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Consumer Banking Service Agreement and Disclosure Statement

This Consumer Banking Service Agreement and Disclosure Statement (as from time to time modified and supplemented, this "Agreement") contains the general terms and conditions of all Services (defined below) and together with an individual Service Agreement, sets forth the terms and conditions applicable to the related Service. It also contains disclosures required by federal law in connection with the Services. You do not have to sign this Agreement, but once you have executed a Service Agreement, you have agreed to the terms and conditions of this Agreement, as from time to time in effect. Each reference in this Agreement to "TowneBank", "we", "us", or "our" refers to TowneBank, a Virginia banking corporation, and each reference to "you" and "your" refers to each depositor, borrower, or authorized user for an Account who is now or hereafter enrolled in any one or more of the Services. Please read this Agreement carefully and keep it for future reference.

1. DEFINITIONS. The following terms, as used in this Agreement, have the following meanings:

"Account" and "Accounts" have the meaning set forth in Section 2(C).
"Account Documents" means this Agreement, the Service Agreements, and any other agreement, fee schedule, operational procedures and instructions, customer setup form (and any document of similar purpose as the foregoing), together with all riders, schedules, exhibits and appendices thereto, which now or hereafter evidences, governs, secures or guaranties the obligations of the parties thereto, including any deposit agreement, securities account agreement, security agreement or guaranty, loan agreement, and all renewals, extensions and modifications thereof and substitutions therefor.
"Billing Account" means the Account, if any, designated by you in a Service Agreement as the Account to be billed for fees and charges in connection with the related Service.
"Business Days" means Monday through Friday, excluding TowneBank's holidays.
"Online Transfers" has the meaning set forth in Section 2(E)(i).
"Security Procedure" has the meaning set forth in Section 2(B).
"Service" means any service described in a Service Agreement or this Agreement to be provided to you.
"Service Agreement" has the meaning set forth in Section 2(A).
"Service Provider" means any person with whom we have in effect an agreement whereby said person agrees to perform any or all of our obligations under this Agreement and any Service Agreement with respect to the related Service. The term "Service Provider" also includes any person with whom a Service Provider has in effect a similar agreement with respect to said Service, and the successors of each of the foregoing persons.
"UCC" means at any time the Uniform Commercial Code as the same may from time to time be in effect in the Commonwealth of Virginia, provided that, if, by reason of mandatory provisions of law, a Service, or any portion thereof, or a transaction, or any portion thereof, contemplated hereby or performed in accordance herewith, is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Virginia then, as to said Service or transaction (or portion of either), "UCC" shall mean the Uniform Commercial Code in effect in such other jurisdiction.
Except as otherwise specifically set forth in this Section or elsewhere in this Agreement, un-capitalized terms used in this Agreement and defined in the UCC have the meanings of such terms as defined in applicable sections of the UCC. Terms specifically defined in other Sections of this Agreement shall have the meanings given to such terms in such Sections. Terms defined in the singular shall have their same definitions in the plural, and vice-versa. Section headings are for convenience only and are not to be considered as part of this Agreement or in any interpretation of any provision hereof.

2. THE SERVICES.

(A) Service Agreements.

The terms of each Service shall be evidenced by an agreement between you and TowneBank, which shall, among other things, incorporate the terms of this Agreement by reference (each, a "Service Agreement"). We shall have no obligations with respect to any Service until such time as we accept a fully completed and duly executed form of Service Agreement with respect to said Service. Any conflict between a provision as set forth in a Service Agreement and the same provision as set forth in this Agreement shall be resolved in favor of such provision as set forth in said Service Agreement. Any conflict between a provision as set forth in a Service Agreement or this Agreement and the same provision as set forth in any other Account Document shall be resolved in favor of such provision as set forth in said Service Agreement or this Agreement.

(B) Security Procedures.

With respect to certain of the Services, this Agreement or a Service Agreement shall set forth certain procedures (each a "Security Procedure") designed to maintain the security of the information and transactions contemplated by the Service. It is possible for any Service to have more than one Security Procedure available. You accept each Security Procedure designated herein or in the related Service Agreement as commercially reasonable for your purposes. You hereby authorize us to rely on such Security Procedure as your signature and authorization to release requested information about your accounts, and further authorize us to act upon all payment orders and other instructions, and other communications received, that have been properly verified by means of the Security Procedure. If we comply with a Security Procedure in verifying a payment order or other instruction issued in your name, we shall be entitled to act on said instruction on your behalf. We shall not be obligated to establish the identity of the person giving said instruction. If we take any action not provided in the Security Procedure to verify the authenticity or content of any payment order or other instruction, such additional action shall not be deemed to become part of the Security Procedure no matter how often we take such additional action. In addition to any similar rights given to us in this Agreement and any Security Procedure, we reserve the right generally to reject or delay acceptance of any instruction or communication which we, or our Service Provider, in good faith believe is not properly authenticated, contains incorrect, ambiguous, or missing information, or cannot or should not be processed. We will provide you with notice of any rejected instruction or communication. We or our Service Provider may cancel the personal identification numbers (PINs) or passwords associated with any Security Procedure if we or it has reason to suspect improper use thereof. Prior to cancellation, we may confer with you, unless in our opinion it would be impracticable or imprudent to do so under the circumstances. Nothing in this subsection (B) shall be construed to require us or our Service Provider to reject or delay any such acceptance, or to make any investigation or inquiry with respect thereto, unless specifically required by a Security Procedure. You agree that the applicable Security Procedure is designed to verify the authenticity of a transaction, payment order or instruction, and not to detect errors in transmission or content, including duplicate transmissions. You agree that neither TowneBank nor its Service Provider shall be responsible for making such a determination.

(C) Accounts.

(i) You agree to use the Services solely in connection with each deposit account (each, a "Deposit Account") and each loan account (each, a "Credit Account") maintained by you with TowneBank and designated by you in the related Service Agreement or subsequently designated by you in a modification to a Service Agreement (collectively, the "Accounts"), except as otherwise expressly provided in this Agreement or as otherwise expressly permitted by us from time to time. Under this Agreement or any Service Agreement, there may be multiple Accounts. You may add any Account for which you or all of you (if more than one), are depositor, borrower, authorized signer, or authorized user, by notifying TowneBank or by visiting any TowneBank branch office. If you close or delete the only checking account designated for a Service, you may no longer be able to use that Service.
(ii) You expressly authorize us to debit the appropriate Deposit Account in the amount of any transaction initiated through any Service by you or by any other person who is authorized to use your password or other Security Procedure, or access said Account. You agree that we may treat any such transaction from a Deposit Account the same as a duly executed written withdrawal, transfer, or check and that we may treat any such transaction to a Deposit Account the same as a deposit, all in accordance with the terms of this Agreement and your deposit agreement(s) with us.
(iii) You agree that we may, without notice or other obligation to you, refuse to make any transaction for security reasons or as otherwise expressly provided in this Agreement or your deposit agreement with us.
(iv) We agree to correct any error made in crediting or debiting any Account by making the appropriate adjustment to your account balance. You agree to repay promptly any amount credited to your Account in error, and you authorize us to initiate a debit transfer to any Account to obtain payment of any erroneous credit.
(v) The Deposit Account statements or other notices provided to you by us will notify you of (a) the execution of transfers and the debits to the Deposit Account made with respect to such transactions and (b) amounts debited by TowneBank from the Billing Account or any other Account for payment of the Services or other charges pursuant to this Agreement. You agree to examine promptly each statement for a Deposit Account and to promptly report any discrepancies between your records and the Deposit Account statements or any other notices mailed by TowneBank to you, as provided in Section 3.
(vi) You may access the Accounts through TowneBank's online banking Service 24 hours a day, seven days a week, except that TowneBank may perform regular maintenance on our systems or equipment, which may result in errors or interrupted service. We may also find it necessary to occasionally change the scope of our Services. TowneBank cannot guarantee that we will be able to provide notice of such interruptions and changes, although we will attempt to provide such notice.

(D) Time of Certain Bank Transactions; Posting; Funds Availability.

If you initiate a Deposit Account transfer of available funds or regular loan payment with available funds on or before six-thirty (6:30) p.m. Eastern Time on a Business Day by Online Transfer, the Online Transfer will be posted to the Account(s) on the same Business Day. If you initiate an Online Transfer after six-thirty (6:30) p.m. Eastern Time on a Business Day, a weekend, or TowneBank holiday, such Online Transfer will be posted on the following Business Day. The following sets forth our schedule for posting and funds availability (intervening holidays will alter this schedule):

If Online Transfer is initiated before 6:30 p.m. Eastern Time:	Funds will be posted on:	Funds will be available on:
Monday	Monday	Tuesday
Tuesday	Tuesday	Wednesday
Wednesday	Wednesday	Thursday
Thursday	Thursday	Friday
Friday	Friday	Saturday
Saturday	Monday	Tuesday
Sunday	Monday	Tuesday

Except as expressly otherwise provided in this Section, transferred funds will be available for transfer and withdrawal as provided in our Schedule of Funds Availability (the "Schedule of Funds Availability"). The schedules provided in this Section are subject to the provisions of subsection (E)(iii) of this Section and of Section 3.

(E) Certain Services.

(i) Online Banking.

In accordance with the Service Agreement for TowneBank's online banking Service, entitled "Internet Banking Enrollment Form", you may use TowneBank online banking Services to initiate electronic fund transfers from one Deposit Account that is a checking, savings or money market deposit account to any other Deposit Account that is a checking, savings or money market deposit account, or to any Credit Account at TowneBank, and pay bills directly from your checking or savings account in the amounts and on the days you request, as provided in said Service Agreement. These types of transactions are referred to in this Agreement as "Online Transfers". You may not initiate wire transfers or ACH transactions, or make stop payment orders, using this Service.

(ii) Automated Teller Machine Transactions. You may use your card and code to:

Withdraw cash from your checking or savings account.
Make deposits to your checking or savings account.
Transfer funds between your checking and savings accounts whenever you request.
Pay for purchases at places that have agreed to accept the card.

Some of these services may not be available at all terminals.

Limitations on dollar amounts of transfers

You may withdraw up to $500 from our terminals each day using the card or code.

You may buy up to $1,000 worth of goods or services each day by using the card or code in our point-of-sale transfer service.

(iii) Funds Transfers. With respect to a Service governed by Article 4A of the UCC:
(a) We may execute a verified payment order even if the payment order would create or increase an overdraft to your Account.
(b) We will use reasonable efforts to act on a recall, cancellation or amendment request that has been initiated by an authorized signer or pursuant to the related Security Procedure, provided we have reasonable opportunity to do so prior to execution of the payment order, but it will not be liable for loss if such recall, cancellation or amendment is not effected. You shall be responsible for and shall be liable to us for any loss, liability, claim or expense (including attorneys' fees) we may incur in connection with its assisting you in the recall, cancellation or amendment of a payment order.
(c) We will receive and process payment orders only on our funds transfer business days and within our established cut-off hours, which we may revise from time to time upon prior notice to you. Payment orders received after our cut-off hours may, at our sole discretion, be considered received and may be processed on our next funds transfer business day. We may record all telephone communications received.
(d) Subject to the preceding subsection, we shall execute each accepted payment order by the payment date of the order. You shall be responsible to remit the amount of the payment order to us upon execution thereof. You shall be responsible for identifying the routing of all funds transfers made pursuant to any payment order, or shall be deemed to have appointed us to do so on your behalf. We may use any appropriate funds transfer system or communications system in executing, paying or transmitting payment orders, including CHIPS, FedWire and SWIFT. You and TowneBank agree to comply with and be bound by the rules of any such funds transfer system through which a payment order may be executed, paid or transmitted.
(e) In executing a payment order, TowneBank, as well as all other originating and receiving banks (including the beneficiary's bank) are authorized to and may rely on the identifying or bank account number of an intermediary bank, beneficiary's bank or beneficiary as proper identification of the intermediary bank, beneficiary's bank or beneficiary, even if the number (no matter where located on the payment order) identifies a person different from the bank or beneficiary identified by name. You shall be responsible for and shall be liable to us for any loss, liability, claim or expense (including attorneys' fees) we may incur in relying on the designated identifying or bank account number.
(f) If you issue a payment order for payment outside the U.S. in a currency other than U.S. dollars, you shall provide instructions to us on the Account or funds to be charged. In the absence of such instructions or a foreign exchange contract with us, we shall be authorized to debit your Account for the U.S. dollar equivalent of the amount of the foreign currency transferred, at our then prevailing rate of exchange. Where applicable, you accept the risk of a fluctuation in currency exchange rates prior to finalization of the transaction. You understand that if the beneficiary's bank is instructed to pay in a currency other than its local currency, payment will normally be made by the beneficiary's bank at its rate of exchange on the date of its payment. In connection with each money transfer, you shall comply with all local currency restrictions and any other local law governing the transaction.

(iv) Stop Payments. If you have told us in advance to make regular payments out of your Account, you can stop any of these payments. Here's how:

- Call us at 757-638-6718, or write us at TOWNEBANK, Churchland, 5716 High Street, Portsmouth, Virginia 23703, in time for us to receive your request 3 business days or more before the payment is scheduled to be made. If you call, we may also require you to put your request in writing and get it to us within 14 days after you call. We will charge you $35.00 for each stop-payment order you give.
- If these regular payments may vary in amount, the person you are going to pay will tell you, 10 days before each payment, when it will be made and how much it will be. (You may choose instead to get this notice only when the payment would differ by more than a certain amount from the previous payment, or when the amount would fall outside certain limits that you set.)
- If you order us to stop one of these payments 3 business days or more before the transfer is scheduled, and we do not do so, we will be liable for your losses or damages.
With respect to all Services, a stop payment order shall be valid for six months unless renewed.

(v) Electronic Messages. You may use TowneBank online banking Service to send an electronic message ("message") to us and to receive a message(s) from us. The message service may not be used to make Online Transfers between Accounts. Message(s) transmitted by you to us via TowneBank online banking often will not be delivered to us immediately. If you need to contact us immediately to stop payment, to report an unauthorized use of your password, to report unauthorized access to an Account, or for any other reason, please contact your nearestTowneBank branch. We will not be responsible for acting on or responding to any message request made through TowneBank online banking until we actually receive your message and have a reasonable opportunity to act. You should check your message center regularly; we will attempt to notify you by message in the event of any technical difficulties or other occurrence that my affect your use of TowneBank online banking.

(vi) Additional Services. We may, from time to time, make additional Services available. We will notify you of the availability and terms of these new Services. By using these additional Services when they become available, you agree to be bound by this Agreement, the related Service Agreement and any additional instructions, procedures and terms provided to you with respect to each of these new Services.

(vii) Documentation.
(1) Terminal transfers. You can get a receipt at the time you make any transfer to or from your Account using one of our automated teller machines.
(2) Preauthorized credits. If you have arranged to have direct deposits made to your Account at least once every 60 days from the same person or company, you can call us at 757-638-6718 to find out whether or not the deposit has been made.
(3)Periodic statements. You will get a monthly account statement (unless there are no transfers in a particular month. In any case, you will get the statement at least quarterly).

3. LIABILITY; INDEMNIFICATION.

(A) TowneBank's Liability for Failure to Make or Stop Certain Transactions. If we do not complete a transfer to or from your Account on time or in the correct amount according to our agreement with you, we will be liable for your losses or damages. However, there are some exceptions. We will not be liable, for instance:

If, through no fault of ours, you do not have enough money in the Account (or any linked Account) to make the transaction.
If the transaction would go over the credit limit on any check overdraft protection line of credit Account linked to the Deposit Account.
If you have not completely and properly followed the terms of this Agreement, the related Service Agreement, or other instructions provided by us or the Service Provider regarding how to effect the transaction.
If any data or instruction transmitted via TowneBank online banking are inaccurate or incomplete.
If you do not initiate a transaction according to the time limits set forth in this Agreement or the related Service Agreement, or if the payment amount requested is less than the full amount due.
If the payment has been transferred from the Deposit Account to a third party, including, without limitation, any third party through which payment is made and any payee or its financial institution.
If the applicable hardware or software, or the Service Provider, or any part of the TowneBank online banking system or other operating system, was not working properly and you knew about the breakdown when you started your transaction.
If circumstances beyond our control, such as an act of God, failure, delay, or error on the part of any third-party service provider (including, without limitation, the Service Provider, the United States Postal Service or any other delivery service), power outage, difficulty with telephone or cable lines or satellite communications, difficulty with any hardware, software, or the Service Provider, computer virus or related problem, or cessation of the operation of the Service Provider or the arrangement between TowneBank and the Service Provider, prevent or delay the transaction, despite reasonable precautions that we have taken.
If your funds are being held or frozen or are subject to legal proceedings.
If the funds in the Deposit Account are unavailable (funds are only conditionally credited until they become available for withdrawal).
If your password, personal identification number, or other similar Security Procedure or portion of a Security Procedure, has been reported lost or stolen or if we have any other reason to believe that a transaction may be erroneous or unauthorized.
If the Deposit Account has been closed.
If the automated teller machine where you are making the transfer does not have enough cash.
If we do not receive the necessary transfer information from you or any third party, or if such information is incomplete or erroneous when received by us.

There may be other exceptions stated in this or any other applicable agreement that we may have with you.

(B) Limits on TowneBank's Liability. Our liability for transactions made to or from Deposit Accounts may also be governed by other Sections of this Agreement. If any provision herein is inconsistent with any provision of applicable law that cannot be varied or waived by agreement, the provisions of applicable law shall control. To the fullest extent permitted by applicable law, you agree that we will have no liability whatsoever for any loss, damage, or claim arising out of any delay or failure in the performance of any Service in accordance with the terms of this Agreement or the related Service Agreement. Our duties and responsibilities to you are strictly limited to those described in this Agreement and the Service Agreements to which we are parties, except with respect to any provisions of the law that cannot be varied or waived by agreement. In no event will TowneBank be liable for any consequential, special, or punitive damages or for any indirect loss that you may incur or suffer in connection with any Service (even if TowneBank has been informed of the possibility of such damages), including, without limitation, attorneys' fees. The Service Provider is an independent contractor and not TowneBank's agent. TowneBank's sole duty shall be to exercise reasonable care in the initial selection of the Service Provider. YOU ACKNOWLEDGE THAT NO EXPRESS OR IMPLIED WARRANTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS OR A PARTICULAR PURPOSE, IS MADE BY TOWNEBANK WITH RESPECT TO ANY OPERATING SYSTEM, INCLUDING WITHOUT LIMITATION THE TOWNEBANK ONLINE BANKING SERVICE OR ANY SOFTWARE, AND TOWNEBANK HEREBY DISCLAIMS ALL SUCH WARRANTIES. The only warranties are those provided by the licensor of any related software and set forth on the related software package. TowneBank shall be excused from any failure or delay in executing a bank transfer or bill payment, if such execution would result in the violation of any applicable state or federal law, rule, regulation or guideline. To the fullest extent permitted by applicable law, you agree that TowneBank shall not have any liability whatsoever for any loss caused by the act, error, or omission of you or any other person, including, without limitation, the Service Provider, any Internet access service provider, any federal reserve bank or transmission or communications facility or any intermediary or receiving financial institution, and no such person shall be deemed TowneBank's agent.

(C) Your Liability for Unauthorized or Erroneous Transactions.

Tell us AT ONCE if you believe your card, code, or other means of access to your Accounts used in connection with a Security Procedure has been lost or stolen, or if you believe that an electronic fund transfer has been made without your permission using information from your check. Telephoning is the best way of keeping your possible losses down. You could lose all the money in your accounts (plus your maximum overdraft line of credit). If you tell us within 2 business days, you can lose no more than $50 if someone used your card or code without your permission. (If you believe your card or code has been lost or stolen, and you tell us within 2 business days after you learn of the loss or theft, you can lose no more than $50 if someone used your card or code without your permission.)
If you do NOT tell us within 2 business days after you learn of the loss or theft of your card or code, and we can prove we could have stopped someone from using your card or code without your permission if you had told us, you could lose as much as $500.
Also, if your statement shows transfers that you did not make, including those made by card, code, or other means, tell us at once. If you do not tell us within 60 days after the statement was mailed to you, you may not get back any money you lost after the 60 days if we can prove that we could have stopped someone from taking the money if you had told us in time.
If a good reason (such as a long trip or a hospital stay) kept you from telling us, we will extend the time periods.
If you believe your card or code has been lost or stolen, call 757-638-6718 or write EFT Department at TOWNEBANK, P.O. Box 7188, Portsmouth, Virginia 23707-0188. You should also call the number or write to the address listed above if you believe a transfer has been made using the information from your check without your permission.

(D) Error resolution Notice.

In case of errors or questions about your electronic transfers, telephone us at 757-638-6718, or write us at TOWNEBANK, P.O. Box 7188, Portsmouth, Virginia 23707-0188 as soon as you can, if you think your statement or receipt is wrong or if you need more information about a transfer listed on the statement or receipt. We must hear from you no later than 60 days after we sent the FIRST statement on which the problem or error appeared.
                        (1) Tell us your name and account number (if any).
                        (2) Describe the error or the transfer you are unsure about, and explain as clearly as you can why you believe it is an error or why you need more information.
                        (3) Tell us the dollar amount of the suspected error.
If you tell us orally, we may require that you send us your complaint or question in writing within 10 business days.
We will determine whether an error occurred within 10 business days after we hear from you and will correct any error promptly. If we need more time, however, we may take up to 45 days to investigate your complaint or question. If we decide to do this, we will credit your account within 10 business days for the amount you think is in error, so that you will have the use of the money during the time it takes us to complete our investigation. If we ask you to put your complaint or question in writing and we do not receive it within 10 business days, we may not credit your account.
For errors involving new accounts, point-of-sale, or foreign-initiated transactions, we may take up to 90 days to investigate your complaint or question. For new accounts, we may take up to 20 business days to credit your account for the amount you think is in error.
We will tell you the results within three business days after completing our investigation. If we decide that there was no error, we will send you a written explanation. You may ask for copies of the documents that we used in our investigation.

4. FEES AND CHARGES; OTHER OBLIGATIONS.

In consideration of our making the Services available to you, you agree to pay, and you authorize us to automatically debit to the Billing Account during the first week of each calendar month, the fees and charges set forth in the related fee schedule attached to this Agreement, or as otherwise set forth in our schedules of fees and charges as from time to time in effect. You will be solely responsible for all tariffs, duties, or taxes imposed by any government or governmental agency in connection with any transaction made pursuant to this Agreement or any Service Agreement and for all telephone charges, Internet access service charges, tools tariffs, and other costs for online sessions initiated by you. There may be other costs and charges associated with the Accounts. To the fullest extent permitted by applicable law, you authorize us to obtain payment of your obligations to us under this Agreement and any Service Agreement from time to time by (a) initiating debit or credit transfers to any of the Accounts or (b) deducting the payment from the amount of any transaction. Such obligations include, without limitation, fees owed to us and settlement for transactions initiated through any Service. At the time any Account is closed (whether by you, by us, or otherwise) or any Service is terminated (whether by you, by us, or otherwise), you agree that all such obligations will be immediately due and payable to us, and you authorize us to withhold the amount of any such obligations from any Account. Debiting an Account or deducting payment from the amount of any transaction is not TowneBank's exclusive remedy under this or any other section of this Agreement, and TowneBank will not be deemed to have made an election of remedies by making any such debit or deduction on any one or more occasions.

5. MISCELLANEOUS.

(A) Disclosure of Deposit Account Information to Third Parties. You agree that we may from time to time disclose to third parties information about your Accounts or the transactions that you make through the Services in accordance with the following conditions. We will disclose information to third parties about your Accounts or the transactions you make:

Where it is necessary for completing transactions or providing any other Service; or
In order to verify the existence and condition of any Account for a third party, such as a credit bureau or merchant; or
In order to comply with government agency or court orders; or
If you give us your written permission.

(B) Other Agreements; Severability; Governing Law. The terms and conditions of this Agreement and the Service Agreements to which we are a party are cumulative with and in addition to any terms of all related Account Documents, all as may be amended from time to time. In the event of any conflict between this Agreement and the content of any software or any related materials regarding TowneBank's obligations to you, the terms of this Agreement will control. If any provision of this Agreement is unlawful or unenforceable, each such provision or writing will be without force and effect without thereby affecting any other provision hereof. The parties agree to be bound by the Rules as in effect from time to time with respect to all automated clearing house transfers made hereunder. This Agreement will be governed by the substantive laws of the United States, applicable federal regulations, and to the extent not inconsistent therewith, the laws of the state where our offices holding the account(s) are located, without regard to such state's rules regarding conflict of laws.

(C) Amendments.We may amend this Agreement from time to time. Each amendment will be effected by our mailing or otherwise delivering the amendment, revised agreement and/or notice thereof to you in accordance with applicable federal and state laws. If no federal or state law specifically governs the amendment, the amendment shall be effected by mailing or otherwise delivering it to you or positing it in our full-service branch offices at least 10 calendar days prior to the effective date of the amendment. Notwithstanding the foregoing and to the extent permitted by applicable law, we may change any term of this Agreement without prior notice or obligation to you: (a) if the related software or the Service Provider changes any term without providing us sufficient notice to enable us to properly notify you; (b) for security reasons; (c) to comply with applicable law; or (d) as otherwise expressly provided in this Agreement.

(D) Termination.You agree that we may cancel or restrict your use of any Service at any time upon such notice (including e-mail) as is reasonable under the circumstances. You may cancel any Service by written request to TowneBank at any time. Further, TowneBank reserves the right to cancel online banking Services for those who have not accessed their account online for a period of more than six (6) months. TowneBank will attempt to notify you fifteen (15) days prior to cancellation to ensure that you no longer wish to use said Service.

(E) Assignment. You may not assign all or any part of your rights or obligations under this Agreement or any Service without our prior express consent, which may be withheld in our sole discretion. We may assign or delegate all or any part of our rights or obligations under this Agreement or any Service, including, without limitation, the performance of our obligations set forth herein or in a Service Agreement. This Agreement will be binding on and inure to the benefit of the successors and assigns of either party.

(F) No Third-Party Beneficiaries. This Agreement is for the benefit of you and TowneBank and is not intended to grant, and shall not be construed as granting, any rights to or otherwise benefiting any other person, except as expressly otherwise provided in this Agreement.

(G) CHOICE OF FORUM AND JURY TRIAL WAIVER. In the event any litigation is instituted to enforce or interpret the terms of this Agreement, you agree that the exclusive forum therefore shall be the Circuit Court of Portsmouth, Virginia. In the event that TowneBank is the prevailing party, TowneBank shall be entitled to reimbursement for all reasonable attorneys' fees and costs incurred including, but not limited to, those incurred incident to any appeal. YOU AND TOWNEBANK HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ALL DISPUTES, CONTROVERSIES AND CLAIMS BY, BETWEEN OR AGAINST EITHER YOU OR TOWNEBANK WHETHER THE DISPUTE, CONTROVERSY OR CLAIM IS SUBMITTED TO ARBITRATION OR IS DECIDED BY A COURT.

(H) Confidentiality. You hereby authorize the transfer of any information relating to you to and between the branches, subsidiaries, affiliates and agents of TowneBank and third parties selected by any of them, wherever situated, for confidential use in connection with the Services and the transactions thereunder. You acknowledge that any such branch, subsidiary, affiliate, agent or third party shall be entitled to transfer any such information as required by any law, court, regulator or legal process. You agree to keep confidential the Security Procedure and other TowneBank information provided to you in connection with this Agreement and the Service Agreements (except TowneBank information in the public domain), to limit access to your employees (under a similar duty of confidentiality) who require access in the normal course of their employment or otherwise as required by law or judicial process, and to limit its use to the manner designated by us.

(I) Ownership of Online Banking Service Materials. The content and information on our website is the property of TowneBank. It should not be duplicated or copied by any means. By enrolling in TowneBank's online banking Service, you agree to abide by all of the conditions set forth by TowneBank. To enroll for Internet Banking, please click here to speak with someone at one of our branches or call our E-Banking Department at (757) 638-6714.

Schedule A

TowneBank Security Procedures and

Confidentiality Terms for Online Banking Service

1. BROWSER SECURITY. TowneBank online banking service transmits data using SSL (Secure Socket Layer) technology that supports 128-bit key encryption. It is important to verify that a secure connection between your browser and the TowneBank online banking server has been established before transmitting any confidential account information over the Internet. An indicator on your web browser can verify this. Netscape Navigator has a key symbol that appears in the lower left corner of the screen. When the symbol appears "solid" transmitted data is being encrypted. When this symbol appears "broken", a secure session has not been established. Similarly, Microsoft Internet Explorer has a lock symbol that appears when data is being encrypted. When this symbol does not appear, a session is not secure.

2. HOST SECURITY. TowneBank's web server does not connect directly to the Internet. It is buffered from the Internet through the use of a firewall. All access from outside TowneBank must go through this firewall, which screens the requests and allows only valid http traffic to reach the server. TowneBank's online banking service makes use of an ICSA certified firewall.

3. LINKS. Links to non-TowneBank websites contained in this site are offered only as pointers to sources of information on subjects that may be of interest to users of the TowneBank website, and TowneBank is not responsible for the content of such sites as we have no control over what is displayed there. TowneBank does not guarantee the authenticity of documents at such sites, and links to non-TowneBank sites do not imply any endorsement of or responsibility for the ideas, opinions, information, products, or services offered at such sites. Use of links to any non-TowneBank site is solely at the user's own risk.

4. HARDWARE AND SOFTWARE REQUIREMENTS. To be able to use the TowneBank online banking service, you must provide your own personal computer (a "PC") with a modem, related equipment (the "Hardware") and Internet web browser software (the "software"). You also must provide the type of telephone service and Internet access service required by the Hardware and/or the Software. Once the Hardware has been properly connected to the telephone service, and any required Internet access has been established, you will be able to access the TowneBank online services through the PC banking service provider (the "Service Provider") that will act as an interface between you and TowneBank. You are and will remain solely responsible for the purchase, hook-up, installation, loading, operation and maintenance of the Hardware, the Software, the telephone service, and the Internet access service (if applicable) to your PC, and for all related costs. You are solely responsible for scanning the Hardware and the Software for computer viruses and other related problems before you use them.

5. CONFIDENTIALITY AND PROTECTION OF PERSONAL IDENTIFICATION NUMBER. All TowneBank online banking transactions or inquiries must be initiated by use of your TowneBank online banking customer identification number ("User ID") and personal identification number (the "password"). We will assign you a User ID and temporary password after we have accepted your Application. The first time you sign on to the TowneBank online banking service, you will be required to select a new password. You may change your password from time to time, as provided in the Software. It is recommended that you do not use your social security number or other codes that may be easy for others to determine as your password. No TowneBank employee will ever ask for your password, nor should you provide it to anyone unless you intend to allow that person access to your accounts.YOU AGREE TO KEEP YOUR PASSWORD CONFIDENTIAL. USE OF THE PASSWORD BY YOU OR BY ANY OTHER PERSON WITH YOUR AUTHORIZATION WILL BE CONSIDERED THE SAME AS YOUR WRITTEN SIGNATURE AUTHORIZING US TO COMPLETE ANY TRANSACTION OR REQUEST COMMUNICATED THROUGH TOWNEBANK ONLINE BANKING.You agree that any TowneBank online banking transaction or request initiated by use of the password will be subject to and governed by this Agreement.

5.1 Member logins require a Member ID and password. A private password must be chosen the first time that a member uses the system. TowneBank personnel cannot see a private password that has been set by the customer. During the initial login Members will be asked to create a PassMark (a quick and easy security measure that helps prevent fraud and identity theft)
        A. A Member's PassMark includes an image and a unique phrase that will always display before the Member enters their password.
        B. Verification of this PassMark assures that the Member is at the TowneBank website and not a "spoofed" site. PassMark also allows the Bank to evaluate the Member's computer to ensure that the login is not a fraudulent attempt.
        C. If the Member's computer is not recognized, or the password is incorrect, the PassMark will begin asking the Member challenge questions. The answers to these questions are known only to the Member who enrolled in PassMark.

5.2 If you authorize another person to use your password, that person can use TowneBank online banking to view any information or initiate any transaction on any of the accounts to the same extent as you, including viewing information or initiating transactions on accounts to which that person does not otherwise have access. As such, your sharing of your password is strongly discouraged by TowneBank.

5.3 You should always exit TowneBank online banking after you finish viewing your accounts. Never leave your computer unattended while accessing the TowneBank online banking service. If you should, a third party may be able to access your accounts from your terminal, without ever needing to use your password.

5.4 To guard against unauthorized access to your online banking account, TowneBank will block access to your account after 5 consecutive invalid login attempts. Also, the access to your online account will be blocked after 90 days of inactivity. You will need to contact TowneBank's Electronic Banking Department to regain access to your online banking account.

Schedule B

TowneBank Fees and Charges for Online Banking Service

Currently there are no monthly service fees associated with our bill payment feature in connection with this Service.

There are currently no other fees or charges for this Service.

Schedule C

TowneBank Fees and Charges for Automated Teller Machine Transactions

You will be charged $1.50 for each withdrawal that you make using an automated teller machine not owned by us. When you use an ATM not owned by us, you may be charged a fee by the ATM operator or any network used (and you may be charged a fee for a balance inquiry even if you do not complete a fund transfer).

Withdrawals are free for certain products.

There is no charge for point-of-sale (POS) transactions.

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