Required Provisions of a Plan of Conversion

The plan of conversion shall: (1) State the business purposes to be accomplished by the plan of conversion. 10/2/98 (Effective 9/4/98) - corrected (2) Provide that the converting bank shall issue and sell its capital stock at a total price equal to the estimated pro forma market value of such stock in the converted bank based on an independent valuation. (3) Provide that each eligible account holder shall receive without payment, nontransferable subscription rights to purchase capital stock in an amount equal to the greater of the maximum purchase limitation established for the public offering pursuant to 209 CMR 33.05(6)(a), 1/10 of 1% of the total offering of shares or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of capital stock to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the eligible account holder and the denominator is the total amount of qualifying deposits of all eligible account holders in the converting bank. If the allotment made in this paragraph results in an oversubscription, shares shall be allocated among subscribing eligible account holders so as to permit each such account holder, to the extent possible, to purchase a number of shares sufficient to make his total allocation equal to 100 shares. Any shares not so allocated shall be allocated among the subscribing eligible account holders on such equitable basis, related to the amounts of their respective qualifying deposits as may be provided in the plan of conversion. (4) Provide that nontransferable subscription rights to purchase capital stock received by officers, corporators, trustees, and directors and their associates of the converting bank based on their increased deposits in the converting bank in the one year period preceding the eligibility record date shall be subordinated to all other subscriptions involving the exercise of nontransferable subscription rights to purchase shares. (5) Provide that, in plans of conversion involving an eligibility record date that is more than 15 months prior to the date of the latest amendment to the application for conversion filed prior to approval by the commissioner, a supplemental eligibility record date be determined whereby each supplemental eligible account holder of a converting bank shall receive without payment, nontransferable subscription rights to purchase supplemental shares in an amount equal to the greater of the maximum purchase limitation for the public offering pursuant to 209 CMR 33.05(6)(a), 1/10 of 1% of the total offering of shares or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of capital stock to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the supplemental eligible account holder and the denominator is the total amount of the qualifying deposits of all supplemental eligible account holders in the converting bank on the supplemental eligibility record date. (a) Subscription rights received pursuant to 209 CMR 33.05(5) shall be subordinated to all rights received by eligible account holders to purchase shares pursuant to 209 CMR 33.05(3). (b) Any nontransferable subscription rights to purchase shares received by an eligible account holder in accordance with 209 CMR 33.05(3) shall be applied in partial satisfaction of the subscription rights to be distributed pursuant to 209 CMR 33.05(5). (c) In the event of an oversubscription for supplemental shares pursuant to 209 CMR 33.05(5), shares shall be allocated among the subscribing supplemental eligible account holders as follows: 1. Shares shall be allocated among subscribing supplemental eligible account holders so as to permit each such supplemental account holder, to the extent possible, to purchase a number of shares sufficient to make his total allocation (including the number of shares, if any, allocated in accordance with 209 CMR 33.05(3)) equal to 100 shares. 2. Any shares not allocated in accordance with 209 CMR 33.05 (5)(c)1. shall be allocated among the subscribing supplemental eligible account holders on such equitable basis, related to the amounts of their respective qualifying deposits as may be provided in the plan of conversion. 10/2/98 (Effective 9/4/98) - corrected (6) Provide that any shares of the converting bank not sold in the subscription offering shall be sold in a public offering through an underwriter and/or directly by the converting bank in a direct community offering, subject to the applicant demonstrating to the commissioner the feasibility of the method of sale and to such conditions as are provided in the plan of conversion. Such conditions shall include, but not be limited to: (a) A condition limiting purchases by persons and their associates in this phase of the offering to a number of shares or a percentage of the total offering so long as such limitation does not exceed 5% of the total offering of shares. The limitations provided for in 209 CMR 33.05(7) and (8) shall apply to shares acquired in this phase of the offering. (b) A condition requiring that orders for stock in any public offering shall be filled up to a maximum of 2% of the total offering and thereafter remaining shares shall be allocated on an equal number of shares per order until all orders have been filled. (c) A condition requiring the stock offered and sold in the public offering be offered and sold in a manner that will achieve the widest distribution of the stock. (d) A condition that the direct community offering give a preference to natural persons residing in the bank's community as defined in accordance with M.G.L. c. 167, § 14. (7) Provide that the number of shares which any person together with any associate or group of persons acting in concert may subscribe for or purchase as a result of the plan of conversion shall not exceed 5% of the total offering of shares. For purposes of this paragraph, the members of the converting bank's board shall not be deemed to be associates or a group acting in concert solely as a result of their board membership. (8) Provide that the number of shares which officers, trustees, corporators, and directors of the converting bank and their associates may purchase as a result of the plan of conversion shall not exceed 30% of the total offering of shares. (9) Provide that without the prior written approval of the commissioner, no officer or director of the converted bank or their associates shall purchase capital stock of a bank from the converted bank for a period of three years following the conversion. (10) Provide that the sales price of the shares of capital stock to be sold pursuant to the plan of conversion shall be a uniform price; and specify the underwriting and/or other marketing arrangements to be made to assure the sale of all shares not sold in the subscription offering. (11) Provide that each savings account holder of the converting bank shall receive, without payment, a withdrawable deposit account or accounts in the converted bank equal in withdrawable amount to the withdrawal value of such account holder's deposit account or accounts in the converting bank. (12) Provide for the establishment and maintenance of a liquidation account for the benefit of eligible account holders and supplemental eligible account holders in the event of a subsequent complete liquidation of the converted bank. (a) Liquidation Account. 1. Each converted bank shall, at the time of conversion, establish a liquidation account in an amount equal to the net worth of the converting bank set forth in its latest statement of financial condition contained in the final prospectus or offering circular. The function of the liquidation account is to establish a priority on liquidation and, except as provided in 209 CMR 33.05(12)(a)2. and 3., the existence of the liquidation account shall not operate to restrict the use or application of any of the net worth accounts of the converted bank. 2. The liquidation account shall be maintained by the converted bank for the benefit of eligible account holders and supplemental eligible account holders who after the conversion continue to hold the deposit accounts held by them on the eligibility record date and/or the supplemental eligibility record date. Each such eligible account holder and supplemental eligible account holder shall, with respect to each deposit account held, have exclusively a contingent creditor relationship to the bank with respect to that portion of the liquidation account balance ("subaccount"). 10/2/98 (Effective 9/4/98) - corrected 3. In the event of a complete liquidation of the converted bank (and only in such event), each eligible account holder and supplemental eligible account holder shall be entitled to receive a liquidation distribution from the liquidation account, in the amount of the then current adjusted subaccount balances for deposit accounts then held, before any liquidation distribution may be made with respect to capital stock. No merger, consolidation, purchase of bulk assets with assumption of deposit accounts and other liabilities, or similar transactions, in deposit accounts and other liabilities, which the converted bank is not the surviving entity is considered to be a complete liquidation for this purpose. In such transactions, the liquidation account shall be assumed by the surviving entity. 4. The initial subaccount balance for a deposit account held by an eligible account holder and/or supplemental eligible account holder shall be determined by multiplying the opening balance in such liquidation account by a fraction of which the numerator is the amount of qualifying deposits in such deposit account on the eligibility record date and/or the supplemental eligibility record date, and the denominator is the total amount of qualifying deposits of all eligible account holders and supplemental eligible account holders in the converting bank on such dates. For deposit accounts in existence at both dates, separate subaccounts shall be determined on the basis of the qualifying deposits in such deposit accounts on such record dates. Such initial subaccount balance shall not be increased by additional deposits, and shall be subject to downward adjustment by withdrawal. 5. If the deposit balance in any deposit account of an eligible account holder or supplemental eligible account holder at the close of business on any annual fiscal year closing date subsequent to the respective record dates is less than either: a. The deposit balance in such deposit account at the close of business on any other annual fiscal year closing date subsequent to the eligibility record date or supplemental eligibility record date, or b. The amount of the qualifying deposit as of the eligibility record date or supplemental eligibility record date, then, the subaccount balance for such deposit account shall be adjusted by reducing such subaccount balance in an amount equal to the reduction in such a deposit balance. In the event of such downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related deposit account. If any such deposit account is closed, the related subaccount balance shall be reduced to zero. (13) Provide for an eligibility record date, which shall not be less than 90 days prior to the date of adoption of the plan of conversion by the converting bank's board. (14) Provide that the holders of the capital stock of the converted bank shall have exclusive voting rights in the converted bank. (15) Provide that the plan of conversion adopted by the applicant's board may be substantively amended by such board as a result of comments from regulatory authorities and at anytime thereafter with the concurrence of the commissioner; and that the conversion may be terminated by such board at any time prior to the meeting of corporators or shareholders called to consider the plan of conversion and at any time thereafter with the concurrence of the commissioner. (16) Provide that, all shares of capital stock purchased by directors, trustees, corporators, and officers on original issue pursuant to the plan of conversion either directly from the bank (by subscription or otherwise) or from an underwriter of such shares, shall be subject to the restriction that such shares shall not be sold for a period of one year following the date of purchase, except in the event of death or substantial disability (as determined by the commissioner) of the director, trustee, corporator or officer, or upon the written approval of the commissioner. 10/2/98 (Effective 9/4/98) - corrected (17) Provide that, in connection with shares of capital stock subject to restriction on sale for a period of time, pursuant to 209 CMR 33.00 that: (a) Each certificate for such stock shall bear a legend giving appropriate notice of such restriction; (b) Appropriate instructions shall be issued to the transfer agent for the converted bank's capital stock with respect to applicable restrictions on transfer of any such restricted stock; and (c) Any shares issued as a stock dividend, stock or otherwise with respect to any such restricted stock shall be subject to the same restrictions as may apply to such restricted stock. (18) State that capital stock to be issued pursuant to the plan of conversion will not be covered by deposit insurance. (19) Provide that the expenses incurred in connection with the plan of conversion shall be reasonable. (20) Contain no provision which the commissioner shall determine to be inequitable or detrimental to the applicant, its deposit account holders or other banks or contrary to the public interest. (21) Establish a time period within which the plan of conversion must be consummated. The time period shall not be more than 24 months from the date the board of directors or board of trustees approve the plan of conversion. (22) Provide that the converting bank shall: (a) promptly following the conversion register the securities issued in connection therewith pursuant to the Massachusetts General Laws and to the Securities Exchange Act of 1934 if either or both of such registrations are required under applicable law; (b) use its best efforts to encourage and assist a market maker to establish and maintain a market for the securities issued; and (c) use its best efforts to list those shares issued on a national or regional securities exchange or on the NASDAQ quotation system. (23) That the converting bank shall not loan funds or otherwise extend credit to any person to purchase the capital stock of the institution. (24) Provide that the converting bank shall maintain a copy of its application for conversion in its main banking office for public inspection.