Preview | Agreement and Plan of Reorganization |

TABLE OF CONTENTS


Section			Page
ARTICLE I DEFINITIONS, CONSTRUCTION				1

	Section 1.01.	Definitions		1

ARTICLE II MERGER, EFFECTS OF MERGER				6

	Section 2.01.	Interim Bank		6

	Section 2.02.	Merger		6

	Section 2.03.	Closing, Effective Date and Effective Time		6

	Section 2.04.	Plan of Merger		7

	Section 2.05.	Director Appointments for Acquiror Board		7

ARTICLE III MERGER CONSIDERATION, EXCHANGE PROCEDURES				7

	Section 3.01.	Merger Consideration		7

	Section 3.02.	Cash Elections		8

	Section 3.03.	Proration		9

	Section 3.04.	Bank Stock Options		9

	Section 3.05.	Bank Warrants		10

	Section 3.06.	Certain Adjustments		10

	Section 3.07.	Exchange Fund		10

	Section 3.08.	Exchange Procedures		11

	Section 3.09.	Distributions with Respect to Unexchanged Shares		11

	Section 3.10.	No Further Ownership Rights in Bank Common Stock		12

	Section 3.11.	No Fractional Shares of Acquiror Common Stock		12

	Section 3.12.	Termination of Exchange Fund		12

	Section 3.13.	Investment of Exchange Fund		12

	Section 3.14.	Lost Certificates		12

	Section 3.15.	Withholding Rights		13

	Section 3.16.	Further Assurances		13

	Section 3.17.	Stock Transfer Books		13

ARTICLE IV ACTIONS PENDING MERGER				13

	Section 4.01.	Forbearance of Bank		13

	Section 4.02.	Forbearance of Acquiror		15


Section			Page
ARTICLE V REPRESENTATIONS AND WARRANTIES				16

	Section 5.01.	Disclosure Schedules		16

	Section 5.02.	Standard		16

	Section 5.03.	Representations and Warranties of Bank		16

	Section 5.04.	Representations and Warranties of Acquiror		28

ARTICLE VI COVENANTS				31

	Section 6.01.	Reasonable Efforts		31

	Section 6.02.	Shareholder Approval		31

	Section 6.03.	Registration Statement		32

	Section 6.04.	Press Release		33

	Section 6.05.	Access, Information		33

	Section 6.06.	Acquisition Proposals		33

	Section 6.07.	Affiliate Agreements		34

	Section 6.08.	Takeover Laws		34

	Section 6.09.	Nasdaq Listing		34

	Section 6.10.	Regulatory Applications		34

	Section 6.11.	Indemnification, Directors and Officers Insurance		35

	Section 6.12.	Benefit Plans		36

	Section 6.13.	Notification of Certain Matters		36

	Section 6.14.	Exercise of Warrants		37

	Section 6.15.	Shareholder Agreements		37

	Section 6.16.	Consents and Approvals		37

ARTICLE VII CONDITIONS TO CONSUMMATION OF MERGER				37

	Section 7.01.	Conditions to Each Partys Obligations to Effect Merger		37

	Section 7.02.	Conditions to Obligations of Bank to Effect Merger		38

	Section 7.03.	Conditions to Obligations of Acquiror to Effect Merger		38

ARTICLE VIII TERMINATION				39

	Section 8.01.	Termination		39

	Section 8.02.	Effect of Termination		40

	Section 8.03.	Termination Fee		41

ARTICLE IX MISCELLANEOUS				41


Section			Page
	Section 9.01.	Survival		41

	Section 9.02.	Waiver, Amendment		41

	Section 9.03.	Counterparts		41

	Section 9.04.	Governing Law, Waiver of Jury Trial		41

	Section 9.05.	Expenses		41

	Section 9.06.	Notices		42

	Section 9.07.	Entire Understanding, No Third Party Beneficiaries		42

	Section 9.08.	Interpretation		42

Schedule 6.12

LIST OF EXHIBITS


Exhibit A				Plan of Merger

Exhibit B				Affiliate Letter

Exhibit C				Shareholder Agreement

Exhibit D-1				Form of Employment Agreement

Exhibit D-2				Form of Employment Agreement

iii

AGREEMENT AND PLAN OF REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 9, 2005 (this Agreement), by and between ALBEMARLE FIRST BANK, a Virginia banking corporation (Bank), and MILLENNIUM BANKSHARES CORPORATION (Acquiror).

RECITALS

A. Bank. Bank is a Virginia banking corporation, having its principal place of business in Charlottesville, Virginia.

B. Acquiror. Acquiror is a Virginia corporation, registered as a financial holding company, having its principal place of business in Reston, Virginia.

C. Interim Bank. Acquiror intends to form a bank under the laws of the Commonwealth of Virginia as a wholly-owned subsidiary of Acquiror to facilitate the acquisition of Bank as provided herein.

D. Intentions of the Parties. It is the intention of the Parties to this Agreement that the business combination contemplated hereby be treated as a reorganization under Section 368 of the Internal Revenue Code of 1986, as amended (the Code), and that this Agreement shall constitute a plan of reorganization for purposes of the Code.

E. Board Action. The respective Boards of Directors of each of Acquiror and Bank have determined that it is in the best interests of their respective organizations and their shareholders to consummate the strategic business combination transaction provided for herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, the Parties agree as follows:

AGREEMENT

In consideration of the foregoing, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which are hereby acknowledged by the Parties by their execution hereof), the Parties agree as follows.

ARTICLE I
DEFINITIONS, CONSTRUCTION

Section 1.01. Definitions. For purposes of this Agreement, the following capitalized terms have the following meanings.

Acquiror has the meaning set forth in the preamble to this Agreement.

Acquiror Average Price means the average of the daily closing prices of Acquiror Common Stock on the Nasdaq SmallCap Market (as reported in The Wall Street Journal or, if not reported therein, in another mutually agreed upon authoritative source) for the twenty consecutive trading days on the Nasdaq SmallCap Market ending at the close of trading on the Determination Date (in the event that on any trading day within such twenty consecutive trading day period there are no trades of Acquiror Common Stock, then the closing price on any such day shall be deemed to be the closing price

of Acquiror Common Stock on the immediately preceding trading day on which there was any such trade).

Acquiror Board means the Board of Directors of Acquiror.

Acquiror Common Stock means the common stock, par value $5.00 per share, of Acquiror.

Acquiror Employee Plans has the meaning set forth in Section 6.12.

Acquiror Meeting has the meaning set forth in Section 6.02.

Acquisition Proposal means any tender or exchange offer, proposal for a merger, consolidation or other business combination involving Bank or any of its Subsidiaries or any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the assets or deposits of, Bank or any of its Subsidiaries, other than the transactions contemplated by this Agreement.

Agreement means this Agreement, as amended or modified from time to time in accordance with Section 9.02.

Articles Amendment has the meaning set forth in Section 6.02.

Bank has the meaning set forth in the preamble to this Agreement.

Bank Affiliate has the meaning set forth in Section 6.07.

Bank Board means the Board of Directors of Bank.

Bank By-Laws means the By-laws of Bank.

Bank Certificates has the meaning set forth in Section 3.02(b).

Bank Charter means the Articles of Incorporation of Bank.

Bank Common Stock means the common stock, par value $4.00 per share, of Bank.

Banking Act means the Virginia Banking Act.

Bank Meeting has the meaning set forth in Section 6.02.

Bank Stock Option has the meaning set forth in Section 3.04.

Bank Stock Option Plan means the Albemarle First Bank 1999 Stock Option Plan, as amended.

Benefit Plans has the meaning set forth in Section 5.03(n).

Bureau of Financial Institutions means the Virginia State Corporation Commissions Bureau of Financial Institutions.

Business Day means any day on which banks are not required or authorized to close in the State of Virginia.

Cash Consideration has the meaning set forth in Section 3.01(b)(i).

Cash Election has the meaning set forth in Section 3.02(a).

Cash Election Shares has the meaning set forth in Section 3.01(b)(i).

Cash Proration Factor has the meaning set forth in Section 3.03(b)(i).

Closing Date has the meaning set forth in Section 2.03.

Code has the meaning set forth in the Recitals.

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