John C. and Tate M. Todd - Page 5




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          the New York Stock Exchange, the American Stock Exchange, or any            
          city or any regional stock exchange, nor were the shares                    
          regularly traded in the national or any regional over-the-counter           
          (OTC) market for which published quotations are available.  The             
          shares were not shares of an open-end investment company                    
          (commonly know as a mutual fund), as provided in section 1.170A-            
          13(c)(7)(xi)(A)(3), Income Tax Regs.                                        
          Procedure for Purchase or Sale of Shares of Bancorp                         
               Before and throughout 1994, the procedure for someone                  
          wishing to purchase or sell shares of Bancorp was to contact an             
          officer of the bank or a local stockbroker specializing in the              
          shares of Bancorp.  The bank or broker would try to match a                 
          potential seller with a potential buyer.  That could prove                  
          difficult, since Bancorp shares were not frequently sold.  The              
          bank maintained a numerical list, by certificate number, of all             
          share transactions (the bank’s list).  The bank’s list showed the           
          date, seller, buyer, number of shares, share cost (if available),           
          and certificate number.  Gill & Associates, Inc. (Gill &                    
          Associates), a member of the National Association of Securities             
          Dealers since 1984, acted as a placement agent or “matchmaker”              
          for certain of the sales of the shares.  As a matchmaker, Gill &            
          Associates maintained a list of individuals wishing to purchase             
          shares and contacted these individuals when approached by others            
          interested in selling shares.  In order to quote a price to an              






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