AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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CHARTER ONE FINANCIAL INC | CITIZENS FINANCIAL GROUP, INC.

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware Date: 5/10/2004
Industry: SandLs/Savings Banks Law Firm: Goodwin Procter LLP; Wachtell, Lipton, Rosen & Katz LLP; Silver, Freedman & Taff, L.L.P.;The Royal Bank of Scotland Group PLC Sector: Financial

AGREEMENT AND PLAN OF MERGER

By and Among

CHARTER ONE FINANCIAL, INC.

CITIZENS FINANCIAL GROUP, INC.

CARDINAL ACQUISITION CORP.

and, solely with respect to Article 11 of this Agreement,

THE ROYAL BANK OF SCOTLAND GROUP PLC

dated as of May 4, 2004

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TABLE OF CONTENTS1

Page

ARTICLE 1

DEFINITIONS

Section 1.01. Definitions...................................................1

Section 1.02. Other Definitional and Interpretative Provisions..............6

ARTICLE 2

THE MERGER

Section 2.01. The Merger....................................................7

Section 2.02. Consummation..................................................7

Section 2.03. Conversion of Shares..........................................7

Section 2.04. Surrender and Payment.........................................8

Section 2.05. Company Equity Compensation Plans; Surrender of Company

Common Stock by Executive Officers and Directors.............10

Section 2.06. Dissenters' Rights...........................................11

Section 2.07. Adjustments..................................................11

Section 2.08. Withholding Rights...........................................11

Section 2.09. Lost Certificates............................................11

ARTICLE 3

THE SURVIVING CORPORATION

Section 3.01. Alternative Transaction Structures...........................12

Section 3.02. Certificate of Incorporation.................................12

Section 3.03. Bylaws.......................................................12

Section 3.04. Directors and Officers.......................................12

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 4.01. Corporate Existence and Power................................13

Section 4.02. Corporate Authorization......................................13

Section 4.03. Governmental Authorization...................................14

Section 4.04. Non-contravention............................................14

Section 4.05. Capitalization...............................................15

Section 4.06. Subsidiaries.................................................15

Section 4.07. SEC Filings; Financial Statements............................16

Section 4.08. Disclosure Documents.........................................18

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1 The Table of Contents is not a part of this Agreement.

<PAGE>

Section 4.09. Absence of Certain Changes...................................18

Section 4.10 . Litigation and Liabilities...................................19

Section 4.11. Compliance with Laws and Court Orders; Reporting

Requirements.................................................19

Section 4.12. Bank Capitalization..........................................21

Section 4.13. Material Contracts...........................................21

Section 4.14. Fees.........................................................21

Section 4.15. Opinion of Financial Advisor.................................21

Section 4.16. Taxes........................................................22

Section 4.17. Intellectual Property........................................23

Section 4.18. Personnel Matters............................................23

Section 4.19. Environmental Matters........................................26

Section 4.20. Property and Leases..........................................27

Section 4.21. Derivative Transactions......................................27

Section 4.22. Broker/Dealer Status.........................................28

Section 4.23. Antitakeover Statutes and Rights Agreement...................28

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

Section 5.01. Corporate Existence and Power................................29

Section 5.02. Corporate Authorization......................................29

Section 5.03. Governmental Authorization...................................30

Section 5.04. Non-contravention............................................30

Section 5.05. SEC Reports; Financial Statements............................31

Section 5.06. Disclosure Documents.........................................32

Section 5.07. Compliance with Laws and Court Orders........................32

Section 5.08. Litigation...................................................32

Section 5.09. Finder' Fees................................................33

Section 5.10. Financing....................................................33

ARTICLE 6

COVENANTS OF THE COMPANY

Section 6.01. Conduct of the Company.......................................33

Section 6.02. Stockholder Meeting; Proxy Material..........................37

Section 6.03. Access to Information........................................37

Section 6.04. Acquisition Proposals........................................38

Section 6.05. Transition Committee.........................................40

Section 6.06. Control of Other Party's Business............................40

Section 6.07. ALCO Management..............................................41

Section 6.08. Branch Incentive Plan; Other Products........................41

Section 6.09. Charitable Contributions.....................................41

<PAGE>

ARTICLE 7

COVENANTS OF BUYER

Section 7.01. Obligations of Merger Subsidiary.............................42

Section 7.02. Director and Officer Liability...............................42

Section 7.03. Benefit Plans................................................43

Section 7.04. Conduct of Buyer and Merger Subsidiary.......................45

ARTICLE 8

COVENANTS OF BUYER AND THE COMPANY

Section 8.01. Reasonable Best Efforts......................................45

Section 8.02. Preparation of Company Proxy Statement.......................46

Section 8.03. Public Announcements.........................................47

Section 8.04. Further Assurances...........................................47

Section 8.05. Notices of Certain Events....................................47

ARTICLE 9

CONDITIONS TO THE MERGER

Section 9.01. Conditions to Obligations of Each Party......................48

Section 9.02. Conditions to the Obligations of Buyer

and Merger Subsidiary........................................48

Section 9.03. Conditions to the Obligations of the Company.................49

ARTICLE 10

TERMINATION

Section 10.01. Termination.................................................49

Section 10.02. Effect of Termination.......................................51

ARTICLE 11

MISCELLANEOUS

Section 11.01. Notices.....................................................51

Section 11.02. Survival of Representations and Warranties..................53

Section 11.03. Amendments and Waivers......................................53

Section 11.04. Expenses....................................................54

Section 11.05. Binding Effect; Benefit; Third Party Beneficiaries;

Assignment..................................................55

Section 11.06. Governing Law...............................................55

Section 11.07. Jurisdiction................................................55

Section 11.08. WAIVER OF JURY TRIAL........................................56

Section 11.09. Counterparts; Effectiveness.................................56

Section 11.10. Entire Agreement; Interpretation............................56

Section 11.11. Severability................................................57

Section 11.12. Specific Performance........................................57

Section 11.13. Liability for Payment of Merger Consideration...............57

iii

<PAGE>

SCHEDULES

Company Disclosure Schedule

<PAGE>

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of May 4, 2004 among Charter One

Financial, Inc., a Delaware corporation (the "COMPANY"), Citizens Financial

Group, Inc., a Delaware corporation ("BUYER"), Cardinal Acquisition Corp., a

Delaware corporation and a wholly owned Subsidiary of Buyer ("MERGER

SUBSIDIARY"), and, solely with respect to Article 11 of this Agreement, The

Royal Bank of Scotland Group PLC, a public limited liability company

incorporated under the laws of Scotland and indirect parent of Buyer

("HOLDINGS").

WHEREAS, the respective Boards of Directors of Buyer, Merger Subsidiary and

the Company have approved this Agreement and the Merger (as defined below) and

deem it advisable and in the best interests of their respective stockholders to

consummate the Merger on the terms and conditions set forth herein;

WHEREAS, Buyer, Merger Subsidiary and the Company desire to make those

representations, warranties, covenants and agreements specified herein in

connection with this Agreement;

WHEREAS, Holdings has agreed, pursuant to Section 11.13 hereof, to be

jointly and severally liable for the payment of the Merger Consideration (as

defined below) and any payment obligation arising from certain breaches of

this Agreement by Buyer and Merger Subsidiary; and

WHEREAS, prior to the execution and delivery of this Agreement, the

Board of Directors of the Company has duly amended the Amended and Restated

Stockholder Protection Rights Agreement dated as of October 20, 1999 between

the Company and BankBoston, N.A., as Rights Agent (the "RIGHTS AGREEMENT") to

provide that (i) the entry into by Buyer, Merger Subsidiary and the Company

of this Agreement and (ii) the acquisition of Company Common Stock by Buyer

or Merger Subsidiary pursuant to the Merger will not constitute or cause to

occur a "Flip-over Transaction or Event", "Flip-in Date", "Separation Time"

or "Stock Acquisition Date", or cause Buyer or Merger Subsidiary to be an

"Acquiring Person", pursuant to the Rights Agreement.

NOW, THEREFORE, in consideration of the foregoing and the

representations, warranties, covenants and agreements herein contained, the

parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. DEFINITIONS. (a) The following terms, as used herein, have

the following meanings:

<PAGE>

"AFFILIATE" means, with respect to any Person, any other Person directly

or indirectly controlling, controlled by, or under common control with such

Person.

"AGREEMENT" means this Agreement and Plan of Merger, together with the

Company Disclosure Schedule and the Buyer Disclosure Schedule.

"BANK REGULATOR" shall mean any pertinent federal or state Governmental

Authority charged with the supervision of banks, thrifts or bank or financial

holding companies or engaged in the insurance of bank deposits.

"BHC ACT" means the Bank Holding Company Act of 1956.

"BUSINESS DAY" means a day, other than Saturday, Sunday or any other day

on which commercial banks in New York, New York or London, England are

authorized or required by law to close.

"BUYER MATERIAL ADVERSE EFFECT" means a material adverse effect on the

ability of Buyer or Merger Subsidiary to timely consummate the Merger and the

transactions contemplated by this Agreement.

"CODE" means the Internal Revenue Code of 1986, as amended.

"COMPANY BALANCE SHEET" means the consolidated balance sheet of the

Company as of December 31, 2003 and the footnotes thereto set forth in the

Company 10-K.

"COMPANY BALANCE SHEET DATE" means December 31, 2003.

"COMPANY COMMON STOCK" means the common stock, $0.01 par value, of the

Company.

"COMPANY EQUITY COMPENSATION PLAN" means any equity or equity-based

compensation plan under which directors, employees, independent contractors

or other service providers to the Company and its Affiliates may purchase or

otherwise acquire shares of Company Common Stock or receive awards that are

based on or may be settled in shares of Company Common Stock.

"COMPANY INTELLECTUAL PROPERTY RIGHTS" means all material Intellectual

Property Rights owned or licensed and used or held for use by the Company or

any of its Subsidiaries.

"COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)

the business, results of operations or financial condition of the Company and

its Subsidiaries, taken as a whole (PROVIDED, HOWEVER, that, with respect to

this clause (i), Material Adverse Effect shall not be deemed to include

effects to the extent resulting from (a) changes, after the date hereof, in

generally accepted accounting principles or regulatory accounting

requirements applicable to banks or savings associations and their holding

companies generally, (b) changes, after

<PAGE>

the date hereof, in laws, rules or regulations of general applicability or

interpretations thereof by courts or Governmental Authorities, (c) actions or

omissions of the Company or any of its Subsidiaries taken with the prior written

consent of Buyer or expressly required hereunder, (d) changes, after the date

hereof, in general economic or market conditions affecting banks or their

holding companies generally or (e) the public disclosure of the transactions

contemplated by this Agreement), or (ii) the ability of the Company to timely

consummate the transactions contemplated by this Agreement.

"COMPANY PREFERRED STOCK" means the preferred stock, $0.01 par value, of

the Company.

"COMPANY 10-K" means the Company's annual report on Form 10-K for the

fiscal year ended December 31, 2003.

"DELAWARE LAW" means the General Corporation Law of the State of

Delaware.

"DISSENTING SHAREHOLDERS" means shareholders exercising appraisal rights

pursuant to Section 262 of the Delaware Law.

"EMPLOYEE PLAN" means any (i) "employee benefit plan", as defined in

Section 3(3) of ERISA; (ii) any employment, consultancy, severance or similar

service agreement, plan, arrangement or policy; or (iii) any other plan or

arrangement providing for compensation, bonuses, profit-sharing, equity or

equity-based compensation or other forms of incentive or deferred

compensation, vacation benefits, insurance (including any self-insured

arrangements), medical, dental, vision or prescription benefits, disability

or sick leave benefits, life insurance, employee assistance program, workers'

compensation, supplemental unemployment benefits and post-employment or

retirement benefits (including compensation, pension or insurance benefits);

in each case which is sponsored, maintained, administered, contributed to by

the Company or any Affiliate and covers any current or former employee,

director or independent contractor of the Company or any of its Subsidiaries

or with respect to which the Company or any of its Subsidiaries has any

liability to any current or former employee, director or independent

contractor of the Company or any of its Subsidiaries.

"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law

(including common law), treaty, judicial decision, regulation, rule,

judgment, order, decree, injunction, permit or governmental restriction or

requirement or any agreement with any Governmental Authority or other third

party, relating to human health and safety (as affected by the environment or

natural resources), the environment, pollutants, contaminants (including mold

or other fungal contaminants), wastes or chemicals or to any toxic,

radioactive, ignitable, corrosive, reactive or otherwise hazardous

substances, wastes or materials.

<PAGE>

"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,

certificates, approvals and other similar authorizations of Governmental

Authorities relating to or required by Environmental Laws and affecting, or

relating in any way to, the business of the Company or any Subsidiary as

currently conducted.

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA AFFILIATE" with respect to the Company means any other entity

that, together with the Company, would be treated as a single employer under

Section 414 of the Code.

"FDIC" means the Federal Deposit Insurance Corporation.

"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal

Reserve System.

"HOLDINGS 20-F" means Holdings' annual report on Form 20-F for the

fiscal year ended December 31, 2003.

"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"INTELLECTUAL PROPERTY RIGHTS" means any trademark, service mark, trade

name, mask work, invention, patent, trade secret, copyright, know-how

(including any registrations or applications for registration of any of the

foregoing) or any other similar type of proprietary intellectual property

right.

"JOINT VENTURE" means any Person which is not a Subsidiary of the

Company and in which (i) the Company, directly or indirectly, owns or

controls any shares of any class of the outstanding voting securities or

other equity interests, including without limitation, an equity investment,

as such term as of the date hereof is defined in the Federal Deposit

Insurance Corporation's rules and regulations at 12 C.F.R. Section 362.2(g),

of 5% or more or (ii) the Company or one of its Subsidiaries is a general

partner.

"LIEN" means, with respect to any property or asset, any mortgage, lien,

pledge, charge, security interest or other encumbrance of any kind in respect

of such property or asset. For purposes of this Agreement, a Person shall be

deemed to own subject to a Lien any property or asset that it has acquired or

holds subject to the interest of a vendor or lessor under any conditional

sale agreement, capital lease or other title retention agreement relating to

such property or asset.

"1933 ACT" means the Securities Act of 1933.

"1934 ACT" means the Securities Exchange Act of 1934.

"OCC" means the Office of the Comptroller of Currency.

<PAGE>

"OFFICER" of any Person means any executive officer of such Person

within the meaning of Rule 3b-7 of the 1934 Act.

"PERSON" means an individual, corporation, partnership, limited

liability company, association, trust or other entity or organization,

including a government or political subdivision or an agency or

instrumentality thereof.

"RIGHTS" has the meaning given to such term in the Rights Agreement.

"SEC" means the Securities and Exchange Commission.

"SUBSIDIARY" means, with respect to any Person, any entity of which (i)

if a corporation, securities or other ownership interests having ordinary

voting power to elect a majority of the board of directors or other persons

performing similar functions are at the time directly or indirectly owned by

such Person or (ii) if a limited liability company, partnership, association

or other business entity, a majority of the membership, partnership or other

ownership interests thereof are at the time directly or indirectly owned by

such Person.

"THIRD PARTY" means any Person other than Buyer or any of its Affiliates.

"WARN ACT" means the Worker Adjustment and Retraining Notification Act.

Any reference in this Agreement to a statute shall be to such statute,

as amended from time to time, and to the rules and regulations promulgated

thereunder.

(b) Each of the following terms is defined in the Section set forth

opposite such term:

<TABLE>

TERM SECTION

<S> <C>

Acquisition Proposal............. 6.04

Bankruptcy and Equity Exception.. 4.02

Benefits Transition Date......... 7.03

Branch Incentive Plan............ 6.09

Buyer Disclosure Schedule........Article 5

Certificates..................... 2.04

Closing.......................... 2.02

Company Disclosure Schedule......Article 4

Company DRIP..................... 2.05

Company Options.................. 2.05

Company Proxy Statement.......... 4.08

Company SEC Documents............ 4.07

Company Securities............... 4.05

Company Stockholder Meeting...... 6.02

Company Subsidiary Securities.... 4.06

</TABLE>

<PAGE>

<TABLE>

TERM SECTION

<S> <C>

Company Units.................... 2.05

Confidentiality Agreement........ 6.03

Covered Employees................ 7.03

Dissenting Shares................ 2.03

Effective Time................... 2.01

End Date......................... 10.01

Exchange Agent................... 2.04

Expenses......................... 11.04

Finance Laws..................... 4.11

GAAP............................. 4.07

Governmental Authority........... 4.03

Holdings.........................Recitals

Indemnified Person............... 7.02

Material Contract................ 4.13

Merger........................... 2.01

Merger Consideration............. 2.03

Permits.......................... 4.01

Regulatory Applications.......... 4.03

Representatives.................. 6.04

Rights Agreement.................Recitals

Significant Stockholders.........Recitals

Surviving Corporation............ 2.01

Tax Return....................... 4.16

Tax.............................. 4.16

Taxing Authority................. 4.16

Termination Fee.................. 11.04

Transaction Agreements........... 11.10

Transition Committee............. 6.06

Trust Shares..................... 2.03

United States Bank............... 2.04

</TABLE>

Section 1.02. OTHER DEFINITIONAL AND INTERPRETATIVE PROVISIONS. Unless

specified otherwise, in this Agreement the obligations of any party consisting

of more than one Person are joint and several. The words "hereof", "herein" and

"hereunder" and words of like import used in this Agreement shall refer to this

Agreement as a whole and not to any particular provision of this Agreement. The

captions herein are included for convenience of reference only and shall be

ignored in the construction or interpretation hereof. References to Articles,

Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and

Schedules of this Agreement unless otherwise specified. All Exhibits and

Schedules annexed hereto or referred to herein are hereby incorporated in and

made a part of this Agreement as if set forth in full herein. Any capitalized

terms used in any Exhibit or Schedule but not otherwise defined therein, shall

have the meaning as defined in this Agreement. Any singular term in this

Agreement shall be deemed to include the plural, and any plural term the

singular. Whenever the words

<PAGE>

"include", "includes" or "including" are used in this Agreement, they shall be

deemed to be followed by the words "without limitation", whether or not they are

in fact followed by those words or words of like import. References to any

agreement or contract are to that agreement or contract as amended, modified or

supplemented from time to time in accordance with the terms thereof. References

to any Person include the successors and permitted assigns of that Person.

References from or through any date mean, unless otherwise specified, from and

including or through and including, respectively.

ARTICLE 2

THE MERGER

Section 2.01. THE MERGER. (a) At the Effective Time, Merger Subsidiary

shall be merged (the "MERGER") with and into the Company in accordance with

Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,

and the Company shall be the surviving corporation (the "SURVIVING

CORPORATION").

(b) As soon as practicable after satisfaction or, to the extent permitted

hereunder, waiver of all conditions set forth in Article 9, the Company and

Merger Subsidiary shall file a certificate of merger with the Delaware Secretary

of State and make all other filings or recordings required by Delaware Law in

connection with the Merger. The Merger shall become effective at such time (the

"EFFECTIVE TIME") as the certificate of merger is duly filed with the Delaware

Secretary of State (or at such later time as may be specified in the certificate

of merger).

possess all the rights, powers, privileges and franchises and be subject to all

of the obligations, liabilities, restrictions and disabilities of the Company

and Merger Subsidiary, all as provided under Delaware Law.

Section 2.02. CONSUMMATION. Unless this Agreement shall have been

terminated and the Merger shall have been abandoned pursuant to Section 10.01,

the consummation of the Merger (the "Closing") shall take place at 10:00 a.m.,

New York City time, at the offices of Davis Polk & Wardwell, 450 Lexington

Avenue, New York, New York, as soon as possible, but in no event later than

three Business Days, after satisfaction or waiver (to the extent permitted

hereunder) of the conditions set forth in Article 9 (other than those conditions

that by their nature are to be satisfied at Closing, but subject to satisfaction

or waiver of those conditions), or at such other time or place as Buyer and the

Company may agree in writing.

Section 2.03. CONVERSION OF SHARES. At the Effective Time:

<PAGE>

(a) each share of Company Common Stock (i) held by the Company as treasury

stock or (ii) owned by Buyer or any Subsidiary of Buyer, in each case,

immediately prior to the Effective Time shall be canceled, and no payment shall

be made with respect thereto; PROVIDED that any shares of Company Common Stock

(A) held by Buyer or any of its Subsidiaries in connection with any market

making or proprietary trading activity or for the account of clients, customers

or other Persons, (B) as to which Buyer or any of its Subsidiaries is or may be

required to act as a fiduciary or in a similar capacity, (C) shares held by

Buyer or the Company or any of their respective Subsidiaries in respect of a

debt previously contracted (any such shares in clauses (A), (B) or (C), "TRUST

SHARES") or (D) the cancellation of which would violate any legal duties or

obligations of Buyer or any of its Subsidiaries, in each case, shall not be

cancelled but, instead, shall be treated as set forth in Section 2.03(c) below;

(b) each share of common stock of Merger Subsidiary outstanding immediately

prior to the Effective Time shall be converted into and become one share of

common stock of the Surviving Corporation with the same rights, powers and

privileges as the shares so converted and shall constitute the only outstanding

shares of capital stock of the Surviving Corporation; and

Section 2.05 with respect to shares of Company Common Stock as to which

appraisal rights have been exercised, each share of Company Common Stock

outstanding immediately prior to the Effective Time shall be converted into the

right to receive in cash from Buyer an amount equal to $44.50, without interest

(the "MERGER CONSIDERATION").

Section 2.04. SURRENDER AND PAYMENT. Prior to the Effective Time, Buyer

shall appoint an agent, reasonably satisfactory to the Company (the "EXCHANGE

AGENT") for the purpose of exchanging for the Merger Consideration certificates

representing shares of Company Common Stock (the "CERTIFICATES"). Prior to the

Effective Time, Buyer shall deposit or cause to be deposited with the Exchange

Agent in a separate fund established for the benefit of the holders of shares of

Company Common Stock, cash sufficient to pay the aggregate Merger Consideration

required to be paid for all of the Certificates at the Effective Time. Any cash

deposited with the Exchange Agent shall not be used for any purpose other than

as set forth in this Article 2 and shall be invested by the Exchange Agent as

directed by Buyer or the Surviving Corporation in: (A) direct obligations of, or

obligations the principal of and interest on which are unconditionally

guaranteed by, the United States of America with a remaining term at the time of

acquisition thereof not in excess of 90 days, (B) money market accounts or

certificates of deposit maturing within 90 days of the acquisition thereof and

issued by a bank or trust company organized under the laws of the United States

of America or a State thereof having a combined capital surplus in excess of

$500,000,000 (a "UNITED STATES BANK"), (C) commercial paper issued by a domestic

corporation and given a rating of no lower than A1 by Standard & Poor's

Corporation and P1 by Moody's Investors Service, Inc. with a remaining

<PAGE>

term at the time of acquisition thereof not in excess of 90 days or (D) demand

deposits with any United States Bank. The earnings and interest thereon shall be

paid to Buyer or as Buyer directs. Promptly after the Effective Time (but in no

event later than seven Business Days after the Effective Time), Buyer shall

send, or shall cause the Exchange Agent to send, to each holder of record of

shares of Company Common Stock at the Effective Time, a letter of transmittal

and instructions (which shall specify that the delivery shall be effected, and

risk of loss and title shall pass, only upon proper delivery of the Certificates

to the Exchange Agent) for use in such exchange.

(b) Each holder of shares of Company Common Stock that have been converted

into the right to receive the Merger Consideration shall be entitled to receive,

upon surrender to the Exchange Agent of a Certificate, together with a properly

completed letter of transmittal, the Merger Consideration in respect of the

Company Common Stock represented by each such Certificate. Until so surrendered

or transferred, as the case may be, each such Certificate shall represent after

the Effective Time for all purposes only the right to receive such Merger

Consideration.

other than the Person in whose name the surrendered Certificate is registered,

it shall be a condition to such payment that (i) either such Certificate shall

be properly endorsed or shall otherwise be in proper form for transfer and (ii)

the Person requesting such payment shall pay to the Exchange Agent any transfer

or other similar taxes required as a result of such payment to a Person other

than the registered holder of such Certificate or establish to the reasonable

satisfaction of the Exchange Agent that such tax has been paid or is not

payable.

(d) After the Effective Time, there shall be no further registration of

transfers of shares of Company Common Stock. If, after the Effective Time,

Certificates are presented to the Surviving Corporation, they shall be canceled

and exchanged for the Merger Consideration provided for, and in accordance with

the procedures set forth, in this Article 2.

(e) Any portion of the Merger Consideration made available to the Exchange

Agent pursuant to Section 2.04(a) (and any interest or other income earned

thereon) that remains unclaimed by the holders of shares of Company Common Stock

six months after the Effective Time shall be returned to Buyer, upon demand, and

any such holder who has not exchanged shares of Company Common Stock for the

Merger Consideration in accordance with this Section 2.04 prior to that time

shall thereafter look only to Buyer for payment of the Merger Consideration in

respect of such shares without any interest thereon. Notwithstanding the

foregoing, Buyer shall not be liable to any holder of shares of Company Common

Stock for any amounts paid to a public official pursuant to applicable abandoned

property, escheat or similar laws. Any amounts remaining unclaimed by holders of

shares of Company Common Stock immediately prior to such time when the amounts

would otherwise escheat to or become property of

<PAGE>

any Governmental Authority shall become, to the extent permitted by applicable

law, the property of Buyer free and clear of any claims or interest of any

Person previously entitled thereto.

Section 2.05. COMPANY EQUITY COMPENSATION PLANS; SURRENDER OF COMPANY

COMMON STOCK BY EXECUTIVE OFFICERS AND DIRECTORS. (a) At the Effective Time,

each outstanding option to purchase shares of Company Common Stock which the

Company is obligated to honor, whether through the issuance of shares of Company

Common Stock or otherwise, granted under a Company Equity Compensation Plan

(each, a "COMPANY OPTION"), shall be cancelled and the Company shall pay each

holder thereof at or promptly after the Effective Time (but in no event later

than seven Business Days after the Effective Time) for each such Company Option

cancelled an amount in cash (without interest) determined by multiplying (i) the

excess, if any, of the Merger Consideration over the applicable exercise price

of such Company Option by (ii) the number of shares of Company Common Stock

subject thereto immediately prior to the Effective Time. In connection

therewith, the Company shall provide written notice to each holder of a then

outstanding Company Option (whether or not such Company Option is then vested or

exercisable), that (A) such Company Option shall be, as at the date of such

notice, exercisable in full, (B) such Company Option shall terminate at the

Effective Time and (C) if such Company Option is not exercised or otherwise

terminated on or before the fifth Business Day prior to the Effective Time, such

Company Option shall be treated as set forth in the immediately preceding

sentence. Immediately prior to the Effective Time, all outstanding compensatory

Company Common Stock units granted under a Company Equity Compensation Plan

(collectively, "COMPANY UNITS"), including the 2004 Senior Executive Stock Unit

Deferred Compensation Plan and the Stock Deferred Compensation Plan, shall

become fully vested and cease to be subject to any risk of forfeiture or

restriction on transferability. At the Effective Time, each Company Unit shall

be cancelled, and the Company shall pay each holder thereof at or promptly after

the Effective Time (but in no event later than seven Business Days after the

Effective Time) for each such Company Unit cancelled an amount in cash (without

interest) determined by multiplying (i) the Merger Consideration by (ii) the

number of shares of Company Common Stock subject thereto immediately prior to

the Effective Time.

(b) The Company has taken all action as is necessary to provide that (i)

from and after the date of this Agreement, no new participants shall be

permitted to enroll in the Company's automatic dividend reinvestment plan (the

"Company DRIP") and the Company shall direct BankBoston N.A., as transfer agent

under the Company DRIP, to stop accepting Authorization Cards (as described in

the Company DRIP) and (ii) no later than three Business Days prior to the date

on which the Effective Time occurs, no further shares of Company Common Stock

will be purchased under the Company DRIP. Immediately prior to the Effective

Time and subject to the consummation of the Merger, the Company shall terminate

the Company DRIP.

<PAGE>

that are necessary to give effect to the transactions contemplated by this

Section 2.05.

(d) The board of directors of the Company shall adopt such resolutions

necessary to provide that the surrender of any Company Common Stock, Company

Options and Company Units by each officer and director of the Company who is

subject to Section 16 of the 1934 Act shall be an exempt transaction pursuant to

Rule 16b-3 under the 1934 Act.

Section 2.06. DISSENTERS' RIGHTS. Notwithstanding anything in this

Agreement to the contrary, if any Dissenting Shareholder shall demand to be paid

the "fair value" of such holder's shares of Company Common Stock, as provided in

Section 262 of the Delaware Law, such shares shall not be converted into or

exchangeable for the right to receive the Merger Consideration except as

provided in this Section 2.06, and the Company shall give Buyer notice thereof

and Buyer shall have the right to participate in all negotiations and

proceedings with respect to any such demands. Neither the Company nor the

Surviving Corporation shall, except with the prior written consent of Buyer,

voluntarily make any payment with respect to, or settle or offer to settle, any

such demand for payment. If any Dissenting Shareholder shall fail to perfect or

shall have effectively withdrawn or lost the right to dissent, the shares of

Company Common Stock held by such Dissenting Shareholder shall thereupon be

treated as though such shares had been converted into the Merger Consideration

pursuant to Section 2.03.

Section 2.07. ADJUSTMENTS. If, during the period between the date of this

Agreement and the Effective Time, any change in the outstanding shares of

capital stock of the Company shall occur, including by reason of any

reclassification, recapitalization, stock split (including a reverse stock

split) or combination, exchange, subdivision or readjustment of shares, or any

stock dividend thereon with a record date during such period or issuer tender or

exchange offer or other similar transaction, the Merger Consideration and any

other amounts payable pursuant to this Agreement shall be appropriately

adjusted.

Section 2.08. WITHHOLDING RIGHTS. Each of the Surviving Corporation and

Buyer shall be entitled to deduct and withhold from the consideration otherwise

payable to any Person pursuant to this Article 2 such amounts as it is required

to deduct and withhold with respect to the making of such payment under any

provision of federal, state, local or foreign tax law. If the Surviving

Corporation or Buyer, as the case may be, so withholds amounts, such amounts

shall be treated for all purposes of this Agreement as having been paid to the

holder of the shares of Company Common Stock, Company Options or Company Units

in respect of which the Surviving Corporation or Buyer, as the case may be, made

such deduction and withholding.

Section 2.09. LOST CERTIFICATES. If any Certificate shall have been lost,

stolen or destroyed, upon the making of an affidavit of that fact by the Person

<PAGE>

claiming such Certificate to be lost, stolen or destroyed and, if required by

the Surviving Corporation, the posting by such Person of a bond, in such

reasonable amount as the Surviving Corporation may direct, as indemnity against

any claim that may be made against it with respect to such Certificate, the

Exchange Agent will issue, in exchange for such lost, stolen or destroyed

Certificate, the Merger Consideration to be paid in respect of the shares of

Company Common Stock represented by such Certificate, as contemplated by this

Article 2.

ARTICLE 3

THE SURVIVING CORPORATION

Section 3.01. ALTERNATIVE TRANSACTION STRUCTURES. Notwithstanding anything

that may be deemed to be to the contrary contained herein, at its election,

Buyer may change, and the Company shall cooperate in such efforts (including,

without limitation, by entering into an appropriate amendment to this

Agreement), the method of effecting the combination with the Company, including

to provide for a merger of the Company into Buyer or any Subsidiary of Buyer or

to substitute any of Buyer's direct or indirect wholly owned Subsidiaries of

Buyer or Merger Subsidiary organized under the laws of Delaware as a constituent

corporation in the Merger; PROVIDED, HOWEVER, that no such change shall (i)

alter or change the amount or kind of consideration to be issued to holders of

shares of Company Common Stock as provided for in this Agreement, (ii)

materially impede or delay consummation of the transactions contemplated by this

Agreement or (iii) otherwise adversely affect the stockholders of the Company.

Section 3.02. CERTIFICATE OF INCORPORATION. The certificate of

incorporation of the Company in effect at the Effective Time shall be the

certificate of incorporation of the Surviving Corporation until amended in

accordance with Delaware Law.

Section 3.03. BYLAWS. The bylaws of Merger Subsidiary in effect at the

Effective Time shall be the bylaws of the Surviving Corporation until amended in

accordance with Delaware Law.

Section 3.04. DIRECTORS AND OFFICERS. From and after the Effective Time,

until successors are duly elected or appointed and qualified in accordance with

applicable law, (i) the directors of Merger Subsidiary at the Effective Time

shall be the directors of the Surviving Corporation and (ii) the officers of the

Company at the Effective Time shall be the officers of the Surviving

Corporation.

<PAGE>

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Disclosure Schedule (subject to Section

11.10(c)) delivered by the Company to Buyer contemporaneously with the

execution and delivery of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"),

the Company represents and warrants to Buyer that:

Section 4.01. CORPORATE EXISTENCE AND POWER. The Company is a corporation

duly incorporated, validly existing and in good standing under the laws of the

State of Delaware and has all corporate powers and all governmental licenses,

authorizations, permits, consents and approvals (collectively, "Permits")

required to carry on its business as now conducted, except for those Permits the

absence of which would not have, individually or in the aggregate, a Company

Material Adverse Effect. The Company is duly qualified to do business as a

foreign corporation and is in good standing in each jurisdiction where such

qualification is necessary, except for those jurisdictions where failure to be

so qualified would not have, individually or in the aggregate, a Company

Material Adverse Effect. The Company is duly registered as a financial holding

company under the BHC Act. The Company has heretofore made available to Buyer

true and complete copies of the certificate of incorporation and bylaws of the

Company as currently in effect.

Section 4.02. CORPORATE AUTHORIZATION. (a) The execution, delivery and

performance by the Company of this Agreement and the consummation by the Company

of the transactions contemplated hereby are within the Company's corporate

powers and, except for the required approval of the Company's stockholders in

connection with the consummation of the Merger, have been duly authorized by all

necessary corporate action on the part of the Company. The affirmative vote of

the holders of a majority of the outstanding shares of Company Common Stock is

the only vote of the holders of any of the Company's capital stock necessary in

connection with the consummation of the Merger. This Agreement is a valid and

binding agreement of the Company enforceable against the Company in accordance

with its terms, subject to bankruptcy, insolvency, fraudulent transfer,

reorganization, moratorium and similar laws of general applicability relating to

or affecting creditors' rights and to general equity principles (the "BANKRUPTCY

AND EQUITY EXCEPTION").

(b) At a meeting duly called and held on May 4, 2004, the Company's Board

of Directors has (i) unanimously determined that this Agreement and the

transactions contemplated hereby are fair to and in the best interests of the

Company's stockholders, (ii) unanimously approved and adopted this Agreement and

the transactions contemplated hereby, (ii) approved and adopted an amendment to

the Rights Agreement to render the Rights inapplicable to the Merger, this

Agreement and the transactions contemplated hereby, (iii) unanimously resolved

to recommend approval and adoption of this Agreement by

<PAGE>

its stockholders and (iv) directed that this Agreement be submitted

to the Company's stockholders for their adoption.

Section 4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and

performance by the Company of this Agreement and the consummation by the Company

of the transactions contemplated hereby require no action by or in respect of,

or filing with, any governmental body, agency, official, authority or

instrumentality (each, a "GOVERNMENTAL AUTHORITY"), domestic, foreign or

supranational, other than (i) the filing of a certificate of merger with respect

to the Merger with the Secretary of State of Delaware and appropriate documents

with the relevant authorities of other states in which the Company is qualified

to do business, (ii) the filing of an application by Buyer with the

Massachusetts Board of Bank Incorporation (and, in connection with such

application, an application with the Massachusetts Housing Partnership Fund), an

application by Buyer on Form FR Y-3 with the Federal Reserve Board and the other

filings and actions listed in Section 4.03 of the Company Disclosure Schedule

(together, the "REGULATORY APPLICATIONS"), (iii) compliance with any applicable

requirements of the HSR Act, (iv) compliance with any applicable requirements of

the 1934 Act, and any other applicable securities laws, whether state or

foreign, and (v) any actions or filings the absence of which would not be

reasonably expected to have, individually or in the aggregate, a Company

Material Adverse Effect. As of the date of this Agreement, the Company knows of

no reason why all regulatory approvals from any Governmental Authority required

for the consummation of the transactions contemplated by this Agreement should

not be obtained on a timely basis.

Section 4.04. NON-CONTRAVENTION. The execution, delivery and performance

by the Company of this Agreement and the consummation of the transactions

contemplated hereby do not and will not (i) contravene, conflict with, or result

in any violation or breach of any provision of the certificate of incorporation

or bylaws of the Company or the comparable governing instruments of any of its

Subsidiaries, assuming compliance with the matters referred to in Section 4.03,

contravene, conflict with or result in a violation or breach of any provision of

any applicable law, statute, ordinance, rule, regulation, judgment, injunction,

order, or decree applicable to the Company or any of its Subsidiaries, require

any consent or other action by any Person under, constitute a default, or an

event that, with or without notice or lapse of time or both, would constitute a

default, under, or cause or permit the termination, cancellation, acceleration

or other change of any right or obligation or the loss of any benefit to which

the Company or any of its Subsidiaries is entitled under any provision of any

agreement or other instrument binding upon the Company or any of its

Subsidiaries or any license, franchise, permit, certificate, approval or other

similar authorization affecting, or relating in any way to, the assets or

business of the Company and its Subsidiaries or result in the creation or

imposition of any Lien on any asset of the Company or any of its Subsidiaries,

except for such contraventions, conflicts and violations referred to in clause

(ii) and for such

<PAGE>

failures to obtain any such consent or other action, defaults, terminations,

cancellations, accelerations, changes, losses or Liens referred to in clauses

(iii) and (iv) that would not be reasonably expected to have, individually or in

the aggregate, a Company Material Adverse Effect.

Section 4.05. CAPITALIZATION. (a) The authorized capital stock of the

Company consists of 360,000,000 shares of Company Common Stock and 20,000,000

shares of Company Preferred Stock. As of the close of business on May 3, 2004,

there were outstanding 223,800,732 shares of Company Common Stock, no shares of

Company Preferred Stock, compensatory stock options to purchase an aggregate of

26,617,611 shares of Company Common Stock (of which options to purchase an

aggregate of 13,785,100 shares of Company Common Stock were vested) and

compensatory units with respect to 365,013 shares of Company Common Stock (of

which, no units with respect to shares of Company Common Stock were vested). The

Company has no shares of capital stock reserved for issuance, except that, as of

May 3, 2004, there were 3,600,000 shares of Company Preferred Stock reserved for

issuance pursuant to the Rights Agreement, and 31,139,413 shares of Company

Common Stock reserved for issuance pursuant to the Company Equity Compensation

Plans. A true and complete copy of the Rights Agreement as in effect as of the

date hereof has been made available to Buyer. Section 4.05 of the Company

Disclosure Schedule contains a true and complete list as of May 3, 2004 of the

number of outstanding Company Options, the exercise price of all Company Options

and number of shares of Company Common Stock issuable at such exercise price.

All outstanding shares of capital stock of the Company have been, and all shares

that may be issued pursuant to the Company Equity Compensation Plans will be,

when issued in accordance with the respective terms thereof, duly authorized and

validly issued and are fully paid and nonassessable. No Subsidiary of the

Company owns any shares of capital stock of the Company, other than shares held

in a trust or fiduciary capacity or Trust Shares.

(b) Except as set forth in this Section 4.05 and for changes since May 3

2004 resulting from the exercise of employee stock options outstanding on such

date or the distribution of shares in satisfaction of Company Units outstanding

on such date, there are no outstanding shares of capital stock or voting

securities of the Company, securities of the Company convertible into or

exchangeable for shares of capital stock or voting securities of the Company or

options or other rights (other than the Rights) to acquire from the Company, or

other obligation of the Company to issue, any capital stock, voting securities

or securities convertible into or exchangeable for capital stock or voting

securities of the Company (the items in clauses (i), (ii) and (iii) being

referred to collectively as the "COMPANY SECURITIES"). There are no outstanding

obligations of the Company or any of its Subsidiaries to repurchase, redeem or

otherwise acquire any of the Company Securities.

Section 4.06. SUBSIDIARIES. Each Subsidiary of the Company is a

corporation, limited liability company or similar corporate entity duly

<PAGE>

incorporated, validly existing and in good standing (where such concept exists)

under the laws of its jurisdiction of incorporation, has all corporate powers

and all Permits required to carry on its business as now conducted, except for

those Permits the absence of which would not have, individually or in the

aggregate, a Company Material Adverse Effect. Each such Subsidiary is duly

qualified to do business as a foreign corporation and is in good standing in

each jurisdiction where such qualification is necessary, except for those

jurisdictions where failure to be so qualified would not have, individually or

in the aggregate, a Company Material Adverse Effect. All material Subsidiaries

of the Company and their respective jurisdictions of incorporation are

identified in the Company 10-K and all Joint Ventures are identified in Schedule

4.06 of the Company Disclosure Schedule.

(b) All of the outstanding capital stock of, or other voting securities or

ownership interests in, each Subsidiary of the Company and each Joint Venture,

is owned by the Company, directly or indirectly, free and clear of any Lien and

free of any other limitation or restriction (including any restriction on the

right to vote, sell or otherwise dispose of such capital stock or other voting

securities or ownership interests). There are no outstanding securities of the

Company or any of its Subsidiaries convertible into or exchangeable for shares

of capital stock or other voting securities or ownership interests in any

Subsidiary of the Company or options or other rights to acquire from the Company

or any of its Subsidiaries, or other obligations of the Company or any of its

Subsidiaries to issue, any capital stock or other voting securities or ownership

interests in, or any securities convertible into or exchangeable for any capital

stock or other voting securities or ownership interests in, any Subsidiary of

the Company (the items in clauses (i) and (ii) being referred to collectively as

the "COMPANY SUBSIDIARY SECURITIES"). There are no outstanding obligations of

the Company or any of its Subsidiaries to repurchase, redeem or otherwise

acquire any of the Company Subsidiary Securities.

Section 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company has made

available to Buyer (i) the Company's annual reports on Form 10-K for its fiscal

years ended December 31, 2003, 2002 and 2001, (ii) its proxy or information

statements relating to meetings of, or actions taken without a meeting by, the

stockholders of the Company held since December 31, 2003, and (iii) all of its

other reports, statements, schedules and registration statements filed with the

SEC since December 31, 2003 (the documents referred to in this Section 4.07(a),

collectively, the "COMPANY SEC DOCUMENTS"). The Company has filed all reports,

schedules, forms, statements and other documents (including exhibits, material

agreements and other information incorporated therein) required to be filed by

the Company with the SEC since December 31, 2002.

(b) As of its filing date, each Company SEC Document complied, and each

such Company SEC Document filed subsequent to the date hereof will comply, as to

form in all material respects with the applicable requirements of the 1933 Act

and the 1934 Act, as the case may be.

<PAGE>

to the date hereof, on the date of such filing), each Company SEC Document filed

pursuant to the 1934 Act did not, and each such Company SEC Document filed

subsequent to the date hereof will not, contain any untrue statement of a

material fact or omit to state any material fact necessary in order to make the

statements made therein, in the light of the circumstances under which they were

made, not misleading.

(d) Each Company SEC Document that is a registration statement, as amended

or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date

such registration statement or amendment became effective, did not contain any

untrue statement of a material fact or omit to state any material fact required

to be stated therein or necessary to make the statements therein not misleading.

(e) Each of the consolidated balance sheets included in or incorporated by

reference into the Company SEC Documents (including the related notes and

schedules) filed prior to the date of this Agreement fairly presents, and, if

filed after the date of this Agreement, will fairly present, the consolidated

financial position of the Company and its consolidated Subsidiaries, as of its

date, and each of the consolidated statements of operations, cash flows and of

changes in shareholders' equity included in or incorporated by reference into

the Company SEC Documents (including any related notes and schedules) fairly

presents, and, if filed after the date of this Agreement, will fairly present,

the results of operations, retained earnings and changes in financial position,

as the case may be, of the Company and its consolidated Subsidiaries for the

periods set forth therein (subject, in the case of unaudited statements, to

notes and normal year-end audit adjustments in amounts materially consistent

with past experience), in each case in accordance with U.S. generally accepted

accounting principles ("GAAP") consistently applied during the periods involved,

except as may be noted therein.

(f) The books and records of the Company and its Subsidiaries have been,

and are being, maintained in all material respects in accordance with GAAP and

any other applicable legal and accounting requirements and reflect only actual

transactions.

(g) The management of the Company has (x) implemented disclosure controls

and procedures (as defined in Rule 13a-15(e) of the 1934 Act) to ensure that

material information relating to the Company, including its consolidated

Subsidiaries, is made known to the management of the Company by others within

those entities, and (y) has disclosed, based on its most recent evaluation, to

the Company's outside auditors and the audit committee of the Board of Directors

of the Company (A) all significant deficiencies and material weaknesses in the

design or operation of internal control over financial reporting (as defined in

Rule 13a-15(f) of the 1934 Act) which are reasonably likely to adversely affect

the Company's ability to record, process, summarize and report financial data

and (B) any fraud, whether or not material, that involves management or other

employees who have a significant role in the Company's internal control over

financial

<PAGE>

reporting. A summary of any of those disclosures made by management to the

Company's auditors and audit committee is set forth in Section 4.07(f) of the

Company Disclosure Schedule.

(h) Since July 30, 2002,(x) through the date hereof, neither the Company

nor any of its Subsidiaries nor, to the knowledge of the officers of the

Company, any director, officer, employee, auditor, accountant or representative

of the Company or any of its Subsidiaries has received or otherwise had or

obtained knowledge of any material complaint, allegation, assertion or claim,

whether written or oral, regarding the accounting or auditing practices,

procedures, methodologies or methods of the Company or any of its Subsidiaries

or their respective internal accounting controls, including any material

complaint, allegation, assertion or claim that the Company or any of its

Subsidiaries has engaged in questionable accounting or auditing practices, and

(y) no attorney representing the Company or any of its Subsidiaries, whether or

not employed by the Company or any of its Subsidiaries, has reported evidence of

a material violation of securities laws, breach of fiduciary duty or similar

violation by the Company or any of its officers, directors, employees or agents

to the Board of Directors of the Company or any committee thereof or to any

director or officer of the Company.

Section 4.08. DISCLOSURE DOCUMENTS. The proxy or information statement of

the Company to be filed with the SEC in connection with the Merger (the "COMPANY

PROXY STATEMENT") and any amendments or supplements thereto will, when filed,

comply as to form in all material respects with the applicable requirements of

the 1934 Act. At the time the Company Proxy Statement or any amendment or

supplement thereto is first mailed to stockholders of the Company, and at the

time such stockholders vote on adoption of this Agreement, the Company Proxy

Statement, as supplemented or amended, if applicable, will not contain any

untrue statement of a material fact or omit to state any material fact necessary

in order to make the statements made therein, in the light of the circumstances

under which they were made, not misleading. The representations and warranties

contained in this Section 4.08 will not apply to statements or omissions

included in the Company Proxy Statement based upon information relating to Buyer

or its Affiliates furnished to the Company in writing by Buyer or its Affiliates

specifically for use therein.

Section 4.09. ABSENCE OF CERTAIN CHANGES. Since the Company Balance Sheet

Date, the business of the Company and its Subsidiaries has been conducted in the

ordinary course consistent with past practices and there has not been:

(a) any event, occurrence, development or state of circumstances or facts

that has had or would reasonably be expected to have, individually or in the

aggregate, a Company Material Adverse Effect; or

(b) any action taken by the Company or any of its Subsidiaries from the

Company Balance Sheet Date through the date of this Agreement that, if taken

<PAGE>

during the period from the date of this Agreement through the Effective Time,

would constitute a breach of Section 6.01.

Section 4.10. LITIGATION AND LIABILITIES. (a) There are no (i) civil,

criminal or administrative actions, suits, claims, hearings, investigations or

proceedings pending or, to the knowledge of the officers of the Company,

threatened against the Company or any of its Subsidiaries or Affiliates, or (ii)

litigations, arbitrations, investigations or other proceedings, or injunctions

or final judgments relating thereto, pending or, to the knowledge of the

officers of the Company, threatened against the Company or any of its

Subsidiaries or Affiliates before any Governmental Authority, including, without

limitation, the Federal Reserve Board, the OCC or the FDIC, except in the case

of either clause (i) or (ii), for those that would not reasonably be expected to

have, individually or in the aggregate, a Company Material Adverse Effect. None

of the Company, any of its Subsidiaries or any of its Affiliates is a party to

or subject to the provisions of any judgment, order, writ, injunction, decree or

award of any Governmental Authority which would reasonably be expected to have,

individually or in the aggregate, a Company Material Adverse Effect.

(b) There are no liabilities or obligations of the Company or any

Subsidiary of the Company, whether or not accrued, contingent or otherwise and

whether or not required to be disclosed, or any other facts or circumstances

that would reasonably be expected to result in any obligations or liabilities

of, the Company or any of its Subsidiaries, other than:

(i) liabilities or obligations to the extent reflected or fully

reserved against on the Company Balance Sheet or reasonably apparent in the

notes thereto;

(ii) liabilities or obligations incurred in the ordinary course of

business since the Company Balance Sheet Date; or

(iii) liabilities or obligations that, individually or in the

aggregate, would not be reasonably expected to have a Company Material

Adverse Effect.

Section 4.11. COMPLIANCE WITH LAWS AND COURT ORDERS; REPORTING

REQUIREMENTS. (a) The Company and each of its Subsidiaries (i) is and has been

in compliance with the terms of the Permits required to carry on its business as

now conducted and (ii) is and has been in compliance with, and to the knowledge

of the officers of the Company is not under investigation with respect to and

has not been threatened in writing or, to the knowledge of the officers of the

Company, otherwise been threatened, to be charged with or given written notice

of any violation of, any applicable law, statute, ordinance, rule, regulation,

judgment, injunction, order or decree (including, but not limited to, the USA

PATRIOT Act of 2001), in each case, except for failures to comply or violations

that have not had and would not reasonably be expected to have, individually or

<PAGE>

in the aggregate, a Company Material Adverse Effect. Since December 31, 2000,

the Company and its Subsidiaries have timely filed all material reports required

to be filed with (i) the Federal Reserve Board, (ii) the OCC, (iii) the FDIC and

(iv) any other Bank Regulator.

(b) Except as would not reasonably be expected to have, either individually

or in the aggregate, a Company Material Adverse Effect, each of the Company and

its Subsidiaries have properly administered all accounts for which it acts as a

fiduciary, including accounts for which it serves as a trustee, agent,

custodian, personal representative, guardian, conservator or investment advisor,

in accordance with the terms of the governing documents, applicable state and

federal law and regulation and common law. None of the Company, any of its

Subsidiaries, or any director, officer or employee of the Company or any of its

Subsidiaries, has committed any breach of trust or fiduciary duty with respect

to any such fiduciary account that would reasonably be expected to have, either

individually or in the aggregate, a Company Material Adverse Effect and, except

as would not reasonably be expected to have, either individually or in the

aggregate, a Company Material Adverse Effect, the accountings for each such

fiduciary account are true and correct and accurately reflect the assets of such

fiduciary account.

in the regular course of the business of the Company and its Subsidiaries, since

December 31, 2000, no Bank Regulator has initiated any proceeding or, to the

knowledge of the officers of the Company, investigation into any part of the

business or operations of the Company or any of its Subsidiaries.

(d) The business and operations of the Company and of each of the Company's

Subsidiaries through which the Company conducts its finance activities

(including mortgage banking and mortgage lending activities and consumer finance

activities, which consumer finance activities include direct and indirect

automobile lending, banking, home equity operations and consumer financial

services (together, the "COMPANY FINANCE SUBSIDIARIES")), have been conducted in

compliance with all applicable statutes and regulations regulating the business

of consumer lending, including state usury laws, the Truth in Lending Act, Real

Estate Settlement Procedures Act of 1974, the Consumer Credit Protection Act,

the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Homeowners

Ownership and Equity Protection Act, the Fair Debt Collections Act and other

federal, state, local and foreign laws regulating lending ("FINANCE LAWS"), and

have complied with all applicable collection practices in seeking payment under

any loan or credit extension of such Company Finance Subsidiaries except, in

each case, for such failures to comply as would not, individually or in the

aggregate, reasonably be expected to have a Company Material Adverse Effect. In

addition, there is no pending or, to the knowledge of the officers of the

Company, threatened charge by any

<PAGE>

Governmental Authority that any of the Company Finance Subsidiaries has

violated, nor any pending or, to the knowledge of the officers of the Company,

threatened investigation by any Governmental Authority with respect to possible

violations of, any applicable Finance Laws where such violations would, either

individually or in the aggregate, reasonably be expected to have a Company

Material Adverse Effect.

Section 4.12. BANK CAPITALIZATION. Each depository institution that is a

Subsidiary of the Company is "well capitalized", as such term is defined in the

rules and regulations promulgated by the OCC. Each depository institution that

is a Subsidiary of the Company has received at least a "satisfactory" rating

under the Community Reinvestment Act at its most recent examination. The

Company is "well capitalized" as such term is defined in the Federal Reserve

Board's Regulation Y.

Section 4.13. MATERIAL CONTRACTS. Each contract requiring aggregate annual

payments to be made to or by the Company in excess of $500,000 and each other

"material contract" (as defined in Item 601(b)(10) of Regulation S-K under the

1933 Act), in each case, to which the Company or one of its Subsidiaries is a

party (each such contract, a "MATERIAL CONTRACT") is a valid, binding and

enforceable obligation of the Company or its Subsidiary, as the case may be, and

is in full force and effect, except where the failure to be valid, binding and

enforceable and in full force and effect would not reasonably be expected to

have a Company Material Adverse Effect. None of the Company nor any of its

Subsidiaries is (i) in default or violation of any term, condition or provision

of any Material Contract, except for any defaults or violations that would not

reasonably be expected to have, individually or in the aggregate, a Company

Material Adverse Effect or (ii) party to, or bound by, any agreement or

arrangement (including any agreement with any Bank Regulator) that (x) expressly

limits or otherwise restricts the ability of the Company or such Subsidiary to

compete in, or conduct, any line of business or to compete with any Person, in

each case in any geographic area or during any period of time, in any material

respect, or (y) adversely affects, in any material respect, the conduct of the

Company's and its Subsidiaries' business, taken as a whole, as currently

conducted.

Section 4.14. FEES. Except for Lehman Brothers Inc., a copy of whose

engagement agreement has been provided to Buyer (the "ENGAGEMENT LETTER"), there

is no investment banker, broker, finder or other intermediary who might be

entitled to any fee or commission from the Company or any of its Subsidiaries in

connection with the transactions contemplated by this Agreement. The Engagement

Letter has not been amended, and will not be amended, without the prior consent

of Buyer. The estimated fees and expenses of Lehman Brothers Inc. and legal

counsel to the Company have been disclosed in writing to Buyer.

Section 4.15. OPINION OF FINANCIAL ADVISOR. The Company has received the

opinion of Lehman Brothers Inc., financial advisor to the Company, to the effect

that, as of the date of this Agreement, the Merger Consideration is fair to the

Company's stockholders from a financial point of view.

<PAGE>

Section 4.16. TAXES. (a) Except as would not reasonably be expected to

have, individually or in the aggregate, a Company Material Adverse Effect:

(i) all Tax Returns of the Company or any of its Subsidiaries required

to be filed on or before the date hereof (taking into account any

applicable extensions) have been filed when due in accordance with all

applicable laws, and all such Tax Returns are, or shall be at the time of

filing, true and complete;

(ii) the Company and each of its Subsidiaries has paid (or has had

paid on its behalf) or has withheld and remitted to the appropriate Taxing

Authority all Taxes due and payable (including applicable employee payroll

Taxes), or, where payment is not yet due or where such Taxes are being

challenged in good faith, has established (or has had established on its

behalf and for its sole benefit and recourse) in accor

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