                  contracts or rental agreements related to such business, and
                  Purchaser will maintain all facilities necessary for the use
                  of such safe deposit boxes by persons entitled to use them;
                  provided, that nothing herein shall be deemed to prohibit
                  Purchaser, after the Effective Time, from discontinuing the
                  safe deposit box services or facilities at the Banking Centers
                  (all in accordance with applicable law and any contractual
                  obligations regarding the same).

                                       7

<PAGE>

         (b)      As of the Effective Time, Seller shall transfer and assign the
                  records related to such safe deposit box business to
                  Purchaser, and Purchaser shall maintain and safeguard all such
                  records and be responsible for granting access to and
                  protecting the contents of safe deposit boxes at the Banking
                  Centers.

         (c)      Safe deposit box rental payments (not including late payment
                  fees) collected by either Seller or Purchaser applying to
                  periods both before and after the Effective Time shall be
                  prorated as of the Effective Time.

Section 1.6. Employee Matters.
-----------  ----------------

         (a)      Purchaser shall offer employment to all employees (the
                  "Employees") employed by Seller at the Banking Centers as of
                  the Effective Time (other than employees whose respective
                  functions do not relate exclusively to operation of one or
                  more of the Banking Centers) in their then respective current
                  functional positions and locations with remuneration not less
                  than levels at the Effective Time and benefits generally
                  equivalent to benefits offered by Purchaser to similarly
                  situated employees of Purchaser. The names, positions, dates
                  of hire and current salary levels of the Employees are
                  detailed in Exhibit 1.6(a). Except for Purchaser's qualified
                  and nonqualified pension plans (if any), Employees who become
                  employees of Purchaser as of the Effective Time ("Transferred
                  Employees") shall receive full credit for their prior service
                  with Seller (and with other entities to the extent service
                  with any such entity is treated by Seller as service with it)
                  under Purchaser's benefit plans and policies, including its
                  vacation and sick leave policies, to the same extent as if the
                  service had been with Purchaser. As of the Effective Time, the
                  Transferred Employees and their dependents, if any, covered
                  under Seller's health insurance plan preceding the Effective
                  Time shall be covered under Purchaser's health insurance plan
                  without being subject to any pre-existing condition
                  limitations or exclusions. Transferred Employees shall not be
                  required to satisfy the deductible and employee payments
                  required by Purchaser's comprehensive medical and/or dental
                  plans for the calendar year of the Effective Time (i) to the
                  extent of amounts previously credited during such calendar
                  year under comparable plans maintained by Seller, or (ii) to
                  the extent the same is waived in its entirety by the
                  applicable insurer, as determined by the applicable insurer in
                  its sole discretion. With respect to Purchaser's qualified and
                  nonqualified pension plans, Transferred Employees shall
                  receive full credit for prior service with Seller (and with
                  other entities to the extent service with any such entity is
                  treated by Seller as service with it) for purposes of
                  determining their participation eligibility and vesting rights
                  to the same extent as if the service had been with Purchaser.
                  Benefits under Purchaser's pension plans for Transferred
                  Employees shall be determined solely with reference to service
                  with Purchaser.

         (b)      Seller makes no representations or warranties about whether
                  any of its employees will remain at the Banking Centers and
                  become and remain employed by Purchaser after the Effective
                  Time. Seller will use its commercially reasonable best efforts
                  to maintain the employees as employees of Seller at the
                  Banking

                                       8

<PAGE>

                  Centers until the Effective Time. Purchaser shall have no
                  responsibilities or rights with respect to any employee of
                  Seller whose employment shall be terminated for any reason
                  prior to the Effective Time or who shall elect not to become
                  an employee of Purchaser. Seller agrees that, for a period of
                  12 months after the Effective Time, it will not solicit for
                  employment any Transferred Employee who remains employed by
                  Purchaser.

Any Transferred Employee whose employment is terminated without cause by
Purchaser within 12 months after the Effective Time shall be entitled to
receive, severance benefits of no less than the amount provided in Exhibit
1.6(c) to the extent the Transferred Employee qualifies for such severance
benefit (taking into account the Transferred Employee's service with Seller).
Purchaser agrees that, for a period of 12 months after the Effective Time, it
will not solicit for employment any employee of Seller (other than Transferred
Employees) who is employed at a location in a county in which any Banking Center
is located or in any contiguous county; provided, however, that such prohibition
shall not apply to solicitations which are directed to the general public.

Section 1.7. Records and Data Processing.
-----------  ---------------------------

         (a)      As of the Effective Time, Purchaser shall become responsible
                  for maintaining the files, documents and records referred to
                  in this Agreement. Purchaser will preserve and safekeep them
                  as required by applicable law and sound banking practice.
                  After the Effective Time, Purchaser will permit Seller and its
                  representatives, at reasonable times and upon reasonable
                  notice, to examine, inspect, copy and reproduce (at Seller's
                  expense) any such files, documents or records as Seller deems
                  reasonably necessary.

         (b)      As of the Effective Time, Seller will permit Purchaser and its
                  representatives, at reasonable times and upon reasonable
                  notice, to examine, inspect, copy and reproduce (at
                  Purchaser's expense) files, documents or records retained by
                  Seller regarding the assets and liabilities transferred under
                  this Agreement as Purchaser deems reasonably necessary.

         (c)      It is understood that certain of Seller's records may be
                  available only in the form of photocopies, film copies or
                  other non-original and non-paper media.

Section 1.8. Security.
-----------  --------

         As of the Effective Time, Purchaser shall become solely responsible for
the security of and insurance on all persons and property located in or about
the Banking Centers.

Section 1.9. Taxes and Fees; Proration of Certain Expenses.
-----------  ---------------------------------------------

         Purchaser shall be responsible for the payment of all fees and taxes
related to this transaction, except that (i) Purchaser shall not be responsible
for, or have any liability with respect to, taxes on any income to Seller
arising out of the transactions herein, and (ii) with

                                       9

<PAGE>

respect to any transfers of Real Property, Purchaser and Seller shall each pay
fifty percent (50%) of the real estate transfer and recordation taxes, fees and
costs incurred in connection therewith. Purchaser shall not be responsible for
any income tax liability of Seller arising from the business or operations of
the Banking Centers before the Effective Time, and Seller shall not be
responsible for any tax liabilities of Purchaser arising from the business or
operations of the Banking Centers after the Effective Time. Utility payments,
telephone charges, real property taxes, personal property taxes, rent, salaries,
deposit insurance premiums, other ordinary operating expenses of the Banking
Centers and other expenses related to the liabilities assumed or assets
purchased hereunder shall be prorated between the parties as of the Effective
Time. To the extent any such item has been prepaid by Seller for a period
extending beyond the Effective Time, there shall be a proportionate monetary
adjustment in favor of Seller.

Section 1.10. Real Property.
------------  -------------

         (a)      Title and Leasehold Matters.
                  ---------------------------

                  (i)      Not more than 30 calendar days after the date of this
                           Agreement, Seller agrees to deliver to Purchaser
                           copies of all title and lease information in
                           possession of Seller, including but not limited to
                           title insurance policies, attorneys' opinions on
                           title, surveys, covenants, deeds, notes and
                           mortgages, leases and easements relating to the Real
                           Property. Such delivery shall constitute no warranty
                           by Seller as to the accuracy or completeness thereof
                           or that Purchaser is entitled to rely thereon.

                  (ii)     Purchaser agrees to notify Seller in writing within
                           30 calendar days after the date of this Agreement of
                           any mortgages, pledges, material liens, encumbrances,
                           reservations, tenancies, encroachments, overlaps or
                           other title exceptions or zoning or similar land use
                           violations (excluding legal but nonconforming uses)
                           related to the Real Property to which Purchaser
                           reasonably objects (the "Title Defects"). Purchaser
                           agrees that Title Defects shall not include real
                           property taxes not yet due and payable, or easements,
                           restrictions, tenancies, and rights of way which do
                           not materially interfere with the use of the Real
                           Property as a banking center or defects which
                           Purchaser can obtain protection from through purchase
                           of title insurance at regular rates (or higher rates
                           if the excess over the regular rate is paid by
                           Seller). Seller shall make a good faith effort to
                           correct any such Title Defect to Purchaser's
                           reasonable satisfaction at least 10 calendar days
                           prior to Closing; provided, however, that Seller
                           shall not be obligated to bring any lawsuit or make
                           any payments of money (except to pay liens that
                           Seller does not dispute in good faith) to cure a
                           Title Defect. If Seller is unable or unwilling to
                           cure any such Title Defects to Purchaser's reasonable
                           satisfaction, Purchaser shall have the option to
                           (upon written notice to Seller) receive title in its
                           then existing condition (with a corresponding
                           Purchase Price adjustment that is agreeable to both
                           parties), or to accept the assets and assume the
                           liabilities of the Banking Center without the Real
                           Property on which the Banking Center is located (in

                                       10

<PAGE>

                           which event the Purchase Price shall be reduced by a
                           reasonable estimate of the moving expenses to be
                           incurred by Purchaser in relocating operations of the
                           Banking Center from the Real Property to another
                           business premises). Upon termination of this
                           Agreement with respect to the Real Property of a
                           Banking Center pursuant to this Section 1.10, neither
                           party shall have any further liability to the other
                           party under this Agreement with respect to such Real
                           Property and the Purchase Price shall be adjusted
                           accordingly.

                  (iii)    Purchaser shall have the right to update title
                           matters at Closing for any changes which may have
                           arisen between the date of Purchaser's original title
                           search and the Closing Date. If such update indicates
                           that any Title Defects have been placed of record
                           since the date of Purchaser's original title search,
                           and Purchaser reasonably objects thereto, then Seller
                           may elect to delay the Closing with respect to the
                           affected Banking Center for up to 30 calendar days
                           while Seller makes a good faith effort to cure any
                           such Title Defect to Purchaser's reasonable
                           satisfaction; provided that Seller shall not be
                           obligated to bring any lawsuit or make any payments
                           of money (except to pay liens that Seller does not
                           dispute in good faith) to cure a Title Defect. If
                           Seller is unable or unwilling to cure any such Title
                           Defect within such 30 day period, Purchaser shall
                           have the option to (upon written notice to Seller)
                           receive title in the then existing condition (with a
                           corresponding Purchase Price adjustment reasonably
                           agreeable to both parties) or to accept the assets
                           and assume the liabilities of the Banking Center
                           without the Real Property on which the Banking Center
                           is located, in which event neither party shall have
                           any further liability to the other party under this
                           Agreement with respect to the Real Property of such
                           Banking Center and the Purchase Price shall be
                           adjusted accordingly.

         (b)      Environmental Matters.
                  ---------------------

                  Purchaser shall have the right to conduct such investigation
                  of environmental matters, solely at Purchaser's expense, with
                  respect to the Real Property as it may reasonably require and
                  shall report the results of any such investigation, together
                  with its objections to any material violation of applicable
                  environmental law which impacts the Real Property or the use
                  thereof as a banking center, if any, to Seller no later than
                  60 calendar days after the date of this Agreement; provided,
                  that without the prior written consent of Seller, Purchaser
                  shall not conduct any ground water monitoring or install any
                  test well or undertake any other investigation which requires
                  a permit or license from, or the reporting of the
                  investigation or the results thereof to, a local or state
                  environmental regulatory authority or the United States
                  Environmental Protection Agency. Seller has no actual
                  knowledge of any material violation of applicable
                  environmental law which materially impacts the real property
                  or the use thereof as a Banking Center. If Purchaser objects
                  to any material violation of applicable environmental law
                  which materially impacts the Real Property or the use thereof
                  as a Banking Center

                                       11

<PAGE>

                  ("Environmental Issue"), which is discovered by Purchaser's
                  investigation as provided for in subsection (d) below, Seller
                  and Purchaser shall address such Environmental Issue as set
                  forth in subsection (d) below.

         (c)      Facilities Inspection.
                  ---------------------

                  Purchaser shall have the right, for and during the period
                  ending 60 calendar days following the date of execution of
                  this Agreement (the "Inspection Period"), to inspect, solely
                  at Purchaser's expense, the physical condition of the Real
                  Property, including, without limitation, compliance of the
                  Real Property with the provisions of the Americans with
                  Disabilities Act (collectively, "Inspection Issues"). These
                  inspections shall be conducted during regular business hours
                  by qualified inspectors or employees of Purchaser or its
                  affiliates following not less than three business days notice
                  to Seller. Prior to entry upon the property, Purchaser will
                  confirm to Seller the existence of general liability insurance
                  in coverage amounts reasonably acceptable to Seller. Any
                  physical disturbance to the Real Property shall be subject to
                  Seller's prior approval, which may be subject to such
                  reasonable repair and restoration conditions as Seller may
                  impose (including, without limitation, the obligation to
                  repair any disturbed area to its condition immediately prior
                  to that disturbance). Purchaser promptly shall provide Seller
                  with copies of any and all written reports in connection with
                  those inspections, at no cost to Seller, upon Seller's
                  request.

         (d)      Correction of Defects.
                  ---------------------

                  If Purchaser discovers a defect in a Banking Center with
                  respect to Inspection Issues or Environmental Issues (a
                  "Defect") that would require the expenditure of over $25,000
                  to correct, as determined by Purchaser in its reasonable
                  discretion, Purchaser shall promptly give written notice
                  thereof to Seller describing the Defect in detail, and Seller
                  shall have the obligation to pay up to the sum of $75,000 to
                  cure such Defect at such Banking Center prior to the Effective
                  Time if reasonably possible or as soon thereafter as can be
                  reasonably accomplished. Purchaser shall pay the first $25,000
                  to cure such Defect. If the estimated cost to cure a Defect
                  exceeds $100,000, Seller shall have the option to pay the
                  additional cost to cure the Defect or in the alternative, to
                  lease the Banking Center which has a Defect to Purchaser for a
                  period of two years. Such lease shall be negotiated in good
                  faith by the parties at a market rate upon commercial property
                  and lease terms consistent with the area and Banking Center
                  involved. If the parties are unable to reach agreement on such
                  a lease at least 45 calendar days prior to the Closing Date,
                  each party shall select a commercial real estate professional
                  who shall provide a market rate for lease of the Banking
                  Center in question. The lease rate shall be set at the average
                  of the two market rates so determined. Other lease terms shall
                  be as negotiated by the parties or, failing agreement by the
                  parties, as mutually agreed by the commercial real estate
                  professionals. This method of resolving defects shall be
                  applied to each Banking Center.

                                       12

<PAGE>

                                   ARTICLE II
                                   ----------
                           CLOSING AND EFFECTIVE TIME
                           --------------------------

Section 2.1. Effective Time.
-----------  --------------

         The purchase of assets and assumption of liabilities provided for in
this Agreement shall occur at a closing (the "Closing") to be held at a mutually
agreeable time and location within 15 calendar days following the date of all
approvals by regulatory agencies and after all statutory waiting periods have
expired, or at such other place, time or date on which the parties shall
mutually agree. The effective time (the "Effective Time") shall be 11:59 p.m.
local time, on the day on which the Closing occurs (the "Closing Date").

Section 2.2. Closing.
-----------  -------

         (a)      All actions taken and documents delivered at the Closing shall
                  be deemed to have been taken and executed simultaneously, and
                  no action shall be deemed taken nor any document delivered
                  until all have been taken and delivered.

         (b)      At the Closing, subject to all the terms and conditions of
                  this Agreement, Seller shall deliver or make reasonably
                  available to Purchaser:

                  (1)      A limited warranty deed transferring title to the
                           Real Property to Purchaser;

                  (2)      A Bill of Sale, in substantially the form attached
                           hereto as Exhibit 2.2(b)(2) (the "Bill of Sale"),
                           transferring to Purchaser all of Seller's interest in
                           the Personal Property, the Loans and other assets;

                  (3)      An Assignment and Assumption Agreement, in
                           substantially the form attached hereto as Exhibit
                           2.2(b)(3) (the "Assignment and Assumption
                           Agreement"), assigning Seller's interest in the
                           Equipment Leases, the Assignable Contracts, the Safe
                           Deposit Contracts, and the Deposit Liabilities;

                  (4)      Consents from third persons that are required to
                           effect the assignments set forth in the Assignment
                           and Assumption Agreement, including, but not limited
                           to, the lessors under the Equipment Leases to the
                           extent required. With respect to any Equipment Lease
                           for which the required consent is not obtained from
                           the lessor prior to the Closing, in lieu of such
                           consent Seller may provide either (at Seller's sole
                           option), a special indemnity in form and content
                           reasonably satisfactory to Purchaser against any loss
                           to Purchaser resulting from the failure to obtain
                           such consent, or the substitution by Seller and
                           delivery hereunder to Purchaser of equipment
                           comparable to the equipment subject to such Equipment
                           Lease;

                                       13

<PAGE>

                  (5)      Seller's keys to the safe deposit boxes and Seller's
                           records related to the safe deposit box business at
                           the Banking Centers;

                  (6)      Seller's files and records related to the Loans;

                  (7)      Seller's records related to the Deposit Liabilities
                           assumed by Purchaser;

                  (8)      The Coins and Currency;

                  (9)      Such of the other assets to be purchased as shall be
                           capable of physical delivery;

                  (10)     A certificate of a proper officer of Seller, dated as
                           of the date of Closing, certifying to the fulfillment
                           of all conditions which are the obligation of Seller
                           and that all of the representations and warranties of
                           Seller set forth in this Agreement remain true and
                           correct in all material respects as of Effective
                           Time;

                  (11)     A certified copy of a resolution of the Board of
                           Directors of Seller, or its Executive Committee,
                           approving the sale of the Banking Centers
                           contemplated hereby;

                  (12)     Such certificates and other documents as Purchaser
                           and its counsel may reasonably require to evidence
                           the receipt by Seller of all necessary corporate and
                           regulatory authorizations and approvals for the
                           consummation of the transactions provided for in this
                           Agreement;

                  (13)     An affidavit of Seller certifying that Seller is not
                           a "foreign person" as defined in the federal Foreign
                           Investment in Real Property Tax Act of 1980; and

                  (14)     a Closing Statement, substantially in the form
                           attached hereto as Exhibit 2.2(b)(14) (the "Closing
                           Statement"); and

                  (15)     The Power of Attorney substantially in the form
                           attached hereto as Exhibit 1.4(h).

                           It is understood that the items listed in subsections
                           (b)(5) and (8) shall be transferred after the Banking
                           Centers have closed for business on the Closing Date
                           and that the records listed in subsections (b)(6) and
                           (7) will be transferred as soon as practicable after
                           the Closing, but in no event more than five business
                           days after the Closing. For purposes of this
                           Agreement, the term "business day" shall mean any day
                           that Seller is open for business.

                                       14

<PAGE>

         (c)      At the Closing, subject to all the terms and conditions of
                  this Agreement, Purchaser shall deliver to Seller:

                  (1)      The Assignment and Assumption Agreement;

                  (2)      A certificate and receipt acknowledging the delivery
                           and receipt of possession of the property and records
                           referred to in this Agreement;

                  (3)      A certificate of a proper officer of Purchaser, dated
                           as of the Date of Closing, certifying to the
                           fulfillment of all conditions which are the
                           obligation of Purchaser and that all of the
                           representations and warranties of Purchaser set forth
                           in this Agreement remain true and correct in all
                           material respects as of the Effective Time;

                  (4)      A certified copy of a resolution of the Board of
                           Directors, or its Executive Committee, of Purchaser
                           approving the purchase of the Banking Centers
                           contemplated hereby;

                  (5)      Such certificates and other documents as Seller and
                           its counsel may reasonably require to evidence the
                           receipt of Purchaser of all necessary corporate and
                           regulatory authorizations and approvals for the
                           consummation of the transactions provided for in this
                           Agreement; and

                  (6)      the Closing Statement.

         (d)      All instruments, agreements and certificates described in this
                  Section 2.2 shall be in form and substance reasonably
                  satisfactory to the parties' respective legal counsel.

Section 2.3. Closing Payment.
-----------  ---------------

         (a)      Amount. At the Closing, as applicable, either (i) Seller shall
                  pay to Purchaser an amount equal to the excess amount of the
                  amount of Deposit Liabilities assumed by Purchaser over the
                  Purchase Price, as adjusted for pro rata payments pursuant to
                  Section 1.9 or (ii) Purchaser shall pay to Seller an amount
                  equal to the excess amount of the Purchase Price over the
                  amount of Deposit Liabilities assumed by Purchaser, in
                  immediately available funds as adjusted for pro rata payments
                  pursuant to Section 1.9. The payment made at the Closing
                  pursuant to this section is referred to as the "Closing
                  Payment".

         (b)      Method of Payment. Because the parties acknowledge that
                  certain amounts to be paid may not be finally determinable
                  until after the Closing Date, the Closing Payment will be paid
                  as follows:

                  (i)      Not less than 2 business days (as hereinafter
                           defined) prior to the Closing Date, Seller shall
                           deliver to Purchaser a proposed preliminary closing

                                       15

<PAGE>

                           statement in the form of Exhibit 2.2(b)(14) as of a
                           date not more than 5 business days prior to the
                           Closing Date. The parties shall agree upon the
                           preliminary closing statement prior to the Closing
                           Date. On the Closing Date, Seller will transfer to
                           Purchaser, or Purchaser will transfer to Seller, as
                           appropriate, by wire transfer of immediately
                           available funds, the estimated Closing Payment as
                           reflected on the preliminary closing statement (the
                           "Estimated Closing Payment").

                  (ii)     Not later than 10 business days following the Closing
                           Date (the "Provisional Settlement Date"), Seller and
                           Purchaser shall determine the actual Closing Payment
                           and, based on such determination, Seller shall pay to
                           Purchaser, or Purchaser shall pay to Seller, as
                           appropriate, in immediately available funds, by wire
                           transfer effected in accordance with the written
                           instructions of the party entitled to receive
                           payment, an amount equal to the difference between
                           the Estimated Closing Payment and the actual Closing
                           Payment plus interest on such difference for the
                           number of days elapsed from but excluding the Closing
                           Date to and including the Provisional Settlement
                           Date, at the Federal Funds Rate (as hereinafter
                           defined) on the Closing Date.

                  (iii)    Purchaser and Seller agree to recalculate and adjust
                           by appropriate payment in immediately available
                           funds, by wire transfer effected in accordance with
                           the written instructions of the party entitled to
                           receive such payment, 30 business days after the
                           Closing Date (the "Final Settlement Date"), the
                           Closing Payment if the parties shall determine that
                           the amount previously paid to Purchaser as the
                           Closing Payment should be adjusted. Any payment made
                           based on an adjustment of the Closing Payment by
                           either party to the other shall include interest on
                           the amount of the adjustment for the number of days
                           elapsed from but excluding the Closing Date to and
                           including the Final Settlement Date at the Federal
                           Funds Rate on the Closing Date.

         (c)      In the event that a dispute arises as to the appropriate
                  amounts to be paid to either party on the Final Settlement
                  Date, each party shall pay to the other on such Final
                  Settlement Date all amounts other than those as to which a
                  dispute exists. Any disputed amounts retained by a party which
                  are later found to be due to the other party shall be paid to
                  such other party promptly upon resolution with interest
                  thereon from the Final Settlement Date to the date paid at the
                  applicable Federal Funds Rate. In the event of such a dispute,
                  either party may submit the matter to a firm of certified
                  public accountants mutually agreeable to Seller and Purchaser
                  (the "Mediator"), which shall determine such dispute in
                  accordance with the terms and conditions of this Agreement
                  within 30 calendar days after the submission. The parties
                  shall each pay one-half of the fees and expenses of the
                  Mediator, except that the Mediator may assess the full amount
                  of its fees and expenses against either party if it determines
                  that party negotiated the Closing Payment in

                                       16

<PAGE>

                  bad faith. The Closing Payment, as agreed upon by the parties
                  and determined under this subsection, shall be final and
                  binding upon the parties.

         (d)      The Federal Funds Rate shall mean the rate quoted for Federal
                  Funds in the Money Rates Column of the Wall Street Journal,
                  adjusted daily, for the period beginning with the first
                  calendar day following the Effective Time and ending with the
                  Final Settlement Date.

                                   ARTICLE III
                                   -----------
                                 INDEMNIFICATION
                                 ---------------

Section 3.1. Seller's Indemnification of Purchaser.
-----------  -------------------------------------

         Subject to limitations in this ARTICLE III, Seller shall indemnify,
hold harmless and defend Purchaser from and against any costs, expenses,
liabilities, losses or damages, including without limitation reasonable
attorneys' fees and expenses (a "Loss") incurred by Purchaser caused by any
breach by Seller of any representation or warranty contained herein, and any
Loss arising out of any claims, actions, suits or proceedings commenced prior to
the Effective Time or arising out of events occurring prior to the Effective
Time relating to operations at the Banking Centers, except to the extent of
liabilities assumed or payable hereunder by Purchaser. Claims for indemnity must
be made within the time frame set forth in Section 3.3(a).

Section 3.2. Purchaser's Indemnification of Seller.
-----------  -------------------------------------

         Subject to limitations in this ARTICLE III, Purchaser shall indemnify,
hold harmless and defend Seller from and against any Loss incurred by Seller
caused by any breach by Purchaser of any representation or warranty contained
herein and any Loss arising out of any claims, actions, suits or proceedings
arising out of events occurring following the Effective Time relating to
operations at the Banking Centers. Claims for indemnity must be made within the
time frame set forth in Section 3.3(a).

Section 3.3. Claims for Indemnity.
-----------  --------------------

         (a)      A claim for indemnity under Sections 3.1 or 3.2 of this
                  Agreement shall be made by the claiming party prior to the
                  expiration of 12 months after the Effective Time by the giving
                  of notice thereof to the other party. Such notice shall set
                  forth in reasonable detail the basis upon which such claim for
                  indemnity is made. In the event that any such claim is made
                  within such prescribed 12 month period, the indemnity relating
                  to such claim shall survive until such claim is resolved.
                  Claims not made within such 12 month period shall cease and no
                  indemnity shall be made therefor.

         (b)      A party seeking indemnification pursuant to this Section 3.3
                  (an "indemnified party") shall give prompt notice to the party
                  from whom such indemnification is sought (the "indemnifying
                  party") of the assertion of any claim, or the commencement of
                  any action or proceeding, in respect of which indemnity may

                                       17

<PAGE>

                  be sought hereunder; provided, however, in no event shall an
                  original claim for indemnification under this Agreement be
                  given later than the first anniversary of the Closing Date.
                  The indemnified party shall assist the indemnifying party in
                  the defense of any such action or proceeding. The indemnifying
                  party shall have the right to, and shall at the request of the
                  indemnified party, assume the defense of any such action or
                  proceeding at its own expense. In any such action or
                  proceeding, the indemnified party shall have the right to
                  retain its own counsel, but the fees and expenses of such
                  counsel shall be at its own expense unless:

                           (i)      the indemnifying party and the indemnified
                                    party shall have mutually agreed to the
                                    retention of such counsel; or

                           (ii)     the named parties to any such suit, action
                                    or proceeding (including any impleaded
                                    parties) include both the indemnifying party
                                    and the indemnified party and, in the
                                    reasonable judgment of the indemnified
                                    party, representation of both parties by the
                                    same counsel would be inappropriate due to
                                    actual or potential differing interests
                                    between them.

         (c)      An indemnifying party shall not be liable under this Section
                  3.3 for any settlement effected without its consent of any
                  claim, litigation or proceeding in respect of which indemnity
                  may be sought hereunder. The indemnifying party may settle any
                  claim without the consent of the indemnified party, but only
                  if the sole relief awarded is monetary damages that are paid
                  in full by the indemnifying party, and includes as an
                  unconditional term thereof the giving by the claimant or
                  plaintiff of a release of the indemnified party, in form and
                  substance satisfactory to the indemnified party and its
                  counsel, from all liability with respect to such claim, action
                  suit or proceeding. An indemnified party shall, subject to its
                  reasonable business needs, use reasonable efforts to minimize
                  the indemnification sought from the indemnifying party
                  hereunder. Notwithstanding the foregoing, no investigation by
                  an indemnified party at or prior to the Closing shall relieve
                  an indemnifying party of any liability hereunder, unless the
                  indemnified party seeks indemnity in respect of a
                  representation or warranty which it actually had reason to
                  believe to be incorrect as a result of its investigation prior
                  to the Closing and the indemnified party intentionally failed
                  to bring such belief to the attention of the indemnifying
                  party prior to the Closing.

         (d)      After the Closing, Section 3.3 shall provide the exclusive
                  remedy for any misrepresentation, breach of warranty, covenant
                  or other agreement or other claim arising out of this
                  Agreement or the transactions contemplated hereby.

Section 3.4. Limitations on Indemnification.
-----------  ------------------------------

         Notwithstanding anything to the contrary contained in this Article III,
no indemnification shall be required to be made by either party until the
aggregate amount of all claims for indemnity by a party exceeds $50,000. Once
such aggregate amount exceeds the $50,000

                                       18

<PAGE>

threshold, such party shall thereupon be entitled to indemnification for all
amounts in excess of such threshold. IN ADDITION, THE PARTIES SHALL HAVE NO
OBLIGATIONS UNDER THIS ARTICLE III FOR ANY CONSEQUENTIAL LIABILITY, DAMAGE OR
LOSS THE INDEMNIFIED PARTY MAY SUFFER AS THE RESULT OF ANY DEMAND, CLAIM OR
LAWSUIT.

                                   ARTICLE IV
                                   ----------
                    REPRESENTATIONS AND WARRANTIES OF SELLER
                    ----------------------------------------

         Seller hereby represents and warrants to Purchaser as follows:

Section 4.1. Corporate Organization.
-----------  ----------------------

         Seller is a Maryland chartered trust company duly organized, validly
existing and in good standing under the laws of the State of Maryland. Seller
has the corporate power and authority to own its properties, to carry on its
business as currently conducted and to effect the transactions contemplated
herein.

Section 4.2. No Violation.
-----------  ------------

         The Banking Centers have been operated in all material respects in
accordance with applicable laws, rules and regulations. The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated herein, will not cause the acceleration of the maturity of, any
material obligation or loan to which Seller is a party and does not constitute a
breach or violation of or constitute a default under (a) Seller's Charter or
Bylaws; (b) any material provision of any material agreement or any other
material restriction of any kind to which Seller is a party or by which Seller
is bound; or (c) any material statute, law, decree, regulation, judgment or
order of any governmental authority.

Section 4.3. Corporate Authority.
-----------  -------------------

         The execution and delivery of this Agreement, and the consummation of
the transactions contemplated herein, have been duly authorized by Seller, and
no further corporate authorization is necessary for Seller to consummate the
transactions contemplated hereunder.

Section 4.4. Enforceable Agreement.
-----------  ---------------------

         This Agreement has been duly authorized, executed and delivered by
Seller and is the legal, valid and binding agreement of Seller, enforceable in
accordance with its terms except enforceability may be limited under any
applicable law pertaining to bankruptcy, receivership, reorganization,
fraudulent transfer or insolvency or similar laws affecting creditors' rights
generally and to general principles of equity.

                                       19

<PAGE>

Section 4.5. Brokers, Finders and Advisors.
-----------  -----------------------------

         Seller will pay the costs related to any broker, finder, financial
advisor legal counsel, accountant or similar agent engaged by Seller in
connection with this Agreement and the transactions contemplated herein.

Section 4.6. Personal Property.
-----------  -----------------

         Seller owns, and will convey to Purchaser at the Closing, all of
Seller's right, title and interest to all of the Personal Property free and
clear of any claims, mortgages, liens, security interests, pledges or
encumbrances of any kind, except as may otherwise be set forth in this
Agreement.

Section 4.7. Real Property.
-----------  -------------

         Seller makes the following representations regarding the Real Property:

         (a)      Except as specifically set forth herein, Seller has no
                  knowledge of any condemnation proceedings pending against the
                  Real Property.

         (b)      Except as specifically set forth herein or disclosed to
                  Purchaser prior to the execution of this Agreement, Seller has
                  not entered into any agreement regarding the Real Property,
                  and the Real Property is not subject to any claim, demand,
                  suit, lien, proceeding or litigation of any kind, pending or
                  outstanding, or to the knowledge of Seller, threatened or
                  likely to be made or instituted, which would in any way be
                  binding upon Purchaser or its successors or assigns or
                  materially affect or limit Purchaser's or its successors' or
                  assigns' use and enjoyment of the Real Property or which would
                  materially limit or restrict Purchaser's right or ability to
                  enter into this Agreement and consummate the sale and purchase
                  contemplated hereby.

         (c)      Seller has or will have at Closing good and marketable fee
                  simple title to the Real Property and, at Closing, will own
                  the Real Property outright subject to no mortgage, pledge,
                  lien, security interest, lease, charge, encumbrance or
                  conditional sales or other title retention agreement except
                  for real property taxes not yet due and payable, and easements
                  and rights of way which do not materially interfere with the
                  use of the Real Property as a banking center. Purchaser's sole
                  remedy for a breach of the representations and warranties in
                  this Section 4.7 shall be to elect not to purchase the Real
                  Property on which a Banking Center is located as provided in
                  Section 1.10.

Section 4.8. Condition of Property.
-----------  ---------------------

         Except as may be otherwise specifically set forth in this Agreement,
the Real Property and Personal Property to be purchased by Purchaser hereunder
are sold AS IS, WHERE IS, with no warranties or representations whatsoever,
except as may be expressly represented or warranted in this Agreement.

                                       20

<PAGE>

Section 4.9. Loans.
-----------  -----

         (i) Seller has good title to each Loan being purchased by Purchaser and
each is a valid loan in conformity with applicable laws and regulation; (ii) the
documentation relating to each Loan accurately reflects the payment history, the
outstanding balance of the Loan, and all receipts pertaining to the Loan from
the obligor(s) thereof and all credits to which such obligor(s) are entitled,
(iii) to the best of Seller's knowledge, all signatures on and executions of any
documents by Seller in connection with each Loan are genuine; (iv) with respect
to each Loan that is secured, Seller has a valid and enforceable lien on the
collateral described in the documents relating to such Loan, and such lien has
the priority described in Seller's loan files relating to such Loans (except as
enforceability may be limited by bankruptcy laws and other similar laws relating
to creditors' rights and principles of equity), (v) no taxes or other liability
of Seller shall accrue against or be collected from Purchaser out of any Loan by
reason of the purchase thereof by Purchaser, (vi) Seller has paid or caused to
be paid any and all license, franchise, intangible, stamp or other tax or fee
due and owing to any state where a Loan originated, or any political subdivision
thereof, arising from or growing out of the acquisition, collection or holding
of any Loan, and (vii) neither Seller nor, to the best of Seller's knowledge,
any of its agents, officers, employees or representatives in any manner has been
guilty of any civil or criminal fraud with respect to the creation of any Loan
or with respect to the transfer, assignment and sale of the same to Purchaser
hereunder.

Section 4.10. Compliance with Certain Laws.
------------  ----------------------------

         To the best of Seller's knowledge, the Deposits and Loans were opened,
extended or made, and have been maintained, in accordance with all applicable
federal and state laws, regulations, rules and orders.

Section 4.11. Community Reinvestment Act Representation.
------------  -----------------------------------------

         The most recent Community Reinvestment Act rating received by Seller
was not less than "satisfactory."

Section 4.12. Leases.
------------  ------

         The Equipment Leases are in full force and effect and are fully
transferable and assignable to Purchaser, except to the extent that consent of
the lessor or another party is required by the terms of the respective lease
documents. Purchaser's sole remedy for failure to obtain any such required
consent with respect to the Equipment Leases shall be as provided in Section
2.2(b)(4).

Section 4.13. Limitation of Representations and Warranties.
------------  --------------------------------------------

         Except as may be expressly represented or warranted in this Agreement
by Seller, Seller makes no representations or warranties whatsoever with regard
to any asset being transferred to Purchaser or any liability or obligation being
assumed by Purchaser or as to any other matter or thing.

                                       21

<PAGE>

Section 4.14. Litigation.
------------  ----------

         There are no actions, suits or proceedings pending, or to Seller's
knowledge, threatened, against Seller related to the Assets or the transactions
contemplated by this Agreement.

                                    ARTICLE V
                                    ---------
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER
                   -------------------------------------------

         Purchaser hereby represents and warrants to Seller as follows:

Section 5.1. Corporate Organization.
-----------  ----------------------

         Purchaser is a North Carolina chartered bank duly organized, validly
existing and in good standing under the laws of the state of North Carolina.
Purchaser has the corporate power and authority to own the properties being
acquired, to assume the liabilities being transferred and to effect the
transactions contemplated herein.

Section 5.2. No Violation.
-----------  ------------

         The execution and delivery of this Agreement, and the consummation of
the transactions contemplated herein, will not cause the acceleration of the
maturity of, any material obligation or loan to which Seller is a Party and does
not constitute a breach or violation of or constitute a default under (a) the
Charter or Bylaws of Purchaser; any material provision of any material agreement
or any other material restriction of any kind to which Purchaser is a party or
by which Purchaser is bound; (b) any material statute, law, decree, regulation
or order of any governmental authority.

Section 5.3. Corporate Authority.
-----------  -------------------

         The execution and delivery of this Agreement, and the consummation of
the transactions contemplated herein, prior to the Effective Date will have been
duly authorized by Purchaser, and no further corporate authorization on the part
of Purchaser is necessary to consummate the transactions contemplated hereunder.

Section 5.4. Enforceable Agreement.
-----------  ---------------------

         This Agreement has been duly authorized, executed and delivered by
Purchaser and is the legal, valid and binding agreement of Purchaser enforceable
in accordance with its terms except as enforceability may be limited under any
applicable law pertaining to bankruptcy, receivership, reorganization,
fraudulent transfer or insolvency or similar laws affecting creditors' rights
generally and to general principles of equity.

                                       22

<PAGE>

Section 5.5. No Brokers.
-----------  ----------

         Purchaser will pay the costs related to any broker, finder, financial
advisor legal counsel, accountant or similar agent engaged by Purchaser in
connection with this Agreement and the transactions contemplated herein.

Section 5.6. Regulatory Capital and Condition.
-----------  --------------------------------

         Purchaser is in compliance with all applicable capital standards as of
the date hereof and has no reason to believe that it will be unable to obtain
the required regulatory approvals for the transactions contemplated herein
solely as a result of its current level of regulatory capital. Purchaser's
ability to consummate the transactions contemplated by this Agreement is not
contingent on raising any equity capital.

Section 5.7. Government Proceedings.
-----------  ----------------------

         Purchaser is not subject to, and has not received any notice or advice
that it may be subject to, any order, agreement, memorandum of understanding or
other regulatory enforcement action or proceeding with or by any federal or
state agency charged with the supervision or regulation of banks or engaged in
the insurance of the deposits of banks or any other governmental agency having
supervisory or regulatory authority with respect to Purchaser that could affect
Purchaser's ability to obtain the required regulatory approvals or to satisfy
any of the other conditions required to be satisfied in order to consummate the
transactions contemplated hereby.

Section 5.8. Community Reinvestment Act.
-----------  --------------------------

         The most recent Community Reinvestment Act rating received by Purchaser
was not less than "satisfactory."

Section 5.9. Litigation.
-----------  ----------

         There are no actions, suits or proceedings pending, or to Purchaser's
knowledge, threatened, against Purchaser related to the transactions
contemplated by this Agreement.

                                   ARTICLE VI
                                   ----------
            OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME
            --------------------------------------------------------

Section 6.1. Access to Information.
-----------  ---------------------

         Purchaser acknowledges that it has conducted satisfactory due diligence
with respect to the assets and liabilities to be acquired by Purchaser
hereunder. Notwithstanding the foregoing, Seller shall afford to the officers
and authorized representatives of Purchaser, upon prior notice and subject to
Seller's normal security requirements, access to the properties, books and
records pertaining to the Banking Centers in order to facilitate the
consummation of the transactions

                                       23

<PAGE>

herein contemplated, provided, that such access shall be at reasonable times and
shall not interfere with the normal business and operations of the Banking
Centers or the affairs of Seller relating to the Banking Centers. Nothing in
this Section 6.1 shall require Seller to breach any obligation of
confidentiality or to reveal any proprietary information, trade secrets or
marketing or strategic plans. It is understood that certain of Seller's records
may be available only in the form of photocopies, film copies or other
non-original and non-paper media.

Section 6.2. Delivery of Magnetic Media Records.
-----------  ----------------------------------

         Seller shall prepare or cause to be prepared at its expense and make
available to Purchaser at Seller's data processing center magnetic media records
in Seller's field format not later than 20 calendar days after the execution of
this Agreement, and further shall make available to Purchaser such records
updated as of the Closing Date, which records shall contain the information
related to the items described in Subsections 2.2(b)(6) and (b)(7). Such updated
records shall be made available at such time after Closing as agreed to by the
parties. Seller may, with the consent of Purchaser, provide such reports in
paper format instead of magnetic media format.

Section 6.3. Application for Approval to Effect Purchase of Assets and
-----------  ---------------------------------------------------------
Assumption of Liabilities.
-------------------------

         Within 30 calendar days following the execution of this Agreement,
Purchaser shall prepare and file applications required by law with the
appropriate regulatory authorities for approval to purchase and assume the
aforesaid assets and liabilities, to establish branches at the locations of the
Banking Centers (or relocations to the extent contemplated herein), and to
effect in all other respects the transactions contemplated herein. Purchaser
agrees to process such applications in a diligent manner and on a priority basis
and to provide Seller promptly with a copy of such applications as filed (except
for any confidential portions thereof) and all material notices, orders,
opinions, correspondence and other documents with respect thereto, and to use
its best efforts to obtain all necessary regulatory approvals. Purchaser knows
of no reason why such applications should not receive all such approvals.
Purchaser shall promptly notify Seller upon receipt by Purchaser of notification
that any application provided for hereunder has been denied. Seller shall
provide such assistance and information to Purchaser as shall be reasonably
necessary for Purchaser to comply with the requirements of the applicable
regulatory authorities.

Section 6.4. Conduct of Business; Maintenance of Properties.
-----------  ----------------------------------------------

         (a)      From the date hereof until the Effective Time, Seller
                  covenants that it will:

                  (i)      Carry on, or cause to be carried on, the business of
                           the Banking Centers substantially in the same manner
                           as on the date hereof, use all reasonable efforts to
                           preserve intact its current business organization,
                           and preserve its business relationships with
                           depositors, customers and others having business
                           relationships with it and whose accounts will be
                           retained at the Banking Centers; provided, that
                           Seller need not, in its sole discretion,

                                       24

<PAGE>

                           advertise or promote new or substantially new
                           customer services in the principal market areas of
                           the Banking Centers;

                  (ii)     Cooperate with and assist Purchaser in assuring the
                           orderly transition of the business of the Banking
                           Centers to Purchaser from Seller; and

                  (iii)    Maintain the Real Property and the Personal Property
                           in its current condition, ordinary wear and tear
                           excepted.

         (b)      Between the date hereof and the Effective Time, Seller shall
                  not, without the prior consent of Purchaser:

                  (i)      Acquire or dispose of any fixed assets with respect
                           to the Banking Centers, other than pursuant to
                           commitments made on or before the date of this
                           Agreement and except for replacement of furniture,
                           furnishings and equipment and normal maintenance and
                           refurbishing in the ordinary course of business of
                           the Banking Centers, provided that this Section shall
                           not require the replacement of any such items by
                           Seller;

                  (ii)     Increase or agree to increase the salary,
                           remuneration or compensation or other employment
                           benefits of persons employed at the Banking Centers
                           other than in accordance with Seller's customary
                           policies or bank-wide changes consistent with past
                           practices, or pay or agree to pay any uncommitted
                           bonus to any such employees other than regular
                           bonuses granted based on historical practice;

                  (iii)    Change any pricing in deposit accounts at the Banking
                           Centers on other than a regional basis, except as may
                           be required in the ordinary course of business
                           consistent with past practices;

                  (iv)     Materially increase the staffing levels at any
                           Banking Center or effect changes in branch personnel
                           employed as of the Effective Time other than in the
                           ordinary course of business consistent with past
                           practices; or

                  (v)      Enter into any agreement to sell, grant or convey the
                           Real Property or any part thereof, including
                           easements or rights of way over the Real Property.

Section 6.5. No Solicitation by Seller.
-----------  -------------------------

         For a period of 12 months after the Effective Time, Seller will not
specifically target and solicit customers of the Banking Centers utilizing any
customer or mailing list which consists primarily of customers of the Banking
Centers; provided, that these restrictions shall not apply to general mass
mailings, telemarketing calls, statement stuffers and other similar
communications directed to current customers of Seller or Seller's affiliates,
or to the public or newspaper, radio or television advertisements of a general
nature, or otherwise prevent Seller from taking such actions as may be required
to comply with any applicable federal or state laws, rules or

                                       25

<PAGE>

regulations. In addition, these restrictions shall not apply to (a) the
solicitation of (i) commercial accounts normally established and maintained in
offices other than the Banking Centers or (ii) any credit or debit card customer
which has an agreement with Seller for merchant services which is not
transferred to Purchaser, or (b) the installation and operation by Seller of
automated teller machines at any location.

Section 6.6. Further Actions.
-----------  ---------------

         Each party hereto shall execute and deliver such instruments and take
such other actions as the other party may reasonably require in order to carry
out the intent of this Agreement.

Section 6.7. Fees and Expenses.
-----------  -----------------

         Except as otherwise provided herein, Purchaser shall be responsible for
the costs of all title examinations, title insurance fees, surveys, its own
attorneys' and accountants' fees and expenses and other expenses arising in
connection therewith. Seller shall be responsible for its own attorneys' and
accountants' fees and expenses related to this transaction.

Section 6.8. Breaches with Third Parties.
-----------  ---------------------------

         If the assignment of any material claim, contract, license, lease,
commitment, sales order or purchase order (or any material claim or right or any
benefit arising thereunder) without the consent of a third party would
constitute a breach thereof or materially affect the rights of Purchaser or
Seller thereunder, then such assignment is hereby made subject to such consent
or approval being obtained. The failure to obtain such consent shall not
constitute a breach of this Agreement by Seller.

Section 6.9. Insurance.
-----------  ---------

         As of the Effective Time, Seller will discontinue its insurance
coverage maintained in connection with the Banking Centers and the activities
conducted thereon, except for coverage relating to periods preceding the
Effective Time. Purchaser shall be responsible for all insurance protection for
the Banking Centers' premises and the activities conducted thereon immediately
following the Effective Time. Pending the Closing, risk of loss shall be the
responsibility of Seller.

Section 6.10. Public Announcements.
------------  --------------------

         Seller and Purchaser agree that, from the date hereof, neither shall
make any public announcement or public comment, regarding this Agreement or the
transactions contemplated herein without first consulting with the other party
hereto and reaching an agreement upon the substance and timing of such
announcement or comment. Further, Seller and Purchaser acknowledge the
sensitivity of this transaction to the Employees and no announcements or
communications with the public or these Employees shall be made without the
prior approval of Seller.

                                       26

<PAGE>

Section 6.11. Tax Reporting.
------------  -------------

         Seller shall provide Purchaser all 1099 data for Purchaser to comply
with all 2004 tax reporting obligations in connection with transferred assets
and liabilities on or before the Effective Time, and Purchaser shall comply with
all tax reporting obligations with respect to the transferred assets and
liabilities after the Effective Time.

                                   ARTICLE VII
                                   -----------
                      CONDITIONS TO PURCHASER'S OBLIGATIONS
                      -------------------------------------

         The obligations of Purchaser to complete the transactions contemplated
in this Agreement are conditioned upon fulfillment, on or before the Closing, of
each of the following conditions:

Section 7.1. Representations and Warranties True.
-----------  -----------------------------------

         The representations and warranties made by Seller in this Agreement
shall be true in all material respects on and as of the Effective Time as though
such representations and warranties were made at and as of such time, except to
the extent otherwise provided herein or consented to by Purchaser.

Section 7.2. Obligations Performed.
-----------  ---------------------

         Seller shall (a) deliver or make available to Purchaser those items
required by Section 2.2, and (b) perform and comply in all material respects
with all obligations and agreements required by this Agreement to be performed
or complied with by it prior to or on the Effective Time.

Section 7.3. No Adverse Litigation.
-----------  ---------------------

         As of the Effective Time, no action, suit or proceeding shall be
pending or threatened against Seller which is reasonably likely to (a)
materially and adversely affect the business, properties and assets of the
Banking Centers, or (b) materially and adversely affect the transactions
contemplated herein.

Section 7.4. Regulatory Approval.
-----------  -------------------

         (a)      Purchaser shall have received all necessary regulatory
                  approvals of the transactions provided in this Agreement, all
                  notice and waiting periods required by law to pass shall have
                  passed, no proceeding to enjoin, restrain, prohibit or
                  invalidate such transactions shall have been instituted or
                  threatened, and any conditions of any regulatory approval
                  shall have been met.

         (b)      Such approvals shall not have imposed any condition which is
                  materially disadvantageous or burdensome to Purchaser.

                                       27

<PAGE>

                                  ARTICLE VIII
                                  ------------
                       CONDITIONS TO SELLER'S OBLIGATIONS
                       ----------------------------------

         The obligations of Seller to complete the transactions contemplated in
this Agreement are conditioned upon fulfillment, on or before the Closing, of
each of the following conditions:

Section 8.1. Representations and Warranties True.
-----------  -----------------------------------

         The representations and warranties made by Purchaser in this Agreement
shall be true in all material respects at and as of the Effective Time as though
such representations and warranties were made at and as of such time, except to
the extent otherwise provided herein or consented to by Seller.

Section 8.2. Obligations Performed.
-----------  ---------------------

         Purchaser shall (a) deliver to Seller those items required by Section
2.2, and (b) perform and comply in all material respects with all obligations
and agreements required by this Agreement to be performed or complied with by it
prior to or on the Effective Time.

Section 8.3. No Adverse Litigation.
-----------  ---------------------

         As of the Effective Time, no action, suit or proceeding shall be
pending or threatened against Purchaser or Seller which might materially and
adversely affect the transactions contemplated hereunder.

Section 8.4. Regulatory Approval.
-----------  -------------------

         (a)      Purchaser shall have received from the appropriate regulatory
                  authorities approval of the transactions contemplated herein,
                  waiting periods required by law to pass shall have passed, no
                  proceeding to enjoin, restrain, prohibit or invalidate such
                  transactions shall have been instituted or threatened, and any
                  conditions of any regulatory approval shall have been met.

         (b)      Such approvals shall not have imposed any condition which is
                  materially disadvantageous or burdensome to Seller.

                                   ARTICLE IX
                                   ----------
                                   TERMINATION
                                   -----------

Section 9.1. Methods of Termination.
-----------  ----------------------

         This Agreement may be terminated in any of the following ways:

         (a)      by either Purchaser or Seller, in writing five calendar days
                  in advance of such termination, if the Closing has not
                  occurred by December 31, 2004;

                                       28

<PAGE>

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

         (c)      by Purchaser in writing if the conditions set forth in Article
                  VII (with the exception of delivery of items required to be
                  delivered at Closing) of this Agreement shall not have been
                  met by Seller or waived in writing by Purchaser within 30
                  calendar days following the date of all approvals by
                  regulatory agencies and after all statutory waiting periods
                  have expired;

         (d)      by Seller in writing if the conditions set forth in Article
                  VIII of this Agreement shall not have been met by Purchaser or
                  waived in writing by Seller within 30 calendar days following
                  the date of all approvals by regulatory agencies and after all
                  statutory waiting periods have expired;

         (e)      any time prior to the Effective Time, by Purchaser or Seller
                  in writing if the other shall have been in breach of any
                  representation and warranty in any material respect (as if
                  such representation and warranty had been made on and as of
                  the date hereof and on the date of the notice of breach
                  referred to below), or in breach of any covenant, undertaking
                  or obligation contained herein, and such breach has not been
                  cured by the earlier of 30 calendar days after the giving of
                  notice to the breaching party of such breach or the Effective
                  Time; provided, however, that there shall be no cure period in
                  connection with any breach of Section 6.3, so long as such
                  breach by Purchaser was not caused by any action or inaction
                  of Seller, and Seller may terminate this Agreement immediately
                  if regulatory applications are not filed within 30 calendar
                  days after the date of this Agreement as provided in that
                  Section; or

         (f)      by Seller in writing at any time after any applicable
                  regulatory authority has denied approval of any application of
                  Purchaser for approval of the transactions contemplated
                  herein.

Section 9.2. Procedure Upon Termination.
-----------  --------------------------

         In the event of termination pursuant to Section 9.1, and except as
otherwise stated therein, written notice thereof shall be given to the other
party, and this Agreement shall terminate immediately upon receipt of such
notice unless an extension is consented to by the party having the right to
terminate.

         If this Agreement is terminated as provided herein,

         (a)      each party will return all documents, work papers and other
                  materials of the other party, including photocopies or other
                  duplications thereof, relating to this transaction, whether
                  obtained before or after the execution hereof, to the party
                  furnishing the same; and

                                       29

<PAGE>

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

Section 9.3. Payment of Expenses.
-----------  -------------------

         Should the transactions contemplated herein not be consummated because
of a party's breach of this Agreement, in addition to such damages as may be
recoverable in law or equity, the other party shall be entitled to recover from
the breaching party, upon demand, itemization and documentation, its reasonable
outside legal, accounting, consulting and other out-of-pocket expenses.

                                    ARTICLE X
                                    ---------
                            MISCELLANEOUS PROVISIONS
                            ------------------------

Section 10.1. Amendment and Modification.
------------  --------------------------

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

Section 10.2. Waiver or Extension.
------------  -------------------

         Except with respect to required approvals of the applicable
governmental authorities, either party, by written instrument signed by a duly
authorized officer, may extend the time for the performance of any of the
obligations or other acts of the other party and may waive (a) any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto or (b) compliance with any of the undertakings,
obligations, covenants or other acts contained herein.

Section 10.3. Assignment.
------------  ----------

         This Agreement and all of the provisions hereof shall be binding upon,
and shall inure to the benefit of, the parties hereto and their permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either of the parties hereto without
the prior written consent of the other.

Section 10.4. Confidentiality.
------------  ---------------

         Seller and Purchaser agree that the Confidentiality Agreement dated
March 31, 2004 between Seller and Purchaser (the "Confidentiality Agreement")
shall survive the execution hereof and the consummation of the transactions
contemplated herein.

                                       30

<PAGE>

Section 10.5. Addresses for Notices, Etc.
------------  ---------------------------

         All notices, requests, demands, consents and other communications
provided for hereunder and under the related documents shall be in writing and
transmitted by nationally recognized air courier (charges prepaid), telecopied
or personally delivered (with receipt thereof acknowledged) to the applicable
party at the address indicated below:

If to Seller:     Provident Legal Department
                  114 East Lexington Street
                  Baltimore, Maryland 21201
                  Fax Number: 410-277-2887
                  Attn: General Counsel

With a copy to:   Paul M. Aguggia
                  Muldoon Murphy Faucette & Aguggia LLP
                  5101 Wisconsin Avenue, NW
                  Washington, DC 20016
                  Fax Number: 202-966-9406

If to Purchaser:  Gateway Bank & Trust Co.
                  Post Office Box 1908
                  Elizabeth City, North Carolina 27906-1908
                  Attention:  D. Ben Berry, CEO
                  Facsimile:  (252) 334-1651

With a copy to:   Maupin Taylor, P.A.
                  P.O. Box Drawer 19764
                  Raleigh, NC 27619
                  Attention:  Ronald D. Raxter
                  Facsimile:  (919) 981-4300

or, as to each party, at such other address as shall be designated by such party
by notice to the other party complying with the terms of this Section.

Section 10.6. Counterparts.
------------  ------------

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

Section 10.7. Headings.
------------  --------

         The headings of the Sections and Articles of this Agreement are
inserted for convenience only and shall not constitute a part thereof.

                                       31

<PAGE>

Section 10.8. Governing Law.
------------  -------------

         This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.

Section 10.9. Sole Agreement.
------------  --------------

         Except for the Confidentiality Agreement, this Agreement and the
exhibits and attachments hereto represent the sole agreement between the parties
respecting the transactions contemplated hereby, and all prior or
contemporaneous written or oral proposals, agreements in principle,
representations, warranties and understandings between the parties with respect
to such matters are superseded hereby and merged herein.

Section 10.10. Severability.
-------------  ------------

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

Section 10.11. Parties In Interest.
-------------  -------------------

         Nothing in this Agreement, express or implied, including, without
limitation the provisions of Section 1.6(a), is intended or shall be construed
to confer upon or give to any person (other than the parties hereto, their
successors and permitted assigns) any rights or remedies under or by reason of
this Agreement, or any term, provision, condition, undertaking, warranty,
representation, indemnity, covenant or agreement contained herein.

                                       32

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the date first written
above.

SELLER:

PROVIDENT BANK OF MARYLAND

By:    /s/ Dennis A. Starliper
     -------------------------------------
Name:  Dennis A. Starliper
Title: Executive Vice President & CFO

PURCHASER:

GATEWAY BANK & TRUST CO.

By:    /s/ D. Ben Berry
     -------------------------------------
Name:  D. Ben Berry
Title: Chairman, President and CEO

                                       33

<PAGE>

                        PURCHASE AND ASSUMPTION AGREEMENT

                                     BETWEEN
                           PROVIDENT BANK OF MARYLAND
                                       AND
                            GATEWAY BANK & TRUST CO.

                                   SCHEDULE 1
                                   ----------

                             LIST OF BANKING CENTERS
                             -----------------------

1.       Elizabeth City, NC

         400 West Ehringhaus Street
         Elizabeth City, NC  27909

2.       Emporia, VA

         520 South Main Street
         Emporia, VA  23847

3.       Suffolk, VA

         2825 Godwin Boulevard
         Suffolk, VA  23434

<PAGE>

                        PURCHASE AND ASSUMPTION AGREEMENT

                                    BETWEEN
                           PROVIDENT BANK OF MARYLAND
                                      AND
                            GATEWAY BANK & TRUST CO.

                                  EXHIBIT LIST

         Exhibit No.        Description
         -----------        -----------

         1.1(a)(3)          Schedule of Leases and Contracts
         1.1(b)             List of Excluded Assets
         1.3(a)             Deposit Liabilities
         1.4(a)             Loans
         1.4(h)             Power of Attorney
         1.6(a)             List of Employees
         1.6(c)             Severance Benefits
         2.2(b)(2)          Form of Bill of Sale
         2.2(b)(3)          Form of Assignment and Assumption Agreement
         2.2(b)(14)         Form of Closing Statement

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